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Four Corners (FCPT) Acquires MercyOne Outpatient Clinic for $3M

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Four Corners Property Trust (FCPT - Free Report) recently announced the acquisition of MercyOne outpatient clinic property located in a strong retail corridor in lowa for $3 million. The move aligns with FCPT’s portfolio expansion efforts, with real estate leased to strong credit operators.

The property is corporate-operated under a long-term, triple net lease with six years of residual term and is likely to generate steady revenues. Priced at a cap rate of 7.2% on rent as of the closing date, excluding transaction costs, FCPT’s latest acquisition seems prudent.

MercyOne, a non-profit healthcare system, is an integral part of the larger Trinity Health network. MercyOne oversees the operation of more than 420 hospitals, clinics and various healthcare facilities in Iowa and Nebraska.

Of late, this real estate investment trust (REIT), mainly engaged in the ownership and acquisition of high-quality, net-leased restaurant and retail properties, has been on an acquisition spree.

Last week, Four Corners announced the acquisition of Mercy Health Clinic property, located in a strong retail corridor in Missouri, for $3.8 million. The property is corporate-operated under a triple net lease.

In May, Four Corners announced the purchase of eight Mavis Tire and affiliated operated properties for $20 million. Located across Alabama, Georgia, Louisiana, New Jersey, New York and Tennessee, each of these properties is operated under a long-term, triple net lease.

Moreover, in the same month, Four Corners announced the acquisition of a Longhorn Steakhouse property for $2 million. Located in a highly trafficked corridor in Illinois, the property is corporate-operated under a net lease.

These strategic moves not only broaden FCPT's footprint in various sectors but also ensure portfolio diversification. This benefits both the company and its investors as they gain exposure to growing industries and establish long-term lease agreements with strong tenants.

Moreover, during the first quarter, Four Corners acquired four properties for a combined purchase price of $15.9 million at an initial weighted average cash yield of 6.9% on rents in place as of Mar 31, 2023, and a weighted average remaining lease term of 9.9 years.

As of Mar 31, 2024, Four Corners’ rental portfolio comprised 1,115 properties located in 47 states. The properties are 99.6% occupied under long-term, net leases with a weighted average remaining lease term of around 7.6 years.

However, the company’s expansions may face potential headwinds in a high-interest-rate environment, which could increase borrowing costs for future acquisitions.

Over the past three months, shares of this Zacks Rank #3 (Hold) company have declined 0.9% compared with the industry's fall of 6%.

 

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Stocks to Consider

Some better-ranked stocks from the broader REIT sector are Lamar Advertising (LAMR - Free Report) and Rexford Industrial Realty (REXR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for LAMR’s 2024 funds from operation (FFO) per share has moved 3.7% northward over the past two months to $8.03.

The Zacks Consensus Estimate for REXR’s current-year FFO per share has been raised marginally over the past two months to $2.34.

Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.

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