Curbline Properties (NYSE:CURB) is a high-end shopping center REIT focused on small shop retail in high household income areas. It was spun off from Site Centers (SITC) in October 2024. With a couple of quarters under its belt as an independent company, we are adding it to our coverage universe at Portfolio Income Solutions. This article will discuss CURB’s: Property portfolio Leasing performance Growth prospects Valuation Risks Our overall take on the stock Let’s get to it. Property Portfolio Curbline ow ...

Financial Performance - For the three months ended March 31, 2025, net income attributable to Curbline increased to $10.55 million, up from $7.98 million in the prior year, representing a year-over-year growth of 32%[97] - Funds from Operations (FFO) attributable to Curbline for the same period rose to $24.95 million, compared to $17.21 million in the previous year, marking a 45% increase[97] - Total revenues for the three months ended March 31, 2025, increased to $38,695,000 from $28,039,000 in 2024, representing a $10,656,000 increase or approximately 38% growth[100] - Rental income rose to $38,438,000 in Q1 2025, up from $27,866,000 in Q1 2024, marking a $10,572,000 increase or about 38%[100] - Net income attributable to Curbline increased to $10,550,000 in Q1 2025 from $7,975,000 in Q1 2024, reflecting a $2,575,000 increase or approximately 32%[104] - Funds from Operations (FFO) attributable to Curbline for Q1 2025 was $24,954,000, up from $17,210,000 in Q1 2024, indicating a $7,744,000 increase or about 45%[116] - Operating Funds from Operations (Operating FFO) for Q1 2025 reached $25,127,000, compared to $20,321,000 in Q1 2024, representing a $4,806,000 increase or approximately 24%[116] - Total Curbline NOI for the same period was $28.472 million, reflecting a 28.9% increase compared to $22.086 million in the prior year[121] Property and Leasing Information - As of March 31, 2025, Curbline Properties Corp. owned 107 convenience shopping centers with a total gross leasable area (GLA) of 3.4 million square feet, achieving an aggregate leased rate of 96.0% and occupancy of 93.5%[86] - The average annualized base rent (ABR) per square foot was $35.14 as of March 31, 2025, a slight decrease from $35.62 at December 31, 2024, and $35.87 at March 31, 2024[98] - New cash leasing spreads were reported at 20.8%, while cash renewal leasing spreads were at 8.3% for the first quarter of 2025[98] - Approximately 54% of the ABR under Curbline's leases is set to expire within the next five years, providing opportunities for rent increases[95] - The Company executed new leases and renewals totaling approximately 124,000 square feet of GLA for the three months ended March 31, 2025[149] - As of March 31, 2025, the convenience property portfolio had leased and occupancy rates of 96.0% and 93.5%, respectively, with an ABR per occupied square foot of $35.14[151] Acquisitions and Investments - Curbline acquired 16 properties for a total purchase price of $139.1 million during the first quarter of 2025[98] - The Company acquired 16 convenience shopping centers for a total purchase price of $139.1 million through April 22, 2025[138] Cash and Debt Management - As of March 31, 2025, the Company had $594 million in unrestricted cash and a $400 million undrawn line of credit, with total debt outstanding at $100 million[123] - The Company maintains a $100 million interest rate swap agreement to fix the variable-rate SOFR component of its Term Loan Facility at 3.578%[128] - The Company had $100.0 million of indebtedness as of March 31, 2025, with a fixed interest rate of 5.078% on its Term Loan Facility[153] - The Company’s fixed-rate debt carrying value was adjusted to include the $100.0 million of variable-rate debt swapped to a fixed rate, with a fair value of the swap as an asset of $19,722 at March 31, 2025[160] - A 100 basis-point increase in market interest rates would adjust the fair value of the swap to an asset of $3.1 million at March 31, 2025[161] Dividend and Shareholder Returns - The company declared a quarterly cash dividend of $0.16 per share of common stock, paid in April 2025[98] - The Company declared a quarterly cash dividend of $0.16 per share, totaling $17.1 million, with $17 million paid on April 8, 2025[130] Operational Challenges and Strategies - Rising interest rates and market volatility pose risks to the Company’s ability to finance future investments and maturities[153] - The Company believes it can backfill spaces vacated by bankrupt or non-renewing tenants due to favorable market conditions[152] - The Company intends to actively manage interest costs on variable-rate debt and may enter into swap positions or interest rate caps[162] - The Company routinely monitors tenant credit profiles to assess potential impacts on financial statements and cash flow[152] - The increase in recoveries from tenants was primarily due to acquisitions, with recoveries at approximately 92.4% of operating expenses for Q1 2025, down from 96.2% in Q1 2024[100] - General and administrative expenses surged to $8,928,000 in Q1 2025 from $1,524,000 in Q1 2024, reflecting a $7,404,000 increase[101] - The company reported a decrease in lease termination fees and ancillary income from $2,090,000 in Q1 2024 to $1,090,000 in Q1 2025, a decline of $1,000,000[100] - The Company has not entered into any derivative financial instruments for trading or speculative purposes as of March 31, 2025[162]

Financial Data and Key Metrics Changes - Curbline Properties reported a nearly 9% sequential increase in NOI, driven by organic growth and acquisitions [27] - CapEx as a percentage of NOI was under 5%, leading to approximately $25 million of retained cash flow before distributions, despite NOI being $28 million [13][29] - The company raised its OFFO guidance to a range between $0.99 and $1.02 per share for 2025, reflecting better-than-expected operations and acquisition pacing [30] Business Line Data and Key Metrics Changes - The leasing rate increased by 50 basis points sequentially to 96%, with blended straight-line leasing spreads at 27% [15] - Same-property NOI growth is expected to average greater than 3% for the three-year period ending in 2026 [15] - The company signed almost 120,000 square feet of new leases and renewals in Q1, including notable tenants like AT&T and Verizon [14] Market Data and Key Metrics Changes - Curbline owns over 3.3 million square feet of convenience assets, representing less than 1% of the total U.S. inventory of 950 million square feet [16] - The average household income for the first quarter investments was nearly $110,000, with a weighted average lease rate of over 95% [22] Company Strategy and Development Direction - Curbline focuses exclusively on convenience properties, which are expected to outperform in various macro environments due to high tenant retention and low CapEx [7][12] - The company plans to continue acquiring convenience properties, with a current pipeline exceeding $500 million [19][20] - The strategy emphasizes capital efficiency and the ability to generate cash flow growth with minimal capital investment [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's ability to generate compelling stakeholder value, supported by a strong balance sheet with nearly $600 million in cash [25] - The demand for available space remains strong, driven by existing retailers and service tenants expanding into suburban markets [23] - Management acknowledged potential impacts from macroeconomic changes but remains confident in the value proposition of small format retail [24] Other Important Information - The company has a net cash position and $1 billion in liquidity, positioning it well for future investments [25][35] - Curbline's business model allows for quick tenant turnover and lower costs associated with backfilling vacancies, enhancing resilience during economic downturns [106][108] Q&A Session Summary Question: Thoughts on funding sources and cost of capital - Management indicated they are exploring various funding sources, including bank, bond, and insurance markets, and will choose the best option as the year progresses [41][42] Question: Details on the acquisition pipeline - The acquisition pipeline consists mostly of single asset purchases, with a blended cap rate around 6.25% [48][49] Question: Impact of tariffs on underwriting and sector exposure - Management noted that most tenants do not carry inventory, minimizing the impact of tariffs, but acknowledged that higher capital costs may influence investment decisions [52][55] Question: Changes in seller willingness to transact - Seller willingness remains firm, primarily driven by life events rather than market timing, maintaining consistent inventory levels [64] Question: Same-store growth and occupancy changes - Same-store NOI was up 2.5% for the quarter, with occupancy metrics impacted by tenant renewals and terminations [29][66] Question: Confidence in affluent portfolio amidst consumer pullback - Management emphasized the importance of zoning and scarcity value in affluent areas, which supports the business model despite broader consumer trends [88][89] Question: Acquisition guidance for future years - The company plans to maintain a $500 million acquisition target for 2025, with potential for exceeding this based on current deal flow [96][98]

Curbline Properties Corp. (NYSE:CURB) Q1 2025 Earnings Call April 24, 2025 8:00 AM ET Company Participants Stephanie Ruys de Perez - Vice President, Capital Markets David Lukes - Chief Executive Officer Conor Fennerty - Chief Financial Officer Conference Call Participants Craig Mailman - Citi Ronald Kamdem - Morgan Stanley Todd Thomas - KeyBanc Capital Markets Alexander Goldfarb - Piper Sandler Michael Mueller - JPMorgan Paulina Rojas - Green Street Floris Van Dijkum - Compass Point Research Operator Thank ...

Financial Performance - Curbline Properties reported a net income of $10.6 million, or $0.10 per diluted share, for Q1 2025, up from $8.0 million, or $0.08 per diluted share, in Q1 2024, reflecting a year-over-year increase of 32.5%[14] - Operating funds from operations (OFFO) for Q1 2025 were $25.1 million, or $0.24 per diluted share, compared to $20.3 million, or $0.19 per diluted share, in the prior year, marking a 23.6% increase[14] - Net income attributable to Curbline rose to $10,550,000 in Q1 2025, up from $7,975,000 in Q1 2024, a 32.8% increase[32] - Funds from Operations (FFO) attributable to Curbline increased to $24,954,000 in Q1 2025, compared to $17,210,000 in Q1 2024, reflecting a 45.1% growth[32] - Total Curbline NOI increased by 28.9% to $28,472 in Q1 2025 from $22,086 in Q1 2024[48] - Rental income increased to $38,438,000 in Q1 2025 from $27,866,000 in Q1 2024, representing a 37.9% growth[29] Property Portfolio and Acquisitions - Curbline acquired 11 convenience shopping centers for a total of $124.2 million during the first quarter of 2025[11] - The company expanded its property portfolio to 107 properties with a total Gross Leasable Area (GLA) of 3,385,000 square feet as of March 31, 2025, up from 97 properties and 3,098,000 square feet at the end of 2024[39] - In Q1 2025, Curbline Properties Corp. acquired properties totaling 285 thousand square feet for $124,190,000[60] - Year-to-date acquisitions for 2025 reached 315 thousand square feet with a total investment of $139,073,000[60] Leasing and Occupancy - The leased rate increased to 96.0% as of March 31, 2025, compared to 95.5% at December 31, 2024, and 96.6% at March 31, 2024[20] - The same property leased rate improved to 96.9% in Q1 2025 from 96.6% in Q1 2024, indicating a 0.3% increase[48] - Curbline generated cash new leasing spreads of 20.8% and cash renewal leasing spreads of 8.3% for Q1 2025[20] - The leasing activity for new leases in Q1 2025 showed an average base rent (ABR) of $41.37 PSF, a 20.8% increase compared to the previous quarter[50] Financial Guidance and Market Capitalization - The company updated its 2025 guidance for net income attributable to Curbline to a range of $0.43 to $0.50 per diluted share, and for Operating FFO to a range of $0.99 to $1.02 per diluted share[15] - The company reported a total equity market capitalization of $2,545,127,000 as of March 31, 2025, up from $2,439,122,000 at the end of 2024[42] - The market value per share increased to $24.19 as of March 31, 2025, compared to $23.22 at the end of 2024[42] Expenses and Liabilities - Operating and maintenance expenses increased by 21.5% to $3,615 in Q1 2025 from $2,979 in Q1 2024[48] - Curbline's total liabilities increased to $185,224,000 in Q1 2025 from $90,541,000 in Q4 2024, primarily due to the addition of an unsecured term loan[34] - The total debt stood at $98,988,000, with an unsecured term loan of $100,000,000 maturing in October 2029[44] Tenant and Revenue Composition - Top 25 tenants contribute $26,975 in base rent, accounting for 24.3% of total portfolio rent of $111,065[58] - Total Gross Leasable Area (GLA) for top 25 tenants is 741 thousand square feet, representing 21.9% of the total portfolio GLA of 3,385 thousand square feet[58] - The largest tenant, Starbucks, has 23 units with a base rent of $2,576,000, making up 2.3% of total rent[58] - The second-largest tenant, Darden, occupies 8 units with a base rent of $1,586,000, representing 1.4% of total rent[58] Strategic Initiatives and Future Growth - The company is actively expanding its portfolio through strategic acquisitions in key markets such as Phoenix and Jacksonville[60] - Future growth strategies include focusing on new property developments and enhancing existing properties to increase rental income[60] - The company’s centers are located in key metropolitan areas, including Atlanta, Chicago, and New York, contributing to diverse revenue streams[64] Performance Metrics and Limitations - The company utilizes Funds from Operations (FFO) and Operating FFO as key performance measures, which exclude depreciation and amortization unique to real estate[68] - FFO is calculated as net income attributable to the company, adjusted for gains and losses from real estate dispositions, impairment charges, and certain non-cash items[70] - The company recognizes the limitations of FFO and Operating FFO, stating they do not represent cash generated from operating activities in accordance with GAAP[75] - The company emphasizes that SPNOI does not represent cash available for dividends or capital expenditures, and should not be considered an alternative to GAAP net income[78]

Business Execution and Performance - The company is organized with a limited track record and may struggle to execute its business plan successfully[21] - The company's financial condition and results of operations may not reflect its performance as an independent public company[21] - The company may not achieve the expected benefits of its separation from SITE Centers, which could adversely affect its business[22] - The Company may not achieve expected benefits from the separation from SITE Centers, which could adversely affect its business and financial condition[22] Financial Risks and Conditions - The company's dependence on rental income poses risks in the event of significant occupancy loss[21] - Inflation may adversely impact the company's real estate operations due to rising construction costs or operating expenses exceeding rental income[21] - If the Company fails to qualify as a REIT, it may face significant tax liabilities, adversely impacting stock value[26] - The Company has not established a minimum distribution payment level and cannot assure future distributions[26] - Changes in market conditions could negatively affect the market price of the Company's publicly traded securities[26] - The Company's ability to make distributions is limited by Maryland law, potentially affecting shareholder returns[26] Growth and Management Challenges - The company may face challenges in managing growth effectively and capturing expected efficiencies of scale[21] - The Company may be unable to retain and attract key management personnel, impacting operational effectiveness[29] Environmental and Regulatory Risks - The company may be adversely affected by environmental risks associated with its real estate investments[21] - The company may encounter potential liabilities and increased costs related to sustainability considerations[21] - Legislative actions affecting REITs could have a negative effect on the Company or its stockholders[26] Market and Consumer Trends - Changes in consumer trends and suburban populations could negatively impact the company's revenues[21] - Conflicts of interest may arise with the Operating Partnership and its limited partners, impeding beneficial business decisions[26] Legal and Operational Risks - The Company may be subject to litigation that could adversely affect its results of operations[29] - Real estate investments are illiquid, which may hinder the company's ability to dispose of properties on favorable terms[21]

Financial Performance - Curbline Properties reported a fourth quarter net income of $11.5 million, or $0.11 per diluted share, compared to $7.6 million, or $0.07 per diluted share, in the prior year, reflecting a year-over-year increase of 51.3%[8]. - Operating funds from operations (OFFO) for the fourth quarter were $23.8 million, or $0.23 per diluted share, up from $17.9 million, or $0.17 per diluted share, in the same period last year, marking a 32.9% increase[8]. - The company reported a net income attributable to Curbline of $11,461,000 for Q4 2024, compared to $7,626,000 in Q4 2023[22]. - FFO attributable to Curbline for Q4 2024 was $23,642,000, up 43% from $16,436,000 in Q4 2023[26]. - Net operating income for Q4 2024 was $26,159,000, representing a 31.4% increase compared to $19,914,000 in Q4 2023[30]. - Same Property Net Operating Income (NOI) for Q4 2024 increased by 3.0% year-over-year to $17,584,000, while annual Same Property NOI rose by 5.8% to $68,433,000[41]. - Total Curbline NOI for Q4 2024 was $26,159,000, reflecting a significant increase of 31.4% compared to the previous year, with annual NOI growing by 30.0% to $93,278,000[41]. - The company estimates net income for 2025 to be between $0.48 and $0.56 per diluted share, with Operating FFO projected between $0.97 and $1.01 per diluted share[11]. Acquisitions and Growth - The company acquired 20 convenience shopping centers for a total of $206.1 million during the fourth quarter[8]. - In Q1 2024, Curbline Properties Corp. acquired 37 properties for a total price of $19.11 million, with a total GLA of 37,000 square feet[55]. - In Q2 2024, the company acquired 176 properties for $54.73 million, totaling 176,000 square feet of GLA[55]. - In Q3 2024, Curbline Properties Corp. acquired 266 properties for $145.33 million, with a total GLA of 266,000 square feet[55]. - The total acquisitions for 2024 amounted to 878 properties for $425.32 million, with a total GLA of 878,000 square feet[55]. - Curbline Properties Corp. is expanding its market presence with acquisitions in key metropolitan areas such as Phoenix, Los Angeles, and Miami[55]. - The company is focusing on enhancing its portfolio through strategic acquisitions and market expansion initiatives[55]. - Future guidance indicates continued growth in property acquisitions and potential new developments in 2025[55]. Leasing and Occupancy - The leased rate was 95.5% as of December 31, 2024, slightly down from 96.7% a year earlier, primarily due to acquisitions[19]. - Cash new leasing spreads were 30.5% and cash renewal leasing spreads were 10.3% for the year ended December 31, 2024[19]. - The company reported a leased rate of 96.1% for Same Properties, consistent with the previous year, while the commenced rate improved to 95.1%[41]. - Minimum rents for Q4 2024 were $17,126,000, up from $16,536,000 in Q4 2023, indicating a positive trend in rental income[41]. - In Q4 2024, new leases totaled 4 with a Gross Leasable Area (GLA) of 7,375 square feet at an average base rent (ABR) of $46.22 per square foot, reflecting a 15.0% increase in cash leasing spreads[45]. - The total number of renewals in Q4 2024 was 18, covering 45,118 square feet at an ABR of $29.54 per square foot, with a cash leasing spread increase of 9.5%[45]. - The combined new leases and renewals in Q4 2024 amounted to 22, with a GLA of 52,493 square feet and an average rent of $31.88 per square foot, showing a cash leasing spread increase of 10.6%[45]. Financial Metrics and Ratios - Total assets as of Q4 2024 reached $2,033,098,000, a significant increase from $921,632,000 in Q4 2023[28]. - Total equity market capitalization stands at $2,439,122,000, with a market value per share of $23.22[37]. - The company has no total debt, resulting in a net debt of $(626,409,000)[37]. - The company’s Same Property NOI operating margin is 73.8%, slightly down from 75.8% in the previous year[41]. - The total portfolio consists of 1,002 leases covering 2,909,000 square feet, with an aggregate ABR of $103,218,000, averaging $35.48 per square foot[51]. - The top 25 tenants contribute $25,383,000 in base rent, accounting for 24.6% of total base rent, with a GLA of 699,000 square feet, representing 22.6% of total GLA[53]. Operational Strategies - The company has a strategy to focus on properties with long-term tenants, enhancing stability and revenue predictability[54]. - The company is actively exploring new technologies and strategies to optimize property management and enhance tenant experiences[55]. - The company utilizes Funds from Operations (FFO) and Operating FFO as key performance measures, which exclude depreciation and amortization unique to real estate, providing a clearer view of operational performance[64]. - The company defines Operating FFO as FFO excluding certain non-comparable charges, which helps in analyzing core operating results[67]. - Net Operating Income (NOI) is used as a supplemental performance measure, calculated as property revenues minus property-related expenses, reflecting trends in occupancy and rental rates[72]. - Same-Property Net Operating Income (SPNOI) is reported to provide insights into the performance of comparable assets, excluding non-cash and non-comparable items[73]. - The company emphasizes that FFO and Operating FFO should not be considered as alternatives to GAAP net income or cash flow measures, as they do not represent cash available for dividends or capital expenditures[71].

Financial Performance - The company reported a net loss attributable to Curbline Predecessor of $15.4 million for the three months ended September 30, 2024, compared to a net income of $8.8 million for the same period in 2023 [55]. - Funds from Operations (FFO) attributable to Curbline Predecessor decreased to $(4.3) million for the three months ended September 30, 2024, from $16.4 million in the prior year [55]. - Total revenues for the three months ended September 30, 2024, were $29.8 million, an increase of $5.5 million compared to $24.2 million in the same period of 2023 [64]. - The company reported a net loss of $1.199 million attributable to Curbline Predecessor for the nine months ended September 30, 2024, compared to a net income of $23.385 million in 2023, a decrease of $24.584 million [72]. - Operating FFO for the nine months ended September 30, 2024, increased to $19,512 million from $16,874 million in the prior year, primarily due to property acquisitions [81]. - Cash flow provided by operating activities decreased by $23.7 million to $25,256 million for the nine months ended September 30, 2024, primarily due to higher transaction costs related to the spin-off [92]. Property Portfolio - As of September 30, 2024, Curbline Properties Corp. owned a portfolio of 79 properties with approximately 2.7 million square feet of gross leasable area (GLA) [51]. - The company owned 79 wholly owned properties as of September 30, 2024, with an occupancy rate of 93.8% and an average ABR of $35.65 per occupied square foot [67]. - Curbline Properties acquired 12 properties for an aggregate purchase price of $81.6 million from October 1, 2024, to November 8, 2024 [62]. - The company acquired 14 convenience properties for a total gross purchase price of $219,174 million through September 30, 2024 [96]. - The convenience property portfolio had a leased rate of 95.4% and an occupancy rate of 93.8% as of September 30, 2024 [101]. Expenses and Costs - Total expenses for the three months ended September 30, 2024, were $21.538 million, an increase of $6.472 million from $15.066 million in 2023 [69]. - General and administrative expenses for the nine months ended September 30, 2024, were approximately 8.5% of total revenues, up from 5.0% in 2023 [70]. - The company incurred transaction costs of $30.879 million for the nine months ended September 30, 2024, compared to $1.054 million in 2023, a change of $29.825 million [71]. Liquidity and Financing - The company had $800 million in cash on hand at the time of its separation from SITE Centers, positioning it for future acquisitions without the need for near-term equity [53]. - The Company had approximately $800.0 million in cash on hand, a $400.0 million unsecured, undrawn line of credit, and a $100.0 million unsecured, delayed draw term loan following its separation from SITE Centers [82]. - The Company expects to maintain sufficient liquidity and financial flexibility to pursue its business plan, which includes acquiring additional convenience properties [94]. - The Company entered into a $100.0 million forward interest rate swap agreement to fix the variable-rate component of its Term Loan Facility at 3.578% [86]. - Cash flow provided by financing activities increased by $140.6 million, primarily due to increased transactions with SITE Centers [93]. Market Conditions and Risks - The company routinely monitors tenant credit profiles to assess potential impacts on financial statements and cash flow due to changing economic conditions [103]. - Inflation and changing consumer spending patterns continue to pose risks to the retail sector and the company's tenants [103]. - The company has favorable prospects to backfill spaces vacated by bankrupt or non-renewing tenants, despite economic uncertainties [103]. - The company has not entered into any derivative financial instruments for trading or speculative purposes, maintaining a focus on risk management [111]. Occupancy and Leasing - The leased rate was 95.4% as of September 30, 2024, down from 96.7% at December 31, 2023 [63]. - The company signed new leases and renewals for approximately 257,000 square feet of GLA during the nine months ended September 30, 2024 [63]. - Occupancy rates were reported at 96.3% and 93.6%, with an average base rent (ABR) of $35.31 per square foot as of September 30, 2023 [102]. - The weighted-average cost of tenant improvements and lease commissions for leases executed during the nine months ended September 30, 2024, was estimated at $1.62 per rentable square foot [102]. Interest and Debt Management - Interest expense for the three months ended September 30, 2024, was $388 thousand, a change of $750 thousand from the previous year [71]. - The company had no indebtedness as of September 30, 2024, but rising interest rates and capital market conditions could impact future financing and investment plans [104]. - A 100 basis-point increase in interest rates is estimated to decrease the fair value of the company's fixed-rate debt from $24.8 million to $24.6 million [109]. - The company entered into a $100.0 million forward interest rate swap agreement to fix the variable-rate SOFR component of its Term Loan Facility to 3.578% from April 1, 2025, through October 1, 2028 [112]. Performance Metrics - Funds from Operations (FFO) and Operating FFO are used to assess the financial performance of the company, excluding certain non-cash items and gains/losses from property dispositions [73]. - The company emphasizes that FFO and Operating FFO should be considered alongside GAAP net income for a comprehensive understanding of its performance [79]. - Net (loss) income attributable to Curbline for the nine months ended September 30, 2024, was $(15,410) million, a decrease from $8,779 million in the prior year [81].