Observer Lite: 5/16/2025

Earnings from FrontView
Frontage-focused net lease trust FrontView REIT (NYSE: FVR) released 1Q2025 earnings. Key updates include:
-Invested $49.2 million into 17 properties at a 7.9% cash yield (29% of ABR from investment grade rated tenants; 12-year WALT); Select tenants include PNC Financial, Take 5 Oil Change, Dollar Tree, Bank of America, Meineke, Seven Brew, La-Z-Boy, and Strickland Brothers
-Subsequent to 3/31, acquired one additional property for $3.6 million (8.1% cap rate; 7-years remaining) and have five properties under contract for $15.7 million (8.0% cap rate; 8-year WALT)
-Sold one property for $2.1 million (Freddy’s Steakburger; 6.9% cap rate)
-Portfolio now includes 323 properties generating $62.1 million of ABR across 2.6 million square feet via 329 tenants with 96.3% occupancy, a 7.4-year WALT, and 33% of ABR sourced from investment grade rated tenants
-New quarterly discloser releasing the top 40 tenant concentrations (see below) representing nearly 60% of ABR
-Updates on 12 properties that are vacant or has a tenant in bankruptcy: 1 sold; 1 under firm contract to sell; 2 under conditional contracts to sell; 1 leased; 2 leases under LOI; remaining in marketing/negotiating stages
-Recorded provisions for impairment of $428,000
-Lowered net investment activity guidance to $125-145 million (from $175-200 million)

CBRE net lease update
Brokerage firm CBRE released its 1Q2025 net lease report. The firm reported total single tenant transaction volume of $9.6 billion (up 9% year-over-year) at an average 7.0% cap rate.

CBRE data includes transactions above $2.5 million. Retail volume during the quarter surged 38% versus 1Q24 while industrial rose 16% and office fell 30%.

Despite three years of elevating cap rates, spreads remain tight compared to post-GFC averages.

Check out the full report here:
Q1_2025_U.S._Net-Lease_Investments

Unlocking its inner sneakerhead
Dick’s Sporting Goods (NYSE: DKS) announced a definitive agreement to acquire Foot Locker (NYSE: FL) for $24/share implying a $2.5 billion FL enterprise value.

The combined entity will operate 3,266 stores across 26 countries with FY2024 revenue and adjusted EBITDA of $21 billion and $2.3 billion, respectively.

Each company primarily leases its retail stores while according to the most recent Form 10-K filings, both retailers own the real estate for two of their distribution centers.

Despite its plan to fund the acquisition with cash on hand and debt financing, DKS “is committed to maintaining its investment grade rating following the completion of the transaction.”

In terms of disclosed net lease owner exposure, DKS represents the #1 tenant concentration at Alpine Income Property Trust (NYSE: PINE) generating 10% of annualized base rent. DKS generated 4.3% of the multi-tenant retail portfolio straight-line rent at Global Net Lease (NYSE: GNL) as of 12/31/2024. The portfolio was sold to RCG Ventures in 1Q2025 (partial closing with remaining to close in 2Q2025).

-Sean Hostert