Curbline Properties Q1 Earnings Call Highlights

Key Points

• Investment pipeline accelerated: Curbline raised its full-year investment target to $850 million (from $750M) and said it has already closed, contracted or been awarded roughly 90% of that target, with acquisitions yielding cap rates in the low‑6% range and expected unlevered IRRs of about 7%–9%.
• 2026 FFO guidance increased: Management raised 2026 FFO to $1.20–$1.23 per share (midpoint ~14% growth) while maintaining a same‑property NOI outlook around a 3% midpoint after Q1 same‑property NOI rose 4.8%.
• Strong liquidity and conservative leverage: Curbline ended the quarter with $306 million cash, about $296 million of expected equity proceeds, and said it has “over $700 million” of immediate liquidity with a leverage ratio near 20%, supporting continued acquisitions.

Curbline Properties NYSE: CURB reported first-quarter 2026 results that management said came in ahead of budget, supported by stronger-than-expected net operating income (NOI), higher occupancy-driven recoveries, and lower general and administrative (G&A) expense. Executives also raised full-year investment and FFO targets as acquisition activity remained elevated and leasing demand stayed firm.

Acquisition pipeline drives higher investment target

Chief Executive Officer David Lukes said the company “had an incredibly productive and active start to the year,” citing elevated investment opportunities, strong leasing demand, and expanded liquidity and access to capital. He said the increased activity is “leading to an increase in our FFO guidance range.”

On the investment front, Lukes said acquisition opportunities accelerated beginning in the third quarter of 2025 and continued into 2026, prompting the company to raise its full-year investment target to $850 million from $750 million.

Lukes attributed the stronger pipeline to four factors he characterized as unique to Curbline: a fragmented but liquid convenience retail market with most transactions between private buyers and sellers; increased inbound interest as the company has built scale and a track record as a public company; a refined investment process built from more than $1 billion of acquisitions; and a potential multi-year tailwind from aging private owners seeking liquidity.

He noted that since the company’s spin-off, 22% of the $1.2 billion of assets acquired have been off-market. Lukes also said that for marketed deals acquired post-spin-off, Curbline has worked with 29 different brokerage companies, which he said underscores the market’s fragmentation and the importance of local relationships.

In response to Morgan Stanley analyst Ronald Kamdem, Lukes said the current acquisition pipeline is “exclusively individual properties” with “no portfolios of note.” Chief Financial Officer Conor Fennerty added that cap rates and return expectations were unchanged from prior quarters, with acquisitions in “the low sixes,” translating to “an unlevered IRR in the 7%-9%, depending on the property.”

Later on the call, Fennerty said the company had already closed, placed under contract, or been awarded about 90% of the $850 million target—“call it $750 of the $850”—while cautioning that pipeline items carry due diligence risk. He said the company has “really good visibility on closings for call it the next two quarters,” and added there is “a chance we exceed that figure for the full year.”

Leasing remains active; same-property NOI up nearly 5%

Curbline signed more than 145,000 square feet of new leases and renewals during the quarter, according to Lukes. He said trailing 12-month spreads were consistent with five-year averages as space remains tight in the company’s targeted affluent markets.

Lukes also emphasized tenant diversification, noting that only eight tenants contribute more than 1% of base rent and only one tenant contributes more than 2%. He said all 62 new and renewal leases signed in the quarter were with different tenants, and 71% were national credit operators.

Fennerty reported that the lease rate increased 30 basis points year-over-year to 96.3%, with occupancy up 60 basis points. Same-property NOI grew 4.8% in the first quarter, driven by 3.5% base rent growth and lower uncollectible revenue year-over-year.

Both Lukes and Fennerty highlighted Curbline’s capital efficiency. Lukes said quarterly capital expenditures were 6.3% of quarterly NOI, which he described as among the most capital-efficient in the public REIT sector. Fennerty added that trailing 12-month CapEx was 7.3% of NOI.

2026 FFO guidance raised; same-property growth outlook maintained

Fennerty said Curbline increased 2026 FFO guidance to $1.20 to $1.23 per share, with the midpoint representing 14% growth. He said the guidance reflects the higher $850 million investment target, a 3.25% return on cash that declines as cash is invested, CapEx as a percentage of NOI below 10%, and G&A of roughly $32 million (including fees paid under the company’s shared services agreement).

First-quarter results were “ahead of budget,” Fennerty said, largely due to higher NOI and lower G&A. He also noted a non-cash accounting gross-up under the shared services agreement: the company recorded $1.8 million of non-cash G&A expense offset by $1.8 million of non-cash other income, which he said will continue while the agreement remains in place and is excluded from G&A targets.

For same-property NOI, management maintained a midpoint forecast of 3% growth in 2026, following 3.3% in 2025 and 5.8% in 2024. Asked about longer-term trends, Fennerty said management has described the business as “a 2.5%-4% business,” with results likely toward the high end during periods of supply-demand imbalance.

However, Fennerty cautioned that the second quarter will face an “almost 300 basis point headwind” to same-property NOI growth due to the timing of 2025 CapEx spending and a difficult uncollectible revenue comparison. He said growth is expected to decelerate in the second quarter, then accelerate into year-end, with second-half base rent growth expected to average over 4%.

Among other quarterly moving pieces, Fennerty said interest expense is set to rise to about $8.5 million in the second quarter due to funding of a private placement offering in late January. He also said non-cash revenue is expected to decline sequentially by about $500,000 due to the write-off of below-market leases in the first quarter, while G&A is expected to remain roughly flat.

Balance sheet liquidity and capital access highlighted

Fennerty said Curbline ended the quarter with cash on hand of $306 million. During the first quarter and second quarter-to-date, the company sold 11.8 million shares on a forward basis with $296 million of expected gross proceeds, which he said are expected to settle in 2026. Including cash and unsettled equity proceeds totaling $371 million, he said the company has “over $700 million of immediate liquidity available” to fund remaining investments included in guidance.

Fennerty also said the company closed the remaining portion of a previously announced $200 million private placement offering in the first quarter. He characterized access to multiple capital sources as “a key differentiator” versus the largely private buyer universe in convenience properties.

According to Fennerty, the company’s leverage ratio was approximately 20% at quarter end, which he said provides “substantial dry powder and liquidity” to continue acquiring assets and scaling the business.

Management discusses market conditions, competition, and tenant mix

During the Q&A, executives addressed investor questions about macro conditions and competition. Responding to Citi analyst Craig Mailman on potential consumer spending pressure, Lukes said the company uses foot-traffic and geolocation data to evaluate property desirability and leasing, but said it is “not a great proxy” for tenant profitability due to limited insight into basket size. He said Curbline is “real estate first,” focusing on simple, flexible shop space that can serve a wide variety of tenants, and said the portfolio is oriented around “running errands type of consumer behavior.”

On competitive interest in the asset class, Lukes acknowledged “growing interest in the sector,” but said the market’s fragmentation makes it difficult for institutions to deploy large pools of capital quickly. He added that if institutions want to scale, they may need to partner with local operators, and the added fees could create a “floor” on cap rates. He said going-in cap rates for the asset class can range from low 5% to high 6%, with Curbline’s volume blending around 6%.

In response to questions about owner demographics, Lukes said the company has observed sellers often motivated by “life events or life planning” and is increasingly building relationships not only with brokers but also with estate planning attorneys, wealth management offices, and private banks to better identify likely sellers over time.

Finally, asked about the difference between GAAP and cash cap rates, Fennerty said the company’s average differential since going public has been about 35 basis points, adding that the company references and budgets to cash cap rates.

About Curbline Properties NYSE: CURB

Curbline Properties Corp. is a real estate investment trust which is an owner and manager of convenience shopping centers positioned on the curbline of well-trafficked intersections and major vehicular corridors in suburban. Curbline Properties Corp. is based in NEW YORK.

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