Curbline Properties Corp. Q2 FY2026 earnings call

• Investment Activity
  • Acquired $374 million of properties in Q2 2026, bringing year-to-date 2026 acquisition volume to $564 million
  • Raised almost $550 million in new equity in 2026 year-to-date, including a $350 million June offering
  • Four core drivers of increased acquisition opportunity: a highly fragmented industry with Curbline's large, well-connected team; established reputation and track record supporting portfolio growth to nearly 6 million square feet; platform scale enabling more efficient underwriting and faster closing than local competitors; long-term tailwind from intergenerational real estate wealth transfer driving seller liquidity demand
  • Leasing and Portfolio Composition
  • Signed 167,000 square feet of new leases and renewals in Q2 2026, with leasing volume accelerating from Q1 2026 driven by higher renewal activity
  • Trailing 12-month lease spreads remain consistent with 5-year historical averages, supported by limited supply in the high-income markets where Curbline operates
  • Highly diversified tenant base: only 7 tenants contribute more than 1% of base rent, only 1 tenant contributes more than 2% of base rent. There are over 1,300 unique total tenants, including over 500 unique national tenants that represent approximately 70% of total base rent
  • Operational Strength
  • Curbline is the only public company exclusively focused on acquiring top-tier convenience real estate across the U.S., giving it first-mover advantage in this capital-efficient sector
  • The simple, flexible building format supports a wide range of uses, driving broad tenant demand
  • Capital expenditures consistently remain well below 10% of NOI, a defining hallmark of the convenience asset class

Curbline Properties is exclusively focused on convenience retail real estate, and does not break out results into multiple distinct product segments. Aggregate consolidated results for Q2 2026 were as follows: Net Operating Income (NOI) increased 12% sequentially and over 50% year-over-year, driven by acquisition activity and organic growth. Portfolio lease rate rose 20 basis points sequentially to 96.5%, even with a 20 basis point headwind from new acquisitions. Portfolio occupancy reached 94.3%, the highest level since the company's spinoff. Same property NOI decelerated in Q2 due to a 260 basis point headwind from lower-than-forecast recovery revenue and a 100 basis point headwind from $370,000 in storm damage costs; adjusted for these factors, same property NOI growth would have been 3.1%. Reported same property NOI still outperformed budget, with base rent growth of over 2.3%. Trailing 12-month capital expenditures totaled 8% of NOI, keeping Curbline among the most capital-efficient public REITs.

• Full-year 2026 acquisition target was raised to $1 billion from the prior target of $850 million
  • Full-year 2026 adjusted Funds From Operations (OFFO) guidance was increased to a range of $1.24 to $1.26 per share, representing over 17% year-over-year growth at the midpoint, one of the highest growth rates in the REIT sector
  • Full-year 2026 same property NOI growth forecast is maintained at 3% at the midpoint, following 3.3% growth in 2025 and 5.8% growth in 2024. Management expects meaningful acceleration in base rent growth in Q4 2026, with ~90% of the current development pipeline expected to commence by March 31, 2027
  • Full-year 2026 G&A is projected at $32 million, including fees under the shared services agreement with Site Centers; Q3 2026 G&A is expected to be ~$8 million
  • The Q3 2026 average diluted share count is expected to be ~114 million shares, assuming no additional equity settlements beyond Q2 activity
  • Long-term organic same property NOI growth is expected to range between 2.5% and 4%, currently closer to the 4% end of the range due to favorable supply-demand dynamics

• Small same property pool relative to the total asset base (only 56% of total NOI in Q2 2026) creates inherent volatility in quarterly same property operating metrics
  • Acquisition activity can bring near-term modest occupancy dilution when acquiring properties with below-portfolio vacancy levels, creating quarterly headline noise
  • Intergenerational deal flow is episodic and cannot be guaranteed to remain at current elevated levels indefinitely
  • Penetration of new markets such as the Northeast U.S. corridor is progressing slower than core Sunbelt markets, creating geographic concentration risk in the near to medium term
  • Seller acceptance of tax-deferred OP unit acquisition structures has been limited, and it is uncertain how much this sourcing avenue will grow

Q: What is the upside to current occupancy levels, is the Q2 same property NOI deceleration greater than expected, and what long-term same growth run rate should be assumed? / A: Q2 deceleration was in line with management expectations, and the quarter actually outperformed budget. The small size of the same property pool creates quarterly volatility, and management expects significant acceleration in same property growth in the second half of 2026 due to pipeline commencement timing. Long-term growth is expected to hold between 2.5% and 4%, and near-term supply/demand puts it closer to 4%. For occupancy, management expects it will stay in the high 90% range (around 97% long-term) if the economy remains strong, with near-term fluctuations driven by the vacancy profile of new acquisitions.

Q: Is the current $1 billion annual acquisition pace sustainable long-term, and is the team scaled to handle this volume? / A: The company currently targets $1 billion in annual one-off acquisitions, up from an initial spinoff target of $500 million. Generational wealth transfer is expected to increase deal flow over the next decade, and Curbline still only holds ~0.6% of the total U.S. convenience real estate inventory, giving it a very long runway for growth. Curbline has a 26-person acquisition team, larger than any other competitor in the space, and can scale G&A efficiently as the portfolio grows, supporting ongoing FFO growth.

Q: Has the recent rise in 10-year Treasury yields impacted acquisition pricing or changed Curbline's underwriting hurdles? / A: Local sellers and competitors focus on unlevered internal rates of return rather than reacting quickly to changes in Treasury yields, so cap rates have not changed in recent months, holding the average in the low six percent range. Curbline's underwriting already uses conservative assumptions for market rent growth and mark-to-market, so there has been no need to adjust hurdle rates in the current environment.

Q: How is Curbline approaching geographic expansion outside its core Sunbelt footprint? / A: Curbline inherited a concentrated portfolio in the Southeast and Southwest from its spinoff, and built deep existing relationships in those markets that support more acquisition activity. The company is actively building relationships and expanding into new markets including the Mountain states, Pacific Northwest, and Midwest. The Northeast corridor has been slower to penetrate because most properties are long-held by generational owners, but management expects the geographic footprint to become much more diversified over the next 2-3 years as relationships develop.