FrontView REIT, Inc. Q3 FY2025 earnings call

• Portfolio is built around smaller, highly fungible net lease assets in front of major retail nodes, with diversified tenant base. - Optimized portfolio, has strong C-suite talent, low-levered balance sheet. - Acquired 3 properties for ~$15.8 million in Q3 with average cap rate 7.5% and weighted average remaining lease term ~11 years. - Sold 15 properties for $32.9 million in Q3, eliminated exposure to several casual dining concepts. - Enhanced disclosures including Placer.ai visitation rankings and refreshed website with portfolio-level page.

Annualized base rent (ABR) was $61.3 million as of September 30, down from $63.2 million at June 30. The decrease in ABR reflects the company being a net seller of assets during the quarter with $32.9 million of dispositions and $15.7 million of acquisitions. Total cash rental income totaled $15.4 million, compared to $15.7 million last quarter. Nonreimbursed property cost was $405,000, slightly better than expectations. Annualized base rent excluding the Tricolor property (which vacated post quarter) would have been $60.7 million.

• 2025: Acquisitions range $115M-$125M, dispositions $70M-$80M. AFFO per share guidance increased to $1.23-$1.25. - 2026: Expect ~$100M net acquisitions, driving AFFO per share $1.26-$1.30. - $75 million convertible preferred equity investment to fund 2026 net acquisitions, accretive when deployed, can draw capital in tranches.

• Market uncertainties affecting acquisition and disposition timing. - Potential impact of Tricolor fraud resolution on financials. - Risk of deviation of actual results from forward-looking statements due to known and unknown factors.

Q: First question relates to 2026. Can you just give us a little bit more on -- you mentioned it sounds like Tricolor is kind of out and maybe it gets backfilled. But also just with 20 lease expirations next year, kind of what's on the organic sort of core portfolio side you have baked into the guide?

A: Tony, thanks for the question. Good to hear from you. In terms of the guidance, it's pretty simple. As we exited this year at $0.31 roughly with all the asset dispositions, that annualizes to $1.24. And as mentioned, it doesn't include any income from Tricolor. We do expect to -- hopefully, we'll be able to provide an update, that will be a bit better depending on how the resolution ends up happening. We anticipate 0 equity. We are fully funded with this new capital deployment, and that's really what's primarily driving. In terms of expirations, we're ahead of all of that. And I can let Steve talk about our expirations.

Q: Maybe if we could start back on the guide, you guys provided some helpful color around cap rates and credit loss. Could you talk to maybe what the high end and low end for the guide represents on each of those metrics. And if there's any other color you could give around what helps formulate your guide?

A: Sure, John. Good to hear from you. So in terms of the low end at $1.26, it's really about the timing of the deployment of the capital. So we are -- we set an investment guidance of $100 million next year, and it really depends on how quickly we deploy it. We do have some dispositions as well in our guidance next year and so we'll continue to do some asset recycling. But on the low end, the way to think about a $0.31 run rate, $1.24, we do think that this is accretive at least $0.02. I feel very comfortable at $1.26 even if we deploy the capital a little bit later. On the high end, what will really drive that is a little bit of favorable resolutions on any sort of credit issues and earlier acquisitions, higher cap rates. And that would be the predominant drivers between the low and high end.