REIT IPO Alert: Can This Net-Lease REIT Earn Your Investment Dollars?

Although the pace of initial public offerings (IPOs) has been slow in 2024, real estate investment trusts (REITs) have made their presence known. Lineage Inc. (NASDAQ:LINE), a cold-storage industrial REIT, had the biggest IPO of the year, raising $4.4 billion. Another new REIT, Sila Realty Trust, has gained over 20% in the last several weeks.

Will another success story join their ranks? FrontView REIT has filed paperwork with the Securities and Exchange Commission for an initial public offering to raise as much as $100 million. Frontview plans to trade on the New York Stock Exchange under the ticker FVR.

Check It Out:

• This billion-dollar fund has invested in the next big real estate boom, here's how you can join for $10.
  This is a paid advertisement. Carefully consider the investment objectives, risks, charges and expenses of the Fundrise Flagship Fund before investing. This and other information can be found in the Fund's prospectus. Read them carefully before investing.

• Investor alert: Triple-net properties can put a check in your pocket every quarter—a can’t-miss opportunity for accredited investors.

FrontView REIT is an internally managed net lease REIT focusing on out-parcel properties. Out-parcel properties are small parcels of land typically located at the edge of a larger retail development, such as a shopping center, mall, or strip center. These properties are usually stand-alone plots and are often leased or sold to businesses that want to operate separately but still benefit from the traffic of the larger development. Most of FrontView’s properties are in front of or near shopping centers.

FrontView was founded in 2016 and was previously known as NADG NNN. The company currently has 278 properties across 31 states. Frontview has a variety of tenant types. Its restaurants are generally corporate or multiunit franchise operators from fast-food chains such as Wendy's and McDonald’s to casual dining, including Olive Garden, LongHorn Steakhouse, and Chili's. Other tenants include cellular stores, banks, automotive stores, medical services, pharmacies, and convenience stores. FrontView also rents to home improvement stores such as Lowe's Home Improvement, Floor & Décor and Home Depot, as well as general retail.

Read More:

• A billion-dollar investment strategy with minimums as low as $10 — you can become part of the next big real estate boom today.
  This is a paid advertisement. Carefully consider the investment objectives, risks, charges and expenses of the Fundrise Flagship Fund before investing. This and other information can be found in the Fund's prospectus. Read them carefully before investing.

• Commercial real estate has historically outperformed the stock market. This platform allows accredited investors to invest in commercial real estate, invest today for a 1% boost.

As of June 30, 2024, approximately 93.2% of FrontView’s leases were triple net leases. This favorable lease structure means that the tenant pays not just the rent but also utilities, insurance, maintenance, and taxes. Tenant concentration is fairly low. The lead tenant, Verizon, represents 3.4% of annualized base rent. Other top tenants are Oak Street Health, Adams Auto Group, Raising Canes and IHOP.

FrontView reported $56 million in revenue for the 12 months ending June 30, 2024. The company's plan for growth is essentially more of the same. The opportunity it sees is that the net lease out-parcel market is currently highly fragmented. It has already spotted $45.2 million in potential acquisitions. In the SEC filing, the company stated: "We believe, based on our strong relationships with out-parcel tenants, significant expertise in the out-parcel space, the size and scalability of our platform, historical broker relationships and a balance sheet with significant liquidity, that we are uniquely positioned to capitalize on this opportunity."

FrontView's focus on service-oriented properties should help it remain recession-resistant. Retail REITs have performed well so far this year as a combination of limited new supply and strong demand has kept rents high. According to Nareit, as of the end of August, total retail REIT performance year to date was 15.23%. No IPO date has been set for FrontView yet.

Better Yields Than Some REITs?

The current high-interest-rate environment has created an incredible opportunity for income-seeking investors to earn massive yields, but not through publicly-traded REITs.

Arrived Homes, the Jeff Bezos-backed investment platform has launched its Private Credit Fund, which provides access to a pool of short-term loans backed by residential real estate with a target 7% to 9% net annual yield paid to investors monthly. It paid 8.1% in July. The best part? Unlike other private credit funds, this one has a minimum investment of only $100. 

Looking for fractional real estate investment opportunities? The Benzinga Real Estate Screener features the latest offerings.

"ACTIVE INVESTORS' SECRET WEAPON" Supercharge Your Stock Market Game with the #1 "news & everything else" trading tool: Benzinga Pro - Click here to start Your 14-Day Trial Now!

Get the latest stock analysis from Benzinga?

This article REIT IPO Alert: Can This Net-Lease REIT Earn Your Investment Dollars? originally appeared on Benzinga.com

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.