SEGMENTS

12 Months Ended

Dec. 31, 2024

Segment Reporting [Abstract]

SEGMENTS

NOTE 14 – SEGMENTS

During 2024, 2023, and 2022, we operated in two segments: real estate operations and restaurant operations. In our real estate operations, we lease properties to tenants through net lease arrangements under which the tenants are primarily responsible for ongoing costs relating to the properties, including utilities, property taxes, insurance, common area maintenance charges, and maintenance and repair costs. In our restaurant operations, we operate seven LongHorn Steakhouse restaurants located in the San Antonio, Texas area.

Our chief operating decision maker evaluates performance of the real estate operations based on Adjusted Funds from Operations (“AFFO”) and evaluates performance of the restaurant operations based on Earnings Before Interest, Taxes, Depreciation, and Amortization ("EBITDA") in order to determine how to allocate resources to these segments. We define AFFO as total real estate operations segment revenues, less total segment operating expenses. We define EBITDA as total restaurant operations segment revenues less total segment operating expenses. We consider these respective measures useful because they allow investors, analysts and our management to measure our year-over-year ability to fund dividend distribution from operating activities. In order to facilitate a clear understanding of our historical consolidated operating results, AFFO and EBITDA should be examined in conjunction with net income as presented in our Consolidated Financial Statements and other financial data included elsewhere in this Annual Report.

Our segments are based on our organizational and management structure, which aligns with how our results are monitored and performance is assessed. The accounting policies of the reportable segments are the same as those described in Note 2 - Summary of Significant Accounting Policies.

The following table presents financial information for the real estate operations segment.

	Year Ended December 31,
(In thousands)	2024			2023			2022
Revenues:
Real estate operations revenue	$	236,264		$	217,276		$	190,236
Segment revenue		236,264			217,276			190,236
Operating expenses:
Interest expense		46,634			42,295			34,301
Other segment items, net		27,723			27,267			22,718
AFFO	$	161,907		$	147,714		$	133,217
Reconciliation to Segment net income:
Depreciation and amortization		(53,607	)		(49,996	)		(40,762	)
Realized gain on sale, net		—			2,341			8,139
Stock-based compensation		(6,987	)		(6,271	)		(4,978	)
Straight-line rent		3,810			5,523			6,372
Non-cash amortization of deferred financing costs		(2,597	)		(2,311	)		(2,104	)
Other non-cash revenue adjustments		(2,072	)		(2,061	)		(2,151	)
Segment net income	$	100,454		$	94,939		$	97,733

(1)Other segment items, net includes: compensation and related expenses, external services, other operating costs, property expenses, other income, net, and income tax expense

The following table presents financial information for the restaurant operations segment.

	Year Ended December 31,
(In thousands)	2024			2023			2022
Revenues:
Restaurant operations revenue	$	30,939		$	30,725		$	29,583
Segment revenue		30,939			30,725			29,583
Operating expenses:
Cost of goods sold		24,305			24,033			23,418
Other segment items, net		5,587			5,531			5,250
EBITDA	$	1,047		$	1,161		$	915
Reconciliation to Segment net income:
Depreciation and amortization		(907	)		(735	)		(709	)
Income tax (expense) benefit		1			97			(31	)
Segment net income	$	141		$	523		$	175

The following table reconciles the segment revenues to our total revenues.

	Year Ended December 31,
(In thousands)	2024		2023		2022
Revenues:
Real estate operations revenue	$	236,264	$	217,276	$	190,236
Restaurant operations revenue		30,939		30,725		29,583
Other		870		2,605		3,375
Total revenues	$	268,073	$	250,606	$	223,194

The following table reconciles the segment net incomes to our net income.

	Year Ended December 31,
(In thousands)	2024		2023		2022
Segment net income:
Real estate operations	$	100,454	$	94,939	$	97,733
Restaurant operations		141		523		175
Net income	$	100,595	$	95,462	$	97,908

The following table presents supplemental information by segment.

Supplemental Segment Information at December 31, 2024

(In thousands)	Real Estate Operations			Restaurant Operations			Total
Total real estate investments	$	3,175,813		$	22,831		$	3,198,644
Accumulated depreciation		(767,716	)		(7,789	)		(775,505	)
Total real estate investments, net	$	2,408,097		$	15,042		$	2,423,139
Cash and cash equivalents		2,985			1,096		$	4,081
Total assets		2,631,171			21,855		$	2,653,026
Total debt, net of deferred financing costs		1,137,889			—		$	1,137,889

Supplemental Segment Information at December 31, 2023

(In thousands)	Real Estate Operations			Restaurant Operations			Total
Total real estate investments	$	2,926,425		$	22,996		$	2,949,421
Accumulated depreciation		(731,345	)		(7,601	)		(738,946	)
Total real estate investments, net	$	2,195,080		$	15,395		$	2,210,475
Cash and cash equivalents		14,776			1,546		$	16,322
Total assets		2,429,136			22,498		$	2,451,634
Total debt, net of deferred financing costs		1,112,689			—		$	1,112,689

Capital expenditures in our Consolidated Statements of Cash Flows relate to the real estate operations segment.