Core Viewpoint - Curbline Properties (CURB) is a high-end shopping center REIT focusing on small shop retail in affluent areas, recently spun off from Site Centers, and is now being added to the coverage universe at Portfolio Income Solutions [1]. Property Portfolio - CURB owns 107 properties with approximately 3.4 million leasable square feet, primarily located in markets such as Atlanta, Phoenix, Miami, Houston, and Charlotte [2][4]. - The properties are predominantly small shop spaces with minimal anchor store exposure, leading to a higher average rent per square foot of $35.14 [4][5]. Leasing Performance - In Q1'25, CURB reported a +14.2% blended cash renewal spread and a +26.9% blended GAAP spread, indicating strong leasing performance [9]. - Leased occupancy stands at 96%, which is significantly higher than commenced occupancy at 93.5%, suggesting potential for contractually baked-in growth from signed but not yet occupied leases [10]. Growth Outlook - CURB is expected to experience rapid AFFO/share growth driven by moderate organic growth and aggressive external growth through acquisitions, with an anticipated same-store NOI growth of about 3% annually [11][14]. - The company has a substantial cash position of approximately $494 million, allowing for significant acquisition potential without incurring high debt levels [15]. Valuation - CURB's current AFFO multiple is around 23X, which may appear expensive; however, adjustments for its unique capital structure suggest a valuation based on enterprise value rather than traditional multiples [18][20]. - The implied market cap based on various cap rates indicates that CURB is trading at a cap rate in the high 6s on mark-to-market NOI, suggesting it may be undervalued compared to its properties' stabilized cap rates [26][27]. Overall Assessment - CURB is viewed as undervalued with a fair value estimated to be about 10% above its current market price, although it may have less upside compared to other shopping center REITs that are trading at deeper discounts [31][32]. - The company is positioned to deliver slightly above-market returns, with potential for favorable market price movement due to rapid AFFO/share growth from its cash deployment strategy [33].
Curbline: Rapidly Growing Into Its Valuation