Curbline Properties Corp. (CURB) Q4 2024 Earnings Summary

Executive Summary

• Inaugural quarter as a standalone REIT delivered higher profitability: Revenues rose to $34.9M, Net Income $11.5M, Diluted EPS $0.11 vs $0.07 YoY; Operating FFO was $23.8M ($0.23/share) vs $17.9M ($0.17/share) YoY, driven by acquisitions and interest income, partially offset by higher G&A .
• Balance sheet remains a key differentiator: $626M cash, no debt at year-end; $500M credit facility in place and a forward swap fixing the $100M term loan at 5.078% when drawn, supporting external growth at attractive funding costs .
• Leasing and same-property performance: Q4 cash new/renewal rent spreads of 15.0%/9.5% and straight-lined spreads of 36.9%/16.9%; 4Q24 SPNOI +3.0% YoY; full-year SPNOI +5.8% .
• External growth cadence remains robust: 20 properties acquired in Q4 ($206.1M) with blended acquisition cap rate of ~6.25% on recently closed deals; management targets ~$500M of acquisitions in 2025 .
• Outlook: FY2025 guidance initiated at Net Income $0.48–$0.56 and Operating FFO $0.97–$1.01 per diluted share; management expects ~2.8% SPNOI growth midpoint and ~$32M G&A; results were “ahead of budget,” a modest positive surprise vs internal expectations .

What Went Well and What Went Wrong

What Went Well

• Acquisitions and pipeline: Closed $206.1M across 20 centers in Q4; additional $7.7M acquired Q1-to-date; management highlighted rising inbound deal flow and a large addressable market, underscoring platform scalability .
• Balance sheet flexibility and funding: Ended Q4 with $626M cash, zero debt, and full availability on $400M revolver and $100M delayed draw term loan; swap locks the term loan rate at 5.078% when drawn .
• Leasing momentum and retained cash generation: Strong spreads (cash new 15.0%, renewal 9.5% in Q4) and limited CapEx intensity supported retained cash; CEO: “CapEx as a percentage of NOI... just over 5%... led to over $25 million of retained cash before distributions despite NOI of $26 million” .

What Went Wrong

• Reported margin/recovery optics: Same-property NOI operating margin declined ~200 bps and recovery ratio fell ~360 bps YoY due to an O&M reclassification post spin; CFO clarified that apples-to-apples same-store metrics were up YoY .
• Elevated non-operating costs: Transaction costs and other non-operating items weighed on 2024 results (Q4 “transaction, debt extinguishment and other” of $181k; full-year $31.3M), creating a gap between FFO and Operating FFO on an annual basis .
• Slightly lower leased rate YoY: Leased rate was 95.5% at 12/31/24 vs 96.7% at 12/31/23, primarily reflecting acquisition impacts; management expects non-same-store occupancy to converge toward same-store levels in H1 .

Financial Results

Leasing Trend KPIs

Portfolio Metrics

Same-Property Performance

Capital Structure and Liquidity

Notes:

• Reported “Quarterly SPNOI” growth for Q4 2024 was +3.0% YoY .
• Signed Not Opened (SNO) spread was 160 bps at 12/31/24, representing $4.6M of ABR .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• Strategy and growth: “We are confident that we can close on $500 million of convenience acquisitions per year... We’ve significantly exceeded that pace with $351 million of acquisitions in the last 6 months.”
• Capital efficiency and retained cash: “CapEx as a percentage of NOI... just over 5%. And which led to over $25 million of retained cash before distributions despite the fact that NOI was just $26 million.”
• Inflation hedging via renewals: “This is a renewals business where we can capture growing market rents with little landlord capital or downtime... 2024 same-property NOI growth of 5.8%.”
• Balance sheet positioning: “Approximately $626 million of cash on hand, no debt, a $100 million undrawn delayed draw term loan and full availability under its $400 million revolving credit facility.”
• Acquisition economics: “For what we’ve closed... fourth quarter and first quarter thus far, we’re at 6.25%.”

Q&A Highlights

• Pricing, cap rates, IRR: Cap rates flat to modestly down; blended recent acquisition cap ~6.25%; unlevered IRR targets high-single digits (7.5–9%); market rent growth offsets cap compression .
• CapEx intensity vs anchored formats: Sub-10% CapEx load for convenience centers vs 20–40% historically for anchored/redevelopment-heavy assets; supports lower going-in cap rates for similar IRR .
• Margin/recovery metrics: O&M reclass post spin affected reported ratios; same-store margins and recoveries were up YoY on a comparable basis .
• Occupancy convergence: Non-same-store pool expected to converge to same-store occupancy within H1; simple re-leasing reduces downtime and limits SNO pipeline magnitude .
• Dividend policy: Board decision; near-term payout ratio likely ~75% given depreciation shield timing; management preference high-60s/low-70s longer term .

Estimates Context

• We attempted to retrieve S&P Global consensus for Q4 2024 EPS and Revenue and FY2025 outlook but could not access data due to an SPGI request limit error. As a result, external consensus comparisons are unavailable at this time. We will update estimate comparisons when S&P Global access is restored [SPGI access error noted].

Key Takeaways for Investors

• Net-cash REIT with ample dry powder: $626M cash, no debt, and $500M facilities provide capacity to drive outsized external growth and support earnings expansion without near-term equity needs .
• Strong leasing power and inflation linkage: Double-digit leasing spreads and shorter lease terms position CURB to capture market rent growth with minimal CapEx and downtime, underpinning SPNOI resilience .
• Acquisition engine is active: Q4 acquisitions ($206.1M) and a ~6.25% blended cap rate signal attractive deployment opportunities; management’s ~$500M annual target appears achievable with current pipeline .
• Guidance frames 2025 normalization: OFFO $0.97–$1.01/share and ~2.8% SPNOI midpoint reflect a small but growing same-store pool and lapping strong 2024; watch for non-same-store occupancy catch-up in H1 .
• Economics favor small-format convenience: Sub-10% CapEx load versus anchored formats enables similar IRRs at lower cap rates and supports retained cash generation, reinforcing capital efficiency .
• Reported margins optics: Expect periodic noise from O&M reclass and shared services gross-up; core same-store property metrics remain healthy; net income impact of gross-up is zero .
• Potential dividend initiation: Board-driven policy; near-term payout ratio likely ~75%; magnitude and timing could become a catalyst once formalized .

Additional Notes

• Q4 2024 press release and quarterly financial supplement were filed as Exhibit 99.1 within the 8-K; no separate standalone press releases were identified beyond this news release .
• Prior quarter trend analysis leveraged the Q4 supplement’s quarterly leasing metrics and SPNOI reconciliations due to the October 1 spin impacting the form of prior standalone disclosures .