Four Corners Diversifies Out of Restaurant Niche
Four Corners Property Trust has signed a definitive agreement for the purchase of 20 additional outparcel properties from Washington Prime Group for a purchase price of approximately $37.8 million.
MILL VALLEY, CA—Four Corners Property Trust has signed a definitive agreement for the purchase of 20 additional outparcel properties from Washington Prime Group for $37.8 million. This pricing reflects a mid-6% capitalization rate on in-place net operating income.
The transaction is Four Corners’ first investments outside of restaurant net lease and is part of a larger strategy of diversification.
The deal includes 12 restaurant properties as well as eight properties operating in other retail sectors. These outparcels are located in Colorado, Connecticut, Florida, Illinois, Indiana, Iowa, Kentucky, Maryland, New Jersey, Ohio, Pennsylvania, Texas and Virginia. The 20 additional outparcels span 17 brands, of which nine will be new to Four Corners’ portfolio, including six non-restaurant brands. The restaurant brands include Buffalo Wild Wings, Chick-fil-A, Chili’s (two), Chipotle, Olive Garden, Outback Steakhouse, Raising Cane’s, Slim Chickens, Starbucks, Texas Roadhouse and Wendy’s. The non-restaurant brands include Citibank, Firestone, Jared Jewelry (two), JPMorgan Chase, PNC and Wells Fargo.
Initially, Four Corners’ efforts to diversify focused on acquiring assets across the restaurant sector. Four Corners’ holdings outside of Darden concepts have risen from 0% of rental income at inception to approximately 25% at the end of second quarter 2019.
The transaction was first announced in September 2017 when Four Corners reported it would acquire 41 restaurant outparcels from Washington Prime Group. Since that announcement, 33 properties have closed for $50 million, one property was removed during due diligence and four were added to the portfolio to bring the total deal size up to 44 properties for approximately $70 million.
Closing for the remaining 11 properties from the September 2017 announcement, as well as for the 20 properties in the new transaction, are expected to occur in rolling tranches as the properties become available to be conveyed, subject to due diligence and customary closing conditions. Four Corners closed on $32.7 million of outparcels in 2018, and completed $17.3 million of outparcel sales during the first half of 2019.