Group 1 - Outparcel REIT FrontView (NYSE: FVR) has experienced a 30% decline since its IPO in October 2024, underperforming compared to the broader REIT index (VNQ) and the overall market [1] - The company is currently facing challenges related to its tenants [1]

FrontView REIT (FVR) Q4 2024 Earnings Call March 20, 2025 08:27 PM ET Company Participants Timothy Dieffenbacher - CFO, Treasurer & SecretaryStephen Preston - Founder, Chairman of the Board, Co-CEO & Co-PresidentRonald Kamdem - Managing Director & Head of US REITs and CRE ResearchRandall Starr - Co-CEO, Co-President & Director Conference Call Participants John Kilichowski - Vice President - Equity Research AnalystDaniel Guglielmo - Equity Research AnalystNone - Analyst Operator morning, ladies and gentlemen ...

Portfolio Overview - As of December 31, 2024, FrontView owned a diversified portfolio of 307 properties across 35 U.S. states, with a total rentable area of approximately 2.4 million square feet[18][20]. - The portfolio's occupancy rate was 97.7%, with 320 tenants representing 150 different brands, and no single tenant brand accounting for more than 2.9% of the annual base rent (ABR)[20][25]. - Approximately 33.1% of tenants had an investment-grade credit rating, and 97.3% of leases had contractual rent escalations[20]. - The ABR weighted average remaining term of leases was approximately 7.2 years, with 96.1% of leases having renewal options[20][36]. - No single state exceeded 13.2% of the company's ABR, with Illinois representing the highest at 13.2%[20][33]. - Approximately 40.0% of the company's annualized base rent (ABR) comes from properties in its top five states: Illinois (13.2%), Texas (8.1%), Georgia (7.6%), North Carolina (5.7%), and Ohio (5.4%)[96]. - As of December 31, 2024, approximately 67% of the company's tenants had a credit rating below investment-grade or were unrated, as a percentage of its ABR[99]. - The top tenant brands included Fast Pace Urgent Care and Verizon, each accounting for 2.9% and 2.7% of ABR, respectively[26]. - The top 20 tenant brands accounted for approximately 37.0% of the company's ABR, with the largest tenant, Fast Pace Urgent Care, representing about 2.9% of the ABR[103]. - As of December 31, 2024, tenants in the restaurant industry represented approximately 30.6% of the company's ABR, indicating a significant exposure to this sector[101]. Financial Performance - For the year ended December 31, 2024, total rental revenues were $59.9 million, resulting in a net loss of $31.2 million and funds from operations (FFO) of $2.0 million[20]. - The company recorded net losses of approximately $31.2 million and $1.5 million for the years ended December 31, 2024 and 2023, respectively[81]. - The company incurred approximately $1.7 million in expenses not reimbursed or paid by tenants for the year ended December 31, 2024[40]. - The company incurred approximately $1.7 million in non-reimbursable expenses for the year ended December 31, 2024, which could impact financial stability if significant future expenses arise[110]. - The company expects to maintain its status as an emerging growth company until it reaches total annual gross revenue of $1.235 billion or more[68]. - The company anticipates that fluctuations in financial results could materially and adversely affect its operations and investor expectations[78]. - The company may not achieve the total returns expected from future acquisitions due to increasing costs of capital and lower capitalization rates[82]. - The company may face challenges in meeting required principal and interest payments due to insufficient cash flow[150]. - The company may not be able to make expected distributions due to insufficient cash flow or restrictions from debt agreements[211]. Debt and Financing - The company has a principal balance of approximately $266.5 million in outstanding indebtedness, which may expose it to default risks[75]. - The company’s debt consists of borrowings under its Revolving Credit Facility and Term Loan with a variable interest rate of Adjusted SOFR plus 1.2% and a maturity date of October 2027[149]. - The company has a $250 million Revolving Credit Facility and a $200 million Term Loan that bear interest at floating rates based on SOFR plus an applicable margin[163]. - The company may incur mortgage debt on properties, which increases the risk of foreclosure and loss of those properties[159]. - Disruptions in financial markets could limit the company's ability to obtain debt financing on commercially reasonable terms, impacting its investment strategy[158]. - The company believes it was in compliance with all financial and operational covenants related to its debt obligations as of December 31, 2024[161]. REIT Status and Tax Implications - The company intends to elect to be taxed as a REIT, requiring annual distribution of at least 90% of its REIT taxable income[58]. - The company must distribute at least 90% of its REIT taxable income each year to avoid entity-level taxes, and failure to do so could result in a 4% nondeductible excise tax[154]. - If the company fails to qualify as a REIT, it may face significant tax liabilities that would reduce cash available for distributions to stockholders[190]. - The company must ensure that at least 75% or 95% of its gross income is derived from qualifying sources, such as rents from real property[191]. - The company is subject to a 100% excise tax on certain non-arm's-length transactions with its TRSs, which could impact financial performance[199]. - Compliance with REIT requirements may restrict effective hedging and could lead to increased costs or tax liabilities[204]. Risks and Challenges - The company faces significant risks related to tenant defaults and vacancies, which could materially affect its revenue[74]. - The company may experience difficulties in renewing leases or re-leasing properties, particularly for specialty properties[75]. - The company faces cybersecurity risks, including potential data breaches and operational disruptions, which could materially affect its business[112]. - The integration of artificial intelligence tools presents risks such as inaccuracy and data privacy concerns, which could adversely impact the company's operations[113]. - The company faces significant risks associated with repositioning or construction of real estate projects, which may adversely affect returns on capital due to inaccurate projections and increased costs[116]. - Economic conditions affecting discretionary consumer spending could lead to tenant bankruptcies, adversely impacting the company's financial results[134]. - A decline in economic conditions may result in decreased demand for properties, affecting the company's ability to maintain and gain tenants[134]. - Increased interest rates may decrease the value of the company's properties, negatively impacting its financial condition[137]. - The company may face increased interest costs due to rising market interest rates, which could adversely affect its stock price and overall financial performance[155]. - The company may face conflicts of interest between stockholders and limited partners in the OP, which could impede beneficial business decisions[182]. Operational and Management Aspects - The company employs 15 full-time employees, focusing on various essential corporate activities[48]. - The company completed the Internalization, acquiring affiliates of North American Realty Services LLLP (NARS) and onboarding its entire senior management team[173]. - The company may incur unforeseen costs and difficulties associated with being self-managed, which could materially affect its operations[174]. - The company has entered into indemnification agreements with directors and executive officers, potentially limiting stockholder rights against them[179]. - The company’s investment and financing policies can be changed by the board of directors without stockholder approval, potentially increasing leverage and risk of default[177]. Environmental and Regulatory Risks - The company is subject to various environmental laws and regulations, which may impose liability for hazardous substance releases[59]. - The company has obtained environmental insurance policies to mitigate potential environmental risks on certain properties[63]. - Environmental liabilities associated with properties may lead to substantial costs for investigation and remediation, impacting financial performance[126]. - The presence of hazardous substances on properties could adversely affect the company's ability to sell, lease, or improve those properties[127]. - The company may incur additional expenses related to asbestos-containing materials in its properties, which could have a material adverse effect[130]. - Compliance with various laws and regulations may require unanticipated expenditures that could reduce investment returns for shareholders[145].

Financial Performance - For Q4 2024, the company reported revenues of $16.9 million, an increase from $15.5 million in Q4 2023, representing a year-over-year growth of approximately 8.8%[12] - The net loss for Q4 2024 was $22.0 million, compared to a net loss of $21.5 million in the previous quarter, indicating a slight increase in losses[12] - Funds From Operations (FFO) for Q4 2024 were reported at $(9.7) million, while Adjusted Funds From Operations (AFFO) were $7.4 million, showing a decline in FFO but a positive AFFO[12] - The company declared a dividend of $6.1 million for Q4 2024, with a dividend per diluted share of $0.215[12] - The company reported a net (loss) income of $(22,009) thousand for the three months ended December 31, 2024, compared to $(21,488) thousand in the previous quarter[16] - EBITDA for the quarter was $(8,846,000), a decrease from $(10,025,000) in the previous quarter and significantly lower than $23,283,000 in the same quarter last year[23] Assets and Liabilities - Total assets as of December 31, 2024, were $821.8 million, up from $733.1 million in the previous quarter, reflecting a growth of approximately 12.1%[12] - The total liabilities decreased to $299.1 million from $448.4 million in the previous quarter, indicating a significant reduction in debt levels[12] - Cash and cash equivalents stood at $5.1 million as of December 31, 2024, down from $9.9 million in the previous quarter[12] - The company reported a net cash provided by operating activities of $5.3 million for Q4 2024, compared to $7.6 million in Q3 2024[12] - Total liabilities decreased to $299,131,000 in December 2024 from $471,320,000 in December 2023, a reduction of 36.5%[14] - The company reported a net debt of $263,406,000 as of December 31, 2024, down from $409,571,000 in the previous quarter[26] Equity and Shareholder Value - FrontView REIT's total equity (book value) increased to $522.7 million as of December 31, 2024, compared to $284.7 million in the previous quarter, reflecting a substantial increase in shareholder value[12] - Total equity rose to $522,678,000 in December 2024 from $197,071,000 in December 2023, a significant increase of 164.5%[14] - The implied equity market capitalization was $504,431 thousand, accounting for 65.3% of total capitalization[19] - The equity balance as of December 31, 2024, included 17,291 thousand shares of common stock and 10,532 thousand OP units, totaling 27,823 thousand[22] Property Portfolio - As of December 31, 2024, FrontView REIT owned a diversified portfolio of 307 properties across 35 U.S. states, with total real estate held for investment at cost amounting to $719.4 million[12] - The portfolio expanded to 307 properties, an increase from 278 properties in the previous quarter[33] - The company has a total of 2,401,000 square feet across its properties, with General Retail occupying 20.9% of this space[38] - The largest tenant industry is Casual Dining, contributing 15.4% to ABR with 44 properties[38] - The company has 41 properties in Medical and Dental Providers, contributing 14.1% to ABR[38] Rental Income and Occupancy - Rental revenues for the three months ended December 31, 2024, were $16,868,000, up 8.7% from $15,514,000 in the previous quarter[15] - The company’s total annualized base rent increased to $58.8 million as of December 31, 2024, up from $52.1 million in the previous quarter[33] - The occupancy rate decreased to 97.7% from 98.9% in the previous quarter[33] - Contractual rental amounts billed increased to $14,547 thousand for the three months ended December 31, 2024, compared to $13,194 thousand in the previous quarter, reflecting a 10.2% growth[17] Expenses and Depreciation - Operating expenses increased to $13,735,000 in December 2024 from $12,784,000 in the previous quarter, reflecting a rise of 7.4%[15] - Accumulated depreciation increased to $40,398,000 in December 2024 from $28,734,000 in December 2023, indicating a growth of 40.7%[14] - Interest expense for the three months ended December 31, 2024, was $4,517,000, up from $3,593,000 in the previous quarter, an increase of 25.7%[15] Future Outlook - Lease expirations indicate that 11.7% of ABR ($6,875,000) is set to expire in 2027, affecting 382 square feet[45] - Future lease expirations show a gradual increase, with 7.5% of ABR ($4,386,000) expiring thereafter[45] - The weighted average remaining lease term increased to 7.2 years from 6.7 years in the previous quarter[33]

Group 1 - Many real estate companies have been negatively affected by the Federal Reserve's rate hikes over the past few years, leading to a decline in real estate stock prices and making many REITs less favorable [1] - The article highlights a shift in investment strategy, focusing on stocks with strong competitive advantages and effective management teams, indicating a potential for better performance in the current market environment [1] Group 2 - The current market conditions suggest a need for portfolio revision, with an aim to hold between 10 to 15 stocks along with a few broad ETFs, reflecting a strategic approach to investment diversification [1]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2024 ☐ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 001-42301 FRONTVIEW REIT, INC. (Exact name of registrant as specified in its charter) Maryland 93-2133671 (State or other jurisdiction of incorporation or organization)(I.R.S. ...

Portfolio and Properties - As of September 30, 2024, FrontView REIT owned a diversified portfolio of 278 outparcel properties across 31 U.S. states[6] - The company has 278 properties across 31 U.S. states, with a total rentable square footage of 2.1 million[22] - The largest tenant, Verizon, accounts for 3.4% of Annual Base Rent (ABR) with 8.5 properties[23] - The Quick Service Restaurants sector represents 17.4% of ABR, with 62.5 properties[25] - The company operates in 15 different industries, with the highest concentration in Casual Dining at 19.3% of ABR[25] - Untenanted properties account for 0.0% of the total ABR, with 17 properties[29] Financial Performance - Revenues for Q3 2024 were $14.534 million, a slight decrease from $15.259 million in Q2 2024[8] - Funds From Operations (FFO) for Q3 2024 were $5.350 million, with FFO per share at $0.20[8] - Adjusted Funds From Operations (AFFO) for Q3 2024 were $6.221 million, with AFFO per share at $0.23[8] - Net loss for Q3 2024 was $(1.764) million, translating to a net loss per share of $(0.07)[8] - The company reported a net loss of $(1,764) million for the three months ended September 30, 2024, compared to a net loss of $(3,339) million for the same period in the previous year[17] - EBITDA for the three months ended September 30, 2024, was $10,105,000, down from $10,729,000 in the prior year[17] - The annualized adjusted EBITDAre is projected at $41,376,000 for the three months ended September 30, 2024[18] Assets and Liabilities - Total assets increased to $814.305 million from $733.070 million in the previous quarter[9] - Total liabilities decreased to $280.399 million from $448.372 million in the previous quarter[8] - Total liabilities increased to $471,320 million as of September 30, 2024, from $456,902 million in the previous quarter[10] - Total stockholders' equity as of September 30, 2024, was $197,071 million, an increase from $192,082 million in the previous quarter[10] - Total debt amounts to $253,499,000, which is 32.4% of total capitalization[14] - The company has a net debt of $160,238,000, with a net debt to annualized adjusted EBITDAre ratio of 3.9[18] - The total leverage ratio is reported at 30.9%, well below the required maximum of 60%[19] Cash and Financing - Cash and cash equivalents increased to $93.261 million from $9.895 million in the previous quarter[9] - The company has a new delayed draw term loan of $200,000,000 maturing on October 3, 2027[15] - The new revolving credit facility stands at $53,499,000, also maturing on October 3, 2027[15] Rental and Lease Information - Total Annualized Base Rent increased to $52.1 million from $52.0 million, representing a 0.2% growth[22] - Occupancy rate remained stable at 98.9%[22] - Investment Grade tenants decreased to 38.0% from 40.4%[22] - Weighted Average Annual Rent Increases were 1.7%[22] - The top 10 tenant concentration is 23.3%, while the top 20 tenant concentration is 38.5%[22] - The weighted average remaining lease term is 6.7 years, down from 7.0 years[22] - Lease expirations for 2027 amount to $7,158,000, which is 13.7% of the total[29] - The highest lease expiration percentage occurs in 2032 at 10.1%, with a total of $5,283,000[29] Dispositions and Market Outlook - Five properties were disposed of during 2024, with total sale proceeds of $10,773,000 against a purchase price of $10,302,000[20] - The company anticipates continued growth in its portfolio and revenue streams, despite potential market risks[5] Definitions and Metrics - Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO) are non-GAAP measures widely accepted in the industry for comparing REIT performance[30] - Gross Debt is defined as total debt plus debt issuance costs and original issuance discount[30] - Net Debt is calculated as total debt less cash and cash equivalents and restricted cash[30] - Occupancy is measured as the number of properties under signed lease divided by the total number of properties in the portfolio[30] - The company emphasizes that EBITDA and EBITDAre are useful for investors as they provide insights into operating performance excluding certain non-cash costs[30]