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 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]