Retail landlord Site Centers has closed nearly $1 billion in shopping center sales year to date and has a pipeline of pending deals worth more than $1 billion as it switches its focus to strip malls, preparing to spin them off as a new company in October.
The Beachwood, Ohio-based firm on Tuesday reported that it's on track to launch what would be the first public real estate company exclusively dedicated to "convenience" properties, which are retail sites or so-called strip malls without a big-box or grocery store to anchor them. The new standalone company, to be called Curbline Properties, is now slated to include a portfolio of 72 convenience centers, according to Site.
In advance of the spin-off, which is expected to be competed by Oct. 1, Site has been divesting some of its anchored, open-air shopping centers and purchasing strip centers. The retail real estate investment trust is bullish on convenience properties, saying that they perform well because of post-pandemic hybrid work habits, with people able to make quick and repeat stops at them on days when they work from home.
"These assets share common characteristics, including excellent visibility, access, and we believe compelling economics highlighted by limited [capital expenditure] needs," Site President and CEO David Lukes said during a second-quarter earnings call.
Over a Dozen Sales
In the second quarter and the beginning of the third quarter, Site said it sold 15 shopping centers and a parcel at a shopping center for an aggregate price of $868.2 million. And in an update, as of last Friday year to date Site has completed $951 million in property sales, according to Lukes.
Recent activity this month and June included the REIT's sale of Lowe’s at 935 Market Place Blvd. in Cumming, Georgia, for $17.2 million, and in a separate transaction selling Cumming Marketplace at 1250 Market Place Blvd. for $23.4 million.
Lukes told Wall Street analysts that Site had completed $1.8 billion of sales since June 30, 2023. Over $1 billion of additional assets are under contract, in contract negotiations or with executed non-binding letters-of-intent, he said.
"In terms of potential buyers and activity, the pool of interest remains deep and remains an active and liquid market for our portfolio of open-air shopping centers," Lukes said.
On the acquisition front, Site purchased six convenience shopping centers and a ground-leased parcel of land during the second quarter and third quarter to date for an aggregate price of $56 million.
Those properties included: Red Mountain Corner in Phoenix for $2.1 million; Sunrise Plaza in Vero Beach, Florida, for $5.5 million; Roswell Market Center in Roswell for $17.8 million; Wilmette Center in Wilmette, Illinois, for $2.9 million; Crocker Commons in Westlake, Ohio, for $18.5 million; Maple Corner in Nashville, Tennessee, for $8.2 million; and a ground-leased parcel at Collection at Brandon Boulevard in Brandon, Florida, for $1 million. Site reported that it also acquired its joint venture partner's 80% interest in Meadowmont Village in Chapel Hill, North Carolina, for $35.4 million.
In an investor presentation, Site said that Curbline has a 2.4 million-square-foot portfolio "of unanchored convenience real estate concentrated in the top U.S. sub-markets that has been screened and curated based on demographics, credit profile, mark-to-market and cash flow growth."
At the time of the spin-off, Curbline is expected to have $600 million of cash and no debt, according to Site officials.
Three kinds of buyers have emerged for Site's open-air shopping centers, Lukes said. They are: private buyers like local families; private equity funds; and institutions.