Four Corners Property Trust (NYSE:FCPT) announced the disposition of an Olive Garden restaurant property, located in Augusta, Georgia, to Darden Restaurants, Inc. (NYSE: DRI) for $5.5 million. The property was leased to Darden Restaurants, Inc. under a triple-net lease with 14 years of term remaining. The sale is the result of an unsolicited offer, resulting in Darden Restaurants, Inc. exercising its right of first refusal to purchase the property, at a cash cap rate of 4.8%, exclusive of transaction costs.
FCPT anticipates redeploying the proceeds from this transaction through an Internal Revenue Code Section 1031 like-kind exchange (“1031-Exchange”). As a result, net cash proceeds from the sale will be held in an escrow account until one or more properties are purchased through the 1031-Exchange. However, there can be no assurance that an acquisition of a new property or properties will occur. If the Company fails to identify one or more like-kind replacement properties of comparable value within 45 days of the date of sale and/or fails to acquire such property or properties within 180 days of the date of sale, the Company will be required to pay a tax at the highest corporate income tax rate on the “built-in gain” (i.e. the gain that existed at the time FCPT acquired the properties from Darden) recognized on the sale of the properties.
FCPT, headquartered in Mill Valley, CA, is a real estate investment trust primarily engaged in the acquisition and leasing of restaurant properties. FCPT will seek to grow its portfolio by acquiring additional real estate to lease, on a net basis, for use in the restaurant and related food services industry.