FCPT Q4 2025 Earnings Call - Over-equitized Balance Sheet Lets REIT Push Acquisition Growth

Claire, Call Coordinator, FCPT: Welcome, everyone. The FCPT fourth quarter 2025 financial results conference call will begin shortly. In the meantime, if you would like to pre-register to ask a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two. Thank you. Hello, everyone, and thank you for joining the FCPT fourth quarter 2025 financial results conference call. My name is Claire, and I will be coordinating your call today. During the presentation, you can register a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two on your telephone keypad. I will now hand over to Patrick Wernig, Chief Financial Officer, to begin. Please go ahead.

Patrick Wernig, Chief Financial Officer, FCPT: Thank you, Claire. During the course of this call, we will make forward-looking statements, which are based on our beliefs and assumptions. Actual results will be affected by known and unknown factors that are beyond our control or ability to predict. Our assumptions are not a guarantee of future performance, and some prove to be incorrect. For more detailed description of some potential risks, please refer to our SEC filings, which can be found at FCPT.com. All the information presented on this call is current as of today, February twelfth, 2026. In addition, reconciliation to non-GAAP financial measures presented on this call, such as FFO and FFO, can be found in the company’s supplemental report. Pat, I’ll turn the call over to Bill.

Bill Lenehan, CEO, FCPT: Good morning. Following my initial remarks, Josh will comment on our investment activity, and Patrick will discuss financial results and capital position. This past November marked our 10-year anniversary as a public company. Over the past decade, we’ve grown from just four employees with 418 properties leased to a single tenant into a platform with 44 team members and 1,325 leases. We’ve acquired $2.3 billion of properties and paid out over $1 billion of dividends to our shareholders. We are proud of the portfolio and company we’ve built and look forward to continuing our mission to drive shareholder value by a conservative and thoughtful capital allocation. During Q4, we acquired $95 million of net lease properties at a 7% blended cap rate.

In total, during 2025, we acquired $318 million of net lease properties. We largely funded these acquisitions with equity. We raised on the ATM via 4 issuances. One important note on our acquisition volume is we accomplished this without the benefit of any large portfolio transactions. Most of the deals in 2025 were mid-sized transactions between $5 million and $20 million, furthering our extremely granular and selective portfolio construction via high-quality acquisitions. We did this while staying the course on what has become core to FCPT’s brand, a focus on attractive real estate occupied by credit-worthy tenants without sacrificing quality for volume or padding investment spread. Even in an era of increased competition for our larger net lease portfolios, we believe that we have a business model that can scale and source attractive opportunities for growth.

Our in-place portfolio retains its fortress quality with 0 exposure to problematic retail sectors such as theaters, pharmacies, high-rent car washes, and experiential retail. We have sidestepped major tenant credit issues, including 0 bad debt expense in 2020 and 2025, and have very little vacancy in the portfolio. Our rent coverage in Q4 was 5.1 times for the majority of our portfolio report that reports this figure. This remains among the strongest coverage within the net lease industry. To that end, our core anchor tenants of Olive Garden, LongHorn, and Chili’s continue to be leaders within the net lease tenant universe. Most recently, Brinker reported Chili’s same-store sales growth of 9% for the quarter ended December 2025, which represents a two-year sales growth comp of +43%.

Olive Garden and LongHorn reported same-store sales growth of near 5% and 6%, respectively, for the quarter ended November 2025. Really amazing results from our largest tenants, which represent over 51% of our portfolio rent on a combined basis. This improves our portfolio metrics and further demonstrates the benefits of thoughtful asset selection and alignment with best-in-class tenants. On the topic of our Darden assets, Darden announced last week that they are shutting down the Bahama Breeze brand and are converting many of these locations to other Darden brands. Our current Bahama Breeze exposure is just 1.3% of base rent across 10 properties, which equates to an average rent of $341,000 per property, which is very reasonable.

While it is early, we are in discussions with Darden about these properties, and as of now, we do expect several of these stores to be converted to other Darden concepts. Further, these properties are all subject to leases with a minimum of 1.7 years of term remaining, during which time Darden will continue paying rent, taxes, insurance, and all other costs of these locations while we seek new tenants. In the event that they do become permanent closures, we have already received significant inbound inquiries about backfilling the locations over the past week. We have lots of confidence in the quality of the real estate of these properties and expect they could be re-tenanted at similar rents. It’s worth noting the impact of our proactive approach to portfolio management here....

We sold two high-rent Bahama Breeze locations back in 2016 and 2018 in the 4.75%-5% cap rate range. This reduced our exposure to the brand by $2 million in rent, or roughly 35% of where it would otherwise be today. We continue to make meaningful progress in the area of diversification. Olive Garden and LongHorn are 32% and 9% of our rent today, versus a combined 94% spin-off, while 37% of our rents come from outside of casual dining. This includes automotive service at 13%, quick service restaurants at 11%, and medical retail at 10%. Our deal sourcing remains focused on essential retail and services. In our view, creating a prudently positioned portfolio with limited exposure to tariff-sensitive sectors and a strategy centered on everyday consumer demand.

We are constantly evaluating new retail categories as we look to expand the top of our funnel for investments. Similar to our decision to expand into automotive service and medical retail properties, we consider business and AI resilience, availability of creditworthy tenants, real estate quality, and pricing relative attractiveness. Patrick is going to discuss this in more detail, but a key takeaway is that since Q3 2024, our last circuit, $520 million of acquisitions, essentially all of the 171 buildings purchased over the last 18 months, have been funded 85% with equity only, raised at attractive pricing and a balanced funding with low rate term loans. So today, our balance sheet is over-equitized. I’ll repeat that. Today, our balance sheet is over-equitized, with net leverage near 5x.

Further, we didn’t raise debt when it would have required a 7%+ coupon. Now we can access much more favorable debt capital markets with a coupon rate in the 4.5%-5.5% range, depending on the structure and term, whether term loans or notes. This is much more attractive given where we are seeing cap rates today. We are proud of the year that we put together for both the capital raising and acquisition fronts. The team has shown great growth over the last 10 years since inception, and we feel that we are well positioned heading into 2026. We enter the year with low leverage and ample dry powder for opportunities that may arise. Over to you, Josh.

Josh, Investment Team Member, FCPT: Thanks, Bill. I’ll start with a review of this quarter’s activity and more details on 2025 investments. In Q4, we acquired 30 properties with a weighted average lease term of 10 years for $95 million at a blended 7% cap rate. This was a 20 basis point expansion over the previous quarter and our highest blended cap rate in 2025. We finished the year with 105 properties acquired for $318 million at a 6.8% blended cap rate. This represents an average basis of $3 million per property and continues our strategy of partnering with creditworthy operators and selecting fungible, low basis properties to further protect against any downside. Looking back, 2025 was one of our busiest years to date.

Our total investment volume increased 20% from 2024, and we had 53 unique transactions. Said another way, our team was able to post stellar results without reliance on large portfolio transactions. This is important to note because, one, these large deals often command pricing premiums for the ease of putting a greater amount of capital to work. And two, they often require buyers to accept all or nothing, where a good chunk of properties may not fit our underwriting thresholds. That said, our team remains capable and ready to execute on these larger opportunities when the right deal comes around. But we are encouraged our platform can still post significant volume in years, but we do not anchor a large portfolio deal sitting in the market.

In Q4, we also expanded the team’s capabilities outside of our main three categories: restaurants, automotive service, and medical retail, with our acquisition of a Sprouts grocery store and our first equipment rental acquisition of a United Rentals property. As Bill mentioned, our team is constantly evaluating new opportunities in adjacent sectors to understand the resilience of the business and the way the attractiveness of their credit and real estate locations versus our existing portfolio. We feel that both the grocery and equipment rental sectors fit our existing underwriting approach of focusing on recession-resistant, essential service retailers with high quality and fungible real estate. Similar to how we approach our entrance into the automotive service and medical retail sectors, that is, by dipping our toes and building extensive knowledge and expertise before launching an official strategy, we will follow the same pattern here.

While grocery and equipment rental are newer categories for us, we chose these specific properties because of their similarities to the assets we regularly purchase in our existing portfolio. For example, both are leased to best-in-class, creditworthy operators in their respective subcategories. Sprouts is a publicly traded grocer with more than 410 locations across the US and no debt. Our $8.6 million dollar basis in this location is also much lower than the $10-$15 million dollars we typically see for the brand in the market. United Rentals is also a publicly traded company with over 1,600 locations across the US and is rated BB+ by S&P. They are the largest equipment rental provider in the nation and have a demonstrated track record of strong operations.

We’ll continue to evaluate similar opportunities in these sectors, but only so long as they match our existing underwriting thresholds and investment criteria. Now, reflecting on our strategy going forward for 2026. 2025 evidenced substantial repeat counterparty transactions, a trend we expect to continue. Coupled with the expanding top of our funnel, we expect 2026 to be another strong year of increased diversification and expanded platform capabilities. Patrick, back to you.

Bill Lenehan, CEO, FCPT: Thanks, Josh.

Patrick Wernig, Chief Financial Officer, FCPT: ... I’ll start by talking about capital sourcing and the state of our balance sheet. We have full capacity on our $350 million revolver and feel that we have the liquidity to continue executing our business plan in Q1 and into 2026. With respect to leverage at the end of Q4, our net debt to adjusted EBITDA is just 4.9 times, inclusive of outstanding net equity ports. Excluding our forward equity balance, our leverage is 5.1 times. This is our sixth consecutive quarter of leverage below 5.5, at the very bottom of our stated leverage range of 5-6 times. We’ve not fully settled our forward equity balance in 2025, but with a fully available revolver, we feel we still have ample capacity on the debt side.

After including debt capacity and free cash flow, we have over $220 million in liquidity before reaching 5x leverage and substantially more than that before approaching 6x. Said another way, we believe we could utilize low interest rates debt for all acquisitions in 2026 and still remain under our self-imposed leverage. As always, we aim to be opportunistic to achieve the best cost of capital on our funding decision based on market. We are encouraged by the current state of the term loan market, which was much more constrained just a few years ago. As a reminder, 5-year term loans have historically been priced at 95 basis points over SOFR, or an all-in rate today of approximately 4.6% after swaps and before fees.

Private placement notes would be higher than that, but also competitive with current market cap rates while offering longer-term and better. We have 95% of our floating rate debt fixed through November 2027 at 3% versus spot rates today of 4%. Overall, 98% of our debt stack is fixed debt, and our blended cash interest rate is 4%. We maintain a very healthy fixed charge coverage ratio of 4.8 times. I’d also like to remind everyone that in Q3 of last year, we removed the SOFR credit spread adjustment of 10 basis points to our interest expense on the revolver and term loans. Our new borrowing rate on term loans for SOFR was 95 basis points, and the revolver SOFR plus 85 basis points. This had a positive flow through to FFO of approximately $600,000 per year.

Turning to debt maturities, including extension options, we have no debt maturities until December 2026, with $50 million in private notes come due. Our standard maturity schedule will ensure we do not face a significant maturity wall at any point thereafter. That said, we are focused on the small upcoming maturities in 2026 and 2027. We’ve been very encouraged by the liquidity in the bank market today, as well as the very attractive credit spreads being achieved in the private placement and public bond sector. Said another way, we believe we have numerous avenues to address these minor maturities at attractive rates. Now, turning to some of the earnings highlights for Q4. We reported Q4 AFFO per share of $0.45, and our full year AFFO was $1.78 per share, representing 2.9% growth over 2024.

Q4 cash rental income was $67.5 million, representing growth of 11.1% for the quarter compared to last year. Annualized cash-based rent, the leases in place as of quarter end, is $264.2 million, and our weighted average five-year annual cash rent escalator is 1.5%. Cash G&A expense was $18 million for the year, at the very bottom of our guidance range and representing 6.9% cash rental income for the year, compared to 7.1% for the prior year. This improved operating leverage illustrates our continued efforts at efficient growth and the benefits of our improving scale. Our new guidance range for cash G&A in 2026 is $19.2 million-$19.7 million.

As for managing our lease maturity profile, 95% of the 41 leases expiring in 2025 remain occupied today. This includes a high renewal rate and two properties that were quickly released to new tenants. Additionally, we’ve started to make progress on our 42 leases expiring in 2026, which now represents just 1.5% of ADR, down from 2.6% at the start of 2025. Our portfolio occupancy remains very strong today at 99.6%, benefiting from efforts to release our very limited number of vacant impacts. We collected 99.5% of base rent in Q4 and 99.8% for the year. Last quarter did not see any material changes to our collectibility or credit reserves. We want to call out one new slide we introduced to the presentation. It’s on page 11.

We regularly see private market cap rate comps for properties similar to the properties owned in our own portfolio. As our public valuation has lingered lower in recent months, we thought it would be helpful to compare our current implied cap rate to the blended cap rate of recently sold net lease properties. It demonstrates a sizable gap between the higher value of our underlying assets or the stocks that actually trade into that. With that, we’ll turn it back over to Claire for questions.

Claire, Call Coordinator, FCPT: Thank you. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Michael Goldsmith from UBS. Michael, your line is now open. Please go ahead.

Michael Goldsmith, Analyst, UBS: Good morning. Thanks for taking my question. First question is on the move into United Rentals and industrial outdoor storage. Can you just talk a little bit about the market you see there, maybe the total addressable size? You know, it feels like some of your net lease peers have been moving into that space. So, like, what do you see from, like, a competition perspective there? And then if you could talk a little bit about how the cap rates in that space compare to the rest of your portfolio, that’d be helpful. Thanks.

Bill Lenehan, CEO, FCPT: Thanks, Michael. Well, I’d say I’ve been following the sector for a long time. I was chair of the investment committee at Gramercy, you know, 15 years ago, and we were doing quite a bit of this. It’s attractive. It’s, you know, a lot of the value is in the land residual. If you’re careful, you can get in at a good basis. There’s creditworthy tenants. You know, it’s hard to get new sites entitled.... So there’s some entrenchment if you can find an existing site, a very large addressable market, you know, very defensive, and cap rates that make sense. So we’ve looked at a lot of them, we’ll continue to pursue that strategy. It’s. There are players who focus on it now.

One of them was just taken private by Brookfield, but it’s a, it’s an attractive space. As is grocery, by the way, but we found that very often high credit grocers have, you know, a much chunkier purchase price than we typically plan. But, but we’re looking at both of those sectors and others on a continuous basis. But, to answer your question on TAM, you know, we can get back to you, but it’s, you know, it’s enormous compared to the size of our company.

Michael Goldsmith, Analyst, UBS: Got it. Thanks for that. And then, second question, just following up on the Bahama Breeze. It sounds like you got ahead of this in a little bit in the prior year, so you still have a little bit of exposure here. You know, I guess, like, can you just kind of, I guess the question is just: it sounds like rents are about the same of where. Or, like, the interest level of interest is high, but rents are about the same. Is that right? Is that the case? And then also, like, if you compare the publicized list, I think you’ve got, like, four or five locations remaining. So can you just kinda confirm that? Just talk a little bit more about that. Thanks.

Bill Lenehan, CEO, FCPT: Yeah. I think that’s, that’s right. There will be a handful that get converted to other Darden brands. There’ll be... There may be one that we swap out with Darden for another property, and there’ll be a couple that, in a year and a half plus, we have to release. We’ve been inundated with people interested in these sites. They’re very well located, and I think we’re being pretty conservative on the rents, but you know, it’s we’ve sort of been working on this for a week, and we’re sorting through a lot of people who are interested in taking the sites.

Michael Goldsmith, Analyst, UBS: Thank you very much. Good luck in 2026.

Bill Lenehan, CEO, FCPT: Thanks, Michael.

Claire, Call Coordinator, FCPT: Thank you. Our next question comes from John Kikowski from Wells Fargo. Your line is now open. Please go ahead.

John Kikowski, Analyst, Wells Fargo: Good morning. Thank you for taking my question. Maybe just to stay on Bahama Breeze here. Bill, forgive me if I missed it in the opening remarks, you talked about the rents there. Are you able to talk about the performance at these assets? I’m just, you know, if they’re getting converted, would that be at the same rent? And then for the assets that would need to turn in a year and a half, I mean, if you’re getting substantial interest at this point, is there the potential for even a positive mark to market? I’m curious, like, what the total losses that you’re kind of baking into internal estimates.

Bill Lenehan, CEO, FCPT: Yeah, I don’t, I don’t think we’re baking in losses, at all. These brands are, Bahama Breeze as a brand, had limited market expansion. Simply, I don’t think a lot of the U.S. has a view on what Bahamian cuisine is. So it worked in the Southeast, and it just wasn’t relevant to the total size of Darden. And so they’ll convert some of these. They have existing leases, so there won’t be a change in the rental rate, would be my assumption. But we’ll have, you know, brand-new stores, with higher AUV brands. And then for the couple that we’ll get back, and we’ll get back, I feel good that we’ll be able to release them, although it’s early days. So... And, you know, we’re talking about a couple of stores on a portfolio of 1,325.

Patrick Wernig, Chief Financial Officer, FCPT: And yeah, this is Patrick. I would just add that, you know, when you look at that press release Darden put out and the list of sites that they want to convert, there’s still some moving pieces there. And, you know, you have to factor in that some of those stores that have really high-quality real estate are restricted by covenants, by other tenants nearby, by the shopping center itself. So, you know, Darden’s interest in converting a lot of these sites was clear, and it’s just a matter of what they can do within the restrictions that are on those properties. But the demand in the last week has been, I’d say, tremendous from other tenants that want to backfill these locations.

John Kikowski, Analyst, Wells Fargo: Okay, that’s helpful. Thanks, Pat. Then maybe one, another one for you just on the balance sheet. You know, you’ve called the forwards. I think in the opening remarks, you said $220 of liquidity gets you to 5.5. I’m just curious how you think about managing the balance sheet. I know, Bill, you kept saying over-equitize. At what point, the high end is 6, but maybe as you get to 5.5, in an effort to not necessarily reach the high end, do you start to maybe pull on thinner spreads on equity at a certain point? Or do you kinda stick to your guns, and you’ll ride, you know, that number up to 6, and then at that point, if the equity’s not, you know, cooperating, then you start to pull back on the acquisition cadence?

I’m just curious how you think about all scenarios. And obviously, if the risk-off trade works, then great, we get a cost of equity, we keep moving. But just trying to think about all scenarios here.

Bill Lenehan, CEO, FCPT: Yeah, I think we’ve evidenced that we’re disciplined in our capital allocation, that we don’t go out the risk spectrum on acquisitions. You know, we don’t provide guidance for a reason. But that said, we have lots of runway with very accretive acquisitions funded with low leverage, inexpensive financing that’s readily available today in a way that it wasn’t readily available a couple of years ago. So I think we feel like we’re in great shape, and we have minimal maturities to address. So, I think we have a long runway of acquisitions, and our stock has been soft. And I think we’ve, as Pat mentioned, added some detail in our presentation of how well supported by NAV we feel our stock price is. But I think it offers, you know, real value today.

Bill Lenehan, CEO, FCPT0: Got it. Thank you.

Claire, Call Coordinator, FCPT: Thank you. Our next question comes from Anthony Paolone from JPMorgan. Your line is now open. Please go ahead.

Anthony Paolone, Analyst, JPMorgan: Great, thanks. Can you talk about just Red Lobster exposure? Because I think that’s another one that’s been out there talking about perhaps more, more store closures.

Bill Lenehan, CEO, FCPT: Yeah, I don’t think there’s much to say. The brand is doing much, much better than it was under prior ownership. Our stores are predominantly in a master lease. It was affirmed when they restructured, at the same rent. I think we feel quite good about that.

Anthony Paolone, Analyst, JPMorgan: Okay. And then on the diversification strategy, can you maybe just talk about anything that you don’t want to get into or other areas of interest that you haven’t quite tapped yet?

Bill Lenehan, CEO, FCPT: Yeah, I think, you know, we’ve been very clear. We have a page in our presentation of sectors that we’ve avoided. I would, I would double down on what’s on that page. You know, we try to focus on a balanced real estate and credit approach, and we try to stay within sectors that have been through cycles. And so, you know, we don’t own pickleball facilities that cost $20 million. We don’t own $9 million car washes. We don’t own corporate headquarters in the middle of nowhere, where you can get more spread, and it works typically for a while, but on lease renewal, you’d have a lot of risk. So I think we take a much more balanced approach than our peers, and it’s shown in the last decade that our credit performance has been best in class.

Anthony Paolone, Analyst, JPMorgan: Okay, thanks.

Claire, Call Coordinator, FCPT: Thank you. Our next question comes from Rich Hightower from Barclays. Your line is now open. Please go ahead.

Rich Hightower, Analyst, Barclays: Hey, guys. I just wanted to follow up on one of the earlier questions, you know. But what’s the real comfort level with approaching that sort of 6x upper limit on leverage, if that’s the only option the market gives you, you know, as far as executing the sort of plan for 2026 on growth?

Bill Lenehan, CEO, FCPT: Well, I think that’s quite a bit of a ways off. So, you know, hard to make predictions that many months in the future, you know. So I think we feel very good that we have, you know, $200 million of acquisitions before we even have to be thinking about that. And honestly, you know, we’ve had the same leverage ceiling for since inception. We’ve essentially never been close to it. You hasn’t been a driver. So I think that that track record speaks volumes.

Rich Hightower, Analyst, Barclays: All right. Fair enough. And then as far as the, I guess that sort of early vintage of Darden leases coming due in 2027, and I wonder if I’ve asked this before, but, you know, where do you guys sort of peg the mark-to-market or the recapture rate potentially on those, you know, upon renewal, you know, that sort of thing?

Bill Lenehan, CEO, FCPT: They have multiple five-year extension options at 1.5% growth, so the continuation of that 1.5% escalator. So I, I would say that our expectation is the vast majority of those will renew at the, at the 1.5% contractual option.

Rich Hightower, Analyst, Barclays: Got it. Thanks very much, Bill.

Bill Lenehan, CEO, FCPT: Yeah, of course.

Claire, Call Coordinator, FCPT: Thank you. Our next question comes from Wes Golladay, from Baird. Your line is now open. Please go ahead.

Bill Lenehan, CEO, FCPT0: Hey, good morning, guys. Just looking at your, your, you know, your valuation chart you put in the presentation. You have a lot of assets that will trade, call it mid- to low 5s and up to the low 6s. Would you have any appetite to just start disposing of some of those assets and recycling into a little bit higher yield and higher growth assets and get the diversification higher?

Bill Lenehan, CEO, FCPT: Yeah, it’s always an option, Wes. We’ve done very little of it. You know, where we have done it, frankly, was a number of years ago and selling, you know, Bahama Breeze assets at extraordinary pricing with very high rents. We haven’t had to do it in the past. We don’t have to do it today. The Darden assets are very, very high quality and very hard to, you know, replace. They trade for, you know, strong values, for a reason. Darden, as a company, has a $25 billion market cap. Its credit default swaps, you know, are, are like a G7 country. So they’re hard to, they’re hard to let go of, to be honest. It’s an option. We, we know how that works. You know, I would remind everyone that there are REIT rules.

You can’t just sell properties one by one, like some people assume you can, but it’s an option. We haven’t had to do it yet. Nothing wrong with doing it, but hasn’t been primary.

Bill Lenehan, CEO, FCPT1: ... Okay, and then you did have a rare impairment in the quarter. What drove that?

Bill Lenehan, CEO, FCPT: It was a quick service restaurant that we purchased right at the beginning of our life. It was a Party’s in Glass in Alabama. We’ve had a hard time re-leasing it. It’s a tiny property. It’s kind of hard to write down properties, to be honest. We found that the conditions were right to do it, but it’s been vacant for a while. We’ve had a hard time re-leasing it, but, you know, one property over $1,320.

Bill Lenehan, CEO, FCPT1: Yeah. Not, not bad. And one last one on the Red Lobster. I think you mentioned they were, are ground leases. Is that for all of them? And can you share the rent level?

Bill Lenehan, CEO, FCPT: They’re master leased, and again, they were just reaffirmed. So, I would say there’s been a tremendous emphasis on credit issues that aren’t credit issues in the Q&A, and I would ask listeners to sort of see the forest for the trees. But the story here is that we have substantial growth in 2026 that will be really accretive.

Bill Lenehan, CEO, FCPT1: Okay. All right. Thanks for the time.

Claire, Call Coordinator, FCPT: Thank you. Our next question comes from Mitch Germain from Citizens Bank. Your line is now open. Please go ahead.

Mitch Germain, Analyst, Citizens Bank: Thank you. I think, Bill, you talked a little bit about, you know, obviously bigger ticket for a grocer. I’m curious, how, you know, do you potentially look to maybe scale up in that sort of sector?

Bill Lenehan, CEO, FCPT: Yeah, I think it’s very similar, Mitch, to how we looked at medical, retail, and auto service. You know, we spend a lot of time doing research upfront. And we’re conservative in what we purchase. And then as we are active in the market, it helps with seeing deals, and you get more deal flow. So it’s no different than what we’ve done in the past, to be honest. It’s just that the attributes of different property types you need to be, you know, sensitive to. And I think because we’ve been cautious, and, you know, you’ve seen the positive results on our credit results.

Mitch Germain, Analyst, Citizens Bank: And you envision doing direct deals with grocers or maybe leveraging some of your shopping center contacts to-

Bill Lenehan, CEO, FCPT: Yeah.

Mitch Germain, Analyst, Citizens Bank: possibly, kinda scale it up?

Bill Lenehan, CEO, FCPT: It’s all of the above, Mitch. We take a pretty agnostic view on sourcing. So we source things directly. You know, in auto service, we’ve had a number of brands that we’ve had repeat, sell these back business. But we will look at, you know, we’ll look at everything that we can.

Mitch Germain, Analyst, Citizens Bank: Gotcha. And last one from me is, anything not hitting the strike zone today in terms of where you’ve been allocating capital? Like, are you pulling back in any way at all, or it’s all as long as it continues to meet your underwriting criteria, it’s all systems go?

Bill Lenehan, CEO, FCPT: Yeah, I think it’s the latter. You know, we, we’ve been pretty, you know, thoughtful in what we’ve acquired, and we don’t tend to have a view of buy it, and if the performance starts declining, you know, we’ll be able to sell it at a great price. You know, that, that hasn’t been the way we’ve looked at the world. You know, we’ve pruned things in the past, but it’s been minimal, and I think it reflects what we’ve purchased, we feel really good about.

Mitch Germain, Analyst, Citizens Bank: Thank you. Good luck this year.

Bill Lenehan, CEO, FCPT: Thanks.

Claire, Call Coordinator, FCPT: Thank you. Our next question comes from Jim Kimmett from Evercore ISI. Your line is now open. Please go ahead.

Jim Kimmett, Analyst, Evercore ISI: Oh, thank you very much. Perhaps a derivative of where Mitch was heading, could you remind me, what is the percentage of dollars over the past couple of years that really were direct deals with developers, and where you didn’t have a broker involved? Because I’m presuming, you know, that the former gives you a better yield. I’m just, just curious how that’s been playing out proportionately.

Bill Lenehan, CEO, FCPT: Yeah, I don’t think I would look at it that way, Jim. I think that the returns are pretty similar. You know, sophisticated large brands have access to information. They know what their properties trade for. You know, there is some ease of use when you do repeat transactions in the sale-leaseback, because often you have existing documents that you can replace, or you know who the people are, and you know, the sort of cadence of information flow can be better. But I don’t think that there’s a you know, some meaningful advantage of doing originated sale-leaseback.

Jim Kimmett, Analyst, Evercore ISI: Got it. I appreciate that.

Bill Lenehan, CEO, FCPT: Not to work against them in any way, but I don’t think, I don’t think that there’s a big difference.

Jim Kimmett, Analyst, Evercore ISI: Mark has figured it out. Fair enough. Thanks.

Claire, Call Coordinator, FCPT: Thank you. As a reminder, to ask a question, please press Star followed by one on your telephone keypad now. We will now pause for any questions to be registered. We currently have no further questions, so I’d like to hand back to Bill Lenehan for any closing remarks.

Bill Lenehan, CEO, FCPT: Thank you, Claire. For 2026, we’re in the fortunate position of being able to use very economical long-term debt to fund new investments. We see ample external acquisition opportunities, and based on cap rates today, we expect healthy investment spreads and growth for the year. I’d emphasize that in this environment, we do not anticipate slowing down, given our dry powder and where we are seeing our cost of debt capital. Our team will be on the road for some non-deal road shows in Los Angeles and Chicago, the weeks of March 10 and March 17, respectively. We’d love to meet with you in person, so please reach out to Patrick or myself to coordinate. Thank you all, and look forward to seeing many of you in person this year.

Claire, Call Coordinator, FCPT: Thank you. This now concludes today’s call. Thank you all for joining. You may now disconnect your lines.