Q1 2024 SITE Centers Corp Earnings Call

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After todays presentation, there will be an opportunity to ask questions to ask a question you Press Star then one on your touch so far to withdraw your question. Please press Star then two please note. This event is being recorded and all the China commentary a house today, Stephanie Fisher Vice President of capital markets. Please go ahead ma'am.

Stephanie Ruys de Perez: Thank you good morning, and welcome to sites in its first quarter 'twenty 'twenty four earnings conference call. Joining me today are Chief Executive Officer, David Lukes, and Chief Financial Officer Conor Flynn.

Stephanie Ruys de Perez: In addition to the press release distributed this morning, we have posted our quarterly financial supplement and slide presentation on our website at Www Dot site centers dotcom, which are intended to support our prepared remarks during today's call.

Stephanie Ruys de Perez: Please be aware that certain of our statements today may contain forward looking statements within the meaning of federal Securities laws. These forward looking statements are subject to risks and uncertainties and actual results may differ materially from our forward looking statements additional information may be found in our earnings press release and in our filings with the SEC, including our most recent report on Form 10-K.

Stephanie Ruys de Perez: K and 10-Q.

Stephanie Ruys de Perez: In addition, we will be discussing non-GAAP financial measures on today's call, including F. F. L. Operating <unk> and same store net operating income descriptions and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in todays quarterly financial supplement and investor presentation. At this time it is my pleasure to introduce.

Stephanie Ruys de Perez: Who's our Chief Executive Officer, David Lukes.

David R. Lukes: Good morning, and thank you for joining our quarterly earnings call.

David R. Lukes: The first quarter was highlighted by additional progress on the announced the planned spin off of the convenience portfolio from with insight centers into a new and unique focus growth company called curb line properties.

This announcement, along with over $1 billion of completed dispositions and over $100 million of new acquisitions. Since the third quarter of 2023 has put us on a dual path of growing our curb line portfolio through acquisitions and maximizing the value of the site centers portfolio through certain dispositions along with.

David R. Lukes: Continued leasing and asset management.

David R. Lukes: I'll start with an update on curb line shift next to transactions, then conclude with an update on the quarter and operations before turning it over to Conor to talk about the first quarter results the outlook for the rest of the year and the balance sheet.

Speaker Change: Starting with curb line, we began investing in convenience assets over five years ago.

Speaker Change: After several years of investments reviewing data analytics and financial and tenant analysis, we are more convinced than ever that convenience sector is a differentiated unique growth opportunity.

Speaker Change: As announced to seize this opportunity we are creating curb line properties as a first mover read that is unlike other retail rates and has what we believe to be the highest organic cash flow growth potential driven by annual bumps the ability to recapture and mark to market units.

Speaker Change: High quality and diversified tenant roster with minimal concentration risk and limited capex needs as compared to other property types.

Speaker Change: Same store NOI for the current curb line portfolio is expected to grow four 5% in 2024 and average greater than 3% for the next three years when factor in all of these attributes.

Speaker Change: As of quarter end. The curb line portfolio included 67 wholly owned convenience properties expected to generate about $79 million of NOI in 2024 after adjusting for first quarter results and acquisitions.

Speaker Change: These assets share common characteristics, including excellent visibility access and what we believe are compelling economics highlighted by limited capex needs are.

Speaker Change: Arguably what we own today represents the largest highest quality convenience portfolio in the U S. Yet, it's only a fraction of the addressable market for this type of asset.

Convenience properties, which primarily cater to customer daily needs are an integral part of the suburban lifestyle, which has only become more entrenched with increased suburban migration and the adoption of hybrid work.

Speaker Change: And combined with a balance sheet that is expected to have no outstanding debt curb line properties is expected to generate compelling and elevated relative growth and returns for stakeholders.

Speaker Change: As of today, we expect the spin off to be completed on or around October one of this year with curb capitalized with $600 million of liquidity in the form of cash and a preferred investment in site centers.

Speaker Change: Additionally, consistent with our commentary last quarter should we continue to make progress on the disposition front. It is likely that curb would not retain a preferred investment in site and would be capitalized simply with no debt and $600 million of cash.

Speaker Change: On that point moving to transactions, we have closed $170 million of wholly owned property sales year to date with total close to transaction since July 1st of just under $1 $1 billion at a blended cap rate of under 7%.

Speaker Change: The volume of disposition activity has increased since our call last quarter, resulting in over $1 billion of real estate currently either under contract in contract negotiation or with executed nonbinding LOI is at a blended cap rate of roughly 7%. The bulk of this inventory is primarily.

Sub market dominant power centers.

Speaker Change: Closings are expected to pick up over the middle of the year consistent with the timeline that we discussed last quarter for the assets launched around year end.

Speaker Change: The participants in this bidding process has been a wide variety of private and institutional investors. This.

Speaker Change: This deep pool of interest is clearly showing an active and liquid market for our well located and high quality portfolio of open air shopping centers.

Speaker Change: Leasing momentum remains strong market rents are growing and replacement costs continue to escalate factors, we believe that our supporting strong buyer interest.

Speaker Change: These buyers are sophisticated committed to the open air retail format and often have been unlevered acquirers.

Speaker Change: There has certainly been capital markets volatility in recent weeks and no asset sales or certain until closing, but the elevated level of demand for the assets on the market speaks to the quality of the site centers portfolio and the opportunity that we identified with the spin off announcement.

Speaker Change: In terms of acquisitions, we acquired two convenience properties in the first quarter for $19 million in Houston, and Phoenix and have over $100 million of additional convenience assets awarded or under contract subject to standard closing in diligence provisions.

Speaker Change: Average household incomes for the first quarter investments were over $113000 with a weighted average lease rate of almost 100% highlighting our focus on acquiring properties were renewals and lease bumps drive growth without significant capex.

Speaker Change: Going forward, we remain encouraged by the unique opportunity in the convenience sub sector, including the size of the opportunity itself.

The addressable market for convenience assets. According the ICSC is 950 million square feet.

Speaker Change: [noise] curb lines current portfolio, comprising $2 2 million square feet represents one quarter of 1% of total U S inventory, meaning we have plenty of room to grow.

Speaker Change: That said, while we expect to remain active acquirers prior to the spin we continue to prioritize dispositions to take advantage of demand for sites assets, which will likely result in significantly more dispositions as compared to acquisitions in 2024.

Ending with the quarter and operations first quarter results were ahead of expectations on lower G&A higher occupancy and higher lease termination fees.

Speaker Change: Overall quarterly leasing volume was up sequentially, but remains down from 2023 levels, which is a function of a smaller portfolio and certainly less availability.

Speaker Change: Leasing demand continues to be very strong for both existing retailers and service tenants expanding into key suburban markets, along with new concepts competing for the same space.

Speaker Change: Despite despite the strength of execution from our leasing team our lease rate was down 30 basis points sequentially and part as we held space offline to maximize proceeds as part of the sale process.

Speaker Change: Looking forward, we have over 350000 square feet at share in lease negotiations, which we expect to be completed over the next two quarters at similar spreads and economics to the trailing 12 month figures reporting today.

Speaker Change: We continue to expect the commencement of executed leases to be the material driver of our same property NOI growth over the course of 2024.

Speaker Change: Before turning the call over to Conor I want to again, thank everyone at site centers for their work. These past few quarters, which has been nothing short of incredible the spinoff of curb line properties as possible due to the work of the entire organization and we believe the transaction unlocks a compelling opportunity to cigarette to create significant.

Speaker Change: Value for the company stakeholders and with that I'll turn it over to Conor.

Speaker Change: David.

Conor M. Fennerty: I'll start with first quarter earnings and operations before concluding with updates to our 2024 outlook and balance sheet.

As David noted first quarter results were ahead of budget due to better than expected operations, including higher than forecast occupancy and lease termination fees and lower G&A expenses.

Conor M. Fennerty: Neither of these items there were no other material callouts in the quarter.

Conor M. Fennerty: Moving to operations first quarter leasing volume was sequentially higher but remains lower than the 2022 and 2023 run rate as David highlighted due to disposition activity.

Conor M. Fennerty: With this smaller denominator operating metrics remain volatile, though based on the leasing pipeline at quarter end, we expect spreads to be consistent with trailing 12 month levels.

Conor M. Fennerty: Overall leasing activity in economics remain elevated and we remain confident on the backfill of the remaining vacancies highlighting the quality of the portfolio and depth of demand for space.

Conor M. Fennerty: Moving to our outlook for 2024 as David noted we are extremely excited to form and scale. The first publicly traded REIT focused exclusively on convenience assets.

Conor M. Fennerty: And based on the mortgage commitment announced in October along with recent transaction and other financing activity. We are positioned both site anchor blind with a balance sheet that they need to execute on their business plans.

Conor M. Fennerty: As a result of the planned spin off and significant expected asset sales. We did not provide a formal 2024 <unk> guidance range with year end results.

Conor M. Fennerty: We did provide projections, though for total portfolio NOI for the site and curb assets that have been updated to reflect first quarter 2024 acquisitions and dispositions.

Conor M. Fennerty: And as we move forward over the course of the year, we expect to continue to update the projection ranges for future transaction activity.

Conor M. Fennerty: For the current portfolio total NOI is now expected to be roughly $79 million up from $76 million at the midpoint of the projected range before any additional acquisitions and same store NOI growth is expected to be between three and a half and five 5% for 'twenty 'twenty four.

Conor M. Fennerty: For the site portfolio.

Conor M. Fennerty: NOI is now expected to be $257 million down from two.

Conor M. Fennerty: $265 million at the midpoint of the projected range before any additional dispositions.

Conor M. Fennerty: Details on the assumptions underpinning. These ranges are in our press release and earnings slides.

Conor M. Fennerty: In terms of other line items, we continue to expect JV fees to average around $1 million to $5 million per quarter.

And G&A to average around $12 million per quarter prior to the planned spin off.

Conor M. Fennerty: Given our significant cash balance on hand interest income remains elevated at over $7 million for the quarter.

Conor M. Fennerty: That figure will obviously be dependent on short term rates and debt repayment activity.

Conor M. Fennerty: On that point in the first quarter, we repurchased just under $62 million of unsecured bonds at a discount resulting in a gain of approximately $800000.

Conor M. Fennerty: Finally transaction volume, particularly the timing of asset sales is expected to be the largest driver of quarterly F. L and in the first quarter. We included 937000 of NOI from assets sold in the quarter as detailed in the income statement.

Moving to the balance sheet in terms of leverage at quarter end debt to EBITDA was just over four times with a net debt yield north of 20%.

Conor M. Fennerty: Higher to the effectiveness of the spinoff, we expect leverage to continue to decline with debt to EBITDA below four times.

Conor M. Fennerty: Before drawing on the $1 billion mortgage commitment. We also expect to maintain a significant primarily unencumbered asset base, providing additional scale and collateral first sight stakeholders.

Conor M. Fennerty: As I mentioned, we repurchased $62 million of 2025 and toward 'twenty six notes in the first quarter and expect to retire the majority of outstanding consolidated debt prior to the spin with proceeds from the mortgage commitment.

Conor M. Fennerty: This mortgage will be secured by 38 properties that are expected to be part of site centers post spin and funding is expected to occur prior to the spin off subject to the satisfaction of closing conditions.

Conor M. Fennerty: For curb lime properties the company at the time the spend is expected to have no debt $300 million of cash and a $300 million preferred investment and tight centers.

Conor M. Fennerty: This highly liquid balance sheet will allow curb wanted to focus on scaling this platform, while providing the capital to differentiate itself from the largely private buyer universe acquiring convenience properties.

Additionally, as David noted depending on the level of asset sales completed prior to the spin we may look to fund curb entirely with cash and no preferred investment insight.

Conor M. Fennerty: Details on sources and uses and projected capital structures can be found on pages 11, and 12 of the earnings slides.

Conor M. Fennerty: Lastly, as previously announced site centers paid in January 2020 for a special dividend of <unk> 16 cents per share the.

Conor M. Fennerty: The dividend was funded with cash on hand, and with that I'll turn it back to David.

David R. Lukes: Thank you Connor.

David R. Lukes: Operator, we're now ready for questions yes.

Speaker Change: Yes. Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.

Speaker Change: Speakerphone, please pick up your handset before pressing the keys. So anytime you have questions around addressing who'd like to withdraw it. Please press star then two.

Speaker Change: Time, we will pause momentarily to assemble the roster.

Speaker Change: And today's first question comes from Duane <unk> with Wells Fargo.

Thanks. Good morning, you noted a blended cap rate for 1 billion under contract or negotiation of just under 7% I believe is that in line with your initial expectations for these assets there has been interest been better than expected.

Duane: Hey, good morning Dara.

Speaker Change: I think youre merging two comments, we've we've sold and closed on over $1 billion at just below a 7% cap rate.

Speaker Change: The 1 billion, we've awarded and are negotiating LOI or negotiating contracts is approximately a 7% cap rate.

Dara: I would say in general the pricing has been a little stronger than we expected six months ago.

Dara: Okay.

Dara: And how should we think of the P thing of dispositions head of October 1st.

Speaker Change: Yeah, It's a really good question I would say that.

Speaker Change: With a $1 billion awarded the buyers in various stages. Some of those may close some of those may not close as you know there are contingent on a number of factors, but our confidence level in the buyers is pretty high we've taken a lot of time to interview buyers and understand where their equity is coming from their need for debt and so forth. So our confidence level of.

Speaker Change: A lot of closings occurring in the next couple of months is pretty high.

Speaker Change: Having said that anything thats not awarded as of today is unlikely to close in the next couple of months. So I think he probably can.

Guestimate, a pretty decent pipeline for the next few months, but having an increased substantially would be unlikely.

Speaker Change: Okay.

Speaker Change: And I think last quarter, you mentioned there is the.

Speaker Change: Likely be smiling in the peso convenience acquisitions, just as you focus on sales.

Speaker Change: We did complete a few in the quarter should we assume a few per quarter heading up to the spin or is there more likely to be a greater acceleration acquisitions ahead of it.

Speaker Change: I'll, let conor give some specifics but in general that the time that we're allocating towards dispositions is a lot more than the time for acquisitions and that's just a function of demand there's been more demand to buy assets from us than we would've thought six months ago. So a lot of that time is spent on the dispositions pipeline as far as acquisitions go we do have $100 million that's been awarded to.

Speaker Change: Is.

Conor M. Fennerty: That's a number of deals and so I think you can assume that a couple per quarter, leading into the spin is is probably appropriate but post spin I think we're gonna reverse pretty quickly on spending a lot more time on acquisitions.

Yeah, I mean just cause.

Conor M. Fennerty: So some of what David just outlined we've kind of highlighted $25 million to $50 million of acquisitions acquisitions per quarter, obviously run the lighter end of that this quarter, but that probably needs to be at the higher end of that range in the next quarter.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you and the next question comes from Craig Mailman with Citi.

Craig Allen Mailman: Hey, good morning.

David just want to go back to your comment around the capital markets volatility here clearly we've seen the 10 year jump around and you know macro expectations changing here have you seen or had any shift in conversations with people who you thought you were going to get under contract or under LOI is anyone kind of slow rolling you given.

Craig Allen Mailman: Any issues in the debt markets or has that largely been.

David R. Lukes: Not an issue at this point so far yeah, Craig it's it's a really good question I mean, certainly if if rates are all in rates are going up you would expect that to have.

David R. Lukes: Commensurate reaction in cap rates are going in yield.

David R. Lukes: On the other hand, there has been a lot more capital formation around the equity side of buying open air properties.

David R. Lukes: And the rents keep rising and so I guess, what we've really seen and kind of if youre looking at our our pipeline of awarded deals at a seven cap over $1 billion that kind of shows you that the market has been factoring in both the debt side of the equation and.

David R. Lukes: The potential growth of the revenue stream from this type of property. So to date I wouldn't say, it's had much of an impact on cap rates I can't say, that's always going to be the case, but to date. We just haven't seen it. We've just had a significant amount of demand and to your point about buyers and those conversations when John and his team are interviewing potential buyers.

David R. Lukes: You know one of the first questions is you know where does your equity come from and the second question is are you using that or not and we have been tilting towards buyers that are either unlevered or have a very low attachment point.

Operator: All participants will be in Sonali mode. Should you need assistance, please contact our conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you press the star then 1 on your touch screen phone. To withdraw your question, please press star then 2. Please note that this event is being recorded. I now would like to turn the conference over to your host today, Stephanie Rui, Vice President of Capital Markets. Please go ahead, ma'am.

David R. Lukes: So I think the impact to date has been pretty muted and counter I don't know if you mean.

David R. Lukes: A couple of other factors I'd point, you Craig wanted it's just that the yields or cap rates of our sector versus other sectors. You know, we never got down in the retail sector to the threes and fours that you saw and some other property.

Stephanie Ruys de Perez: Thank you. Good morning, and welcome to Cite Center's first quarter 2024 earnings conference call. Joining me today are Chief Executive Officer David Lukes and Chief Financial Officer Conor Fennerty. In addition to the press release distributed this morning, we have posted our quarterly financial supplement and slide presentation on our website at www.sitecenters.com, which are intended to support our prepared remarks during today's call. Please be aware that certain of our statements today may constitute forward-looking statements within the meaning of federal securities laws.

David R. Lukes: Property types like industrial multifamily so the sensitivity around the capital markets. So there's definitely a little bit lower result of that the second thing I would say youre right to point out obviously benchmark rates are higher than they are today one of the important factor. If you think about just capital markets a health, it's just debt availability and in that regard I would say things are materially better.

David R. Lukes: They were six months ago, and so yes underlying rates important but underlying structure is as important and I would just say that we've seen pretty significant improvements in kind of underlying structure for borrowers over the last six months, which isn't a very important factor as we think through underwriting.

David R. Lukes: Yeah.

Speaker Change: That's helpful and then maybe another way to come at it of the $1 billion, that's kind of in some some form of negotiation what percentage of that has kind of money at risk from the buyer.

Speaker Change: Off the top of my head Craig I don't know.

Speaker Change: Okay.

Stephanie Ruys de Perez: These forward-looking statements are subject to risks and uncertainties, and actual results may differ materially from our forward-looking statements. Additional information may be found in our earnings press release and in our SEC filings, including our most recent reports on Form 10-K and 10-Q. In addition, we will be discussing non-GAAP financial measures on today's call, including FFO, operating FFO, and same-store net operating income. Descriptions and reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in today's quarterly financial supplement and investor presentation. At this time, it is my pleasure to introduce our Chief Executive Officer, David Lukes.

Speaker Change: And then just flipping around you know the $100 million of convenience assets in the pipeline.

David R. Lukes: Good morning, and thank you for joining our quarterly earnings call. The first quarter was highlighted by additional progress on the announced planned spin-off of the convenience portfolio from WithinSight Centers into a new and unique focused growth company called CurbLine Properties. This announcement, along with over $1 billion of completed dispositions and over $100 million of new acquisitions since the third quarter of 2023, has put us on a dual path of growing our curbside portfolio through acquisitions and maximizing the value of the site center's portfolio through certain dispositions along with continued leasing and asset management.

Speaker Change: It seems to be a good pace I'm just kind of curious you guys have always said your teams focused on acquisitions today.

Speaker Change: If you had 100% kind of focus on our sorry, our dispositions, if you're a harder because of focus on acquisitions.

Speaker Change: Given the the kind of pool of opportunities out there and the willingness of sellers to part with assets.

Speaker Change: What do you think would be sort of a a good quarterly pace to think of.

Speaker Change: Deals that could be getting done at this point.

Speaker Change: If that was kind of your main focus on the acquisition front.

Speaker Change: What we've said before and you know we spent a lot of time in the last couple of years building spreadsheets, so of inventory across the country building relationships with the local brokerage community understanding which families or private owners might owns small to midsize portfolios. So I think even at the time of the spin announcement back in October we said that our confidence level.

David R. Lukes: I'll start with an update on CurbLine, shift to transactions, then conclude with an update on the quarter and operations before turning it over to Conor to talk about the first quarter results, the outlook for the rest of the year, and the balance sheet.

Speaker Change: [noise] of acquiring $500 million a year is pretty high at a minimum so that's that's kind of our baseline target.

David R. Lukes: Starting with CurbLine, we began investing in convenience stores over five years ago. And after several years of investing, reviewing data analytics, and financial and tenant analysis, we are more convinced than ever that the convenience sector is a differentiated, unique growth opportunity. As announced, to seize this opportunity, we are creating CurbLine Properties as a first-mover REIT that is unlike other retail REITs and has what we believe to be the highest organic cash flow growth potential, driven by annual bumps, the ability to recapture and mark-to-market units, a high-quality and diversified tenant roster with minimal concentration risk and limited capex needs as compared to other property types. Same store NOI for the current CurbLine portfolio is expected to grow 4.5% in 2024 and average greater than 3% for the next three years when factoring in all of these attributes.

Speaker Change: Okay, great. Thank you.

Speaker Change: Thanks, Craig.

Speaker Change: Thank you next question comes from Alexander Goldfarb with Piper Sandler.

Alexander David Goldfarb: Hey, good morning morning down there good morning, Hey, So just a few questions first.

Alexander David Goldfarb: First David you guys are on track full steam ahead for October one spin out.

Alexander David Goldfarb: But can you just give us a sense for on October 2nd what will cite look like and who will be running site and what will curb look like and who's running curb just to get a sense because it sounds like site, we will still have assets.

Alexander David Goldfarb: Conor is doing a great job cleaning up the balance sheet, but just wanted to get a sense of what we're gonna look at on October 2nd.

Speaker Change: Certainly Alex I think what you are going to see on October 2nd is some executives, having a dedicated role in some having a dual role.

David R. Lukes: As of quarter end, the Curb Line portfolio included 67 wholly owned convenience properties expected to generate about $79 million of NOI in 2024 after adjusting for first quarter results and acquisitions. These assets share common characteristics, including excellent visibility, access, and what we believe are compelling economics highlighted by limited CapEx needs. Arguably, what we own today represents the largest, highest quality convenience portfolio in the U.S., yet it is only a fraction of the addressable market for this type of asset. Convenience properties, which primarily cater to customers' daily needs, are an integral part of the suburban lifestyle, which has only become more entrenched with increased suburban migration and the adoption of hybrid work.

Speaker Change: I think the specifics around who has a dual and who has a singular role will.

Speaker Change: Be a subject that we can talk more freely about over the next couple of quarters you know.

Speaker Change: The board of directors is heavily involved in making sure that both companies have the stewardship, both from the board and the executive front that align with those individual company interests and then of course, there's a shared service agreement where the bulk of the company is really servicing both for some period of time as the business plans emerge so I wouldn't say.

Speaker Change: Now is a great time to have specifics, but I would say that you could expect.

Speaker Change: Higher to the spin that we would have more specific announcements on specific leadership yeah.

Speaker Change: That will be detailed in the form 10.

As we detailed in our announcement the timing of that is closer to kind of end of summer for effective date, So where we're still five months out to David's point, but all of that detail will be laid out in the form 10.

David R. Lukes: And combined with a balance sheet that is expected to have no outstanding debt, HerbLine Properties is expected to generate compelling and elevated relative growth and returns for stakeholders. As of today, we expect the spinoff to be completed on or around October 1st of this year, with Curb capitalized with $600 million of liquidity in the form of cash and a preferred investment in SightCenter. Additionally, consistent with our commentary last quarter, should we continue to make progress on the disposition front, it is likely that CURB would not retain a preferred investment in the site and would be capitalized simply with no debt and $600 million of cash.

Speaker Change: Okay. Okay and then the next question is just given you know on one hand, great retail environment, and certainly credit seems to be very good in retail land on the other hand, you know.

Speaker Change: Yeah personal credit lines are expensive and we sort of have the stagflation environment. So as you guys now have more experience running convenience assets are there any differences that you're discerning, whether it's a corporately run.

Speaker Change: Retailer, a franchisee retailer versus a truly independent mom and pop sort of like either small local chain or one off just trying to understand the credit you know what credit trends you've seen across those three types of ownership as you gain more experience running retail.

David R. Lukes: On that point, moving to transactions, we have closed $170 million in wholly owned property sales year-to-date, with total closed transactions since July 1st of just under $1.1 billion at a blended cap rate of under 7%. The volume of disposition activity has increased since our call last quarter, resulting in over $1 billion of real estate currently either under contract, in contract negotiation, or with executed non-binding LOIs at a blended cap rate of roughly 7%.

Speaker Change: Convenience retail that is.

Speaker Change: Sure Alex well I mean remember that the tenant roster that we have is pretty consistent throughout anchored and on anchor assets.

Speaker Change: I think from a convenience perspective, when one's purchasing convenience properties you do have a choice as to whether you're tilting towards more credit or more local there's benefits to both youll note from our our tenant roster on curb line today that we're heavily tilted towards credit I would expect that to remain tilted toward credit but.

David R. Lukes: The bulk of this inventory is primarily sub-market dominant power centers. Closings are expected to pick up over the middle of the year, consistent with the timeline that we discussed last quarter for the assets launched around year-end. The participants in this bidding process have been a wide variety of private and institutional investors. This deep pool of interest is clearly showing an active and liquid market for our well-located and high-quality portfolio of open-air shopping centers.

Speaker Change: A little bit less so and the reason is that if you can find assets that have some local tenants that may be in business for 10, or 15 years. The retention rates are pretty high and the ability to mark to market on a growing market rents is much higher so I think the balance between credit and noncredit is important over the long term.

Speaker Change: But we are always going to be a company that's focused on credit simply because I think in a downturn. The performance is just better over time. So that's why we've got an updated top 25 list four curves in the earnings slides.

David R. Lukes: Leasing momentum remains strong, market rents are growing, and replacement costs continue to escalate – factors, we believe, that are supporting strong buyer interest. These buyers are sophisticated, committed to the open-air retail format, and often have been unlevered acquirers. However, there has certainly been capital markets volatility in recent weeks, and no asset sales are certain until closing.

Speaker Change: I'd mentioned, we feel really good about that top 25. The other point is its a differentiated and highly fragmented.

Speaker Change: Tenant concentration level, especially versus the peer group. So you think about our exposure to any one tenant is very limited on a relative and absolute basis and to us. That's a really compelling part of the thesis in a sense that you've got essentially this is a very low risk of one tenant and having an outsized impact to weather NOI earnings or whatever it may be.

David R. Lukes: But the elevated level of demand for the assets on the market speaks to the quality of the site center's portfolio and the opportunity that we identified with the spinoff announcement. In terms of acquisitions, we acquired two convenience properties in the first quarter for $19 million in Houston and Phoenix and have over $100 million of additional convenience assets awarded or under contract subject to standard closing and diligence provisions. Average household incomes for the first quarter investments were over $113,000 with a weighted average lease rate of almost 100%, highlighting our focus on acquiring properties where renewals and lease bumps drive growth without significant capex. Going forward, we remain encouraged by the unique opportunity in the convenience subsector, including the size of the opportunity itself. The addressable market for convenience stores, according to ICSC, is 950 million square feet.

Speaker Change: That's a really compelling part of the thesis of what we think on an absolute and relative basis.

Speaker Change: Okay. Thank you thanks, Alex.

Speaker Change: Thank you and the next question comes from Todd Thomas with Keybanc capital markets.

Yeah.

Todd Michael Thomas: Hi, Thanks. Good morning, just first first question look there's been a lot of talk about new capital coming into the open Air shopping center space and I'm just curious in your discussions with buyers and what Youre seeing if you could comment on whether you see a shift at all in the interest level for retail centers from <unk>.

From new private equity and institutional investors, just give us a sense of what you're seeing in terms of.

Todd Michael Thomas: Capital formation in recent months for the space.

Yeah, Todd I would say I think I said this on our <unk> call I've I've been very surprised at the depth of demand star.

David R. Lukes: Curb Line's current portfolio, comprising 2.2 million square feet, represents one-quarter of one percent of total U.S. inventory, meaning we have plenty of room to grow. That said, while we expect to remain active acquirers prior to the spin, we continue to prioritize dispositions to take advantage of demand for sites' assets, which will likely result in significantly more dispositions as compared to acquisitions in 2024. Ending with the quarter and operations, first quarter results were ahead of expectations on lower G&A, higher occupancy, and higher lease termination fees.

Todd Michael Thomas: Starting really at the beginning of the year of which tells me that a lot of folks must've made allocations decisions towards the end of the year and Theyre ready to act on that.

Todd Michael Thomas: From an institutional perspective, there has been an increase in institutions in the bidding 10 for various assets.

Todd Michael Thomas: There's also been a fairly large component of our value add folks it's just that the.

Todd Michael Thomas: The pricing I think has gotten away from a lot of the value add buyers because there is a deeper pool of institutions and then lastly, Todd I I've been very surprised at how much private wealth is is active in open air shopping center reps right now and we've sold a tremendous amount of properties to local buyers and those local buyers in many cases had been unlevered.

David R. Lukes: Overall quarterly leasing volume was up sequentially but remains down from 2023 levels, which is a function of a smaller portfolio and certainly less availability. However, leasing demand continues to be very strong for both existing retailers and service tenants, expanding into key suburban markets, along with new concepts competing for the same space. Despite the strength of execution from our leasing team, our lease rate was down 30 basis points sequentially, in part, as we held space offline to maximize proceeds as part of the sale process.

Todd Michael Thomas: Wealthy family offices, they tend to know the property is pretty well I think John gets a lot of inbound calls from local and regional families. So as much as we all talk about the institutional capital the private side has been pretty surprising.

Speaker Change: Okay, and then of the $1 billion pipeline that that you're talking about.

Speaker Change: It looks like about 152 million is under contract is that right and then based on the asset sales.

David R. Lukes: Looking forward, we have over 350,000 square feet at share in lease negotiations, which we expect to be completed over the next two quarters at similar spreads and economics to the trailing 12-month figures reporting today. We continue to expect the commencement of executed leases to be the material driver of our same property NOI growth over the course of 2024. Before turning the call over to Conor, I want to again thank everyone at SightCenters for their work these past few quarters, which has been nothing short of incredible.

Speaker Change: That you that you are seeing here in the pipeline and the level of activity that youre anticipating do you see potential for curve to be in a net cash position at spin.

Speaker Change: Help me out that last point, Todd I'm sorry.

Do you expect with the level of dispositions that that Youre seeing out of sight do you expect that do you see that the potential for a curve to be in a net cash position. That's been yeah. I would say that's the base case and to both David and my comments, we think there's a a very good chance that curb has no preferred investors.

David R. Lukes: The spinoff of CurbLine Properties is possible due to the work of the entire organization, and we believe the transaction unlocks a compelling opportunity to create significant value for the company's stakeholders. And with that, I'll turn it over to Conor. Thank you, David.

Speaker Change: Insight and it's all cash with no debt. So I would tell you our confidence incur being in a net cash position is very high to your point on what's under contract with referred to on page 11, it's a greater percentage or a greater dollar amount what were trying to show here is just what's needed to kind of the minimum threshold to meet our business plan I think to David's point on the 1 billion.

Conor M. Fennerty: I'll start with first quarter earnings and operations before concluding with updates to our 2024 outlook and balance sheet. As David noted, first-quarter results were ahead of budget due to better-than-expected operations, including higher-than-forecast occupancy and lease termination fees and lower G&A expenses. Outside of these items, there were no other material callouts in the quarter.

Speaker Change: Plus of of assets under contract are awarded we feel really good about a very large percentage of that and so the odds of us kind of having a significantly higher disposition proceeds number from page 11 on the slides is very high and in that environment or in that case, you would not have a perhaps you would have a significant amount of cash.

Conor M. Fennerty: Moving to operations, first quarter leasing volume was sequentially higher, but remains lower than the 2022 and 2023 run rates, as David highlighted, due to disposition activity. With this smaller denominator, operating metrics remain volatile, though based on the leasing pipeline at quarter end, we expect spreads to be consistent with trailing 12-month levels. Overall leasing activity and economics remain elevated, and we remain confident in the backfill of the remaining vacancies, highlighting the quality of the portfolio and depth of demand for space.

Speaker Change: At at curb $600 million, plus and you'd have a much lower leverage profile for site. So there's a pretty significant flow through again, I think to David's points, where our expectation is just given the timeline we laid out in the last earnings call you'll start to see some of those dispositions pick up in the next couple of months and then I think you'll see us update pages, 11, and 12 and see.

Speaker Change: Kind of flow through to their respective balance sheets of the two entities.

Speaker Change: Which is a nice way to circle back to why why are we tilting so much of our time on dispositions.

Conor M. Fennerty: Moving to our outlook for 2024, as David noted, we are extremely excited to form and scale the first publicly traded REIT focused exclusively on convenience assets. And based on the mortgage commitment announced in October, along with recent transaction and other financing activity, we have positioned both Cite and CurbLine with the balance sheets that they need to execute on their business plans. As a result of the plan spin-off and significant expected asset sales, we did not provide a formal 2024 FFO guidance range with year-end results.

Speaker Change: Cause the disposition pipeline is increasing the future value of curb line because it'll have so much liquidity and its also derisking site centers in terms of its overall leverage in size. So I.

Speaker Change: I think our confidence level that what youre seeing on page 11 is the base case and the counterpoint will likely become better is pretty good.

Speaker Change: Alright. Thank you thanks Scott.

Thank you and the next question comes from Ronald Camden with Morgan Stanley.

Conor M. Fennerty: We did provide projections, though, for Total Portfolio NOI for the SITE and CURB assets that have been updated to reflect first quarter 2024 acquisitions and dispositions. And as we move forward over the course of the year, we expect to continue to update the projection ranges for future transaction activity.

Ronald Kamdem: Hey, two quick ones, just going back to acquisitions aren't on sort of car or maybe if you could talk to.

Ronald Kamdem: What your what the cap rates look like and what you're thinking and importantly has that sort of changes or shifted at all as sort of rates have moved.

Speaker Change: Ron on the acquisitions I could barely hear you, saying that you're saying, what's the what's the return expectation for the acquisitions, yeah, Yeah exactly.

Conor M. Fennerty: For the CURB portfolio, total NOI is now expected to be roughly $79 million, up from $76 million, at the midpoint of the projected range before any additional acquisitions, and same-sur-NOI growth is expected to be between 3.5% and 5.5% for 2024. For the CITE portfolio, total NOI is now expected to be $257 million, down from $265 million at the midpoint of the projected range before any additional dispositions. Details on the assumptions underpinning these ranges are in our press release entry slides.

Speaker Change: Cap rates return expectations and has that shifted as rates have moved yeah.

Speaker Change: I mean, I'll say at a similar comment on on the dispositions and what impact rates have had when we're buying convenience properties. The going in cap rate is pretty consistent with high quality retail and other and other formats.

Today, it's kind of been in the low to mid sixes.

Speaker Change: It's unique I think is that you're getting a very similar top line growth.

Or NOI growth.

Conor M. Fennerty: In terms of other line items, we continue to expect JV fees to average around $1.25 million per quarter and G&A to average around $12 million per quarter prior to the planned spinoff. Given the significant cash balance on hand, interest income remains elevated at over $7 million for the quarter, though that figure will obviously be dependent on short-term rates and debt repayment activity. On that point, in the first quarter, we repurchased just under $62 million of unsecured bonds at a discount, resulting in a gain of approximately $800,000.

Speaker Change: Absent changes in occupancy, but the capex required to generate that growth is significantly lower so while the going in cap rate I think is consistent with other high quality retail formats. The unlevered IRR I think is higher.

Speaker Change: And and I and although I think we thought that rates changing might have had some impact on that going in cap rate number. The reality is shop rents have been growing and so the offset to raising rates as raising rents and therefore, the unlevered IRR is still moving in a positive direction.

Speaker Change: Great and then if I could just ask one just following up on the comments on Capex, which was actually my second question as we're sort of thinking about curb.

Conor M. Fennerty: Finally, transaction volume, particularly the timing of asset sales, is expected to be the largest driver of quarterly FFL, and in the first quarter, we included $937,000 of NOI from assets sold in the quarter, as detailed in the income statement.

Speaker Change: How does the sort of capex profile in terms of the types of numbers versus what site was doing so for example in <unk>.

Conor M. Fennerty: Moving to the balance sheet, in terms of leverage, at quarter end, debt to EBITDA was just over four times, with a net debt yield north of 20%. Prior to the effectiveness of the spinoff, we expect leverage to continue to decline, with debt to EBITDA below four times. Before drawing on the $1 billion mortgage commitment, we also expect to maintain a significant, primarily unencumbered asset base, providing additional scale and collateral for site stakeholders.

Speaker Change: So you've got one to 2 million of maintenance $12 million of tea is cumulative leasing commissions just trying to figure out what that's going to look like on October 2nd.

Conor M. Fennerty: Sure Ron it's Conor.

Conor M. Fennerty: You talked about this in prior presentations, it's kind of to David's point, the fulcrum point or one of the most exciting aspects of the of the thesis so for the industry in general Capex percent of NOI, including redevelopment has been running kind of 20% to 30%.

Conor M. Fennerty: As I mentioned, we repurchased $62 million of 2025 and 2026 notes in the first quarter and expect to retire the majority of outstanding consolidated debt prior to the spin with proceeds from the mortgage commitment. This mortgage will be secured by 38 properties that are expected to be part of site centers post-spin, and funding is expected to occur prior to the spinoff, subject to the satisfaction of closing conditions. For Curb Line Properties, the company at the time of the spin is expected to have no debt, $300 million in cash, and a $300 million preferred investment in a shopping center.

Our view of curve would be at sub 10%. So its a dramatic difference versus the industry at large and again, that's really one of the most compelling parts of the thesis obviously when you think about as a public entity. If we're a pure play that leaves you with fairly significant free cash flow relative to enterprise, which obviously compounds over time, so again.

Conor M. Fennerty: It's a great question and that's a huge focus one of ours and to David's point, there's just a lot less obsolescence risk around the site plans and when you lose a tenant youre not necessarily changing walls roofs, or it's a fairly straightforward process. So again, it's it's kind of a fulcrum fees are the most exciting aspect of the thesis and it's less than half on our numbers.

Conor M. Fennerty: This highly liquid balance sheet will allow CurveLine to focus on scaling its platform while providing the capital to differentiate itself from the largely private buyer universe acquiring convenience properties. Additionally, as David noted, depending on the level of asset sales completed prior to the spin, we may look to fund CURB entirely with cash and no preferred investment in sight. Details on sources and uses and projected capital structures can be found on pages 11 and 12 of the earnings slide. Lastly, as previously announced, site centers paid in January 2024 a special dividend of $0.16 per share. The dividend was funded with cash on hand.

Conor M. Fennerty: The industry overall.

Speaker Change: Thanks, so much.

Speaker Change: Thank you and the next question comes from Floris Van <unk> with Compass point.

Floris Gerbrand Hendrik Van Dijkum: Hey, good morning, guys.

Floris Gerbrand Hendrik Van Dijkum: Obviously, some some really good progress on the dispositions are.

Floris Gerbrand Hendrik Van Dijkum: Just a couple a couple of questions maybe following up on the.

Floris Gerbrand Hendrik Van Dijkum: What the board of curve is going to look like are you going to keep that as a sideboard gonna stay the sideboard or is that going to transfer over.

David R. Lukes: And with that, I'll turn it back to David.

David R. Lukes: Thank you, Conor. Operator, we're now ready for questions.

To curb line and can you give us any any more specifics on that at this point.

Operator: Yes, thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw it, please press star, then 2. At this time, we will pause momentarily to assemble the roster. And today's first question comes from Dori Kesten with Wells Fargo.

Speaker Change: Sure Floris I can give you I can give you some but not all I would say that if you look back at RBI.

Speaker Change: The board made a decision that both companies needed.

Speaker Change: Consistent stewardship from the shareholder representation standpoint, and therefore, there was a couple of board members that moved from one company to the other to provide that leadership.

Dori Lynn Kesten: Thanks. Good morning. You noted a blended cap rate for a billion under contract or negotiation of just under 7%, I believe. Is that in line with your initial expectations for these assets, or has interest been better than expected?

Speaker Change: We have not decided nor announced which directors are taking on which rolls, but I think it's fair to assume that you.

Speaker Change: You would see at least one director at a minimum take.

David R. Lukes: Hi Dori. I think you're merging two comments. We've sold and closed on over a billion at just below a 7% cap rate. The billion we've awarded and are negotiating LOIs or negotiating contracts is approximately a 7% cap rate. I would say, in general, the pricing has been a little stronger than we expected six months ago.

Speaker Change: The helm of of site centers, while the majority of the directors would likely move to curb line since that's the growth entity.

Great and maybe maybe another follow up question on <unk>.

Speaker Change: Credit quality.

Speaker Change: I know that you're.

Speaker Change: Largest tenants I think your largest tenant for curb line will be Starbucks, but you also have darden do you have to pull.

Speaker Change: And Mcdonald's in there, which typically have a lot of franchisees, who do you have as your.

David R. Lukes: Okay, and how should we think of the pacing of this mission ahead of October 1?

David R. Lukes: It's a really good question. I would say that with a billion dollars awarded to buyers at various stages, some of those may close, and some of those may not close. As you know, they're contingent on a number of factors, but our confidence level in the buyers is pretty high. We've taken a lot of time to interview the buyers and understand where their equity is coming from, their need for debt, and so forth. So our confidence level of a lot of closings occurring in the next couple of months is pretty high. We have estimated a pretty decent pipeline for the next few months, but having an increase substantially would be unlikely.

Whose whose underwriting the credit of the of that lease is the franchisee or as at the parent company in decades.

Speaker Change: Floris I'd have to check, but I believe about 100% of our darden hundreds of our chipotle or corporate I can't recall any of that a franchisee or or if either one of those organizations.

Go down that path. So youre right. There are other tenants on our top 25 list that do have some franchise exposure.

Speaker Change: Oftentimes, it's corporate sometimes its franchise I would just point you to the fact that I think back to the GSC of the shopping center industry and the issues. You had there has been a pretty significant transition from this kind of quote unquote mom and pop to either franchise or corporate exposure and in particular some of the franchisees one hundreds of units across different brands and concepts.

David R. Lukes: Okay, and I think last quarter you mentioned there would likely be a slowing in the pace of convenience store acquisitions just as you focus on sales, but you did complete a few in the quarter. Should we assume a few per quarter heading up to the spin, or is there more likely to be a greater acceleration in acquisitions ahead of it?

Speaker Change: So just because something has a franchisee it doesn't mean, it's inferior credit quality. There are there are certain situations, where it's a pretty impressive organization and I would say it's.

Speaker Change: As you know there is some corporate or some public are examples of those franchise.

Speaker Change: Our franchisees so.

Conor M. Fennerty: I mean, I'll let Conor give some specifics, but in general, the time that we're allocating toward dispositions is a lot more than the time for acquisitions, and that's just a function of demand. There's been more demand to buy assets from us than we would have thought six months ago. So a lot of that time is spent on the disposition pipeline. As far as acquisitions go, we do have $100 million that's been awarded to us.

Speaker Change: It's dependent on the entity you're right as part of our underwriting we're looking at who the franchise. He is as a corporate is a franchise that obviously has an impact on on values and in.

Speaker Change: Expected rent growth, but I would just point you away from that kind of mom and pop local franchisee kind of GSE mentality and and and.

Speaker Change: I can point you to a number of examples where the franchisees today are pretty significant and well capitalized.

Conor M. Fennerty: That's a number of deals, and so I think you can assume that a couple per quarter leading into the spin is probably appropriate. But post-spin, I think we're going to reverse pretty quickly on spending a lot more time on acquisitions.

Speaker Change: Thanks Scott.

Speaker Change: Okay.

Thank you and then last question comes from some of your kind of all with Evercore ISI.

Conor M. Fennerty: Yeah, Dori, just consistent with what David just outlined, we've kind of highlighted $25 to $50 million in acquisitions per quarter. Obviously, we're on the lighter end of that this quarter, but that probably needs to be at the higher end of that range in the next quarter.

Speaker Change: Hey, good morning, Conor I just had one question here when I look at it.

Curb line and they look at the same store NOI growth of three five.

Evercore ISI: To five 5%, which remained unchanged, but I'm just trying to understand like what why the why you know that.

Evercore ISI: That range is still pretty wide.

Evercore ISI: Considering that you're pretty much in may and I know the tenant environment, it's been pretty muted.

Craig Allen Mailman: Thank you. And the next question comes from Craig Mailman with Citi.

David R. Lukes: Good morning, David. I just want to go back to your comment about the capital markets volatility here. Clearly, we've seen the 10 year jump around and, you know, macro expectations changing here. Have you seen or had any changing conversations with people who you thought you were gonna get under contract or under LOI? Is anyone kind of slow rolling you, given any issues in the debt markets? Or has that largely been largely been an issue at this point? So

At least from the disruption side, so I guess, what's driving that.

Yeah, I mean, Sameer as you know they start conversations on December 30th we still might have a pretty wide range based off my general I would call. It prudent forecasting a there was a couple of things one it's a really small denominator right. So a couple of hundred thousand dollars can move that range are removed the reported number of pretty significantly.

Speaker Change: That would be 0.1, 0.2, I would take the other side of the coin and say, it's only may as opposed to it is already Mei.

David R. Lukes: Yeah, Craig, it's a really good question. I mean, certainly, if all-in rates are going up, you would expect that to have a commensurate reaction in cap rates; they're going up in yield. On the other hand, there's been a lot more capital formation around the equity side of buying open-air properties, and the rents keep rising. And so I guess what we've really seen, and kind of if you're looking at our pipeline of awarded deals at a 7-cap, you know, over a billion dollars, that kind of shows you that the market has been factoring in both the debt side of the equation and the potential growth of So to date, I wouldn't say it's had much of an impact on cap rates. I can't say that's always going to be the case, but to date, we just haven't seen it.

Speaker Change: That's really the biggest piece, but you're right. We really have had no credit issues in either portfolio year to date.

Speaker Change: I think we had 199 cents and the JV portfolio, we had a we have no rite aid exposure across entire entity. So I would say it really is a function of the fact that it's a small denominator, but we've had no credit issues on either portfolio year to date.

Okay. Thanks.

Speaker Change: Of course.

Speaker Change: Thank you and then last question comes from Mike Mueller with JP Morgan.

Michael William Mueller: Yeah, Hi, just a quick one on some operating stats for the sequential.

Michael William Mueller: Leased and occupancy changes on the anchor side on the <unk>.

Michael William Mueller: Mine site.

Michael William Mueller: That all would you say organic in terms of Q4 to Q1 or was there any.

David R. Lukes: We've just had a significant amount of demand. And to your point about buyers and those conversations, when John and his team are interviewing potential buyers, you know, one of the first questions is, you know, where does your equity come from? And the second question is, are you using debt or not?

Michael William Mueller: Notable mix impact from asset sales on their yeah, Mike that we didn't call out any anything related transactions. This quarter because it was it was immaterial as you know in prior quarters, we'd sold I think the average lease rate was 99% and it did have a an outsized impact. This one was organic and as I think David alluded to in his comments was we called it out.

David R. Lukes: And we've been tilting towards buyers that are either unlevered or have a very low attachment point. So I think the impact to date has been pretty muted. And, Conor, I don't know if you have anything to add.

Michael William Mueller: Slides there are certain situations, where we're holding space off line for dispositions.

Conor M. Fennerty: Yeah. There are a couple other factors I'd point to, Craig. One is just the yield or cap rates of our sector versus other sectors. You know, we never got down in the retail sector to the threes and fours that you saw in some other property types like industrial and multifamily.

Michael William Mueller: Meaning the buyer would prefer to have the space vacant as opposed to whatever lease we're working on that's been a driver of quarter over quarter, but otherwise there was no material impact from from transactions this quarter.

Conor M. Fennerty: So the sensitivity around the capital markets is definitely a little bit lower as a result of that. The second thing I would say, you're right to point out that, obviously, benchmark rates are higher than they are today. One of the important factors when you think about just capital markets and health is just debt availability. And in that regard, I would say things are materially better than they were six months ago. And so, yes, the underlying rate's important, but the underlying structure is just as important. And I would just say that we've seen pretty significant improvements in the underlying structure for borrowers over the last six months, which is a very important factor as you think through underwriting.

Speaker Change: Got it okay. Thank you Youre welcome.

Speaker Change: Thank you. The next question comes from Paul in a real house with Green Street.

Speaker Change: Hello.

Only one question My question was just asked but.

Paul: You mentioned market rents have continued to rise and in a way compensated the higher.

Paul: Going in cap rate when thinking about Irr's can you put some numbers behind that comment about grants right thing.

Craig Allen Mailman: That's helpful. And maybe another way to come at it, of the billion that's kind of in some form of negotiation, what percentage of that has the kind of money at risk from the buyer?

Paul: Yeah.

Speaker Change: Good morning Paulina.

Speaker Change: Hard to put a lot of meat behind that statistically.

Speaker Change: I can give a lot of anecdotes, but rolling it all up it's a little bit more difficult I would say that.

David R. Lukes: Off the top of my head, Craig, I don't know.

Speaker Change: When we're budgeting in the fall for.

Craig Allen Mailman: Okay. And then just flipping around, you know, the 100 million convenience assets in the pipeline seem to be a good pace. I'm just kind of curious, you guys have always said your team is focused on acquisitions today. If you had 100% kind of focus on, or sorry, on dispositions, if you were 100% focused on acquisitions, given the kind of pool of opportunities out there and the willingness of sellers to part with assets, what do you think would be sort of a good quarterly pace to think of of deals that could be getting done at this point if that was kind of your On the acquisition front, Yeah.

Speaker Change: Leasing in the first couple of quarters, we've consistently seen rents, particularly for small shops be higher than we anticipated six months ago and that's been the same thing for the last four years.

Speaker Change: Is it a dramatic rise of 50% now, but it seems like it's a pretty consistent kind of beat on the on the shop rents now what comes with that is a little bit higher cost as well, but I think in any environment, where you've just got so little vacancy in almost any.

Speaker Change: Unit size, there's just more competition for space and so I think the landlords are generally choosing between the highest rent possible or the best rent with a credit tenant and we've been selecting the best rent, we can get with a credit tenant and and in that case are we still seeing the rents outpacing what we underwrote.

David R. Lukes: On the acquisition front, as we've said before, we've spent a lot of time in the last couple years building spreadsheets of inventory across the country, building relationships with the local brokerage community, and understanding which families or private owners might own small to mid-sized portfolios. So I think even at the time of the spin announcement back in October, we said that our confidence level of acquiring $500 million a year is pretty high, at minimum. So that's kind of our baseline target.

Speaker Change: Six months ago.

Speaker Change: It is a dramatic no I would say, it's not dramatic but it certainly has been consistent and consistently higher than we would've thought.

Speaker Change: Thank you.

Speaker Change: Thanks Elena.

Speaker Change: Thank you.

Speaker Change: Comes from Linda Tsai with Jefferies.

Linda Tsai: Hi, two quick ones, what happens to the sites credit reading when you spin off the curve does the credit rating transfer the carbon if not what do the rating agencies wanted to see to assign an investment grade rating.

Alexander David Goldfarb: Thank you. And the next question comes from Alexander Goldfarb with Piper Sandler.

Operator: Hey, good morning. Morning, down there. Morning, Alex.

Speaker Change: Thank you Linda and good morning, Conor So as we work through the course of the year prior to the spin we would close the mortgage commitment and then use the proceeds to pay off all of our unsecured bonds at that time, we will withdraw our credit rating. So for curve. It would be a new entity should we go down the investment grade path, we would that need to go through.

Alexander David Goldfarb: Hey, so just a few questions. First, David, you guys are, you know, on track, full steam ahead for the October 1st spin out. But can you just give us a sense of what on October 2nd the site will look like? And who will be running it? And what will curb look like? And who's running it? Just to get a sense because it sounds like the site will still have assets. Conor's doing a great job cleaning up the balance sheet. But I just want to get a sense of what we're going to look at on October 2.

Speaker Change: The process of getting a rating from from whatever agencies. We wanted to so we would not transferred over and we withdraw and we'd expect to withdraw that rating prior to the spin effective date.

Conor M. Fennerty: And what would the rating agencies want to see.

David R. Lukes: Certainly, Alex, I think what you are going to see on October 2nd is some executives having a dedicated role and some having a dual role. I think the specifics around who has a dual role and who has a singular role will be a subject that we can talk more freely about over the next couple of quarters. You know, the board of directors is heavily involved in making sure that both companies have the stewardship, both from the board and the executive front, that aligns with those individual company interests.

Speaker Change: It depends on what path youre going private versus public there's a number of tests. Some qualitative some quantitative scales. The biggest one do you think about index eligibility on on bond sizing you know 300 plus million dollars for a jubilant our company is probably.

Speaker Change: A number that's too big for one issuance and so you could go a number of different paths you could go to private placement path and obviously, that's a much smaller.

Issuance size, but the biggest thing for the public side is scale now what's exciting about curve as we've got the expectation for $2 billion plus of assets at the time of the spin, but that's before any leverage capacity right. So I would say we have all the ingredients to be a public issuer Republic Ige.

David R. Lukes: And then, of course, there's a shared service agreement where the bulk of the company is really servicing both for some period of time as the business plans emerge. So I wouldn't say now is a great time to have specifics, but I would say that you could expect, you know, prior to the spin, that we would have more specific announcements on specific leadership.

Speaker Change: Issuer.

Not our expectation to be won on day, one, but we got all the ingredients in place and what do you think it is an important kind of arrow to have in our quiver.

Conor M. Fennerty: Yeah, Alex, that would be detailed in the Form 10, as we detailed in our announcement. The timing of that is closer to the end of summer for effective dates, so we're still five months out from David's point, but all that detail will be laid out in the Form 10.

Speaker Change: Thanks for that and then on page 16, you show your map.

Speaker Change: How does the mark to market on rents vary across the regions in which you are concentrated.

Alexander David Goldfarb: Okay, okay. And then the next question is, just given, you know, on the one hand, a great retail environment, and certainly, credit seems to be very good in retail land. On the other hand, you know, personal credit lines are expensive, and, you know, we sort of have this taxation environment. So, as you guys now have more experience running convenience assets, Are there any differences that you're discerning, whether it's a corporately run retailer, a franchisee retailer versus a truly independent mom and pop, sort of like either, you know, a small local chain or one off, just trying to understand the credit, you know, what credit trends you've seen across those three types of ownership as you gain more experience running retail? Yeah, convenience retail, that is.

Speaker Change: Yeah, I mean, it's really you're talking about.

Speaker Change: AVR per region, Linda Yes, yes, yes, I would say, it's generally pretty consistent around around the.

Speaker Change: The country with the biggest mark to market. We're seeing is a recapture of cut what called season pads, meaning you know kind of 19 nineties restaurant pads that we're getting back and replacing with a modern USR. The other place we see pretty significant mark to market is on drive throughs or any unit with a drive through so I would I would say, it's less around ABR per region and more around unit.

Speaker Change: Type <unk> kind of the seasoning or a vintage of that whats interesting is if you look back on our portfolio kind of site and carbon and look at the two you could argue today the mark to market is greater on site versus curb but curve. We actually think we can get out the mark to market, which again is one of the compelling points of diseases, whereas for a site and this is a issue of kind of the <unk>.

David R. Lukes: Sure, Alex. Well, I mean, remember that the tenant roster that we have is pretty consistent throughout anchored and unanchored assets. I think from a convenience perspective, when one's purchasing convenience properties, you do have a choice as to whether you're tilting towards more credit or more local. There are benefits to both.

Speaker Change: History of large you know the mark to market is in units that you generally are not going to recapture as the large format spaces that are are held by investment grade tenants that are going to hold them in perpetuity. So.

Speaker Change: Again, I would say, it's less of a regional a mark to market and much more on kind of seasoning and unit type.

Speaker Change: Thanks.

Speaker Change: Thank you and then last question comes from Kevin Kim was truest.

David R. Lukes: You'll note from our tenant roster on CurbLine today that we're heavily tilted toward credit. I would expect that to remain tilted toward credit, but probably a little bit less so. The reason is that if you can find assets that have some local tenants that may be in business for 10 or 15 years, the retention rates are pretty high, and the ability to mark the market on growing market rents is much higher.

Thanks, Good morning.

Ki Bin Kim: What percent of curbs portfolio today are basically kind of carved out a lot from the older or preexisting site portfolio.

Keith I don't know the exact number on hand, I think it's just over 30% that number would come down over time as we invest the cash on hand, I would just say we don't we don't look at those assets any differently and as you think about I think we brought those pointed out previously when we went through the process to decide what pieces to carve out or not we wanted to make sure that.

David R. Lukes: I think the balance between credit and non-credit is important over the long term, but we are always going to be a company that's focused on credit simply because I think in a downturn, the performance is just better over time. Yeah, Alex, on that point. As David mentioned, we feel really good about that top 25.

Ki Bin Kim: The every component of the carve out was consistent with the assets, we were buying meaning access site plan visibility mark to market credit quality.

Conor M. Fennerty: The other point is it's a differentiated and highly fragmented tenant concentration level, especially versus a peer group. So you think about our exposure to any one tenant is very limited on a relative and absolute basis. And to us, that's a really compelling part of the thesis in the sense that you've got essentially this very low risk of one tenant having an outsized impact on NLI earnings or whatever it may be. That's a really compelling part of the thesis, we think, on an absolute and relative basis. Okay. Thanks.

Ki Bin Kim: A limited our reliance or no reliance on adjacent retail if there is any and so I would just tell you you know we feel as good about those units our properties as we do with other ones we bought.

Ki Bin Kim: From 30, part third parties or last five plus years.

Ki Bin Kim: And.

For about 30%.

Ki Bin Kim: Are there a leasing restrictions from the anchors in dose.

Ki Bin Kim: Portions of the retail center that you don't know that's exactly my 0.1 of the important things we look through so there were parcels and pads and effectively properties, we really liked but if they had those issues of restrictions over reliant on the adjacent retail they're not part of curb I mean, the whole thesis of curve is that what drives the visibility or excuse me what.

Operator: Okay, thank you.

Todd Michael Thomas: Thank you. The next question comes from Todd Thomas with Hebank Capital Markets.

Ki Bin Kim: Drive the traffic and the sales to that site is a site plan and visibility access and so if there's anything that effectively impaired the value of quality of that site. It was not included in curb. So as a result, there's some great real estate that we wanted or has pieces that are consistent with the current thesis, but if it didn't check every box we kept it.

Ki Bin Kim: We didnt carve it out.

Ki Bin Kim: And on G&A, you mentioned 12 million per quarter, but after the spin off do you have a sense of what that G&A could it look like yeah. So I would put that keeping in a bucket of some of the board comments managing questions a piece that as we transition from a sum of the parts story. It's an earnings story over the course of the summer that's likely a piece that we provide for curb it's fair to.

David R. Lukes: First, first question. You know, look, there's been a lot of talk about new capital coming into the open air shopping center space. And I'm just curious, in your discussions with buyers and what you're seeing, if you could comment on whether you see a shift at all in the interest level for retail centers from new private equity and institutional investors; just give us a sense of what you're seeing in terms of capital formation in recent months for the space.

Todd Michael Thomas: Hi, thanks. Good morning.

David R. Lukes: Yeah, Todd, I would say, and I think I said this on our 4Q call, I've been very surprised at the depth of demand starting really at the beginning of the year, which tells me that a lot of folks must have made allocation decisions towards the end of the year, and they're ready to act on that. From an institutional perspective, there has been an increase in institutions in the bidding tent for various assets.

Ki Bin Kim: Assume I think consistent with our comments in prior quarters, though we believe based off I would tell you exempt extensive analysis over the last couple of quarters and months that we could operate curb as efficiently if not more efficiently than site.

David R. Lukes: There's also been a fairly large component of value-add folks. It's just that the pricing, I think, has gotten away from a lot of the value-add buyers because there's a deeper pool of institutions. And then lastly, Todd, I have been very surprised at how much private wealth is active in open-air shopping centers right now. We've sold a tremendous amount of properties to local buyers, and those local buyers, in many cases, have been unlevered, wealthy family offices.

Ki Bin Kim: It's a huge focus of ours, obviously, if you think about all of our comments around capex free cash flow efficiency, making sure. We've got the right sized our G&A load for curve is really important to us.

Ki Bin Kim: And so we will provide more ingredients on that over the course of the year, but again I would just point you to a prior comments that we think we can operate curb as efficiently if not more efficiently insight today.

Speaker Change: Okay. Thank you Youre welcome.

David R. Lukes: They tend to know the properties pretty well. I think John gets a lot of inbound calls from local and regional families. So, as much as we all talk about institutional capital, the private side has been pretty surprising.

Speaker Change: Thank you and the next question comes from Michael Gorman of P. T O G.

Michael William Mueller: Yeah. Thanks, Good morning, David I, just wanted to go back to your comment about some of the dispositions and holding some of the space offline to maximize value can you just provide a little bit more color. There is that a function of potential alternate use at these sites or is it a function of kind of Ti and capex packages in this in this market not being fully kind of re.

Todd Michael Thomas: Okay, and then of the billion-dollar pipeline that you're talking about, it looks like about $152 million is under contract. Is that right? And then based on the asset sales that you're seeing in the pipeline and the level of activity that you're anticipating, do you see potential for Curb to be in a net cash position at SPIN?

Michael William Mueller: <unk> and the sale process. If you did go ahead with re leasing that space.

David R. Lukes: Sure Michael Happe to you too.

Michael Happe: It's pretty common in the length of time it takes to sell a large property.

Michael Happe: There you end up in a conversation with a buyer as to what what they desire and what they're willing to pay for and in some markets, particularly when you have levered buyers there, they're looking for stability and a very high occupancy and other markets like we have today. There are some buyers that would prefer to choose their own adventure on the <unk>.

Conor M. Fennerty: Help me out with that last point, Todd. I'm sorry.

Todd Michael Thomas: Do you expect, with the level of dispositions that you're seeing out of sight, do you see that there's potential for a curb to be in a net cash position at spin?

Conor M. Fennerty: Yeah, I would say that's the base case. And in both David and my comments, we think there's a very good chance that CURB has no preferred investment in sight, and it's all cash with no debt. So I would tell you our confidence in CURB being in a net cash position is very high. To your point on what's under contract, what's referred to on page 11, it's a greater percentage or greater dollar amount. What we're trying to show here is just what's needed to kind of the minimum threshold to meet our business plan.

Michael Happe: Last space that's available.

Michael Happe: And we do have a number of properties that have a recent vacancy such as a bed bath space and there's choices to make because theres competing.

Michael Happe: Tenants that want that space I wouldn't say, it's alternative use I'd say all those all those competitive forces are still in retail, but a buyer may want to go with less credit and more ti and a higher rent or they might want to go with more credit left ti at a lower rent, but the proceeds that we can achieve from selling one of those assets it sometimes depends.

Conor M. Fennerty: I think, to David's point, on the billion dollars plus of assets under contract or awarded, we feel really good about a very large percentage of that. And so the odds of us kind of having a significantly higher disposition proceeds number from page 11 on the slides are very high. And in that environment or in that case, you would not have a significant amount of cash at CURB, $600 million plus, and you'd have a much lower leverage profile for the site.

Michael Happe: And on which adventure that that buyers selecting and therefore, we sometimes we'll show them current activity with tenants, but we won't execute those leases will simply handover the contract and let them.

Michael Happe: Select which path they want to go down that that's been a way that we've been able to drive I think pretty good cap rates and pretty high value by allowing some flexibility to the buyers.

Conor M. Fennerty: So there's a pretty significant flow through. Again, I think to David's point, where our expectation is that, given the timeline we laid out in the last earnings call, you'll start to see some of those dispositions pick up in the next couple of months. And then I think you'll see us update pages 11 and 12 and see kind of the flow through to the respective balance sheets of the two entities, which is a nice way to circle back.

Speaker Change: Okay, great. Thank you very much thanks, Michael.

Speaker Change: Thank you and this does conclude the question and answer session I wasn't trying to Florida management for any closing comments.

Speaker Change: Thank you for joining our call we look forward to speaking with you next quarter.

David R. Lukes: Which is a nice way to circle back to why we are spending so much of our time on dispositions? Because the disposition pipeline is increasing the future value of CurbLine because it will have so much liquidity, and it's also de-risking site centers in terms of their overall leverage and size. So, I think our confidence level that what you're seeing on page 11 is the base case, and to Conor's point, will likely become better.

Speaker Change: Thank you. Thank you for attending today's presentation you may now disconnect your phone lines.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: [music].

Ronald Kamdem: Thank you. The next question comes from Ronald Kamden with Morgan Stanley.

Ronald Kamdem: Hey, two quick ones. Just going back to acquisitions on sort of a curb, maybe can you talk to what your cap rates look like and what IRRs you're thinking and, importantly, has that sort of changed or shifted at all as sort of rates of move?

David R. Lukes: Ron, on the acquisitions, I could barely hear you. You're saying what's the return expectation for the acquisitions? Yeah, exactly. On the acquisitions, cap rates, return expectations, and has that shifted as rates have moved? Yeah.

David R. Lukes: I mean, I'll make a similar comment on the dispositions and what impact rates have had. When we're buying convenience properties, the going-in cap rate is pretty consistent with high-quality retail in other formats. Meaning today, it's kind of been in the low to mid-sixes. What's unique, I think, is that you're getting a very similar top-line growth, or NOI growth, absent changes in occupancy, but the CapEx required to generate that growth is significantly lower.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yeah.

David R. Lukes: So, while the going and cap rate, I think, is consistent with other, you know, high-quality retail formats, the unlevered IRR, I think, is higher. And although I think we thought that rates changing might have had some impact on that going in cap rate number, the reality is that shop rents have been growing. And so, the offset to raising rates is raising rents, and therefore, the unlevered IRR is still moving in a positive direction.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].

Ronald Kamdem: And then if I could just ask, just following up on the comments on CapEx, which was actually my second question, as we're sort of thinking about curbing, what is the sort of CapEx profile in terms of terms of numbers versus what the site was doing? So for example, in 1Q, you know, you've got 1 to 2 million in maintenance, 12 million in TIs, 2 million in leasing commissions, just trying to figure out what that's going to look like on October 2.

Conor M. Fennerty: Sure, Ron, it's Conor. We've talked about this in prior presentations. It's kind of, to David's point, the fulcrum point or one of the most exciting aspects of the thesis. So for the industry in general, CapEx percent in Hawaii, including redevelopment, has been running kind of at 20 to 30 percent. Our view of CURB would be at sub-10 percent.

Conor M. Fennerty: Sure, Ron. It's Conor.

Conor M. Fennerty: So it's a dramatic difference versus the industry at large, and again, that's really one of the most compelling parts of the thesis. Obviously, when you think about it as a public entity, for a pure play, that leads to fairly significant free cash flow relative to the enterprise, which obviously compounds over time.

Conor M. Fennerty: So again, it's a great question. It's a huge focus point of ours. And to David's point, there's just a lot less obsolescence risk around the site plans. And when you lose a tenant, you're not necessarily changing walls or roofs. It's a fairly straightforward process. So again, it's kind of the fulcrum piece or the most exciting aspect of the thesis. And it's less than half of our numbers for the industry overall.

Operator: Thank you. And the next question, of course, is from Dijkum about Compass Point.

Dijkum: Hey, morning, guys. Obviously, some really good progress on the dispositions. Just a couple of questions, maybe following up on what the board of CURB is going to look like. Are you going to keep the... Is the site board going to stay the site board, or is that going to transfer over to CURBLINE? And can you give us any more specifics on that at this point? Sure, Floris.

David R. Lukes: Sure, Floris, I can give you some, but not all. I would say that, if you look back at RVI, the board made a decision that both companies needed consistent stewardship from the shareholder representation standpoint, and therefore, there were a couple of board members that moved from one company to the other to provide that leadership. We have not decided nor announced which directors are taking on which roles, but I think it's fair to assume that you would see at least one director, at a minimum, take the helm of site centers, while the majority of the directors would likely move to curb lines since that's the growth entity.

Floris Gerbrand Hendrik Van Dijkum: Great, and maybe another follow-up question on credit quality. I know that your largest tenant, I think your largest tenant for CurbLine will be Starbucks, but you also have Darden, you have Chipotle, and McDonald's in there, which typically have a lot of franchisees. Who do you have as your Who's underwriting the credit of that lease? Is it the franchisee, or is it the parent company in that case? Yeah, of course, I'd have to check, but I believe 100% of our dark...

Conor M. Fennerty: Yeah, Floris, I'd have to check, but I believe 100% of our Darden, and 100% of our Chipotle are corporate. I can't recall any that are franchisee or if either one of those organizations go down that path. So you're right, there are other tenants on our top 25 list that do have some franchise exposure. Oftentimes, it's corporate; sometimes it's franchised. I would just point you to the fact that, if you think back to the GFC and the shopping center industry and the issues it had, there's been a pretty significant transition from this kind of quote-unquote mom and pop to either franchise or corporate exposure.

Conor M. Fennerty: And in particular, some of the franchisees own hundreds of units across different brands and concepts. So just because something is a franchise doesn't mean it's of inferior credit quality. There are certain situations where it's a pretty impressive organization, and I would say it's, as you know, there are some corporate or some public examples of those franchisees. So it's dependent on the entity. You're right. As part of our underwriting, we're looking at who the franchisee is as a corporate entity as a franchise.

Conor M. Fennerty: That obviously has an impact on values and expected rent growth, but I would just point you away from that kind of mom and pop, local franchisee, GFC mentality and can point you to a number of examples where the franchisees today are pretty significant and well-capitalized.

Conor M. Fennerty: Thanks, Conor. Thank you, and the next question comes from Samir Khanal with Evercore ISI. Hey, hey, good morning.

Samir Upadhyay Khanal: Thank you, and the next question comes from Samir Khanal with Evercore ISI. Hey, hey, good morning.

Conor M. Fennerty: Yeah, I mean, Samir, as you know, based on our conversations on December 30th, we still might have a pretty wide range based on my general, I would call it prudent forecasting. There are a couple of things. One, it's a really small denominator, right? So a couple hundred thousand dollars could move that range or move the reported number pretty significantly. That would be point one. Point two, I would take the other side of the coin and say it's only May as opposed to saying it is already May. That's really the biggest piece.

Conor M. Fennerty: You're right. We really have had no credit issues in either portfolio year to date. I think we had $0.199 in the JV portfolio. We have no right of exposure across the entire entity.

Conor M. Fennerty: So I would say it really is a function of the fact that it's a small denominator. But we've had no credit issues on either portfolio year to date. Okay, thanks. Of course. Thank you, and the next question comes from Mike Mueller with J.P. Morgan.

Conor M. Fennerty: Yeah, Mike, we didn't call out anything related to transactions this quarter because it was immaterial. As you know, in prior quarters we'd sold, I think the average lease rate was 99%, and it did have an outsized impact. This one was organic, and as David alluded to in his comments and as it was recalled in our slides, there are certain situations where we're holding space offline for dispositions, meaning the buyer would prefer to have the space vacant as opposed to whatever lease we're working on. That's been the driver quarter over quarter, but otherwise, there was no material impact from transactions this quarter.

Michael William Mueller: Thank you. And the next question comes from Mike Mueller with J.P. Morgan. Yeah, hi.

Michael William Mueller: Got it. Okay. Thank you. You're welcome. Thank you. And the next question comes from Paulina Rojas with Green Star. Hello, um, only one.

Paulina Alejandra Rojas: Thank you. The next question comes from Paulina Rojas of Green Street.

David R. Lukes: Good morning, Paulina. Hard to put a lot of meat behind that, statistically. I can give you a lot of anecdotes, but putting it all together is a little bit more difficult. I would say that... When we're budgeting in the fall for leasing in the first couple of quarters, we've consistently seen rents, particularly for small shops, be higher than we anticipated six months ago, and that's been the same thing for the last four years.

David R. Lukes: Is it a dramatic rise of 50 percent? No, but it seems like it's a pretty consistent kind of beat on the shop rents. Now, what comes with that is a little bit higher cost as well, but I think in any environment where you've got so little vacancy in almost any unit size, there's just more competition for space, and so I think the landlords are generally choosing between the highest rent possible or the best rent with a credit tenant. And we've been selecting the best rent we can get with a credit tenant, and in that case, we've still seen the No, I would say it's not dramatic, but it certainly has been consistent and consistently higher than we would have thought.

Linda Tsai: Thank you. And the next question comes from Linda Tsai. Hi, two quick ones.

Operator: Thank you. Thanks, Paulina. Thank you. The next question comes from Linda Tsai.

Linda Tsai: Hey Linda, good morning.

Conor M. Fennerty: It's Conor. So, as we worked through the course of the year prior to the spin, we would close the mortgage commitment and then use the proceeds to pay off all of our unsecured bonds. At that time, we would withdraw our credit rating. So, for CURB, it would be a new entity. Should we go down the investment-grade path, we would then need to go through the process of getting a rating from whatever agencies we want to.

Conor M. Fennerty: So, we would not transfer it over, and we would expect to withdraw that rating prior to the spin-off date. And what would the rating agencies want? It depends on what path you're going down, private versus public. There's a number of tests, some qualitative, some quantitative.

Conor M. Fennerty: Scale is the biggest one. You think about index eligibility for bond sizing. You know, $300 million for a $2 billion company is probably a number that's too big for one issuance, and so you could go a number of different paths. You could go the private placement path, and obviously, that's a much smaller issuance size.

Conor M. Fennerty: But the biggest thing for the public side is scale. Now, what's exciting about Curb is we've got the expectation of $2 billion-plus in assets at the time of the spend, but that's before any leverage capacity, right? So I would say we have all the ingredients to be a public issuer, a public IG issuer. It's not our expectation to be one on day one, but we've got all the ingredients in place, and that I think is an important kind of arrow to have in our quiver.

Linda Tsai: Thanks for that. And then on page 16, you show your map. How does the marked market for rents vary across the regions in which you're concentrated? Yeah, I mean, it's really, are you talking about the ABR per region, Linda? Yes, yes.

Conor M. Fennerty: Yeah, I would say it's generally pretty consistent around the country. The biggest mark-to-market we're seeing is the recapture of what's called seasoned pads, meaning the kind of 1990s restaurant pads that we're getting back and replacing with a modern QSR. The other place we see pretty significant mark-to-market is on drive-thrus or any unit with a drive-thru. So I would say it's less around ABR per region and more around unit type and or kind of seasoning or vintage of that.

Conor M. Fennerty: What's interesting is, if you look back on our portfolio of Cite and Curb and compare the two, you could argue today the mark-to-market is greater on Cite versus Curb. But Curb, we actually think we can get at the mark-to-market, which, again, is one of the compelling points of the thesis. Or as for Cite, and this is an issue with the industry at large, you know, the mark-to-market is in units that you generally are not going to recapture.

Conor M. Fennerty: It's a large form of spaces that are held by an investment grade tenant that is going to hold them in perpetuity. So, again, I would say it's less of a regional mark-to-market and much more of a kind of seasonality and unit type. Thanks.

Operator: Thank you. And the next question comes from Ki-bin Kim with Truist. Thanks, good morning. What percent of curbs is there for flow today?

Ki Bin Kim: you know, put it at 30%. Are there leasing restrictions? from the anchors and the portions of the retail center that you don't own? No, and that's exactly my point, one of the important things we looked through. So there were parcels and pads and, effectively, properties we really liked. But if they had those issues or restrictions or were reliant on the adjacent retail, they're not part of CURB. I mean, the whole thesis of CURB is that what drives the visibility or, excuse me, what drives the traffic and the sales to that site is that site plan, visibility, and access.

Ki Bin Kim: If there's anything that effectively impaired the value or quality of that site, it was not included in CURB. So as a result, there's some great real estate that we wanted or has pieces that are consistent with the CURB thesis. But if it didn't check every box, we kept it; we didn't carve it out.

Conor M. Fennerty: And on GNA, you mentioned $12 million per quarter, but after the spinoff, do you have a sense of what that GNA could look like? Yes, I would put that even in the bucket of some of the board comments, management questions, a piece that as we transition from a sum of the parts story to an earnings story over the course of the summer, that's likely a piece that we provide for CURB. It's fair to assume, I think consistent with our comments in prior quarters, though, we believe based on, I would tell you, extensive analysis over the last couple of quarters and months that we can operate CURB as efficiently, if not more efficiently than CITE.

Conor M. Fennerty: It's a huge focus of ours. Obviously, if you think about all of our comments around CapEx, free cash flow, and efficiency, making sure we've got the right-sized GNA load for CURB is really important to us. And we'll provide more details on that over the course of the year. But again, I would just point you to our prior comments that we think we can operate CURB as efficiently, if not more efficiently than CITE today. Okay, thank you. Thank you. And the next question comes from Michael Gorman of BTIG. Yeah, thanks. Good morning, David. I just wanted to go back to your comment.

Michael William Mueller: Thank you. And the next question comes from Michael Gorman of BTIG. Yeah, thanks. Good morning, David. I just wanted to go back to your question.

David R. Lukes: It's pretty common in the length of time it takes to sell a large property. You end up in a conversation with the buyers about what they desire and what they're willing to pay for. And in some markets, particularly when you have levered buyers, they're looking for stability and a very high occupancy rate. In other markets, like we have today, there are some buyers that would prefer to choose their own adventure on the last space that's available.

David R. Lukes: And we do have a number of properties that have a recent vacancy, such as a Bed Bath Space, and there are choices to make because there are competing tenants that want that space. But I wouldn't say it's an alternative use.

David R. Lukes: I'd say all those competitive forces are still in retail. But a buyer may want to go with less credit and more TI and a higher rent, or they might want to go with more credit, less TI, and a lower rent. But the proceeds that we can achieve from selling one of those assets are sometimes dependent on which adventure that buyer is selecting. And therefore, we sometimes will show them current activity with tenants, but we won't execute those leases.

David R. Lukes: We'll simply hand over the contract and let them select which path they want to go down. That's been a way that we've been able to drive, I think, pretty good cap rates and pretty high values by allowing some flexibility to the buyer.

Operator: Thank you, and this does conclude the question and answer session. I would like to return the floor to management for any closing comments.

David R. Lukes: Thank you for joining our call. We look forward to speaking with you next quarter. Thank you. Thank you for attending today's presentation.

Operator: Thank you. Thank you for attending today's presentation. You may now disconnect your phone lines.

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