SITE Centers Corp. (NYSE: SITC) today announced operating
results for the quarter ended March 31, 2020.
“SITE Centers had a strong start to the year and is
well-positioned heading into a period of economic uncertainty given
the strength of the Company’s curated portfolio and balance sheet,”
commented David R. Lukes, President and Chief Executive Officer.
“We have substantial liquidity, no material near-term maturities,
and no material capital commitments.”
Results for the Quarter
- First quarter net income attributable to common shareholders
was $29.2 million, or $0.15 per diluted share, as compared to net
income of $27.4 million, or $0.15 per diluted share, in the
year-ago period. The year-over-year increase in net income was
primarily attributable to a gain recognized on the sale of a joint
venture interest offset by a valuation allowance of the Company’s
preferred investments and debt extinguishment costs.
- First quarter operating funds from operations attributable to
common shareholders (“Operating FFO” or “OFFO”) was $61.2 million,
or $0.32 per diluted share, compared to $58.7 million, or $0.32 per
diluted share, in the year-ago period.
Significant First Quarter and Recent Activity
- Completed the sale of SITE Centers’ 15% stake in the DDRTC
Joint Venture to its partner, TIAA-CREF, which resulted in net
proceeds to the Company of approximately $141 million prior to any
working capital adjustments.
- Repaid $200 million aggregate principal amount of 4.625% senior
unsecured notes due 2022. The Company recorded a charge in
connection with the notes repayment of $17.2 million primarily
related to prepayment penalties.
- Sold one shopping center and land for an aggregate sales price
of $33.4 million, totaling $13.4 million at SITE Centers’ share,
including $7.5 million from the repayment of a mezzanine loan.
- Repurchased 0.8 million of its common shares for $7.5 million.
The shares were repurchased at a weighted-average price of
$9.18.
- Implemented a COVID-19 response plan that included
transitioning all company employees to a virtual workplace,
enacting protocols in line with government guidelines at
company-owned shopping centers to keep all centers operational,
working with tenants to access small business resources including
those provided by the Payroll Protection Program (PPP), and by
taking decisive steps to improve liquidity, reduce capital spending
and increase financial flexibility.
- The Company’s Board of Directors has suspended payment of
dividends on its common shares for the second quarter of 2020. The
Board of Directors has not made any decisions with respect to its
dividend policy beyond the second quarter of 2020 and intends to
maintain compliance with REIT taxable income distribution
requirements.
Key Quarterly Operating Results
- Reported 3.7% same store net operating income growth on a pro
rata basis for the first quarter of 2020, excluding redevelopment.
Including redevelopment, same store net operating income growth for
the same period was 3.1%.
- Generated new leasing spreads of 20.1% and renewal leasing
spreads of 3.3%, both on a pro rata basis, for the quarter and new
leasing spreads of 12.2% and renewal leasing spreads of 3.8%, both
on a pro rata basis, for the trailing twelve-month period.
- Reported a leased rate of 92.9% at March 31, 2020 on a pro rata
basis, compared to 93.8% on a pro rata basis at December 31, 2019
and 93.0% at March 31, 2019.
- Annualized base rent per occupied square foot on a pro rata
basis was $18.49 at March 31, 2020, compared to $17.92 at March 31,
2019.
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. Additional information about the
Company is available at https://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 0447058 at least ten minutes prior to the scheduled start of
the call. A replay of the conference call will also be available at
ir.sitecenters.com for one year after the call. A copy of the
Company’s Supplemental package is available on the Company’s
website.
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.
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 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. 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, management fee expense, fair market value of leases and
expense recovery adjustments. SSNOI includes assets owned in
comparable periods (15 months for quarter comparisons). In
addition, SSNOI is presented both including and excluding activity
associated with development and major 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 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 are included in this release and
the accompanying financial supplement.
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, the impact of the outbreak of COVID-19 on the
Company’s ability to manage its properties, finance its operations
and perform necessary administrative and reporting functions and on
tenants’ ability to operate their businesses, generate sales and
meet their financial obligations, including the obligation to pay
rent; local conditions such as the supply of, and demand for,
retail real estate space in the area; 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; 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; impairment charges; 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; valuation and risks relating to
our joint venture and preferred equity 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 and our ability to maintain REIT status. 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 impacts of COVID-19 may also exacerbate the risks
described therein, any of which could have a material effect on the
Company. 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
1Q20
1Q19
Revenues:
Rental income (1)
$112,529
$112,221
Other property revenues
1,553
1,469
114,082
113,690
Expenses:
Operating and maintenance
18,480
18,841
Real estate taxes
17,657
17,743
36,137
36,584
Net operating income
77,945
77,106
Other income (expense):
Fee income (2)
15,228
17,332
Interest income
3,485
4,521
Interest expense
(20,587)
(21,726)
Depreciation and amortization
(42,993)
(42,608)
General and administrative (3)
(11,376)
(14,112)
Other (expense) income, net (4)
(17,409)
153
Impairment charges
0
(620)
Income before earnings from JVs and
other
4,293
20,046
Equity in net income of JVs
2,171
1,043
Reserve of preferred equity interests
(18,057)
(1,099)
Gain on sale of joint venture interest
45,681
0
Gain on disposition of real estate,
net
773
16,377
Tax expense
(233)
(272)
Net income
34,628
36,095
Non-controlling interests
(295)
(305)
Net income SITE Centers
34,333
35,790
Preferred dividends
(5,133)
(8,383)
Net income Common Shareholders
$29,200
$27,407
Weighted average shares – Basic –
EPS
193,726
180,546
Assumed conversion of diluted
securities
0
545
Weighted average shares – Basic &
Diluted – EPS
193,726
181,091
Earnings per common share –
Basic
$0.15
$0.15
Earnings per common share –
Diluted
$0.15
$0.15
(1)
Rental income:
Minimum rents
$74,641
$74,961
Ground lease minimum rents
5,468
5,018
Percentage and overage rent
601
1,376
Recoveries
27,199
27,461
Lease termination fees
3,025
2,587
Ancillary and other rental income
2,084
1,259
Bad debt
(489)
(441)
(2)
Fee Income:
JV and other fees
7,598
7,876
RVI fees
6,074
6,556
RVI disposition fees
1,556
1,100
RVI refinancing fee
0
1,800
(3)
Mark-to-market adjustment (PRSUs)
2,167
(899)
(4)
Other income (expense), net
Transaction and other expense, net
(223)
163
Debt extinguishment costs, net
(17,186)
(10)
SITE Centers Corp.
Reconciliation: Net Income to FFO and Operating FFO and Other
Financial Information
in thousands, except per share
1Q20
1Q19
Net income attributable to Common
Shareholders
$29,200
$27,407
Depreciation and amortization of real
estate
41,619
40,957
Equity in net income of JVs
(2,171)
(1,043)
JVs' FFO
7,143
7,975
Non-controlling interests
28
28
Impairment of real estate
0
620
Reserve of preferred equity interests
18,057
1,099
Gain on sale of joint venture interest
(45,681)
0
Gain on disposition of real estate,
net
(773)
(16,377)
FFO attributable to Common
Shareholders
$47,422
$60,666
RVI disposition and refinancing fees
(1,556)
(2,900)
Mark-to-market adjustment (PRSUs)
(2,167)
899
Debt extinguishment, transaction, net
17,409
22
Joint ventures - debt extinguishment,
other
42
14
Total non-operating items, net
13,728
(1,965)
Operating FFO attributable to Common
Shareholders
$61,150
$58,701
Weighted average shares & units –
Basic: FFO & OFFO
193,867
180,690
Assumed conversion of dilutive
securities
0
545
Weighted average shares & units –
Diluted: FFO & OFFO
193,867
181,235
FFO per share – Basic
$0.24
$0.34
FFO per share – Diluted
$0.24
$0.33
Operating FFO per share – Basic
$0.32
$0.32
Operating FFO per share –
Diluted
$0.32
$0.32
Common stock dividends declared, per
share
$0.20
$0.20
Capital expenditures (SITE Centers
share):
Development and redevelopment costs
8,734
6,849
Maintenance capital expenditures
2,255
1,398
Tenant allowances and landlord work
10,383
8,311
Leasing commissions
968
843
Construction administrative costs
(capitalized)
840
626
Certain non-cash items (SITE Centers
share):
Straight-line rent
(1,342)
316
Straight-line fixed CAM
149
201
Amortization of (above)/below-market rent,
net
1,402
1,196
Straight-line rent expense
(70)
(420)
Debt fair value and loan cost
amortization
(1,110)
(1,122)
Capitalized interest expense
286
271
Stock compensation expense
176
(1,855)
Non-real estate depreciation expense
(1,316)
(1,558)
SITE Centers Corp. Balance
Sheet: Consolidated Interests
$ in thousands
At Period End
1Q20
4Q19
Assets:
Land
$881,360
$881,397
Buildings
3,289,988
3,277,440
Fixtures and tenant improvements
493,371
491,312
4,664,719
4,650,149
Depreciation
(1,323,390)
(1,289,148)
3,341,329
3,361,001
Construction in progress and land
62,250
59,663
Real estate, net
3,403,579
3,420,664
Investments in and advances to JVs
85,074
181,906
Investment in and advances to affiliate
(1)
190,105
190,105
Receivable – preferred equity interests,
net
93,909
112,589
Cash
514,258
16,080
Restricted cash
106
3,053
Notes receivable
0
7,541
Receivables and straight-line (2)
56,436
60,594
Intangible assets, net (3)
76,038
79,813
Other assets, net
25,576
21,277
Total Assets
4,445,081
4,093,622
Liabilities and Equity:
Revolving credit facilities
645,000
5,000
Unsecured debt
1,447,997
1,647,963
Unsecured term loan
99,504
99,460
Secured debt
54,210
94,874
2,246,711
1,847,297
Dividends payable
44,047
44,036
Other liabilities (4)
186,845
220,811
Total Liabilities
2,477,603
2,112,144
Preferred shares
325,000
325,000
Common shares
19,399
19,382
Paid-in capital
5,703,521
5,700,400
Distributions in excess of net income
(4,075,813)
(4,066,099)
Deferred compensation
5,994
7,929
Other comprehensive income
(104)
(491)
Common shares in treasury at cost
(13,600)
(7,707)
Non-controlling interests
3,081
3,064
Total Equity
1,967,478
1,981,478
Total Liabilities and Equity
$4,445,081
$4,093,622
(1)
Preferred investment in RVI
$190,000
$190,000
Receivable from RVI
105
105
(2)
SL rents (including fixed CAM), net
30,646
31,909
(3)
Operating lease right of use assets
22,013
$21,792
(4)
Operating lease liabilities
41,008
40,725
Below-market leases, net
45,700
46,961
SITE Centers Corp.
Reconciliation of Net Income Attributable to SITE to Same Store
NOI
$ in thousands
1Q20
1Q19
1Q20
1Q19
SITE Centers at 100%
At SITE Centers Share
(Non-GAAP)
GAAP
Reconciliation:
Net income attributable to SITE
Centers
$34,333
$35,790
$34,333
$35,790
Fee income
(15,228)
(17,332)
(15,228)
(17,332)
Interest income
(3,485)
(4,521)
(3,485)
(4,521)
Interest expense
20,587
21,726
20,587
21,726
Depreciation and amortization
42,993
42,608
42,993
42,608
General and administrative
11,376
14,112
11,376
14,112
Other expense (income), net
17,409
(153)
17,409
(153)
Impairment charges
0
620
0
620
Equity in net income of joint ventures
(2,171)
(1,043)
(2,171)
(1,043)
Reserve of preferred equity interests
18,057
1,099
18,057
1,099
Tax expense
233
272
233
272
Gain on sale of joint venture interest
(45,681)
0
(45,681)
0
Gain on disposition of real estate,
net
(773)
(16,377)
(773)
(16,377)
Income from non-controlling interests
295
305
295
305
Consolidated NOI
77,945
77,106
77,945
77,106
SITE Centers' consolidated JV
0
0
(476)
(444)
Consolidated NOI, net of
non-controlling interests
77,945
77,106
77,469
76,662
Net (loss) income from unconsolidated
joint ventures
(18,654)
6,666
1,981
774
Interest expense
17,755
25,656
3,329
4,429
Depreciation and amortization
30,104
39,504
5,196
6,167
Impairment charges
31,720
12,267
1,586
2,453
Preferred share expense
4,530
5,459
227
273
Other expense, net
4,657
5,456
936
996
Gain on disposition of real estate,
net
(8,906)
(15,966)
(1,739)
(1,555)
Unconsolidated NOI
$61,206
$79,042
11,516
13,537
Total Consolidated + Unconsolidated
NOI
88,985
90,199
Less: Non-Same Store NOI adjustments
(4,505)
(8,220)
Total SSNOI including
redevelopment
84,480
81,979
Less: Redevelopment Same Store NOI
adjustments
(5,240)
(5,566)
Total SSNOI excluding
redevelopment
$79,240
$76,413
SSNOI % Change including
redevelopment
3.1%
SSNOI % Change excluding
redevelopment
3.7%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200430005017/en/
Conor Fennerty, 216-755-5500 EVP and Chief Financial Officer
SITE Centers (NYSE:SITC)
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