Curbline Properties to Be the First Public REIT
Exclusively Focused on the Convenience Sector
Curbline Offers a Unique Scalable Investment
Opportunity with a Balance Sheet Intended to Fuel Company for
Significant Growth in Fragmented Yet Liquid Market
$646M of Assets Sold Since June 30, 2023 at a
6.5% Cap Rate and $242M of Additional Assets Under Contract for
Sale Subject to Standard Closing Conditions
SITE Centers Obtained $1.1B Financing
Commitment with Proceeds Expected to be Used to Repay All
Outstanding Unsecured Debt
SITE Centers Declares Fourth Quarter Dividend
of $0.13 per share and Expects to Declare and Pay a Special Cash
Dividend of at least $0.10 per share Prior to January 31, 2024
SITE Centers Corp. (the “Company” or “SITE Centers”) (NYSE:
SITC), an owner of open-air shopping centers in suburban, high
household income communities, today announced that the Company’s
Board of Directors has unanimously approved a plan to spin-off the
Company’s Convenience assets into a separate publicly-traded REIT
to be named Curbline Properties Corp. (“Curbline Properties” or
“CURB”).
“We believe that the Convenience real estate sector offers
attractive, inflation-protected returns with limited capital
expenditure requirements and are excited to form and scale the
first public real estate company focused exclusively on Convenience
properties located on the curbline in the wealthiest submarkets in
the United States. CURB’s balance sheet upon separation from SITE
Centers is expected to position Curbline Properties for significant
asset growth in a period of market disruption, providing a
compelling competitive advantage in a fragmented yet liquid
marketplace,” commented David R. Lukes, President and Chief
Executive Officer. “For SITE Centers, our work over the past six
years has resulted in a carefully curated mix of dominant grocery,
lifestyle, net lease and regional power center properties located
in the top submarkets in the United States with compelling
near-term net operating income (“NOI”) growth. Following the
separation, SITE Centers intends to continue maximizing value via
our leasing and tactical redevelopment efforts and
opportunistically realize value through asset sales where
appropriate.”
TRANSACTION HIGHLIGHTS
- Unlocks Unique, Focused Growth Company – The expected
spin-off will separate the Company’s Convenience strategy from SITE
Centers, unlocking the first and only public REIT exclusively
focused on Convenience assets which generally consist of a row of
primarily shop units. The Convenience sector offers attractive,
inflation-protected returns driven by high renewal and retention
rates and limited operating capital expenditures.
- CURB Balance Sheet Positioned for Growth in Scalable
Market - Based on CURB’s expected net cash, debt-free position
upon separation from SITE Centers along with its limited capital
needs, CURB is expected to be able to significantly grow its asset
base with no additional near-term equity required. There are over
68,000 unanchored assets in the United States (950 million square
feet) according to ICSC, with over $40 billion of assets traded in
the period between 2018 and 2022. This highly fragmented, but
liquid market, provides a substantial addressable opportunity for
CURB.
- SITE Portfolio Concentrated in Top Retail Submarkets -
Pro forma for the spin-off and including all assets owned as of
September 30, 2023, SITE Centers remains well positioned based on
its curated portfolio of properties located in the top submarkets
in the United States with average household incomes of $109,000
(88th percentile as compared to all shopping centers in the United
States) and 69% of the wholly-owned portfolio anchored by a grocer
or warehouse club.
- SITE Centers to Continue to Maximize Value – The
Company’s Signed Not Opened (SNO) pipeline of $14.4 million
represents 4.5% of third quarter 2023 Pro-Rata Share (PRS)
Annualized Base Rent (ABR), providing a tailwind to future NOI
growth further supported by steady demand for vacant space and
limited industry supply. SITE Centers obtained a $1.1B financing
commitment with financing and disposition proceeds expected to be
used to retire all unsecured debt outstanding prior to the spin-off
and provide maximum flexibility for stakeholders.
- Management Expertise and Track Record – SITE’s
management team has a strong strategic and transaction track record
with $6.9 billion of assets (at 100%) sold since the first quarter
of 2017, the successful spin-off and monetization of all 50
properties in Retail Value Inc., and the unwind of multiple joint
venture portfolios.
CURBLINE OVERVIEW
Convenience retail properties are positioned on the curbline of
well-trafficked intersections, offering excellent access and
visibility along with dedicated parking. The properties generally
consist of a ubiquitous row of primarily shop units leased to a
diversified mixture of national and local service and restaurant
tenants that cater to daily convenience trips from the growing
suburban population including top tenants Starbucks (2.3% of ABR),
Darden (2.0%), JPMorgan Chase (1.4%), Verizon (1.3%) and Chipotle
(1.2%). The property type’s site plan and depth of leasing
prospects reduce operating capital expenditures and provide
significant tenant diversification. The median asset size of the
CURB portfolio as of September 30, 2023 is 20,000 square feet with
91% of base rent generated by units less than 10,000 square
feet.
Since launching its convenience strategy in 2019, the Company
has amassed a portfolio of 61 wholly-owned properties, including
assets separated or in the process of being separated from SITE
Centers properties, concentrated in Metropolitan Statistical Areas
(MSAs) and submarkets with compelling long-term population and
employment growth and above-average household incomes of over
$115,000 (91st percentile). Same-property NOI growth for the CURB
portfolio is expected to average greater than 3% in the next three
years (2024-2026), driven by fixed rental revenue increases and
rent commencements along with negotiated and option renewals. As of
September 30, 2023, the CURB portfolio was 96.2% leased with ABR
per square foot of $35.32.
In 2022, SITE Centers began the process of separating certain
convenience properties that are adjacent to existing assets, with
the separation work expected to be completed prior to the planned
spin-off of CURB. The separated properties to be included in CURB
share similar characteristics to convenience assets purchased to
date and were selected based on projected cash flow growth,
demographics, the credit profile of tenants and other key financial
and real estate attributes.
CURB is expected to be in a net cash position at the time of the
spin-off with cash on hand, a preferred investment in SITE Centers,
and an unsecured, undrawn line of credit. The Company intends to
acquire additional convenience properties prior to the spin-off,
which will be included in the CURB portfolio, funded via additional
SITE Centers dispositions, retained cash flow and cash on hand.
CURB is expected to be led by David Lukes as President and Chief
Executive Officer. Conor Fennerty is expected to be Chief Financial
Officer and Treasurer and John Cattonar is expected to be Chief
Investment Officer.
In the third quarter of 2023, SITE Centers acquired three
convenience properties for an aggregate price of $28.1 million,
including Towne Crossing Shops (Richmond, Virginia) for $4.2
million, Oaks at Slaughter (Austin, Texas) for $14.1 million and
The Marketplace at 249 (Houston, Texas) for $9.8 million.
Subsequent to quarter end, the Company acquired two additional
convenience properties for an aggregate price of $26.0 million
including Estero Crossing (Fort Meyers, Florida) for $17.1 million
and Point at University (Charlotte, North Carolina) for $8.9
million.
SITE CENTERS OVERVIEW
Pro forma for the spin-off and including all assets owned as of
September 30, 2023, SITE Centers will include 83 properties,
including 13 joint venture properties, concentrated in the
country’s largest MSAs including Chicago (7.6% of pro-rata ABR),
Atlanta (7.2%), Boston (7.1%), Orlando (6.9%) and Denver (6.3%)
with average household incomes of $109,000 (88th percentile).
In addition to its positioning in the top submarkets with
elevated employment and population growth, over 90% of ABR of the
pro forma SITE Centers portfolio is generated by national tenants
with 69% of properties by ABR anchored by a grocer or warehouse
club. As of September 30, 2023, ABR per square foot for the
portfolio was $17.82 and the leased rate was 94.4% with an SNO
pipeline of $14.4 million which represents 4.5% of ABR.
In October 2023, SITE Centers obtained a commitment from
affiliates of Apollo, including ATLAS SP Partners, to provide a
$1.1 billion delayed-draw mortgage facility to be secured by 40
properties across 15 states with flexibility to reduce the
commitment or loan balance with proceeds from asset sales or other
sources of capital. The mortgage is expected to be funded prior to
the spin-off date with loan and additional asset sale proceeds
expected to be used to retire all unsecured debt, including all
outstanding public notes, prior to the spin-off of CURB. SITE
Centers is expected to have no unsecured debt outstanding at the
time of the spin-off effective date. In October 2023, SITE Centers
also closed on a $100 million mortgage secured by Nassau Park
Pavilion. Proceeds were used for general corporate purposes
including the repayment of a portion of the outstanding balance on
the Company’s line of credit.
SITE Centers is expected to provide certain shared services to
CURB for up to 24 months following the transaction. Following the
separation of CURB, the Company may opportunistically sell
additional assets to repay debt, redeem CURB’s preferred investment
and return capital to shareholders.
SITE Centers sold 11 wholly owned shopping centers in the third
quarter and fourth quarter to date for an aggregate price of $645.6
million, with 6 additional assets for an aggregate price of $242.0
million under contract for sale subject to standard closing
conditions. The assets sold to date were disposed of at a blended
6.5% cap rate. Disposition proceeds are expected to be used to
repay the outstanding balance on the Company’s line of credit, fund
acquisitions, retire near-term maturities and for general corporate
purposes. Additional details related to recent transaction activity
can be found in the CURB investor presentation.
SITE CENTERS DECLARES FOURTH QUARTER 2023 DIVIDEND &
ANNOUNCES EXPECTED SPECIAL DIVIDEND
SITE Centers today declared a dividend on its common stock of
$0.13 per share for the fourth quarter of 2023. The dividend is
payable on January 5, 2024 to shareholders of record at the close
of business on December 11, 2023. Based on 2023 transaction
activity, the Company also expects to declare and pay a special
cash dividend of at least $0.10 per share prior to January 31, 2024
subject to final SITE Centers’ Board of Directors approval. The
Company will assess and expects to adjust, if necessary, future
quarterly dividends prior to the spin-off of CURB.
SPIN-OFF DETAILS
CURB expects to confidentially submit its initial draft Form 10
registration statement with the U.S. Securities and Exchange
Commission in 2024, and the spin-off is expected to be completed in
the second half of 2024. CURB intends to elect to be treated as a
REIT for U.S. federal income tax purposes and be structured as an
UPREIT which is expected to be a competitive advantage when
acquiring assets from private Convenience sellers. Shareholders of
SITE Centers will receive shares of CURB via a taxable pro rata
stock distribution. The transaction is subject to certain
conditions, including the effectiveness of CURB’s Form 10
registration statement and final approval and declaration of the
distribution by SITE Centers’ Board of Directors. The transaction
does not require shareholder approval.
An investor presentation regarding the spin-off can be found on
the Investor portion of SITE Centers’ website at
http://ir.sitecenters.com.
SPIN-OFF ADVISORS
Morgan Stanley & Co. LLC and Wells Fargo are acting as lead
financial advisors and Jones Day is serving as legal counsel to
SITE Centers.
CONFERENCE CALL DETAILS
The Company will hold a conference call to discuss the spin-off
and third quarter results today at 5:30pm Eastern Time. All
interested parties can access the call by dialing 888-317-6003
(U.S.), 866-284-3684 (Canada), or 412-317-6061 (international)
using passcode 5228692. The call will also be webcast and available
in a listen-only mode on SITE Centers’ website at
ir.sitecenters.com. SITE Centers no longer intends to host its
previously announced earnings conference call on November 2,
2023.
About SITE Centers Corp.
SITE Centers is an owner and manager of open-air shopping
centers located in suburban, high household income communities. The
Company is a self-administered and self-managed REIT operating as a
fully integrated real estate company and is publicly traded on the
New York Stock Exchange under the ticker symbol SITC. Additional
information about the Company is available at www.sitecenters.com.
To be included in the Company’s e-mail distributions for press
releases and other investor news, please click here.
Safe Harbor
The Company considers portions of the information in this press
release to be forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, both as amended, with respect to
the Company's expectation for future periods. Although the Company
believes that the expectations reflected in such forward-looking
statements are based upon reasonable assumptions, it can give no
assurance that its expectations will be achieved. For this purpose,
any statements contained herein that are not historical fact may be
deemed to be forward-looking statements. There are a number of
important factors that could cause our results to differ materially
from those indicated by such forward-looking statements, including,
among other factors, our ability to complete the spin-off in a
timely manner or at all; the expected tax treatment of the
spin-off; our ability to satisfy the various closing conditions to
the spin-off and the anticipated financing thereof or have such
conditions waived; our ability to consummate additional
dispositions, transfers, property separations and acquisitions
prior to the completion of the spin-off; our ability to obtain
required third-party consents and regulatory approvals to complete
the spin-off in a timely manner or at all; the composition of the
spin-off portfolio; the post-transaction leadership of CURB; the
impact of the spin-off on our business and that of CURB; and the
Company’s and CURB’s ability to execute their respective business
strategies following the spin-off, including the ability of CURB to
acquire assets and obtain debt or equity financing on reasonable
terms, if at all. Other risks and uncertainties that could cause
our results to differ materially from those indicated by such
forward-looking statements include our ability to declare and pay
dividends; general economic conditions, including inflation and
interest rate volatility; local conditions such as the supply of,
and demand for, retail real estate space in our geographic markets;
the impact of e-commerce; dependence on rental income from real
property; the loss of, significant downsizing of or bankruptcy of a
major tenant and the impact of any such event on rental income from
other tenants and our properties; redevelopment and construction
activities may not achieve a desired return on investment;
impairment charges; valuation and risks relating to our joint
venture investments; the termination of any joint venture
arrangements or arrangements to manage real property; property
damage, expenses related thereto and other business and economic
consequences (including the potential loss of rental revenues)
resulting from extreme weather conditions or natural disasters in
locations where we own properties, and the ability to estimate
accurately the amounts thereof; sufficiency and timing of any
insurance recovery payments related to damages from extreme weather
conditions or natural disasters; any change in strategy; the impact
of pandemics and other public health crises; unauthorized access,
use, theft or destruction of financial, operations or third party
data maintained in our information systems or by third parties on
our behalf; and our ability to maintain REIT status. For additional
factors that could cause the results of the Company to differ
materially from those indicated in the forward-looking statements,
please refer to the Company's most recent reports on Forms 10-K and
10-Q. The Company undertakes no obligation to publicly revise these
forward-looking statements to reflect events or circumstances that
arise after the date hereof.
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version on businesswire.com: https://www.businesswire.com/news/home/20231030356477/en/
Conor Fennerty, EVP and Chief Financial Officer 216-755-5500
SITE Centers (NYSE:SITC)
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