Part I - FINANCIAL INFORMATION Financial Statements Q1 2025 financial statements show total assets grew to $860.8 million, net loss improved to $1.3 million, and operating cash flow was $8.1 million, with significant property investments Condensed Consolidated Balance Sheets Total assets increased to $860.8 million, driven by real estate acquisitions, while liabilities rose to $345.2 million from increased debt, leading to a slight equity decrease to $515.6 million Condensed Consolidated Balance Sheets (Unaudited) | | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total assets | $860,835 | $821,809 | | Real estate held for investment, net | $710,563 | $679,008 | | Cash and cash equivalents | $3,309 | $5,094 | | Total liabilities | $345,244 | $299,131 | | Debt, net | $310,214 | $266,538 | | Total equity | $515,591 | $522,678 | Condensed Consolidated Statements of Operations and Comprehensive Loss Q1 2025 net loss improved to $1.3 million from $3.4 million, driven by increased rental revenues and decreased interest expense Statements of Operations Highlights (in thousands) | | Three months ended March 31, 2025 (in thousands) | Three months ended March 31, 2024 (in thousands) | | :--- | :--- | :--- | | Rental revenues | $16,243 | $15,259 | | Total operating expenses | $13,020 | $11,568 | | Interest expense | $4,497 | $6,695 | | Net loss | $(1,337) | $(3,369) | | Net loss per share (Basic & Diluted) | $(0.06) | — | Condensed Consolidated Statements of Equity Total equity decreased to $515.6 million due to distributions and net loss, partially offset by stock-based compensation - Key changes in equity during Q1 2025 included a net loss of $833 thousand attributable to the company, distributions of $3.8 million, and stock-based compensation of $615 thousand19 Condensed Consolidated Statements of Cash Flows Q1 2025 operating cash was $8.1 million, investing used $47.3 million for real estate, and financing provided $37.4 million, resulting in a $1.8 million cash decrease Cash Flow Summary (in thousands) | | Three months ended March 31, 2025 (in thousands) | Three months ended March 31, 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $8,101 | $2,590 | | Net cash (used in) provided by investing activities | $(47,285) | $5,655 | | Net cash provided by (used in) financing activities | $37,399 | $(12,177) | | Net decrease in cash and cash equivalents | $(1,785) | $(3,932) | Notes to the Condensed Consolidated Financial Statements Notes detail the company's REIT status with 323 properties, Q1 acquisitions of $49.9 million, total debt of $312 million, and subsequent property transactions - The company is an internally-managed net-lease REIT that owned a portfolio of 323 properties across 37 U.S. states as of March 31, 202528 - During Q1 2025, the company acquired 17 properties for an aggregate purchase price of $49.9 million86 - As of March 31, 2025, total debt outstanding was $312.0 million, comprising a $112.0 million Revolving Credit Facility and a $200.0 million Term Loan, with a weighted average interest rate of 5.62%9395 - Subsequent to March 31, 2025, the company acquired approximately $3.6 million of additional rental property, sold one property for $2.8 million, and borrowed an additional $6.5 million on its Revolving Credit Facility129 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses REIT strategy, Q1 revenue growth and reduced net loss, maintaining a 5.7x Net Debt to EBITDAre ratio, and outlining liquidity Our Real Estate Investment Portfolio The portfolio of 323 properties across 37 states is diversified by tenant, industry, and geography, with no single brand exceeding 3.1% of ABR - The portfolio is diversified with 329 tenants operating 151 different brands; no single tenant brand accounts for more than 3.1% of ABR138 - The top three tenant industries by ABR are Restaurants (16.1%), Financial Services (10.1%), and Convenience Stores (8.5%)141142 - The properties are located in 37 U.S. states, with no single state exceeding 14.2% of ABR (Illinois)143 Our Leases The portfolio was 96.3% leased with a 7.4-year average lease term, staggered expirations, and 97.9% of leases include fixed-rate rent escalations - The ABR weighted average remaining lease term was approximately 7.4 years, with no more than 11.0% of rental revenue expiring in any single year before 2030150 - Approximately 97.9% of leases (based on ABR) feature rent escalations, with 68.8% having fixed percentage increases155156158 Results of Operations Q1 2025 rental revenues increased by 6% to $16.2 million, and net loss improved to $1.3 million due to portfolio growth, eliminated management fees, and reduced interest expense Comparison of Results of Operations (in thousands) | | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change ($ in thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Rental revenues | $16,243 | $15,259 | $984 | 6% | | Total operating expenses | $13,020 | $11,568 | $1,452 | 13% | | Interest expense | $4,497 | $6,695 | $(2,198) | (33)% | | Net loss | $(1,337) | $(3,369) | $2,032 | (60)% | - Property and asset management fees, which totaled $1.5 million in Q1 2024, were eliminated in Q1 2025 due to the Internalization of management in October 2024168 - Interest expense decreased by $2.2 million primarily due to a lower debt balance of $310.2 million as of March 31, 2025, compared to $427.8 million a year prior170 Liquidity and Capital Resources Liquidity relies on operating cash and debt facilities; total debt was $312.0 million with $138.0 million available, targeting a net debt-to-EBITDAre ratio below 6.0x, and in compliance with covenants - The company's long-term goal is to target a net debt-to-annualized adjusted EBITDAre ratio of 6.0x over time; the ratio was approximately 5.7x as of March 31, 2025178 - The company has a $250.0 million Revolving Credit Facility and a $200.0 million Term Loan, both maturing in October 2027181186 - As of March 31, 2025, the company had $138.0 million of available capacity under its Revolving Credit Facility and was in compliance with all loan covenants185188 Non-GAAP Financial Measures Q1 2025 non-GAAP metrics improved, with FFO increasing to $6.4 million, AFFO to $8.2 million, and Net Debt to Annualized Adjusted EBITDAre at 5.7x Reconciliation of Net Loss to FFO and AFFO (in thousands) | | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net loss | $(1,337) | $(3,369) | | FFO | $6,429 | $4,159 | | AFFO | $8,229 | $4,989 | Leverage Ratios | | As of March 31, 2025 (in thousands) | As of March 31, 2024 (in thousands) | | :--- | :--- | :--- | | Gross Debt | $312,000 | $431,049 | | Net Debt | $308,691 | $417,852 | | Net Debt to Annualized Adjusted EBITDAre | 5.7x | 9.8x | Critical Accounting Policies and Estimates Critical accounting policies involve significant estimates for purchase price allocation of acquired properties and impairment of long-lived assets, requiring judgment and future cash flow estimates - The allocation of purchase price for acquired properties requires significant estimates to determine the fair values of tangible assets (land, buildings) and intangible assets and liabilities (in-place leases, above/below-market leases)216217 - The company reviews long-lived assets for impairment when events suggest the carrying value may not be recoverable, which involves subjective assumptions about future cash flows, occupancy, rental rates, and residual values47220 Quantitative and Qualitative Disclosures About Market Risk Primary market risk is interest rate risk from floating-rate debt, mitigated by interest rate swap agreements on the $200.0 million Term Loan, fixing the rate at 3.664% - The company is exposed to interest rate risk from its floating-rate Revolving Credit Facility and Term Loan223 - On March 3, 2025, the company entered into interest rate swap agreements on its $200.0 million Term Loan to convert the floating-rate debt to a fixed rate of 3.664%, reducing the impact of interest rate changes194224 Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the quarter ended March 31, 2025225 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls226 Part II - OTHER INFORMATION Legal Proceedings The company is not involved in any legal proceedings expected to have a material adverse effect on its business or financial condition - The company is not a party to any legal proceedings that would reasonably be expected to have a material adverse effect on its business227 Risk Factors No material changes to risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes have occurred from the risk factors set forth in the Annual Report on Form 10-K for the year ended December 31, 2024228 Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities were reported during the period - None229 Defaults Upon Senior Securities No defaults upon senior securities were reported - None230 Mine Safety Disclosures This item is not applicable to the company - Not applicable231 Other Information No officers or directors adopted or terminated Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements during the period - No officers or directors adopted or terminated any contract, instruction, or written plan for the purchase or sale of our securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c)232 Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents and SOX certifications by officers - The report includes certifications from the Co-Chief Executive Officers and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002234
FrontView REIT, Inc.(FVR) - 2025 Q1 - Quarterly Report