Curbline Properties Corp.(CURB) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents Curbline Properties Corp.'s unaudited financial statements and management's analysis of its financial condition and operations Financial Statements – Unaudited This section presents Curbline Properties Corp.'s unaudited consolidated financial statements, reflecting significant growth post-spin-off driven by property acquisitions Consolidated Financial Statements The financial statements show significant year-over-year growth in revenues and net income, driven by property portfolio expansion and increased assets Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total real estate assets, net | $1,519,183 | $1,262,217 | | Cash and cash equivalents | $429,865 | $626,409 | | Total Assets | $2,133,803 | $2,033,098 | | Indebtedness, net | $99,090 | $0 | | Total Liabilities | $204,822 | $90,541 | | Total Equity | $1,928,981 | $1,942,557 | Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Rental Income | $41,104 | $27,944 | $79,542 | $55,810 | | Total Revenues | $41,402 | $28,156 | $80,097 | $56,195 | | Net Income Attributable to Curbline | $10,392 | $6,236 | $20,942 | $14,211 | | Diluted EPS | $0.10 | $0.06 | $0.20 | $0.14 | Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash flow provided by operating activities | $59,543 | $32,331 | | Net cash flow used for investing activities | ($308,479) | ($80,876) | | Net cash flow provided by financing activities | $52,392 | $49,350 | Notes to Consolidated Financial Statements The notes detail the company's business, accounting policies, and key financial events, including significant property acquisitions and new debt facilities - During the first six months of 2025, the Company acquired 30 convenience shopping centers for a gross purchase price of $279.1 million[43] - In June 2025, the company arranged a private placement of $150.0 million in unsecured senior notes, consisting of $100.0 million due 2030 at 5.58% and $50.0 million due 2032 at 5.87%, with the sale scheduled to close on September 3, 2025[51][52][55] - As of June 30, 2025, $100.0 million was drawn and outstanding on the Term Loan Facility, with no amounts drawn on the $400.0 million Revolving Credit Facility[62] - Subsequent to the quarter end, in July 2025, the Company acquired an additional 29 convenience shopping centers for $260.4 million and entered into a new $150.0 million term loan, which was fully drawn[91][92] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the company's performance, strategy, and financial condition, highlighting strong H1 2025 results driven by acquisitions and healthy portfolio metrics Executive Summary The company, a public REIT focused on convenience shopping centers, reported significant growth in H1 2025 driven by property acquisitions and a strong BBB rating from Fitch - As of June 30, 2025, the portfolio consisted of 125 convenience shopping centers with 3.7 million sq. ft. of GLA, a 96.1% leased rate, and 93.5% occupancy[98] - From January 1 through July 25, 2025, the company acquired 59 properties for an aggregate purchase price of $539.5 million[111] - In May 2025, Fitch Ratings assigned the Company a Long-Term Issuer Default Rating of BBB with a Stable Outlook[111] H1 2025 Leasing Spreads | Leasing Type | Spread | | :--- | :--- | | New Leases | 16.2% | | Renewals | 8.3% | Results of Operations This section details operating results for H1 2025 versus 2024, showing significant increases in revenues and net income primarily due to property acquisitions Change in Revenues (Six Months Ended June 30, 2025 vs 2024, in thousands) | Revenue Component | 2025 | 2024 | $ Change | | :--- | :--- | :--- | :--- | | Rental income | $79,542 | $55,810 | $23,732 | | Other income | $555 | $385 | $170 | | Total revenues | $80,097 | $56,195 | $23,902 | Change in Expenses (Six Months Ended June 30, 2025 vs 2024, in thousands) | Expense Component | 2025 | 2024 | $ Change | | :--- | :--- | :--- | :--- | | Operating and maintenance | $11,068 | $5,991 | $5,077 | | Real estate taxes | $9,792 | $5,996 | $3,796 | | General and administrative | $17,084 | $3,725 | $13,359 | | Depreciation and amortization | $30,502 | $18,611 | $11,891 | - The increase in revenues and most operating expenses for H1 2025 was primarily driven by the acquisition of convenience shopping centers, with G&A expenses rising due to post-spin-off costs as a standalone public company[117] Non-GAAP Financial Measures The company defines and reconciles non-GAAP measures, reporting strong growth in FFO and Operating FFO for H1 2025, alongside a 4.4% increase in Same-Property NOI FFO and Operating FFO Reconciliation (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net income attributable to Curbline | $20,942 | $14,211 | | Depreciation and amortization | $30,464 | $18,611 | | FFO attributable to Curbline | $51,364 | $32,822 | | Transaction, debt extinguishment and other costs | $702 | $7,223 | | Operating FFO attributable to Curbline | $52,066 | $40,163 | - Same-Property NOI increased by 4.4% for the six months ended June 30, 2025, compared to the prior-year period, rising from $38.9 million to $40.6 million[139] Liquidity, Capital Resources and Financing Activities The company maintained strong liquidity as of June 30, 2025, actively engaging in capital markets to fund its acquisition strategy and declaring quarterly dividends - At June 30, 2025, primary sources of capital were unrestricted cash of $429.9 million and a $400.0 million undrawn unsecured line of credit[141] - The company drew $100.0 million on its Term Loan Facility in March 2025, with the all-in rate on this loan fixed at 4.678% via an interest rate swap[144][146] - The company declared quarterly cash dividends of $0.16 per share for both Q1 and Q2 2025, totaling $34.2 million declared year-to-date[157] Economic Conditions Management observes steady retailer demand for its properties in high-income suburban areas, benefiting from a diversified tenant base despite macroeconomic risks - The company continues to experience steady retailer demand, executing new leases and renewals for approximately 217 thousand square feet of GLA in H1 2025[176] - The tenant base is diversified, with only one tenant, Starbucks, accounting for 2.6% of the Company's annualized consolidated rental revenues as of June 30, 2025[177] - Management acknowledges risks from inflation, higher interest rates, and evolving consumer behaviors, but believes its portfolio is well-positioned due to its location in high-income suburban communities and focus on necessity-based tenants[179] Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate risk, which is mitigated by effectively fixing its variable-rate debt through interest rate swaps - The company's primary market risk exposure is interest rate risk[183] - The interest rate risk on the $100.0 million Term Loan Facility has been mitigated through an interest rate swap, effectively fixing the rate through October 2029, with an all-in interest rate of 4.678% based on the current spread[183][185] - The company does not plan to enter into any derivative financial instruments for trading or speculative purposes[188] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Based on an evaluation as of June 30, 2025, the CEO and CFO concluded that the Company's disclosure controls and procedures were effective[189] - There were no changes in the Company's internal control over financial reporting during Q2 2025 that materially affected, or are reasonably likely to materially affect, internal controls[190] PART II. OTHER INFORMATION This section provides additional information, including legal proceedings, risk factors, and other required disclosures Legal Proceedings The company is subject to various legal proceedings, none of which are expected to have a material adverse effect on its financial position or operations - The company is subject to various legal proceedings which, taken together, are not expected to have a material adverse effect on the Company[192] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - There have been no material changes to the risk factors set forth in the Annual Report on Form 10-K[193] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities during the period - None[194] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[195] Other Information The company reports no other information - None[197] Exhibits This section lists the exhibits filed with the Form 10-Q, including key agreements and certifications - Key exhibits filed include the Note and Guaranty Agreement from June 26, 2025, officer certifications, and Inline XBRL documents[201]