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ONE BIG THING

SITE Centers Rolls Out New REIT, Curbline Properties

What: On October 1, SITE Centers Corp (NYSE: SITC) officially spun off a new REIT called Curbline Properties Corp (NYSE: CURB), giving SITE Centers shareholders two shares of Curbline for each share of SITE Centers they own. The spin-off created a special dividend of $0.16 per share for existing SITE Centers shareholders.

Who: SITE Centers is a Beachwood, OH-based retail REIT that wholly owns open-air shopping centers. About 64% are anchored by grocery stores or high-quality discount stores. Some of its largest tenants are TJX Companies Inc (NYSE: TJX), Ross Stores Inc (Nasdaq: ROSS), Burlington Stores Inc (NYSE: BURL), Dollar Tree Inc (Nasdaq: DLTR) and Kroger Co (NYSE: KR).

On September 30, SITE Centers sold 11 properties for $610 million, ahead of the Curbline spin-off. The disposition gives Curbline an enhanced total of $800 million in cash, along with a $400 million unsecured line of credit and a $100 million unsecured delayed draw term loan. However, Curbline will begin with zero indebtedness.

On the same day, Morgan Stanley analyst Richard Hill maintained SITE Centers at equal weight and raised the price target from $56 to $57. Stifel analyst Simon Yarmak has a Buy rating on SITE Centers with a $65.25 price target. However, new price targets will need to be made because after the spin-off, SITE Centers has a new adjusted price, closing on Tuesday at $17.06. Curbline closed Tuesday at $22.60.

Curbline Properties says it’s the first publicly traded REIT focused exclusively on convenience real estate. It now owns 78 convenience shopping centers, with locations in well-trafficked intersections and major travel corridors in suburban, high-income communities across 15 states. Curbline has a well-diversified portfolio with 43% of the portfolio ABR from the Southeast and 23% in the Southwest, Texas and Mountain regions. 96.6% of Curbline’s properties are presently leased.

Why: In 2019, SITE Centers began investing in convenience properties, and in 2024, after reviewing its financials, the board determined that it would be best for SITE to spin off its convenience properties into a separate REIT. Convenience properties are those with a row of small-shop units leased to a diversified mix of national and local service and restaurant tenants that cater to the growing suburban population.

Curbline’s portfolio is expected to cater to the growing suburban culture of convenience trips in fast-growing areas. It was added to the S&P SmallCap 600 before the opening of trading on October 1 and replaced Cross Country Healthcare, Inc. (Nasdaq: CCRN).

Takeaway: Several REITs such as Net Lease Office Properties (NYSE: NLOP), a spin-off from WP Carey Inc (NYSE: WPC) have performed well since being spun off. Net Lease has had a total return of 59.59% since the end of October 2023. But Orion Office REIT Inc (NYSE: ONL), a spin-off from Realty Income Corp (NYSE: O) in November 2021, has faltered. Orion’s total return since then is an ugly -77.83%.

Of course, Curbline is a retail REIT with no office properties, and given its diversification, demographics and high occupancy rate, one might expect it to perform well in coming years. Two analysts weighed in on Curbline and SITE Centers on October 2. Stifel analyst Simon Yarmak initiated coverage of Curbline with a Buy rating and announced a price target of $24.75. Wells Fargo analyst Dori Kesten downgraded SITE Centers from Overweight to Equal-Weight and lowered the price target from $68 (pre-spin-off) to $19. The analysts seem happy about Curbline Properties, but SITE Centers? Not so much.

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REIT Roundup:

Ashford Hospitality Trust, Inc. (NYSE: AHT) On September 27, it announced it intends to execute a 1-for-10 reverse stock split, to regain compliance with the NYSE.

Diversified Healthcare Trust (Nasdaq: DHC) On September 29, announced it sold 18 triple-net leased Senior Living Communities to Brookdale Senior Living, Inc. (NYSE: BKD) for $135 million or $154,000 per unit. Brookdale has leased and operated the 18 communities for the past 21 years. Diversified Healthcare Trust plans to use the proceeds from the sale to pay down its $941 million of senior secured notes due January 2026.

Gaming and Leisure Properties Inc (Nasdaq: GLPI) On September 30, announced it has promoted Chief Operating Officer, Brandon Moore, to the additional role of President, effective immediately.

Terreno Realty Corp (NYSE: TRNO) On September 30, announced it has completed the development and stabilization of Countyline Corporate Park Phase IV Building 39, in Hialeah, FL, effective September 30. The building is 178,000 square feet on 10.9 acres and is 100% leased to one tenant.

Piedmont Office Realty Trust, Inc. (NYSE: PDM) On September 30, announced that Chief Financial Officer Robert E. Bowers, the CEO since 2007, will transition to an administrative role as of November 8. He will be succeeded by Sherry L. Rexroad, most recently the CFO of STORE Capital Corporation, a private commercial REIT based in Scottsdale, AZ.

Kimco Realty Corp (NYSE: KIM) On October 1, announced it acquired the Waterford Lakes Town Center, a 976,000 square-foot open-air shopping center in Orlando, FL. for $322 million, using cash and a mortgage for $164 million. The property is 99% occupied.

Centerspace (NYSE: CSR) On October 2, announced the acquisition of The Lydian, a Denver, CO community with 129 homes and 23,000 square feet of office and retail space, for $54 million.

Farmland Partners Inc (NYSE: FPI) On October 2, announced the sale of a portfolio of 46 farms with 41,554 acres of farmland to Farmland Reserve, Inc. for $289 million. Farmland’s total gain on the sale will be approximately $50 million. Proceeds will go toward reducing debt, buying back stock, new acquisitions and general corporate purposes.

Caretrust REIT Inc (NYSE: CTRE) On October 3, announced it has acquired four skilled nursing facilities with 396 beds in the Mid-Atlantic area for $74.7 million. The facilities will be triple-net-leased with a new (unnamed) operator.

Upgrades:  

Caretrust REIT Inc: On October 1, Wells Fargo analyst James Feldman upgraded Caretrust REIT from Equal-Weight to Overweight and raised the price target from $28 to $34.

InvenTrust Properties Corp (NYSE: IVT)Bank of America Securities analyst Craig Schmidt upgraded InvenTrust Properties from Neutral to Buy and raised the price target from $30 to $33.

Downgrades

Highwoods Properties Inc (NYSE: HIW) On October 1, Deutsche Bank analyst Omotayo Okusanya downgraded Highwoods Properties from Buy to Hold and raised the price target from $31 to $35.

Insider Transactions:

Omega Healthcare Investors Inc (NYSE: OHI) On October 2, COO Daniel Booth sold 56,725 shares of Omega Healthcare for a total transaction value of $2,283,181.

Winners & Losers

📈 Biggest Winners This Week:

• Strawberry Fields Reit Inc (NYSEAMERICAN: STRW) Up 7.74%

• Clipper Realty Inc (NYSE: CLPR) Up 7.59%

• Brandywine Realty Trust (NYSE: BDN) Up 4.98%

• Farmland Partners Inc (NYSE: FPI) Up 3.27%

• DigitalBridge Group Inc (NYSE: DBRG) Up 2.68%

• Uniti Group Inc (Nasdaq: UNIT) Up 2.03%

📉 Biggest Losers This Week: Mortgage and Hotel REITs

• Claros Mortgage Trust Inc (NYSE: CMTG) Down 8.67%

• Peakstone Realty Trust (NYSE: PKST) Down 7.34%

• Industrial Logistics Property Trust (Nasdaq: ILPT) Down 5.97%

• Park Hotels & Resorts Inc (NYSE: PK) Down 5.96%

• BrightSpire Capital Inc (NYSE: BRSP) Down 5.86%

• Medical Properties Trust Inc (NYSE: MPW) Down 5.42%

• Alexandria Real Estate Equities Inc (NYSE: ARE) Down 5.35%

• KKR Real Estate Finance Trust Inc (NYSE: KREF) Down 5.13%

• Pebblebrook Hotel Trust (NYSE: PEB) Down 5.16%

ONE FOR THE ROAD

Hurricane Helene Insurance Claims Estimated Over $20 Billion And Growing

What: Hurricane Helene, the Category 4 storm that landed near Perry, FL on September 26 and devastated areas across 600 miles of Florida, Georgia the Carolinas, Tennessee and Virginia, has already produced financial losses that Moody’s Analytics estimates will be between $20 billion to $34 billion.

Where: Residential and commercial real estate losses, flooding and wind damage across populated areas such as Tallahassee and Atlanta contributed to this huge total. As of October 1, at least 139 people have died as a result of Hurricane Helene. 40 of those were in Buncombe country, North Carolina, a community under water from severe flooding. Another 33 in South Carolina died. As of October 1, 1.5 million people still were without electric power. Total communities were completely wiped off the map.

Of the 39,898 claims submitted by September 30 in Florida, 20,759 were for residential properties and 294 were for commercial properties. Southeast-based REITs Sun Communities Inc (NYSE: SUI), NexPoint Residential Trust Inc (NYSE: NXRT) and Pebblebrook Hotel Trust (NYSE: PEB) and UMH Properties Inc (NYSE: UMH) reported no material building or structural damage from the storm.

Takeaway: With the massive losses from Hurricane Helene, homeowners and businesses in the Southeast can expect to see increases in homeowners and commercial property insurance on their next statements. Thousands of claims adjusters are now spread out across the Southeast, but assessing property damage has been difficult because of unpassable roads, downed trees and power lines, and flooding. Insurance companies too will face greater costs from reinsurance companies.

Insurance companies recommend that anyone who suffered residential or commercial property damage document everything with photos and videos and be as specific as possible when making a claim. They also advise to keep all receipts for any out-of-pocket expenses incurred from the storm, including relocation costs.