CURBLINE PPTYS CORP earnings calls

Acquisitions, cap rates, and same-store NOI

Q (Ronald Kamdem · Morgan Stanley): The analyst asked how the changed interest-rate environment affects acquisition opportunities, cap rates, and expected IRRs. He also asked whether same-store NOI acceleration can continue and what to expect from renewals and pricing.

A: Management said deal volumes remain high and sellers keep calling. They noted borrowing costs have risen and cap rates moved up, but cap-rate moves may be stickier for growth assets with mark-to-market rent upside. Same-property NOI acceleration is expected to be occupancy driven, and renewal spreads should remain roughly stable around prior ranges.

Return targets and capital deployment

Q (Todd Thomas · KeyBanc): The analyst asked whether Curbline's return requirements have changed given higher cost of capital and how they plan to deploy current dry powder. He also asked whether the shared services agreement expiry affects the desire for scale or discipline in acquisitions.

A: Management said yes, cost of capital is higher on both equity and debt, so unlevered IRR expectations have increased. They review deals with a five-year cash-flow accretion model, have not changed their buy box, and have over $900 million of immediate liquidity, allowing flexibility. They emphasized discipline in underwriting and that scale and G&A efficiency are already strong.

"Our cost of capital has gone up, both on the equity and the debt side, so our unlevered IRR expectations have also increased." — David Lukes (CEO)

Buyer pool and liquidity

Q (Craig Mailman · Citi): The analyst wanted to know how deep the cash buyer pool is beyond Curbline and whether that gives negotiating power to push going-in yields. He also asked how they avoid fatigue or predictability in capital raising and about borrowing cost ranges.

A: Management said the buyer pool is large with many private regional buyers, so pricing is set by many transactions where they are not involved. They focus on growth assets and believe buyers value mark-to-market rent upside, which can keep cap rates sticky. They have about $900 million of liquidity, unencumbered assets, and term-loan and private placement borrowing options with all-in rates in the mid- to low-single-digit range depending on structure.

"If we weren't to swap that, our all-in rate would be about a 4.9%." — Conor Fennerty (CFO)

Debt optionality and adjacent deals

Q (Alexander Goldfarb · Piper Sandler): The analyst asked whether the company plans to add more debt or remain equity-focused, and how they will decide. He also asked about the increasing focus on buying adjacent properties and whether that is a material growth source.

A: Management said they value optionality and will choose debt or equity based on the market and the use of funds at the time. They will pivot as conditions change rather than commit to one path. The team said adjacent deals were a talking point six months ago and are now becoming more material, often driven by word of mouth, purchase rights, or family parcel sales, and they help make sourcing easier.

"I would say that six months ago it was a talking point. Now it's becoming a bit more material." — David Lukes (CEO)

Returns versus underwriting and markets

Q (Floris van Dijkum · Ladenburg): The analyst asked how early acquisitions performed against original underwriting and NOI expectations, and how that gives confidence for future deals. He also asked about expansion in Atlanta and whether they are scaling into other smaller markets like Madison.

A: Management said going-in cap rates vary widely for the sector and they focus on growth assets with mark-to-market rent upside. They acknowledged they were conservative on mark-to-market and have outpaced renewal and new-leasing spreads versus original budgets, and overall CapEx has been lower than expected, which helped unlevered IRRs. They said they want to be roughly equal-weighted across the top 30 markets and will be open-minded to buy where strong demographics and opportunities exist.

"I would say we were fairly consistently wrong on mark to market, in the fact that we were just too conservative." — David Lukes (CEO)

Tenant credit and occupancy outlook

Q (Mike Mueller · JPMorgan): The analyst asked about tenant health and bad debt expectations given consumer focus. He also asked, outside of acquisition mix, how economic occupancy (94.5%) could trend by end of 2027 with SNO coming online.

A: Management said they have not seen a material change in credit or AR; their placeholder for the year is about 60 basis points of uncollected revenue and they've been running just under that. They noted a modest uptick in national bankruptcies in some sectors but not material in their portfolio. On SNO, they said the occupancy ramp is best modeled with SNO dollars and that a lease-occupied gap of roughly 100 to 150 basis points is a reasonable assumption.

"Our placeholder for the year has been about 60 basis points of uncollected revenue, and we've been running just under that." — Conor Fennerty (CFO)

Buyer types, retention, bankruptcies

Q (Linda Tsai · Truist): The analyst asked whether buyers are split between levered and all-cash and what the company sees in deals. She also asked the portfolio retention rate and whether bankruptcies are rising into 2027 or seasonal.

A: Management said they do not have a statistical split but see anecdotal trends: traditional mortgage borrowers focus on flatter, higher-yield assets, while higher-quality unanchored deals often use debt sourced through private wealth networks. They noted they are effectively an all-cash buyer, and Conor said national tenant retention for nationals is roughly the low 90s over the last five years with no material change; recent bankruptcies feel like an uptick from a low base and are concentrated in some COVID-era winners turned losers.

"My guess is, I think, I want to say for our nationals, it's the low 90s over the last five years." — Conor Fennerty (CFO)