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Todd Thomas; Analyst; KeyBanc Capital Markets Inc.
Samir Khanal; Analyst; Evercore ISI
Floris Dijkum; Analyst; Compass Point Investigation
Ki-Kim; Analyst; Truist Securities, Inc.
Dori Kesten; Analyst; Wells Fargo Securities, LLC
Michael Mueller; Analyst; JPMorgan Chase
Operator
Hello and welcome to the fourth quarter 2023 operating effects convention of the SITE Centers. (Operator Instructions) Please note that this occasion is being recorded lately. Now I’d like to turn the floor over to Stephanie Ruys de Pérez, Vice President of Capital Markets. Please go ahead.
THANK YOU. Hello and welcome to the SITE Centers Q4 2023 Earnings Conference Call. I’m joined today by CEO David Lukes and CFO Conor Fennerty. In addition to the press release distributed this morning, we have posted our quarterly monetary supplement and a slide presentation on our online page at www. sitecenters. com, which are intended for our ready comments. During today’s call, please note that certain of our statements today would likely involve forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are subject to risks and uncertainties, and actual effects may differ materially from our forward-looking statements. Additional information can be found in our earnings press release and our filings with the SEC, including our most recent report on Forms 10-K and 10-Q. Additionally, we will discuss non-GAAP monetary measures in today’s call, adding FFO, operating FFO, and same-store net operating income, descriptions and reconciliations of those non-GAAP monetary measures along with directly comparable maximum GAAP measures can be discovered in today’s Quarterly Financial Supplement and Investor Presentation. At this time, I am excited to introduce you to our President and CEO, David Lukes.
Hello and thank you for participating in our quarterly prosuits call. The fourth quarter was significant for SITE Centers, to say the least, highlighted by the long-awaited announcement of the spin-off of the services portfolio within SITE Centers into a new and exclusive targeted expansion company, Curbline Properties. This announcement, along with nearly $1 billion in transaction activity, puts us on a dual path: developing our core blind portfolio through acquisitions and net pricing of SITE Center portfolio assets through divestitures and Asset control. We are only 3 months away from announcing the spin-off, however we have made really extensive progress on the business plans for the site and Kurt and there will be more progress to come. I’ll start with an update on the Curb line transition, go out to trading, then conclude with an update on the quarter and operations before turning the call over to Conor to brief him on the effect of all of this on the balance sheet and 2024 effects. Starting with a curved line, we began investing in commodity assets more than five years ago and after several years of transactional activity. Through monetary and tenant knowledge and research review and research, we are more confident than ever that the convenience store industry is differentiated and a unique expansion opportunity. As announced to take advantage of this opportunity, we are creating curbside housing as a first-come, first-serve read only that is differentiated from all other retail pricing and has what we believe is the greatest potential for bio-money flow expansion. superior, driven by annual bumps, resilience and market valuation sets, a diverse and high-quality tenant pool with minimal concentration risk and limited investment needs compared to other housing types. Same-store NOI for the existing curbside portfolio is expected to grow 4. 5% in 2024, averaging over 3% over the next 3 years when all of those attributes are taken into account. As of year-end, Curvelines’ portfolio includes 65 freehold convenience homes that are expected to generate approximately $76 million in NOI in 2024. Those assets all share common characteristics, adding appropriate visibility. access and what we consider compelling economics evidenced through limited capital expenditure. needs. What we have today represents arguably the largest portfolio of the highest quality services in the United States. These homes, which primarily cater to Aaron’s regular clientele, are an integral component of a suburban lifestyle, which has only become more entrenched with increased suburban migration and the rise of hybrid and combination paints with a balance of fact unmatched, without With a notable flow of debt or money and desired investments available, sidewalk homes are expected to generate the best expansion and profitability for stakeholders. As of today, we expect the spin-off to be completed around October 1 of this year. Based on transactions completed to date, we now expect Curve to be capitalized with $600 million in money, which is $100 million more than a few months ago in money and investments in SITE brokers. As for divestitures, the curve will most likely not be considered a desired investment and will simply be capitalized with no debt and $600 million of liquidity. At this point, turning to transactions, we sold $736 million of freehold homes in the fourth quarter. quarter at a total capitalization rate of 6. 5%. At the end of the fiscal year, we sold another $82 million. To date, the speed of disposals has remained physically powerful and the pricing of those assets has remained strong, resulting in just about $750 million in existing real estate, either under letter of intent or in negotiations. of contract, at a maximum combined rate of around 7%. of this stock is mainly composed of dominant force intermediaries in the submarket, and approximately 30% of the assets across the price contain a classic dealer. Needless to say, the benchmark is a testament to the quality of SITE’s midstream portfolio and highlights the opportunity we learned about with the spinoff announcement. Over the past six years, this enforcement team has sold more than $7 billion through food purchasing intermediaries; Through this process, John Catena and his team have acquired a deep understanding of clients seeking high-end assets. quality. These components come with a wide diversity of market components, adding personal clients and public threats. Either way, those clients know the assets, they know our submarkets, and sometimes they are unleveraged clients of high-quality real estate. SITE’s brokerage portfolio fits this mold as it was thoughtfully decided upon through the spin-off of RVI and our joint venture continues and remains incredibly attractive to a wide diversity of clients looking to invest in outdoor advertising real estate. The retail operating environment has changed dramatically. After a pandemic with limited sources and increased demand from a broader set of tenants, products are expected to help the fundamentals of the sector in the coming years. Favorable macroeconomic points as well as the company’s express points such as locations, the ethanol pipeline, which represents 4. 2% of adjusted base rents, as well as redevelopment deliveries and vacant equipment rentals, deserve generate a really significant expansion of the NOI over time. These two points, combined with our knowledge of the client universe, as well as the sector and the fast tailwinds, make us very self-confident and allow us to maximize the price on other sites of those houses through the sale of assets in the personal market. The site is expected to continue focusing on this attractive price discovery and NAV arbitrage opportunity. in terms of acquisitions. We secured 4 convenience homes for $62 million during the quarter, as well as Charlotte, Cape Coral, Atlanta and Phoenix. Source of median household income for the fourth quarter, investments will exceed $104,000 and a weighted average rental rate of almost 100%, highlighting our focus on acquisitions. housing where renovations and lease increases drive expansion without significant capital expenditure. Looking ahead, we remain motivated by unique opportunities in the convenience subsector, which adds to the duration of the opportunity itself. The addressable market for commodity ASSETS, according to CAPI, is 950 million square feet. Curbline’s existing portfolio of 2. 2 million square feet represents a quarter of 1% of the total US stock, which means we have plenty of room to grow. That said, while we plan to acquire more homes before the spin-off, we are prioritizing divestitures to take advantage of the demand for site assets, which will act as a sort of regulator of acquisition volume in 2024. Ultimately, during the quarter . and operations, we had a very productive fourth quarter with effects above budget. Our asset operations groups continue to do an excellent job of getting tenants open ahead of schedule, which contributed in part to our outperformance this quarter. Overall, quarterly rental volume declined sequentially, but this was largely due to a smaller portfolio and lower availability. Demand for Array Leasing remains very strong from existing stores and service tenants expanding into key suburban markets, as well as new concepts. competing for the same speed. Despite strong execution from our leasing team, our leasing rate was [down 10%] – [10 basis points] sequentially due to a 50 basis point headwind due to significant asset sales in the fourth quarter, from of which on average 98% were rented. Looking ahead, we have another 350,000 square feet in lease negotiations, adding all the remaining square feet of our Bed Bath, which we expect to be completed over the next two quarters with similar margins and economics as the numbers. of the last 12 months reported today. We continue to expect the graduation of our signed leases to be the significant driving force of our NOI expansion in the same homes during 2024. Before turning the call over to Conor, he would like to thank everyone on the SITE Centers team for their paintings that led to this announcement. And in recent months, the impact on Curbline homes has become imaginable through the work of everyone in the organization, positioning us for expansion. We firmly believe that the compelling opportunity before us is to create a meaningful price for the business. the company’s interest groups. And with that, I give way 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 are now in a position to answer questions.
Operator
Now we’ll log in and respond. (Operator’s Instructions) Alexander Goldfarb, Piper Sandler.
Hey HELLO. Hello, I’m stopping by some quick payment mornings. First and foremost, David, you’re not describing an IVR-type entity for the existing site, but it’s still hard not to think about the site. That will eventually stick to the path, so to speak, especially at the speed of the designs that you’re making. And it’s transparent that the guide is aimed at the sidewalk. So, can you give us a little more color on how?Do we think about SITE One after October 1, 2024?
Of course. I’ll be satisfied with that. I think it depends on the signals we get from the public markets and the signals we get from the personal markets. And at this point, the signals are very strong that the personal market is valuing assets at a higher value. So we pay attention to the signals and will continue to sell assets if this continues. So, those asset sell-offs, I think they’re probably going to pick up again, you can see the scale of activity that we have right now at values that I think are very strong. So for the future, all I can say is the time between now and the rotation date. We will continue to sell assets and reconsider what the strategy is and what the bottom line will be 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.
Of course. Well, as far as cap rates go, you and I have discussed this many times, it’s hard to pin down cap rates when the number of deals is small here and there, I will say that on the assets closed in the fourth quarter they averaged [ 6. 5% capitalization]. , had a wide diversity of formats as well as a very wide diversity of capitalization rates. We sold some assets in the [low 5] and we sold some assets in the [top 7] in this next organization where we are under LOI. We have reached agreements and are beginning to negotiate contracts. Is the same. Some houses have [under 6]. Some houses are [top 7]. So I think the average is an attractive mark, and I think the average from [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 number of additional homes we have will increase or decrease. What I found is that personal market players are less focused on the retail format and are more intrigued by credit quality, the submarket where the asset is located in the lease term. And in that sense, the SITE center portfolio fits the mandate of many personal shoppers, because we are in a high-income demographic. Leases have been so physically powerful over the last two or three years that the term is strong and weaker tenants like Bed Bath and beyond have largely exited the pipeline. Therefore, there is a sense that personal market participants are achieving an increase in the price of those assets, which means that we are fulfilling those mandates. As you know, one of the things that also contributes to a lot of activity is the presence of a grocery store. And today we still have more than 2,000 centers in our portfolio to which a food store is attached. And average sales are high with some of them exceeding $1,000 per square foot. So I think the valuation that we’ve noted turns out to be consistent with what I would expect in the coming months. be sure. So our view on capped rates is that buyers look at the price in that term and the quality of the credit. And we see the results. On the buyer’s side, when we buy local homes, the main difference between what we sell and what we buy is that expansion and the cost of that expansion. So if we can offer a much larger number of the same stores, the cost of generating it is particularly lower. I agree with you that the unlevered IRR on convenience homes is higher than what we sell today.
Thank you.
Thanks, Alex.
Operator
Craig Mailman, Citi.
More or less, track sales, at least if, over the last two quarters, it averaged close to $800 million per quarter. They’ve given you $750 million under contract, just over $750 million, how much is advertised? Right now, not at a contract or letter of intent level, but close enough to give us an idea of what the cadence might be for the rest of the year, because it sounds like you’ve already done that. What happens to the remaining $3. 5? billion to sell Pro Formative [$750 million]. Is this the right type from a volume point of view?
Of course, Craig is David. Es a little tricky to listen to, but I think what he’s asking is what’s the total volume of assets that we trade, right?Is that where it’s going?
Yes, I’m sorry, I’ll speak louder on my phone. Yes, the overall volume it trades today and the undeniable fact that it is $750 million, is a fairly similar cadence to what it did in the fourth quarter. So, can this kind of quarterly run rate be achieved here?And as we think about what happens in the end, that equates to about $3. 5 billion. Is this also the right way to think about what’s left here in the short term?
Well, I would say right now under the letter of intent and negotiating the transaction. Like I said, that’s about $750 million. There are about 2,000 more homes that are subject to various bureaucracy marketing to middlemen. And that equates to a fund of about $800 million that will be released in the next 30 days. And the real question is how many of those transactions will be completed?There were houses that we didn’t like and didn’t negotiate there, there were conditions where a client was looking to consolidate some assets into a small portfolio, which sped up the process. So it all comes down to how much time John’s team has to make changes?Or is it in smaller teams or larger portfolios?So, it’s very complicated for me to say that if we close $800 million in the fourth quarter, we’ll get another $750 million and then another $800 million is in the early stages of commercialization. It seems like there’s still a lot of volume.
What I don’t know is how much of this is closed and how much of Todd is actually negotiating. It can be reduced to a single slippage from a time standpoint, just a little bit of cadence compared to David’s point when the assets are listed, and so on. We’ll probably see a pause between the December shutdowns we had and the next batch, which means it’s probably going to be in a month or two and just to give you some context. So, it’s most likely going to be a $750 million run rate now in the first quarter, but to David’s point, depending on how much we have under letter of intent or under contract plus stainless steel, we may see a lot more volume in the moment and 3rd quarters. Regarding your inquiry during the assessment, we provide the projected NOI levels for the site and sidewalk. So I’ll leave it up to you what kind of compounding rate you should set, but it’s worth giving you an idea of how long the remaining asset base will last.
No, it’s useful. And David, in terms of, you know, the good fortune rate, in your opinion, what’s the good fortune rate in the sales resolution type compared to what’s advertised here?And how do you translate that kind of I think you’re at the end of the day, what are the characteristics that determine the value that you get versus maybe some offers that don’t fit?And to what extent, apart from the type of configuration or some of those offers. “And why not right at this point, given that you’re acting the stent, I mean, the ball is so low that it does. Does it make sense to settle for them instead of waiting for higher values here, since we have to finish this wallet anyway?
Yes it was. I would say that in the fourth quarter the spread between bid and ask was a little smaller. Therefore, we have chosen not to transact on certain properties. What appears to have replaced, Craig, as capital flowed in the second part of last year, several value-add buyers were contemplating strips. And I think most of what we sold in the fourth quarter was off-market, where John had relationships with 1,031 investors or strategic investors in a given market. What seemed to change in the first quarter is that there is simply more capital allocated to the core-plus prime and long-term slots. And the buildup of institutional interest over the past 30 days has been notable. So my sense is that the bid-ask spread has increased, the amount of capital seeking core real estate has increased, the point of confidence among mainstream buyers that the sector has very smart fundamentals and the tailwinds seem more powerful. For me, transaction activity will probably remain quite high. That’s why I think the smart fortune rate is probably higher than in the second part of last year.
And then just one last one. Just know that we’re a few months away from the initial announcement here. So do you have more clarity on the control layout, the overhead and administrative overhead, the payout layout that comes with this between the view and the curb?
It should be remembered that the purposes of these two corporations are very different. One gets smaller and the other grows. And to facilitate this transition, the shared facilities that we will establish between the two corporations will allow those G
And Craig, if you’re thinking about going back to my comment about the projections, we have the NOI diversity because we’re really giving you the coins for a sum of the coins. And getting back to David’s point, as we get closer to that rotation, don’t forget that we’re still out for over six months. You will begin to see us evolve more towards the winning story genre and give the ingredients and the coins. The Form-10 is notoriously a vital tool. component of this. Again, I think the data varies, much like how we offer more data today instead of October over the next few months.
Super. Thank you.
Thank you Craig.
Operator
Todd Thomas, KeyBanc.
Thomas Thomas
First of all, could you expand Kerr’s investment portfolio a bit in the market today?Just in terms of the product you see and the price. And I think, David, you said you’re focusing on the I Site Designs today, but I’m curious to know how we think about the volume of upcoming carbon acquisitions 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.
Thomas 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.
That’s Conor. Bonjour. There are several points to consider. The maximum is just the S-pipeline.
Thomas Thomas
Well, that makes sense. And one last point, actually, David, that you’ve discussed now, I’m thinking twice, you know, the growing appetite for real estate advertising from the end of the year to the beginning of the year here. Is the disposition activity the most productive and deserves to be executed on a sole ownership basis?Or is there an appetite for a portfolio sale or something more prominent in the market position that is being positioned today in the designs of the SITE?
That remains to be seen, Todd. De fact, we have an open mind to wallets because it makes our task a little easier. And there have been conversations with various teams about potential portfolios, but we’re also value-sensitive and there’s been a lot of personal conversations. Capital you need [1,031] or that you know the submarket likes an asset and in some cases it just means it’s worth the extra paints because of the value. I’ll also be curious to see if the wallets go through. And if we continue more with one-time transactions, I’ll be curious, but I don’t know.
Thomas Thomas
OK thanks.
Thanks, Todd.
Operator
Samir Khanal, Evercore ISI.
Samir Khanal
David, of the $750 million under contract, power plants have a [limit of seven]. And with that, it may be a positive read for the market, given that some other people possibly think it’s closer to an [eight]. ] type of what you have left to sell. So give us a little bit more color about I don’t know, like the geographic regions where those assets are. Is it just some kind of wallet-type arrangement? Or do you just take a look around to give the force centers a little more color?
Yes, Sameer. First, simply that when I didn’t say under contract, I said awarded under a letter of intent or in the contract negotiation procedure. Therefore, some of them may fall and be replaced by others. But we thought that was when it was vital to provide at least some data on the volume and the type of pricing we apply today, because it is relevant. And I feel like what we’re doing today is pretty consistent. Since the majority of the portfolio is made up of the assets we recently traded, the contracts are spread across the country. They are in other retail formats and about 30% of them have classic groceries at about 70% off. And some of them are bigger assets, some of them are smaller assets. And to me, that turns out to be a pretty smart combination of most of our portfolio. I would say that there are some assets that we haven’t traded yet that are better, that are the highest volume, and there are some assets that we have that are not included in this and that are probably worse. rentals in. But overall, I feel like this is a pretty consistent reading for most of the portfolio.
Samir Khanal
Okay, I understand. And I guess my moment is about Curbline. I know you said I didn’t have debt to begin with, but I guess what’s the long-term leverage plan or even the equity allocation for the curve right now?THANK YOU.
Hi Samir, I’m Connor, hi, Dave and I discussed that starting today we expect $300 million in turnacircular money and an estimated investment of $300 million dollars. However, going back to David’s point, if we continue to sell assets, we will probably only reach $600 million in liquidity, let’s say that. Yes, I think we have $1. 2 or $1. 3 billion in GAV today. Now, coming back to Tom’s point, we plan to raise more assets, let’s say between $25 million and $50 million depending on the quarter. So in circular numbers, you’re talking about a GAV of, let’s call it, $1. 4 billion and $600 of money and consistent with maybe, let’s call it $2 billion of initial turnover time. I think it’s fair to assume that this curve would use that money to deploy capital, and once you’ve used that money, the question is, what is your leverage type trajectory or trajectory? And there we will see. We’ll see how it goes. I mean, I think if you look at our corporate centers or SITE over the last six years, at times we have tried to maintain a track record that is consistent or even better than the peer group. And I think the restriction is fair. to see if it is fair to assume, excuse me, that it is a similar path. That said, it’s a way out as of now. So let’s see what we do from there. But again, I think it’s fair to assume that this is simply a consistent boundary structure, to the extent that we have a site today. I don’t know if this helps answer your question.
Samir Khanal
It’s not. That’s it for me. Thanks guys.
Thanks, Samir.
Operator
Floris Van Dijkum, Compass Point.
Floris Dijkum
Hi, guys. It looks like you’ll be busy over the next few months, with some pretty interesting new concepts and further growth, as you say. I’m just curious to know some of the pricing involved. You talked about the commitments you made to the debt of the $1. 1 billion loan. Could you tell us what the charge of that commitment is and what the charge of that debt would be?And then secondly, that component. You said debt is tied to 40 assets, I think after turnover. Did you already know those assets? Presumably, lenders will need to know what assets the credits extend over. And are those assets some of your most productive assets or maybe they provide a bit of detail about what’s left, so you can expect them to be part of the site after the rotation?
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
Thank you, Conor (several speakers)
Am I the answer to this component 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 vital asset because we built it from the ground up, literally, asset after asset. So, here both one and both, we’re satisfied with the fact that the overall metrics are on page 15, the floors at which the comparisons are made, I guess it’s hard to answer your point about David’s point about exclusions being around 25. %, perhaps slightly higher than the global portfolio in terms of ABR. But rarely does it reduce both one and both days, as we buy assets. And if you think about a few years, the balance sheet query is about $1. 2 billion of GAV today and we exclude or we call it $300 million, $400 million, out of that amount, as we deploy $2 billion or $3 billion, the exclusions dropped to a pretty negligible amount. Again, we are satisfied with both exclusions. We are pleased to own them and have chosen them carefully. But this type of portfolio subset will diminish over time as we mobilize or at least deploy liquidity.
Floris Dijkum
Thanks guys.
Operator
Ki Bin Kim with Truist.
Ki-Kim
I have some articles on housework here. When you list the maximum fees on your transfers, can you tell us what your definition is?
And if it comes with asset control fees and things like that, well, we have even more fees in mind, just a definition of the maximum rate, which is a 12-month term NOI, adding control fees.
Ki-Kim
It is ok. And in its NOI projection of $250 million for the SITE Center portfolio. I’m guessing it’s from [1231], wallet 2023. And if it can only provide a higher level, what does that mean from the NOI of it?store?
Yes, you’re right. That includes the two assets that were sold in January or February to date, and has adapted to them. So yes, we gave it the balance sheet and analyzed it in 1231. So that’s a smart record. It’s a good point to point out why we don’t provide a screening for SITE centers for a number of reasons. And the most important reason, and this is something, that David and I alluded to in our opening remarks, is that it just loses its relevance. So we sold $1 billion worth of real estate in the fourth quarter. None of those assets had a Bed Bath
Ki-Kim
It is ok. THANK YOU.
Operator
Dori Castaigne, Wells Fargo.
Dori Kesten
Thanks, disclaimer, what would you call October a company timeline for pivoting right now or maybe just more significant sales get things done or generate 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 I’m guessing the goal of asset promotion from that point on would remove the desired equity stake from deals, it’s probably pretty close to [$1 to the dollar], which means that if we were to sell another 300, from now on, it would move away. I think, in terms of David’s point, you know, the point of activity that we’re seeing, we think rather this curve is probably just for cash. There’s no challenge with that, again, as with financing, we have everything in place. We don’t want to sell any more assets today, but it turns out that most likely, given the volume of business we have in this area. Is it more likely that this curve is only effective?Right. Thank you.
Operator
At Patrick Rhodia’s house, Verte Street.
Yes, hello. And my question is about the ABR in position for Cove. And I see that it’s 36 a foot and that’s towards the higher end of what I see for its small store peers. So I’m wondering where you see the hiring market position for your area 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 it’s vital if you take a look at our October 30th disclosure that our new lease spreads averaged over 30% over the last 4 years with the curhire portfolio. I think one of the things that we literally like about these types of assets is that the market valuation is achievable, meaning that the length of leases is such that we can actually hit the rent in the market rather than thinking of an asset anchored in a grocery store or a giant component of an asset. The highest market price is with the largest domestic tenants in the back, or I buy it from someone else and you’ll never get that price on the market. So, it’s a vital differentiator of the type of assets we literally price, because there’s a true valuation based on the market. valuation and we can achieve it, which rarely happens in other outdoor 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]?
I just said it’s a taxable version, we’re better off, there’s no 1031 earnings, because that’s when that profit is passed on to the stakeholder. So, on the other point, I’d just like to underline that we don’t have big gains, I deserve to say it at the portfolio level. Some assets generate significant tax gains. But based on an overall combined portfolio, I don’t think it’s significant compared to the company. So, for those two reasons, the 1031 market has less priority for us today.
Thank you.
You are welcome.
Operator
Mike Mueller, JP Morgan.
Michael Mueller
Just a few questions on the sidewalk for a little matter. Can you give us an idea of how we’re going to look at your weighted rent variations, how they would compare if you were to distinguish between the curve and the existing site type?Do you need 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
They gave it to me. It is ok. Thank you.
Thanks Mike.
Operator
This concludes our question and answer session. I would like to turn it over to David Lukes for any final comments.
Thank you all for joining our call and we will contact you next quarter.
Operator
The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.