SITE Centers Corp., SITC, currently carrying a Zacks Rank #3 (Hold), has gained 11.2% over the past month compared with the retail industry’s rally of 6.7%.
What’s Behind the Surge?
This Beachwood, OH-based retail real estate investment trust (REIT) has a portfolio of well-located properties in suburban and high-household-income regions of the United States, with a focus on tenants with necessity-based businesses and aggressive capital-recycling efforts which have enabled it to ride the growth curve.
Out with the Old, In with the New
SITE Centers announced plans to spin off its convenience retail assets into a separate, publicly-traded REIT — Curbline Properties Corp. (“Curbline”) — in late October 2023. The move is aimed at streamlining the company’s portfolio of retail properties, opening up scope to maximize value through leasing and tactical redevelopment efforts.
Prudent Measures and Positive Outlook
The spin-off is anticipated to drive net operating income and cash flow growth in the upcoming period and is likely to close in the second half of 2024, subject to certain customary closing conditions.
Strong Market Position and Agility
SITE Centers’ recent spin-off plans coupled with robust demand for retail real estate have aided its surge in stock price. The company’s aggressive capital-recycling efforts to enhance its portfolio quality augur well.
Given SITE Centers’ encouraging recent leasing pipeline and a significant portion of essential retail components in its shopping centers, the company remains well-poised for growth.
Balance Sheet and Concerns
SITE Centers exited third-quarter 2023 with $878 million of liquidity and investment-grade credit ratings, enabling it to capitalize on long-term growth opportunities. However, higher e-commerce adoption and limited consumers’ willingness to spend pose near-term concerns for the company.
Stocks to Consider
Other better-ranked stocks from the retail REIT sector are TANGER INC (SKT) and Urban Edge Properties (UE), each carrying a Zacks Rank #2 (Buy).
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