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 31.2 million and funds from operations (FFO) of 31.2 million and 1.7 million in expenses not reimbursed or paid by tenants for the year ended December 31, 2024[40]. - The company incurred approximately 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 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].
FrontView REIT, Inc.(FVR) - 2024 Q4 - Annual Report