FrontView REIT (FVR) risk factors, FY2024 10-K

Other

1. 01We have limited opportunities to increase rents under our long-term leases with tenants, which could impede our growth and materially and adversely affect us
2. 02Our portfolio of properties is also concentrated in certain tenant brands and industries, and any adverse developments relating to one or more of these brands or industries could materially and adversely affect us
3. 03Security breaches and other technology disruptions could disrupt our operations, compromise our confidential information or information systems and expose us to liability, which could materially and adversely affect us
4. 04An increase in market interest rates could increase our interest costs on existing and future debt and could adversely affect our stock price, and a decrease in market interest rates could lead to additional competition for the acquisition of real estate, any of which could materially and adversely affect us

Risks Related to Our Business and Properties

1. 05Properties involve significant risks of tenant defaults and tenant vacancies, which could materially and adversely affect us
2. 06The weighted average remaining term of our leases is 7.2 years, excluding renewal options, which will require us to undertake more re-leasing efforts that could materially and adversely affect us
3. 07Our financial results have and may continue to fluctuate in the future, which makes predicting our revenues, costs and expenses difficult, and any volatility in our future financial results could materially and adversely affect us
4. 08We may not be able to achieve growth through acquisitions at a rate that is comparable to our historical results, which could materially and adversely affect us
5. 09We have experienced net losses for the past three years and we may experience additional net losses in the future
6. 10We may not achieve the total returns we expect from our future acquisitions, which could materially and adversely affect us
7. 11We may not be able to obtain acquisition financing or obtain other capital from third-party sources on favorable terms or at all, which could materially and adversely affect our growth prospects and our business
8. 12the market price per share of our Common Stock
9. 13We may not be able to effectively manage our growth and any failure to do so could materially and adversely affect us
10. 14As we continue to acquire properties pursuant to our growth strategy, our portfolio may become less diversified which could materially and adversely affect us
11. 15We face increasing competition for acquiring properties from publicly traded REITs and companies, private institutional investors and business operators that may or may not have greater resources than we do, which could materially and adversely affect us
12. 16We face significant competition for tenants, which could materially and adversely affect us, including our occupancy, rental rates, and results of operations
13. 17The departure of any of our key personnel with long-standing business relationships could materially and adversely affect us
14. 18Our management team has limited prior experience in operating a public company, which could materially and adversely affect us
15. 19Tenant demand for properties may decline, which could materially and adversely affect us
16. 20Our portfolio of properties is concentrated among tenants with non-investment grade credit ratings, and any adverse developments affecting the credit of these tenants could materially and adversely affect us
17. 21Our assessment that many of our tenants’ businesses are e-commerce resistant may prove to be incorrect, which could materially and adversely affect us
18. 22The decrease in demand for restaurant properties may materially and adversely affect us
19. 23If one or more of our top 20 tenant brands, which together represented approximately 37.0% of our ABR as of December 31, 2024, suffers a downturn in their business, it could materially and adversely affect us
20. 24We may be unable to renew leases, re-lease properties as leases expire, or lease vacant spaces on favorable terms or at all, which, in each case, could materially and adversely affect us
21. 25Our business is subject to significant re-leasing risk, particularly for specialty properties that are suitable for only one use, which could materially and adversely affect us
22. 26Our underwriting and risk management procedures that we use to evaluate a tenant’s credit risk may fail, or otherwise not accurately reflect the risk of our investment, which could materially and adversely affect us
23. 27Any failure of one or more tenants to provide accurate or complete financial information could prevent us from identifying tenant problems that could materially and adversely affect us
24. 28If one or more of our tenants declares bankruptcy or becomes insolvent, then we may encounter significant difficulties in navigating those bankruptcy proceedings, which could materially and adversely affect us
25. 29Some of our leases may require us to pay or reimburse tenants for property-related expenses, which could materially and adversely affect us
26. 30Some of our tenants operate their businesses under franchise or license agreements, which, if terminated or not renewed prior to the expiration of their leases with us, would likely impair their ability to pay us rent, which could materially and adversely affect us
27. 31The use of artificial intelligence presents risks and challenges that may adversely impact our business and operating results or that of our tenants
28. 32Our properties may be subject to impairment charges which could materially and adversely affect us, including our financial condition
29. 33We face risks associated with repositioning or construction of real estate projects, which may materially and adversely affect us
30. 34Changes in accounting and reporting standards may materially and adversely affect us
31. 35We may acquire properties or portfolios of properties through tax deferred contribution transactions, which could result in stockholder dilution and limit our ability to sell such assets and materially and adversely affect us
32. 36Certain provisions of our leases or loan agreements may be unenforceable, which could materially and adversely affect us
33. 37We may become subject to litigation, which could materially and adversely affect us
34. 38The costs of environmental contamination or liabilities related to environmental laws may materially and adversely affect us
35. 39We could become subject to liability for asbestos-containing building materials in the buildings on our property, which could cause us to incur additional expenses
36. 40Our properties may contain or develop harmful mold or suffer from other adverse conditions, which could lead to liability for adverse health effects and costs of remediation

Risks Related to Investments in Real Estate

1. 41Our operating results are affected by economic and regulatory changes that impact the commercial real estate market in general, which could materially and adversely affect us
2. 42increased competition for real property acquisitions targeted by our investment strategy
3. 43Global and U.S. financial markets and economic conditions may materially and adversely affect us
4. 44Our real estate investments are illiquid, which could materially and adversely affect us, including our financial condition and cash flows
5. 45Increases in interest rates may decrease the value of our properties, which could materially and adversely affect us
6. 46As of January 2024, the CPI rose 3.0% year over year before seasonal adjustment. Federal policies and recent global events, such as the rising price of oil and the conflict between Russia and Ukraine, may have exacerbated, and may continue to exacerbate, increases in the CPI
7. 47Natural disasters, terrorist attacks, other acts of violence or war, or other catastrophic events could materially and adversely affect us
8. 48We face risks associated with climate change, which could materially and adversely affect us
9. 49Our inability to effectively monitor and respond to the rapid and ongoing developments and expectations regarding our ESG practices may materially and adversely affect us
10. 50Insurance on our properties may not adequately cover all losses and any uninsured losses could materially and adversely affect us
11. 51Our costs of compliance with laws and regulations may require us or our tenants to make unanticipated expenditures that could reduce the investment return of our stockholders
12. 52Compliance with the ADA may require us to make unanticipated expenditures that could materially and adversely affect us
13. 53Compliance with fire, safety, environmental, and other regulations may require us to make unanticipated expenditures that could materially and adversely affect us
14. 54We may obtain only limited warranties when we acquire a property and may only have limited recourse if our acquisitions subject us to unknown liabilities

Risks Related to Debt Financing

1. 55As of December 31, 2024, we had approximately $266.5 million principal balance of indebtedness outstanding (net of fees), which may expose us to the risk of default under our debt obligations
2. 56Our debt obligations may make it difficult to meet the REIT distribution requirements and avoid entity-level taxes
3. 57Disruptions in the financial markets and deteriorating economic conditions could adversely affect our ability to obtain debt financing on commercially reasonable terms and adversely impact our ability to implement our investment strategy and achieve our investment objectives
4. 58We may incur mortgage debt on our properties, which may subject us to certain risks, and the occurrence of any such risk could materially and adversely affect us
5. 59Failure to hedge effectively against interest rate changes may materially and adversely affect us
6. 60Our Revolving Credit Facility and Term Loan contain various covenants which, if not complied with, could accelerate our repayment obligations, thereby materially and adversely affecting us
7. 61We may be adversely affected by changes in SOFR reporting practices, the method in which SOFR is determined or the use of alternative reference rates

Risks Related to Our Organizational Structure

1. 62Our charter contains provisions, including ownership and transfer restrictions, that may delay, discourage, or prevent a takeover or change of control transaction that could otherwise result in a premium price to our stockholders
2. 63We may issue preferred stock or separate classes or series of common stock, which could adversely affect the holders of our Common Stock
3. 64Termination of our employment agreements with certain members of our senior management team could be costly
4. 65In the event of the executive’s termination of employment by the Company for cause, or the executive voluntarily terminates employment (without good reason), the executive will be entitled to receive the Accrued Benefits
5. 66We may experience adverse consequences as a result of the Internalization
6. 67We may have incurred unknown liabilities in connection with the 50/50 Joint Venture Acquisition, which could materially and adversely affect us
7. 68Our ability to recover any loss that we may suffer as a result of the REIT Contribution Transactions and Internalization may be limited
8. 69Our board of directors may change our investment and financing policies without stockholder approval, which could materially and adversely alter the nature of an investment in us
9. 70Our rights and the rights of our stockholders to take action against our directors and officers are limited
10. 71active and deliberate dishonesty by the director or officer that was established by a final judgment as being material to the cause of action adjudicated
11. 72Our bylaws designate specific courts in Baltimore, Maryland and the federal district courts of the United States as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us
12. 73We are a holding company with no direct operations and rely on funds received from the OP to pay liabilities
13. 74Our UPREIT structure may result in potential conflicts of interest between the interests of our stockholders and limited partners in the OP, which may materially and adversely impede business decisions that could benefit our stockholders
14. 75We are an “emerging growth company,” and we cannot be certain if the reduced SEC reporting requirements applicable to emerging growth companies will make our Common Stock less attractive to investors, which could make the market price and trading volume of our Common Stock more volatile and decline significantly
15. 76The value of an investment in our Common Stock may be reduced if we or any of our subsidiaries are required to register as an investment company under the Investment Company Act and, if we are subject to registration under the Investment Company Act, we will not be able to continue our business
16. 77Failure to qualify as a REIT would materially and adversely affect us and the value of our Common Stock
17. 78for the five years following re-election of REIT status, upon a taxable disposition of an asset owned as of such re-election, we would be subject to corporate level tax with respect to any built-in gain inherent in such asset at the time of re-election
18. 79Even if we qualify and remain qualified as a REIT for U.S. federal income tax purposes, we may be subject to other tax liabilities that reduce our cash flow and our ability to make distributions to our stockholders
19. 80If the OP fails to qualify as a partnership for U.S. federal income tax purposes, we would cease to qualify as a REIT and suffer other adverse consequences
20. 81To satisfy the REIT distribution requirements, we may be forced to take certain actions to raise funds if we have insufficient cash flow which could materially and adversely affect us and the trading price of our Common Stock
21. 82The ownership of our TRSs, and any other TRS we form, are subject to limitations, and our transactions with our TRSs, and any other TRS we form, may cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm’s-length terms
22. 83The IRS may treat sale-leaseback transactions as loans, which could jeopardize our REIT status or require us to make an unexpected distribution
23. 84Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends
24. 85The tax imposed on REITs engaging in “prohibited transactions” may limit our ability to engage in transactions which would be treated as sales for U.S. federal income tax purposes
25. 86Complying with the REIT Requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities
26. 87Complying with the REIT Requirements may force us to liquidate or forgo otherwise attractive investments
27. 88Changes to the U.S. federal income tax laws could have a material and adverse effect on us and our stockholders

Risks Related to Ownership of Our Common Stock

1. 89The market price and trading volume of shares of our Common Stock may be volatile
2. 90the realization of any of the other risk factors presented in this report
3. 91We may not be able to make distributions to our stockholders at the times or in the amounts we expect, or at all
4. 92We may change the dividend policy for our Common Stock in the future
5. 93Increases in market interest rates may result in a decrease in the value of shares of our Common Stock
6. 94There may be future dilution to earnings related to shares of our Common Stock
7. 95Future offerings of debt, which would be senior to shares of our Common Stock upon liquidation, and/or preferred equity securities that may be senior to shares of our Common for purposes of distributions or upon liquidation, may materially and adversely affect the market price of shares of our Common Stock
8. 96Sales of substantial amounts of our Common Stock in the public markets, or the perception that they might occur, could reduce the price of our Common Stock
9. 97Sales of substantial amounts of our capital stock in the public markets may dilute your voting power and your ownership interest in us