FrontView REIT, Inc. 2026 Q2 Earnings Call

Pierre, please go ahead. Thank you, operator, and thank you everyone for joining us for FrontView’s second quarter 2026 earnings call.

I will be joined on the call by Stephen Preston, Chairman, and CEO. Before we get started, I would like to remind everyone that this presentation contains forward-looking statements. Although we believe these forward-looking statements are based on reasonable assumptions, they are subject to known and unknown risks and uncertainties that can cause actual results to differ materially from those currently anticipated due to several factors. I refer you to the safe harbor statement in our most recent filings with the SEC for a detailed discussion of the risk factors relating to these forward-looking statements. This presentation also contains certain non-GAAP financial metrics.

Reconciliation of non-GAAP financial metrics to most directly comparable GAAP metrics are included in the exhibits furnished to the SEC under Form 8-K, which include our earnings release, supplemental, and investor presentation. These materials are available on the investor relations page of our company’s website. With that, I am now pleased to introduce Stephen Preston.

Steve? Great. Thank you, Pierre, and good morning, everyone.

This quarter demonstrates why the best risk-adjusted returns in net lease come from owning exceptional real estate with a diverse tenant base in vibrant markets where the strength of the real estate leads to increases in rents and value over time. Nearly 80% of our properties are located in top 100 MSAs, 92% are positioned near shopping centers, the average five-mile population exceeds 172,000, and the median Placer.ai ranking is in the top third of their respective concepts. Our portfolio is exceptionally well-diversified, with the largest tenant now representing only 2.6% of ABR and the top 10 tenants accounting for just 20.2%. In addition, 33.6% of our rents are derived from investment-grade tenants. Our median box is 5,000 sq ft, and our median annual rent is only $174,000 per property. We often describe our portfolio as containing fungible buildings with replaceable rents.

While those phrases can sound abstract, the following examples illustrate exactly what we mean. Recently, we created a Bank of America ground lease in front of our Walmart in Rochester, N.Y. We converted a former Burger King franchisee to a Chipotle at our property in Mechanicsville, Va. We replaced a Miller’s Ale House with a Raising Cane’s ground lease at our property in Chicago, Ill. We released a former Tricolor location to Avis in Marietta, Ga. We created a Panda Express and Jaggers ground lease from a former single Twin Peaks in Winston-Salem, N.C., and we replaced a former Walgreens with an Amazon fulfillment center in Durham, N.C. In aggregate, these transactions generated $1.6 million in ABR with an estimated value of $29 million, compared to our basis of $19.8 million, or a 47% increase in value.

Importantly, this value was created from assets that were underperforming, but where the exceptional quality of the underlying real estate allowed us to unlock significant value. Although none of this value creation has been crystallized through actual property sales, the improved tenant credit, lease structures, and real estate configurations have meaningfully increased their market value. We’ve also optimized the portfolio through a disciplined and proactive disposition strategy. Every disposition serves one of three objectives. First, to enhance real estate quality. Second, to increase diversification, and finally, to recycle capital into better opportunities. Since our IPO, we have strategically sold approximately $110.5 million of properties, representing 14.6% of our original IPO assets to increase tenant and industry diversification, reduce exposure to tertiary locations, and remove weaker or tired concepts.

The median disposition cap rate across all these sales, which were not our best assets by any means, was 6.88%, which is below our currently implied valuation. This quarter, we sold five tertiary Dollar Trees, a Friendly’s in N.Y., a Staples in Ill., a Fast Pace in Ind., and a Hooters in Ky. at a weighted average 7.12% cash cap rate. Each transaction improved the overall real estate quality, tenant credit, or diversification of the portfolio. Continual portfolio optimization is part of our business model, and we will continue to proactively prune the portfolio as part of our ongoing value creation strategy. While the bulk of our portfolio optimization is complete, we will remain active in recycling capital where we see opportunities to enhance portfolio quality.

The result is a portfolio with strong operators, exceptional real estate, and one of the most diversified tenant bases in the net lease sector. Importantly, investors can evaluate the portfolio directly as we are the only net lease REIT that discloses 100% of its ABR by tenant and the address of each and every property. Turning to acquisitions, we acquired 17 properties for $58.2 million at an average cash cap rate of 7.34% and a weighted average lease term of 7.3 years for the quarter. These acquisitions were consistent with the real estate characteristics we target across the portfolio, with median metrics including a purchase price of $2.6 million, building size of 5,700 sq ft, Placer.ai score of 20.4, annual rent of $217,000 per property, and five-mile population of 141,000. We continue to target larger MSAs with an emphasis on established, well-populated growth markets.

While cap rates in these markets have historically been somewhat lower than the U.S. average, we believe the premium is justified by strong demographics, favorable supply and demand dynamics, and greater long-term rental growth prospects. The weighted average lease term this quarter was slightly below our historical average because we purposefully acquired several properties with shorter remaining lease terms. These assets have below-market rents, strong tenant performance, and clear opportunities to create value through lease renewals or extensions. Our market knowledge and relationships allowed us to acquire them at prices well below their longer-term intrinsic value. We view these select transactions as a form of risk-mitigated development. They can provide development-like spreads without requiring us to assume construction, lease-up, or entitlement risk because the tenants are already open, operating, and paying rent.

As an example, we acquired a veterinarian clinic backed by a national guarantor in Indiana with a little more than two years left on the lease at an 8.75% cap rate. The cap rate was reflective of the short term remaining, but through our relationship with the tenant, we are extending the term to 12 years without providing any significant concessions, creating a wide development-like spread with zero development or construction risk. After the extension, this alone would have raised our walled on acquisitions from 7.3 years to 7.7 years. Consistent with prior quarters, we are highlighting one acquisition this quarter, a corporately guaranteed Aspen Dental property in Roseville, Michigan, which is on the cover of our investor presentation. The property is located on a hard corner out parcel to a Kroger supermarket with frontage along a major arterial carrying over 25,000 vehicles per day.

It also ranks in the top 15 of its concept statewide based on Placer.ai. Roseville is a suburb of the Detroit metropolitan area, the 14th largest MSA in the U.S. Founded in 1998, Aspen Dental supports a nationwide network of more than 1,100 branded dental offices and is one of the largest and fastest-growing dental service organizations in the country. We acquired the property at a 7.2% cap rate with annual rent of only $147,000. Given the quality of the real estate and low rent, re-tenanting would be a source of upside if it were ever given the opportunity. This combination of credit and use, exceptional real estate location, readily releasable box size, replaceable rent, and potential upside is a prime example of a FrontView target acquisition. The asset was previously under contract with another buyer at a cap rate in the mid 6 range, providing market validation.

When that transaction failed to close, the seller prioritized certainty and speed of execution. FrontView stepped in, closed quickly, and acquired the property at a higher cap rate. This transaction demonstrates our ability to create value through sourcing, asset selection, certainty of execution, and the relationships we have developed across a fragmented marketplace where our typical transaction size competes less with institutional capital. This allows us to avoid portfolio transactions where pricing is a premium and invariably contain real estate we would not want to own. Last quarter, we introduced the concept of evaluating select development partnership opportunities that would leverage our team's decades of retail development experience. These partnerships could expand our sourcing channels and allow us to earn higher yields while maintaining our focus on real estate quality and mitigated risk management. We continue to evaluate a number of potential developments that meet our underwriting standards.