FrontView REIT : Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

About this update from Frontview Reit, Inc.

Ma nagement's Discussion and Analysis of Financial Condition and Results of Operations Except where the context suggests otherwise, as used in this Quarterly Report on Form 10-Q, 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 Condensed Consolidated Financial Statements and the accompanying Notes to the Condensed Consolidated Financial Statements appearing elsewhere in this Quarterly Report on Form 10-Q. Explanatory Note and Certain Defined Terms Unless the context otherwise requires, the following terms and phrases are used throughout this MD&A as described below: • "Adjusted SOFR" means the referenced SOFR rate plus an adjustment of 0.10% based on market convention at the time of entering into our Revolving Credit Facility and Term Loan; • "Annualized Base Rent" or "ABR" means the annualized contractual cash rent due for the last month of the reporting period, and adjusted to remove rent from properties sold during the month and to include a full month of contractual cash rent for properties acquired during the last month of the reporting period; • "CPI" means the Consumer Price Index for All Urban Consumers (CPI-U): U.S. City Average, All Items, as published by the U.S. Bureau of Labor Statistics, or other similar index which is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services; • "Internalization" means the internalization of the external management team, assets and functions previously performed for our Predecessor by our external manager and its affiliates, pursuant to the terms of the Internalization Agreement, which closed contemporaneously with the closing of our initial public offering; • "Occupancy" or a specified percentage of our portfolio that is "occupied" or "leased" means as of a specified date (i) the number of properties that are subject to a signed lease divided by (ii) the total number of properties in our portfolio; • "Predecessor" means NADG NNN Property Fund LP, a Delaware limited partnership, and its subsidiaries; • "Properties" means individual building properties (small or large formats) leased to one or more tenants that are in locations with direct frontage on high-traffic roads that are visible to consumers; • "REIT Contribution Transactions" means the contributions of the interests in entities within our Predecessor's private REIT fund structure that directly or indirectly own our Predecessor's properties pursuant to the terms of the Contribution Agreements, which closed contemporaneously with the closing of our initial public offering; • "Revolving Credit Facility" means our $250 million unsecured revolving credit facility under a credit agreement that became effective concurrently with the completion of our initial public offering; • "Series A Preferred Stock" means our Series A Convertible Preferred Stock, par value $0.01 per share; • "SOFR" means the Secured Overnight Financing Rate, which is a new index calculated by short-term repurchase agreements, backed by Treasury securities; • "Term Loan" means our $200 million unsecured term loan under a credit agreement that became effective concurrently with the completion of our initial public offering; and • "we," "our," "us," "FrontView," and "Company" mean FrontView REIT, Inc., a Maryland corporation, together with its consolidated subsidiaries, including the OP, after giving effect to the REIT Contribution Transactions and Internalization, except where it is clear from the context that the term only means FrontView REIT, Inc. before giving effect to such transactions. Overv iew We are an internally managed net-lease real estate investment trust ("REIT") focused on acquiring, owning, and managing properties with frontage that are leased to a diversified tenant base. Our real estate-first investment strategy is centered around highly visible properties in prominent retail corridors with strong underlying real estate fundamentals. We target properties along high-traffic roads that offer strong consumer visibility and adaptable building formats capable of supporting various businesses over time. As of March 31, 2026, FrontView owned a diversified portfolio of 309 direct frontage properties across 36 U.S. states, leased primarily to service and necessity based tenants across 16 industries, including medical and dental providers, quick-service and casual dining restaurants, financial institutions, cellular retailers, automotive related, fitness, and general retail along with several other diversified industries. As of March 31, 2026, we had total debt of $314.0 million, Net Debt of $304.7 million, Net Debt to Annualized Adjusted EBITDAre ratio of 5.3x and a Fixed Charge Coverage Ratio of 3.5x. Net Debt, Annualized Adjusted EBITDAre and Fixed Charge Coverage Ratio 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. Our Real Estate Investment Portf olio To achieve an appropriate risk-adjusted return, we seek to maintain a highly diversified portfolio of properties located in prominent areas with direct frontage on high-traffic roads that are visible to consumers. We aim to ensure diversity across geographic locations, tenants, and brands, and to enable cross-diversification within each category. We discuss below our portfolio diversification based on several different metrics and information provided as of March 31, 2026. Diversification by Tenant Brand We typically seek tenants that operate service-oriented businesses, such as medical and dental providers, quick-service and casual dining restaurants, financial institutions, cellular retailers, automotive related, fitness, and general retail along with several other diversified industries. As of March 31, 2026, our properties were occupied by 327 leases that operated 156 different brands, with no single tenant brand accounting for more than 3.1% of our ABR. The following table sets forth information with respect to all of our tenant brands (based on ABR) as of March 31, 2026: # Tenant Concepts # of Leases % of ABR Investment Grade Rated Dollar Tree 13 3.10 % Yes Fast Pace Urgent Care 8 2.74 % - Verizon 9 2.64 % Yes Raising Canes 6 2.34 % - LA Fitness 3 2.21 % - Dick's 1 2.16 % Yes Oak Street Health 6 2.09 % - IHOP 7 1.92 % - Mammoth Car Wash 6 1.90 % - Bank of America 5 1.86 % Yes Range USA 3 1.84 % - LA-Z-Boy 3 1.79 % - Adams Auto Group 2 1.70 % - AT&T 6 1.66 % Yes T-Mobile 9 1.64 % Yes Chili's 3 1.54 % - PNC Bank 5 1.52 % Yes Wells Fargo 3 1.36 % Yes St. Joseph Hospice 2 1.34 % - Heartland Dental 5 1.28 % - Advance Auto Parts 7 1.28 % - Aspen Dental 6 1.28 % - Lowe's Home Improvement 1 1.17 % Yes Academy Sports 1 1.11 % - Charles Schwab 1 1.11 % Yes VASA Fitness 1 1.10 % - Parachute Plasma 2 1.03 % - WSS 2 1.01 % Yes Wendy's 5 1.00 % - Wellnow 4 0.99 % - Walmart 1 0.98 % Yes Best Buy 1 0.95 % Yes Andy's Frozen Custard 4 0.95 % - Burger King 4 0.94 % - Edge Fitness 1 0.94 % - Chase Bank 3 0.94 % Yes Floor & Decor 1 0.93 % - Applebee's 3 0.90 % - Walgreens 2 0.89 % - Stop & Shop Gas 3 0.88 % Yes CVS 2 0.87 % Yes Dollar General 4 0.86 % Yes Starbucks 5 0.79 % Yes Sleep Number 3 0.78 % - Action Behavior Centers 2 0.77 % - Avis 1 0.75 % - Chuy's Mexican 2 0.73 % Yes Texas Roadhouse 2 0.73 % - Take 5 Oil Change 5 0.72 % - Exxon 2 0.71 % - Chipotle 4 0.71 % - AutoSavvy 1 0.69 % - Physicians Immediate Care 2 0.66 % - Jiffy Lube 3 0.64 % - O'Reilly Auto Parts 4 0.63 % Yes Harbor Freight 2 0.62 % - AutoZone 3 0.61 % Yes WellMed 1 0.60 % Yes Planet Fitness 1 0.60 % - 7 Brew 3 0.57 % - Circle K 2 0.54 % Yes Fulton Bank 1 0.53 % Yes Longhorn Steakhouse 2 0.51 % Yes FitzMark 1 0.51 % - KEDPlasma 1 0.51 % - Stanton Optical 2 0.50 % - Panera Bread 2 0.50 % Yes Miller's Ale House 1 0.49 % - Trinity Medical Center 1 0.48 % - Ted's Café Escondido 1 0.48 % - Taco Bell 2 0.46 % - Xfinity 2 0.46 % Yes Grifols 1 0.46 % - Hooters 2 0.45 % - Buffalo Wild Wings 1 0.45 % - Sonic 3 0.45 % - Jared 2 0.44 % Yes Saltgrass Steakhouse 1 0.44 % - McAlister's Deli 2 0.42 % - 7-Eleven 2 0.41 % Yes Byrider 1 0.41 % - Mattress Firm 2 0.41 % - Staples 1 0.40 % - Diamonds Direct 1 0.40 % Yes Arby's 2 0.40 % - Quick Clean Carwash 1 0.39 % - Caliber Collision 1 0.39 % - Caliber Car Wash 1 0.39 % - Delta Community Credit Union 1 0.39 % - Southern Immediate Urgent Care 1 0.37 % - Rise 1 0.37 % - BP 1 0.37 % - Big Blue Swim School 1 0.36 % - Meineke 2 0.36 % - Chuck E Cheese 1 0.34 % - Pizza Hut 2 0.34 % - UTMB Health 1 0.34 % Yes Skechers 1 0.33 % - Friendly's 1 0.33 % - Slim Chickens 1 0.33 % - Sherwin Williams 2 0.32 % Yes Valvoline 2 0.31 % - Hook & Reel 1 0.30 % - Olive Garden 1 0.29 % Yes Mavis Discount Tire 1 0.29 % - Hops N Drops 1 0.29 % - Trophy Fuel & Wash 1 0.29 % - City Barbeque 1 0.29 % - Citizens Bank 1 0.28 % Yes AMERA Gas Station 1 0.28 % - Roots Oil 1 0.27 % - H&R Block 1 0.27 % Yes National Tire & Battery 1 0.26 % - pOpshelf 1 0.26 % Yes HTeaO 2 0.26 % - Express Oil 1 0.24 % - Wing Daddy's 1 0.24 % - Consumers Credit Union 1 0.24 % - American Family Care 1 0.24 % - Strickland Brothers 1 0.22 % - Banner Health 1 0.22 % Yes Aaron's 1 0.21 % - BMO 1 0.21 % Yes MedExpress Urgent Care 1 0.21 % Yes Republic Bank 1 0.21 % - Sage Dental 1 0.20 % - McDonalds 1 0.18 % Yes Long John Silvers 1 0.18 % - Tumbleweed, Inc. 1 0.18 % - Panda Express (1) 2 0.18 % - Urgent Team 1 0.17 % - America's Best 1 0.17 % - Chicken Salad Chick 1 0.17 % - MOD Pizza 1 0.17 % - Elias Diamonds 1 0.16 % - Zip Car Wash 1 0.15 % - Go Health 1 0.15 % - Popeyes 1 0.15 % - Bojangles 1 0.14 % - Granny's 1 0.14 % - Valero 1 0.12 % - Nothing Bundt Cakes 1 0.12 % - Jimmy John's 1 0.11 % - Dunkin Donuts 1 0.11 % - Church's Chicken 1 0.11 % - Falafel King 1 0.10 % - Tropical Smoothie 1 0.10 % - Firehouse Subs 1 0.09 % - Auto Glass Now 1 0.06 % - Miracle Ear 1 0.06 % - Marquette Bank 1 0.05 % - Regions Banks ATM 1 0.02 % Yes By Gollys (2) 2 0.00 % - PATH USA (2) 1 0.00 % - Jaggers (2) 1 0.00 % - Hair Palace (2) 1 0.00 % - Total Portfolio 327 100.00 % (1) Panda Express leases one property that is currently paying rent; the other Panda Express is under a new lease, and is excluded from ABR. (2) Represents new leases where rent has not yet commenced and is excluded from ABR. Diversification by Tenant Industry The following chart shows a breakdown of our ABR by the tenant industries that comprised our portfolio as of March 31, 2026: (in thousands, except for # of Leases, percentages, and Rent per Square Foot) Industry # of Leases ABR % of ABR Square Feet Rent per Square Foot Medical and Dental Providers 53 $ 10,819 16.8 % 329 $ 32.88 Quick Service Restaurants 62 $ 8,052 12.5 % 174 $ 46.28 Other - Service 25 $ 7,870 12.3 % 441 $ 17.85 Casual Dining 35 $ 6,699 10.4 % 206 $ 32.52 Financial Institutions 25 $ 5,588 8.7 % 134 $ 41.70 Cellular Stores 26 $ 4,112 6.4 % 95 $ 43.28 Automotive Stores 32 $ 3,856 6.0 % 194 $ 19.88 Fitness Operators 7 $ 3,340 5.2 % 215 $ 15.53 Discount Retail 18 $ 2,704 4.2 % 196 $ 13.80 Convenience Stores and Gas Stations 14 $ 2,485 3.9 % 37 $ 67.16 Automotive Dealers 5 $ 2,281 3.6 % 77 $ 29.62 Car Washes 9 $ 1,824 2.8 % 33 $ 55.27 Home Improvement Stores 5 $ 1,689 2.6 % 263 $ 6.42 Other - Necessity 6 $ 1,597 2.5 % 295 $ 5.41 Pharmacies 4 $ 1,129 1.8 % 52 $ 21.71 Professional Services 1 $ 173 0.3 % 4 $ 43.25 Total 327 $ 64,218 100.0 % 2,745 $ 23.39 Diversification by Geography As of March 31, 2026, our properties were located in 36 U.S. states, with no single state exceeding 14.1% of our ABR. The following table sets forth information with respect to geographic diversification by state in our portfolio (based on ABR) as of March 31, 2026: (in thousands, except for # of Properties, and percentages) State # of Properties Square Feet % of ABR IL 36 358 14.1 % TX 25 160 8.6 % GA 22 157 7.1 % NC 16 191 5.8 % FL 15 149 5.4 % OH 22 127 4.6 % VA 15 90 4.4 % IN 16 81 4.2 % TN 12 95 4.1 % PA 8 145 3.9 % NY 8 242 3.3 % MI 10 68 2.9 % SC 10 87 2.8 % OK 11 60 2.7 % MO 8 49 2.5 % AL 9 40 2.3 % MN 7 72 2.3 % MD 6 43 2.2 % LA 5 52 2.1 % AZ 6 40 2.1 % KS 6 37 1.8 % MS 3 77 1.8 % KY 8 40 1.7 % ME 3 186 1.7 % NJ 7 40 1.4 % CT 2 5 0.7 % UT 2 22 0.5 % CO 2 10 0.5 % NE 2 20 0.5 % NV 1 4 0.4 % AR 1 3 0.3 % WI 1 10 0.3 % ID 1 6 0.3 % RI 1 1 0.3 % MA 1 2 0.2 % WV 1 1 0.2 % Total 309 2,770 100.0 % Property Acquisitions Our acquisitions team presents potential transactions to the Real Estate Investment Committee for approval. The Real Estate Investment Committee is responsible for approving (i) the acquisition or disposition of any single property greater than $5.0 million, (ii) the acquisition of properties in the aggregate amount up to $150.0 million in any one calendar quarter, and (iii) the disposition of properties in an aggregate amount up to $30.0 million in any one calendar quarter, in each case, prior to consulting with our Board of Directors. Further, the Real Estate Investment Committee is responsible for recommending that the Board of Directors approve, (i) individual property acquisitions or dispositions that exceed $25.0 million in value, (ii) the acquisition of properties that exceed an aggregate amount of $150.0 million in any one calendar quarter and (iii) disposition of properties that exceed an aggregate amount of $30.0 million in any one calendar quarter. Our Leases Lease Maturity Our portfolio was 98.7% leased as of March 31, 2026. Our cash flows from operations are primarily generated through our real estate investment portfolio and the monthly lease payments received under our leases with our tenants. As of March 31, 2026, the ABR weighted average remaining term of our leases was approximately 7.3 years, excluding renewal options. As of March 31, 2026, no more than 10.7% of our rental revenue was derived from leases that expire in any single year prior to 2030. Substantially all of our leases are net, meaning our tenants are generally obligated to pay customary operating expenses associated with the leased property (such as real estate taxes, insurance, maintenance, certain repairs and capital costs). The following table presents certain information as of March 31, 2026 based on lease expirations by year. (in thousands, except for percentages, Rent per Square Foot, and # of Leases) Year ABR % of ABR Square Feet Rent per Square Foot # of Leases 2026 $ 1,313 2.0 % 39 $ 33.67 10 2027 $ 6,889 10.7 % 379 $ 18.18 33 2028 $ 3,765 5.9 % 135 $ 27.89 26 2029 $ 5,690 8.9 % 187 $ 30.43 30 2030 $ 5,895 9.2 % 179 $ 32.93 30 2031 $ 5,554 8.6 % 188 $ 29.54 34 2032 $ 5,539 8.6 % 410 $ 13.51 23 2033 $ 4,410 6.9 % 164 $ 26.89 23 2034 $ 3,947 6.2 % 175 $ 22.55 20 Thereafter $ 21,216 33.0 % 889 $ 23.87 98 Total $ 64,218 100.0 % 2,745 $ 23.39 327 We typically purchase properties that are subject to existing long-term net leases with a variety of remaining lease years (initial terms of 10 years or more at lease signing that often have renewal options as well). Substantially all of our leases are net leases, meaning our tenants are generally obligated to pay customary operating expenses associated with the leased property (such as real estate taxes, insurance, maintenance, and in many cases, certain repairs and capital costs, subject to caps and exclusions in leases). For the three months ended March 31, 2026, we incurred an aggregate of approximately $0.3 million of expenses not reimbursed or paid for by our tenants. Approximately 97.5% of our leases (based on ABR) have rent escalations, including the option terms, and generally ranging from 1.0% to 3.0% annually. In general, when negotiating a new lease or an amendment to an existing lease in connection with an acquisition, redevelopment or new development, we seek to negotiate, among other things, relatively long lease terms and tenant renewal options; market rents; annual rent escalation provisions; landlord-favorable going dark, assignment, change of control provisions; limited or no exclusive or co-tenancy clauses that favor the tenant, and obligations for certain tenants and certain guarantors to periodically provide us with financial information. We may seek to use master lease structures where it fits market practice in the particular property type, pursuant to which we seek to lease multiple properties to an individual tenant on an all or none basis. In a master lease structure, a tenant is responsible for a single lease payment relating to the entire portfolio of leased properties, as opposed to multiple lease payments relating to individually leased properties. The master lease structure prevents a tenant from "cherry picking" locations, where it unilaterally gives up underperforming properties while maintaining its leasehold interest in well-performing properties. 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. For a discussion of these factors, see " Management's Discussion and Analysis of Financial Condition and Results of Operations - Factors that Affect Our Results of Operations and Financial Condition " in our Annual Report on Form 10-K for the year ended December 31, 2025. Results of Operations The following discussion includes the results of our operations for the periods presented. Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025 (unaudited, in thousands, except for percentages) For the three months ended March 31, 2026 2025 $ % Revenues Rental revenues $ 17,976 $ 16,243 $ 1,733 11 % Interest income on mortgage loans 209 - 209 > 100 % Total revenues 18,185 16,243 1,942 12 % Operating expenses Depreciation and amortization 7,672 7,814 (142 ) (2) % Property operating expenses 2,330 2,376 (46 ) (2) % General and administrative expenses 3,651 2,830 821 29 % Total operating expenses 13,653 13,020 633 5 % Other expenses (income) Interest expense 4,213 4,497 (284 ) (6) % Gain on sale of real estate (963 ) (467 ) (496 ) > (100) % Impairment loss 812 428 384 90 % Income taxes 70 102 (32 ) (31) % Total other expenses 4,132 4,560 (428 ) (9) % Net income (loss) $ 400 $ (1,337 ) 1,737 > 100 % Rental Revenues (unaudited, in thousands, except for percentages) For the three months ended March 31, 2026 2025 $ % Revenues: Contractual rental amounts billed $ 15,770 $ 15,020 $ 750 5 % Reimbursable income 2,067 1,659 408 25 % Percentage rent 34 34 - 0 % Other operating income 292 119 173 > 100 % Adjustment to recognize contractual rental amounts on a straight-line basis 434 122 312 > 100 % Above/below market lease amortization, net (621 ) (711 ) 90 13 % Total rental revenues $ 17,976 $ 16,243 $ 1,733 11 % Rental revenues for the three months ended March 31, 2026 increased $1.7 million compared to March 31, 2025, due to improved occupancy and a stronger performing portfolio. The $0.4 million increase in reimbursable income was mainly due to improved occupancy resulting in increased property expenses recovered from tenants during the three months ended March 31, 2026. Other operating income includes termination fees, late fees and, other miscellaneous income. The $0.2 million increase in other operating income was attributable to lease termination fees received for certain properties during the three months ended March 31, 2026. Interest income on mortgage loans receivable for the three months ended March 31, 2026 totaled $0.2 million. The increase relates to seller financing in connection with the sale of certain properties in 2025. Operating Expenses Depreciation and amortization The $0.1 million decrease in depreciation and amortization for the three months ended March 31, 2026 mainly relates to a decrease in writeoffs of intangible lease assets related to vacancies. Property operating expenses 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 in many cases, certain repairs and capital costs. The following table presents the non-reimbursable property operating expenses for the respective periods: (unaudited, in thousands) For the three months ended March 31, 2026 2025 Real estate taxes $ 1,663 $ 1,491 Other property operating expenses 667 885 Property operating expenses 2,330 2,376 Reimbursable income (2,067 ) (1,659 ) Less: non-recurring items - (189 ) Non-reimbursable property operating expenses $ 263 $ 528 For the three months ended March 31, 2026, we incurred $0.3 million, in aggregate of expenses that were not tenant obligations, which includes property operating expenses incurred on vacant properties. For the three months ended March 31, 2025, we incurred $0.5 million in aggregate of expenses that were not tenant obligations, after adjusting for $0.2 million of non-recurring restructuring costs. The $0.2 million decrease in non-reimbursable property operating expenses was mainly attributable to improved occupancy. General and administrative expenses The $0.8 million increase in general and administrative expenses for the three months ended March 31, 2026 was primarily due to an increase of $0.4 million related to stock-based compensation and $0.2 million of increased professional fees and subscriptions entered into the later part of 2025. For the three months ended March 31, 2026, we also incurred an additional $0.2 million of non-recurring expenses mainly attributable to restructuring and legal fees related to non-recurring items. Other expenses and income Interest expense Interest expense for the three months ended March 31, 2026 decreased $0.3 million compared to the three months ended March 31, 2025. The decrease was primarily due to a decrease in interest rates in 2026. As of March 31, 2026 and 2025, the weighted average interest rate was 4.81% and 5.62%, respectively. Gain on sale of real estate Gain on sale of real estate for the three months ended March 31, 2026 increased by $0.5 million compared to the three months ended March 31, 2025. During the three months ended March 31, 2026, we sold five properties at a net gain of approximately $1.0 million. During the three months ended March 31, 2025, we sold one property at a net gain of approximately $0.5 million. Impairment loss The following table presents the impairment for the respective periods: (unaudited, in thousands, except number of properties) For the three months ended March 31, 2026 2025 Number of properties 4 1 Carrying value prior to impairment loss $ 7,165 $ 6,504 Fair value 6,353 6,076 Impairment loss $ 812 $ 428 During the three months ended March 31, 2026 and 2025, we recorded an impairment loss of $0.8 million relating to four properties and an impairment loss of $0.4 million relating to one property, respectively. The amount of impairment fluctuates each period based on existing facts and circumstances. The increase in impairment loss is primarily driven by the increased level of property dispositions. Vacant properties were sold to facilitate the redeployment of capital into income-producing assets. Liquidity and Cap ital Resources 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. Liquidity/REIT Requirements 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 and Company operating performance. 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. The Revolving Credit Facility and Term Loan both have three-year terms with an initial maturity of October 3, 2027, with two 12-month extensions which, if exercised, would extend the maturity until October 3, 2029, subject to certain conditions. 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, additional issuances of Series A Preferred Stock pursuant to the Investment Agreement (as defined below), 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. 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 at-the-market common equity offering programs, subject to market conditions and Company operating performance. We anticipate that the net proceeds from any public offerings will be used to repay debt, fund acquisitions, and for other general corporate purposes. On February 27, 2026, we established an at-the-market common equity offering program ("ATM Program"), through which we may, from time to time, publicly offer and sell shares of common stock having an aggregate gross sales price of up to $75.0 million. As of March 31, 2026, we did not issue any shares of common stock under the ATM Program. Financing Strategy Our long-term financing strategy is to maintain a leverage profile that creates operational flexibility and generates superior risk-adjusted returns for our stockholders. We may finance our operations and investments using a variety of methods, including available unrestricted cash balances, property operating revenue, proceeds from property dispositions, available borrowings under our Revolving Credit Facility and Term Loan, common and preferred stock issuances and debt securities issuances, including mortgage indebtedness and senior unsecured debt. We determine the amount of equity and debt financing to be used when acquiring an asset by evaluating our cost of equity capital, terms available in the credit markets (such as interest rate, repayment provisions and maturity) and our assessment of the particular asset's risk. We may issue common stock when we believe that our share price is at a level that allows the offering proceeds to be accretively invested into additional properties, to permanently finance properties that were financed by our Revolving Credit Facility or Term Loan, or to repay outstanding debt at or before maturity. Stock Repurchase Program In November 2025, the Board of Directors authorized a stock repurchase program under which the Company may purchase up to $75.0 million of its outstanding common stock from time to time through November 10, 2026. The Company may make repurchases through open market transactions, block purchases, privately negotiated transactions or in such other manner in compliance with applicable securities laws and regulations. The manner, timing and amount of any repurchases will be based on an evaluation of business, market and other conditions, stock price, regulatory and contractual requirements, capital availability and other factors. The repurchase program does not require the Company to acquire any particular amount of common stock, and the program may be suspended, modified or discontinued at any time at the Company's discretion without prior notice. As of March 31, 2026, no repurchases have been under the stock repurchase program. Series A Convertible Preferred Stock On November 12, 2025, the Company entered into an investment agreement (the "Investment Agreement") with certain institutional investors pursuant to which the Company agreed to sell 750,000 shares of Series A Preferred Stock, at a price of $100 per share, for aggregate gross proceeds of $75.0 million. The sale of Series A Preferred Stock will occur in multiple tranches. The Series A Preferred Stock accumulates cumulative dividends ("Regular Dividends") at a rate (the "Regular Dividend Rate") per annum equal to 6.75% on the liquidation preference thereof. The liquidation preference with respect to any share of Series A Preferred Stock is $100. The dividend rate will increase to 8% on the date that is four years after the last date on which the Series A Preferred Stock is issued pursuant to the Investment Agreement and will increase by an additional 2% on each subsequent anniversary thereafter up to a total of 12%. Regular dividends on the Series A Preferred Stock will be payable if, as and when authorized by the Company's board of directors or any duly authorized committee thereof, to the extent not prohibited by law, quarterly in arrears on January 15, April 15, July 15 and October 15 of each year. Declared Regular Dividends will be payable solely in cash. In the event that any accumulated Regular Dividend is not authorized and paid on the applicable Regular Dividend payment date, then additional dividends ("Defaulted Regular Dividends") will accumulate on the amount of such unpaid Regular Dividend, compounded quarterly at the Regular Dividend Rate. Shares of the Series A Preferred Stock will be entitled to participate on an as-converted basis in any dividend declared and paid on (i) our common stock, subject to certain exceptions, which exceptions include a regular quarterly cash dividend that does not exceed 75% of AFFO per share for the applicable quarter, and (ii) the OP Units that is not also declared and paid as a dividend on the Series A Preferred Stock pursuant to clause (i). In addition, so long as any shares of Series A Preferred Stock remain outstanding, unless full Regular Dividends, including any Defaulted Regular Dividends thereon, have been declared and paid in cash, the Company will be prohibited from declaring or paying any dividends on any junior stock, OP Units or dividend parity stock, and the Company and its subsidiaries will be prohibited from repurchasing, redeeming or otherwise acquiring for value any junior stock or OP Units, in each case subject to certain exceptions. For so long as any shares of the Series A Preferred Stock are outstanding, the affirmative vote of either (i) holders of Series A Preferred Stock and holders of each class or series of voting parity stock, if any, representing at least a majority of the combined outstanding voting power of the Series A Preferred Stock and such voting parity stock, if any, or (ii) Maewyn FVR II LP (the "Maewyn Purchaser"), will be required to (i) amend, modify or repeal any provision of the Company's charter in a manner that adversely affects the special rights, preferences or voting powers of the Series A preferred stock, or (ii) (x) amend or modify the Company's charter to authorize or create, or to increase the number of authorized shares of, any dividend parity stock, liquidation parity stock, dividend senior stock or liquidation senior stock or (y) authorize, create or issue any structurally senior equity at subsidiaries of the Company existing as of February 10, 2026, subject to certain exceptions. Until such time as the Maewyn Purchaser beneficially owns (determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended) less than 3.5% of our common stock (including, for the avoidance of doubt, the number of shares of common stock that would be issuable upon the conversion of all outstanding shares of Series A Preferred Stock or the number of shares of common stock that would be issuable upon exercise of the Warrants, as applicable, held by the Maewyn Purchaser) on a fully diluted basis, any majority consent must include the Maewyn Purchaser. Each holder of Series A Preferred Stock has the right, at its option, to convert its Series A Preferred Stock, in whole or in part, into shares of our common stock, at any time. The number of shares of common stock into which a share of Series A Preferred Stock will convert at any time will equal the then-effective conversion rate. The conversion rate of the Series A Preferred Stock is currently set at 5.88235 shares of common stock, based on an implied conversion price of $17.00 per share of common stock. In the event of a "change of control" where the per share consideration to be paid on our common stock (the "Change of Control Price") is less than the then-effective conversion price, the conversion rate will be adjusted so that the number of shares of common stock into which a share of Series A Preferred Stock will convert will equal the liquidation preference divided by the Change of Control Price. The conversion rate is also subject to customary anti-dilution adjustments, including in the event of any stock split, stock dividend, recapitalization or similar events. The conversion rate may not be adjusted prior to the receipt of stockholder approval if such adjustment would result in a conversion price less than the "minimum price" (as defined in the Articles Supplementary). Subject to certain conditions described below, the Company may, at its option at any time that is two years after the last date on which the Series A Preferred Stock is issued pursuant to the Investment Agreement, convert the outstanding shares of Series A Preferred Stock, in whole or in part, into shares of common stock if, during the 30 consecutive trading days immediately preceding the date the Company notifies holders of the Series A Preferred Stock of the election to convert, the volume weighted average price of our common stock exceeds 117.5% of the conversion price. The Company will not exercise its right to mandatorily convert shares of Series A Preferred Stock unless certain liquidity conditions with regard to the shares of common stock to be issued upon such conversion are satisfied. The Company may, at its option, convert all of the outstanding shares of Series A Preferred Stock into shares of common stock in the event of a "change of control" transaction. The Series A Preferred Stock is redeemable, in whole or in part, at the option of the Company at any time, subject to certain conditions, on or after the date that is three years after the last date on which the Series A Preferred Stock is issued pursuant to the Investment Agreement, at a cash redemption price per share equal to the (i) liquidation preference of such share plus (ii) accumulated and unpaid Regular Dividends, including any Defaulted Regular Dividends thereon, on such share to, but excluding the redemption date. In addition to the cash redemption price, the Company will issue a warrant to each holder (other than a Terminating Holder (as defined below)) representing the right to purchase, at an exercise price equal to the Series A Preferred Stock conversion price as of the business day before the redemption date, a number of shares of our common stock equal to the aggregate liquidation preference of the shares of Series A Preferred Stock to be redeemed divided by such conversion price. If a Purchaser fails to cure any default of its obligation to purchase shares of Series A Preferred Stock pursuant to any subsequent funding request for a period of 30 calendar days following the date notice of the default is sent by the Company, such Purchaser, if it still holds shares of Series A Preferred Stock, or any holder that acquires shares of Series A Preferred Stock directly or indirectly from such Purchaser (such Purchaser or other holder, a "Terminating Holder"), will have 10 calendar days to elect to convert all of its outstanding shares of Series A Preferred Stock, after which time such Terminating Holder's right to submit shares of Series A Preferred Stock will terminate. In addition, if such Terminating Holder does not elect to convert its shares of Series A Preferred Stock during such 10-day period, the Company will then have the option to redeem such Terminating Holder's shares of Series A Preferred Stock at any time. As of March 31, 2026, 250,000 shares of Series A Preferred Stock were issued. Description of Existing Debt Outstanding 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 bear interest at floating rates based on SOFR plus an applicable margin based on our leverage ratio that initially ranged between 1.20% and 1.75% per annum. On September 16, 2025, we amended the Revolving Credit Facility to remove the 10 basis points credit spread adjustment applicable to Adjusted SOFR. On October 24, 2025, we amended the Revolving Credit Facility to adjust the applicable margin based on our leverage ratio to range between 1.15% to 1.75% per annum. As of March 31, 2026, the applicable margin was 1.15%. As of March 31, 2026, we had $136.0 million of available capacity under our Revolving Credit Facility. 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 has been fully drawn 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. Our Term Loan includes a ticking fee of 0.20% per annum on the average daily amount of unfunded term loan commitments. Borrowings under our Term Loan bear interest at floating rates based on SOFR plus an applicable margin based on our leverage ratio that initially ranged between 1.20% and 1.75% per annum. On September 16, 2025, we amended the Term Loan to remove the 10 basis points credit spread adjustment applicable to Adjusted SOFR. On October 24, 2025, we amended the Term Loan to adjust the applicable margin based on our leverage ratio to range between 1.15% to 1.75% per annum. As of March 31, 2026, the applicable margin was 1.15%. 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 March 31, 2026, 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% Tangible net worth ≥ 380,032 Contractual Obligations The following table provides information with respect to our contractual commitments and obligations as of March 31, 2026. Refer to the discussion in the Liquidity and Capital Resources section above for further discussion over our short and long-term obligations. (unaudited, in thousands) Year of Maturity Revolving Credit Facility (1) Term Loan (1) Interest Expense (2) Dividend (3) Commitments to Fund Investments (4) Total Remainder of 2026 $ - $ - $ 10,975 $ 6,402 $ 20,132 $ 37,509 2027 114,000 200,000 8,863 - - 322,863 2028 - - - - - - 2029 - - - - - - 2030 - - - - - - Thereafter - - - - - - Total $ 114,000 $ 200,000 $ 19,838 $ 6,402 $ 20,132 $ 360,372 (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 March 31, 2026. This amount includes the impact of interest rate swap agreements. (3) Amount includes dividends declared as of March 31, 2026 on our common stock, our Series A Convertible Preferred Stock and the OP Units. (4) Amounts include acquisitions under contract. Derivative Instruments and Hedging Activities We are 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 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. On March 3, 2025, we entered into interest rate swap agreements to manage interest rate risk exposure on the Term Loan. The aggregate notional amount of these contracts is $200.0 million, and they mature in March 2028. The interest rate swap agreements utilized by us effectively modify our exposure to interest rate risk by converting a portion of our floating-rate debt to a fixed rate of 4.814%, including the applicable margin of 1.15% as of March 31, 2026, thus reducing the impact of interest-rate changes on future interest expense. The agreements involve the receipt of floating-rate amounts in exchange for fixed-rate interest payments over the life of the agreement without an exchange of the underlying principal amount. On September 10, 2025, we entered into five sequential interest rate swap agreements to manage interest rate risk exposure on the Revolving Credit Facility, with the first interest rate swap agreement effective September 12, 2025. Each agreement is structured to commence immediately following the maturity of the preceding agreement. The aggregate notional amount on these contracts is $100.0 million, and they mature in six-month intervals, with the final maturity in March 2028. The interest rate swap agreements utilized by us effectively modifies our exposure to interest rate risk by converting a portion of our floating-rate debt to a weighted average fixed rate of 3.220%, reducing the impact of interest-rate changes on future interest expense. The agreements involve the receipt of floating-rate amounts in exchange for fixed-rate interest payments over the life of the agreement without an exchange of the underlying principal amount. In the future, we may enter into additional interest rate swaps or other hedging arrangements. We have not entered, and do not intend to enter, into derivative or interest rate transactions for speculative purposes. Cash Flows Cash and cash equivalents totaled $9.3 million as of March 31, 2026, as compared to $3.3 million as of March 31, 2025. The table below shows information concerning cash flows for the three months ended March 31, 2026, and 2025: For the three month ended March 31, (unaudited, in thousands) 2026 2025 Net cash provided by operating activities $ 7,108 $ 8,101 Net cash used in investing activities (25,744 ) (47,285 ) Net cash provided by financing activities 14,412 37,399 Net decrease in cash and cash equivalents during the period $ (4,224 ) $ (1,785 ) The change in net cash provided by operating activities during the three months ended March 31, 2026 as compared to three months ended March 31, 2025 was mainly due to an increase of $1.4 million in cash revenues due to the increase in occupancy in our portfolio, offset by an increase of $0.8 million in general and administrative expenses as described above. The remainder of the change in net cash provided by operating activities relates to timing of payment of payables and accrued liabilities. The change in net cash used in investing activities was due to 10 properties acquired and five properties sold during the three months ended March 31, 2026, compared to 17 properties acquired and one property sold during the three months ended March 31, 2025. The increase in net cash provided by financing activities during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 was mainly due to the net proceeds from issuance of Series A Preferred Stock of $23.9 million and proceeds from debt of $18.5 million, offset by $20.0 million in repayment of debt and distributions paid of $6.4 million. For the three months ended March 31, 2025, the Company drew $43.5 million of debt and paid $6.2 million of distributions. 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, Adjusted NOI, Annualized Adjusted NOI, Adjusted Cash NOI, Annualized Adjusted Cash NOI, Net Debt, Adjusted Net Debt and Fixed Charge Coverage Ratio, 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. 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. 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, as applicable, 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 indicative of operating performance 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. 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 also use AFFO as a measure of our performance when we formulate corporate goals. 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 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. The following is a reconciliation of net income (loss) (which is the most comparable GAAP measure) to FFO and AFFO: Reconciliation of net income (loss) to FFO and AFFO For the three months ended March 31, (unaudited, in thousands, except share, per share amounts and percentages) 2026 2025 Net income (loss) $ 400 $ (1,337 ) Less: Series A Convertible Preferred Stock dividends (239 ) - Net income (loss) attributable to OP common unitholders 161 (1,337 ) Depreciation and amortization (1) 7,672 7,814 Gain on sale of real estate (963 ) (467 ) Impairment loss 812 428 Funds from Operations ("FFO") $ 7,682 $ 6,438 Straight-line rent adjustments (434 ) (122 ) Amortization of financing transaction and discount costs 395 395 Amortization of above/below market lease intangibles 621 711 Stock-based compensation 1,061 615 Adjustment for structuring and public company readiness costs - 201 Other non-recurring expenses (2) 165 - Adjusted Funds from Operations ("AFFO") $ 9,490 $ 8,238 FFO per share $ 0.27 $ 0.23 AFFO per share $ 0.34 $ 0.30 Dividends per share $ 0.215 $ 0.215 Dividends per share as a percentage of AFFO 63.2 % 71.7 % Weighted average common shares outstanding, basic 22,279,016 17,319,742 Weighted average operating partnership units outstanding 5,599,015 10,503,084 Unvested restricted stock units and LTIP units (3) 186,055 - Weighted average common shares outstanding, diluted (4) 28,064,086 27,822,826 (1) Includes write-offs of intangibles of $0.3 million for the three months ended March 31, 2026. (2) Other non-recurring expenses include one-time legal expenses, deal pursuit costs and other non-recurring items. (3) Excludes unvested performance based LTIP awards that are contingently issuable. (4) Represents weighted average common shares outstanding, diluted, excluding any shares issuable upon conversion of the Company's Series A Convertible Preferred Stock. 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 EBITDA provides investors and analysts with a measure of our performance 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 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 EBITDAre for future periods may be significantly different from our Annualized Adjusted EBITDAre. Adjusted EBITDAre and Annualized Adjusted EBITDAre are not measurements of performance under GAAP, and our Adjusted EBITDAre and Annualized Adjusted EBITDAre may not be comparable to similarly titled measures of other companies. You should not consider our Adjusted EBITDAre and Annualized Adjusted EBITDAre as alternatives to net income or cash flows from operating activities determined in accordance with GAAP. Adjusted Net Operating Income ("NOI") and Adjusted Cash NOI are non-GAAP financial measures which we use to assess our operating results. We compute Adjusted NOI as Adjusted EBITDAre excluding general and administration expenses. We further adjust Adjusted NOI for non-cash revenue components of straight-line rent and other amortization expense to derive Adjusted Cash NOI. We believe Adjusted NOI and Adjusted Cash NOI provide useful and relevant information because they reflect only those income and expense items that are incurred at the property level. Adjusted NOI and Adjusted Cash NOI are not measurements of financial performance under GAAP and may not be comparable to similarly titled measures of other companies. You should not consider Adjusted NOI and Adjusted Cash NOI as alternatives to net income or cash flows from operating activities determined in accordance with GAAP. Annualized Adjusted NOI is calculated by multiplying Adjusted NOI for the applicable quarter by four and Annualized Adjusted Cash NOI is calculated by multiplying Adjusted Cash NOI for the applicable quarter by four. We believe these annualized figures provide a meaningful estimate of our current run rate for all of our investments as of the end of the most recently completed quarter given the contractual nature of our long-term net leases. You should not unduly rely on these measures as they are based on assumptions and estimates that may prove to be inaccurate. Our actual Adjusted NOI and Adjusted Cash NOI for future periods may be significantly different from our Annualized Adjusted NOI and Annualized Adjusted Cash NOI. The following table reconciles net income (which is the most comparable GAAP measure) to EBITDA, EBITDAre, Adjusted EBITDAre, Adjusted NOI and Adjusted Cash NOI: Reconciliation of net income to EBITDA, EBITDAre, Adjusted EBITDAre, Adjusted NOI and Adjusted Cash NOI Three months ended March 31, (unaudited, in thousands) 2026 Net income 400 Depreciation and amortization (1) 8,023 Interest expense 4,213 Income taxes 70 EBITDA 12,706 Gain on sale of real estate (963 ) Impairment loss 812 EBITDAre 12,555 Adjustments: Current period investment activity (2) 362 Current period disposition activity (2) (20 ) Non-cash compensation expense 1,061 Exclude non-recurring expenses (3) 165 Exclude write-offs of amortization of intangibles 270 Adjusted EBITDAre 14,393 General and administrative, net of non-recurring 2,425 Adjusted Net Operating Income ("NOI") 16,818 Straight-line rental revenue, net (429 ) Adjusted Cash NOI 16,389 Annualized Adjusted EBITDAre 57,572 Annualized Adjusted NOI 67,272 Annualized Adjusted Cash NOI 65,556 (1) Includes amortization of above/below market lease intangibles of $0.6 million and excludes write-offs of intangibles of $0.3 million. (2) Reflects an adjustment to give effect to all investments and dispositions during the quarter as if they had been acquired or disposed as of the beginning of the period. (3) Reflects an adjustment to exclude non-recurring expenses including one-time legal expenses, deal pursuit costs and other non-recurring items. Net Debt is a non-GAAP financial measure. We define Net Debt as our Gross Debt less cash and cash equivalents. We then adjust Net Debt by the undrawn Series A Preferred Stock to derive Adjusted Net Debt. The ratios of Net Debt to Annualized Adjusted EBITDAre and Adjusted Net Debt to Annualized Adjusted EBITDAre represent Net Debt and Adjusted Net Debt as of the end of the applicable period divided by 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 as well as Gross Debt less cash and cash equivalents and undrawn Series A Preferred Stock, which could be useful to repay debt. The following table reconciles total debt (which is the most comparable GAAP measure) to Net Debt and Adjusted Net Debt, and presents the ratios of Net Debt to Annualized Adjusted EBITDAre and Adjusted Net Debt to Annualized Adjusted EBITDAre: Reconciliation of total debt to Net Debt and Adjusted Net Debt and ratio of Net Debt to Annualized Adjusted EBITDAre and Adjusted Net Debt to Annualized Adjusted EBITDAre: As of March 31, (unaudited, in thousands) 2026 Debt Term Loan $ 200,000 Revolving Credit Facility 114,000 Gross Debt 314,000 Cash and cash equivalents (9,294 ) Net Debt $ 304,706 Net value of undrawn Series A Convertible Preferred Stock (50,000 ) Adjusted Net Debt $ 254,706 Leverage Net Debt to Annualized Adjusted EBITDAre 5.3x Adjusted Net Debt to Annualized Adjusted EBITDAre 4.4x The Fixed Charge Ratio is the ratio of Annualized Adjusted EBITDAre to Annualized Fixed Charges. Fixed charges are computed for the applicable quarter on a consolidated basis as interest expense (excluding amortization of fees paid in cash and discounts and premiums on debt), plus regularly scheduled principal repayments of debt (excluding any balloon or similar payments), plus any preferred dividends payable in cash. The Annualized Fixed Charges is calculated by multiplying fixed charges for the applicable quarter by four. We believe this ratio is useful to investors and analysts as it is used to evaluate our liquidity and ability to obtain financing. The following table summarizes our fixed charges, and fixed charge coverage ratio: As of March 31, (unaudited, in thousands) 2026 Interest expense $ 4,213 Non-cash interest (395 ) Preferred dividends 239 Fixed charges 4,057 Annualized fixed charges 16,228 Fixed Charge Coverage Ratio 3.5x Critical Accounting Policies and Estimates The preparation of the historical condensed 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 condensed 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 condensed consolidated financial statements included elsewhere in this Form 10-Q. Management believes the following critical accounting policies affect its more significant estimates and assumptions used in the preparation of our condensed 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. 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 Condensed Consolidated Financial Statements included in this Form 10-Q.

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