Financial Data and Key Metrics Changes - In Q4 2025, NOI increased by 16% sequentially and almost 60% year-over-year, driven by acquisitions and organic growth [12] - The lease rate remained unchanged at 96.7%, with occupancy up 20 basis points [13] - Full-year same-property NOI growth was 3.3%, with Q4 growth at 1.5% despite a 50 basis point headwind from uncollectible revenue [13][14] - The company forecasts FFO guidance for 2026 in the range of $1.17 to $1.21 per share, representing a 12% year-over-year growth [14][15] Business Line Data and Key Metrics Changes - The company signed over 400,000 sq ft of new leases and renewals in 2025, with new lease spreads averaging 20% and renewal spreads just under 10% [5] - Capital expenditures were just 7% of NOI for the full year, indicating high capital efficiency [5][14] Market Data and Key Metrics Changes - The total U.S. market for convenience retail assets is 950 million sq ft, significantly larger than the company's current portfolio of almost 5 million sq ft [6] - The company has built a significant network of relationships with sellers and brokers, which is crucial for growth in a fragmented market [7] Company Strategy and Development Direction - The company focuses on acquiring top-tier convenience retail assets, leveraging a first-mover advantage in the public market [4] - The strategy emphasizes simple, flexible buildings that align with consumer behavior, catering to daily errands rather than destination shopping [9] - The company aims for double-digit cash flow growth, supported by a strong balance sheet and operational efficiency [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth opportunities in the convenience sector, citing a significant addressable investment market [5] - The company anticipates continued strong demand for its properties, with expectations for same-property NOI growth of 3% in 2026 [15][27] - Management noted that the business plan has been accelerated due to better-than-expected operational performance and a strong acquisition pipeline [78] Other Important Information - The company ended the year with a leverage ratio of less than 20%, providing substantial liquidity for future acquisitions [19] - The company has raised a total of $600 million in debt capital since its formation, with a weighted average interest rate of approximately 5% [18] Q&A Session Summary Question: Can you talk about the acquisition pipeline and cap rates? - Management indicated that cap rates have remained just north of 6%, with a range from mid-5s to high 6s depending on various factors [23][24] Question: Can you elaborate on same-store NOI and leasing spreads? - Management noted that leasing spreads are expected to return to low 20s, and same-property NOI guidance for 2026 is a wide range of 2%-4% [26][27][30] Question: Are there any operating synergies from having multiple properties in single markets? - Management acknowledged some operational synergies but emphasized that the high recovery rate of the asset class minimizes their impact on overall performance [36][37] Question: What is the thought process on incremental equity issuance versus building out the debt ladder? - Management highlighted a broad range of options for capital sources, emphasizing the importance of maintaining flexibility in funding strategies [54][55] Question: Can you discuss the recent disposition and future asset management activities? - Management confirmed that there are no planned dispositions for 2026, with the recent sale being a small, opportunistic decision [66][68]
Curbline Properties Corp.(CURB) - 2025 Q4 - Earnings Call Transcript