SITE Centers to Launch Spin-Off REIT

A SITE Center retail property in Phoenix. Image courtesy of CommercialEdge

SITE Centers, owner of open-air shopping centers, will spin-off its convenience assets into Curbline Properties Corp., a publicly traded REIT that was approved by the firm’s Board of Directors.

The new company, CURB, will be the first and only public REIT exclusively focused on convenience retail. Wells Fargo and Morgan Stanley & Co. LLC are the lead financial advisors, while Jones Day is serving as legal counsel to SITE Centers.

Convenient convenience assets

The company has acquired a total of 61 wholly-owned properties located in U.S. submarkets since the launch of its convenience strategy in 2019, in metro areas with an annual household income of more than $115,000. In 2022, SITE began the separation of convenience assets that are next to existing properties, a process that is slated for completion prior to the spin-off. The separated stores will be included in the CURB portfolio.

Located at well-trafficked intersections, the convenience retail properties primarily consist of shop unit rows leased to a diverse mix of national and local tenants including Starbucks, Darden, JPMorgan Chase, Verizon and Chipotle. Having a median asset size of 20,000 square feet, the portfolio was 96.2 percent leased as of September.

Spin-off details

In preparation of the spin-off process, SITE Centers received a $1.1 billion financing commitment in October 2023 from affiliates of Apollo, including ATLAS SP Partners, that will be used to retire unsecured debt, including all outstanding prior notes. The REIT also closed on a $100 million mortgage secured by Nassau Park Pavilion.

By the time of the separation, CURB is expected to be in a net cash position, to have an unsecured and undrawn line of credit and a preferred investment in SITE Centers. The company will acquire additional assets before the spin-off takes place that will be part of the new REIT portfolio. SITE Centers will provide shared services to CURB in the first two years following the spin-off.

As part of the new arrangement, David Lukes will assume the position of president & CEO, Connor Fennerty will serve as CFO & treasurer while John Cattonar will act as CIO. CURB will submit its initial draft Form 10 registration statement with the U.S. Securities and Exchange Commission in 2024, with the spin-off process slated for completion in the second half of next year.

SITE Centers’ recent transactions

SITE Centers made several convenience retail transactions in the third quarter of 2023. The company purchased three properties in Virginia and Texas for a total price of $28.1 million, as well as two assets in Florida and North Carolina which traded for a total of $26 million.

The REIT also sold 11 shopping centers in the third and fourth quarter of this year for a total of $645.6 million and six other assets which traded for a combined $242 million. Two of the transactions involved the 107,884-square-foot Terrell Plaza in San Antonio and the 225,214-square-foot Larkin’s Corner in Boothwyn, Pa.