SITE Centers Corp. (NYSE: SITC) (“SITE Centers” or the
“Company”) today announced current preliminary, estimated results
of operations for the third quarter ended September 30, 2019. The
Company expects net income attributable to common shareholders for
the third quarter of 2019 of approximately $0.08 per diluted share,
and operating funds from operations (“Operating FFO” or “OFFO”) for
the third quarter of 2019 of approximately $0.30 per diluted share.
A reconciliation of OFFO to net income attributable to common
shareholders is provided below. Key operating results and
significant recent activity include:
Key Operating Results
- Estimates 1.6% same store net operating income growth on a pro
rata basis for the quarter (exceeding management’s previous
forecast) and 3.0% same store net operating income growth on a pro
rata basis for the first nine months of 2019.
- Generated new leasing spreads of 13.9% and renewal leasing
spreads of 4.6%, both on a pro rata basis, for the quarter and new
leasing spreads of 13.8% and renewal leasing spreads of 5.5%, both
on a pro rata basis, for the trailing twelve-month period.
- Leased rate of 94.2% at September 30, 2019 on a pro rata basis,
compared to 92.7% at September 30, 2018.
- Annualized base rent per occupied square foot on a pro rata
basis was $18.04 at September 30, 2019, compared to $17.47 at
September 30, 2018.
Significant Third Quarter and Recent Activity
- Sold two shopping centers for an aggregate sales price of $39.2
million, totaling $37.9 million at SITE Centers’ share, including
$1.3 million from the repayment of the Company’s preferred equity
investment in its two joint ventures with Blackstone.
- Announced the expected sale of its 15% stake in the DDRTC Joint
Venture to its partner, TIAA-CREF, based on a gross fund value of
$1.14 billion. The transaction is expected to close in early
2020.
- In October 2019, the Company acquired one shopping center in
Austin, Texas for $12.6 million.
These current preliminary, estimated results of operations are
based on management’s initial review of operations for the fiscal
quarter ended September 30, 2019, and remain subject to completion
of the Company’s customary closing and review procedures and final
adjustments and other developments that may arise between now and
the time the financial results for the fiscal quarter ended
September 30, 2019 are finalized. It is possible that the final
reported results for the fiscal quarter ended September 30, 2019
may differ materially from the estimates provided in this
release.
The Issuer has filed a registration statement (including a
prospectus) with the Securities and Exchange Commission (the “SEC”)
for the offering to which this communication relates. Before you
invest, you should read the prospectus in that registration
statement and other documents the Issuer has filed with the SEC for
more complete information about the Issuer and this offering. You
may get these documents for free by visiting EDGAR on the SEC’s Web
site at www.sec.gov. Alternatively, copies of the preliminary
prospectus supplement and the prospectus may be obtained by calling
the Company at 216-755-5500.
About SITE Centers Corp.
SITE Centers is an owner and manager of open-air shopping
centers that provide a highly-compelling shopping experience and
merchandise mix for retail partners and consumers. 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.
Anticipated Earnings Release Date
The Company expects to report financial and operating results
for the quarter ended September 30, 2019 prior to market open on
October 30, 2019. The Company also plans to host its quarterly
earnings conference call and audio webcast on October 30, 2019 at
9:00 a.m. Eastern Time. All interested parties can access the
earnings call by dialing (888) 317-6003 (U.S.), (866) 284-3684
(Canada) or (412) 317- 6061 (international) using pass code
4590014. 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 will
be available on SITE Centers’ website for future 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
pass code 10135320 through November 13, 2019.
Non-GAAP Measures
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.
In December 2018, the National Association of Real Estate
Investment Trusts (“NAREIT”) issued NAREIT Funds From Operations
White Paper - 2018 Restatement (“2018 FFO White Paper”). The
purpose of the 2018 FFO White Paper was not to change the
fundamental definition of FFO but to clarify existing guidance and
to consolidate into a single document alerts and policy bulletins
issued by NAREIT since the last FFO white paper was issued in 2002.
The 2018 FFO White Paper was effective starting with first quarter
2019 reporting. The changes to the Company’s calculation of FFO
resulting from the adoption of the 2018 FFO White Paper relate to
the exclusion of gains or losses on the sale of land as well as
related impairments, gains or losses from changes in control and
the reserve adjustment of preferred equity interests. The Company
adopted changes in its calculation in 2019 on a retrospective
basis.
FFO is generally defined and calculated by the Company as net
income (loss) (computed in accordance with 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, including reserve adjustments of
preferred equity interests, (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 noncontrolling 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. Operating FFO is useful to investors as the
Company removes non-comparable charges, income and gains 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 net operating income (“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 (including reimbursements) and expenses, lease termination
income in excess of lost rent, management fee expense, fair market
value of leases and expense recovery adjustments. SSNOI also
excludes activity associated with development and major
redevelopment and includes assets owned in comparable periods (15
months for quarter comparisons). 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 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 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 estimated non-GAAP measures to
their most directly comparable GAAP measures are included in this
release.
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 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, local conditions such as supply of space or a
reduction in demand for real estate in the area; competition from
other available space; 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; redevelopment and construction
activities may not achieve a desired return on investment; our
ability to buy or sell assets on commercially reasonable terms; our
ability to complete acquisitions or dispositions of assets under
contract; our ability to secure equity or debt financing on
commercially acceptable terms or at all; our ability to enter into
definitive agreements with regard to our financing and joint
venture arrangements and our ability to satisfy conditions to the
completion of these arrangements; 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 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; any
change in strategy; our ability to maintain REIT status; and with
respect to our estimated results for the quarter ended September
30, 2019, the fact that such results are preliminary, the fact that
such results have been prepared by management and have not been
reviewed by the Company’s auditors and that changes in these
results may result from the completion of our quarter end closing
procedures and the review of our results by our auditors. 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
Form 10-K and Form 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.
Reconciliations
Reconciliation of Net Income Attributable to Common Shareholders
to the FFO and Operating FFO estimates for the three months ended
September 30, 2019:
3Q2019E
Approximate
Per Share-
Diluted
Net income attributable to common shareholders
$0.08
Depreciation and amortization of real estate
0.21
Equity in net income of JVs
-0.01
JVs’ FFO
0.05
Gain on disposition of real estate
-0.08
Impairment of real estate and reserve of preferred equity interests
0.05
FFO (NAREIT)
$0.30
RVI disposition fees, mark-to-market adjustment (PRSUs), business
interruption income and other (1)
-
Operating FFO
$0.30
(1)
The impact of these adjustments nets to a zero impact on the per
share diluted calculation.
Reconciliation of Net Income (Loss) Attributable to SITE Centers
to SSNOI estimates for the three and nine months ended September
30, 2019 and 2018 (in thousands):
Estimated At SITE
Centers Share (Non-GAAP)
3Q19E
3Q18
9M19E
9M18
Net income (loss) attributable to SITE
Centers
$23,630
$(8,931)
$76,697
$(66,413)
Fee income
(12,821)
(15,118)
(45,360)
(30,424)
Interest income
(4,616)
(5,055)
(13,658)
(15,412)
Interest expense
21,160
26,962
63,973
115,915
Depreciation and amortization
40,732
49,629
123,400
196,515
General and administrative
15,304
15,232
44,348
45,353
Other expense, net
322
1,454
254
99,316
Impairment charges
2,750
19,890
3,370
68,394
Hurricane property (income) loss
-
(157)
-
817
Equity in net (income) loss of joint
ventures
(2,612)
2,920
(5,446)
(9,687)
Reserve of preferred equity interests
6,373
2,201
12,106
4,537
Tax expense
249
238
827
611
Gain on disposition of real estate,
net
(14,497)
(124)
(31,087)
(39,643)
Income from non-controlling interests
271
239
836
1,191
Consolidated NOI
76,245
89,380
230,260
371,070
SITE Centers’ consolidated JV
(435)
(404)
(1,314)
(1,186)
Consolidated NOI, net of
non-controlling interests
75,810
88,976
228,946
369,884
Net income (loss) from unconsolidated
joint ventures
2,331
(7,735)
4,676
4,246
Interest expense
3,918
3,689
12,742
11,244
Depreciation and amortization
6,024
4,766
18,195
14,904
Impairment charges
-
13,182
2,453
14,028
Preferred share expense
277
313
824
954
Other expense, net
966
962
2,988
3,295
(Gain) loss on disposition of real estate,
net
(10)
(3,313)
1,515
(12,638)
Unconsolidated NOI
13,506
11,864
43,393
36,033
Total Consolidated + Unconsolidated
NOI
89,316
100,840
272,339
405,917
Less: Non-Same Store NOI Adjustments
(5,500)
(18,319)
(25,536)
(166,391)
Total SSNOI
$83,816
$82,521
$246,803
$239,526
SSNOI % Change
1.6%
3.0%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191021005810/en/
Matthew Ostrower, 216-755-5500 EVP and Chief Financial
Officer
SITE Centers (NYSE:SITC)
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