SITE Centers Corp. (NYSE: SITC), an owner of open-air shopping
centers primarily in suburban, high household income communities,
announced today operating results for the quarter ended September
30, 2024.
"SITE Centers completed the planned spin-off of Curbline
Properties on October 1, unlocking a unique and scalable
opportunity focused on convenience real estate and providing
investors with two distinct business plans,” commented David R.
Lukes, President and Chief Executive Officer. “Following the
disposition of 25 properties during the third quarter for an
aggregate price of $1.4 billion, the Company has completed the sale
of substantially all of the properties that had been in its active
disposition pipeline prior to the spin-off. Going forward, SITE
Centers intends to maximize value through continued leasing, asset
management and potential additional asset sales.”
Results for the Third Quarter
- Third quarter net income attributable to common shareholders
was $320.2 million, or $6.07 per diluted share, as compared to net
income of $45.9 million, or $0.87 per diluted share, in the
year-ago period. The increase year-over-year primarily was the
result of higher gain on sale from dispositions and interest income
partially offset by the impact of lower property Net Operating
Income (“NOI") as a result of net property dispositions, debt
extinguishment costs including the write-off of fees related to the
original mortgage facility commitment and Curbline Properties Corp.
("Curbline" or "CURB") transaction costs.
- Third quarter operating funds from operations attributable to
common shareholders (“Operating FFO” or “OFFO”) was $42.8 million,
or $0.81 per diluted share, compared to $69.9 million, or $1.33 per
diluted share, in the year-ago period. The decrease year-over-year
primarily was due to the impact of lower property NOI as a result
of net property dispositions, partially offset by higher interest
income.
Significant Third Quarter and Recent Activity
- Sold 25 shopping centers during the third quarter for an
aggregate price of $1.4 billion.
- Acquired seven convenience shopping centers during the third
quarter for an aggregate price of $145.3 million. All of these
properties were included in the Curbline spin-off.
- During the quarter, redeemed all remaining outstanding senior
unsecured notes due in 2025, 2026 and 2027 for total cash
consideration, including expenses, of $1.2 billion and recorded
debt extinguishment costs of approximately $6.7 million. The 2027
notes were partially hedged and, in August 2024, the related
swaption agreements, which did not qualify for hedge accounting,
were terminated and the Company received a cash payment of $1.3
million.
- In August 2024, repaid the $200.0 million term loan and
terminated the revolving credit facility which had no balance
outstanding and recorded $4.8 million of aggregate debt
extinguishment costs. The term loan was hedged with an interest
rate swap which was also terminated in August 2024 and the Company
received a cash payment of $6.8 million.
- In August 2024, the Company closed and funded a $530.0 million
mortgage facility secured by 23 properties. At September 30, 2024,
the outstanding principal balance on the mortgage facility was
$206.9 million secured by 13 properties. The Company recorded debt
extinguishment costs of $10.1 million in the three months ended
September 30, 2024 due to disposition-related repayments.
Additionally, the Company wrote off $10.9 million in fees in the
third quarter relating to the termination of the original $1.1
billion mortgage facility commitment obtained in October 2023.
- On August 19, 2024, the Company’s common shares began trading
on a split-adjusted basis (one-for-four) on the NYSE at the opening
of trading. All prior year common share and earnings per share
amounts have been adjusted for comparability.
- On October 24, 2024, the Company provided notice of its intent
to redeem all of its outstanding 6.375% Class A Cumulative
Redeemable Preferred Shares and the associated depositary
shares.
Curbline Properties
- On October 1, 2024, the previously announced spin-off of
Curbline was completed. At the time of spin-off, Curbline's
portfolio consisted of 79 properties and Curbline was capitalized
with $800.0 million of unrestricted cash and had no outstanding
indebtedness.
Key Quarterly Operating Results
- Reported a leased rate of 91.3% at September 30, 2024 compared
to 93.2% at June 30, 2024 and 94.6% at September 30, 2023, all on a
pro rata basis. The September 30, 2024 leased rate has been
adjusted to reflect the removal of all properties included in the
CURB spin-off.
Property NOI Projection
The Company projects, based on the assumptions below, 2024
property level NOI to be between $94.7 million and $96.9
million.
This projection:
- Calculates NOI pursuant to the definition of NOI as described
below, excludes NOI from all Curbline properties and all properties
sold prior to September 30, 2024 and assumes that all SITE Centers
properties owned as of September 30, 2024 are held for the full
year 2024,
- Includes the Company's share of joint venture NOI,
- Excludes from NOI G&A allocated to operating expenses which
totaled $2.1 million in 3Q2024, or $8.4 million annualized,
and
- Includes revenue from the Company's Beachwood, OH office
headquarters.
About SITE Centers Corp.
SITE Centers is an owner and manager of open-air shopping
centers located primarily 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.
Supplemental Information
Copies of the Company's quarterly financial supplement are
available on the Investor Relations portion of the Company's
website, ir.sitecenter.com.
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 (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 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.
FFO, Operating FFO and NOI 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 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 to the most directly comparable
GAAP financial measure is not provided because the Company is
unable to provide such reconciliation without unreasonable effort
due to the multiple components of 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 sell
properties on commercially reasonable terms and to satisfy closing
conditions applicable to such sales; our ability to finance our
businesses 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 September 30, 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
3Q24
3Q23
9M24
9M23
Revenues:
Rental income (1)
$
89,017
$
142,498
$
322,089
$
414,324
Other property revenues
412
588
2,090
1,978
89,429
143,086
324,179
416,302
Expenses:
Operating and maintenance
16,185
20,986
55,980
66,628
Real estate taxes
12,170
20,543
45,056
60,875
28,355
41,529
101,036
127,503
Net operating income (2)
61,074
101,557
223,143
288,799
Other income (expense):
JV and other fee income
1,334
1,673
4,346
5,307
Interest expense
(16,706
)
(21,147
)
(54,045
)
(61,991
)
Depreciation and amortization
(34,251
)
(52,821
)
(117,840
)
(165,535
)
General and administrative (3)
(15,111
)
(11,259
)
(38,896
)
(35,935
)
Other income (expense), net (4)
(41,655
)
(690
)
(47,974
)
(2,011
)
Impairment charges
0
0
(66,600
)
0
(Loss) income before earnings from JVs and
other
(45,315
)
17,313
(97,866
)
28,634
Equity in net income of JVs
328
518
406
6,495
Gain on sale and change in control of
interests
0
0
2,669
3,749
Gain on disposition of real estate,
net
368,139
31,047
633,169
31,230
Tax expense
(199
)
(236
)
(732
)
(811
)
Net income
322,953
48,642
537,646
69,297
Non-controlling interests
0
0
0
(18
)
Net income SITE Centers
322,953
48,642
537,646
69,279
Preferred dividends
(2,789
)
(2,789
)
(8,367
)
(8,367
)
Net income Common Shareholders
$
320,164
$
45,853
$
529,279
$
60,912
Weighted average shares – Basic – EPS
(5)
52,400
52,322
52,381
52,376
Assumed conversion of diluted securities
(5)
153
28
177
60
Weighted average shares – Diluted – EPS
(5)
52,553
52,350
52,558
52,436
Earnings per common share – Basic
(5)
$
6.09
$
0.87
$
10.07
$
1.16
Earnings per common share – Diluted
(5)
$
6.07
$
0.87
$
10.03
$
1.16
(1)
Rental income:
Minimum rents
$
57,036
$
89,717
$
206,608
$
267,713
Ground lease minimum rents
4,555
6,296
15,295
19,108
Straight-line rent, net
1,472
496
3,616
2,160
Amortization of (above)/below-market rent,
net
1,167
9,223
3,280
12,099
Percentage and overage rent
1,063
1,095
4,450
4,498
Recoveries
22,134
34,753
80,366
104,570
Uncollectible revenue
95
(811
)
81
(1,126
)
Ancillary and other rental income
917
1,511
3,211
4,716
Lease termination fees
578
218
5,182
586
(2)
Includes NOI from assets sold in 2024 and
properties included in the CURB spin-off
40,291
N/A
160,765
N/A
(3)
Separation and other charges
595
1,086
1,348
4,014
(4)
Interest income (fees), net
13,997
(92
)
29,841
(206
)
Transaction costs
(23,847
)
(641
)
(31,436
)
(1,848
)
Debt extinguishment costs
(32,559
)
43
(43,004
)
43
Gain on debt retirement
0
0
1,037
0
Gain (loss) on derivative instruments
754
0
(4,412
)
0
(5)
Prior periods presented have been adjusted
to reflect the Company's one-for-four reverse stock split
SITE Centers Corp.
Reconciliation: Net Income
to FFO and Operating FFO
and Other Financial
Information
in thousands, except per share
3Q24
3Q23
9M24
9M23
Net income attributable to Common
Shareholders
$
320,164
$
45,853
$
529,279
$
60,912
Depreciation and amortization of real
estate
33,253
51,412
114,276
161,480
Equity in net income of JVs
(328
)
(518
)
(406
)
(6,495
)
JVs' FFO
1,555
2,145
4,703
6,327
Non-controlling interests
0
0
0
18
Impairment of real estate
0
0
66,600
0
Gain on sale and change in control of
interests
0
0
(2,669
)
(3,749
)
Gain on disposition of real estate,
net
(368,139
)
(31,047
)
(633,169
)
(31,230
)
FFO attributable to Common
Shareholders
($
13,495
)
$
67,845
$
78,614
$
187,263
Gain on debt retirement
0
0
(1,037
)
0
Transaction, debt extinguishment and other
(at SITE's share)
55,653
679
79,041
2,186
Separation and other charges
595
1,345
1,820
4,444
Total non-operating items, net
56,248
2,024
79,824
6,630
Operating FFO attributable to Common
Shareholders
$
42,753
$
69,869
$
158,438
$
193,893
Weighted average shares & units –
Basic: FFO & OFFO (1)
52,400
52,322
52,381
52,393
Assumed conversion of dilutive securities
(1)
153
28
177
60
Weighted average shares & units –
Diluted: FFO & OFFO (1)
52,553
52,350
52,558
52,453
FFO per share – Basic (1)
$
(0.26
)
$
1.30
$
1.50
$
3.57
FFO per share – Diluted (1)
$
(0.26
)
$
1.30
$
1.50
$
3.57
Operating FFO per share – Basic
(1)
$
0.82
$
1.34
$
3.02
$
3.70
Operating FFO per share – Diluted
(1)
$
0.81
$
1.33
$
3.01
$
3.70
Common stock dividends declared, per
share (1)
$
0.00
$
0.52
$
1.04
$
1.56
Capital expenditures (SITE Centers
share):
Redevelopment costs
1,182
7,609
7,192
15,726
Maintenance capital expenditures
1,792
4,528
5,449
11,552
Tenant allowances and landlord work
7,397
13,187
28,878
38,938
Leasing commissions
850
1,861
5,168
6,255
Construction administrative costs
(capitalized)
839
795
2,653
2,395
Certain non-cash items (SITE Centers
share):
Straight-line rent
1,491
516
3,715
2,236
Straight-line fixed CAM
33
94
156
238
Amortization of below-market rent/(above),
net
1,301
9,314
3,611
12,364
Straight-line ground rent expense
(9
)
(25
)
(16
)
(130
)
Debt fair value and loan cost
amortization
(1,709
)
(1,165
)
(4,525
)
(3,591
)
Capitalized interest expense
76
321
547
916
Stock compensation expense
(2,013
)
(1,756
)
(5,958
)
(5,119
)
Non-real estate depreciation expense
(1,001
)
(1,411
)
(3,571
)
(4,064
)
(1)
Prior periods presented have been adjusted
to reflect the Company's one-for-four reverse stock split
SITE Centers Corp.
Balance Sheet:
Consolidated Interests
$ in thousands
At Period End
3Q24
4Q23
Assets:
Land
$
613,990
$
930,540
Buildings
1,700,647
3,311,368
Fixtures and tenant improvements
323,926
537,872
2,638,563
4,779,780
Depreciation
(799,336
)
(1,570,377
)
1,839,227
3,209,403
Construction in progress and land
17,887
51,379
Real estate, net
1,857,114
3,260,782
Investments in and advances to JVs
32,179
39,372
Cash (1)
1,063,088
551,968
Restricted cash
21,038
17,063
Receivables and straight-line (2)
38,842
65,623
Intangible assets, net (3)
93,108
86,363
Other assets, net
21,729
40,180
Total Assets
3,127,098
4,061,351
Liabilities and Equity:
Revolving credit facilities
0
0
Unsecured debt
0
1,303,243
Unsecured term loan
0
198,856
Secured debt
300,842
124,176
300,842
1,626,275
Dividends payable
2,789
63,806
Other liabilities (4)
171,541
195,727
Total Liabilities
475,172
1,885,808
Preferred shares
175,000
175,000
Common shares
5,247
5,239
Paid-in capital
5,927,905
5,923,919
Distributions in excess of net income
(3,460,210
)
(3,934,736
)
Deferred compensation
4,968
5,167
Accumulated comprehensive income
6,113
6,121
Common shares in treasury at cost
(7,097
)
(5,167
)
Total Equity
2,651,926
2,175,543
Total Liabilities and Equity
$
3,127,098
$
4,061,351
(1)
On October 1, 2024, $800 million was used
to capitalize Curbline Properties
(2)
SL rents (including fixed CAM), net
$
17,152
$
31,206
(3)
Operating lease right of use assets
16,086
17,373
Below market ground leases (as lessee)
13,653
0
(4)
Operating lease liabilities
35,819
37,108
Below-market leases, net
38,729
46,096
Excludes costs to complete redevelopment
projects at Curbline assets
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241030950373/en/
Gerald Morgan, EVP and Chief Financial Officer 216-755-5500
SITE Centers (NYSE:SITC)
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SITE Centers (NYSE:SITC)
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