FrontView REIT announced Q1 earnings. Another solid quarter of execution and the share price has done well too, up ~22% YTD.

Highlights:

• Q1 AFFO of $0.34 per share, up 13% year-on-year from $0.30 (but benefited from some one-time items so not a fair run rate)

• Occupancy held at 98.7% with just 4 vacant assets (flat vs Q4)

• Another raise to 2026 AFFO guidance to $1.29-$1.33 (from $1.27-$1.32), now implying 5% growth at the midpoint

• Acquired 10 properties for $34m at a 7.5% cash cap rate (9.4yr WALT, 1.5% annual escalators)

• Sold 5 properties (3 vacant and 2 tenanted) for $10m, with leased properties sold at a 6.89% cap rate (8.0yr WALT)

• Net acquisition guidance left unchanged at $100m fully funded by draws on the convertible preferred ($25m drawn, $50m available) with the balance

• Net Debt was flat quarter on quarter and Net Debt / EBITDA was 5.3x with 3.5x fixed charge coverage

Interesting tidbits from the earnings call:

• Achieved strong re-leasing spreads, +20% on 4 leases in Q1, 3 of which are new leases that will commence over the next 12 - 18 months and represent a source of NOI growth not included in the 2026 guide but will benefit 2027 and beyond.

• Plan to add some development (“starting small”) to their capital deployment mix, targeting 100 - 200 bp spreads over acquisitions.

• Continue to improve disclosures, breaking out non-reimburseable OPEX, which helps investors understand earnings power of the leased portfolio and drag from vacant assets.

The only “bad” news for investors is that the share price is catching up with the valuation, aided by the ~5% move today after earnings (a good problem to have).

At $18.25 per share, I see FrontView trading at a ~7.6% cap rate and 14x cash FFO. We’ve certainly moved out of discounted territory and I’d say we’ve left cheap behind as well and the company is right around fairly valued.

There have been some moving pieces around non-cash rent but broadly I see in-place cash NOI of $63m, which valued at a 7.5% cap rate results in a NAV of ~$18.35 per share (~$20.85 per share at a 7% cap rate). This quarter’s NAV is the first to incorporate the potential dilution from the convertible preferred, which will increase as the remaining $50m is drawn (but has been a key piece in supporting the re-rating of the company).

Valuing the company on a cash FFO (what they call AFFO) basis becomes more applicable as the probability of this remaining a going concern rises with the valuation. A 15x multiple would result in a ~$20.00 stock price.

I think it’s still worth holding onto shares for a couple of reasons:

1. They’ve demonstrated an ability to drive internal revenue and NOI growth through re-leasing and re-positioning their properties, which arguably could deserve a premium valuation vs. peers.

2. It’s small size means that G&A as a % of revenue remains high - around 15% today - which creates operational leverage that allows external growth to drive stronger cash flow growth than larger peers.

3. They’re within striking distance of trading at a premium to NAV and being able to kick-start the net lease REIT flywheel of attractive cash flow through through acquisitions funded by equity issuance.

That being said, this is rapidly becoming a trimming candidate for me as its become my largest position through price appreciation and a source of capital for other, cheaper ideas.