FrontView REIT's Q2 2025: Unraveling Contradictions in Bad Debt, Cap Rates, and Tenant Health

Bad debt expense expectations, cap rates and acquisition strategy, tenant health and bad debt expectations, cap rate trends and pipeline size are the key contradictions discussed in FrontView REIT's latest 2025Q2 earnings call.



Portfolio Performance and Lease Resolutions:
- FrontView REIT ended the quarter with a 97.8% occupancy rate, resolving issues from 12 previously troubled properties, recovering 65% of the aggregate prior rent from 9 assets.
- The successful lease resolutions and property sales were attributed to high-quality real estate and the company's ability to re-tenant, repurpose, or sell assets for maximum value.

Capital Deployment and Dispositions:
- The company sold 9 properties for $22.7 million, with an average cash cap rate of approximately 6.75%.
- This strategy aims to capitalize on the liquidity of the real estate assets and focus on assets with lower WALTs or less optimal concepts.

Acquisition Activity and Cap Rates:
- FrontView acquired 5 properties for approximately $17.8 million, at an average cash cap rate of 8.17%.
- The acquisitions were driven by strong pipeline opportunities, motivated sellers, and the ability to secure assets with great corporate credits and attractive valuations.

Guidance and Financial Metrics:
- The company reduced its net capital deployment guidance and lowered its acquisition target range to between $110 million and $130 million.
- This adjustment is to manage leverage, enhance portfolio quality, and maintain balance sheet discipline, amid a capital recycling strategy.