FrontView REIT, Inc. Q1 FY2026 Earnings Call

Hello, everyone. Thank you for joining us, and welcome to FrontView REIT, Inc. First Quarter 2026 Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Pierre Revol, Chief Financial Officer. Please go ahead.

Thank you, Operator. And thank you, everyone, for joining us for FrontView REIT, Inc.’s first quarter 2026 earnings. 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. Reconciliations of non-GAAP financial metrics to the most directly comparable GAAP metrics are included in the exhibits furnished to the SEC under Form 8-Ks which include our earnings release, supplemental package, and investor presentation. These materials are available on the Investor Relations page of our company website. With that, I am now pleased to introduce Stephen Preston. Stephen?

Thank you, Pierre, and good morning, everyone. This quarter demonstrates the operational and portfolio advancements we have made over the last year. We have elevated the strength of the management team, enhanced our portfolio, deepened tenant and industry diversification, and continued to focus on attractive markets with replaceable rents and high profile street frontage locations. Since the IPO, we have reduced our largest tenant exposure to 3.1%, lowered our top 10 tenant concentration to 23%, and reduced our restaurant exposure from 37% to under 23%. At the same time, we have invested in technology, data, and processes that improve scalability and decision making. FrontView REIT, Inc. is in its strongest position since inception and is poised to deliver compounding growth. Our scalable real estate-first strategy is focused on acquiring fungible, frontage-based assets typically located in dense retail corridors where underlying land value provides downside protection. Today, 77% of our properties are located within a top 100 MSA, and our average five-mile population is 175,000 people, highlighting the vibrant, desirable markets in which we own and operate real estate. Consistent with this strategy, we disclose each of our property locations through Google Maps links on the portfolio page of our corporate website. We also disclose every tenant and its ABR in our filings. I encourage investors to review these best-in-class disclosures which provide detailed, industry-leading visibility into the merits of our real estate, tenant credit, box sizes, and portfolio diversification. As I mentioned last quarter, we will be featuring an acquisition each quarter on the front cover of our investor presentation. This quarter, we are highlighting a Jiffy Lube in Baton Rouge, Louisiana, the second-largest MSA in the state and a top 100 MSA nationally. Jiffy Lube is a national automotive service brand and subsidiary of Shell USA, with more than 2,000 locations across North America. We acquired the property at a 7.4% cap rate on a 10-year net lease. The site sits directly in front of a Walmart Neighborhood Market and across from Raising Cane’s, with direct frontage on Kersey Boulevard and approximately 37,000 vehicles per day. At roughly $160,000 of annual rent, the rent basis is replaceable with arguable upside given the visibility, traffic counts, and surrounding retail demand. We were able to acquire the asset at an attractive price and at a significant discount to market by accommodating a seller-specific time and requirement. This acquisition demonstrates FrontView REIT, Inc.’s reputation as a buyer that can solve problems for sellers and source transactions that are not widely marketed. To summarize, we bought a fungible asset with frontage, with replaceable rent, in a desirable retail node, all at an elevated cap rate relative to the market. Including this asset, we own three Jiffy Lubes representing about 60 basis points of our ABR. In addition to this Jiffy Lube, I would also call your attention to the cover of our annual report where we highlight another one of our properties: a two-tenant building leased to Wells Fargo and T-Mobile. This is an A+ location across from a Walmart Supercenter in urban Dallas. The property is under-rented at $313,000 annual rent, with over 6,000 square feet of rentable area and is situated on approximately one acre of land on a corner with over 295,000 vehicles per day. This is emblematic of the type of real estate we are focused on securing. For the quarter, we acquired 10 properties for $34 million at an average cash cap rate of 7.5% and a weighted average lease term of 9.4 years. These acquisitions were consistent with the characteristics we target across the portfolio, including a median purchase price of $2.3 million, a weighted average Placer.ai score of 26 indicating top 30% of the category within the state, and a median rent per box of $170,000. With respect to acquisition cap rates, we anticipate Q2 2026 to settle around 7.3% to 7.4% with volumes generally in line with our guidance. We continue to see significant depth in the marketplace, particularly in smaller transactions where FrontView REIT, Inc. has real advantages. Since we are not dependent on larger transactions or portfolio deals, we rarely compete directly with large institutional buyers, REITs, or private equity capital. This allows us to secure attractive transactions from multiple sources where our execution and reputation provide us with a competitive edge relative to other, less sophisticated parties in the space. We are also seeing select development opportunities where our extensive retail development experience may allow us to achieve meaningfully wider yields while maintaining a disciplined approach to risk. Our team’s decade of historical experience developing outparcels along with developing retail and large-format shopping centers makes us uniquely qualified to underwrite and evaluate development opportunities. This capability is already established at FrontView REIT, Inc. We have completed several successful, value-creating developments including a Miller’s Ale House to a Raising Cane’s, a Sleep Number to a Seven Brew, a Burger King to a Chipotle, a Twin Peaks to a Jaggers and a Panda Express, and a new Bank of America ground lease in front of our Walmart in Rochester. Collectively, these projects created about $10 million of incremental value, representing an approximately 90% increase in value to our shareholders over and above our original purchase price. Although we do not currently have any third-party development assets under formal contract, we expect to begin a limited development program over the next few quarters and look forward to generating outsized risk-adjusted returns on these assets. Regarding dispositions, we sold five properties for $10 million during the quarter at an average cash cap rate of approximately 6.9% for the occupied assets, with a weighted average lease term of eight years. We sold a Dollar Tree in Vermillion, South Dakota which did not align with our real estate-first focus, and an underperforming McAlister’s Deli. Asset recycling is part of our strategy, and we expect dispositions to be incrementally focused on fine-tuning the portfolio and pruning less optimal locations and concepts. Switching to the portfolio, we ended the quarter at approximately 99% occupancy, with only four vacant assets. Importantly, our view of vacancy is shaped by the quality of the underlying real estate. Historically, when we have re-tenanted properties, we achieved rent spreads north of 110% of prior rent, which reinforces our willingness to be patient and pursue the right long-term outcome rather than defaulting to a quick sale. During the quarter, we successfully re-tenanted three expiring locations: a CVS in Chicago, a Dollar Tree in Newark, and a Twin Peaks in North Carolina. As highlighted on page 3 of our investor presentation, these transactions in total generated over 23% increases in rent relative to the prior tenants, reinforcing the embedded value of our real estate and the strength of our locations. These properties create a temporary drag in 2026 because repositioning takes time. However, the right answer is to be patient. By focusing on quality locations, fungible boxes, and replaceable rents, we can generate stronger outcomes. These re-tenantings create meaningfully greater long-term value than simply selling the asset quickly and redeploying the proceeds. Over time, this approach enhances organic growth as our high-quality real estate appreciates. With multiple proven levers to create value, including active asset management, re-tenanting, and accretive acquisitions, we are well positioned to generate returns both through growth and expertise, not simply relying on outside capital or market conditions. We are aligned with our shareholders and we will continue to capitalize on value-enhancing opportunities, positioning us to outperform. With that, I will turn the call over to Pierre Revol to review the quarterly numbers and guidance.

Thanks, Stephen. We had a strong operational quarter driven primarily by improved cash NOI and accretive capital deployment. Our adjusted cash revenue, which excludes reimbursement income and non-cash items, increased $707,000 sequentially to $16.3 million. The increase was driven by $75 million of acquisitions completed over the two quarters, as well as a $274,000 lease termination fee related to a dark Take 5 property. We subsequently sold the vacant asset for $1.7 million, generating close to a $700,000 gain over our original purchase price, highlighting the strength of our basis and underlying real estate. During the quarter, we enhanced our revenue disclosure by separately presenting other operating income, which includes termination fees, late fees, and other miscellaneous income generated through active portfolio management. These amounts are a normal part of operating a diversified real estate portfolio, but they are more episodic than base rent or percentage rent. Although this level of detail is not commonly broken out by net lease REITs, we believe the additional transparency helps investors better understand the underlying drivers of our results. This change is consistent with our broader commitment to best-in-class disclosures, is reflected in our Form 10-Q, and is highlighted in both our supplemental and investor presentation. Our non-reimbursable property costs decreased $385,000 sequentially to $263,000 or 1.6% of adjusted cash revenue, compared to 4.2% last quarter. This meaningful improvement was driven by improved occupancy, higher recovery income, and the impact of portfolio optimization work completed in 2025. As Stephen mentioned, we also have three properties currently being re-tenanted that contributed $181,000 of base rent in the first quarter. These three properties have already been leased to four tenants, with the majority of the rent commencement staggered over the next 12 to 18 months. Once stabilized, we expect orderly rent from these assets to increase to approximately $225,000. First-quarter cash NOI benefited from termination income, rent from the three properties currently being re-tenanted, and unusually low property cost leakage relative to the 2%–3% range we anticipate for 2026. After normalizing for these items, second-quarter run-rate cash NOI on the current portfolio would approximate $15.7 million before the incremental benefit from the recently executed re-tenanting leases, or approximately $700,000 lower than Q1 actuals. Our adjusted cash G&A was $2.4 million, consistent with the prior quarter. As we continue to grow our asset base, we have meaningful opportunity to create operating leverage by building the business the right way, through disciplined processes, better data and technology, and a platform that can scale with limited incremental G&A. Beginning last fall, we began investing in select technology partnerships, enterprise licenses, data analytics, and workflow applications to improve the efficiencies and operations of our business. These investments are building blocks in our effort to create an AI-native net lease REIT. Importantly, these tools and process changes are not a substitute for real estate judgment. They complement the deep real estate experience built over decades as private developers—what we often refer to as our developer DNA. Our objective is to build scalability, improve decision making, enhance risk management, and drive efficiency with an emphasis on data analytics. Turning to the balance sheet. Our revolver balance decreased modestly to $114 million, and our cash interest expense declined $86,000 sequentially to $3.8 million. Net debt to annualized adjusted EBITDAre improved by three-tenths of a turn to 5.3x, while LTV fell to 32.6%, and our fixed charge coverage ratio remained strong at 3.5x. Including the remaining $50 million of available convertible preferred equity capacity, adjusted net debt to annualized adjusted EBITDAre was 4.4x. We also announced a quarterly dividend of $0.215 per share, which represents a 63.2% AFFO payout ratio. This is our lowest payout ratio since becoming a public company. It provides more free cash flow to fund higher growth. Turning to guidance. We are maintaining our fully funded net investment target of $100 million and raising our AFFO per share guidance range to $1.29 to $1.33. At the midpoint, this represents 5% year-over-year growth, and at the high end approximately 7% growth. The increase in AFFO per share guidance is primarily driven by our strong first-quarter operating results and continued portfolio performance to date. We remain disciplined in capital allocation; our fully funded investment target provides meaningful visibility into our ability to grow while maintaining a conservatively levered balance sheet and dividend policy. As we said before, our smaller size is a structural advantage. With only $100 million of net investment, we can generate elevated AFFO per share growth while remaining disciplined in our capital allocation criteria. Our cash flow per share growth is built on a frontage-focused portfolio that is intentionally diversified across tenants and industries, yet concentrated in the attributes that matter most as real estate investors: targeting top 100 MSAs, fungible boxes, and replaceable rents. When combined with our discount to NAV, our growth profile is not yet reflected in our forward FFO per share. To help frame that disconnect, we included pages 24 and 25 in our investor presentation, which compare FrontView REIT, Inc.’s growth, diversification, and valuation relative to peers. FrontView REIT, Inc.’s growth profile is already among the most competitive in the net lease sector, while our AFFO multiple relative to growth remains among the lowest. In our view, that gap does not reflect the quality of the real estate we own, the multiple avenues that drive FrontView REIT, Inc.’s growth, or the long-term value creation embedded in the portfolio. With that, I will turn the call over to the Operator to open it up for Q&A. Operator?

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from Anthony Paolone with JPMorgan Chase. Please go ahead.

Oh, great. Thanks. Good morning, everybody. My first question is, you brought up the idea of looking at development deals. Could you maybe expand on that a little bit and give us a sense as to what order of magnitude you are looking at right now, who your partners might be, how you might structure these sorts of things? Just a little bit more detail would be great.

Sure. Good morning, Anthony, and thank you. I will start with the fact that, as a management team, we have been historically involved in significant retail development activities. We are going to look to develop when risk is mitigated, and certainly that will mean that we have a signed lease, that we have entitlements in place—that means your site plan is in place. We will have costs in place through a general contracting contract. We will have zoning, and then we will have building permits in tow as well. We are going to start small. We think that it is going to be small capital allocations—maybe $1 million to $3 million of equity for any one transaction. Ultimately it is very important that we make sure we have sufficient spreads—that is certainly why you are doing development in the first place—built into the project. And so we expect that we will be doing our own development and that we will be developing with sophisticated partners as well, and expecting somewhere between 100 to 200 basis points of spread built into the projects. It is also important to note that development is not new to FrontView REIT, Inc. We have already completed several developments in our portfolio. We have completed a Miller’s Ale House to a Raising Cane’s, a Burger King to a Chipotle, a Sleep Number to a Seven Brew, a Twin Peaks that we refitted to two separate tenants, Jaggers and a Panda Express, and we created a Bank of America in our Walmart Rochester outparcel from vacant land. We are very prepared to embark upon a development program. These activities have brought about $10 million of value increase over and above our purchase price across those assets. So this can be a good engine for us and very accretive, and again we are going to take it slow in the beginning.

I would just add to that, Anthony. The legacy of the company as a developer goes back even in the NADG days. They were partners with Kimco in a lot of projects as well. There is a lot of understanding on how these partnerships work. Both Stephen and the team have these relationships with developers and have done it for a very long time. That is why it makes sense if you find the right partnership and the right deal with the right real estate qualities that we are pursuing.

Okay. Thank you for all that color there. And then just my second question is on the leasing side. You seem to be off to a good start there. Can you maybe give us a little bit of a look ahead and anything you are picking up in terms of potential known move-outs, or how things are going as you look out into 2027?

I think that is essentially a credit watch list question. Everything feels pretty good right now as we look forward. We have the watch list and it is minimal. We have no material changes or additions to that watch list. It seems very healthy. We are watching a GoHealth, a Sleep Number, a couple of small urgent cares, and a couple of gas stations. Otherwise it feels positive. We have worked through the pharmacy exposure throughout the portfolio, and that exposure is roughly about 2% or less. Our total Sleep Number exposure is roughly 70 basis points across all three locations. To extrapolate a little bit on that, we expect bad debt to be in that 50 basis points range. Right now very little is known, so mostly it is about the unknown at this point.

In terms of lease expirations, we have 10 expirations coming up. There is nothing really in there that we expect to be problematic. We have a couple of vacancies—four properties—and we are working through those. We talked about Smokey Bones last quarter and we are working to sign a lease on that one. We also have a Walgreens that we are working to sign a lease for. Those would be potential pickups as we look forward. We feel very comfortable around the expiration schedule.

The Smokey Bones asset is one where we decided to take our time and it is looking like it is going to become two tenants. That is an example of the virtues of the real estate we buy and the demand tenants have for this real estate. The Walgreens that closed—we have a tenant that is expected to backfill that and we are very close to finalizing that. We are very excited about our ability to continue to re-tenant and create strong recapture rates.

Great. Thank you.

Next question comes from Eric Borden with BMO Capital Markets. Please go ahead.

Good morning. Thanks for taking my question. Just following up on the recapture rates and the lease expiration schedule, just curious if you could help quantify the mark-to-market or recapture rate that you are hoping to achieve on the 10 lease expirations this year and then the 33 in the following year. Thank you.

Of course. To provide some context on expirations, we view these as opportunities driven by quality, desirable, fungible real estate. Since 2016, we have had 51 tenants renew—45 renewed with the same tenant and six renewed with a new tenant—and we are about at a 106% rental rate recapture. Our overall renewal rate is about 90%. For 2026, we are already through half of the expirations and have increased rent income; there are about nine left and we expect 2026 to be positive. We expect 2027 to follow suit and we are already in discussions with a number of those tenants. These expirations are tenant- and real estate-driven based on the quality of our locations.

I would also point you to page 12 of our investor presentation where there are several statistics around Placer scores and populations. The one to call out is a median rent per box over the next five years of all the expirations of $156,000. That is a very good basis. Most tenants will renew as expected, but on the off chance of the roughly 10% that may not renew, we expect to be able to resolve that and capture higher rents.

Thank you. Appreciate all the detail. My follow-up question is on the disposition spread over acquisitions that you achieved in the quarter—it was approximately 60 basis points. Just curious, how repeatable is that spread as you look to complete your net investment goals this year? Thank you.

We expect that spread to be repeatable and will use historical data to demonstrate it. In 2025 and into 2026, we sold about $86 million of property at about a 6.97% cap rate on average. Those assets were generally below the best assets in our portfolio and were sold to optimize the portfolio. Examples include assets tied to bankruptcies or underperforming concepts such as Twin Peaks, Red Lobster, Ruby Tuesday, Cafe Rio, a dark Bojangles, and a Denny’s franchisee. These are not our premier assets, and they were sold to optimize. We expect to continue transacting in that realm. If we were to include some of the hot assets, the blended cap rate would drop materially.

Your next question comes from Ronald Kamdem with Morgan Stanley. Please go ahead.

Great. Maybe just staying on capital recycling—could you talk a little bit more about the acquisition pipeline and cap rates, how those have been trending, and then on the disposition side, clearly there is always pruning to be done, but are you mostly through, or how should we think about what is left to be filled? Thanks.

On dispositions, the optimization is fairly close to complete. We will continue to manage the portfolio and expect dispositions of somewhere in the $40 million to $50 million range this year, down about half from prior. For cap rates, we were about 7.5% for the quarter and expect Q2 to be roughly 7.3%, maybe similar in Q3. The institutional interest in net lease has increased and there is abundant capital setting the tone for the market, but we play in a different market—smaller transactions where leverage for the smaller buyers is a bit easier to obtain from smaller banks. Cap rates in shopping center retail have come in, not quite the same for our space, and we still feel good about a stable market. We will focus on 'good hot states' like Texas, Florida, Georgia, and Arizona where cap rates can be tighter. Regarding the pipeline, we have a strong, deep pipeline. Q2 and Q3 are effectively in tow. We are seeing opportunities in the same asset types in our portfolio: frontage, low rents, motivated sellers, and solid tenant credit. Examples in the pipeline include Hawaiian Bros, Burlington, Bob’s Furniture, Tropical Smoothie, Spec’s, PNC, veterinarian clinics, and a Giant Eagle grocery store. We can increase acquisition cadence if needed—we established availability when we went public at about $100 million in a quarter. Right now we have the $100 million of capital in tow for this year and are set, but we could expand if necessary.

Great. Really helpful. And then for my follow-up—on the guidance raise, could you just go through the pieces? Is it bad debt? Is it higher rents? Just quickly the guidance raise components. Thanks.

The guidance range is primarily driven by the portfolio performing well. If you think about what we printed in the first quarter at $0.34, at the midpoint of the range you are effectively doing $0.32 to $0.33 in the remaining three quarters. We are not seeing issues with portfolio leasing and do not have required dispositions—these are portfolio optimizations, not distressed sales. We are seeing good leasing activity and feel comfortable with the range. For bad debt, most of it is unidentified reserves on watch-list items, and given the quarter's performance we thought it was appropriate to raise the range.

Helpful. Thank you.

Your next question is from Yana Golan with Bank of America. Please go ahead.

Hello. Just following up on the guidance range. Like you said, it implies $0.32–$0.33 per quarter AFFO. So I guess sequentially, how should we think about the cadence for the balance of the year? And then what factors are expected to drive the implied moderation?

In my prepared remarks I walked through the NOI components for Q1 that will drop into Q2. The other income we called out and the three tenants that expired and are being re-tenanted will not materially impact 2026 but will flow into 2027. All in, that drops effective NOI from Q1 to Q2 by about $700,000. So when you think about AFFO per share cadence, you would expect that drop into Q2 from the $0.34, but as assets come in and we deploy capital, and with rent escalators, AFFO should increase to get within the roughly $1.31 midpoint.

Thank you. And just sticking to cadence, given where the current share price is and the maintenance of the net investment guidance, how should we be thinking about the timing of deployment of the remaining $50 million of the preferred capital?

It might be helpful to go over that. The preferred equity capital we put in place last year on November 12 was $75 million at 6.75% with a convertible feature at $17 a share, which is above that level now. We have until November 12 to call it, and our idea was to hit our target of $100 million of acquisitions and fund it with the $75 million of equity capital this year. For two years after the final draw—through November 2028—the preferred cannot be converted. There is a question of whether they would convert, which is possible, but unlikely given the yield they are getting is 6.75% versus our dividend yield, which is much lower. We are fully funded. I expect we will match fund our acquisitions with the equity and some debt on about a 25% LTV ratio as discussed. Our Q2 and Q3 are pretty well built and we will time deployment of that preferred equity to fund those deals.

Your next question comes from John with B. Riley Securities. Please go ahead.

Good morning. Maybe thinking about investment yields—I know you talked a little bit about where you want to see development spreads; I am assuming relative to your cost of capital—but how could that impact or maybe uplift the historical cap rates you have seen on your more traditional investments?

When investing in developments, we expect to receive a preferred return initially. What development allows us to do is access tenants and assets we might not otherwise acquire at attractive yields. For example, acquiring a Chick-fil-A at a 5% cap rate may not make sense directly, but through development with 150 to 200 basis points of spread, we could effectively place that asset on the books in the high 6s or low 7s. That is an accretive way to create value for the portfolio. The stable cash flow exists and we can sell finished product in the open market to realize the widened spread.

That makes sense. And then as I am thinking about the rent roll-ups on the leasing activity, how much of that was tied to replacing tenants that had credit issues? I am assuming the Twin Peaks was kind of repositioning within that number. And was any of it purely lease expirations where you felt you needed a better rent with a new tenant and therefore did not keep the old tenant in place?

It is a mixture of credit-driven replacements, expirations, and proactive repositioning. For example, Miller’s Ale House was a paying tenant but underperforming; we proactively negotiated a buyout and replaced it with Raising Cane’s, which resulted in a significant uplift. Across the portfolio, the combination of strong underlying real estate and low rents enables us to pursue these opportunities.

To highlight three specific transactions: the Twin Peaks was an expiring lease and we proactively addressed it, getting a 92% rent increase. The CVS in Chicago decided not to renew, and we put in a child care operator, Path USA, which yields an 18% rent increase once that tenant goes in. Broadly, many net lease investors discuss recapture and growth but miss the importance of proactively addressing tenants that may not renew. For us, those non-renewals are opportunities to grow and improve long-term earnings.

Appreciate that color. Thank you.

Next question comes from Daniel Guglielmo with Capital One Securities. Please go ahead.

Hi, everyone. Thanks for taking my questions. We have talked a few times about development, but I do know over the past couple of years, really since rates went up, it has been hard to get development investments to pencil. What has changed over the past few months around the underwriting math that makes it more attractive?

You are right—development depends on market and cap rate cycles. As finished-product cap rates compress, development spreads narrow, and conversely they widen when cap rates come in. We have seen cap rates move, creating an opportunity to generate wider returns without adding much incremental risk. We will start small and watch the cycle as cap rates evolve. That is why development was less attractive in prior years, but it looks more compelling now.

Okay, great. That is very helpful. And then on the transaction market, recently what has been driving owners to sell the properties that you are acquiring? It would just be a helpful refresher because you focus on niche property types with less competition.

The market we play in is filled with individual and less sophisticated sellers, which is the nature of sub-$10 million transactions. We do not generally compete for large portfolios or hugely marketed assets. These sellers may be 1031 exchange sellers, retirees, people needing capital for personal reasons, or other life events. That creates continuous liquidity and turnover. As a sophisticated buyer that can close quickly and without financing contingencies, we can source attractive deals and often achieve wider spreads relative to other smaller buyers.

Great. Thank you.

Your next question comes from Matthew Erdner with Jones Trading. Please go ahead.

Hey, thanks for taking the question. You talked a little bit about the dispositions and that part being somewhat pruned out by now. As you look to refine that a little further, are there any geographic concentrations—Illinois kind of sticks out to me—or certain sectors that you are looking to move out of?

Illinois sometimes gets a bad reputation, but many suburbs are strong and vibrant. We have increased our exposure to Illinois and we want to increase Texas over time. From an industry perspective, we will continue to prioritize diversification while focusing on real estate quality and rents. We like medical, financial, automotive, vet clinics, fitness, QSR/fast casual, and select retail concepts. We are cautious on gas given the evolving model, and we continue to reduce pharmacy exposure, which is around 2% of ABR. We are sensitive to car wash exposure as well. For restaurants, we have reduced exposure to older, tired concepts—those that were popular in the 1990s and early 2000s. We still like restaurants, particularly QSR with drive-thrus and fungible boxes that can be repurposed for many uses.

On the disposition side, we also look at whether an asset is in a tertiary market. We target top 100 MSAs and want to increase that percentage. Some tenants might be strong nationally, but if they are situated in tertiary markets with lots of land and limited population, they do not fit our real estate-first investment thesis. Those assets can be sold and are often sought after by different buyers. The advantage for us is we can choose these dispositions to improve the overall quality of the portfolio.

Got it. That is very helpful. I appreciate all the comments. Thanks.

There are no further questions at this time. I will now hand the call back to Stephen for closing remarks.

Yes. Thank you, everyone, for your time today, and we appreciate your interest in FrontView REIT, Inc. and our differentiated approach to net lease. We look forward to seeing you at the BMO conference next week and NAREIT in June in New York. Please do not forget to check out our properties on our website. Be safe and be healthy. Thank you all.

This concludes today’s call. Thank you for attending. You may now disconnect.