Curbline Properties (NYSE:CURB) raised its 2026 acquisition target and adjusted funds from operations outlook after reporting second-quarter results that management said exceeded its budget, supported by higher occupancy, recoveries and acquisition volume.
Chief Executive Officer David Lukes said the convenience-focused real estate investment trust acquired $374 million of properties during the second quarter and $564 million year to date. The company increased its full-year acquisition target to $1 billion from $850 million.
Acquisition activity and market opportunity
Lukes said the company’s investment pipeline is supported by a fragmented ownership base, its network of relationships in major metropolitan markets, the scale of its platform and what it views as a long-term transfer of real estate ownership to a new generation of owners seeking liquidity.
The company targets properties along primary vehicle corridors with strong demographics, high traffic counts and creditworthy tenants. Curbline is approaching 6 million square feet of convenience real estate, according to Lukes.
During the question-and-answer session, Lukes said current acquisition cap rates remain in the low-6% range for the company’s expected $1 billion of purchases in 2026. He said cap rates can vary from the low-5% range to the high-6% range depending on occupancy and mark-to-market potential. He described unlevered internal rates of return of around 8% as a more useful measure for the asset class.
The company’s 2026 acquisition pipeline is made up entirely of one-off transactions, Chief Financial Officer Conor Fennerty said. Lukes added that portfolios in the sector tend to be relatively small and that Curbline generally values portfolio purchases as the sum of the individual assets rather than applying a portfolio premium or discount.
Operations, occupancy and leasing
Curbline signed more than 167,000 square feet of new leases and renewals during the quarter. Its lease rate increased 20 basis points sequentially to 96.5%, despite acquisitions creating an approximately 20-basis-point headwind. Occupancy rose to 94.3%, the highest level since the company’s spinoff, Fennerty said.
The portfolio has more than 1,300 distinct tenants, including more than 500 national tenants that account for roughly 70% of base rent. Only seven tenants account for more than 1% of base rent, and only one represents more than 2%, Lukes said.
All 15 new leases signed in the quarter involved different tenants, including FedEx Office and Tropical Smoothie, along with health and service businesses. Lukes said the company’s properties are designed as flexible rows of shops that can accommodate a broad range of uses and tenant types.
Responding to questions about occupancy potential, Lukes said occupancy should remain at the higher end of the company’s range, which he characterized as approximately 97%, as long as economic conditions remain healthy. However, he noted that occupancy can be affected by whether acquired properties have vacancies or whether Curbline elects to replace existing tenants.
Same-property growth and 2026 guidance
Second-quarter net operating income rose 12% sequentially and more than 50% from a year earlier, driven by acquisitions and organic growth, Fennerty said. The company’s results were ahead of budget, he said, due largely to higher NOI from stronger-than-expected occupancy and recoveries as well as greater acquisition volume.
Same-property NOI growth decelerated during the second quarter, as expected. Lower recovery revenue represented a 260-basis-point headwind, while $370,000 of storm-related expenses at a North Carolina property added another 100-basis-point headwind. Excluding those items, same-property NOI growth would have been 3.1%, according to Fennerty. Base rent growth was more than 2.3%.
Fennerty said the company continues to expect 3% same-property NOI growth at the midpoint of its 2026 outlook, following growth of 3.3% in 2025 and 5.8% in 2024. He said the same-property pool represented only about 56% of second-quarter NOI and can create volatility in reported operating metrics.
The company expects base-rent growth to accelerate meaningfully in the fourth quarter as leases in its signed-not-open pipeline begin to commence. Almost 90% of that pipeline is expected to commence by March 31 of next year, with the entire pipeline expected to begin by the end of the third quarter of next year.
Curbline raised its 2026 operating funds from operations guidance to $1.24 to $1.26 per share. At the midpoint, the outlook represents growth of just over 17%, Fennerty said. The guidance assumes $1 billion in investments, roughly a 3.5% return on cash, capital expenditures of less than 10% of NOI and approximately $32 million in general and administrative expense.
Capital position and shared-services agreement
Curbline raised nearly $550 million in equity during the second quarter, including a June offering. The company sold 18.1 million shares on a forward basis during the quarter, including shares related to the June offering, for expected gross proceeds of $541 million.
At quarter-end, Curbline had $155 million of cash and $696 million of unsettled equity proceeds. Fennerty said the company had more than $800 million of immediate liquidity available to fund about $500 million of remaining investments included in its guidance.
The company ended the quarter with a leverage ratio of approximately 20%. Fennerty said Curbline expects to have sufficient equity and cash available for at least the next six months and could consider the private-placement market thereafter. He said the company retains debt capacity, while the eventual funding mix will depend on market pricing.
Fennerty also said SITE Centers did not exercise its one-time option to terminate the companies’ shared-services agreement by June 30. Unless the parties negotiate a change, the agreement will remain in effect through Oct. 1, 2027. Curbline paid SITE Centers $1.2 million in fees during the second quarter, and management said it does not expect a material change in G&A when the agreement expires.
About Curbline Properties (NYSE:CURB)
Curbline Properties Corp. is a real estate investment trust which is an owner and manager of convenience shopping centers positioned on the curbline of well-trafficked intersections and major vehicular corridors in suburban. Curbline Properties Corp. is based in NEW YORK.
