Four Corner’s Bill Lenehan: An Appetite to Acquire Restaurants


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Bill Lenehan - CEO Four Corners Property Trust

As a board member of Darden Restaurants in 2015, Bill Lenehan played a role in executing what, essentially, was one giant-sized sale-leaseback with the spin-off of 424 properties into a separate publicly traded company. The spin-off allowed Darden – and its shareholders – to unlock capital tied up in its real estate, and it offered some significant tax savings to boot.

These days, Lenehan is CEO of that new REIT entity—Four Corners Property Trust (NYSE-FCPT) – and he is helping other restaurant chains and individual franchise operators do much the same thing by acquiring their properties and then leasing them back via long-term net leases. Their focus is on credit-worthy operators with national and super regional brands and well-located properties. “We want to be supportive real estate capital partners for growing restaurant brands and franchisees,” says Lenehan.

Lenehan’s career in real estate and net lease investments spans more than 15 years, including 10 years spent working for hedge fund Farallon Capital Management investing in real estate. He joined the board of Darden on a slate of directors nominated by activist hedge fund investor Starboard Value as part of a major turnaround effort that created significant value for Darden and its shareholders.

After spending a year working on that spin-off, Lenehan threw his hat in the ring when they were looking for someone to run the new REIT. “I felt that the company that we were creating with FCPT was very, very high quality and was a very interesting investment opportunity that would be exceptionally well positioned to grow,” says Lenehan. FCPT officially began operating in November 2015.

The initial portfolio consisted entirely of Darden-branded restaurants, the majority of which were Olive Garden and LongHorn Steakhouses. FCPT has since grown its holdings to include more than 520 restaurants in 44 states with the addition of other QSR brands, such as Burger King, Pizza Hut, Wendy’s, KFC, Arby’s and Buffalo Wild Wings. The company has an appetite – and the funds – to keep fueling portfolio growth with over $50 million in cash on its balance sheet and an untapped $250 million credit line.

Interest rates have gone up meaningfully in the last several months, but it is still a good time to do a sale-leaseback, says Lenehan. “We haven’t seen capitalization rates on real estate (the ratio of rent to purchase price) increase as you would expect in a rising interest rate environment,” he says. “But market participants are expecting flat to increasing cap rates going forward.” In addition, the ever-increasing property values operators have experienced over the last several years appears to be moderating, he adds. 

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