Q4 2023 Site Centers Corp Earnings Call

Participants

Todd Thomas; Analyst; KeyBanc Capital Markets Inc.

Samir Khanal; Analyst; Evercore ISI

Floris Dijkum; Analyst; Compass Point Research & Trading, LLC

Ki Kim; Analyst; Truist Securities, Inc.

Dori Kesten; Analyst; Wells Fargo Securities, LLC

Michael Mueller; Analyst; JPMorgan Chase & Co.

Presentation

Operator

Good day and welcome to SITE Centers reports fourth quarter 2023 operating results conference call. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over toStephanie Ruys de Perez, Vice President Capital Markets. Please go ahead.

Thank you. Good morning, and welcome to SITE Centers Fourth Quarter 2023 earnings conference call. Joining me today are Chief Executive Officer, David Lukes, and Chief Financial Officer, Conor Fennerty. In addition to the press release distributed this morning, we have posted our quarterly financial supplement and slide presentation on our website at www.sitecenters.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 report on Form 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-store net operating income, descriptions and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP 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 morning, and thank you for joining our quarterly earnings call. Fourth quarter was significant for SITE Centers to say the least highlighted by the announced planned spin-off of the convenience portfolio from within SITE Centers into a new and unique focused growth company Curbline Properties.
This announcement, along with nearly $1 billion of transaction activity, has put us on a dual path of growing our core blind portfolio through acquisitions and realizing NAV of the SITE Centers portfolio through dispositions and asset management. We are only three months past the spin-off announcement, but have made substantial progress on the business plans for both site and Kurt with more progress to come.
I'll start with an update on Curb line transition, exit transactions and then conclude with an update on the quarter and operations before turning it over to Conor to talk about how all of this impacts the balance sheet and 2024 results.
Starting with curved line, we began investing in convenience assets over five years ago and after several years of transaction activity review and data analytics and financial and tenant analysis, we are more convinced than ever that the convenience sector is both differentiated and a unique growth opportunity. As announced to seize this opportunity, we are creating curb line properties as a unique first mover read that is differentiated from all other retail rates and has what we believe to be the highest organic cash flow growth growth potential driven by annual bumps, the ability to recapture and mark to market units, a high-quality and diversified tenant roster with minimal concentration risk and limited CapEx needs as compared to other property types.
Same-store NOI for the current curb line portfolio is expected to grow 4.5% in 2024, an average greater than 3% for the next three years when factoring in all of these attributes. As of year end, the curve line portfolio included 65 wholly owned convenience properties expected to generate about $76 million of NOI in 2024.
All of these assets share common characteristics, including excellent visibility, access and what we believe are compelling economics highlighted by limited CapEx needs. Arguably what we own today represents the largest highest quality convenience portfolio in the United States.
These properties, which primarily cater to daily customer aaron's are an integral part of a suburban lifestyle, which has only become more entrenched with increased suburban migration and the rise of hybrid work and combined with a balance sheet that is truly unmatched with no outstanding debt and cash and a preferred investment on hand, curbline properties is expected to generate best in class growth and returns for stakeholders.
As of today, we expect the spin-off to be completed on or around October 1, of this year. Based on the transactions completed to date, we now expect curve to be capitalized with $600 million of liquidity or $100 million more than a few months ago in the form of cash and the preferred investment in SITE Centers.
Additionally, should we make more progress on the dispositions front, it is likely that curve would not retain a preferred investment in sight and would be capitalized simply with no debt and $600 million of cash.
To that point moving to transactions, we sold $736 million of wholly-owned properties in the fourth quarter at a blended cap rate of 6.5%. Subsequent to year end, we sold another $82 million. As of today, the pace of dispositions has remained robust, and the pricing of those assets has remained strong, resulting in almost $750 million of real estate currently either under LOI or in contract negotiation at a blended cap rate of roughly 7%.
The bulk of this inventory is primarily sub-market dominant power centers with roughly 30% of the assets by value containing a traditional grocer. Needless to say, the level of demand speaks to the quality of the SITE Centers portfolio and highlights the opportunity that we identified with the spin-off announcement.
Over the past six years, this management team has sold over $7 billion of shopping centers, through that process, John Catena and his team have gained a very good understanding of which buyers are seeking high-quality assets.
These parties include a wide range of market participants, including both private buyers and public risks. In all cases, these buyers know the assets, they know our submarkets and they are often unlevered acquirers of high-quality real estate. The SITE Centers portfolio fits that mold, having been carefully selected via the RVI spin off and our joint venture unwinds and remains extremely attractive to a wide range of buyers looking to invest in open-air retail real estate.
The retail operating environment has dramatically shifted post pandemic with limited supply and higher demand from a broader set of tenants, trends that should support fundamentals for the sector for years. Macro tailwinds, along with company-specific factors like sites, ethanol pipeline, which represents 4.2% of spin adjusted base rents along with redevelopment deliveries and the lease-up of vacant units are expected to generate substantial forward NOI growth.
These two factors combined our knowledge of the buyer universe plus sector and specific tailwinds makes us very confident and maximizing value on additional sites on those properties via private market asset sales.
Going forward, I would expect Site to continue to focus on this compelling value creation opportunity and the NAV arbitrage in terms of acquisitions. We acquired four convenience properties for $62 million in the quarter, and Charlotte, Cape Coral, Atlanta and Phoenix.
Average household incomes for the fourth quarter, investments will over $104,000 and a weighted average lease rate of almost 100%, highlighting our focus on acquiring properties where the renewals and lease bumps drive growth without significant CapEx.
Going forward, we remain encouraged by the unique opportunities in the convenience subsector, including the size of the opportunity itself. The addressable market for convenience ASSETS according to ICSC, is 950 million square feet. Curbline's current portfolio comprising 2.2 million square feet represents one-quarter of 1% of total US inventory, meaning we have plenty of room to grow.
That said, while we expect to acquire additional properties prior to the spin, we are prioritizing dispositions to take advantage of demand for sites' assets, which will act as a governor of sorts to acquisitions volume in 2024.
Ending with the quarter and operations, we had a very productive fourth quarter with results ahead of budget. Our property operations teams continue to do a great job getting tenants open for business ahead of schedule, which drove part of our outperformance this quarter.
Overall, quarterly leasing volume was down sequentially, but this was largely a function of a smaller portfolio and less availability. Leasing demand continues to be very strong from both existing retailers and service tenants expanding into key suburban markets, along with new concepts, competing for the same space.
Despite the strength of execution from our leasing team, our lease rate was [down 10%] -- [10 basis points] sequentially due to a 50 basis point headwind from significant fourth quarter asset sales, which averaged 98% leased. Looking forward, we have another 350,000 square feet at share in lease negotiation, including effectively all of our remaining Bed Bath square footage, which we expect to be completed over the next two quarters at similar spreads and economics than the trailing 12 month figures reported today.
We continue to expect commencement of our signed leases to be the material driver of our same-property NOI growth over the course of 2024.
Before turning the call over to Conor I want to thank everyone at the SITE Centers team for their work leading into this announcement. And over the last few months, spin-off at Curbline properties as possible due to the work of truly everyone across the organization and it positions us for growth.
We strongly believe that the compelling opportunity in front of us is to create significant value for the company's stakeholders.
And with that, I'll turn it over to Conor.

Thanks, Dave. And I'll start with quarter earnings and operations before concluding with the 2024 outlook and updates to the balance sheet. As David noted, fourth quarter OFFO was ahead of budget due to better than expected operations and higher interest income, partially offset by higher operating and G&A expenses.
Specific to operating expenses, we had about $2 million of higher landlord and CAM expenses in the quarter related in part to some seasonal items, including snow removal that we do not expect to reoccur. Outside of these items, there were no other material callouts in the quarter.
Moving to operations, fourth quarter leasing volume was lower due to the significant dispositions that David highlighted in the back half of the year, along with what's available space with this smaller denominator, operating metrics will become more volatile based on the leasing pipeline.
At year end, we expect spreads to be consistent with trailing 12 month levels over the course of the year. Overall, leasing activity economics remain elevated and we remain confident on the backfill of the remaining vacancies highlighting the quality of the portfolio and depth of demand.
Moving to 2024, as David noted, we're extremely excited to form and scale the first publicly traded retail focus exclusively on convenience assets and based on the mortgage commitment announced in October, along with recent transaction and financing activity, we have positioned both SITE and Curbline with the balance sheet that they need to execute on their business plans.
As a result of the planned spinoff and significant expected asset sales, we are not providing a formal 2024 FFO guidance range. We are providing projections, though, for total portfolio at Ally for the site and current portfolios that include all properties owned as of year end.
And as we move forward over the course of the year, we expect to update the projection ranges for transaction activity. For the CURB portfolio, total NOI is expected to be roughly $76 million at the midpoint of the projected range before any additional acquisitions. And same-store NOI growth is expected to be between 3.5% and 5.5% for 2024.
For the SITE portfolio, total NOI is expected to be roughly $265 million at the midpoint of the project range before any dispositions. Additional details on the assumptions underpinning these ranges are in our press release and earnings slides.
In terms of other line items, we expect JV fees to average around $1.25 million per quarter, and G&A to average around $12 million per quarter prior to the planned spin-off. Given the significant cash balance on hand, interest income is likely to remain elevated in the first half of the year. So it will obviously be dependent on short term rates and any debt repayment activity.
Transaction volume, particularly the timing of asset sales, is expected to be the largest driver of quarterly FFO in the fourth quarter included $4.5 million of NOI from assets sold in the quarter as detailed in the supplement.
Moving to the balance sheet in terms of leverage at quarter end debt to EBITDA was 4.2 times with a net debt yield [north to 20%]. Over the course of 2024, we expect leverage to continue to decline with net debt to EBITDA below 4 times. Prior to drawing on the $1.1 billion mortgage commitment, we expect to maintain the significant primarily unencumbered asset base, providing additional scale and collateral for site stakeholders.
We repaid the 2024 notes and one wholly owned mortgage in the fourth quarter and expect to retire the majority of outstanding consolidated debt prior to the spin with proceeds from the mortgage commitments. This mortgage will be secured by 40 properties that are expected to be part of SITE Centers post-spin.
Funding expect is expected to occur prior to the spinoff, subject to the satisfaction of closing conditions. For Curbline properties, the company at the time to spend is expect expected to have no debt now at $300 million of cash and a $300 million preferred investment insights enters this highly liquid balance sheet will allow turbine to focus on scaling this platform while providing the capital to differentiate itself from the largely private buyer universe acquiring communities properties.
Additionally, as David noted, depending on the level of asset sales completed prior to spin, we may look to fund Curb entirely with cash and no preferred investment in sight. Details on sources and uses and projected capital structures can be found on pages 12 and 13 of the earnings slides.
Lastly, as a result of 2023 transaction activity, SITE Centers paid in January 2020 for a special dividend of $0.16 per share. The dividend was funded with cash on hand, the Company also declared its first quarter dividend of $0.13 per share, which is unchanged from the fourth quarter.
And with that, I'll turn it back to David.

Thank you, Conor. Operator, we're now ready to take questions.

Question and Answer Session

Operator

We will now begin the question and answer session. (Operator Instructions)
Alexander Goldfarb, Piper Sandler.

Hey, good morning. Morning, going to out a few quick pay morning. Just a few questions here. Just first, the big one, David, you're not outlining an RVI type entity for legacy site, but still it's hard not to think about site ultimately sort of going the way, if you will, especially at the pace of dispositions that you're doing. And clearly management's focus on curb. So can you just give a little bit more color on how we should think about SITE Uno post October first, 2024?

Sure. I'll be happy to. I think it really depends on what signals we're getting from the public markets and what signals we're getting from the private markets. And at this point, the signals are very strong that the private market values assets and at a higher value.
And so we're listening to those signals and we continue to sell assets on should that continue. Then those asset sales, I think probably pick up on, you can see how much activity we have going on right now at values that I think are very strong.
So moving forward, all I can say is in the time being between now and the spin date. We will continue to sell assets and we'll reconsider what the strategy is and what the eventual outcome is at that time.

Okay. And then on cap rates, I think the prior back, but you sold a year end into early this year, I think you averaged [6.5%] on dispositions. You're saying now the next batch looks to be a [7%]. And I don't recall what you said on the curb asset acquisitions, but can you just talk a little bit more about cap rates and then also, can you talk about IRRs? So when you look at these assets, the ones you're selling and then the ones you're buying, it almost sounds like based on your comments, literally the convenience assets not only have lower CapEx needs but actually have higher returns, which sounds incredible, but just wanted to get a little bit more perspective on that. And then maybe as part of that, you could just talk about what you're finding on credit quality as far as expectations for bad debt as you underwrite the curve assets.

Sure. Well, on cap rates on either you and I have discussed numerous times, it's difficult to pin down cap rates when the number of transactions are a handful here and there I will say that on the assets closed in the fourth quarter that were averaging a [6.5% cap], did have a wide range of formats as well as a real wide range of cap rates. We sold some assets in the [low 5s] and we sold some assets in the [high 7s] on this next group where we're under LOI.
We've awarded deals and we're starting to negotiate contracts on. It's the same thing. There are some properties that are [low 6s]. There's some properties that are [high 7s]. So I think the average is an interesting note, and I do think the average of [6.5] in the last batch to seven in this batch, I don't know what that means going forward. I don't know if the additional properties we have are going to be higher or lower.
I what I have found is that the private market participants are less focused on retail format and they're more intrigued by the credit quality, the submarket that the asset lies in and the duration of the lease term.
And in that sense, the SITE Centers portfolio fits that mandate of a lot of private buyers because we are in high income demographics. The lease-up has been so robust in the last two or three years that the duration is pretty strong and the weaker tenants like Bed Bath and beyond have largely left the portfolio. So it feels like the private market participants are putting a higher value on those assets, which means that we fit those mandates.
One of the things that, as you know, also contributes to a lot of activity is the presence of a grocery store. And we still have more than 2,000 centers that have a grocery store attached to them in the portfolio today. And the average sales are quite high and there's a number of them that are more than $1,000 a square foot.
So I do think that the valuation that we've been seeing feels to be consistent with what I would expect the next couple of months to be on. So our view on cap rates is that buyers are seeing the value of this duration and the credit quality. And we're seeing the outcome of that.
On the buy side, where we're buying convenience properties, the main difference between what we're selling and buying is that growth and the cost of that growth. So if we can deliver a much higher same-store number, but the cost to generate that is significantly less. I do agree with you that the unlevered IRR of the convenience properties is higher than what we're selling today.

Thank you.

Thanks, Alex.

Operator

Craig Mailman, Citi.

Thank you. Sort of follow up on the sales on at least the case that you guys are the last couple quarters have averaged almost $800 million a quarter. You guys have $750 million under contract, just beyond the $750 million, how much is being marketed currently, maybe not at the under contract or LOI phase, but kind of close to give us a sense of what the cadence could be for the balance of the year, because it seems like you guys have. What about $3.5 billion left to sell Pro formative [$750 million]. Is that about right from a volume perspective?

Sure, Craig, it's David. It's a little difficult to hear you, but I think what you're asking is what's the total volume of assets that them we're marketing is that? Is that where you're going?

Yes, sorry, I'll talk louder to my phone. Yes, the total volume that you're marketing today and just the fact that on the $750 million kind of that's a pretty similar cadence to what you did in the fourth quarter.
So is that is that achievable kind of quarterly run rate here? And as we think about what's last on? It feels like about $3.5 billion. Is that also kind of the right way to think about kind of what's left here in the near term?

Well, I'd say right now under under LOI and negotiating transactions. Like I said, it's about $750 million. There's another 2,000 properties that are in various forms of marketing with brokers on that. And that equates to somewhere around an $800 million group that's going to be launching sometime in the next 30 days.
And the real question is how much of that transacts? There had been properties that we didn't like the pricing and we didn't transact there, have them situations where a buyer has wanted to group a couple of assets together into a small portfolio that has speeded up the process.
So it really comes down to simply how much time does John's team have to transact? And is it one by one? Or is it in small groups or larger portfolios? So it's really difficult for me to say, other than if we close $800 million in the fourth quarter, we got another $750 million is spoken for and then we've got another $800 million that's in an early stage of marketing. It feels like there's still plenty of volume out there.

What I don't know is how much of that closes and how much of it, Todd actually transacts there could go into just a slide from a timing perspective, just kind of the cadence of to David's point when assets are being listed, et cetera, you're likely to see a lull between the December closings we had and then the next batch, meaning it's probably a month or two from now and just to give you context. So it's as likely now to $750 million first quarter run rate, but to David's point based off how much we have under LOI or contract plus the stainless and you could see a lot more volume in the second and third quarters.
In terms of your question on the valuation, we did provide the projected NOI ranges for site and Curb. So I'll defer to you on kind of what cap rate you want to put in there, but that should help give you a sense of sizing on the remaining asset base.

No, that's helpful.
And David, to your point of, you know, the hit rate kind of what do you think the hit rate is on the kind of decision to sell versus what's being marketed here? And how does that and kind of translate into what you think ultimately are what are the characteristics that are kind of driving the pricing that you're getting versus maybe some bids that don't fall in?
And how far outside of the kind of the parameters or some of these bids? And why not just at this point, given the fact that you're effectuating stent, I mean, are they so low ball does it. Does it make sense just to take them versus continue to hold out for better pricing here since you ultimately need to wind down this portfolio anyway?

Yes, it was. I would say in the fourth quarter, the bid-ask spread was a little lighter. And so there were some properties that we chose not to transact on. What feels like it's changed, Craig, as capital flows on that in the second half of last year, there were a number of value add buyers that were looking at strips. And I think most of what we sold in the fourth quarter was off market where John had relationships with 1,031 buyers or strategic buyers in a certain market.
What seemed to change in the first quarter is that there's just more capital allocated to strips from core and core-plus buyers. And the increase in institutional interest in the last 30 days has been noticeable. So it feels to me like the bid-ask spread has come in, the amount of capital looking for core real estate has gone up the confidence level of core buyers that the sector has really good fundamentals and tailwinds seems higher.
And therefore, it feels to me like the transaction activity is likely to stay pretty high. And so I do think the hit rate is probably higher than it was in the back half of last year.

And then just one last one. Just I know we're a couple of months past the initial kind of announcement here. So do you guys have any more clarity on the management structure, G&A, kind of fee structure that goes along with it in between sight and Curb?

Let's remember that the purpose of these two companies are very different. One is getting smaller and one is getting bigger. And in order to facilitate that transition, the shared services that we'll be putting in place between the two companies will allow for that G&A to migrate from one company to the other.
At the end of the day, once the shared services agreement burns off I don't expect any overlap in staffing between the two companies. I think we're going to know a lot more in the next six months as to which company needs more staff and which type of leadership.
And I would expect in the next couple of months and quarters, we will certainly be able to give more information to the market, our Board of Directors is very focused on the issue, management is very focused on the G&A issue and our competence level that we can eventually run on Curbline at a G&A level that's at least as efficient as SITE Centers of today is very high, but there's a transition period.
And I think we'll be giving you a lot more detail in the next few quarters, but I don't have a lot to add this morning.

And Craig, if you think about just going back to my comment about projections, we've got the NOI range as we effectively giving you the pieces for a sum of the parts.
And to David's point, as we get close to that spin, they remember we're still six plus months off. You'll start to see us transition more towards the kind of earnings story and give you the ingredients and pieces. The Form-10 is obviously important part of that. So again, I think you'll kind of see it drifting out of information, much like we provide additional information today versus October over the next couple of months.

Great. Thank you.

Thanks Craig.

Operator

Todd Thomas, KeyBanc.

Todd Thomas

Thanks. Good morning. First, can you just expand a little bit on the investment pipeline for Kerr properties in the market today? Just in terms of product you're seeing and pricing. And I think, David, you said that you're emphasizing I SITE center dispositions today, but I'm curious how we should think about the volume of acquisitions going forward for the carbon today?

Yes, Todd, the I'm there's a certain amount of anchor internally because we're all excited to be buying assets on. We've got a lot of opportunities that we're underwriting. The volume of Curbline assets that are available at any given time in the US is much higher than I would have thought. So it feels like the addressable market is there.
We've been buying somewhere in the mid six cap rate range and we feel strong strongly about the financial returns of that investment. The challenge is simply want to time management. We've got an awful lot of disposition activity going on on, like I mentioned to Craig, the amount of capital that seems to be very intrigued with SiTE centers on as we turn the calendar to '24 has been high.
And so we've been allocating internal resources towards dispositions, and that's on the legal side. That's on the transaction side, that's on the due diligence and underwriting side. And so it has put a little bit of a governor on how much we can allocate to acquisitions. So I would expect the acquisitions to be a little bit slower over the next couple of months because we're awfully busy on selling.

Todd Thomas

Okay. And you said that curbs expected to grow, I guess on the quarter, same-store basis around 3% or more over the next several years. But in '24, it's expected grow 3.5% to 5.5% to 4.5% at the midpoint. What why is 2024 same-store growth more elevated relative to that long-term growth rate target? Can you just talk about what's driving that premium growth in the near term for the CURB segments.

Its Conor. Good morning. There's a couple of factors there. The biggest one being simply just the S&L pipeline and the collapse of the kind of leasing occupancy rate. So much like SITE Centers, much like our peers, much like the open-air sector, there's just been a lot of leasing volume in the current portfolio and we expect that kind of occupancy gap to compress over time.
The other member advantage of the current portfolio is you just have less downtime. And so if you think about it you've got space back over the last couple of years, downtime to backfill is a lot shorter versus banker. And so you're just seeing kind of that compression or timeline to get those spaces back filled in a much shorter period, which is driving the growth.
The other thing is we had members a small denominator, some very, very significant mark-to-market opportunities as well. Those are driving as well. So again, I would say it's a similar boost or drivers versus other kind of open-air real estate. It's just a tighter time line and a smaller denominator.

Todd Thomas

Okay, makes sense. And one last one, actually, David, you've mentioned now I think twice, you know, the increase in appetite for retail real estate since the end of the year at the beginning of the year here. Is the disposition activity still best and to be executed on a one-off property basis? Or is there any appetite for a portfolio sale or something larger in the marketplace to take place today on the SITE dispositions?

It remains to be seen, Todd. We're certainly open-minded to portfolios because it makes our job a little bit easier. And there have been conversations with several groups about potential portfolios from, but we're also price sensitive and there's been a lot of private capital that's got a [1,031] need or that knows the sub market really likes an asset and certain cases, it just means that it's worth the extra work because of the value. I will be curious as well to see if portfolios increase. And we're if we continue more with one-off transactions, I'll be curious, but I don't I don't really know.

Todd Thomas

Okay, thank you.

Thanks, Todd.

Operator

Samir Khanal, Evercore ISI.

Samir Khanal

Hi there. David, on the $750 million that's under contract, the power centers have a [seven cap]. And with that, that may be a positive read for the market out there, considering that some people may think it was closer to an [eight] kind of what you have remaining to sell. So maybe give us a little bit more color on I don't know like the geographic regions where these assets are located. It's just sort of a portfolio type deal? Or just trying to get a bit more more more color on these on these power centers?

Yes, Sameer. First of all, just remember when I did not say under contract I said awarded under LOI or negotiating a contract on. So some of those might fall out that might get replaced by others. But we felt it was when it was important to provide at least some disclosure around how much volume, approximately what type of pricing we're working on today since it is relevant.
And I feel like what we're working on today is fairly consistent with the majority of the portfolio on the assets that we're currently negotiating contracts are spread across the country. They're in various some retail formats and about 30% of them have a traditional grocery store at about 70% down.
And some of them are larger assets, some are smaller assets. And so to me, it feels like a pretty good mix of the majority of our portfolio. I would say there are some assets that we have not transacted yet that are better, i.e, very high volume grocers and there are some assets that we have that are not included in that that are probably worse.
They might have a theater with a high rents on. But for the most part I feel like it's a pretty consistent read through to the majority of the portfolio.

Samir Khanal

Okay, got it. And I guess my second question is around Curbline. I know you said it had no debt initially, but I guess what's the longer term leverage plan or even sort of the capital structure for curve at this time?
Thanks.

Hey Samir, its Connor, good morning, Dave and I both mentioned as of today, we're expecting $300 million of cash at the time of spin and the $300 million preferred investment. However, to David's point, if we continue to sell assets that likely shift to just $600 million of cash and let's call it. Yes, I think we've got $1.2 billion or $1.3 billion of GAV today.
Now to Tom's point, we do expect to acquire more assets, let's call it $25 million to $50 million a quarter going into it. So round numbers, you're talking about a GAV of, call it, $1.4 billion and $600 of cash and perhaps a, call it $2 billion time to spin initially.
I think it's fair to assume that that curve would use that cash to deploy capital, and then once you're have utilized that cash, the question is, what's your kind of leverage path or trajectory? And there we'll see. We'll see how it plays out. I mean, I think if you look at our company or SITE Centers in the last six years, we've generally looked to maintain a balance sheet that was consistent, if not marginally better than the peer group.
And I think the curb is fair to be seen if there's either a fair to assume, excuse me, that it's a similar path. All that said, that's a ways out from now. So we'll see what, um, what we're how we go from there. But I'm again, I think it's fair to assume it's just a consistent cap structure as we have a site today. I don't know if that helps answer your question.

Samir Khanal

No, it does. That's it for me. Thanks, guys.

Thanks, Samir.

Operator

Floris Van Dijkum, Compass Point.

Floris Dijkum

Hey, good morning, guys. Thanks. Looks like you're going to be busy for the next couple of months, pretty exciting new concepts, higher growth, as you say. I'm just curious on some of the cost involved. You mentioned the commitments that you've got for the $1.1 billion of debt, mortgage debt. Could you tell us what the cost of that commitment is and what the cost of that debt would be?
And then secondly, it was part of that. You've said you that debt is related to 40 assets, I think post spin. Have you identified those assets already? Presumably lenders will want to know what assets are there providing the credit on? And so does that are those assets some of your better assets or maybe give a little bit of detail on what's what's remaining that you expect it to be part of sites post spin?

Good morning. It's Conor. If you look at our slides on page 12, we've got sources and uses for the transaction, which we updated as of year-end. If you recall at the time of the spin announced on October 30 and provided a similar slide that was as of the third quarter. So we kind of roll this forward a quarter to help with the sources and uses.
You are correct to point out that we've excluded the commitment fee related to that transaction from those costs. I think it's fair to assume that the additional detail is provided in our K when we file that and a couple of weeks from here.
But they're generally market terms, we had a commitment as part of the RBI facility. If you recall, back in 2018, I think it was actually six years ago, seven years ago this month. And we've been kind of a market commitment fees generally around a point upfront. And it's fair to assume that at the Apollo facility, something very similar.
If you come back to who our counterparty with that as Atlas SP, that was actually our counterparty, the old Chris, we securitized products team six or seven years ago, as I just mentioned, so it's a group of work worked with for a number of occasions. We've done a number of deals with in the summer. We lose we have like Retail Trust and as part of our process for that commitment. We identified those 40 assets. We've already gone through underwriting with them.
So yes, that pools and identified guests that lender have worked through that if you recall, there's also a kind of effectively a go-shop provision as part of that commitment where we can take that to market and go in a different path or we can continue to work with Atlas or Apollo.
So the ultimate financials or ultimate economics, I should say of that transaction are to be determined to David's point, I think from Craig earlier, we'll provide more details as we get closer. But there's a world where we use a much smaller facility based off asset sales. Those even though even more aggressive loan we don't we don't have any borrowings that time to spend if the transaction market really remains robust.
So again, we'll provide more detail as we get closer to spend. But it's a market. It's fair to assume it's a market rate CMBS deal. And again, we'll land we'll provide updates as we progress through 2024.

Floris Dijkum

Thanks, Conor, (multiple speakers)

I think that the answers that part of the question?

Floris Dijkum

I think the other question I had was in relation to your to your current portfolio. There's one other as far as I'm aware, there's one other our sizable portfolio out there that somewhat similar to yours, which is the Crowe portfolio. You must have looked at that closely. Maybe could you give a couple of potential differentiating factors you have for your portfolio versus that portfolio or and how people should think about us and what's your what percentage of your NOI, the $76 million of NOI that you have for the for the current portfolio, how much of that was carve out and from your existing assets versus actual convenience assets that you've acquired separately as stand-alone assets?

Yes, but in two parts, but I'll let I apologize, Alex. I'll let Kurt take part B, which is the carve-out details. But on Part A., there's so much inventory in the US and convenience. There are a number of smaller and midsize portfolios out there. I hate to get into a comparison between on different portfolios just because you have imperfect information. I will say that we did hand select this portfolio. I mean, we chose what the carve out. We chose what the lead behind, which owes what to buy in the last five years.
So we're very happy with the credit quality, the growth quality, the sub markets, the locations, the daily traffic, the cellphone data that we've been tracking for years, as you know. So we're really happy with the portfolio we have on I hate to start comparing it to other portfolios that we just don't have perfect information as a data point.

I think it's a really important asset because we built this from the ground up literally asset-by-asset. So everything in here, we feel really good about the overall metrics are on page 15, floors on which makes the comparisons, I guess difficult to your point to David's point on the carve outs are about 25%, maybe marginally more than that of the overall portfolio in terms of ABR. But that's coming down every day, right, as we buy assets.
And you think about just some years question on the balance sheet for a $1.2 billion-ish of GAV today and we carve outs or call it $300 million, $400 million of that, as we deployed a $2 billion, $3 billion, the carve outs dropped to a fairly insignificant amount. So again, we feel really good about each of those carve outs. We're happy to own them and we hand-selected each of them. But that kind of a subset of the portfolio will shrink over time as we as we lever up or at least deploy the cash.

Floris Dijkum

Thanks, guys.

Operator

Ki Bin Kim with Truist.

Ki Kim

Thanks. I have a couple of housekeeping items here. When you quote cap rates on your dispositions, can you just talk about what definition that is?

And if you if you're including property management charge and things like that, hey, even more installment in our mind, there's only one definition of the cap rate, which is a forward 12-month NOI, including a management fee.

Ki Kim

Okay. And on your $250 million NOI projection for the SITE Centers portfolio. I'm assuming that's as of [1231], 2023 portfolio. And if you can provide just high level, what does that translate to from a same-store NOI standpoint?

Yes, you're right. So it includes the two assets that were sold as of January or February to date. And so you did adjust for those. So effectively, we gave you the balance sheet and the analyzed at 1231. So it's a good one. It's a good point to call out in terms of same or it's the same for and why we didn't provide a projection for SITE Centers for a couple of reasons.
And the biggest reason, and this is something, David and I both alluded to in our prepared remarks is it's just losing relevance. So we sold $1 billion of real estate effectively in the fourth quarter. None of those assets had a Bed Bath & Beyond. If we included those in 2024 our same store would be higher, not because it's better real estate or worst real estate, but simply because of whether or not the bad debts are in there or not. In the same vein, if we sell a number of our Bed Bath assets, which we expect to in the first half year, our same-store will start to go up. Does that mean things were getting better for that portfolio now it's just the volatility around operating metrics for Titan is really going to grow and as a result that's dropped in terms of relevance.
Now, do you think about some guideposts on how you should think about same-store per site over the course of the year, it's fair to assume on a static portfolio growth would be look similar to the fourth quarter and the first half of the year as we come through through bad debt. And then you start to see a pretty dramatic acceleration in the back half of the year as the S&L pipeline and also those in those bed that backfills come into place. And that gets you to a level that I think it's pretty consistent what we did in 2023 in the back half and what some of our peers reporting for their guidance for 24. But I would just I would just give you again a caveat that relevance, we think the metric is pretty low and the volatility of same-stores be so dramatic, of course, 24 based on asset sales that we just don't think it's a relevant number or to provide at this time.

Ki Kim

Okay. Thank you.

Operator

Dori Castaigne, Wells Fargo.

Dori Kesten

Thanks, warning, which could you call October rather firm time line for the spin at this point or could material incremental sales move that forward or doing more installers?

It's a great question at this time. We think October first as a great place holder, you're absolutely right. If you saw some dramatic change in transaction positively negatively, we might move up or move back to date. All that said, remember, we don't need to sell another asset to get this transaction done right now with the financing is effectively that bridge. So everything from here to David's point or responses from earlier is purely upside to both site and curb stakeholders, which is the same stakeholder today. So it's a great question. Mobile Altadis, along as of today is our best guess. It feels like transactions and five transactions remain the biggest variable to whether that date moves forward or back a month or so.
Okay.

Dori Kesten

And what I guess what level of asset sales from this point on would remove the preferred equity stake from the transactions, it's probably pretty close story to [$1 for dollar], meaning if we sold an additional 300 then from here, we'd prefer to go away. I think, to David's point around, you know, the level of activity we're seeing, we feel pretty good that that's likely curve is just cash. No problem on that said, again, like the financing we have everything in place. We don't need to sell additional assets today, but it does feel likely based on the volumes of activity we've got going on that. It's likely that curve is simply cash?
Correct.
Thank you.

Operator

Patrick Rhodia's, Green Street.

Yes, good morning. And my question is about the in-place ABR for Cove. And I see it's 36 a foot and which is towards the high end of what I see for your peers for small shop. So I was wondering where do you see the market rent for your space today?

Yes, it's a good question calling out. And the reality is that you shop rents can vary dramatically in a larger property. In other words, the shops that are along the curve line up in the front of the property tend to have higher rents. The properties that we refer to as the shops there in the back of a property adjacent to a grocery store adjacent to a larger format, retailers tend to have lower rents. So it's not surprising that the outparcel buildings or multi-tenant pads that are along the high traffic intersection tend to generate the higher rents on the mark to market is a really good question, and I don't have a succinct answer on that part of the reason is that market rents for shops have been grown specifically coming out of the pandemic with a lot of that suburban migration. The cellphone data, which is telling us that a hybrid workforce is pretty entrenched on. You're just seeing a lot more tenant demand. And so a lot of the rents are growing at a pace that we're not really sure we don't have great data on, but the market market, it certainly presents.

I think an important if you look back our disclosure from October 30th under our new lease spreads averaged over 30% on the last four years with the current portfolio. I think one of the things we really like about the property type is that mark-to-market achievable, meaning the duration of the leases is such that we can actually get at that market rent as opposed to think about a grocery-anchored asset or a large from an asset, the biggest mark to market is with the biggest national tenants in the back, I either grocers someone else and you're never going to get at that mark-to-market. So it's an important differentiator of the property type that we really like is there's real mark-to-market and we can get at it and which isn't always the case in other open-air formats.

Thank you. And then my second question is you have matured that you're prioritizing dispositions and I wonder if it was at all a consideration trying to accelerate acquisitions to maximize and to [1,031]?

Yes, it's a really good question, Paul. And I just given this is a taxable spin, we're actually better off not a 1031 gains because it's actually then that gain has passed on the stakeholder.
So on the other point I would just make is we actually don't have material gains, I should say at a portfolio level. There are certain assets that have significant tax gains. But on a on an overall blended portfolio basis, I don't think it's significant relative the enterprise. So for both of those reasons, on the 1031 market is less of a focus for us today.

Thank you.

You're welcome.

Operator

Mike Mueller, JP Morgan.

Michael Mueller

Yes, hi. Just a few questions on curb for small deal. Can you give us a sense as to when we look at your blended rent spreads, how they would compare if you would break out mix up between curve and kind of the legacy site stuff that you want to sell?

Yes, there are some we haven't broken them out again to my question. Paulina response to point, excuse me, the spreads for the curve we provided in the October presentation. I will point out though there is a little bit different dumb approach or not a little bit. There is a different approach for curve. We are likely to include all spreads included in that, not just spreads that have a tenant moved out in the last 12 months for a variety of reasons.
One, we just it's a bigger pool to we think it's just a more relevant metric. But if you look with that kind of differentiated new approach, our spreads have averaged 30%. That's not dramatically different than site, and it's just the capital to get that spread is a lot lower.
So again, I'd point you back to the October 30th presentation, on just just the only caveat being that it's a little bit different approach and that includes all spaces, not just those vacant less than 12 months.

I'm sorry, I missed part of that. I think my signal went out for a little bit during that last question. And then one other question too on I guess in the supplemental, you typically break out redevelopment expansion. And I guess we're just looking at that. Is it safe to say that pretty much everything tied to that goes theoretically with that legacy site or when you look at the current portfolio a year out or so. Would you envision having some some activity like that, whether it's like a renovation or expansion and as well, just what's Innosight this up today for SITE Centers shops or framing him. That's new Starbucks pad that is part of occurred in university Hills. That is part of the curve as well.
But I'll defer to David on the ultimate path going forward, I certainly think that our our redevelopment activity will be minimal at best at this point on it's a renewals business. The purpose of the business is to buy real estate where we can raise rents with low CapEx. Having said that, the larger the portfolio gaps, the more renovation work is required here and there so I think we will have some activity, but I would not expect us to be having a large redevelopment component in the business.

Michael Mueller

Got it. Okay. Thank you.

Thanks, Mike.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to David Lukes for any closing remarks.

Thank you all for joining our call, and we will talk to you next quarter.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.