Business Context and Reporting Period
Company: Four Corners Property Trust, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: November 10, 2015
Event: Entry into a Material Definitive Agreement regarding interest rate hedging.
Key Financial Metrics
This filing does not report revenue, profit, cash flow, or margins. It specifically addresses debt management and liquidity risk mitigation.
- Variable Rate Debt: $400.0 million (matures November 9, 2020).
- Hedging Instrument 1: $200.0 million notional value; Fixed rate paid 1.16%; Matures November 9, 2018.
- Hedging Instrument 2: $200.0 million notional value; Fixed rate paid 1.56%; Matures November 9, 2020.
- Counterparty: J.P. Morgan Chase Bank, N.A.
Material Changes
The Company entered into two interest rate swaps to mitigate interest rate risk associated with its $400.0 million variable rate debt. These agreements convert the variable interest rate exposure (based on one-month LIBOR) to fixed rates for the respective notional amounts.
Guidance, Outlook, and Risks
Management Commentary: The hedging agreements were entered into specifically to mitigate interest rate risk and are not for trading purposes.
Contract Terms: The agreements are governed by an International Swaps and Derivatives Association (ISDA) Master Agreement, which contains customary representations, warranties, and covenants. The agreement may be terminated prior to expiration.
Risks: The primary risk addressed is interest rate volatility on the Company's variable rate debt.
Investor Verification Checklist
- Verify the total outstanding variable rate debt balance to confirm the $400.0 million figure is current.
- Review the full ISDA Master Agreement (to be filed as an exhibit to the 2015 Form 10-K) for termination clauses and credit support requirements.
- Confirm the impact of the fixed rates (1.16% and 1.56%) on the Company's future interest expense projections.
- Check for any subsequent amendments to the debt agreement or swap terms in later filings.