Curbline Properties Corp.

Hello and welcome to the CurbLine Properties Corp second quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session, and if you would like to ask a question during this time, please press star one on your telephone keypad. I would now like to turn the conference over to Stephanie Rouse de Perez, Vice President of Capital Markets. You may begin.

Thank you. Good evening and welcome to CurbLine Properties' second quarter 2025 earnings conference call. Joining me today are Chief Executive Officer David Lukes and Chief Financial Officer Connor Pennerty. In addition to the press release distributed earlier, we have posted our quarterly financial supplement and slide presentation on our website at curbline.com, which are intended to support our prepared remarks during today's call. 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 reports on Forms 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 property net operating income. Descriptions and reconciliation of these non-GAAP financial measures the most directly comparable gap 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.

Good evening, and welcome to CurbLine Properties' second quarter conference call. The last four months have been an incredibly active period for the company that highlight the significant growth potential embedded in CurbLine. Specifically, we acquired $415 million of properties in the second quarter and third quarter to date, reported our highest quarterly new leasing volume since we began tracking, and have raised or are in the process of raising $300 million of debt capital. And importantly, in terms of investments, our team on the ground are creatively sourcing and reviewing a larger pool of opportunities than ever before, including both marketed and off-market deals. In many cases, working directly with owners where we can come to an agreement on assets that are consistent with our portfolio characteristics. More on that later. I'd like to start by thanking our incredible team for achieving the results that we reported tonight that support our differentiated investment strategy, capable of generating double digit earnings and cashflow growth well above the REIT average for a number of years to come. This growth is underpinned by the economics of the convenience property type, which is our exclusive focus. The large addressable market in front of us and our unmatched balance sheet that is aligned with the company's business plan. These ingredients clearly position CurbLine to outperform in a variety of macro environments. I'll walk through operations first and then conclude with more details on acquisitions before turning it over to Connor to talk more specifically about the quarter, the increase in expectations for 2025 outlook, and our balance sheet. We began investing in convenience properties almost seven years ago. recognizing the strong financial performance of the small format asset class, both within the retail sector and the broader real estate industry. Demand for the right locations in our property type has produced two noteworthy and differentiated outcomes. First, the capital efficiency of the business is superior to many other retail formats. Desirable small format space not only has high tenant renewal rates, but is also inexpensive to prepare for the next tenant in the event there is vacancy. When compared to larger buildings that are generally purpose-built with longer construction periods, the capital efficiency of our simple business is unique. In other words, less capital is needed to generate the same organic growth rate as the rest of the retail real estate industry and helps generate compounding cashflow growth for CurbLine. To that point, In the second quarter, CapEx as a percentage of NOI for CurbLine was just over 7%, which led to almost $25 million of retained cash before distributions. As Curb scales, this retained cash flow will increase, providing a durable source of capital that's outsized relative to the company's asset base, boosting earnings and cash flow. The second outcome is that our space is highly liquid because of the number of tenants that are willing to take a one to 2000 square foot shop unit is significantly higher than for purpose built large format units. This liquidity allows the property type to keep up with inflation remarkably well. Improves tenant diversification, reducing credit risk concentration, and provides an opportunity to drive rent growth as we seek to maximize rental income given the productivity of the unit size. The strength in demand for our units was highlighted by the depth and the breadth of second quarter leasing volume with almost 50,000 square feet of new leases signed, which is our highest level since we began tracking operating metrics for the curb line portfolio. New deals included leases with Chick-fil-A, Just Salad, Chase, Club Champion, and a variety of other service users. Activity remains wide in terms of tenants seeking to lease space and includes primarily national service tenants, banks, medical and wellness operators, and quick service restaurants. Net leasing volume pushed the company's lease rate up to 96.1% sequentially, among the highest in the sector, and drove 22% blended straight line leasing spreads for the trailing 12-month period. The economics of our business, a high return on leasing capital and the widest pool of tenants to work with, along with significant national exposure, position CurbLine for absolute and relative success throughout a cycle. Shifting to the investment side, which is the second driver of CurbLine's growth, part of the thesis behind the CurbLine spinoff was the large addressable yet fragmented market that had not been institutionalized. Not every asset is a fit for the company, but we believe there is a significant opportunity set of properties that do share common characteristics with our existing portfolio, including excellent visibility, access, and compelling economics highlighted by a broad available tenant universe and limited capital needs. To that point, since the company's spinoff, CurbLine has acquired over $750 million of assets and demonstrated now for five straight quarters the depth and liquidity of the asset class with acquisition volume of over $100 million per quarter. Our original 2025 guidance range included $500 million of convenience acquisitions for the year which equates to around $125 million per quarter. We've obviously significantly exceeded that pace with the acceleration in activity, a function of our marketing efforts, as we've seen a larger number of brokers and individual sellers proactively engage with us. This is a distinct change from the pre-spin environment. The situation also allows us to work directly with sellers on a timeline and a process that works best for both parties. and has increased the visibility and the volume of our pipeline of investments. To this point, just this past week, we closed on a 23 property portfolio for $159 million. Over the last several years, we developed a relationship with the principals of one of the larger and sophisticated convenience center owners in the country. That relationship led to a joint effort to structure a transaction of individually selected properties that worked for both sides. The assets acquired have characteristics consistent with our portfolio and our investment thesis and are located primarily throughout the southeastern United States in markets that we know well. While portfolios remain unique and difficult to find in the convenient space, our ability to source and structure these unique opportunities further differentiates CurbLine as the trusted partner for owners of high-quality assets seeking liquidity. For the second quarter, CurbLine acquired 19 properties for $155 million via 17 separate transactions. Investments continue to be concentrated in the affluent markets that CurbLine currently operates in already, including Houston, Chicago, Phoenix, and Atlanta. However, we continue to make acquisitions in new submarkets that share the key characteristics we seek, including our first properties in Dallas and the New York metro area, where we hope to scale long-term. Average household incomes for the second quarter investments were nearly $137,000, with a weighted average lease rate of over 96%, highlighting our focus on acquiring properties where renewals and lease bumps drive growth without significant capex. Before turning the call over to Connor, I do want to highlight one of the key differentiating aspects of the Curb Line spinoff, which is our balance sheet. The net cash position at quarter end matches the business plan with almost $430 million of cash and over $1 billion of liquidity, including financings expected to close in the third quarter. I could not be more opportunistic about the opportunity ahead of us. And with that, I'll turn it over to Connor.