Wolfe taking ‘wait and see’ approach on Site Centers split, downgrades shares

As previously reported, Wolfe Research downgraded Site Centers to Peer Perform from Outperform and removed the firm’s prior $21 price target. Following an analysis of the earnings power of Site Centers as two entities, both Site and Curbline, the firm expects the earnings power of the two divided entities to be modestly below its prior estimates due to initial G&A dissynergies and higher interest costs due to the repayment of attractive in place debt. In the subsequent valuation, the firm assumes liquidation value for the remainco and a going concern valuation for the Curbline spinco but acknowledges “an enormous margin of error” in both its earnings assumptions and valuation so it is adopting a “wait and see” approach, the analyst tells investors.