Four Springs Capital Trust is an internally managed real estate investment trust focused on acquiring, owning and actively managing a portfolio of single‑tenant, income producing industrial, medical and necessity retail properties throughout the United States that are subject to long‑term net leases.
We seek to acquire single‑tenant net lease properties throughout the United States that are leased to high quality tenants and have remaining lease terms in excess of 10 years with contractual rent increases. We believe these properties offer benefits as compared to other types of commercial real estate due to the relative stability of the cash flows from long‑term leases, as well as reduced property‑level expenses and capital expenditures resulting from the net lease structure.
We generally target properties with purchase prices ranging from $5 million to $25 million, as we believe there is less competition from larger institutional investors that typically target larger properties and portfolios. Our portfolio is diversified not only by tenant, industry and geography, but also by property type, which we believe differentiates us from certain other net lease REITs and further reduces risk and enhances cash flow stability. We are an active asset manager and regularly review each of our properties for changes in the credit of the tenant, business performance at the property, industry trends and local real estate market conditions.
Portfolio Overview
Our portfolio is diversified by tenant, property type, industry and geography, and has an average remaining lease term of 10 years. Our portfolio’s highlights include credit quality of tenants, duration of leases, net lease structure, and diversification.
Investment Approach
Our objective is to own and manage a diversified portfolio of single‑tenant net lease real estate that maximizes cash available for distribution and delivers sustainable long‑term risk‑adjusted returns to our shareholders.
Our primary investment strategy is to acquire, own and actively manage a diversified portfolio of single‑tenant, income producing retail, industrial, medical and other office properties throughout the United States that are subject to long‑term net leases. In order to reduce the risks associated with adverse developments affecting a particular tenant, industry, geography or property type, we have assembled, and will seek to maintain, a portfolio that is diversified accordingly.
We have developed and implemented rigorous processes and procedures that integrate the analysis of the real estate attributes, tenant credit and lease structure of each property that we consider acquiring, which we believe allows us to acquire properties that provide attractive risk‑adjusted returns.
For each property, our analysis primarily focuses on evaluating the following:
Real Estate
Within the context of the relevant market and submarket, we evaluate the suitability of the property for the specific business conducted there and the industry in which the tenant operates, the prospect for re‑tenanting or selling the property if it becomes vacant, and whether or not the property has expansion potential. We also evaluate alternative uses for each property, as well as other potential users and estimated replacement rents.
Tenant Credit
We evaluate the tenant’s credit profile by focusing on data and information specific to the tenant’s financial status and the industry in which it operates. For the tenant’s financial status, we evaluate, to the extent available, the tenant’s current and historical financial statements, capital sources, earnings expectations, operating risks, and general business plan. For the tenant’s industry, we evaluate, among other things, relevant industry trends and the tenant’s competitive market position.
Lease Structure
We evaluate the tenant and landlord obligations contained within the existing or proposed lease, as well as the remaining lease term, any contractual annual or periodic rent escalations and the existence of any termination or assignment provisions.
Tenant Retention
We assess the tenant’s use of the property and the degree to which the property is strategically important to the tenant’s ongoing operations, the tenant’s potential cost to relocate, the supply/demand dynamic in the relevant submarket and the availability of suitable alternative properties. We believe tenant retention tends to be greater for properties that are strategically important to the tenant’s business and where the potential costs to relocate are high.
OUR ACQUISITION UNDERWRITING PROCESS
- PROPERTY MANAGEMENT
- ACCOUNTING
- ONGOING ASSET REVIEW
High Quality, Diversified Portfolio
We believe that the high quality nature of our tenants, the diversification of our portfolio and the long-term net lease structure of our leases reduces risk and enhances the stability and predictability of our cash flows.
