Four Corners Property Trust, Inc.: Form 10-Q for the period ended Sep 30, 2026

Forward-Looking Statements

Statements contained in this Quarterly Report on Form 10-Q, including the documents that are incorporated by reference, that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). Also, when Four Corners Property Trust, Inc. uses any of the words “anticipate,” “assume,” “believe,” “estimate,” “expect,” “intend,” or similar expressions, Four Corners Property Trust, Inc. is making forward-looking statements. Although management believes that the expectations reflected in such forward-looking statements are based upon present expectations and reasonable assumptions, actual results could differ materially from those set forth in the forward-looking statements. Certain factors that could cause actual results or events to differ materially from those anticipated or projected are described in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, as such factors may be updated from time to time in our periodic filings with the Securities and Exchange Commission.

Given these uncertainties, readers are cautioned not to place undue reliance on such statements, which speak only as of the date of this Quarterly Report on Form 10-Q or any document incorporated herein by reference. Four Corners Property Trust, Inc. undertakes no obligation to publicly release any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.

The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and related notes included in the Annual Report on Form 10-K of Four Corners Property Trust, Inc. for the year ended December 31, 2025. Any references to “FCPT,” “the Company,” “we,” “us,” or “our” refer to Four Corners Property Trust, Inc. as an independent, publicly traded, self-administered company.

All filings we make with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K, this and other quarterly reports on Form 10-Q, and our current reports on Form 8-K, and any amendments to those reports are available for free on our website, www.fcpt.com (http://www.fcpt.com), as soon as reasonably practicable after they are filed with, or furnished to, the SEC. We do not intend our website to be an active link or to otherwise incorporate the information contained on our website into this report or other filings with the SEC. However, we use our website as a routine channel of distribution of company information, including press releases, presentations and supplemental information, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor our website in addition to following press releases, SEC filings and public conference calls and webcasts. Our filings can also be obtained for free on the SEC’s Internet website at www.sec.gov (http://www.sec.gov). We are providing our website address solely for the information of investors.

Overview

We are a Maryland corporation and a real estate investment trust (“REIT”) which owns, acquires and leases properties for use in the restaurant and retail industries. Substantially all of our business is conducted through Four Corners Operating Partnership, LP (“FCPT OP”), a Delaware limited partnership of which we are a majority limited partner and our wholly owned subsidiary, Four Corners GP, LLC (“FCPT GP”), is its sole general partner. We believe that we have operated in conformity with the requirements for qualification and taxation as a REIT for the taxable year ended December 31, 2025, and we intend to continue to operate in a manner that will enable us to maintain our qualification as a REIT.

Our revenues are primarily generated by leasing properties to tenants through net lease arrangements under which the tenants are primarily responsible for ongoing costs relating to the properties, including utilities, property taxes, insurance, common area maintenance charges, and maintenance and repair costs. We focus on income producing properties leased to high quality tenants in major markets across the United States. We also generate revenues by operating seven LongHorn Steakhouse restaurants located in the San Antonio, Texas area (the “Kerrow Restaurant Operating Business”) pursuant to franchise agreements with Darden Restaurants, Inc., (together with its consolidated subsidiaries “Darden”).

In addition to managing our existing properties, our strategy includes investing in additional restaurant and retail properties to grow and diversify our existing portfolio. We expect this acquisition strategy will decrease our reliance on higher tenant concentrations and help us gain exposure to non-restaurant retail properties over time. We intend to purchase properties that are well located, occupied by durable concepts, with creditworthy tenants whose operating cash flows are expected to meaningfully exceed their lease payments to us. We seek to improve the probability of successful tenant renewal at the end of initial lease terms by acquiring properties that have high levels of operator profitability compared to rent payments and have absolute rent levels that generally reflect market rates.

During the nine months ended September 30, 2026, FCPT acquired 154 properties for a total investment value of $416.6 million, including transaction costs. These properties are 100% occupied under net leases with a weighted average remaining lease term of 9.7 years.

At September 30, 2026, our lease portfolio had the following characteristics:

• 1,456 properties located in 48 states and representing an aggregate leasable area of 10.0 million square feet;
• 99.5% occupancy (based on leasable square footage);
• An average remaining lease term of 6.7 years (weighted by annualized base rent);
• An average annual rent escalation of 1.6% through December 31, 2030 (weighted by annualized base rent);
• 99.7% of the contractual base rent collected for the three months ended September 30, 2026; and
• 48% investment-grade tenancy (weighted by annualized base rent).

On October 14, 2026, the Company entered into a master agreement with Darden Restaurants, Inc. and certain of its affiliates providing for the extension of 72 Olive Garden and LongHorn Steakhouse leases, of which 66 were previously scheduled to expire in October 2027 and six were early extensions that were previously expiring in October 2028. The extensions were effected through lease amendments or tenant extension options and generally extended the lease terms by approximately five years. The underlying leases continue to provide for annual rent escalations of 1.5%, and no rent concessions or capital contributions were provided by the Company in connection with the agreement.

Analysis of Results of Operations

The following discussion includes the results of our operations for the three and nine months ended September 30, 2026 and 2025 as summarized in the table below:

(In thousands)

Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

During the three months ended September 30, 2026 and 2025, we operated in two segments: real estate operations and restaurant operations. Our real estate operations generate rental income from leases primarily with restaurant brands, which we recognize on a straight-line basis to include the effect of base rent escalators. Our restaurant operations generate restaurant revenue from operating seven LongHorn Steakhouse restaurants.

Real Estate Operations

Rental Revenue

Rental revenue increased $9.2 million, or 14%, during the three months ended September 30, 2026 compared to the three months ended September 30, 2025. This change was due primarily to the acquisition of 184 leased properties during the twelve month period from October 1, 2025 through September 30, 2026. During the three months ended September 30, 2026, we recognized variable lease revenue, including costs paid by the lessor and reimbursed by the lessees, within rental revenue of $3.1 million as compared to $3.0 million during the three months ended September 30, 2025. These amounts are also recognized in property expenses.

We recognize rental income on a straight-line basis to include the effect of base rent escalators, and free rent periods, if any.

General and Administrative Expense

General and administrative expense is comprised of costs associated with personnel, office rent, legal, accounting, information technology, and other professional and administrative services in association with our real estate operations, our REIT structure and public company reporting requirements. General and administrative expenses increased $0.4 million, or 6%, in the three months ended September 30, 2026 compared to the three months ended September 30, 2025, primarily due to an increase in cash compensation-related expenses and increased non-cash stock-based compensation expense. General and administrative expense, after excluding stock-based compensation, for the three months ended September 30, 2026 was $4.7 million, compared to $4.3 million of general and administrative expense, after excluding stock-based compensation, for the three months ended September 30, 2025.

Depreciation and Amortization Expense

Depreciation and amortization expense represents the depreciation on real estate investments and equipment that have estimated lives ranging from 2 to 55 years. Depreciation and amortization increased by approximately $3.5 million, or 23%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, due to the acquisition of 184 properties during the twelve month period from October 1, 2025 through September 30, 2026.

Property Expense

We record all tenant expenses, both reimbursed and non-reimbursed, to property expense. We also record initial direct costs (lease negotiation and other previously capitalizable transaction expenses) as property expenses. Other property expenses consist of expenses incurred on vacant properties, abandoned deal costs, lease transaction costs, property-level expenses and franchise taxes. During the three months ended September 30, 2026, we recorded property expenses of $4.0 million, of which $3.1 million was reimbursed by tenants. During the three months ended September 30, 2025, we recorded property expenses of $3.7 million, of which $3.0 million was reimbursed by tenants. The increase in property expenses is primarily due to an increase in vacancy-related expenses and non-reimbursed property expenses.

Interest Expense

We incur interest expense on our $960 million of term loans, any outstanding borrowings on our revolving credit facility, interest rate swaps, and our $625 million of senior fixed rate notes. Interest expense increased by $4.4 million for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, primarily due to the net increase in term loan borrowings in 2026.

Realized Gain on Sale, Net

During the three months ended September 30, 2026 and 2025, no properties were sold.

Income Taxes

During the three months ended September 30, 2026 and 2025, our income tax expense was $156 thousand and $80 thousand, respectively. The income tax expense on real estate operations consists of state and local income taxes incurred by FCPT on its lease portfolio. As FCPT acquires additional properties in states subject to state income taxes, income tax expense will continue to modestly increase.

Restaurant Operations

Restaurant revenues increased by $0.4 million, or 5%, during the three months ended September 30, 2026 compared to the three months ended September 30, 2025 primarily due to increased guest counts and higher average spend per guest.

Total restaurant expenses increased by $0.5 million during the three months ended September 30, 2026 compared to the three months ended September 30, 2025, primarily attributable to higher commodity costs.

During the three months ended September 30, 2026 and 2025, the Company recorded $298 thousand and $50 thousand for income tax expense and benefit, respectively, primarily due to deferred income tax expense related to the restaurant operations.

Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

During the nine months ended September 30, 2026 and 2025, we operated in two segments: real estate operations and restaurant operations. Our real estate operations generate rental income from leases primarily with restaurant brands, which we recognize on a straight-line basis to include the effect of base rent escalators. Our restaurant operations generate restaurant revenue from operating seven LongHorn Steakhouse restaurants.

Real Estate Operations

Rental Revenue

Rental revenue increased $20.7 million, or 11%, during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. This change was due primarily to the acquisition of 184 leased properties during the twelve month period from October 1, 2025 through September 30, 2026. During the nine months ended September 30, 2026, we recognized variable lease revenue, including costs paid by the lessor and reimbursed by the lessees, within rental revenue of $8.7 million as compared to $8.4 million during the nine months ended September 30, 2025. These amounts are also recognized in property expenses.

We recognize rental income on a straight-line basis to include the effect of base rent escalators, and free rent periods, if any.

General and Administrative Expense

General and administrative expense is comprised of costs associated with personnel, office rent, legal, accounting, information technology, and other professional and administrative services in association with our real estate operations, our REIT structure and public company reporting requirements. General and administrative expenses increased $1.0 million, or 5%, in the nine months ended

September 30, 2026 compared to the nine months ended September 30, 2025, primarily due to an increase in cash compensation-related expenses and increased non-cash stock-based compensation expense. General and administrative expense, after excluding stock-based compensation, for the nine months ended September 30, 2026 was $14.4 million, compared to $13.6 million of general and administrative expense, after excluding stock-based compensation, for the nine months ended September 30, 2025.

Depreciation and Amortization Expense

Depreciation and amortization expense represents the depreciation on real estate investments and equipment that have estimated lives ranging from 2 to 55 years. Depreciation and amortization increased by approximately $7.2 million, or 16%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, due to the acquisition of 184 properties during the twelve month period from October 1, 2025 through September 30, 2026.

Property Expense

We record all tenant expenses, both reimbursed and non-reimbursed, to property expense. We also record initial direct costs (lease negotiation and other previously capitalizable transaction expenses) as property expenses. Other property expenses consist of expenses incurred on vacant properties, abandoned deal costs, lease transaction costs, property-level expenses and franchise taxes. During the nine months ended September 30, 2026, we recorded property expenses of $11.0 million, of which $8.7 million was reimbursed by tenants. During the nine months ended September 30, 2025, we recorded property expenses of $10.3 million, of which $8.4 million was reimbursed by tenants. The increase in property expenses is primarily due to an increase in vacancy-related expenses and non-reimbursed property expenses.

Interest Expense

We incur interest expense on our $960 million of term loans, any outstanding borrowings on our revolving credit facility, interest rate swaps, and our $625 million of senior fixed rate notes. Interest expense increased by $5.5 million for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily due to the net increase in term loan borrowings in 2026.

Realized Gain on Sale, Net

During the nine months ended September 30, 2026 and 2025, no properties were sold.

Income Taxes

During the nine months ended September 30, 2026 and 2025, our income tax expense was $0.3 million and $0.2 million, respectively. The income tax expense on real estate operations consists of state and local income taxes incurred by FCPT on its lease portfolio. As FCPT acquires additional properties in states subject to state income taxes, income tax expense will continue to modestly increase.

Restaurant Operations

Restaurant revenues increased by $1.1 million, or 5%, during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 primarily due to increased guest counts and higher average spend per guest.

Total restaurant expenses increased by $1.3 million during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily attributable to higher commodity costs.

During the nine months ended September 30, 2026, and September 30, 2025, the Company recorded $314 thousand and $30 thousand in income tax expense and benefit, respectively, primarily due to deferred income tax expense related to the restaurant operations.

Critical Accounting Policies and Estimates

The preparation of FCPT’s Consolidated Financial Statements in conformance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as other disclosures in the financial statements. On an ongoing basis, management evaluates its estimates and assumptions; however, actual results may differ from these estimates and assumptions, which in turn could have a material impact on our financial statements. A summary of FCPT’s critical accounting policies is included in our Annual Report on Form 10-K for the year ended December 31, 2025 in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates.” Management believes those critical accounting policies, among others, affect our more significant estimates and assumptions used in the preparation of our Consolidated Financial Statements.

New Accounting Standards

A discussion of new accounting standards and the possible effects of these standards on our Consolidated Financial Statements is included in Note 2 - Summary of Significant Accounting Policies of our Consolidated Financial Statements, included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Liquidity and Financial Condition

At September 30, 2026, we had $7.2 million of cash and cash equivalents and $350 million of borrowing capacity under our revolving credit facility, which expires on February 1, 2029, subject to our ability to extend the term for two additional six-month periods to February 1, 2030. The revolving credit facility provides for a letter of credit sub-limit of $25 million. See Note 6 - Debt, Net of Deferred Financing Costs included in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information. As of September 30, 2026, we had no outstanding borrowings under the revolving credit facility. At September 30, 2026, the weighted average interest rate on the term loans, after consideration of the interest rate hedges, was 4.30%.

Revolving Credit and Term Loan Agreement

On April 6, 2026, the Company entered into a new $200 million senior unsecured delayed draw term loan facility (the "Term Loan Facility") with a group of existing lenders from its existing credit facility. The Term Loan Facility has a seven-year tenor and matures on April 6, 2033, and did not impact the Company's debt covenants. $50 million of the Term Loan Facility was drawn at close and was used to fund the Company’s immediate investment pipeline and other general corporate purposes. The Company has drawn the remaining $150 million. The Term Loan Facility contains a credit margin of 1.25% over SOFR as determined by FCPT’s current investment grade ratings on its senior unsecured debt.

On July 28, 2026, the Company and FCPT OP entered into a Fifth Amended and Restated Revolving Credit and Term Loan Agreement with a group of existing and new lenders (the “2026 Credit Agreement”), which amends and restates in its entirety the Company's Fourth Amended and Restated Revolving Credit and Term Loan Agreement. The 2026 Credit Agreement provides for a senior unsecured revolving credit facility in an aggregate principal amount of $350.0 million with a maturity date of February 1, 2029, and a senior unsecured term loan facility in an aggregate principal amount of $800.0 million (the “2026 Term Loan Facility”), comprised of (i) a $90.0 million term loan tranche with a maturity date of February 1, 2028, (ii) an $85.0 million term loan tranche with a maturity date of March 14, 2028, (iii) a $225.0 million term loan tranche with a maturity date of February 1, 2029, and (iv) a $400.0 million term loan tranche with a maturity date of August 1, 2031, of which $360.0 million was drawn at close and $40.0 million consists of delayed draw term loan commitments that may be drawn during the applicable availability period ending no later than January 28, 2027. The 2026 Credit Agreement has an accordion feature to increase the revolving commitments or add one or more tranches of new term loans or delayed draw term loan commitments up to an additional aggregate amount not to exceed $550.0 million, subject to certain conditions, including one or more new or existing lenders agreeing to provide commitments for such increased amount. The portion of the $400.0 million term loan tranche that was drawn at close was used to pay down the $100 million and $90 million of term loans maturing in November 2026 and February 2027.

Loans under the 2026 Credit Agreement accrue interest at a per annum rate equal to, at our election, either a forward-looking term rate based on the SOFR or daily simple SOFR floating interest rate plus an applicable margin ranging from 0.725% to 1.40%, in the case of the revolving credit facility, and 0.75% to 1.55%, in the case of the 2026 Term Loan Facility, or an alternate base rate determined according to the highest of the prime rate, the federal funds rate plus 0.50% and the one-month term SOFR plus 1.00%, plus a margin ranging from 0.00% to 0.40%, in the case of the revolving credit facility, and 0.00% to 0.55%, in the case of the 2026 Term Loan Facility. In each case, the margin is determined according to the credit rating applicable from time to time with respect to the Company’s senior, unsecured, long-term indebtedness. As of September 30, 2026, term loans under the 2026 Credit Agreement accrued interest at a per annum rate equal to a SOFR rate plus a margin of 0.90%, and the revolver accrued interest at a per annum rate equal to a margin of 0.85%.

In the event that all or a portion of the principal amount of any loan borrowed pursuant to the 2026 Credit Agreement is not paid when due, interest will accrue at the rate that would otherwise be applicable thereto plus 2.00%. We are required to pay a facility fee at a rate ranging from 0.125% to 0.30% per annum, depending on our credit rating applicable from time to time with respect to such indebtedness, on the daily amount of the revolving commitments, whether used or unused. Until the delayed draw term loan commitments are terminated or expire, we are required to pay a ticking fee at a rate ranging from 0.125% to 0.30% per annum on the average daily balance of unfunded delayed draw term loan commitments, which shall accrue beginning on the ninety-first day after July 28, 2026.

We have the option to extend the maturity date of the $85.0 million and $225.0 million term loan tranches, in each case, by one-year on one occasion subject to the satisfaction of certain conditions, including payment by us of an extension fee that is equal to 0.125% of the then-outstanding principal amount of term loans, as applicable, for each such extension.

The 2026 Credit Agreement contains customary events of default including, among other things, payment defaults, breach of covenants, cross default and cross acceleration to material recourse indebtedness, bankruptcy-related defaults, judgment defaults, and the occurrence of certain change of control events. The occurrence of an event of default (after notice and cure periods in certain circumstances) will limit the ability of the Company and FCPT OP to make distributions and may result in the termination of the credit facility and acceleration of repayment obligations.

As of October 29, 2026, the only outstanding debt due within one year is $125 million of private senior notes which we have resources to pay given the new term loan under the 2026 Credit Agreement.

We have entered into the following interest rate swaps to hedge the interest rate variability associated with the term loan portion of our credit facility. These hedging agreements were entered into to mitigate the interest rate risk inherent in FCPT OP’s variable rate debt and not for trading purposes. These swaps are accounted for as cash flow hedges with all interest income and expense recorded as a component of net income and other valuation changes recorded as a component of other comprehensive income.

(1) During the first nine months of 2026, we entered into these interest rate swaps to hedge the interest rate variability associated with the term loan portion of our credit facility

The Company also enters into forward-starting interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the forecasted issuance date of debt.

Note Purchase Agreements

The Company has issued the following $625 million of senior unsecured fixed rate notes in private placements pursuant to note purchase agreements with the various purchasers.

($ in thousands)

33

Capital Markets and Financing Strategy

On a short-term basis, our principal demands for funds will be for operating expenses, distributions to shareholders and interest and principal on current and any future debt financings. We expect to fund our operating expenses and other short-term liquidity requirements, capital expenditures, payment of principal and interest on our outstanding indebtedness, property improvements, re-leasing costs and cash distributions to common shareholders, primarily through cash provided by operating activities. We expect to fund acquisitions, investments, and other capital expenditures, from borrowings under our $350 million revolving credit facility and equity securities. At times the Company may evaluate opportunities to sell certain assets and redeploy the capital into new properties.

We have an effective shelf registration statement on file with the SEC under which we may issue equity financing through the instruments and on the terms most attractive to us at such time. On October 30, 2025, the Company entered into a new ATM program (the "ATM program"), pursuant to which shares of the Company’s common stock having an aggregate gross sales price of up to $500.0 million may be offered and sold (1) by the Company to, or through, a consortium of banks acting as its sales agents or (2) by a consortium of banks acting as forward sellers on behalf of any forward purchasers contemplated thereunder, in each case by means of ordinary brokers’ transactions on the NYSE or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices, by privately negotiated transactions (including block sales) or by any other methods permitted by applicable law. The ATM program replaces the Company's previous $500.0 million ATM program (the "prior ATM program" and, together with the ATM program, the "ATM programs"), which was established in September 2024, under which the Company had sold shares of its common stock having an aggregate gross sales price of $291.8 million through October 30, 2025. In connection with the Company’s ATM programs, the Company may enter into forward sale agreements with certain financial institutions acting as forward purchasers whereby, at the Company's discretion, the forward purchasers may borrow and sell shares of common stock. The use of forward sale agreements allows the Company to lock in a share price on the sale of shares of common stock at the time the respective forward sale agreements are executed but defer settling the forward sale agreements and receiving the proceeds from the sale of shares until a later date.

We currently expect to fully physically settle any future forward sale agreement with the relevant forward purchaser on one or more dates specified by us on or prior to the maturity date of such forward sale agreement, in which case we expect to receive aggregate net cash proceeds at settlement equal to the number of shares specified in such forward sale agreement multiplied by the relevant forward price per share. However, subject to certain exceptions, we may also elect, in our sole discretion, to cash settle or net share settle all or any portion of our obligations under any forward sale agreement, in which case we may not receive any proceeds (in the case of cash settlement) or will not receive any proceeds (in the case of net share settlement), and we may owe cash (in the case of cash settlement) or shares of our common stock (in the case of net share settlement) to the relevant forward purchaser.

During the three and nine months ended September 30, 2026, the Company had the following activity under its ATM program, the net proceeds of which were employed to fund acquisitions and for general corporate purposes.

(1) Net proceeds, after sales commissions and offering expenses

(1) Net proceeds, after sales commissions and offering expenses

At September 30, 2026, the Company had no outstanding forward sale agreements.

At September 30, 2026, there was $500.0 million available for issuance under the ATM programs.

In October 2026, the Company's Board of Directors authorized a share repurchase program that would allow the Company to purchase shares of the Company's common stock having an aggregate gross purchase price of up to $100.0 million. Repurchases under the repurchase program may be made at management's discretion from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions, Rule 10b5-1 plans or otherwise, all in accordance with the rules of the SEC and other applicable legal requirements. The repurchase program does not obligate us to acquire any particular amount of common stock, and the specific timing, price, and size of purchases will depend on prevailing stock prices, general economic and market conditions and other considerations. The repurchase program does not have a termination date and repurchases may be suspended or discontinued at any time at our discretion. No share repurchases have been made to date under the repurchase program.

On a long-term basis, our principal demands for funds include payment of dividends, financing of property acquisitions, and scheduled debt maturities. We plan to meet our long-term capital needs by issuing debt or equity securities or by obtaining asset-level financing, subject to market conditions. In addition, we may issue common stock to permanently finance properties that were financed on an intermediate basis by our revolving credit facility or other indebtedness. In the future, we may also acquire properties by issuing partnership interests of FCPT OP in exchange for property owned by third parties. Our common partnership interests would be redeemable for cash or shares of our common stock, at FCPT’s election.

We continually evaluate alternative financing and believe that we can obtain financing on reasonable terms. However, we cannot be assured that we will have access to the capital markets at times and at terms that are acceptable to us. We expect that our primary uses of capital will be for property and other asset acquisitions, the funding of tenant improvements, other capital expenditures, and debt refinancing.

Because the properties in our portfolio are generally leased to tenants under net leases, where the tenant is responsible for property operating costs and expenses, our exposure to rising property operating costs due to inflation is mitigated. Interest rates and other factors, such as occupancy, rental rate and the financial condition of our tenants, influence our performance more so than does inflation. Changes in interest rates do not necessarily correlate with inflation rates or changes in inflation rates. As described above, we currently offer leases that provide for payments of base rent with scheduled annual fixed increases.

Supplemental Financial Measures

The following table presents a reconciliation of U.S. GAAP net income to National Association of Real Estate Investment Trusts (“NAREIT”) funds from operations (“FFO”) and adjusted funds from operations (“AFFO”).

(In thousands, except share and per share data)

(1) Non-cash gain recognized for GAAP purposes on the exchange of nonfinancial assets related to real estate property.

(2) Amount represents non-cash deferred income tax expense (benefit) recognized in the three and nine months ended September 30, 2026 and 2025 for income tax expense (benefit) at the Kerrow Restaurant Business.

(3) Assumes the issuance of common shares for OP units held by noncontrolling partners.

Non-GAAP Definitions

The certain non-GAAP financial measures included above management believes are helpful in understanding our business, as further described below. Our definition and calculation of non-GAAP financial measures may differ from those of other REITs and therefore may not be comparable. The non-GAAP measures should not be considered an alternative to net income as an indicator of our performance and should be considered only a supplement to net income, and to cash flows from operating, investing or financing activities as a measure of profitability and/or liquidity, computed in accordance with U.S. GAAP.

FFO is a supplemental measure of our performance which should be considered along with, but not as an alternative to, net income and cash provided by operating activities as a measure of operating performance and liquidity. We calculate FFO in accordance with the standards established by the NAREIT. FFO represents net income (loss) computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of property and undepreciated land and impairment write-downs of depreciable real estate, plus real estate related depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures. We also omit the tax impact of non-FFO producing activities from FFO determined in accordance with the NAREIT definition.

Our management uses FFO as a supplemental performance measure because, in excluding real estate related depreciation and amortization and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We offer this measure because we recognize that FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our financial condition and results from operations, the utility of FFO as a measure of our performance is limited. FFO is a non-GAAP measure and should not be considered a measure of liquidity including our ability to pay dividends or make distributions. In addition, our calculations of FFO are not necessarily comparable to FFO as calculated by other REITs that do not use the same definition or implementation guidelines or interpret the standards differently from us. Investors in our securities should not rely on these measures as a substitute for any U.S. GAAP measure, including net income.

Adjusted Funds from Operations is a non-U.S. GAAP measure that is used as a supplemental operating measure specifically for comparing year-over-year ability to fund dividend distributions from operating activities. AFFO is used by us as a basis to address our ability to fund our dividend payments. We calculate AFFO by adding to or subtracting from FFO the following items to the extent present in the applicable period:

1. Straight-line rent revenue adjustment

2. Non-cash expense (income) adjustments related to deferred tax benefits

3. Stock-based compensation expense

4. Non-cash amortization of deferred financing costs

5. Non-real estate investment depreciation

6. Other non-cash revenue adjustments, including amortization of above and below market leases and lease incentives

7. Transaction costs incurred in connection with business combinations

8. Merger, restructuring and other related costs

9. Other non-cash interest expense (income)

10. Non-real estate impairment charges

11. Amortization of capitalized leasing costs

12. Debt extinguishment gains and losses

AFFO is not intended to represent cash flow from operations for the period, and is only intended to provide an additional measure of performance by adjusting the effect of certain items noted above included in FFO. AFFO is a widely reported measure by other REITs; however, other REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not be comparable to other REITs.

Information concerning market risk is incorporated herein by reference to Part II, Item 7A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as supplemented by the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part I, Item 1A titled “Risk Factors.” Other than the developments described thereunder, including changes in the fair values of our assets, there have been no other material changes in our quantitative or qualitative exposure to market risk since December 31, 2025.

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures were effective and were operating at a reasonable assurance level.

Changes in Internal Control over Financial Reporting

During the third quarter of 2026, there have been no changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes to the risk factors as disclosed in Part I, Item 1A. “Risk Factors” beginning on page 8 of our Annual Report on Form 10-K for the year ended December 31, 2025.