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On Wednesday, Compass Point initiated coverage on Curbline Properties Corp (NYSE:CURB), a real estate investment trust specializing in shopping center properties, bestowing a Neutral rating and setting a price target of $24.00.
The company, with a current market capitalization of $2.46 billion, distinguishes itself by having the highest small shop percentage of annual base rent (ABR) in the analyst's strip coverage universe, at 92%. According to InvestingPro data, the stock is trading near its 52-week high of $25.35, with analysts projecting continued profitability for the current year.
Curbline Properties was spun out of Site Centers on October 1, 2024, and as of December 31, 2024, the company owned 97 unanchored convenience properties. These properties are primarily situated in the suburbs of major metropolitan statistical areas (MSAs) such as Miami, Atlanta, Phoenix, Orlando, and San Francisco. The Southeast and Southwest regions house about 65% of Curbline's assets.
At the time of its spinoff, Curbline carried no debt, a notable financial position for a company in the real estate sector. InvestingPro analysis confirms the company's strong financial health, showing it holds more cash than debt and maintains a healthy current ratio of 1.11.
The analyst anticipates that Curbline will utilize its $800 million cash balance to fund acquisitions and will likely secure unsecured debt against its existing portfolio sometime in 2025. This strategy is expected to provide additional funds for further acquisitions, potentially allowing the company to double its current portfolio without the need for raising new equity.
Curbline is projected to maintain the lowest leverage ratio among its peers for the foreseeable future. Despite the expectation of higher overhead costs due to its operational structure, Curbline has arranged a fee agreement with its former parent, Site Centers, which is anticipated to keep expenses in check for the initial period following the spinoff.
The company maintains a strong gross profit margin of 78.1%, though InvestingPro analysis indicates it's currently trading at elevated valuation multiples across various metrics. Subscribers can access 8 additional ProTips and comprehensive financial metrics for deeper analysis.
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