SITE Centers Reports First Quarter 2024 Results

SITE Centers Corp. (NYSE: SITC), an owner of open-air shopping centers in suburban, high household income communities, announced today operating results for the quarter ended March 31, 2024.

“SITE Centers made additional progress on the announced planned spin-off of the Company’s Convenience assets in the first quarter highlighted by $189 million of year-to-date transaction activity and remains on track to form and scale what is expected to be the first public real estate company focused exclusively on Convenience properties,” commented David R. Lukes, President and Chief Executive Officer. “We remain excited by the prospects and opportunity set for both SITE Centers and Curbline Properties and believe both companies remain positioned to achieve their business plans and create stakeholder value.”

Results for the First Quarter

• First quarter net loss attributable to common shareholders was $26.3 million, or $0.13 per diluted share, as compared to net income of $12.5 million, or $0.06 per diluted share, in the year-ago period. The decrease year-over-year primarily was the result of the impact of net property dispositions and impairment charges, partially offset by higher gain on sale from dispositions.
• First quarter operating funds from operations attributable to common shareholders (“Operating FFO” or “OFFO”) was $59.8 million, or $0.28 per diluted share, compared to $62.7 million, or $0.30 per diluted share, in the year-ago period. The decrease year-over-year primarily was due to the impact of net property dispositions, partially offset by property net operating income ("NOI") growth and increased interest income.

Significant First Quarter and Recent Activity

• SITE Centers sold five wholly-owned shopping centers in the first quarter and second quarter to date for an aggregate price of $169.6 million including three wholly-owned shopping centers sold during the first quarter for an aggregate price of $119.4 million.
• Acquired two convenience shopping centers during the first quarter for an aggregate price of $19.1 million, including Grove at Harper's Preserve (Houston, TX) for $10.6 million and Shops at Gilbert Crossroads (Phoenix, AZ) for $8.5 million.
• During the quarter, repurchased $61.6 million aggregate principal amount of outstanding senior unsecured notes due in 2025 and 2026 for a total consideration, including expenses, of $60.8 million and recorded a gain on retirement of debt of approximately $0.8 million.
• During the quarter, recorded impairments of $66.6 million due to changes in hold period assumptions for three wholly-owned assets. Two of the properties, representing $55.7 million of the first quarter impairment, were development projects commenced in 2007 and 2010. These properties were 96.6% leased as of March 31, 2024.
• In October 2023, announced the expected spin-off of the Company’s Convenience assets into a separate publicly-traded REIT to be named Curbline Properties Corp. (“Curbline Properties” or “CURB”). The spin-off is expected to be completed on or around October 1, 2024. As of March 31, 2024, the Company has amassed a portfolio of 67 wholly-owned properties to be included in the CURB portfolio, including assets separated or in the process of being separated from SITE Centers properties. The transaction is subject to certain conditions, including the effectiveness of CURB’s Form 10 registration statement and final approval and declaration of the distribution by SITE Centers' Board of Directors.
• In October 2023, obtained a commitment from affiliates of Apollo, including ATLAS SP Partners, to provide a $1.1 billion mortgage facility to be secured by 40 properties with flexibility to reduce the commitment or loan balance with proceeds from asset sales or other sources of capital. The mortgage is expected to be funded prior to the spin-off date with loan and additional asset sale proceeds expected to be used to retire all unsecured debt, including all outstanding public notes, prior to the spin-off of CURB. In the first quarter of 2024, the Company released two properties that had previously been identified to serve as collateral for the facility, thereby reducing the committed amount to $1.0 billion as of March 31, 2024. The Company expensed $0.7 million of fees related to the facility in the first quarter as a result of the property releases.

Key Quarterly Operating Results

• Reported an increase of 1.5% in same-store net operating income (“SSNOI”) on a pro rata basis for the first quarter of 2024 as compared to the year-ago period which included a 310 basis-point headwind due to lost revenue related to the bankruptcy of Bed Bath & Beyond.
• Generated cash new leasing spreads of 29.0% and cash renewal leasing spreads of 6.5%, both on a pro rata basis, for the trailing twelve-month period ended March 31, 2024 and cash new leasing spreads of 11.5% and cash renewal leasing spreads of 8.0%, both on a pro rata basis, for the first quarter of 2024.
• Generated straight-lined new leasing spreads of 40.3% and straight-lined renewal leasing spreads of 11.0%, both on a pro rata basis, for the trailing twelve-month period ended March 31, 2024 and straight-lined new leasing spreads of 26.9% and straight-lined renewal leasing spreads of 12.4%, both on a pro rata basis, for the first quarter of 2024.
• Reported a leased rate of 94.2% at March 31, 2024 compared to 94.5% at December 31, 2023 and 95.9% at March 31, 2023, all on a pro rata basis.
• As of March 31, 2024, the Signed Not Opened (“SNO”) spread was 260 basis points, representing $13.1 million of annualized base rent on a pro rata basis.

Property NOI Projection

The Company projects, based on the assumptions below, 2024 property level NOI to be as follows:

Portfolio		NOI Projection ($M)
SITE Centers		$252.8 – $260.6
Curbline Properties		$76.9 – $80.2

These projections:

• Calculate NOI pursuant to the definition of NOI used in the SSNOI calculation as described below, except that it includes lease termination fees, assumes all SITE Centers properties owned as of March 31, 2024 are held for the full year 2024 and includes NOI for Curbline Properties assets acquired in 2024 from the date of acquisition,
• Assume 2024 SSNOI growth of 3.5% – 5.5% for Curbline Properties,
• Exclude from NOI G&A allocated to operating expenses which totaled $2.6 million in 1Q2024, or $10.2 million annualized and
• Adjust NOI for the estimated impact of remaining expected parcel separations and includes NOI for SITE Centers from its Beachwood, OH office headquarters.

In reliance on the exception provided by Item 10(e)(1)(i)(B) of Regulation S-K, reconciliation of the projected NOI and assumed range of 2024 SSNOI growth to the most directly comparable GAAP financial measure is not provided because the Company is unable to provide such reconciliations without unreasonable effort due to the multiple components of the calculations which for the same-store calculation only includes properties owned for comparable periods and excludes all corporate level activity as described below under Non-GAAP Measures and Other Operational Metrics.

About SITE Centers Corp.

SITE Centers is an owner and manager of open-air shopping centers located in suburban, high household income communities. The Company is a self-administered and self-managed REIT operating as a fully integrated real estate company, and is publicly traded on the New York Stock Exchange under the ticker symbol SITC. Additional information about the Company is available at www.sitecenters.com. To be included in the Company’s e-mail distributions for press releases and other investor news, please click here.

Conference Call and Supplemental Information

The Company will hold its quarterly conference call today at 8:00 a.m. Eastern Time. To participate with access to the slide presentation, please visit the Investor Relations portion of SITE's website, ir.sitecenters.com, or for audio only, dial 888‑317‑6003 (U.S.), 866-284-3684 (Canada) or 412-317-6061 (international) using pass code 7262807 at least ten minutes prior to the scheduled start of the call. The call will also be webcast and available in a listen-only mode on SITE Centers’ website at ir.sitecenters.com. If you are unable to participate during the live call, a replay of the conference call will also be available at ir.sitecenters.com for further review. You may also access the telephone replay by dialing 877-344-7529 (U.S.), 855-669-9658 (Canada) or 412-317-0088 (international) using passcode 4967980 through May 30, 2024. Copies of the Company’s supplemental package and earnings slide presentation are available on the Company’s website.

Non-GAAP Measures and Other Operational Metrics

Funds from Operations (“FFO”) is a supplemental non-GAAP financial measure used as a standard in the real estate industry and is a widely accepted measure of real estate investment trust (“REIT”) performance. Management believes that both FFO and Operating FFO provide additional indicators of the financial performance of a REIT. The Company also believes that FFO and Operating FFO more appropriately measure the core operations of the Company and provide benchmarks to its peer group.

FFO is generally defined and calculated by the Company as net income (loss) (computed in accordance with generally accepted accounting principles in the United States (“GAAP”)), adjusted to exclude (i) preferred share dividends, (ii) gains and losses from disposition of real estate property and related investments, which are presented net of taxes, (iii) impairment charges on real estate property and related investments, (iv) gains and losses from changes in control and (v) certain non-cash items. These non-cash items principally include real property depreciation and amortization of intangibles, equity income (loss) from joint ventures and equity income (loss) from non-controlling interests and adding the Company’s proportionate share of FFO from its unconsolidated joint ventures and non-controlling interests, determined on a consistent basis. The Company’s calculation of FFO is consistent with the definition of FFO provided by NAREIT. The Company calculates Operating FFO as FFO excluding certain non-operating charges, income and gains/losses. Operating FFO is useful to investors as the Company removes non-comparable charges, income and gains/losses to analyze the results of its operations and assess performance of the core operating real estate portfolio. Other real estate companies may calculate FFO and Operating FFO in a different manner.

The Company also uses NOI, a non-GAAP financial measure, as a supplemental performance measure. NOI is calculated as property revenues less property-related expenses. The Company believes NOI provides useful information to investors regarding the Company’s financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level and, when compared across periods, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and disposition activity on an unleveraged basis.

The Company presents NOI information herein on a same store basis or “SSNOI.” The Company defines SSNOI as property revenues less property-related expenses, which exclude straight-line rental income and reimbursements and expenses, lease termination income, management fee expense, fair market value of leases and expense recovery adjustments. SSNOI includes assets owned in comparable periods (15 months for prior period comparisons). In addition, SSNOI is presented including activity associated with redevelopment. SSNOI excludes all non-property and corporate level revenue and expenses. Other real estate companies may calculate NOI and SSNOI in a different manner. The Company believes SSNOI at its effective ownership interest provides investors with additional information regarding the operating performances of comparable assets because it excludes certain non-cash and non-comparable items as noted above.

FFO, Operating FFO, NOI and SSNOI do not represent cash generated from operating activities in accordance with GAAP, are not necessarily indicative of cash available to fund cash needs and should not be considered as alternatives to net income (loss) computed in accordance with GAAP, as indicators of the Company’s operating performance or as alternatives to cash flow as a measure of liquidity. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures have been provided herein. In reliance on the exception provided by Item 10(e)(1)(i)(B) of Regulation S-K, reconciliation of the projected NOI and assumed rate of 2024 SSNOI growth to the most directly comparable GAAP financial measure is not provided because the Company is unable to provide such reconciliations without unreasonable effort due to the multiple components of the calculations which for the same-store calculation only includes properties owned for comparable periods and excludes all corporate level activity as noted above.

The Company calculates Cash Leasing Spreads by comparing the prior tenant's annual base rent in the final year of the prior lease to the executed tenant's annual base rent in the first year of the executed lease. Straight-Lined Leasing Spreads are calculated by comparing the prior tenant's average base rent over the prior lease term to the executed tenant's average base rent over the term of the executed lease. For both Cash and Straight-Lined Leasing Spreads, the reported calculation includes only comparable leases which are deals executed within one year of the date that the prior tenant vacated. Deals executed after one year of the date the prior tenant vacated, deals which are a combination of existing units, new leases at redevelopment properties, and deals for units vacant at the time of acquisition are considered non-comparable and excluded from the calculation.

Safe Harbor

SITE Centers Corp. considers portions of the information in this press release to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, with respect to the Company's expectation for future periods. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. For this purpose, any statements contained herein that are not historical fact, including statements regarding the Company's projected operational and financial performance, strategy, prospects and plans, may be deemed to be forward-looking statements. There are a number of important factors that could cause our results to differ materially from those indicated by such forward-looking statements, including, among other factors, general economic conditions, including inflation and interest rate volatility; local conditions such as the supply of, and demand for, retail real estate space in our geographic markets; the consistency with future results of assumptions based on past performance; the impact of e-commerce; dependence on rental income from real property; the loss of, significant downsizing of or bankruptcy of a major tenant and the impact of any such event on rental income from other tenants and our properties; our ability to enter into agreements to buy and sell properties on commercially reasonable terms and to satisfy closing conditions applicable to such sales; our ability to complete the spin-off of Curbline Properties in a timely manner or at all; our ability to secure equity or debt financing on commercially acceptable terms or at all; redevelopment and construction activities may not achieve a desired return on investment; impairment charges; valuation and risks relating to our joint venture investments; the termination of any joint venture arrangements or arrangements to manage real property; property damage, expenses related thereto and other business and economic consequences (including the potential loss of rental revenues) resulting from extreme weather conditions or natural disasters in locations where we own properties, and the ability to estimate accurately the amounts thereof; sufficiency and timing of any insurance recovery payments related to damages from extreme weather conditions or natural disasters; any change in strategy; the impact of pandemics and other public health crises; unauthorized access, use, theft or destruction of financial, operations or third party data maintained in our information systems or by third parties on our behalf; our ability to maintain REIT status; and the finalization of the financial statements for the period ended March 31, 2024. For additional factors that could cause the results of the Company to differ materially from those indicated in the forward-looking statements, please refer to the Company's most recent reports on Forms 10-K and 10-Q. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

	SITE Centers Corp. Income Statement: Consolidated Interests
	in thousands, except per share
			1Q24		1Q23
	Revenues:
	Rental income (1)		$119,592		$135,872
	Other property revenues		1,029		961
			120,621		136,833
	Expenses:
	Operating and maintenance		20,544		23,166
	Real estate taxes		16,738		20,053
			37,282		43,219
	Net operating income (2)		83,339		93,614
	Other income (expense):
	JV and other fee income		1,470		1,859
	Interest expense		(18,913)		(19,923)
	Depreciation and amortization		(43,150)		(54,016)
	General and administrative		(11,072)		(10,645)
	Other income (expense), net (3)		(105)		(687)
	Impairment charges		(66,600)		0
	(Loss) income before earnings from JVs and other		(55,031)		10,202
	Equity in net income of JVs		17		1,359
	Gain on sale and change in control of interests		0		3,749
	Gain on disposition of real estate, net		31,714		205
	Tax expense		(252)		(213)
	Net (loss) income		(23,552)		15,302
	Non-controlling interests		0		(18)
	Net (loss) income SITE Centers		(23,552)		15,284
	Preferred dividends		(2,789)		(2,789)
	Net (loss) income Common Shareholders		($26,341)		$12,495
	Weighted average shares – Basic – EPS		209,419		209,971
	Assumed conversion of diluted securities		0		436
	Weighted average shares – Diluted – EPS		209,419		210,407
	(Loss) earnings per common share – Basic		$(0.13)		$0.06
	(Loss) earnings per common share – Diluted		$(0.13)		$0.06
(1)	Rental income:
	Minimum rents		$76,062		$88,973
	Ground lease minimum rents		5,444		6,469
	Straight-line rent, net		680		676
	Amortization of (above)/below-market rent, net		1,152		1,185
	Percentage and overage rent		1,927		1,151
	Recoveries		29,682		35,316
	Uncollectible revenue		355		233
	Ancillary and other rental income		1,236		1,757
	Lease termination fees		3,054		112
(2)	Includes NOI from wholly-owned assets sold in 1Q24		937		N/A
(3)	Interest income (fees), net		7,294		(23)
	Transaction costs		(3,398)		(664)
	Debt extinguishment costs		(665)		0
	Gain on debt retirement		760		0
	Loss on equity derivative instruments		(4,096)		0

SITE Centers Corp. Reconciliation: Net Income to FFO and Operating FFO and Other Financial Information
	in thousands, except per share
		1Q24		1Q23
	Net (loss) income attributable to Common Shareholders	($26,341)		$12,495
	Depreciation and amortization of real estate	41,819		52,717
	Equity in net income of JVs	(17)		(1,359)
	JVs' FFO	1,584		1,982
	Non-controlling interests	0		18
	Impairment of real estate	66,600		0
	Gain on sale and change in control of interests	0		(3,749)
	Gain on disposition of real estate, net	(31,714)		(205)
	FFO attributable to Common Shareholders	$51,931		$61,899
	Gain on debt retirement	(760)		0
	Loss on equity derivative instruments	4,096		0
	Transaction, debt extinguishment and other (at SITE's share)	4,139		829
	Other charges	395		0
	Total non-operating items, net	7,870		829
	Operating FFO attributable to Common Shareholders	$59,801		$62,728
	Weighted average shares & units – Basic: FFO & OFFO	209,419		210,112
	Assumed conversion of dilutive securities	802		436
	Weighted average shares & units – Diluted: FFO & OFFO	210,221		210,548
	FFO per share – Basic	$0.25		$0.29
	FFO per share – Diluted	$0.25		$0.29
	Operating FFO per share – Basic	$0.29		$0.30
	Operating FFO per share – Diluted	$0.28		$0.30
	Common stock dividends declared, per share	$0.13		$0.13
	Capital expenditures (SITE Centers share):
	Redevelopment costs	3,053		4,410
	Maintenance capital expenditures	1,286		2,146
	Tenant allowances and landlord work	12,035		14,721
	Leasing commissions	1,959		2,328
	Construction administrative costs (capitalized)	961		796
	Certain non-cash items (SITE Centers share):
	Straight-line rent	714		696
	Straight-line fixed CAM	63		75
	Amortization of below-market rent/(above), net	1,269		1,269
	Straight-line ground rent expense	(5)		(64)
	Debt fair value and loan cost amortization	(1,411)		(1,228)
	Capitalized interest expense	293		286
	Stock compensation expense	(1,888)		(1,620)
	Non-real estate depreciation expense	(1,333)		(1,303)

SITE Centers Corp. Balance Sheet: Consolidated Interests
	$ in thousands
		At Period End
		1Q24		4Q23
	Assets:
	Land	$906,727		$930,540
	Buildings	3,185,457		3,311,368
	Fixtures and tenant improvements	542,875		537,872
		4,635,059		4,779,780
	Depreciation	(1,575,920)		(1,570,377)
		3,059,139		3,209,403
	Construction in progress and land	54,148		51,379
	Real estate, net	3,113,287		3,260,782
	Investments in and advances to JVs	38,607		39,372
	Cash	551,285		551,968
	Restricted cash	5,433		17,063
	Receivables and straight-line (1)	57,159		65,623
	Intangible assets, net (2)	79,015		86,363
	Other assets, net	47,792		40,180
	Total Assets	3,892,578		4,061,351
	Liabilities and Equity:
	Revolving credit facilities	0		0
	Unsecured debt	1,242,191		1,303,243
	Unsecured term loan	198,940		198,856
	Secured debt	124,100		124,176
		1,565,231		1,626,275
	Dividends payable	30,161		63,806
	Other liabilities (3)	173,242		195,727
	Total Liabilities	1,768,634		1,885,808
	Preferred shares	175,000		175,000
	Common shares	21,437		21,437
	Paid-in capital	5,971,666		5,974,904
	Distributions in excess of net income	(3,988,449)		(3,934,736)
	Deferred compensation	5,052		5,167
	Accumulated comprehensive income	8,723		6,121
	Common shares in treasury at cost	(69,485)		(72,350)
	Total Equity	2,123,944		2,175,543
	Total Liabilities and Equity	$3,892,578		$4,061,351
(1)	SL rents (including fixed CAM), net	$31,395		$31,206
(2)	Operating lease right of use assets	17,107		17,373
(3)	Operating lease liabilities	36,847		37,108
	Below-market leases, net	43,241		46,096

SITE Centers Corp. Reconciliation of Net Income Attributable to SITE to Same Store NOI
	$ in thousands
		1Q24		1Q23		1Q24		1Q23
		SITE Centers at 100%				At SITE Centers Share (Non-GAAP)
	GAAP Reconciliation:
	Net (loss) income attributable to SITE Centers	($23,552)		$15,284		($23,552)		$15,284
	Fee income	(1,470)		(1,859)		(1,470)		(1,859)
	Interest expense	18,913		19,923		18,913		19,923
	Depreciation and amortization	43,150		54,016		43,150		54,016
	General and administrative	11,072		10,645		11,072		10,645
	Other expense (income), net	105		687		105		687
	Impairment charges	66,600		0		66,600		0
	Equity in net income of joint ventures	(17)		(1,359)		(17)		(1,359)
	Tax expense	252		213		252		213
	Gain on sale and change in control of interests	0		(3,749)		0		(3,749)
	Gain on disposition of real estate, net	(31,714)		(205)		(31,714)		(205)
	Income from non-controlling interests	0		18		0		18
	Consolidated NOI	83,339		93,614		83,339		93,614
	Less: Non-Same Store NOI adjustments					(6,684)		(18,137)
	Total Consolidated SSNOI					$76,655		$75,477
	Consolidated SSNOI % Change					1.6%
	Net (loss) income from unconsolidated joint ventures	(1,155)		4,767		(176)		1,004
	Interest expense	8,271		7,041		1,832		1,587
	Depreciation and amortization	7,145		9,062		1,727		2,091
	Other expense (income), net	1,896		2,560		441		574
	Loss (gain) on disposition of real estate, net	29		(5,304)		6		(1,062)
	Unconsolidated NOI	$16,186		$18,126		3,830		4,194
	Less: Non-Same Store NOI adjustments					(164)		(547)
	Total Unconsolidated SSNOI at SITE share					$3,666		$3,647
	Unconsolidated SSNOI % Change					0.5%
	SSNOI % Change at SITE Share					1.5%

 

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The SITE Centers Stock at the time of publication of the news with a raise of +1,58 % to 12,85USD on Lang & Schwarz stock exchange (30. April 2024, 12:34 Uhr).