(Out)back for seconds
Four Corners Property Trust (NYSE: FCPT) announced the acquisition of five Outback Steakhouse restaurants, purchased from the same seller as the REIT’s August transaction for 19 Bloomin’ Brands (NASDAQ: BLMN) tenanted sites. Bloomin’ is the parent company of brands including Outback, Carrabba’s Italian Grill, Bonefish Grill, and Fleming’s. The $19.7 million real estate deal ($3.94 million per restaurant) includes assets across Texas (3), Florida (1), and Missouri (1) with each site ‘corporate operated under long-term net leases.’
No cap rate was disclosed, but the deal ‘was priced at a cap rate in range with previous FCPT transactions’ per the press release. Tenant exposure to Bloomin’ accelerated for FCPT in last several months, with Outback and Carrabba’s now generating an estimated $9 million in total annual base rent.1
Out with the old, in with the alternative
Core real estate investor allocation across property type has moved materially since 2017, as measured by the NFI-ODCE (NCREIF Fund Index - Open End Diversified Core Equity)2. Industrial (from under 15% to ~30%) and alternatives3 (from under 4% to 13%) have taken material share from office (17%, down from over 35%) and retail (13%, down from over 20%).
Although net lease typically falls outside of ‘core’ the trend for more industrial, data center, and medical office allocation aligns with recent net lease activity. The decline in retail allocation within the ODCE is likely due to multi-tenant (malls; power centers; lifestyle; strip - which represent nearly half the overall domestic retail commercial real estate investable universe), subcategories not affecting single tenant net lease.4
-Sean Hostert