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Curbline Properties Corp.(CURB) - 2024 Q3 - Quarterly Report
CURBCurbline Properties Corp.(CURB)2024-11-13 21:05

Financial Performance - The company reported a net loss attributable to Curbline Predecessor of 15.4millionforthethreemonthsendedSeptember30,2024,comparedtoanetincomeof15.4 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)millionforthethreemonthsendedSeptember30,2024,from(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 29.8million,anincreaseof29.8 million, an increase of 5.5 million compared to 24.2millioninthesameperiodof2023[64].−Thecompanyreportedanetlossof24.2 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 23.385millionin2023,adecreaseof23.385 million in 2023, a decrease of 24.584 million [72]. - Operating FFO for the nine months ended September 30, 2024, increased to 19,512millionfrom19,512 million from 16,874 million in the prior year, primarily due to property acquisitions [81]. - Cash flow provided by operating activities decreased by 23.7millionto23.7 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 35.65peroccupiedsquarefoot[67].−CurblinePropertiesacquired12propertiesforanaggregatepurchasepriceof35.65 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 219,174millionthroughSeptember30,2024[96].−Theconveniencepropertyportfoliohadaleasedrateof95.4219,174 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 6.472millionfrom6.472 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 30.879millionfortheninemonthsendedSeptember30,2024,comparedto30.879 million for the nine months ended September 30, 2024, compared to 1.054 million in 2023, a change of 29.825million[71].LiquidityandFinancing−Thecompanyhad29.825 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 800.0millionincashonhand,a800.0 million in cash on hand, a 400.0 million unsecured, undrawn line of credit, and a 100.0millionunsecured,delayeddrawtermloanfollowingitsseparationfromSITECenters[82].−TheCompanyexpectstomaintainsufficientliquidityandfinancialflexibilitytopursueitsbusinessplan,whichincludesacquiringadditionalconvenienceproperties[94].−TheCompanyenteredintoa100.0 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 140.6million,primarilyduetoincreasedtransactionswithSITECenters[93].MarketConditionsandRisks−Thecompanyroutinelymonitorstenantcreditprofilestoassesspotentialimpactsonfinancialstatementsandcashflowduetochangingeconomicconditions[103].−Inflationandchangingconsumerspendingpatternscontinuetoposeriskstotheretailsectorandthecompany′stenants[103].−Thecompanyhasfavorableprospectstobackfillspacesvacatedbybankruptornon−renewingtenants,despiteeconomicuncertainties[103].−Thecompanyhasnotenteredintoanyderivativefinancialinstrumentsfortradingorspeculativepurposes,maintainingafocusonriskmanagement[111].OccupancyandLeasing−Theleasedratewas95.4140.6 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 1.62perrentablesquarefoot[102].InterestandDebtManagement−InterestexpenseforthethreemonthsendedSeptember30,2024,was1.62 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 750thousandfromthepreviousyear[71].−ThecompanyhadnoindebtednessasofSeptember30,2024,butrisinginterestratesandcapitalmarketconditionscouldimpactfuturefinancingandinvestmentplans[104].−A100basis−pointincreaseininterestratesisestimatedtodecreasethefairvalueofthecompany′sfixed−ratedebtfrom750 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 24.6million[109].−Thecompanyenteredintoa24.6 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,adecreasefrom(15,410) million, a decrease from 8,779 million in the prior year [81].