FVR US Equity☆

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Except where the context suggests otherwise, as used in this Annual Report on Form 10-K, the terms “FVR,” “we,”“us,”“our,” and “our company” refer to FrontView REIT, Inc., a Maryland corporation incorporated on June 23, 2023, and, as required by context, FrontView Operating Partnership LP, a Delaware limited partnership, which we refer to as the or our “OP”, and to their respective subsidiaries.

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 Consolidated Financial Statements and the accompanying Notes to the Consolidated Financial Statements appearing in Item 8 “Financial Statements and Supplemental Data” in this Annual Report on Form 10-K.

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 owned a well-diversified portfolio of 307 properties across 35 U.S. states as of December 31, 2024. 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, car washes, home improvement stores, grocery stores, fitness operators, professional services as well as general retail tenants.

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 December 31, 2024, the ABR weighted average remaining term of our leases was approximately 7.2 years, excluding renewal options. Approximately 97.3% of our leases (based on ABR) had contractual rent escalations, including, in some cases, pursuant to option terms. As of December 31, 2024, we had 320 tenants that represented 150 different brands. Our top 10 tenant brands (based on ABR) represented approximately 21.8% of our portfolio ABR as of December 31, 2024.

In connection with our IPO 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 will 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 December 31, 2024, we had total debt of $268.5 million, Net Debt of $263.4 million, a Net Debt to Annualized Adjusted EBITDAre ratio of 5.2x, and a pro forma Net Debt to Annualized Adjusted EBITDAre ratio of 5.5x after giving effect to the repayment of debt with the net proceeds of our IPO and borrowings under our Revolving Credit Facility and Term Loan. 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.

Factors that Affect Our Results of Operations and Financial Condition

Our results of operations and financial condition are affected by numerous factors, many of which are beyond our control. Key factors that impact our results of operations and financial condition include rental rates, lease renewals and occupancy, land values, acquisition volume, tenant growth, demand, expansion, construction costs, net-lease terms, market liquidity, financing arrangements and leverage, property dispositions, general and administrative expenses, inflation, interest rates, consumer confidence, the overall economic environment and the financial strength of our tenants.

Rental Rates

Our ability to grow rental revenue from our existing portfolio will depend on our ability to realize the rental escalations built into our leases and execute lease renewals and lease extensions. As of December 31, 2024, approximately 97.3% of our leases (based on ABR) had contractual rent escalations, including, in some cases, pursuant to options terms, with an ABR weighted average annual minimum increase of approximately 1.6%. As of December 31, 2024, approximately 95.1% of our leases (based on ABR) contained fixed annual rent increases or periodic escalations over the term of the lease (e.g. a 10% increase every five years), approximately 2.2% of our leases (based on ABR) contained annual lease escalations based on increases in the CPI, and the remaining approximately 2.7% of our leases (based on ABR) did not contain rent escalation provisions. During periods of inflation, our fixed rent increases may not keep pace with the rate of inflation while the limited number of our leases that include CPI-based increases may fare better. Conversely, during periods where inflation is more limited, our leases with fixed rate increases may fare better than our leases with CPI-based increases.

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Property Dispositions

From time to time, we may seek to sell any of our properties, in particular, where we believe the risk profile may have changed and become misaligned with our then current portfolio acquisition objectives. We also may selectively decide to sell properties that no longer meet one or more of our investment criteria or that may be sold opportunistically. The resulting gains or losses on any future dispositions may materially impact our operating results. The recognition of a gain or loss on the sale of real estate varies from transaction to transaction based on fluctuations in asset prices and demand in the real estate market at the time a property is listed for sale. As of the date of this Annual Report, we have sold 11 properties.

Lease Renewals and Occupancy

As of December 31, 2024, the weighted average remaining term of our leases was approximately 7.2 years, excluding renewal options. One lease representing approximately 0.2% of our leases (based on ABR) expired prior to December 31, 2024. The stability of the rental revenue generated by our properties depends principally on our tenants’ ability to pay rent and our ability to collect rent, our ability to renew expiring leases or re-lease space upon the expiration or other termination of leases, our ability to lease properties that become vacant and maintain or increase rental rates at our leased properties. To the extent our properties become vacant, we would forego rental income while remaining responsible for the payment of property taxes, insurance, maintenance and other related costs and maintaining the property until it is re-leased, which could negatively impact our operating results. As of December 31, 2024, we had seven vacant properties.

Acquisition Volume

Our historical growth in revenues and earnings has been achieved through rent escalations associated with existing in-place leases, coupled with rental income generated from property acquisitions. Our ability to grow revenue will depend, to a significant degree, on our ability to acquire additional properties. Our ability to grow requires us to identify and complete acquisitions that meet our investment criteria. Changes in capitalization rates, interest rates, inflation, market competition, economic changes, property inventory, and other factors may impact our acquisition opportunities in the future. Market conditions may also impact the total returns we can achieve on our investments. Our acquisition volume also depends on our ability to successfully access third-party debt and equity financing to fund our capital needs.

Net-Lease Terms

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. Some leases contain exceptions that require us to pay specified expenses such as the cost of roof, parking lot, heating, ventilation and air conditioning and structure and non-structural repairs and replacement costs, off-site improvements, lease covenants affecting off-site property, and remediation activities (unless necessitated by the tenant), as well as costs related to the operation of a property in excess of certain caps contained within the underlying lease. In certain instances, a landlord’s reimbursement obligation may include reimbursing the tenant for the unamortized costs of certain expenses incurred by the tenant for the development of the premises. In some leases, this type of reimbursement obligation is triggered by the default of the landlord under the lease, but other leases require reimbursement of the tenant due to circumstances outside of the landlord’s control. For the year ended December 31, 2024, we incurred approximately $1.7 million in aggregate of expenses that were not tenant obligations. To the extent that our properties experience an increase in roof and structure, capital or other repairs or costs for which we are contractually responsible under some leases, it could negatively impact our future operating results. In addition, an increase in the number of leases in which we are responsible for some or all of these expenses could negatively influence our future operating results.

Interest Expense

As of December 31, 2024, our debt capital was comprised of a floating rate Term Loan and a floating rate Revolving Credit Facility. Accordingly, we are subject to interest rate risk. We also expect to continue to incur debt in the future in order to fund future acquisitions, which we expect will increase the amount of interest expense we incur. In addition, although we plan to manage our total floating-rate debt exposure, changes in the interest rate environment could either increase or decrease our weighted average interest rate in the future or impact any refinancing initiatives, which could also result in principal reduction requirements and ultimate refinancing risks. Any changes to our debt structure, including borrowings under our Revolving Credit Facility and Term Loan, or debt financing associated with property acquisitions, could materially influence our operating results.

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Property Management and Asset Management Fees

Following completion of the Internalization, we no longer pay property management and asset management fees that were previously paid by our Predecessor, which historically increased as the size of our portfolio grew.

General and Administrative Expenses

Following completion of the Internalization, our general and administrative expenses include direct employee compensation costs for our approximately 15 employees. In addition, our general and administrative expenses include certain professional fees, consulting, portfolio servicing costs, board costs, public company expenses, increased audit, tax and other costs, insurance costs, and other general and administrative expenses not previously incurred by our predecessor based upon its externally managed structure.

Impact of Inflation

Our rental revenues may be impacted by inflation. Approximately 95.1% of our leases (based on ABR) contain rent escalators that increase rent at a fixed amount and may not be sufficient during periods of inflation. As of December 31, 2024, leases that contributed approximately 2.2% of our leases (based on ABR), contained rent escalators based on increases in CPI and the associated increases in rental revenue may be limited during periods of low inflation. The impact of inflation on our property and operating expenses is mitigated since substantially all of our leases are net leases, and property-level expenses are generally paid for or reimbursed to us by our tenants. Some leases contain exceptions that require us to pay specified expenses such as the cost of roof, parking lot, heating, ventilation, and air-conditioning, and structure and non-structural repairs and replacement costs, off-site improvements, lease covenants affecting off-site property, and remediation activities (unless necessitated by the tenant), as well as costs related to the operation of a property in excess of certain caps contained within the underlying lease. To the extent we bear the cost of such expense, in certain cases, warranties are in place to help mitigate future significant capital outlays, though typically such warranties only cover certain limited items and do not provide comprehensive coverage. Inflation and increased costs may also have an adverse impact on our tenants’ businesses and their creditworthiness.

Tenant Bankruptcies

Adverse economic conditions, in addition to general economic downturns, particularly those that affect the markets in which our properties are located, or downturns in our tenants’ industries could impair our tenants’ ability to meet their lease obligations to us and our ability to renew expiring leases or re-lease space. In particular, the bankruptcy or deterioration of operational performance of one or more of our tenants could adversely affect our ability to collect rents from such tenant and maintain our portfolio’s occupancy.

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Results of Operations

The following discussion includes the results of our operations for the periods presented.

Period from January 1, 2024 to October 2, 2024 and from October 3, 2024 to December 31, 2024 Compared to Year Ended December 31, 2023

Successor Predecessor Predecessor

Revenues

Operating expenses

Other expenses (income)

Gain on sale of real estate — (337 ) (725 )

Internalization expense — (16,498 ) —

Gain from acquisition of equity method investment — — 12,988

Equity loss from investment in an unconsolidated entity — — (38 )

Rental Revenues

Successor Predecessor Predecessor

Revenues:

Above/below market lease amortization, net (164 ) (1,341 ) (1,469 )

Contractual rental amounts billed for the period from January 1, 2024 to October 2, 2024 of $43.3 million and for the period from October 3, 2024 to December 31, 2024 of $14.6 million, increased by $10.0 million from $47.9 million for the year ended December 31, 2023. This $10.0 million increase was attributable to (i) the increase in contractual base rent from the consolidation of the 54 properties acquired as part of the 50/50 Joint Venture Acquisition in October 2023, (ii) recognizing a full year of revenue for all acquisitions made during 2023, (iii) growth of our real estate portfolio through 29 acquisitions during 2024 and (iv) same-store rent growth from our in-place lease escalations. This increase was partially offset by the decrease in contractual base rent from the five properties sold throughout 2024.

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Variable rental amounts earned for the period from January 1, 2024 to October 2, 2024 of $1.6 million and for the period from October 3, 2024 to December 31, 2024 of $0.4 million, increased by $1.8 million from $0.2 million for the year ended December 31, 2023. This $1.8 million increase was mainly due to lease termination fee income received during the period from January 1, 2024 to October 2, 2024 and for the period from October 3, 2024 to December 31, 2024. The timing and amount of lease termination income fluctuates each period.

Operating Expenses

Depreciation and amortization

Depreciation and amortization for the period from January 1, 2024 to October 2, 2024 of $21.6 million and for the period from October 3, 2024 to December 31, 2024 of $7.5 million, increased by $4.4 million from $24.7 million for the year ended December 31, 2023. This $4.4 million increase in depreciation and amortization was primarily due to the consolidation of the 54 properties acquired as part of the 50/50 Joint Venture Acquisition and the growth of our real estate portfolio through new acquisitions in 2024. This increase was partially offset by the decrease in depreciation and amortization from the five properties sold in the current year not having a full year of depreciation.

Property operating expenses

Property operating expenses for the period from January 1, 2024 to October 2, 2024 of $5.7 million and for the period from October 3, 2024 to December 31, 2024 of $2.2 million, increased by $2.1 million from $5.8 million for the year ended December 31, 2023. This $2.1 million increase in property operating expenses was mainly due to the increase in the number of properties in our portfolio. For the periods from January 1, 2024 to October 2, 2024 and October 3, 2024 to December 31, 2024, we incurred $1.3 million and $0.4 million, respectively, 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 period from January 1, 2024 to October 2, 2024 of $4.7 million. decreased by $1.1 million from $5.8 million for the year ended December 31, 2023. The $1.1 million decrease in property management and asset management fees was due to the completion of the Internalization on October 2, 2024 which terminated the agreements for property management and asset management fees. Following completion of the Internalization, we no longer pay property management and asset management fees.

General and Administrative expenses

General and administrative expenses for the period from January 1, 2024 to October 2, 2024 of $2.1 million and for the period from October 3, 2024 to December 31, 2024 of $2.8 million, decreased by $3.2 million from $8.1 million for the year ended December 31, 2023. This $3.2 million decrease in general and administrative expenses is primarily due to decreases of $2.6 million in structuring and public company readiness costs and $2.2 million in Internalization expenses compared to the year ended December 31, 2023. This decrease was partially offset by $1.1 million for employee compensation, and $0.6 million for stock-based compensation incurred during the year ended December 31, 2024.

Other expenses and income

Interest expense

Interest expense for the period from January 1, 2024 to October 2, 2024 of $19.9 million and for the period from October 3, 2024 to December 31, 2024 of $3.5 million, increased by $5.0 million from $18.4 million for the year ended December 31, 2023. The increase was primarily due to the increase in weighted average debt of $383.3 million in 2024 compared to $323.0 million in 2023. The increase is also due to the increase in interest rates during 2023. As of December 31, 2024 and 2023, the weighted average interest rate was 5.65% and 5.17%, respectively.

Gain on sale of real estate

During the period from January 1, 2024 to October 2, 2024, we sold five properties at a net gain of approximately $0.3 million. During the year ended December 31, 2023, we sold two properties at a net gain of approximately $0.7 million.

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Impairment loss

The following table presents the impairment for the respective periods:

Successor Predecessor Predecessor

Number of properties 3 1 2

Carrying value prior to impairment loss $ 8,933 $ 1,961 $ 1,036

During the period from January 1, 2024 to October 2, 2024, we recorded an impairment loss of $0.6 million relating to an asset held for investment. During the period from October 3, 2024 to December 31, 2024, we recorded impairment losses of $3.9 million relating to three assets held for sale. For the year ended December 31, 2023, we recorded an impairment loss of $0.2 million relating to an asset held for sale and an impairment loss of $0.2 million with respect to an asset held for investment. The timing and amount of impairment fluctuates each period based on existing facts and circumstances.

Internalization expense

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 termination of the management arrangement of $16.5 million was expensed in the period from January 1, 2024 to October 2, 2024.

Gain from acquisition of equity method investment

On October 20, 2023, we acquired the remaining 50% interest of the 50/50 Joint Venture. We recorded the assets and liabilities acquired at fair value and realized a gain of approximately $13.0 million for the year ended December 31, 2023. Commencing October 20, 2023, the results of the 50/50 Joint Venture have been consolidated into the Company.

Equity loss from investment in an unconsolidated entity

The loss for the year ended December 31, 2023 consists of the 50/50 Joint Venture’s operations from January 1, 2023 to October 20, 2023 when we closed on the 50/50 Joint Venture Acquisition to acquire the remaining 50% interest in the 54 underlying properties. The results from October 21, 2023 to December 31, 2023 are consolidated into the Company.

Liquidity and Capital Resources

Liquidity/REIT Requirements

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. As of December 31, 2024, we have $181.5 million of available capacity under our Revolving Credit Facility.

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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 December 31, 2024, we have total debt outstanding of $268.5 million, Net Debt of $263.4 million, and a Net Debt-to-Annualized Adjusted EBITDAre ratio of approximately 5.2x. 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.

Equity 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 our 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 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 December 31, 2024, 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 December 31, 2024, the applicable facility fee was 0.30%.

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.

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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 December 31, 2024, 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 December 31, 2024, 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%

Contractual Obligations

The following table provides information with respect to our contractual commitments and obligations as of December 31, 2024. Refer to the discussion in the Liquidity and Capital Resources section above for further discussion over our short and long-term obligations.

(in thousands)

Thereafter — — — — — —

(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 December 31, 2024.

(3)

Amounts include dividends declared as of December 31, 2024 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 may be 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 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.

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In the future, we may attempt to manage our interest rate risk by entering into 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, cash equivalents and restricted cash totaled $5.1 million as of December 31, 2024 as compared to $17.1 million as of December 31, 2023. The table below shows information concerning cash flows for the periods from January 1, 2024 to October 2, 2024, October 3, 2024 to December 31, 2024 and for the year ended December 31, 2023:

Successor Predecessor Predecessor

Net cash (used in) provided by investing activities (105,103 ) 7,934 (93,812 )

Net cash provided by operating activities for the period from January 1, 2024 to October 2, 2024 of $17.8 million and for the period from October 3, 2024 to December 31, 2024 of $2.7 million, increased by $3.3 million from $17.2 million for the year ended December 31, 2023. The $3.3 million increase in net cash provided by operating activities for the year ended December 31, 2024 as compared to the year ended December 31, 2023 was mainly due to growth in our real estate portfolio and increase in rental receipts offset by increased interest expense.

Net cash (used in) provided by investing activities for the period from January 1, 2024 to October 2, 2024 of $7.9 million and for the period from October 3, 2024 to December 31, 2024 of $(105.1) million, decreased by $3.4 million from $(93.8) million for the year ended December 31, 2023. The $3.4 million decrease in net cash provided by investing activities was due to increased acquisitions in the year ended December 31, 2024 as compared to the year ended December 31, 2023. During the year ended December 31, 2024, there were five properties sold and 29 properties acquired compared to two properties sold and 26 properties acquired during the year ended December 31, 2023. The Company also acquired the 50/50 Joint Venture in the previous year, which is reflected in the change in net cash used in investing activities.

Net cash provided by (used in) financing activities for the period from January 1, 2024 to October 2, 2024 of $(30.4) million and for the period from October 3, 2024 to December 31, 2024 of $95.0 million, increased by $12.0 million from $52.6 million for the year ended December 31, 2023. The $12.0 million increase in net cash provided by financing activities for the year ended December 31, 2024 as compared to the year ended December 31, 2023 was mainly due to the proceeds received from the IPO issuance and borrowings the Company made from the Term Loan and Revolving Credit Facility. These were used to repay the CIBC Revolving Credit Facility, CIBC Term Loan, and ABS Notes during 2024.

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.

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.

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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.

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The following is a reconciliation of historical and pro forma net income (which is the most comparable GAAP measure) to FFO and AFFO:

Reconciliation of Historical and pro forma net income to FFO and AFFO

Successor Successor Predecessor Predecessor

Pro Forma Historical Historical Historical

Gain on sale of real estate — — (337 ) (725 )

Share of 50/50 Joint Venture's gain on sale of real estate — — — (260 )

Gain from acquisition of equity method investment — — — (12,988 )

Share of 50/50 Joint Venture's straight-line rent adjustments — — — (43 )

Share of 50/50 Joint Venture's amortization of debt issuance cost — — — 226

Stock-based compensation 2,496 608 — —

Adjustment for structuring and public company readiness costs — 662 487 4,092

Other non-recurring expenses — 84 — 172

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 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

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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 Combined Successor and Predecessor Predecessor

Pro Forma Historical Historical

Share of 50/50 Joint Venture's depreciation and amortization — — 122

Share of 50/50 Joint Venture's interest expense — — 130

Share of 50/50 Joint Venture's income taxes — — 2

Gain on sale of real estate — — (1,057 )

Impairment loss on real estate held for investment 3,891 3,891 407

Gain from acquisition of equity method investment — — (12,988 )

Adjustment for current period investment activity (1) — 1,354 —

Adjustment for current period disposition activity (2) — — (36 )

Adjustment for non-cash compensation expense (3) 624 608 —

Adjustment to exclude non-recurring (income) expenses (4) 16,238 16,760 1,361

Adjustment to exclude net write-offs of accrued rental income 63 63 —

(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 and expense.

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Net Debt is a non-GAAP financial measure. We define Net Debt as our Gross Debt less cash, cash equivalents and restricted cash. 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

December 31,

Pro Forma Historical Historical

Debt

CIBC Revolving Credit Facility — — 168,890

Cash, cash equivalents and restricted cash (5,094 ) (5,094 ) (17,129 )

Leverage Ratios:

Net Debt to Annualized EBITDAre (13.3 ) (10.7 ) 11.0

Net Debt to Annualized Adjusted EBITDAre 5.5 5.2 9.6

Critical Accounting Policies and Estimates

The preparation of the historical 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 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 consolidated financial statements included elsewhere in this Form 10-K. Management believes the following critical accounting policies affect its more significant estimates and assumptions used in the preparation of our 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 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.

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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 Consolidated Financial Statements included in this Form 10-K.

Item 7A. 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 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.

As of December 31, 2024 and December 31, 2023, our financial instruments were not exposed to significant market risk due to foreign currency exchange risk.

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Item 8. Financial Statements and Supplementary Data.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (PCAOB ID No. 185) 63

Consolidated Balance Sheets 64

Consolidated Statements of Income (Loss) 65

Consolidated Statements of Equity 66

Consolidated Statements of Cash Flows 67

Notes to Consolidated Financial Statements 69

Schedule III 84

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors

FrontView REIT, Inc.:

Opinion on theConsolidated Financial Statements

We have audited the accompanying consolidated balance sheets of FrontView REIT, Inc. and subsidiaries (the Company) as of December 31, 2024 (Successor) and 2023 (Predecessor), the related consolidated statements of income (loss), equity, and cash flows for the periods from October 3, 2024 to December 31, 2024 (Successor period), and the periods from January 1, 2024 to October 2, 2024 and for the year ended December 31, 2023 (Predecessor periods), and the related notes and financial statement schedule III Real Estate Assets and Accumulated Depreciation (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 (Successor) and 2023 (Predecessor), and the results of its operations and its cash flows for the period from October 3, 2024 to December 31, 2024 (Successor), and the period from January 1, 2024 to October 2, 2024 and the year ended December 31, 2023 (Predecessor periods), in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG LLP

We have served as the Company’s auditor since 2023.

Dallas, Texas

March 20, 2025

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FRONTVIEW REIT INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

Successor Predecessor

ASSETS

Real estate held for investment, at cost

Total real estate held for investment, at cost 719,406 647,180

Cash, cash equivalents and restricted cash 5,094 17,129

LIABILITIES, CONVERTIBLE NON-CONTROLLING PREFERRED INTERESTS AND EQUITY

Liabilities

Accounts payable and accrued liabilities 17,858 17,452

Convertible non-controlling preferred interests — 103,616

Equity

FrontView REIT, Inc. equity

Additional paid-in capital 331,482 —

Accumulated deficit (6,834 ) —

Total FrontView REIT, Inc. equity 324,821 —

Non-controlling interests 197,857 —

The accompanying notes are an integral part of these consolidated financial statements.

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FRONTVIEW REIT INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(in thousands, except per share amounts)

Successor Predecessor (1) Predecessor (1)

Revenues

Operating expenses

Other expenses (income)

Gain on sale of real estate — (337 ) (725 )

Internalization expense — (16,498 ) —

Gain from acquisition of equity method investment — — 12,988

Equity loss from investment in an unconsolidated entity — — (38 )

Less: Net loss attributable to non-controlling interests 1,825 — —

Weighted average number of common shares outstanding

Net loss per share attributable to Common Stock holders

Basic $ (0.19 ) — —

Diluted $ (0.19 ) — —

(1)

The Company determined that earnings per unit in the Predecessor period would not be meaningful to users of this filing, given the different unitholders in the Predecessor.

The accompanying notes are an integral part of these consolidated financial statements.

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FRONTVIEW REIT INC.

CONSOLIDATED STATEMENTS OF EQUITY

(in thousands, except per share amounts)

Issue costs — — — — (326 ) (326 )

Accretion of non-controlling interests — — — — (7,030 ) (7,030 )

Distributions reinvested in Common Units — — — — 640 640

Redemption of Common Units — — — — (6,000 ) (6,000 )

Accretion of non-controlling interests — — — — (12,071 ) (12,071 )

Offering costs, discounts, and commissions — (24,060 ) — — — (24,060 )

Stock-based compensation — 608 — — — 608

Distributions declared to Preferred Units — — — (16 ) — (16 )

Reallocation of non-controlling interests — 17,276 — (17,276 ) — —

The accompanying notes are an integral part of these consolidated financial statements.

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FRONTVIEW REIT INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Successor Predecessor Predecessor

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile net loss to net cash provided by operating activities:

Amortization of above/ below market leases 164 1,341 1,469

Amortization of financing transaction and discount costs 1,588 3,145 2,792

Amortization of organization costs 100 — —

Amortization of software costs 8 25 —

Non-cash rental revenue adjustments (237 ) (970 ) (1,138 )

Gain on sale of real estate — (337 ) (725 )

Stock-based compensation 608 — —

Internalization expense — 16,498 —

Allowance for doubtful accounts — — (328 )

Gain from acquisition of equity method investment — — (12,988 )

Equity loss from investment in an unconsolidated entity — — 38

Changes in operating assets and liabilities:

Accounts payable and accrued liabilities (5,700 ) 2,145 2,703

Related party payable — — (289 )

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition fees paid — (523 ) —

Acquisition of real estate held for investment (104,184 ) — (75,039 )

Deposits on real estate held for investment (438 ) (350 ) 74

Net proceeds from sale of real estate held for investment 148 9,931 5,222

Distributions received from investment in an unconsolidated entity — — 816

Additions to software costs — (21 ) (83 )

Net cash (used in) provided by investing activities (105,103 ) 7,934 (93,812 )

CASH FLOWS FROM FINANCING ACTIVITIES

Capital contributions from Common Unit Holders — — 10,879

Issue costs — — (326 )

Contributions from non-controlling convertible preferred interests — 108 5,052

Redemption of Common Units — — (7,081 )

Deferred offering costs — (2,843 ) (1,953 )

Cash distributions paid to Common Unit Holders — (1,500 ) (16,637 )

Cash distributions paid to Preferred Unit Holders (16 ) (12 ) (16 )

The accompanying notes are an integral part of these consolidated financial statements.

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Successor Predecessor Predecessor

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Non-cash disclosures of non-cash investing and financing activities:

Deferred rent receivable classified as assets held for sale $ — $ — $ 5

Accrued real estate development and improvement costs $ 1,594 $ 1,627 $ 1,555

Accrued acquisition fees $ — $ — $ 523

Accrued deferred leasing fees $ 224 $ 559 $ 264

Accrued deferred offering costs $ 391 $ 225 $ 3,186

OP Units issued as consideration for Internalization $ 17,698 $ — $ —

Distributions reinvested in Common Units $ — $ — $ 640

Dividends payable $ 6,101 $ — $ —

The accompanying notes are an integral part of these consolidated financial statements.

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FRONTVIEW REIT INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 AND 2023

1. BUSINESS DESCRIPTION

All amounts expressed in these consolidated financial statements are in U.S. currency and in thousands, except per unit amounts, number of properties and where indicated.

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 managing member of the OP. The units not owned by the Company in the OP are referred to as OP Units or non-controlling interests.

FrontView REIT, Inc. 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 December 31, 2024, the Company owned a well-diversified portfolio of 307 properties with direct frontage across 35 U.S. states.

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 United States (“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 72.89% ownership interest in the Sub OP as of December 31, 2023. The remaining ownership was referred to as convertible non-controlling preferred interests (“Preferred Unit Holders”).

On October 20, 2023, the Predecessor purchased the remaining 50% interest in NADG NNN 50/50 LP (the “Joint Venture”) for a purchase price of $26,910. The acquisition was accounted for as an asset acquisition and resulted in a gain of $12,988, which is recorded in gain on acquisition of equity method investment in the year ended December 31, 2023 consolidated statements of income (loss).

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 Predecessor effected a 250-for-one split ("Stock Split") with no fractional units being issued that was approved by the Predecessor's general partner and executive committee, on its then outstanding 30 common units. After adjusting for the Stock Split, the Predecessor had 7,520 OP Units.

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) Common Unit Holders of the Predecessor exchanged their common units (or interest in the entity that owns the common units) for OP Units or Common Stock of the Company on a one-for-one basis and (2) existing Preferred Unit Holders exchanged their interests in the Predecessor’s Sub OP (or interest in the entity that owns the preferred interests in the Predecessor’s Sub OP) for OP Units.

2. ACCOUNTING POLICIES FOR FINANCIAL STATEMENTS

a)

Basis of presentation and principles of consolidation

These 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 Commission (the “SEC”). The 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 noncontrolling interests.

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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 December 31, 2024.

b)

Use of estimates

The preparation of these 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 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 reviews its 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.

c)

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.

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 16 – 54 years

Site improvements 4 – 28 years

Tenant improvements Shorter of the lease term or useful life

In-place leases and origination costs Remaining lease term

Leasing fees Remaining lease term

Above- and below market leases Remaining lease term

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.

d)

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.

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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 consolidated statements of income (loss). As of December 31, 2024, there were four properties classified as held for sale of which three had impairment loss recorded in the amount of $3,891. As of December 31, 2023, there were two properties classified as held for sale of which one had an impairment loss recorded in the amount of $229. The Company estimated the fair value of the assets held for sale using Level 2 and Level 3 inputs based on the negotiated selling price, less costs of disposal, received from a third party and a capitalized fair value approach, less costs of disposal, based on market rents and capitalization rates from comparable transactions, respectively. The results of operations for properties disposed of or classified as held for sale were not reclassified as discontinued operations as these events are a normal part of the Company’s operations and do not represent strategic shifts in the Company’s operations.

e)

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 years ended December 31, 2024 and December 31, 2023, the Company recorded impairment losses of $591 and $178, respectively, on real estate held for investment with remaining carrying value of $1,942 and $1,036, respectively, which declined due to the tenants' vacancy. The Company determined the fair value measurement using a range of significant unobservable inputs, including broker market information and recent comparable sales transactions.

f)

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.

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 December 31, 2024 and December 31, 2023, generally 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 consolidated balance sheets. If the Company determines that collectibility of the lease payments is not probable, the Company records an adjustment to rental revenues to reduce the outstanding receivables where collectibility 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.

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For the periods from January 1, 2024 to October 2, 2024, October 3, 2024 to December 31, 2024, and the year ended December 31, 2023, the Company had no individual tenants or common franchises that accounted for more than 10% of rental revenues, excluding lease termination fees.

In accordance with ASC 842, provisions for uncollectible rent are recorded as an offset to rental revenues in the accompanying consolidated statements of income (loss).

g)

Cash, cash equivalents and restricted cash

Cash and cash equivalents comprise amounts held in operating bank and money market accounts.

Restricted cash includes cash proceeds from sale of assets included in the asset backed securitization in anticipation of replacement properties and a maintenance reserve required as part of the asset backed securitization. As of December 31, 2024, the Company had no restricted cash. As of December 31, 2023, the Company had $5,532 of restricted cash.

h)

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 consolidated statements of income (loss). The unamortized balance of deferred financing transaction costs and fair value discount associated with the ABS Notes, secured revolving facility and secured term loans are shown as a reduction of debt on the accompanying consolidated balance sheets. 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 consolidated balance sheets.

i)

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 consolidated balance sheets and consolidated statements of equity upon consummation of the offering. As of December 31, 2023, deferred IPO costs totaled $3,186 and were included within other assets on the consolidated balance sheets.

j)

Non-controlling interests

Non-controlling interests represents the interests held in the OP of 37.9% as of December 31, 2024, by third parties and related parties involved in the Internalization which are accounted for as a separate component of equity.

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 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.

k)

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 consolidated statements of income (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 consolidated balance sheets.

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l)

Income taxes

The Company has elected to be treated as a real estate investment trust (“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 must distribute at least 90% of its taxable income to its shareholders as dividends. As a REIT, the Company will be subject to federal income tax on its undistributed REIT taxable income and net capital gain and to a 4% non-deductible excise tax on any amount by which distributions it pays with respect to any calendar year are less than the sum of (1) 85% of its ordinary income, (2) 95% of its capital gain net income and (3) 100% of its undistributed taxable income from prior years. The Company intends to operate in such a manner so as to qualify as a REIT, but no assurance can be given that the Company will operate in a manner so as to qualify as a REIT. If the Company fails to meet these requirements, it could be subject to federal income tax on all of the Company’s taxable income at regular corporate rates for that year. The Company would not be able to deduct distributions paid to shareholders in any year in which it fails to qualify as a REIT. Additionally, the Company will also be disqualified from electing to be taxed as a REIT for the four taxable years following the year during which qualification was lost unless the Company is entitled to relief under specific statutory provisions. As of December 31, 2024, the Company believes it is in compliance with all applicable REIT requirements.

For the years ended December 31, 2024 and 2023, the Company has distributed 100% of its taxable income and, therefore, is not required to pay any federal income tax in its own right.

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 consolidated statements of income (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 years ended December 31, 2024 and 2023.

The Company is required to file income tax returns with federal and state taxing authorities. As of December 31, 2024, the Company’s U.S. federal and state income tax returns remain subject to examination by the respective taxing authorities for the 2023 tax year.

m)

Earnings per Share

Earnings per common share has 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.

n)

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.

o)

Segment reporting

The Company currently operates in a single 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 Co-Chief Executive Officers. 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.

p)

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:

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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 LIBOR/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.

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.

The following table summarizes the fair value of the Company’s aggregate debt:

(in thousands) December 31, 2023

All of the Company's debt was entered into in the quarter ended December 31, 2024, post IPO. Given all of the Company's debt accrues interest at a variable rate as of December 31, 2024, the carrying amounts approximate fair value.

The Company has financial instruments which include cash, cash equivalents and restricted cash, other assets, and accounts payable and accrued liabilities, which are carried at amortized cost and approximate their fair value unless otherwise noted.

q)

Subsequent events

The Company evaluates subsequent events for disclosure in these consolidated financial statements through the date of the independent auditor’s report which is the date on which these consolidated financial statements were available to be issued.

r)

Recently adopted accounting pronouncements

In September 2016, FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 requires entities to use a forward-looking approach based on current expected credit losses (“CECL”) to estimate credit losses on certain types of financial instruments, including Accounts Receivables. This may result in the earlier recognition of allowances for losses. ASU 2016-13 was effective for the Company beginning January 1, 2023. The adoption of ASU 2016-13 did not have a material impact on the Company’s financial position, results of operations and cash flows.

In March 2020, the FASB issued an Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting”, which provides temporary, optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. Further, in January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848) – Scope”, to clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivative instruments that use an interest rate for margining, discounting or contract price alignment that is modified as a result of the reference rate reform. On December 31, 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848) – Deferral of the Sunset Date of Topic 848”, which extends the sunset (or expiration) date of Topic 848 from December 31, 2022 to December 31, 2024. The Company modified its debt, cap and floor agreements from LIBOR to SOFR during 2023 and has elected to use the optional expedient for contract modifications. The Company has concluded that the amendments should be treated as non-substantial modifications of the existing contracts, resulting in no impact to the Company's consolidated financial statements.

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 consolidated financial statements. This ASU requires public entities to disclose,

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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 December 31, 2024 and 2023, the Company has a portfolio of 307 and 283 real estate properties, respectively. The average remaining lease term for real estate properties owned by the Company as of December 31, 2024 and 2023 was approximately 7.4 years and 7.4 years, respectively.

During the year ended December 31, 2024, the Company acquired 29 properties for an aggregate purchase price of $104,184. The majority of properties acquired during the year ended December 31, 2024, were leased at acquisition with an average remaining lease term of approximately 11.3 years.

During the year ended December 31, 2023, the Company acquired 26 properties for an aggregate purchase price of $75,039, including acquisition costs totaling $1,380. All properties acquired during the year ended December 31, 2023, were leased at acquisition with an average remaining lease term of approximately 8.2 years. Additionally, the Company acquired the remaining 50% interest in the Joint Venture held by the Joint Venture Partner, which consists of 54 properties as of the date of acquisition.

The acquisitions were all accounted for as asset acquisitions. The Company allocated the purchase price of these properties to the fair values of the assets and liabilities assumed, which is summarized in the following table:

Successor Predecessor

Other assets 340 —

Intangible assets:

In-place leases and origination costs 10,846 10,176

Liabilities assumed:

Below-market leases intangible liabilities (1,649 ) (1,793 )

Accounts payable and accrued liabilities (822 ) (350 )

Purchase price (including acquisition costs) $ 104,184 $ 75,039

During the year ended December 31, 2024, the Company sold five real estate properties for $11,005. The Company received net proceeds of $10,079 after paying closing costs of $926 and recorded a gain on sale of $337. The aggregate cost and associated accumulated depreciation and amortization of the properties sold, at the date of sales, were $10,248 and $739 respectively.

The depreciation expense on real estate held for investment was as follows:

Successor Predecessor Predecessor

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The following table summarizes amounts reported as rental revenues on the accompanying consolidated statements of income (loss):

Successor Predecessor Predecessor

Revenues:

Above/below market lease amortization, net (164 ) (1,341 ) (1,469 )

Total estimated future minimum rents to be received under non-cancelable tenant leases in effect as of December 31, 2024, are as follows:

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:

Intangible lease assets:

Intangible lease liabilities:

Intangible lease assets:

Intangible lease liabilities:

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The amortization and net adjustment to rental revenue of intangibles lease assets and liabilities was as follows:

Successor Predecessor Predecessor

Amortization:

Amortization of in-place leases and leasing fees $ 4,224 $ 12,726 $ 15,658

Net adjustment to rental revenue:

Above-market and below-market leases $ 164 $ 1,341 $ 1,469

The remaining weighted average amortization period for the Company’s intangibles assets and liabilities as of December 31, 2024 and 2023 by category are as follows:

Successor Predecessor

In-place leases and origination costs 9.1 9.2

Above-market leases 8.2 8.6

Below-market leases 10.5 9.7

The estimated future amortization expense for intangible lease assets, net of intangible lease liabilities, are as follows:

5. DEBT, NET

(in thousands, except interest rate) Note Maturity Interest Rate

JPMorgan Chase Bank, Term Loan (e) 3-Oct-2027 Adjusted SOFR + 1.20% * 200,000

Unamortized financing transaction costs, JPMorgan Chase Bank, Term Loan (1,962 )

* The approximate SOFR rate at December 31, 2024 was 4.37%, plus a 10 basis point adjustment (“Adjusted SOFR”).

(in thousands, except interest rate) Note Maturity Interest Rate

Unamortized financing transaction and discount costs (3,927 )

** The approximate one-month Term SOFR rate (as defined below) at December 31, 2023 was 5.38%, plus a 10 basis point adjustment (“Adjusted Term SOFR”).

As of December 31, 2024 and 2023, the weighted average interest rate was 5.65% and 5.17%, respectively.

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The aggregate principal repayment of the Company’s debt, excluding the unamortized financing transaction costs of $1,962, due in each of the years under the remaining term, are as follows:

(a)

Asset Backed Securities

On December 9, 2019, the Predecessor and the Joint Venture issued 3.37% Series 2019-1, Class A (rated by Standard & Poors and Kroll Bond Rating Agency) Net-Lease Mortgage Notes (the “ABS Notes”) for gross proceeds of $192,935 and $71,065, respectively, pursuant to the Master Indenture Agreement, among the 95 and 40 properties directly or indirectly owned, as of that date, by the Predecessor and Joint Venture, respectively (collectively, the “Issuers”), and the Indenture Trustee. On October 20, 2023, the Predecessor acquired the remaining 50% interest in the Joint Venture held by the JV Partner and assumed debt at fair value of $66,907, net of a discount of $2,824.

As of December 31, 2023, the ABS Notes are secured by 129 properties directly owned by the Predecessor having a carrying value of $316,322, an assignment of leases and rents and are guaranteed by the Predecessor in the aggregate.

For the years ended December 31, 2024 and 2023, amortization of financing transaction costs recorded by the Company were $1,249 and $1,256, respectively. For the years ended December 31, 2024 and 2023, amortization of discount costs recorded by the Company were $2,440 and $384, respectively.

On December 30, 2024, the Company used the proceeds from the JPMorgan Chase Bank, Revolving Credit Facility and JPMorgan Chase Bank, Term Loan to repay the outstanding borrowings on the ABS Notes in the amount of $252,953.

(b)

CIBC Bank USA Credit Facility

The Predecessor entered into a credit facility agreement with CIBC Bank USA, which provides for a secured revolving line of credit of $65,000 (the “CIBC Revolving Credit Facility”). The CIBC Revolving Credit Facility had a three-year term expiring on March 8, 2024, with two one-year extensions. On March 8, 2024 the Company exercised its option to extend the term for one year to mature on March 8, 2025. The extension was in management’s control as the Predecessor was compliant with the required covenants and can pay the extension fee. The CIBC Revolving Credit Facility bore interest at a rate equal to LIBOR subject to a floor of 0.25% plus 2.25%. Interest only payments are due until maturity. The CIBC Revolving Credit Facility was also subject to an unused commitment fee equal to (1) 0.25% of the unused loan amount if utilization is less than 50% of the CIBC Revolving Credit Facility or (2) 0.15% of the unused loan amount if the utilization is greater than or equal to 50% of the CIBC Revolving Credit Facility. The unused commitment fee was payable quarterly in arrears on the first day of each calendar quarter and is included in interest expense on the accompanying consolidated statements of income (loss).

On July 31, 2021, the CIBC Revolving Credit Facility was amended to increase the maximum commitment under the revolving line of credit to $202,500. In addition, Montgomery Bank, OceanFirst Bank N.A., Hancock Whitney Bank, Bank of Blue Valley, South State Bank N.A. and Woodforest National Bank were added as additional lenders under the CIBC Revolving Credit Facility.

On March 17, 2023, the Predecessor amended the credit agreement for the CIBC Revolving Credit Facility to replace U.S. dollar LIBOR with the Term Secured Overnight Financing Rate (“Term SOFR”) plus an adjustment of 0.11% as of March 17, 2023. Under this amendment, the loan bears interest at a rate equal to Adjusted Term SOFR plus 2.25%.

The CIBC Revolving Credit Facility was secured by certain of the Predecessor’s properties having a carrying value of $354,571 as of December 31, 2023 and an assignment of rents and leases. The Predecessor was required to maintain minimum liquidity reserves of no less than the greater of: (1) $4,000 and (2) an amount equal to 4% of the principal amount outstanding under the CIBC Revolving Credit Facility, but up to a maximum of $8,000 pursuant to the terms of its guarantee.

For the years ended December 31, 2024 and 2023, the Company recorded amortization of financing transaction costs of $653 and $1,152, respectively, relating to the CIBC Revolving Credit Facility.

On October 3, 2024, the Company used the net proceeds of the IPO to repay the outstanding borrowings on the CIBC Bank USA Credit Facility, in the amount of $150,501, inclusive of accrued interest of $496.

(c)

CIBC Bank USA Term Loan

On October 20, 2023, the Predecessor purchased the remaining 50% interest in the Joint Venture from the Joint Venture Partner. The Predecessor assumed a loan (the “CIBC Term Loan”) with CIBC Bank USA, which provides for a secured loan of $17,000. The CIBC Term Loan had a maturity date of March 31, 2027 and bore interest at a rate equal to Term SOFR plus

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1.80%. The CIBC Term Loan was secured by certain of the Predecessor's properties having a carrying value of $28,506 as of December 31, 2023 and an assignment of rents and leases.

On October 3, 2024, the Company used the net proceeds of the IPO to repay the outstanding borrowings on the CIBC Term Loan in the amount of $16,041, inclusive of accrued interest of $71.

(d)

JPMorgan Chase Bank, Revolving Credit Facility

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 $250,000, including $20,000 available for issuance of letters of credit (the “ Revolving Credit Facility”). The Revolving Credit Facility has a three-year term expiring on October 3, 2027, with two 12-month extensions, subject to certain conditions including payment of 0.125% fee on the aggregate outstanding amount of the revolving commitments. Borrowings under the Revolving Credit Facility bears interest at floating rates based on adjusted SOFR plus an applicable margin based on the Company's leverage ratio ranging between 1.20% and 1.75% per annum. As of December 31, 2024, the applicable margin was 1.20%. 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. The commitment fee is payable quarterly in arrears on the first day of each calendar quarter and is included in interest expense on the accompanying consolidated statements of income (loss).

(e)

JPMorgan Chase Bank, Term Loan

On October 3, 2024, the Company entered into a Term Loan Agreement ("Term Loan") with JPMorgan Chase Bank N.A. as administrative agent, provided commitments for an unsecured Term Loan, allowing borrowings of up to $200,000. The Term Loan is available to be drawn until October 2025 and has an initial maturity of October 3, 2027, with two 12-month extensions, subject to certain conditions including payment of a 0.125% fee on the aggregate outstanding principal amount of the Term Loan. The Term Loan bears interest at floating rates based on Adjusted SOFR plus an applicable margin based on the Company's leverage ratio ranging between 1.20% and 1.75% per annum. As of December 31, 2024, the applicable margin was 1.20%.

On December 30, 2024, the Company borrowed $200,000 and used proceeds to repay the ABS Notes.

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 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. PARTNERS’ CAPITAL

Partner’s Capital is comprised of Common Units issued to investors by the Predecessor. As of December 31, 2023, investors had subscribed for 30 Common Units for a total committed capital of $306,978. As of December 31, 2023, all Common Units subscribed for had been issued. Upon completion of the contribution agreements described in Note 1, the Predecessor's Partner's Capital converted to non-controlling interests (see Note 8).

7. EQUITY

On October 3, 2024, the Company completed its IPO and issued 13,200 shares of Common Stock at an initial public offering price of $19.00 per share ("IPO Price") and received net proceeds of $233,871, which were net of underwriter fees and commissions of $16,929. The Company repaid the outstanding principal and accrued interest of the CIBC Revolving Credit Facility of $150,501 and CIBC Term Loan of $16,041 with the net proceeds. The remaining net proceeds were used for general business and working capital purposes, including acquisitions. As part of the IPO, the underwriters were granted an option, exercisable within 30 days from October 3, 2024, to purchase up to an additional 1,980 shares of Common Stock at the IPO Price, less underwriting discounts and commissions. On October 23, 2024, the underwriters partially exercised their option by purchasing an additional 1,091 shares of Common Stock. The Company received net proceeds of $19,327, which were net of underwriter fees and commissions of $1,399.

Pursuant to the Company's Articles of Incorporation (the "Charter"), the Company is authorized to issue an aggregate of 450,000 shares of Common Stock with a par value of $0.01 per share and 50,000 shares of preferred stock with a par value of $0.01 per share. The Company's board of directors, without any action by our stockholders, may amend the Company's Charter from time to time to increase or decrease the aggregate number of shares or the number of shares of any class or series of stock that the Company has authority to issue.

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The shares of the Company’s Common Stock entitle the holders to one vote per share on all matters upon which stockholders are entitled to vote, to receive dividends and other distributions as authorized by the Board of Directors in accordance with the Maryland General Corporation Law, and to all rights of the stockholder pursuant to the Maryland General Corporation Law.

On November 12, 2024, the Board of Directors declared a quarterly dividend of $0.215 per share of Common Stock and OP Unit to holders of record as of December 31, 2024, payable on or before January 15, 2025.

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, OP units issued in the Internalization (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, 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 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 period from October 3, 2024 to December 31, 2024, there were 1,223 OP Units redeemed which the Company settled by issuing 1,223 shares of Common Stock.

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 acquired the assets necessary to operate and manage the portfolio of properties. The purchase price of the Internalization was 931 OP Units with a fair value of $17,698. This was allocated to:

(a) Termination of the management arrangement of $16,498, which is included in internalization expense on the accompanying consolidated statements of income (loss);

(b) Assembled work force of $1,200, which is included in other assets in the accompanying consolidated balance sheets;

(c) Right-of-use lease asset and liability of an operating lease of office space of $644, which are included in other assets and accounts payable and accrued liabilities, respectively in the accompanying consolidated balance sheets.

During the year ended December 31, 2024, the Company recorded amortization of the assembled work force of $100. This is included in depreciation and amortization in the accompanying consolidated statements of income (loss).

10. STOCK-BASED COMPENSATION

For the period from October 3, 2024 through December 31, 2024, the Company granted one-time RSUs. The total amount of stock-based compensation expense recognized in general and administrative expenses in the accompanying consolidated statements of income (loss) was $608 for the period from October 3, 2024 through December 31, 2024. As of December 31, 2024, the remaining unamortized stock-based compensation expense totaled $9,961, and as of December 31, 2024, these awards are expected to be recognized over a remaining weighted average period of 2.5 years. Stock-based compensation expense is recognized on a straight-line basis over the total requisite service period for the entire award.

One-time grant of RSUs

Pursuant to the Equity and Incentive Plan, the Company has 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 5 years, are subject to the holder's continued service through the applicable vesting dates, and in accordance with the terms of the individual grant agreements. These grants vest over a remaining weighted average period of 2.5 years. The weighted average value of grants during the year ended December 31, 2024, was $19.00, which was based on the market price per share of the Company's Common Stock on the grant date.

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The following table presents one-time grant of RSU activity during the year ended December 31, 2024:

Unvested RSU grants outstanding as of October 3, 2024 — —

Vested during the period — —

Forfeited during the period (1 ) 19.00

11. EARNINGS PER SHARE

The following table summarizes the components used in the calculation of basic and diluted earnings per share ("EPS"):

Successor

Basic earnings:

Net loss attributable to FrontView REIT, Inc. common shareholders $ (2,997 )

Less: loss allocated to participating unvested restricted stock units (120 )

Net loss used to compute basic earnings per common share $ (3,117 )

Diluted earnings:

Net loss used to compute basic earnings per common share $ (3,117 )

Add: net loss attributable to non-controlling interests (1,825 )

Net earnings used to compute diluted earnings per common share $ (4,942 )

Weighted average number of common shares outstanding 16,815

Less: weighted average unvested restricted stock units (1) (556 )

Add: effects of convertible OP Units (2) 11,319

Basic and Diluted earnings per share $ (0.19 )

(1)

Represents the weighted average effects of 556 unvested restricted stock units of Common Stock as of December 31, 2024, which will be excluded from the computation of earnings per share until they vest.

(2)

Represents the weighted average effects of 10,532 OP Units outstanding at December 31, 2024.

12. OTHER ASSETS

Other assets consist of the following:

Successor Predecessor

Deferred offering costs — 3,186

Deferred financing transaction costs, net 2,452 —

Prepaid expenses and other assets 3,560 1,662

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13. RELATED PARTY TRANSACTIONS

Predecessor transactions

Related parties consist of the Predecessor's general partner and the Sponsor, their employees, officers, directors and parties related to them and entities under their control. In addition to disclosures elsewhere in these consolidated financial statements:

(a)

During the year ended December 31, 2023, the Predecessor incurred structuring fees and placement fees (“Issue Costs”) of (1) $2 payable to NAPG Equities Inc. (“Equities”) in respect of Common Units issued to Canadian investors, and (2) $243 payable to North American Property Group (“NAPG”) and $81 payable to NARS, in each case, in respect of Common Units issued to U.S. investors. Equities and NAPG are owned by one of the directors of the Predecessor's general partner, and NARS is a partnership affiliated with the Predecessor's general partner. A director of NARS is also a director of the Predecessor's general partner. As of December 31, 2023, the Predecessor paid all Issue Costs to Equities, NAPG, and NARS.

(b)

During the years ended December 31, 2024 and 2023, the Predecessor incurred asset management fees of $3,124 and $4,139, respectively, acquisition fees of $0 and $1,080 respectively, and property management fees and direct costs of $1,561 and $1,616, respectively, payable to NARS. As of December 31, 2024 and 2023, the Company had a payable to NARS relating to these fees of $4,105 and $2,055, respectively, which is included in accounts payable and accrued liabilities on the accompanying consolidated balance sheets.

(c)

The affiliate of the Predecessor (the "Sponsor") holds 1 Common Unit in the Predecessor. During the period from January 1, 2024 through October 2, 2024 and the year ended December 31, 2023, the Predecessor paid aggregate distributions to the Sponsor (in the same amount per Common Unit as are paid to all other investors) in the amount of $25 and $290, respectively, and to other related parties holding an aggregate of 1 Common Unit in the amount of $26 and $303, respectively. After adjusting for the effects of the Stock Split, the Sponsor and other related parties held 125 and 131 OP Units, respectively.

(d)

On October 2, 2024, the Company completed the Internalization and issued 931 OP Units as consideration (See Note 9).

Successor transactions

(a)

For the period from October 3, 2024 through December 31, 2024, the Company incurred outsourcing service fees of $141 to North American Asset Management Corp. ("NAAM"), an affiliate of the Predecessor. The services are limited to property accounting and human resources support. As of December 31, 2024, the Company paid all service fees to NAAM.