FrontView REIT, Inc 10-Q for FY2025 Q1
FrontView REIT, Inc. (FVR)
About this 10-Q
FrontView REIT, Inc filed this 10-Q on May 15, 2025, covering the quarter ended March 31, 2025 (FY2025 Q1).
Headline figures
Quarter ended March 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $16.24M
- up 6.4% from $15.26M a year earlier
- Net loss
- $833K
- compared with a net loss of $2.45M a year earlier
- Diluted EPS
- -$0.06
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 |
Commission File Number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
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(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
There were
FRONTVIEW REIT, INC.
TABLE OF CONTENTS
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Part I - FINANCIAL INFORMATION |
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Item 1. |
Financial Statements - FrontView REIT Inc. |
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1 |
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Financial Statements |
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2 |
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Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) |
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3 |
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4 |
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5 |
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Notes to the Condensed Consolidated Financial Statements (Unaudited) |
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7 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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23 |
Item 3. |
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41 |
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Item 4. |
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41 |
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Item 1. |
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41 |
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Item 1A. |
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41 |
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Item 2. |
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42 |
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Item 3. |
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Item 4. |
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42 |
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Item 5. |
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42 |
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Item 6. |
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43 |
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Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements, which reflect our current views regarding our business, financial performance, growth prospects and strategies, market opportunities, and market trends, that are intended to be made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include all statements that are not historical facts. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” or the negative version of these words or other comparable words. All of the forward-looking statements included in this Quarterly Report on Form 10-Q are subject to various risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results, performance, and achievements could differ materially from those expressed in or by the forward-looking statements and may be affected by a variety of risks and other factors. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from such forward-looking statements.
Important factors that could cause results to differ materially from the forward-looking statements are described in Item 1. “Business,” Item 1A. “Risk Factors,” and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which was filed with the U.S. Securities and Exchange Commission (“SEC”) on March 20, 2025. The “Risk Factors” in our Annual Report on Form 10-K should not be construed as exhaustive and should be read in conjunction with other cautionary statements included elsewhere in this Quarterly Report on Form 10-Q.
You are cautioned not to place undue reliance on any forward-looking statements included in this Quarterly Report on Form 10-Q. All forward-looking statements are made as of the date of this Quarterly Report on Form 10-Q and the risk that actual results, performance, and achievements will differ materially from the expectations expressed in or referenced by this Quarterly Report on Form 10-Q will increase with the passage of time. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by law.
Regulation FD Disclosures
We use any of the following to comply with our disclosure obligations under Regulation FD: SEC filings, press releases, public conference calls, or our website. We routinely post important information on our website at www.frontviewreit.com, including information that may be deemed material. We encourage our shareholders and others interested in our company to monitor these distribution channels for material disclosures. Our website address is included in this Quarterly Report as a textual reference only and the information on the website is not incorporated by reference in this Quarterly Report.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share amounts)
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Successor |
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Successor |
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March 31, |
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December 31, |
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ASSETS |
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Real estate held for investment, at cost |
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Land |
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$ |
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$ |
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Buildings and improvements |
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Total real estate held for investment, at cost |
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Less accumulated depreciation |
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Real estate held for investment, net |
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Assets held for sale |
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Cash and cash equivalents |
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Intangible lease assets, net |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND EQUITY |
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Liabilities |
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Debt, net |
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$ |
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$ |
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Intangible lease liabilities, net |
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Accounts payable and accrued liabilities |
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Total liabilities |
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Equity |
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FrontView REIT, Inc. equity |
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Common Stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Accumulated other comprehensive loss |
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— |
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Total FrontView REIT, Inc. equity |
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Non-controlling interests |
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Total equity |
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Total liabilities and equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(in thousands, except share and per share amounts)
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Predecessor (1) |
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For the three months ended March 31, |
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2025 |
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2024 |
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Revenues |
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Rental revenues |
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$ |
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$ |
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Operating expenses |
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Depreciation and amortization |
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Property operating expenses |
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Property management fees |
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— |
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Asset management fees |
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— |
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General and administrative expenses |
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Total operating expenses |
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Other expenses (income) |
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Interest expense |
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Gain on sale of real estate |
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Impairment loss |
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Income taxes |
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Total other expenses |
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Net loss |
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Less: Net loss attributable to convertible non- |
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— |
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Less: Net loss attributable to non-controlling interests |
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— |
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Net loss attributable to NADG NNN Property Fund LP (Predecessor) and to FrontView REIT, Inc. (Successor) |
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$ |
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$ |
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Weighted average number of common shares outstanding |
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Basic |
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— |
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Diluted |
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— |
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Net loss per share attributable to common stockholders |
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Basic |
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$ |
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$ |
— |
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Diluted |
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$ |
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$ |
— |
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Comprehensive loss |
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Net loss |
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$ |
( |
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$ |
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Other comprehensive loss |
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Change in fair value of interest rate swaps |
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( |
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— |
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Comprehensive loss |
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( |
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( |
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Less: Comprehensive loss attributable to convertible non- |
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— |
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Less: Comprehensive loss attributable to non-controlling interests |
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— |
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Comprehensive loss attributable to NADG NNN Property Fund LP (Predecessor) and to FrontView REIT, Inc. (Successor) |
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$ |
( |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(in thousands, except share and per share amounts)
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Common Stock |
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Additional Paid-in Capital |
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Accumulated Deficit |
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Accumulated Other Comprehensive Loss |
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Non-controlling Interests |
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Total Equity |
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Balances, December 31, 2024 (Successor) |
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$ |
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$ |
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$ |
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$ |
— |
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$ |
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$ |
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Conversion of |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Distributions declared ($ |
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— |
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— |
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( |
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— |
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( |
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Distributions declared to Preferred Units |
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— |
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— |
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— |
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— |
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( |
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( |
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Reallocation of non-controlling interests |
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— |
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( |
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— |
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— |
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Change in fair value of interest rate swaps |
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— |
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— |
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— |
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( |
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( |
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( |
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Net loss |
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— |
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— |
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( |
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— |
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( |
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( |
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Balances, March 31, 2025 (Successor) |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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$ |
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Common Stock |
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Additional Paid-in Capital |
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Accumulated Deficit |
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Non-controlling Interests |
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Partners' Capital |
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Total Equity |
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Balances, December 31, 2023 (Predecessor) |
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$ |
— |
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$ |
— |
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$ |
— |
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$ |
— |
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$ |
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$ |
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Accretion of non-controlling interests |
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— |
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— |
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— |
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— |
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( |
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( |
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Distributions |
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— |
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— |
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— |
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— |
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( |
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( |
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Net loss |
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— |
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— |
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— |
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— |
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( |
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( |
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Balances, March 31, 2024 (Predecessor) |
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$ |
— |
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$ |
— |
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$ |
— |
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$ |
— |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
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Successor |
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Predecessor |
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For the three months ended March 31, |
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2025 |
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2024 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash provided by operating activities: |
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Depreciation and amortization |
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Amortization of above/below market leases |
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Amortization of financing transaction and discount costs |
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Amortization of organization costs |
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— |
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Amortization of software costs |
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Net cash received from derivative settlements |
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— |
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Non-cash rental revenue adjustments |
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( |
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( |
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Gain on sale of real estate |
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( |
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( |
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Stock-based compensation |
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— |
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Impairment loss |
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Changes in operating assets and liabilities: |
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Other assets |
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( |
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Accounts payable and accrued liabilities |
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Net cash provided by operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Acquisition of real estate held for investment |
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( |
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( |
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Deposits on real estate held for investment |
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Deferred leasing costs and other additions to real estate held for investment |
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( |
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( |
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Net proceeds from sale of real estate held for investment |
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Net proceeds from expropriation |
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Additions to software costs |
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— |
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( |
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Net cash (used in) provided by investing activities |
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( |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Contributions from non-controlling convertible preferred interests |
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— |
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Proceeds from debt |
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— |
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Repayment of debt |
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— |
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( |
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Financing transaction costs |
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— |
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( |
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Deferred offering costs |
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— |
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( |
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Cash distributions paid to stockholders |
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( |
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— |
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Cash distributions paid to Preferred Unit holders |
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— |
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( |
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Cash distributions paid to non-controlling convertible preferred interests |
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— |
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( |
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Cash distributions paid to non-controlling interests |
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( |
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— |
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Net cash provided by (used in) financing activities |
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( |
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Net decrease in cash and cash equivalents during the period |
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( |
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( |
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Cash and cash equivalents, beginning of period |
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Cash and cash equivalents, end of period |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
(in thousands)
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Successor |
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Predecessor |
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For the three months ended March 31, |
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2025 |
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2024 |
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
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Cash paid for interest |
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$ |
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$ |
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Non-cash disclosures of non-cash investing and financing activities: |
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Deferred rent receivable classified as assets held for sale |
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$ |
— |
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$ |
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Accrued real estate development and improvement costs |
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$ |
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$ |
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Accrued deferred leasing fees |
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$ |
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$ |
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Accrued deferred offering costs |
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$ |
— |
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$ |
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Conversion of OP Units to Common Stock and additional paid-in capital |
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$ |
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$ |
— |
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Distributions payable to convertible non-controlling preferred interests |
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$ |
— |
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$ |
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Dividends payable |
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$ |
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$ |
— |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
6
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BUSINESS DESCRIPTION
All amounts expressed in these condensed consolidated financial statements are in United States (“U.S.”) currency.
FrontView REIT, Inc. (the “Company” or “Successor”) was formed on June 23, 2023 as a Maryland corporation and elected to be taxed as a real estate investment trust (“REIT”) commencing with its short taxable year ended December 31, 2024. FrontView Operating Partnership LP (the “OP”) is the entity through which the Company conducts its business and owns all of the Company's properties either directly or indirectly through subsidiaries. Upon the closing of the initial public offering ("IPO") on October 3, 2024, the Company is the sole general partner of the OP. The units not owned by the Company in the OP are referred to as OP Units or non-controlling interests.
The Company is an internally-managed net-lease REIT that acquires, owns and manages primarily properties with frontage that are net leased to a diversified group of tenants. The Company is differentiated by an investment approach focused on properties that are in prominent locations with direct frontage on high-traffic roads that are highly visible to consumers. As of March 31, 2025, the Company owned a well-diversified portfolio of
NADG NNN Property Fund LP (the “Predecessor”) was formed on January 6, 2016, to provide investors with the opportunity to invest in a portfolio of high quality, primarily single tenant net leased properties located in the U.S. NADG NNN Operating LP (the “Sub OP”) was the entity through which the Predecessor conducted its business and owned (either directly or through subsidiaries) all of the Predecessor’s properties. The Predecessor had a
Prior to October 2, 2024, the Predecessor was externally managed by North American Realty Services LLLP (“NARS”) and affiliates. NARS and the Predecessor were related parties (see Note 13) and the Company’s Co-CEOs and COO were employees of NARS.
Formation Transactions
On October 2, 2024, the Company, through a series of REIT contribution transactions and completion of the internalization of the external management functions (“Internalization”), created an umbrella partnership real estate investment trust (“UPREIT”) structure with a publicly-traded REIT that is internally managed and owns all of its assets and conducts all of its business through the OP. Pursuant to the contribution agreements, (1)
The following table summarizes the outstanding equity and economic ownership interest of the Company:
|
|
March 31, 2025 |
|
|
December 31, 2024 |
|
||||||||||||||||||
|
|
Shares of Common Stock |
|
|
OP Units |
|
|
Total Diluted Shares |
|
|
Shares of Common Stock |
|
|
OP Units |
|
|
Total Diluted Shares |
|
||||||
Ownership Interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Percent Ownership of OP |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||||
2. ACCOUNTING POLICIES FOR FINANCIAL STATEMENTS
Basis of Presentation and Principles of Consolidation
These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with the rules and regulations of the U.S. Securities and Exchange
7
Commission (the “SEC”). The condensed consolidated financial statements include the financial position, results of operations and cash flows of the Company and subsidiaries in which it has a controlling financial interest. All intercompany amounts have been eliminated in consolidation and the Company’s net income is reduced by the portion of net income attributable to non-controlling interests.
The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. These unaudited interim condensed consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements, and should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto as of and for the years ended December 31, 2024 and 2023 contained in the Company’s Annual Report on Form 10-K filed with the SEC on March 20, 2025, which provide a more complete understanding of the Company's accounting policies, financial position, operating results, business properties, and other matters. In the opinion of management, all adjustments of a normal recurring nature necessary for a fair presentation have been included. The results of operations for the three months ended March 31, 2025 and March 31, 2024 are not necessarily indicative of the results for the full year.
Generally, a controlling financial interest reflects ownership of a majority of the voting interests. The Company consolidates a voting interest entity (“VOE”) in which it has a controlling financial interest and a variable interest entity (“VIE”) if it possesses both the power to direct the activities of the VIE that most significantly affects its economic performance, and (a) is obligated to absorb the losses that could be significant to the VIE or (b) holds the right to receive benefits from the VIE that could be significant to the VIE. The Company has concluded that the OP is a VIE and consolidates its interest in the OP as the Company is deemed to be the primary beneficiary. The portion of the OP not owned by the Company is presented as non-controlling interests as of March 31, 2025 and December 31, 2024.
Use of Estimates
The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of these condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The most significant assumptions and estimates relate to the valuation of real estate and related intangible assets and liabilities upon acquisition, including the assessment of impairments, as well as depreciable lives, and the collectability of trade receivables. On an on-going basis, the Company's chief operating decision makers review the estimates and assumptions. These estimates are based on historical experience and various other assumptions that the Company's chief operating decision makers believes to be reasonable under the circumstances. Actual results could differ from those estimates.
Real Estate Held for Investment
Real estate held for investment is stated at cost, less accumulated depreciation and impairment losses. Upon acquisition of real estate held for investment considered to be an asset acquisition, the purchase price and related acquisition costs (collectively, “the purchase price”) is capitalized as part of the cost basis. The purchase price is allocated between land, buildings and improvements, site improvements, and identifiable intangible assets and liabilities such as amounts related to in-place leases and origination costs acquired, above- and below-market leases, based upon their relative fair values. The allocation of the purchase price requires judgment and significant estimates. The fair values of the land and building assets are determined on an as-if-vacant basis.
Above- and below-market leases are based upon a comparison between existing leases upon acquisition and current market rents for similar real estate. The fair value of above- and below-market leases is equal to the aggregate present value of the spread between the contract and the market rate of each of the in-place leases over their remaining term. The values of the above- and below-market leases are amortized to rental revenues over the remaining term of the related leases.
The fair values of in-place leases and origination costs are determined based on the estimates of carrying costs during the expected lease-up periods and costs that would be incurred to put the existing leases in place under the same market terms and conditions.
In the event a tenant terminates its lease, the unamortized portion of the related intangible values is written off immediately.
8
Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the asset:
Asset |
Estimated useful lives |
Buildings and improvements |
|
Site improvements |
|
Tenant improvements |
|
In-place leases and origination costs |
|
Leasing fees |
|
Above- and below-market leases |
Repairs and maintenance are charged to operations as incurred; major renewals and betterments that extend the useful life or improve the operating capacity of the asset are capitalized.
Assets Held for Sale
The Company classifies assets held for sale when all of the following criteria are met: (1) management commits to a plan to sell the property, (2) the property is available for immediate sale in its present condition, subject only to terms that are usual and customary for sale of real estate properties, (3) an active program to locate a buyer and conduct other actions required to complete the sale has been initiated, (4) the sale of the property is probable and is expected to qualify as a completed sale, (5) the property is actively marketed for sale at a price that is reasonable in relation to its fair value, and (6) actions required to complete the sale indicate that it is unlikely that any significant changes will be made or that the plan to sell will be withdrawn.
For properties classified as held for sale, the Company suspends depreciation and amortization of the real estate properties, including the related intangible lease assets and liabilities, as well as straight-line revenue recognition of the associated lease. Properties held for sale are carried as the lower of cost or fair value, less estimated selling costs. If the estimated fair value less selling costs is lower than the carrying value, the difference will be recorded as an impairment on assets held for sale in the condensed consolidated statements of operations and comprehensive loss. As of March 31, 2025 and December 31, 2024, there were
Impairment of Long-lived Assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The net recoverable amount represents the undiscounted estimated future cash flow expected to be earned from the long-lived asset. In the case of real estate, the undiscounted estimated future cash flows are based on expected cash flows from the use and eventual disposition of the property. The review of anticipated cash flows involves subjective assumptions of estimated occupancy, rental rates and residual value. If such impairment is present, an impairment loss is recognized based on the excess of the carrying amount of the asset over its fair value.
All investments in real estate are subject to elements of risk and are affected by, but not limited to, the general prevailing economic conditions, local real estate markets, supply and demand for leased premises, competition and governmental laws and other requirements.
During the three months ended March 31, 2025 and March 31, 2024, the Company recorded
Revenue Recognition and Accounts Receivable
The Company accounts for leases in accordance with ASC 842, Leases ("ASC 842"). For property related contracts that contain leases, revenue is recognized when the lessee takes possession of or controls the physical use of the leased assets. At the time of lease assumption or inception of a new lease, including new leases that arise from amendments, the Company assesses the terms and conditions of the lease to determine the property lease classification.
9
A lease is classified as an operating lease if none of the following criteria are met: (i) ownership transfers to the lessee at the end of the lease term, (ii) the lessee has a purchase option that is reasonably expected to be exercised, (iii) the lease term is for a major part of the economic life of the leased property, (iv) the present value of the future lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all of the fair value of the leased property, and (v) the leased property is of such a specialized nature that it is expected to have no future alternative use to the Company at the end of the lease term. If one or more of these criteria are met, the lease will generally be classified as a sales-type lease, unless the lease contains a residual value guarantee from a third party other than the lessee, in which case, it would be classified as a direct financing lease under certain circumstances.
As of March 31, 2025 and December 31, 2024, all of the Company's leases with tenants are accounted for as operating leases. Minimum rents are recognized on a straight-line basis over the term of the respective leases and reasonably certain renewal periods. The difference between rental revenue recognized and the cash rent due under the provisions of the lease is recorded as deferred rent receivable and included as a component of other assets in the condensed consolidated balance sheets. If the Company determines that collectability of the lease payments is not probable, the Company records an adjustment to rental revenues to reduce the outstanding receivables where collectability is not probable including deferred rent receivables. Future revenue recognized is limited to amounts paid by the lessee.
The Company's property leases have been classified as operating leases and some have scheduled rent increases throughout the lease term. The Company's leases typically provide the tenant with one or more multi-year renewal options to extend their leases, subject to generally the same terms and conditions, including rent increases, consistent with the initial lease term.
Variable rental amounts include rent increases that are based on changes in the Consumer Price Index (“CPI”), percentage rent or lease terminations. Variable rental amounts are not recognized until the specific events that trigger the variable payments have occurred.
For the three months ended March 31, 2025, and March 31, 2024, the Company had
In accordance with ASC 842, provisions for uncollectible rent are recorded as an offset to rental revenues in the accompanying condensed consolidated statements of operations and comprehensive loss.
Cash and Cash Equivalents
Cash and cash equivalents comprise amounts held in operating bank and money market accounts.
Financing Transaction and Discount Costs
Financing transaction costs incurred in connection with obtaining debt are deferred and amortized over the term of the related debt. For any debt acquired at a discount, where the fair value of debt is less than the carrying amount, the fair value discount is amortized over the term of the related debt using the effective interest method. The amortization of financing transaction costs and fair value discount is charged to interest expense on the accompanying condensed consolidated statements of operations and comprehensive loss. The unamortized balance of deferred financing transaction costs associated with the revolving credit facility and term loan are reported within other assets and debt, net, respectively, in the condensed consolidated balance sheets.
Derivative Instruments
The Company uses derivative instruments to manage exposure to interest rates. The Company does not enter into derivatives for trading or speculative purposes.
All derivatives are recognized at fair value on the Company’s condensed consolidated balance sheets. The accounting for gains and losses resulting from changes in fair value depends on the use of the derivative and whether it is designated and qualifies for hedge accounting. The Company formally documents the relationship of the hedge with the hedged item as well as the risk-management strategy for all designated hedges. Both at inception and on an ongoing basis, the hedging instrument is assessed as to its effectiveness, when applicable. If and when a derivative is determined not to be highly effective as a hedge, the underlying hedged transaction is no longer likely to occur, or the derivative is terminated, hedge accounting is discontinued.
The Company is subject to the credit risk of the counterparties to derivative instruments. Counterparties include a number of major banks and financial institutions. The Company manages individual counterparty exposure by monitoring the credit rating of the counterparty and the size of financial commitments and exposures between the Company and the counterparty.
10
Certain interest rate swap agreements are qualified and designated as cash flow hedges. The effective portion of the fair value unrealized gain or loss on cash flow hedges is reported as a component of Accumulated other comprehensive income ("AOCI") with offsetting amounts recorded in the Company’s condensed consolidated balance sheets depending on the position and the duration of the contract. The gain or loss on the derivative instrument due to the change in fair value is reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. If a derivative is deemed to be ineffective, the change in fair value of the derivative is recognized directly in earnings.
Initial Public Offering Costs
Prior to the close of the IPO on October 3, 2024, the Predecessor incurred and capitalized certain direct, incremental legal, professional, accounting and other third-party fees in connection with the IPO. The deferred IPO costs were offset against IPO proceeds, and reclassified as a component of additional paid-in capital on the condensed consolidated balance sheets and condensed consolidated statements of equity upon consummation of the offering.
Non-Controlling Interests
Non-controlling interests represent the interests held in the OP of
The Company periodically adjusts the carrying value of non-controlling interests to reflect their share of the book value of the OP. Such adjustments are recorded to additional paid-in capital as a reallocation of non-controlling interests in the condensed consolidated statements of equity.
The OP units may be redeemed at the option of the holder or through certain change of control transactions and liquidation events. Approval of the Company’s Board of Directors would be required to effect any change in control transaction or liquidation event and the Company has the right to reject any redemption request received from OP unitholders. Additionally, the Company has the right to settle any approved redemption request of OP units through the issuance of Common Stock or cash, at the option of the Company. Therefore, the OP units are classified within permanent equity. The redemption value of OP units are calculated based on the market value of the Company’s Common Stock or the approved tender offer in the event of a change of control transaction.
Stock-Based Compensation
The Company has issued restricted stock units ("RSUs") under its 2024 Omnibus Equity and Incentive Plan (“Equity and Incentive Plan”). The Company accounts for stock-based incentives in accordance with ASC 718, Compensation - Stock Compensation, which requires that such compensation expense be recognized based on the awards estimated grant date fair value. The value of such awards is recognized as compensation expense in general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss over the appropriate vesting period on a straight-line basis or at the cumulative amount vested at each balance sheet date, if greater. The Company records forfeitures during the period in which they occur by reversing all previously recorded stock compensation expense associated with the forfeited shares. Dividends declared on RSUs issued under the Equity and Incentive Plan are recorded as cumulative distributions in excess of retained earnings in the condensed consolidated balance sheets.
Income Taxes
The Company has elected to be treated as a REIT under Sections 856 to 860 of the Internal Revenue Code of 1986, as amended (the “Code”) and expects to continue to qualify as a REIT. To qualify as a REIT, the Company is subject to various requirements including that it generally must distribute at least
For the three months ended March 31, 2025 and March 31, 2024, the Company has distributed
11
The Company is subject to state and local income or franchise taxes in certain jurisdictions in which some of its properties are located and records these within income taxes in the accompanying condensed consolidated statements of operations and comprehensive loss.
Taxable income from certain non-REIT activities is managed through a taxable REIT subsidiary (“TRS”) and is subject to applicable federal, state, and local income and margin taxes. The Company had no significant taxes associated with its TRS for the three months ended March 31, 2025 and March 31, 2024.
The Company and certain of its subsidiaries (including the Predecessor) are required to file income tax returns with U.S. federal and state taxing authorities. As of March 31, 2025, the Company’s U.S. federal and state income tax returns remain subject to examination by the respective taxing authorities for the tax years, and the Predecessor’s U.S. U.S. federal and state income tax returns remain subject to examination by the respective taxing authorities for the 2021 through 2024 tax years.
Earnings Per Share
Earnings per common share have been computed pursuant to the guidance in ASC 260, Earnings Per Share, which requires the classification of the Company’s unvested shares of restricted Common Stock, which contain rights to receive non-forfeitable dividends as participating securities requiring the two-class method of computing earnings per share. The two-class method is an earnings allocation formula that determines earnings per share for each class of Common Stock and participating securities according to dividends declared (or accumulated) and participation rights in undistributed earnings. In accordance with the two-class method, the Company's calculation of earnings per share excludes the income attributable to unvested shares of restricted Common Stock from the numerator of the calculation and the weighted average shares of Common Stock and potentially dilutive securities in accordance with the treasury stock method and /or if converted method.
Concentration of Credit Risk
Credit risk arises from the potential that a counterparty will fail to perform its obligations. The Company is not exposed to significant credit risk as the Company maintains a number of diverse tenants which mitigates the credit risk.
Segment Reporting
The Company currently operates in a reportable segment, which includes the acquisition, leasing and ownership of net leased properties. The Company's chief operating decision maker ("CODM") is the Company's executive management team, which consists of the . The CODM assesses, measures, and reviews the operating and financial results at the consolidated level for the entire portfolio, and therefore, each property or property type is not considered an individual operating segment. The Company does not evaluate the results of operations based on geography, size, or property type.
Fair Value Measurement
ASC 820 defines fair values as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. In instances, where the determination of the fair value measurement is based on inputs from more than one level of the fair value hierarchy, the entire fair value measurement is classified based on the lowest-level input.
The hierarchy is measured in three levels based on the reliability of inputs:
Level 1 – Quoted prices that are available in active markets for identical assets or liabilities.
Level 2 – Pricing inputs other than quoted prices in active markets, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
The fair value of the Company’s debt was estimated using recent secondary markets, recent financing transactions, estimates of the fair value of the property that serves as collateral for such debt, historical risk premiums for loans of comparable quality, current SOFR and discounted estimated future cash payments to be made on such debt. The discount rates estimated reflect the Company’s judgment as to the approximate current lending rates for loans with similar maturities and assumes that the debt is outstanding through maturity.
The Company measures the fair value of its interest rate swap agreements using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates derived from the observable market interest rate curves.
12
Level 3– Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
All of the Company's debt was entered into in the quarters ended March 31, 2025, and December 31, 2024, post IPO. Given all of the Company's debt accrues interest at a variable rate as of March 31, 2025 and December 31, 2024, the carrying amounts approximate fair value.
Subsequent Events
Recently Adopted Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting – Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires a public entity to disclose significant segment expenses and other segment items in interim and annual periods and expands the ASC 280 disclosure requirements for interim periods. The ASU also explicitly requires public entities with a single reportable segment to provide all segment disclosures under ASC 280, including the new disclosures under ASU 2023-07. The amendments in ASU 2023-07 were effective for the Company beginning January 1, 2024. The Company has one reportable segment and the required disclosure updates have been reflected in the Segment Reporting section elsewhere in Note 2.
In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” This ASU enhances expense disclosures on both an annual and interim basis by requiring public business entities to disclose additional information about specific expense categories in the notes to the condensed consolidated financial statements. This ASU requires public entities to disclose, in a tabular format, purchases of inventory, employee compensation, depreciation, intangible asset amortization and depletion, as applicable, for each income statement line item that contains those expenses. Specific expenses, gains and losses that are already disclosed under existing US GAAP are also required to be included in the disaggregated income statement expense line-item disclosures, and any remaining amounts will need to be described qualitatively. Additionally, the ASU requires disclosure of the total amount of selling expenses and the entity’s definition of selling expenses. This ASU is effective for fiscal years beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027. The Company is evaluating the impact of adopting this ASU.
3. REAL ESTATE HELD FOR INVESTMENT AND LEASE ARRANGEMENTS
The Company acquires, owns, and manages net-leased properties with frontage. The leases are generally net leases, where the tenants are generally responsible for the payment of real estate taxes, insurance premiums and maintenance costs related to the leased property. The leases have been classified as operating leases and generally provide for limited increases in rent as a result of fixed increases, increases in CPI, or increases in tenant’s sales volume.
As of March 31, 2025 and December 31, 2024, the Company had a portfolio of
During the three months ended March 31, 2025, the Company acquired
During the year ended December 31, 2024, the Company acquired
13
The acquisitions were all accounted for as asset acquisitions.
|
Successor |
|
Successor |
|
||
(in thousands) |
March 31, 2025 |
|
December 31, 2024 |
|
||
Land |
$ |
|
$ |
|
||
Buildings |
|
|
|
|
||
Site improvements |
|
|
|
|
||
Other assets |
|
|
|
|
||
Intangible assets: |
|
|
|
|
||
Above-market leases |
|
|
|
|
||
In-place leases and origination costs |
|
|
|
|
||
|
|
|
|
|
||
Liabilities assumed: |
|
|
|
|
||
Below-market leases intangible liabilities |
|
( |
) |
|
( |
) |
Accounts payable and accrued liabilities |
|
( |
) |
|
( |
) |
Purchase price (including acquisition costs) |
$ |
|
$ |
|
||
During the three months ended March 31, 2025, the Company sold
During the year ended December 31, 2024, the Company sold
The depreciation expense on real estate held for investment was as follows:
|
|
Successor |
|
|
Predecessor |
|
|
||
|
|
For the three months ended March 31, |
|
|
|||||
(in thousands) |
|
2025 |
|
|
2024 |
|
|
||
Depreciation |
|
$ |
|
|
$ |
|
|
||
The following table summarizes amounts reported as rental revenues on the accompanying condensed consolidated statements of operations and comprehensive loss:
|
|
Successor |
|
|
Predecessor |
|
|
||
|
|
For the three months ended March 31, |
|
|
|||||
(in thousands) |
|
2025 |
|
|
2024 |
|
|
||
Revenues: |
|
|
|
|
|
|
|
||
Contractual rental amounts billed |
|
$ |
|
|
$ |
|
|
||
Adjustment to recognize contractual rental amounts on a straight-line basis |
|
|
|
|
|
|
|
||
Variable rental amounts earned |
|
|
|
|
|
|
|
||
Above/below market lease amortization, net |
|
|
( |
) |
|
|
( |
) |
|
Other income |
|
|
|
|
|
|
|
||
Total rental revenues |
|
$ |
|
|
$ |
|
|
||
14
Total estimated future minimum rents to be received under non-cancelable tenant leases in effect as of March 31, 2025, are as follows:
(in thousands)
2025 (Remaining) |
|
$ |
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
|
|
$ |
|
Since lease renewal periods are exercisable at the option of the tenant, the above amounts only include future lease payments due during the initial lease terms. Such amounts exclude any potential variable rent increases that are based on changes in the CPI or future variable rents which may be received under the leases based on a percentage of the tenant’s gross sales.
4. INTANGIBLE ASSETS AND LIABILITIES
The following is a summary of intangible lease assets and liabilities and related accumulated amortization:
(in thousands) |
Cost |
|
|
Accumulated Amortization |
|
|
Net Book Value |
|
|||
Intangible lease assets: |
|
|
|
|
|
|
|
|
|||
In-place leases and origination costs |
$ |
|
|
$ |
|
|
$ |
|
|||
Above-market leases |
|
|
|
|
|
|
|
|
|||
Leasing fees |
|
|
|
|
|
|
|
|
|||
Total intangible lease assets |
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|||
Intangible lease liabilities: |
|
|
|
|
|
|
|
|
|||
Below-market leases |
$ |
|
|
$ |
|
|
$ |
|
|||
Total intangible lease liabilities |
$ |
|
|
$ |
|
|
$ |
|
|||
(in thousands) |
Cost |
|
|
Accumulated Amortization |
|
|
Net Book Value |
|
|||
Intangible lease assets: |
|
|
|
|
|
|
|
|
|||
In-place leases and origination costs |
$ |
|
|
$ |
|
|
$ |
|
|||
Above-market leases |
|
|
|
|
|
|
|
|
|||
Leasing fees |
|
|
|
|
|
|
|
|
|||
Total intangible lease assets |
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|||
Intangible lease liabilities: |
|
|
|
|
|
|
|
|
|||
Below-market leases |
$ |
|
|
$ |
|
|
$ |
|
|||
Total intangible lease liabilities |
$ |
|
|
$ |
|
|
$ |
|
|||
The amortization and net adjustment to rental revenue of intangible lease assets and liabilities was as follows:
|
Successor |
|
|
Predecessor |
|
||
|
For the three months ended March 31, |
|
|||||
(in thousands) |
2025 |
|
|
2024 |
|
||
Amortization: |
|
|
|
|
|
||
Amortization of in-place leases and leasing fees |
$ |
|
|
$ |
|
||
|
|
|
|
|
|
||
Net adjustment to rental revenue: |
|
|
|
|
|
||
Above-market and below-market leases |
$ |
|
|
$ |
|
||
15
The remaining weighted average amortization period for the Company’s intangible assets and liabilities as of March 31, 2025 and December 31, 2024 by category are as follows:
Years remaining as at |
|
March 31, 2025 |
|
|
December 31, 2024 |
|
|||
In-place leases and origination costs |
|
|
|
|
|
|
|
||
Leasing fees |
|
|
|
|
|
|
|||
Above-market leases |
|
|
|
|
|
|
|||
Below-market leases |
|
|
|
|
|
|
|||
The estimated future amortization expense for intangible lease assets, net of intangible lease liabilities, are as follows:
(in thousands)
2025 (Remaining) |
|
|
|
|
$ |
|
|
2026 |
|
|
|
|
|
|
|
2027 |
|
|
|
|
|
|
|
2028 |
|
|
|
|
|
|
|
2029 |
|
|
|
|
|
|
|
2030 |
|
|
|
|
|
|
|
Thereafter |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
5. DEBT, NET
|
|
As of March 31, 2025 |
|
|||||||
(in thousands, except interest rate) |
|
Note |
|
Maturity |
|
Interest Rate |
|
|
|
|
Revolving Credit Facility |
|
(a) |
|
|
|
$ |
|
|||
Term Loan |
|
(b) |
|
|
|
|
|
|||
Unamortized financing transaction, Term Loan |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
$ |
|
|
* The approximate SOFR rate at March 31, 2025 was
|
|
As of December 31, 2024 |
|
|||||||
(in thousands, except interest rate) |
|
Note |
|
Maturity |
|
Interest Rate |
|
|
|
|
Revolving Credit Facility |
|
(a) |
|
|
|
$ |
|
|||
Term Loan |
|
(b) |
|
|
|
|
|
|||
Unamortized financing transaction costs, Term Loan |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
$ |
|
|
** The approximate SOFR rate at December 31, 2024 was
As of March 31, 2025 and December 31, 2024, the weighted average interest rate was
The aggregate principal repayment of the Company’s debt, excluding the unamortized financing transaction costs of $
(in thousands)
2025 (remaining) |
|
$ |
— |
|
2026 |
|
|
— |
|
2027 |
|
|
|
|
|
|
$ |
|
16
On October 3, 2024, the Company entered into a credit facility agreement with JPMorgan Chase Bank, N.A., which provides for an unsecured revolving line of credit of $
On October 3, 2024, the Company entered into a Term Loan Agreement ("Term Loan") with JPMorgan Chase Bank N.A. as administrative agent that provided commitments for an unsecured Term Loan, allowing borrowings of up to $
Debt Covenants
The Company is subject to various financial and operational covenants and financial reporting requirements pursuant to its Revolving Credit Facility and Term Loan agreements. These covenants require the Company to maintain certain financial ratios. As of March 31, 2025 and December 31, 2024, the Company believes it was in compliance with all of its loan covenants. If a default or event of default exists, either through default on payments or breach of covenants, we may be restricted from paying dividends to our stockholders in excess of dividends required to maintain our REIT qualification.
6. INTEREST RATE SWAPS
The Company uses derivative instruments to manage exposures to interest rates arising in connection with its outstanding debt arrangements. The Company has established policies and procedures that govern the risk management of these exposures. Both at inception and on an ongoing basis, the derivative instruments that qualify for hedge accounting are assessed as to their effectiveness, when applicable.
The Company is subject to the credit risk of counterparties to derivative instruments. Counterparties include a number of major banks and financial institutions. None of the concentrations of risk with an individual counterparty was considered significant as of March 31, 2025. The Company does not expect any counterparties to fail to meet their obligations. The Company records derivatives in the condensed consolidated balance sheets at fair value.
Cash Flow Hedge
On March 3, 2025, the Company entered into interest rate swap agreements to manage interest rate risk exposure on the Term Loan. The aggregate notional amount of these contracts is $
The above interest rate swap agreements are designated and qualify as a cash flow hedge and as such, the gain or loss on the derivative instruments due to the change in fair value is reported as a component of AOCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. If a derivative is deemed to be ineffective, the change in fair value of the derivative is recognized directly in earnings. The Company did not have any ineffectiveness related to cash flow hedges during the three months ended March 31, 2025.
The cash inflows and outflows associated with the Company’s interest rate swap agreements designated as cash flow hedges are classified in cash flows from operating activities in the accompanying condensed consolidated statements of cash flows.
17
The Company expects a gain of $
The effects of designated cash flow hedges on the Company’s condensed consolidated statements of operations and comprehensive loss consisted of the following:
|
|
|
|
|
Reclassification from Accumulated Other Comprehensive Loss |
|
|
|
|
|||||
(in thousands) |
|
Amount of Loss Recognized in Accumulated Other Comprehensive Loss |
|
|
Location |
|
Amount of Gain |
|
|
Total Interest Expense Presented in the Condensed Consolidated Statements of Operations and Comprehensive Loss |
|
|||
2025 |
|
$ |
|
|
|
$ |
— |
|
|
$ |
|
|||
The table below shows the fair value and location of the derivatives recognized in the Company’s condensed consolidated balance sheets:
|
|
March 31, 2025 |
|
|
(in thousands) |
|
Accounts payable and accrued liabilities |
|
|
Interest rate swap agreement |
|
$ |
|
|
Total |
|
$ |
|
|
7. EQUITY
On October 3, 2024, the Company completed its IPO and issued
Pursuant to the Company's Articles of Incorporation (the “Charter”), the Company is authorized to issue an aggregate of
On November 12, 2024, the Board of Directors declared a quarterly dividend of $
On March 18, 2025, the Board of Directors declared a quarterly dividend of $
8. NON-CONTROLLING INTERESTS
In connection with the REIT contribution transactions and Internalization, non-controlling interests are comprised of the Predecessor's common units, the convertible non-controlling preferred interests (Sub OP Preferred Units), OP units issued in the Internalization (See Note 9), and Preferred Units.
The OP Units are economically equivalent to the Company's Common Stock and, subject to certain restrictions, are redeemable into the Company's Common Stock at the option of the respective unit holders on a one-for-one basis. Holders of the OP Units do not have voting rights in the Company. The OP Units are redeemable at the option of the holder, in which case however, the Company may issue Common Stock or cash, at the Company’s election. Therefore, the OP Units are considered to be permanent equity. Redemption
18
of OP Units held by non-controlling interest holders are recorded by reducing non-controlling interest at historical cost basis with a corresponding increase in Common Stock and additional paid-in capital.
For the three months ended March 31, 2025, there were
9. INTERNALIZATION
On October 2, 2024, the Company completed the Internalization and the Company's management team and corporate staff, who were previously employed by NARS, became employees of a subsidiary of the OP. The management and other fees in the Predecessor's Sub OP agreement were terminated, and the Company acquired the assets necessary to operate and manage the portfolio of properties. The purchase price of the Internalization was
(a) Termination of the management arrangement of $
(b) Assembled work force of $
(c) Right-of-use lease asset and liability of an operating lease of office space of $
During the three months ended March 31, 2025, the Company recorded amortization of the assembled work force of $
10. STOCK-BASED COMPENSATION
The Company granted one-time RSUs on October 2, 2024 and annual RSUs on March 31, 2025. The total amount of stock-based compensation expense recognized in general and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive loss was $
One-time grant of RSUs
Pursuant to the Equity and Incentive Plan, the Company made one-time grant of service-based RSUs on October 2, 2024 to certain employees and non-employee directors. The RSUs have no rights as a common stockholder, but have dividend equivalent rights equal to the cash dividends paid with respect to the corresponding number of common shares to be issued in respect of the RSUs. The vesting terms of these grants are specific to the individual grant, with a maximum term of
Annual grant of RSUs
Pursuant to the Equity and Incentive Plan, the Company has made annual grant of service-based RSUs on March 31, 2025 to certain employees. The RSUs have no rights as a common stockholder, but have dividend equivalent rights equal to the cash dividends paid with respect to the corresponding number of common shares to be issued in respect of the RSUs. The vesting terms of these grants are specific to the individual grant, with a maximum term of
19
The following table presents information about the Company's RSU activity during the three months ended March 31, 2025:
|
|
March 31, 2025 |
|
|||||
(in thousands, except per share amounts) |
|
Number of Shares |
|
|
Weighted Average Grant Date Fair Value per Share |
|
||
Unvested RSU grants outstanding at beginning of period |
|
|
|
|
$ |
19.00 |
|
|
Granted during the period |
|
|
|
|
|
13.41 |
|
|
Vested during the period |
|
|
|
|
|
— |
|
|
Forfeited during the period |
|
|
|
|
|
— |
|
|
Unvested RSU grants outstanding at end of period |
|
|
|
|
$ |
16.82 |
|
|
11. EARNINGS PER SHARE
The following table summarizes the components used in the calculation of basic and diluted earnings per share ("EPS"):
(in thousands, except per share amounts) |
Three months ended March 31, 2025 |
|
|
|
Basic earnings: |
|
|
|
|
Net loss attributable to FrontView REIT, Inc. common |
$ |
( |
) |
|
Less: loss allocated to participating unvested restricted stock units |
|
( |
) |
|
Net loss used to compute basic earnings per common share |
$ |
( |
) |
|
|
|
|
|
|
Diluted earnings: |
|
|
|
|
Net loss used to compute basic earnings per common share |
$ |
( |
) |
|
Add: net loss attributable to non-controlling interests |
|
( |
) |
|
Net earnings used to compute diluted earnings per common share |
$ |
( |
) |
|
|
|
|
|
|
Weighted average number of common shares outstanding |
|
|
|
|
Less: weighted average unvested restricted stock units (1) |
|
( |
) |
|
Weighted average number of common shares outstanding used in |
|
|
|
|
Add: effects of convertible OP Units (2) |
|
|
|
|
Weighted average number of common shares outstanding used in |
|
|
|
|
|
|
|
|
|
Basic and Diluted earnings per share |
$ |
( |
) |
|
12. OTHER ASSETS
|
|
Successor |
|
|
Successor |
|
||
(in thousands) |
|
March 31, 2025 |
|
|
December 31, 2024 |
|
||
Accounts receivable, net |
|
$ |
|
|
$ |
|
||
Deferred rent receivables |
|
|
|
|
|
|
||
Deferred financing transaction costs, net |
|
|
|
|
|
|
||
Prepaid expenses and other assets |
|
|
|
|
|
|
||
Total other assets |
|
$ |
|
|
$ |
|
||
13. RELATED PARTY TRANSACTIONS
20
Predecessor transactions
Related parties consist of the Predecessor’s general partner, their employees, officers, directors and parties related to them and entities under their control. In addition to disclosures elsewhere in these condensed consolidated financial statements:
Successor transactions
14. CONTINGENCIES
Litigation
From time to time, the Company is a party to various litigation matters incidental to the conduct of the Company’s business. While the resolution of such matters cannot be predicted with certainty, based on currently available information, the Company does not believe that the final outcome of any of these matters will have a material effect on its condensed consolidated balance sheets, condensed consolidated statements of operations and comprehensive loss or liquidity.
Environmental matters
As an owner of real estate property, the Company is subject to various U.S. federal, state and municipal laws related to environmental matters. These laws could hold the Company liable for the costs of removal and remediation of certain hazardous substances or wastes released or deposited on or in its properties or disposed of at other locations. The failure to remove or remediate such substances, if any, could adversely affect the Company’s ability to sell its real estate or to borrow using real estate as collateral and could potentially result in claims or other proceedings against the Company. The Company engages third party consultants to review the environmental condition of such property as part of its due diligence review prior to acquisition and is not aware of any material non-compliance with environmental laws at any of its properties.
Property and acquisition related
In the normal course of business, the Company enters into various types of commitments to purchase real estate properties or fund development projects. These commitments are generally subject to the Company’s customary due diligence process and, accordingly, a number of specific conditions must be met before the Company is obligated to purchase the properties.
As of March 31, 2025, the Company did not have any material commitments that could not be funded for re-leasing costs, recurring capital expenditures, non-recurring building improvements, or similar types of costs.
15. SUBSEQUENT EVENTS
The Company identified the following events subsequent to March 31, 2025 that are not recognized in the accompanying condensed consolidated financial statements:
21
22
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand our results of operations and financial condition. This MD&A is provided as a supplement to, and should be read in conjunction with, our Condensed Consolidated Financial Statements and the accompanying Notes to the Condensed Consolidated Financial Statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Explanatory Note and Certain Defined Terms
Unless the context otherwise requires, the following terms and phrases are used throughout this MD&A as described below:
Overview
We are an internally-managed net-lease REIT that is experienced in acquiring, owning and managing properties that are net leased to a diversified group of tenants. We are a growing net-lease REIT and own a well-diversified portfolio of 323 properties with frontage across 37 U.S. states as of March 31, 2025. Our tenants include service-oriented businesses, such as restaurants, cellular stores, financial institutions, automotive stores and dealers, medical and dental providers, convenience and gas stores, pharmacies, car washes, home improvement stores, grocery stores, fitness operators, professional services as well as general retail tenants.
23
We currently derive a majority of our revenue from rents received from individual tenants of each of our properties in our portfolio. Our properties are typically leased under long-term net leases. As of March 31, 2025, the ABR weighted average remaining term of our leases was approximately 7.4 years, excluding renewal options. Approximately 97.9% of our leases (based on ABR) had contractual rent escalations, including, in some cases, pursuant to option terms. As of March 31, 2025, we had 329 tenants that represented 151 different brands. Our top 10 tenant brands (based on ABR) represented approximately 22.6% of our portfolio ABR as of March 31, 2025.
In connection with our initial public offering on October 2, 2024, we completed the Internalization pursuant to which we began directly employing 15 employees and entered into employment agreements with each of our named executive officers. In addition, the Internalization eliminated the management and other fees and carried interest provisions that were previously paid by our predecessor. The historical results of operations for our predecessor through October 2, 2024, include the payment of management fees that we no longer pay following the Internalization and do not include the direct compensation expense associated with our aforementioned approximately 15 employees, or other asset management, acquisition or general and administrative expenses not previously incurred based upon our externally managed structure.
As of March 31, 2025, we had total debt of $312.0 million, Net Debt of $308.7 million and a Net Debt to Annualized Adjusted EBITDAre ratio of 5.7x. Over time we plan to target a net debt to annualized adjusted EBITDAre ratio below 6.0x on a sustained basis. Net Debt and Annualized Adjusted EBITDAre are non-GAAP financial measures, and Annualized Adjusted EBITDAre is calculated based upon EBITDA, EBITDAre, and Adjusted EBITDAre, each of which is also a non-GAAP financial measure. Refer to Non-GAAP Measures below for further details concerning our calculation of non-GAAP measures and reconciliations to the comparable GAAP measure.
Our Real Estate Investment Portfolio
To achieve an appropriate risk-adjusted return, we intend to maintain a highly-diversified portfolio of properties that are in prominent locations with direct frontage on high-traffic roads that are highly visible to consumers and maintain diversity across geographic locations, tenants, and brands and that have cross-diversification within each. We discuss below our portfolio diversification based on several different metrics and information provided as of March 31, 2025.
Diversification by Tenant Brand
We primarily seek tenants that operate service-oriented businesses, such as restaurants, cellular stores, financial institutions, automotive stores and dealers, medical and dental providers, convenience and gas stores, pharmacies, car washes, home improvement stores, grocery stores, fitness operators, professional services as well as general retail tenants. As of March 31, 2025, our properties were occupied by 329 tenants that operated 151 different brands, with no single tenant brand accounting for more than 3.1% of our ABR.
24
The following table sets forth information with respect to each of our top 40 tenant brands (based on ABR) as of March 31, 2025:
(in thousands, except for percentages and # of Properties)
Tenant Brand |
|
# of Properties(1) |
|
|
Square Feet |
|
|
ABR |
|
|
% of ABR |
|
|
% of Square Feet |
|
|||||
Dollar Tree |
|
|
12 |
|
|
|
135 |
|
|
$ |
1,927 |
|
|
|
3.1 |
% |
|
|
5.2 |
% |
Fast Pace Urgent Care |
|
|
8 |
|
|
|
29 |
|
|
|
1,727 |
|
|
|
2.8 |
% |
|
|
1.1 |
% |
Verizon |
|
|
8 |
|
|
|
35 |
|
|
|
1,650 |
|
|
|
2.7 |
% |
|
|
1.4 |
% |
Adams Auto Group |
|
|
3 |
|
|
|
29 |
|
|
|
1,412 |
|
|
|
2.3 |
% |
|
|
1.2 |
% |
Oak Street Health |
|
|
5.5 |
|
|
|
66 |
|
|
|
1,317 |
|
|
|
2.1 |
% |
|
|
2.6 |
% |
IHOP |
|
|
6 |
|
|
|
33 |
|
|
|
1,226 |
|
|
|
2.0 |
% |
|
|
1.3 |
% |
Mammoth Car Wash |
|
|
6 |
|
|
|
22 |
|
|
|
1,205 |
|
|
|
1.9 |
% |
|
|
0.9 |
% |
Raising Canes |
|
|
6 |
|
|
|
21 |
|
|
|
1,201 |
|
|
|
1.9 |
% |
|
|
0.8 |
% |
Bank of America |
|
|
5 |
|
|
|
26 |
|
|
|
1,195 |
|
|
|
1.9 |
% |
|
|
1.0 |
% |
LA-Z-Boy |
|
|
3 |
|
|
|
54 |
|
|
|
1,152 |
|
|
|
1.9 |
% |
|
|
2.1 |
% |
CVS |
|
|
4 |
|
|
|
42 |
|
|
|
1,081 |
|
|
|
1.7 |
% |
|
|
1.6 |
% |
AT&T |
|
|
4 |
|
|
|
24 |
|
|
|
1,063 |
|
|
|
1.7 |
% |
|
|
0.9 |
% |
T-Mobile |
|
|
7.5 |
|
|
|
26 |
|
|
|
1,030 |
|
|
|
1.7 |
% |
|
|
1.0 |
% |
Chili's |
|
|
3 |
|
|
|
18 |
|
|
|
973 |
|
|
|
1.6 |
% |
|
|
0.7 |
% |
Wendy's |
|
|
7 |
|
|
|
21 |
|
|
|
942 |
|
|
|
1.5 |
% |
|
|
0.8 |
% |
PNC Bank |
|
|
5 |
|
|
|
29 |
|
|
|
935 |
|
|
|
1.5 |
% |
|
|
1.1 |
% |
Wells Fargo |
|
|
2.5 |
|
|
|
13 |
|
|
|
871 |
|
|
|
1.4 |
% |
|
|
0.5 |
% |
Advance Auto Parts |
|
|
7 |
|
|
|
66 |
|
|
|
857 |
|
|
|
1.4 |
% |
|
|
2.6 |
% |
Walgreens |
|
|
3 |
|
|
|
38 |
|
|
|
854 |
|
|
|
1.4 |
% |
|
|
1.5 |
% |
St. Joseph Hospice |
|
|
2 |
|
|
|
37 |
|
|
|
849 |
|
|
|
1.4 |
% |
|
|
1.4 |
% |
Heartland Dental |
|
|
5 |
|
|
|
20 |
|
|
|
809 |
|
|
|
1.3 |
% |
|
|
0.8 |
% |
Burger King |
|
|
5 |
|
|
|
20 |
|
|
|
765 |
|
|
|
1.2 |
% |
|
|
0.8 |
% |
Lowe's Home Improvement |
|
|
1 |
|
|
|
168 |
|
|
|
750 |
|
|
|
1.2 |
% |
|
|
6.6 |
% |
VASA Fitness |
|
|
0.5 |
|
|
|
50 |
|
|
|
704 |
|
|
|
1.1 |
% |
|
|
2.0 |
% |
Charles Schwab |
|
|
1 |
|
|
|
9 |
|
|
|
696 |
|
|
|
1.1 |
% |
|
|
0.4 |
% |
Aspen Dental |
|
|
4.5 |
|
|
|
20 |
|
|
|
679 |
|
|
|
1.1 |
% |
|
|
0.8 |
% |
Parachute Plasma |
|
|
2 |
|
|
|
14 |
|
|
|
664 |
|
|
|
1.1 |
% |
|
|
0.5 |
% |
WSS |
|
|
2 |
|
|
|
25 |
|
|
|
649 |
|
|
|
1.0 |
% |
|
|
1.0 |
% |
Wellnow |
|
|
4 |
|
|
|
15 |
|
|
|
635 |
|
|
|
1.0 |
% |
|
|
0.6 |
% |
Walmart |
|
|
1 |
|
|
|
212 |
|
|
|
632 |
|
|
|
1.0 |
% |
|
|
8.3 |
% |
Best Buy |
|
|
1 |
|
|
|
45 |
|
|
|
613 |
|
|
|
1.0 |
% |
|
|
1.8 |
% |
Andy's Frozen Custard |
|
|
4 |
|
|
|
8 |
|
|
|
610 |
|
|
|
1.0 |
% |
|
|
0.3 |
% |
Edge Fitness |
|
|
1 |
|
|
|
53 |
|
|
|
605 |
|
|
|
1.0 |
% |
|
|
2.1 |
% |
Chase Bank |
|
|
2.5 |
|
|
|
13 |
|
|
|
604 |
|
|
|
1.0 |
% |
|
|
0.5 |
% |
Floor & Decor |
|
|
1 |
|
|
|
80 |
|
|
|
600 |
|
|
|
1.0 |
% |
|
|
3.1 |
% |
LA Fitness |
|
|
2 |
|
|
|
34 |
|
|
|
600 |
|
|
|
1.0 |
% |
|
|
1.3 |
% |
Applebee's |
|
|
3 |
|
|
|
15 |
|
|
|
574 |
|
|
|
0.9 |
% |
|
|
0.6 |
% |
Stop & Shop Gas |
|
|
3 |
|
|
|
0 |
|
|
|
563 |
|
|
|
0.9 |
% |
|
|
0.0 |
% |
Buffalo Wild Wings |
|
|
2 |
|
|
|
12 |
|
|
|
560 |
|
|
|
0.9 |
% |
|
|
0.5 |
% |
7-Eleven |
|
|
4 |
|
|
|
11 |
|
|
|
545 |
|
|
|
0.9 |
% |
|
|
0.4 |
% |
Other |
|
|
166 |
|
|
|
972 |
|
|
|
25,733 |
|
|
|
41.4 |
% |
|
|
37.9 |
% |
Total |
|
|
323 |
|
|
|
2,560 |
|
|
$ |
62,057 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
(1) |
Includes two-tenant properties. |
25
Diversification by Tenant Industry
The following chart shows a breakdown of our ABR by the tenant industries that comprised our portfolio as of March 31, 2025:
Industry Pie Chart
26
Diversification by Geography
As of March 31, 2025, our outparcel properties were located in 117 MSAs in 37 U.S. states, with no single state exceeding 14.2% of our ABR.
27
The following table sets forth information with respect to geographic diversification by state in our portfolio (based on ABR) as of March 31, 2025:
(in thousands, except for percentages and # of Properties)
State |
|
# of Properties(1) |
|
|
Square Feet |
|
|
ABR |
|
|
% of Square Feet |
|
|
% of ABR |
|
|||||
IL |
|
|
36 |
|
|
|
379 |
|
|
$ |
8,814 |
|
|
|
14.8 |
% |
|
|
14.2 |
% |
TX |
|
|
24 |
|
|
|
134 |
|
|
|
4,891 |
|
|
|
5.2 |
% |
|
|
7.9 |
% |
GA |
|
|
24 |
|
|
|
150 |
|
|
|
4,426 |
|
|
|
5.9 |
% |
|
|
7.1 |
% |
NC |
|
|
17 |
|
|
|
94 |
|
|
|
3,353 |
|
|
|
3.7 |
% |
|
|
5.4 |
% |
OH |
|
|
22 |
|
|
|
131 |
|
|
|
3,166 |
|
|
|
5.1 |
% |
|
|
5.1 |
% |
TN |
|
|
17 |
|
|
|
93 |
|
|
|
3,133 |
|
|
|
3.6 |
% |
|
|
5.0 |
% |
IN |
|
|
16 |
|
|
|
85 |
|
|
|
2,770 |
|
|
|
3.3 |
% |
|
|
4.5 |
% |
PA |
|
|
8 |
|
|
|
145 |
|
|
|
2,502 |
|
|
|
5.7 |
% |
|
|
4.1 |
% |
VA |
|
|
15 |
|
|
|
76 |
|
|
|
2,445 |
|
|
|
2.9 |
% |
|
|
3.9 |
% |
FL |
|
|
15 |
|
|
|
99 |
|
|
|
2,323 |
|
|
|
3.9 |
% |
|
|
3.7 |
% |
NY |
|
|
8 |
|
|
|
242 |
|
|
|
2,095 |
|
|
|
9.4 |
% |
|
|
3.4 |
% |
AL |
|
|
11 |
|
|
|
49 |
|
|
|
1,783 |
|
|
|
1.9 |
% |
|
|
2.9 |
% |
MO |
|
|
10 |
|
|
|
60 |
|
|
|
1,714 |
|
|
|
2.3 |
% |
|
|
2.8 |
% |
SC |
|
|
10 |
|
|
|
73 |
|
|
|
1,588 |
|
|
|
2.9 |
% |
|
|
2.6 |
% |
NJ |
|
|
10 |
|
|
|
55 |
|
|
|
1,499 |
|
|
|
2.1 |
% |
|
|
2.4 |
% |
AZ |
|
|
7 |
|
|
|
43 |
|
|
|
1,490 |
|
|
|
1.6 |
% |
|
|
2.4 |
% |
MN |
|
|
7 |
|
|
|
72 |
|
|
|
1,445 |
|
|
|
2.8 |
% |
|
|
2.3 |
% |
OK |
|
|
9 |
|
|
|
48 |
|
|
|
1,416 |
|
|
|
1.8 |
% |
|
|
2.3 |
% |
MI |
|
|
8 |
|
|
|
49 |
|
|
|
1,408 |
|
|
|
1.9 |
% |
|
|
2.3 |
% |
MD |
|
|
7 |
|
|
|
50 |
|
|
|
1,406 |
|
|
|
2.0 |
% |
|
|
2.3 |
% |
LA |
|
|
4 |
|
|
|
47 |
|
|
|
1,210 |
|
|
|
1.8 |
% |
|
|
1.9 |
% |
KY |
|
|
8 |
|
|
|
40 |
|
|
|
1,067 |
|
|
|
1.6 |
% |
|
|
1.7 |
% |
ME |
|
|
3 |
|
|
|
186 |
|
|
|
1,062 |
|
|
|
7.3 |
% |
|
|
1.7 |
% |
KS |
|
|
6 |
|
|
|
41 |
|
|
|
1,058 |
|
|
|
1.6 |
% |
|
|
1.7 |
% |
CT |
|
|
3 |
|
|
|
9 |
|
|
|
610 |
|
|
|
0.4 |
% |
|
|
1.0 |
% |
CO |
|
|
3 |
|
|
|
13 |
|
|
|
469 |
|
|
|
0.5 |
% |
|
|
0.8 |
% |
ID |
|
|
1 |
|
|
|
6 |
|
|
|
424 |
|
|
|
0.2 |
% |
|
|
0.7 |
% |
MS |
|
|
2 |
|
|
|
13 |
|
|
|
417 |
|
|
|
0.5 |
% |
|
|
0.7 |
% |
UT |
|
|
2 |
|
|
|
22 |
|
|
|
340 |
|
|
|
0.9 |
% |
|
|
0.5 |
% |
NE |
|
|
2 |
|
|
|
20 |
|
|
|
325 |
|
|
|
0.8 |
% |
|
|
0.5 |
% |
WI |
|
|
2 |
|
|
|
15 |
|
|
|
310 |
|
|
|
0.6 |
% |
|
|
0.5 |
% |
NV |
|
|
1 |
|
|
|
4 |
|
|
|
259 |
|
|
|
0.2 |
% |
|
|
0.4 |
% |
AR |
|
|
1 |
|
|
|
3 |
|
|
|
218 |
|
|
|
0.1 |
% |
|
|
0.4 |
% |
RI |
|
|
1 |
|
|
|
1 |
|
|
|
182 |
|
|
|
0.1 |
% |
|
|
0.3 |
% |
SD |
|
|
1 |
|
|
|
10 |
|
|
|
155 |
|
|
|
0.4 |
% |
|
|
0.2 |
% |
MA |
|
|
1 |
|
|
|
2 |
|
|
|
143 |
|
|
|
0.1 |
% |
|
|
0.2 |
% |
WV |
|
|
1 |
|
|
|
1 |
|
|
|
141 |
|
|
|
0.1 |
% |
|
|
0.2 |
% |
Total |
|
|
323 |
|
|
|
2,560 |
|
|
$ |
62,057 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
(1) |
Includes two-tenant properties. |
Property Acquisitions
Our acquisitions team presents potential transactions to the Real Estate Investment Committee for approval. Subsequent to March 31, 2025, the board of directors approved revisions to the thresholds that the Real Estate Investment Committee is required to approve. The Real Estate Investment Committee is now responsible for approving (i) all acquisitions, (ii) the disposition of any single property greater than $5.0 million, and (iii) the disposition of properties in an aggregate amount up to $30.0 million in any one calendar quarter, in each case, prior to consulting with our board of directors. Further, the Real Estate Investment Committee is responsible for recommending that the full board of directors approve, (i) individual property acquisitions or dispositions that exceed $25.0 million in value, (ii) the acquisition
28
of properties that exceed an aggregate amount of $150.0 million in any one calendar quarter and (iii) disposition of properties that exceed an aggregate amount of $30.0 million in any one calendar quarter.
Our Leases
Lease Maturity
Our portfolio was approximately 96.3% leased as of March 31, 2025. Our cash flows from operations are primarily generated through our real estate investment portfolio and the monthly lease payments received under our long-term leases with our tenants. As of March 31, 2025, the ABR weighted average remaining term of our leases was approximately 7.4 years, excluding renewal options, and approximately 97.0% of such leases (based on ABR) have renewal options remaining. As of March 31, 2025, no more than 11.0% of our rental revenue was derived from leases that expire in any single year prior to 2030.
The following chart sets forth our annual lease expirations based upon the terms of our leases in place as of March 31, 2025 (percentages based on rental revenue):
Because substantially all of our properties are leased under long-term leases, we are not currently required to perform significant ongoing leasing activities on our properties. We have 6 leases, representing approximately 1.6% of our ABR, that will expire prior to December 31, 2025, each with tenant renewal options.
29
The following table presents our lease expirations by year as of March 31, 2025:
(in thousands, except for percentages)
Year |
|
ABR |
|
|
% of ABR |
|
|
Square Feet |
|
|
% of Square Feet |
|
||||
2025 |
|
$ |
1,025 |
|
|
|
1.6 |
% |
|
|
26 |
|
|
|
1.0 |
% |
2026 |
|
|
3,205 |
|
|
|
5.1 |
% |
|
|
108 |
|
|
|
4.2 |
% |
2027 |
|
|
6,877 |
|
|
|
11.0 |
% |
|
|
382 |
|
|
|
14.9 |
% |
2028 |
|
|
4,595 |
|
|
|
7.4 |
% |
|
|
159 |
|
|
|
6.2 |
% |
2029 |
|
|
6,376 |
|
|
|
10.3 |
% |
|
|
215 |
|
|
|
8.4 |
% |
2030 |
|
|
6,362 |
|
|
|
10.3 |
% |
|
|
199 |
|
|
|
7.8 |
% |
2031 |
|
|
4,459 |
|
|
|
7.2 |
% |
|
|
143 |
|
|
|
5.6 |
% |
2032 |
|
|
5,580 |
|
|
|
9.0 |
% |
|
|
423 |
|
|
|
16.5 |
% |
2033 |
|
|
2,764 |
|
|
|
4.5 |
% |
|
|
85 |
|
|
|
3.3 |
% |
2034 |
|
|
4,018 |
|
|
|
6.5 |
% |
|
|
155 |
|
|
|
6.1 |
% |
2035 |
|
|
1,580 |
|
|
|
2.5 |
% |
|
|
79 |
|
|
|
3.1 |
% |
2036 |
|
|
1,784 |
|
|
|
2.9 |
% |
|
|
49 |
|
|
|
1.9 |
% |
2037 |
|
|
2,786 |
|
|
|
4.5 |
% |
|
|
141 |
|
|
|
5.5 |
% |
2038 |
|
|
2,767 |
|
|
|
4.5 |
% |
|
|
164 |
|
|
|
6.4 |
% |
2039 |
|
|
2,647 |
|
|
|
4.3 |
% |
|
|
54 |
|
|
|
2.1 |
% |
Thereafter |
|
|
5,232 |
|
|
|
8.4 |
% |
|
|
151 |
|
|
|
5.9 |
% |
Untenanted Properties |
|
|
— |
|
|
|
— |
|
|
|
27 |
|
|
|
1.1 |
% |
Total |
|
$ |
62,057 |
|
|
|
100.0 |
% |
|
|
2,560 |
|
|
|
100.0 |
% |
We typically purchase properties that are subject to existing long-term net leases with a variety of remaining lease terms (initial terms of 10 years or more at lease signing that often have renewal options as well). Substantially all of our leases are net leases, meaning our tenant generally is obligated to pay customary expenses associated with the leased property (such as real estate taxes, insurance, maintenance and repairs, and in many cases, capital costs, subject to caps and exclusions in some leases). For the three months ended March 31, 2025, we incurred an aggregate of approximately $0.5 million of expenses not reimbursed or paid by our tenants.
Approximately 97.9% of our leases (based on ABR) have rent escalations, including in some cases, pursuant to option terms, and generally ranging from 1.0% to 3.0% annually.
The following chart breaks down the type of rent increase provided in our leases (based on ABR) as of March 31, 2025:
Lease Escalations
(1) |
Includes 10.8% of leases that have rent escalations during their renewal periods |
30
In general, when negotiating a new lease or an amendment to an existing lease in connection with an acquisition, redevelopment or new development, we seek to negotiate, among other things, relatively long lease terms and tenant renewal options; market rents; annual rent escalation provisions; landlord-favorable going dark, assignment, change of control provisions; limited or no exclusive or co-tenancy clauses that favor the tenant and obligations for certain tenants and certain guarantors to periodically provide us with financial information.
In the future, we may seek to use master lease structures where it fits market practice in the particular property type, pursuant to which we seek to lease multiple properties to an individual tenant on an all or none basis. In a master lease structure, a tenant is responsible for a single lease payment relating to the entire portfolio of leased properties, as opposed to multiple lease payments relating to individually leased properties. The master lease structure prevents a tenant from “cherry picking” locations, where it unilaterally gives up underperforming properties while maintaining its leasehold interest in well-performing properties.
Results of Operations
The following discussion includes the results of our operations for the periods presented.
Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024
|
|
Successor |
|
|
Predecessor |
|
|
|
|
|
|
|
|
||||
(unaudited, in thousands, except for percentages) |
|
2025 |
|
|
2024 |
|
|
$ |
|
|
% |
|
|
||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Rental revenues |
|
$ |
16,243 |
|
|
$ |
15,259 |
|
|
$ |
984 |
|
|
|
6 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
7,805 |
|
|
|
7,325 |
|
|
|
480 |
|
|
|
7 |
|
% |
Property operating expenses |
|
|
2,376 |
|
|
|
1,981 |
|
|
|
395 |
|
|
|
20 |
|
% |
Property management fees |
|
|
— |
|
|
|
510 |
|
|
|
(510 |
) |
|
|
(100 |
) |
% |
Asset management fees |
|
|
— |
|
|
|
1,034 |
|
|
|
(1,034 |
) |
|
|
(100 |
) |
% |
General and administrative expenses |
|
|
2,839 |
|
|
|
718 |
|
|
|
2,121 |
|
|
> 100 |
|
% |
|
Total operating expenses |
|
|
13,020 |
|
|
|
11,568 |
|
|
|
1,452 |
|
|
|
13 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other expenses (income) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
4,497 |
|
|
|
6,695 |
|
|
|
(2,198 |
) |
|
|
(33 |
) |
% |
Gain on sale of real estate |
|
|
(467 |
) |
|
|
(388 |
) |
|
|
(79 |
) |
|
|
20 |
|
% |
Impairment loss |
|
|
428 |
|
|
|
591 |
|
|
|
(163 |
) |
|
|
(28 |
) |
% |
Income taxes |
|
|
102 |
|
|
|
162 |
|
|
|
(60 |
) |
|
|
(37 |
) |
% |
Total other expenses |
|
|
4,560 |
|
|
|
7,060 |
|
|
|
(2,500 |
) |
|
|
(35 |
) |
% |
Net loss |
|
$ |
(1,337 |
) |
|
$ |
(3,369 |
) |
|
$ |
2,032 |
|
|
|
(60 |
) |
% |
Rental Revenues
|
|
Successor |
|
|
Predecessor |
|
|
|
|
|
|
|
|
||||
(unaudited, in thousands, except for percentages) |
|
2025 |
|
|
2024 |
|
|
$ |
|
|
% |
|
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Contractual rental amounts billed |
|
$ |
16,679 |
|
|
$ |
14,818 |
|
|
$ |
1,861 |
|
|
|
13 |
|
% |
Adjustment to recognize contractual rental amounts on a straight-line basis |
|
|
122 |
|
|
|
331 |
|
|
|
(209 |
) |
|
|
(63 |
) |
% |
Variable rental amounts earned |
|
|
55 |
|
|
|
443 |
|
|
|
(388 |
) |
|
|
(88 |
) |
% |
Above/below market lease amortization, net |
|
|
(711 |
) |
|
|
(439 |
) |
|
|
(272 |
) |
|
|
62 |
|
% |
Other income |
|
|
98 |
|
|
|
106 |
|
|
|
(8 |
) |
|
|
(8 |
) |
% |
Total rental revenues |
|
$ |
16,243 |
|
|
$ |
15,259 |
|
|
$ |
984 |
|
|
|
6 |
|
% |
The $1.0 million increase in total rental revenues for the three months ended March 31, 2025 was attributable to the growth of our real estate portfolio. During 2024, the portfolio increased by 29 acquisitions, offset by five properties sold. During the three months ended March 31, 2025, the portfolio further increased by 17 acquisitions, offset by one property sold.
The $0.4 million decrease in variable rental amounts earned was mainly due to lease termination fees received during the three months ended March 31, 2024.
31
Operating Expenses
Depreciation and amortization
The $0.5 million increase in depreciation and amortization for the three months ended March 31, 2025 was primarily due to the growth of our real estate portfolio through new acquisitions in the year ended December 31, 2024 and the three months ended March 31, 2025.
Property operating expenses
The $0.4 million increase in property operating expenses for the three months ended March 31, 2025 was mainly due to the increase in number of properties in our portfolio. Substantially all of our leases are net leases pursuant to which our tenants generally are obligated to pay customary expenses associated with the leased property such as real estate taxes, insurance, maintenance and repairs, and in many cases capital costs. For the three months ended March 31, 2025, we incurred $0.5 million in aggregate of expenses that were not tenant obligations, which includes non-recurring legal costs and property operating expenses incurred on vacant properties.
Property management and asset management fees
Property management and asset management fees for the three months ended March 31, 2024 were $0.5 million and $1.0 million, respectively. On October 2, 2024, the completion of the Internalization terminated the agreements for property management and asset management fees. Following the completion of the Internalization, we no longer pay property management and asset management fees.
General and administrative expenses
The $2.1 million increase in general and administrative expenses for the three months ended March 31, 2025 is primarily due to the Internalization of management. This increase was mainly comprised of $1.4 million of employee compensation, and $0.6 million for stock-based compensation incurred during the three months ended March 31, 2025.
Other expenses and income
Interest expense
Interest expense for the three months ended March 31, 2025 decreased $2.2 million compared to the three months ended March 31, 2024. The decrease is primarily due to the decrease in debt of $310.2 million as of March 31, 2025 compared to $427.8 million as of March 31, 2024.
Gain on sale of real estate
During the three months ended March 31, 2025, we sold one property and received proceeds for an expropriation of a portion of a property for approximately no net gain or loss and a net gain of approximately $0.5 million, respectively. During the three months ended March 31, 2024, we sold three properties at a net gain of approximately $0.4 million.
Impairment loss
The following table presents the impairment for the respective periods:
|
|
Successor |
|
|
Predecessor |
|
||
|
|
For the three months ended March 31, |
|
|||||
(unaudited, in thousands, except number of properties) |
|
2025 |
|
|
2024 |
|
||
Number of properties |
|
|
1 |
|
|
|
1 |
|
Carrying value prior to impairment loss |
|
$ |
6,504 |
|
|
$ |
1,961 |
|
Fair value |
|
|
6,076 |
|
|
|
1,370 |
|
Impairment loss |
|
$ |
428 |
|
|
$ |
591 |
|
During the three months ended March 31, 2025, we recorded an impairment loss of $0.4 million relating to an asset held for sale. During the three months ended March 31, 2024, we recorded an impairment loss of $0.6 million relating to an asset held for sale. The amount of impairment fluctuates each period based on existing facts and circumstances.
Liquidity and Capital Resources
Liquidity/REIT Requirements
32
Liquidity is a measure of our ability to meet potential cash requirements, including our ongoing commitments to repay debt, fund our operations, acquire properties, make distributions to our stockholders, and other general business needs. As a REIT, we are required to distribute to our stockholders at least 90% of our taxable income determined without regard to the dividends paid deduction and excluding net capital gain, on an annual basis. As a result, it is unlikely that we will be able to retain substantial cash balances to meet our liquidity needs from our annual taxable income. Instead, we expect to meet our liquidity needs primarily by relying upon external sources of capital, such as borrowings under our debt facilities or additional equity or preferred offerings or other capital raises, which would all be subject to a number of market and other factors in order to be successfully accessible.
Short-term Liquidity Requirements
Our short-term liquidity requirements consist primarily of funds necessary to pay for our operating expenses, including our general and administrative expenses as well as interest payments on our outstanding debt and to pay distributions. Since our portfolio has had a historically strong occupancy level and substantially all of our leases are net leases, we do not currently anticipate making significant capital expenditures or incurring other significant property operating costs (unless vacancies adjust beyond historical norms) that would materially adversely impact short-term financial liquidity. We expect to meet our short-term liquidity requirements primarily from cash and cash equivalents balances, net cash provided by operating activities, and borrowings under our Revolving Credit Facility and Term Loan or through the issuance of debt or equity instruments subject to market conditions.
Long-term Liquidity Requirements
Our long-term liquidity requirements consist primarily of funds necessary to repay debt and to invest in additional revenue generating properties. Debt capital is provided through our Revolving Credit Facility and Term Loan, as well as potentially through the issuance of debt and equity instruments subject to market conditions and Company operating performance. The source and mix of our debt capital in the future will be impacted by market conditions. We plan to prudently balance our debt portfolio with a combination of fixed and floating rate debt and will evaluate opportunities to hedge certain interest rate risk where appropriate.
We expect to meet our long-term liquidity requirements primarily from borrowings under our Revolving Credit Facility and Term Loan, any future debt and equity financings, and proceeds from limited sales of our properties. Our ability to access these capital sources may be impacted by unfavorable market conditions, particularly in the debt and equity capital markets and the real estate market in general, that are outside of our control. In addition, our success will depend on our operating performance, our borrowing restrictions, our degree of leverage, market perceptions of the Company, our access to debt, equity or other capital instruments and other factors. Our acquisition growth strategy significantly depends on our ability to obtain acquisition-financing on favorable terms. We seek to reduce the risk that long-term debt capital may be unavailable to us by strengthening our balance sheet by investing in real estate with creditworthy tenants and lease guarantors, and by maintaining an appropriate mix of debt and equity capitalization.
Target Leverage
As of March 31, 2025, we had total debt outstanding of $312.0 million, Net Debt of $308.7 million, and a Net Debt-to-Annualized Adjusted EBITDAre ratio of approximately 5.7x. Our long-term goal is to target a net debt-to-annualized adjusted EBITDAre ratio of 6.0x over time. We may from time to time modify our leverage policy in light of then current economic conditions, relative costs and availability of debt and equity capital, changes in the market price of our Common Stock, acquisition opportunities, and other factors.
Capital Resources
As a new publicly traded REIT we plan to access the public equity markets to maintain an appropriate mix of debt and equity in line with our leverage policy, primarily through follow-on equity offerings and eventually through an at-the-market common equity offering program once we are shelf eligible. We anticipate that the net proceeds from any public offerings will be used to repay debt, fund acquisitions, and for other general corporate purposes.
Description of Existing Debt Outstanding
The following is a summary of the material provisions of our Revolving Credit Facility and Term Loan.
Revolving Credit Facility
Upon closing of our IPO, a group of lenders, including JPMorgan Chase Bank, N.A. acting as administrative agent, provided commitments for our Revolving Credit Facility, allowing borrowings of up to $250.0 million, including $20.0 million available for issuance
33
of letters of credit. Our Revolving Credit Facility has an initial maturity in October 2027 together with two 12-month extension options, subject to certain conditions, including payment of a 0.125% fee on the aggregate outstanding amount of the revolving commitments.
The Revolving Credit Facility contains a commitment fee of 0.15% per annum if average daily usage in such quarter is over 50% of total revolving commitments and 0.25% per annum if average daily usage in such quarter is equal to or less than 50% of total revolving commitments. Borrowings under our Revolving Credit Facility will bear interest at floating rates based on Adjusted SOFR plus an applicable margin based on our leverage ratio ranging between 1.20% and 1.75% per annum. As of March 31, 2025, the applicable margin was 1.20%.
The Revolving Credit Facility contains an applicable facility fee based on our credit rating ranging between 0.125% and 0.30% per annum. As of March 31, 2025, the applicable facility fee was 0.30%.
As of March 31, 2025, we had $138.0 million of available capacity under our Revolving Credit Facility.
Term Loan
Upon closing of our IPO, a group of lenders, including JPMorgan Chase Bank, N.A. as administrative agent, provided commitments for our Term Loan, allowing borrowings of up to $200.0 million. Our Term Loan is available to be drawn until October 2025 and has an initial maturity of October 2027 together with two 12-month extension options, at our election, subject to certain conditions including payment of a 0.125% fee on the aggregate outstanding principal amount of the Term Loan. On December 30, 2024, we borrowed $200.0 million from the Term Loan to repay our ABS Notes when they matured in December 2024. Our Term Loan includes a ticking fee of 0.20% per annum on the average daily amount of unfunded term loan commitments.
Borrowings under our Term Loan bear interest at floating rates based on Adjusted SOFR plus an applicable margin based on our leverage ratio ranging between 1.20% and 1.75% per annum. As of March 31, 2025, the applicable margin was 1.20%.
Covenants
We are subject to various covenants and financial reporting requirements pursuant to our Revolving Credit Facility and Term Loan. The table below summarizes the applicable financial covenants. If a default or event of default exists, either through default on payments or breach of covenants, we may be restricted from paying dividends to our stockholders in excess of dividends required to maintain our REIT qualification. As of March 31, 2025, we believe we were in compliance with our covenants.
Covenants |
|
Required |
Total Leverage Ratio |
|
≤ 60% |
Adjusted EBITDA to Fixed Charges Ratio |
|
≥ 1.50 to 1.00 |
Secured Leverage Ratio |
|
≤ 40% |
Unencumbered NOI to Unsecured Interest Expense Ratio |
|
≥ 1.75 to 1.00 |
Unsecured Leverage Ratio |
|
≤ 60% |
Tangible Net Worth |
|
≥ 380,032 |
Contractual Obligations
The following table provides information with respect to our contractual commitments and obligations as of March 31, 2025. Refer to the discussion in the Liquidity and Capital Resources section above for further discussion over our short and long-term obligations.
(unaudited, in thousands)
Year of Maturity |
|
Revolving Credit Facility (1) |
|
|
Term Loan (1) |
|
|
Interest Expense (2) |
|
|
Dividend (3) |
|
|
Commitments to Fund Investments (4) |
|
|
Total |
|
||||||
Remainder of 2025 |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
13,160 |
|
|
$ |
6,178 |
|
|
$ |
12,020 |
|
|
$ |
31,358 |
|
2026 |
|
|
— |
|
|
|
— |
|
|
|
17,546 |
|
|
|
— |
|
|
|
— |
|
|
|
17,546 |
|
2027 |
|
|
112,000 |
|
|
|
200,000 |
|
|
|
14,622 |
|
|
|
— |
|
|
|
— |
|
|
|
326,622 |
|
2028 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
2029 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Thereafter |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
112,000 |
|
|
$ |
200,000 |
|
|
$ |
45,328 |
|
|
$ |
6,178 |
|
|
$ |
12,020 |
|
|
$ |
375,526 |
|
34
(1) |
Our Revolving Credit Facility and Term Loan contain two 12-month extension options subject to certain conditions, including the payment of an extension fee equal to 0.125% of the commitments. |
(2) |
Interest expense is projected based on the outstanding borrowings and interest rates in effect as of March 31, 2025. |
(3) |
Amounts include dividends declared as of March 31, 2025 of $0.215 per Common Stock and OP Unit. Future undeclared dividends are excluded. |
(4) |
Amounts include acquisitions under contract. |
Derivative Instruments and Hedging Activities
We are exposed to interest rate risk arising from changes in interest rates on any floating-rate borrowings that we make under our Revolving Credit Facility and Term Loan or other debt or capital instruments that bear interest. Borrowings under our Revolving Credit Facility and Term Loan will bear interest at floating rates based on SOFR plus an applicable margin. Accordingly, fluctuations in market interest rates may increase or decrease our interest expense, which will in turn, decrease or increase our net income and cash flow.
On March 3, 2025, the Company entered into interest rate swap agreements to manage interest rate risk exposure on the Term Loan. The aggregate notional amount of these contracts is $200.0 million, and they mature in March 2028. The interest rate swap agreements utilized by the Company effectively modify the Company’s exposure to interest rate risk by converting a portion of the Company’s floating-rate debt to a fixed rate of 3.664%, thus reducing the impact of interest-rate changes on future interest expense. The agreements involve the receipt of floating-rate amounts in exchange for fixed-rate interest payments over the life of the agreement without an exchange of the underlying principal amount.
In the future, we may attempt to manage our interest rate risk by entering into further interest rate swaps or other hedging arrangements. Under these agreements, we will receive monthly payments from the counterparties equal to the related variable interest rates multiplied by the outstanding notional amounts. In turn, we pay the counterparties each month an amount equal to a fixed interest rate multiplied by the related outstanding notional amounts. The intended net impact of these transactions is that we pay a fixed interest rate on our variable-rate borrowings. We have not entered, and do not intend to enter, into derivative or interest rate transactions for speculative purposes.
Cash Flows
Cash and cash equivalents totaled $3.3 million as of March 31, 2025, as compared to $13.2 million as of March 31, 2024. The table below shows information concerning cash flows for the three months ended March 31, 2025, and 2024:
|
|
Successor |
|
|
Predecessor |
|
||
|
|
For the three months ended March 31, |
|
|||||
(unaudited, in thousands) |
|
2025 |
|
|
2024 |
|
||
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 |
) |
The change in net cash provided by operating activities during the three months ended March 31, 2025 as compared to three months ended March 31, 2024 was mainly due to a decrease in interest expense of approximately $2.2 million. The remainder of the change in net cash provided by operating activities relates to timing of payment of payables and accrued liabilities.
The change in net cash (used in) provided by investing activities was due to 17 properties acquired and one property sold during the three months ended March 31, 2025, compared to no properties acquired and three properties sold during the three months ended March 31, 2024.
The increase in net cash provided by (used in) financing activities during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 is mainly due to the proceeds from debt of $43.5 million offset by distributions paid of $6.1 million compared to the $9.3 million of repayment of debt and $1.6 million of distributions paid, respectively.
Non-GAAP Financial Measures
Our reported results and net earnings per diluted share are presented in accordance with GAAP. We also disclose FFO, AFFO, EBITDA, EBITDAre, adjusted EBITDAre, annualized adjusted EBITDAre and net debt, each of which are non-GAAP measures. We believe these non-GAAP financial measures are industry measures used by analysts and investors to compare the operating performance of REITs.
35
We compute FFO in accordance with the standards established by the Board of Governors of the National Association of Real Estate Investment Trusts (“Nareit”). Nareit defines FFO as GAAP net income or loss adjusted to exclude net gains (losses) from sales of certain depreciated real estate assets, depreciation and amortization expense from real estate assets, gains and losses from change in control, and impairment charges related to certain previously depreciated real estate assets. To derive AFFO, we modify the Nareit computation of FFO to include other adjustments to GAAP net income related to certain non-cash or non-recurring revenues and expenses, including straight-line rents, cost of debt extinguishments, amortization of lease intangibles, amortization of debt issuance costs, amortization of net mortgage premiums, (gain) loss on interest rate swaps and other non-cash interest expense, realized gains or losses on foreign currency transactions, Internalization expenses, structuring and public company readiness costs, extraordinary items, and other specified non-cash items. We believe that such items are not a result of normal operations and thus we believe excluding such items assists management and investors in distinguishing whether changes in our operations are due to growth or decline of operations at our properties or from other factors.
Our leases typically include cash rents that increase through lease escalations over the term of the lease. Our leases do not typically include significant front-loading or back-loading of payments, or significant rent-free periods. Therefore, we find it useful to evaluate rent on a contractual basis as it allows for comparison of existing rental rates to market rental rates. We further exclude costs or gains recorded on the extinguishment of debt, non-cash interest expense and gains, the amortization of debt issuance costs, net mortgage premiums, and lease intangibles, realized gains and losses on foreign currency transactions, Internalization expenses, and structuring and public company readiness costs, as these items are not indicative of ongoing operational results. We use AFFO as a measure of our performance when we formulate corporate goals.
FFO is used by management, investors, and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers, primarily because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. We believe that AFFO is a useful supplemental measure for investors to consider because it will help them to better assess our operating performance without the distortions created by one-time cash and non-cash revenues or expenses. FFO and AFFO may not be comparable to similarly titled measures employed by other REITs, and comparisons of our FFO and AFFO with the same or similar measures disclosed by other REITs may not be meaningful. FFO and AFFO should not be considered alternatives to net income as a performance measure or to cash flows from operations, as reported on our statement of cash flows, or as a liquidity measure, and should be considered in addition to, and not in lieu of, GAAP financial measures.
Neither the SEC nor any other regulatory body has passed judgment on the acceptability of the adjustments to FFO that we use to calculate AFFO. In the future, the SEC, Nareit or another regulatory body may decide to standardize the allowable adjustments across the REIT industry and in response to such standardization we may have to adjust our calculation and characterization of AFFO accordingly.
The following is a reconciliation of net income (which is the most comparable GAAP measure) to FFO and AFFO:
Reconciliation of net income to FFO and AFFO
|
|
Successor |
|
|
Predecessor |
|
||
|
|
For the three months ended March 31, |
|
|||||
(unaudited, in thousands) |
|
2025 |
|
|
2024 |
|
||
Net loss |
|
$ |
(1,337 |
) |
|
$ |
(3,369 |
) |
Depreciation on real property and amortization of real estate intangibles |
|
|
7,805 |
|
|
|
7,325 |
|
Gain on sale of real estate |
|
|
(467 |
) |
|
|
(388 |
) |
Impairment loss on real estate held for investment |
|
|
428 |
|
|
|
591 |
|
FFO |
|
$ |
6,429 |
|
|
$ |
4,159 |
|
Straight-line rent adjustments |
|
|
(122 |
) |
|
|
(331 |
) |
Amortization of financing transaction and discount costs |
|
|
395 |
|
|
|
1,056 |
|
Amortization of above/below market lease intangibles |
|
|
711 |
|
|
|
439 |
|
Stock-based compensation |
|
|
615 |
|
|
|
— |
|
Lease termination fees |
|
|
— |
|
|
|
(414 |
) |
Adjustment for structuring and public company readiness costs |
|
|
201 |
|
|
|
51 |
|
Other non-recurring expenses |
|
|
— |
|
|
|
29 |
|
AFFO |
|
$ |
8,229 |
|
|
$ |
4,989 |
|
We compute EBITDA as earnings before interest, income taxes and depreciation and amortization. EBITDA is a measure commonly used in our industry. We believe that this ratio provides investors and analysts with a measure of our leverage that includes our operating results unaffected by the differences in capital structures, capital investment cycles and useful life of related assets compared to other
36
companies in our industry. In 2017, Nareit issued a white paper recommending that companies that report EBITDA also report EBITDAre in financial reports. We compute EBITDAre in accordance with the definition adopted by Nareit. Nareit defines EBITDAre as EBITDA (as defined above) excluding gains (loss) from the sales of depreciable property and provisions for impairment on investment in real estate. We believe EBITDA and EBITDAre are useful to investors and analysts because they provide important supplemental information about our operating performance exclusive of certain non-cash and other costs.
EBITDA and EBITDAre are not measures of financial performance under GAAP, and our EBITDA and EBITDAre may not be comparable to similarly titled measures of other companies. You should not consider our EBITDA and EBITDAre as alternatives to net income or cash flows from operating activities determined in accordance with GAAP.
We compute adjusted EBITDAre as EBITDAre for the applicable quarter, as adjusted to (i) reflect all investment and disposition activity that took place during the applicable quarter as if each transaction had been completed on the first day of the quarter, (ii) exclude certain GAAP income and expense amounts that we believe are infrequent and unusual in nature because they relate to unique circumstances or transactions that had not previously occurred and which we do not anticipate occurring in the future, (iii) eliminate the impact of lease termination fees from certain of our tenants, and (iv) exclude non-cash stock-based compensation expense. Annualized adjusted EBITDAre is calculated by multiplying adjusted EBITDAre for the applicable quarter by four, which we believe provides a meaningful estimate of our current run rate for all of our investments as of the end of the most recently completed quarter given the contractual nature of our long term net leases. You should not unduly rely on this measure as it is based on assumptions and estimates that may prove to be inaccurate. Our actual reported EBITDAre for future periods may be significantly different from our annualized adjusted EBITDAre.
The following table reconciles net income (which is the most comparable to GAAP measure) to EBITDA, EBITDAre, adjusted EBITDAre, and annualized adjusted EBITDAre.
Reconciliation of net income to EBITDA and EBITDAre
|
|
Successor |
|
|
Predecessor |
|
||
|
|
For the three months ended March 31, |
|
|||||
(unaudited, in thousands) |
|
2025 |
|
|
2024 |
|
||
Net loss |
|
$ |
(1,337 |
) |
|
$ |
(3,369 |
) |
Depreciation and amortization |
|
|
8,516 |
|
|
|
7,764 |
|
Interest expense |
|
|
4,497 |
|
|
|
6,695 |
|
Income taxes |
|
|
102 |
|
|
|
162 |
|
EBITDA |
|
$ |
11,778 |
|
|
$ |
11,252 |
|
Gain on sale of real estate |
|
|
(467 |
) |
|
|
(388 |
) |
Impairment loss on real estate held for investment |
|
|
428 |
|
|
|
591 |
|
EBITDAre |
|
$ |
11,739 |
|
|
$ |
11,455 |
|
Adjustment for current period investment activity (1) |
|
|
509 |
|
|
|
— |
|
Adjustment for current period disposition activity (2) |
|
|
— |
|
|
|
(392 |
) |
Adjustment for non-cash compensation expense (3) |
|
|
615 |
|
|
|
— |
|
Adjustment to exclude non-recurring expenses (income) (4) |
|
|
201 |
|
|
|
(363 |
) |
Adjustment to exclude net write-offs of accrued rental income |
|
|
394 |
|
|
|
— |
|
Adjusted EBITDAre |
|
|
13,458 |
|
|
|
10,700 |
|
Annualized EBITDAre |
|
|
46,956 |
|
|
|
45,820 |
|
Annualized adjusted EBITDAre |
|
$ |
53,832 |
|
|
$ |
42,800 |
|
(1) |
Reflects an adjustment to give effect to all acquisitions during the period as if they had been acquired as of the beginning of the period. |
(2) |
Reflects an adjustment to give effect to all dispositions during the period as if they had been sold as of the beginning of the period. |
(3) |
Reflects an adjustment to exclude non-cash stock-based compensation expense. |
(4) |
Reflects an adjustment to exclude non-recurring expenses including IPO costs, lease termination fees and non-recurring income or expenses. |
37
Net Debt is a non-GAAP financial measure. We define Net Debt as our Gross Debt less cash and cash equivalents. The ratios of Net Debt to EBITDAre and Net Debt to Annualized Adjusted EBITDAre represent Net Debt as of the end of the applicable period divided by EBITDAre or Annualized Adjusted EBITDAre for the period, respectively. We believe that these ratios are useful to investors and analysts because they provide information about Gross Debt less cash and cash equivalents, which could be useful to repay debt, compared to our performance as measured using EBITDAre and Annualized Adjusted EBITDAre, which are described above.
The following table reconciles total debt (which is the most comparable GAAP measure) to Net Debt, and presents the ratios of Net Debt to EBITDAre and Net Debt to Annualized Adjusted EBITDAre:
Reconciliation of total debt to Net Debt and ratio of Net Debt to Annualized EBITDAre and Net Debt to Annualized Adjusted EBITDAre
|
|
Successor |
|
|
Predecessor |
|
|
||
|
|
As of March 31, |
|
|
|||||
(unaudited, in thousands) |
|
2025 |
|
|
2024 |
|
|
||
Debt |
|
|
|
|
|
|
|
||
Term Loan |
|
$ |
200,000 |
|
|
$ |
— |
|
|
Revolving Credit Facility |
|
|
112,000 |
|
|
|
— |
|
|
ABS Notes |
|
|
— |
|
|
|
254,159 |
|
|
CIBC Revolving Credit Facility |
|
|
— |
|
|
|
159,890 |
|
|
CIBC Term Loan |
|
|
— |
|
|
|
17,000 |
|
|
Gross Debt |
|
|
312,000 |
|
|
|
431,049 |
|
|
Cash and cash equivalents |
|
|
(3,309 |
) |
|
|
(13,197 |
) |
|
Net Debt |
|
$ |
308,691 |
|
|
$ |
417,852 |
|
|
Leverage Ratios: |
|
|
|
|
|
|
|
||
Net Debt to Annualized EBITDAre |
|
|
6.6 |
|
|
|
9.1 |
|
|
Net Debt to Annualized Adjusted EBITDAre |
|
|
5.7 |
|
|
|
9.8 |
|
|
Critical Accounting Policies and Estimates
The preparation of the historical condensed consolidated financial statements in conformance with GAAP requires management to make estimates and assumptions that are subjective in nature and affect the reported amounts of assets, liabilities, revenues, and expenses as well as other disclosures in the condensed consolidated financial statements. We base our estimates on historical experience and on various other assumptions believed to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates and assumptions, however, our actual results could differ materially from our estimates. A summary of our significant accounting policies is included in Note 2—Accounting Policies for Financial Statements, contained in the condensed consolidated financial statements included elsewhere in this Form 10-Q. Management believes the following critical accounting policies affect its more significant estimates and assumptions used in the preparation of our condensed consolidated financial statements.
Purchase Price Allocation of Acquired Properties
Upon acquisition of real estate held for investment considered to be an asset acquisition, we capitalized the purchase price (including related acquisition costs) as part of the cost basis. We allocate the purchase price between land, buildings and improvements, site improvements, and identifiable intangible assets and liabilities such as amounts related to in-place leases and origination costs acquired, above- and below-market leases, based upon their fair values. The allocation of the purchase price requires judgment and significant estimates. The fair value of the land and building assets is determined on an as-if-vacant basis.
Above- and below-market leases are based upon a comparison between existing leases upon acquisition and current market rents for similar real estate. The fair value of above- and below-market leases is equal to the aggregate present value of the spread between the contract and the market rate of each of the in-place leases over their remaining term. The fair values of in-place leases and origination costs are determined based on the estimates of carrying costs during the expected lease-up periods and costs that would be incurred to put the existing leases in place under the same market terms and conditions.
We use multiple sources to estimate fair value, including information obtained about each property as a result of our pre-acquisition due diligence and marketing and leasing activities. We also consider information and other factors that impact the determination of fair
38
value such as market conditions, industry conditions that the tenant operates in, characteristics of the real estate (e.g., location, size, value of comparative rental rates, traffic count) and tenant credit profile.
39
Impairment of Long-Lived Assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If such impairment is present, an impairment loss is recognized based on the excess of the carrying amount of the asset over its fair value. The net recoverable amount represents the undiscounted estimated future cash flow expected to be earned from the long-lived asset. In the case of real estate, the undiscounted estimated future cash flows are based on expected cash flows from the use and eventual disposition of the property. We estimate fair value using data such as operating income, estimated capitalization rates or multiples, and with regards to assets held for sale, negotiated selling price, less estimated costs of disposal.
Impact of Recent Accounting Pronouncements
For information on the impact of recent accounting pronouncements on our business, see Note 2 of the Notes to the Condensed Consolidated Financial Statements included in this Form 10-Q.
40
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to interest rate risk arising from changes in interest rates on any floating-rate borrowings we make under our Revolving Credit Facility or Term Loan or other debt or other capital instruments that bear interest. Borrowings under our Revolving Credit Facility and Term Loan will bear interest at floating rates based on Adjusted SOFR plus an applicable margin. Accordingly, fluctuations in market interest rates may increase or decrease our interest expense, which will in turn, decrease or increase our net income and cash flow. In the future, we may manage a portion of our interest rate risk by entering into interest rate swaps or other hedging arrangements. To the extent that we seek to do so, our interest rate risk management strategy will be intended to stabilize cash flow requirements by maintaining interest rate swaps to convert certain variable-rate debt to a fixed rate. We have not entered, and do not intend to enter, into derivative or interest rate transactions for speculative purposes. Refinancing of any of our debt instruments would also be subject to market conditions at the time of such refinancing and our operational performance, which could require principal paydowns and equity injections due to limited financing sources being available at the time.
On March 3, 2025, the Company entered into interest rate swap agreements to manage interest rate risk exposure on the Term
Loan.
As of March 31, 2025 and December 31, 2024, our financial instruments were not exposed to significant market risk due to foreign currency exchange risk or other relevant market rates or prices.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Co-Chief Executive Officers and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of and for the quarter ended March 31, 2025, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, under the supervision and with the participation of management, including our Co-Chief Executive Officers and Chief Financial Officer. Based on the foregoing, our Co-Chief Executive Officers and Chief Financial Officer concluded that our disclosure controls and procedures were effective and were operating at a reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Part II – OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we are subject to various lawsuits, claims, and other legal proceedings that arise in the ordinary course of our business. We are not currently a party to legal proceedings that we believe would reasonably be expected to have a material adverse effect on our business, financial condition, or results of operations. We are not aware of any material legal proceedings to which we or any of our subsidiaries are a party or to which any of our property is subject, nor are we aware of any such legal proceedings contemplated by government agencies.
Item 1A. Risk Factors.
There have been no material changes from the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 20, 2025.
41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None of our officers or directors
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Item 6. Exhibits
No. |
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Description |
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3.1 |
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3.2 |
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3.3 |
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31.1* |
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31.2* |
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31.3* |
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32.1*† |
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32.2*† |
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32.3*† |
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101.INS |
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Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
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101.SCH |
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Inline XBRL Taxonomy Extension Schema Document. |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith.
† In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.
43
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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FRONTVIEW REIT, INC. |
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Date: May 15, 2025 |
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/s/ Stephen Preston |
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Stephen Preston |
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Chairman, Co-Chief Executive Officer and Co-President (Co-Principal Executive Officer) |
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Date: May 15, 2025 |
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/s/ Randall Starr |
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Randall Starr |
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Co-Chief Executive Officer, Co-President, Chief Financial Officer and Director (Co-Principal Executive Officer and Principal Financial Officer) |
44
EXHIBIT 31.1
CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(Rule 13a-14(a)/15d-14(a) Certification)
I, Stephen Preston, certify that:
1. |
I have reviewed this Quarterly Report on Form 10-Q of FrontView REIT, Inc. for the quarter ended March 31, 2025; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: May 15, 2025 |
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/s/ Stephen Preston |
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Stephen Preston |
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Co-Chief Executive Officer |
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(Co-Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(Rule 13a-14(a)/15d-14(a) Certification)
I, Randall Starr, certify that:
1. |
I have reviewed this Quarterly Report on Form 10-Q of FrontView REIT, Inc. for the quarter ended March 31, 2025; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: May 15, 2025 |
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/s/ Randall Starr |
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Randall Starr |
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Co-Chief Executive Officer |
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(Co-Principal Executive Officer) |
EXHIBIT 31.3
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(Rule 13a-14(a)/15d-14(a) Certification)
I, Randall Starr, certify that:
1. |
I have reviewed this Quarterly Report on Form 10-Q of FrontView REIT, Inc. for the quarter ended March 31, 2025; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: May 15, 2025 |
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/s/ Randall Starr |
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Randall Starr |
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Chief Financial Officer |
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(Principal Financial Officer) |
EXHIBIT 32.1
CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(Section 1350 Certification)
In connection with the Quarterly Report on Form 10-Q of FrontView REIT, Inc. (the “Company”) for the quarter ended March 31, 2025 (the “Quarterly Report”), and pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Stephen Preston, Co-Chief Executive Officer of the Company, certifies, to the best of his knowledge, that:
1. |
The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and |
2. |
The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: May 15, 2025 |
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/s/ Stephen Preston |
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Stephen Preston |
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Co-Chief Executive Officer |
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(Co-Principal Executive Officer) |
The foregoing certification is being furnished solely to accompany the Quarterly Report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Exchange Act, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
EXHIBIT 32.2
CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(Section 1350 Certification)
In connection with the Quarterly Report on Form 10-Q of FrontView REIT, Inc. (the “Company”) for the quarter ended March 31, 2025 (the “Quarterly Report”), and pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Randall Starr, Co-Chief Executive Officer of the Company, certifies, to the best of his knowledge, that:
1. |
The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and |
2. |
The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: May 15, 2025 |
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/s/ Randall Starr |
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Randall Starr |
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Co-Chief Executive Officer |
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(Co-Principal Executive Officer) |
The foregoing certification is being furnished solely to accompany the Quarterly Report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Exchange Act, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
EXHIBIT 32.3
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(Section 1350 Certification)
In connection with the Quarterly Report on Form 10-Q of FrontView REIT, Inc. (the “Company”) for the quarter ended March 31, 2025 (the “Quarterly Report”), and pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Randall Starr, Chief Financial Officer of the Company, certifies, to the best of his knowledge, that:
1. |
The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and |
2. |
The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: May 15, 2025 |
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/s/ Randall Starr |
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|
Randall Starr |
|
|
Chief Financial Officer |
|
|
(Principal Financial Officer) |
The foregoing certification is being furnished solely to accompany the Quarterly Report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Exchange Act, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.