SITE Centers Reports First Quarter 2024 Results
SITE Centers Corp. reported a net loss of $26.3 million in the first quarter of 2024, attributing it to property dispositions and impairment charges. Operating FFO was $59.8 million, a decrease due to property dispositions offset by NOI growth. The company sold shopping centers, acquired convenience centers, and repurchased senior notes. Impairments of $66.6 million were recorded for development projects. A spin-off of Convenience assets into Curbline Properties Corp. is expected by October 2024. Key operating results include SSNOI growth of 1.5% and strong leasing spreads. Property NOI projections for 2024 show estimates for both SITE Centers and Curbline Properties.
Strong SSNOI growth of 1.5% in the first quarter of 2024 despite a 310 basis-point headwind related to Bed Bath & Beyond's bankruptcy.
Successful cash new leasing spreads of 29.0% and cash renewal leasing spreads of 6.5% for the trailing twelve-month period ended March 31, 2024.
Property NOI projections for 2024 estimate a promising range for SITE Centers and Curbline Properties, showing growth potential.
A net loss of $26.3 million in the first quarter attributed to property dispositions and impairment charges negatively impacted financial performance.
Operating FFO decreased to $59.8 million due to property dispositions, despite NOI growth and increased interest income.
Recorded impairments of $66.6 million for development projects highlight potential challenges and financial losses for the company.
Insights
“SITE Centers made additional progress on the announced planned spin-off of the Company’s Convenience assets in the first quarter highlighted by
Results for the First Quarter
-
First quarter net loss attributable to common shareholders was
$26.3 million $0.13 $12.5 million $0.06 -
First quarter operating funds from operations attributable to common shareholders (“Operating FFO” or “OFFO”) was
$59.8 million $0.28 $62.7 million $0.30
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 $119.4 million -
Acquired two convenience shopping centers during the first quarter for an aggregate price of
$19.1 million Harper's Preserve (Houston, TX ) for$10.6 million Phoenix, AZ ) for$8.5 million -
During the quarter, repurchased
$61.6 million $60.8 million $0.8 million -
During the quarter, recorded impairments of
$66.6 million $55.7 million 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 , includingATLAS SP Partners, to provide a$1.1 billion $1.0 billion $0.7 million
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 of6.5% , both on a pro rata basis, for the trailing twelve-month period ended March 31, 2024 and cash new leasing spreads of11.5% and cash renewal leasing spreads of8.0% , 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 of11.0% , both on a pro rata basis, for the trailing twelve-month period ended March 31, 2024 and straight-lined new leasing spreads of26.9% and straight-lined renewal leasing spreads of12.4% , both on a pro rata basis, for the first quarter of 2024. -
Reported a leased rate of
94.2% at March 31, 2024 compared to94.5% at December 31, 2023 and95.9% 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
$13.1 million
Property NOI Projection
The Company projects, based on the assumptions below, 2024 property level NOI to be as follows:
Portfolio |
|
NOI Projection ($M) |
SITE Centers |
|
|
Curbline Properties |
|
|
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 $10.2 million -
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 (
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 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) |
|
|
|
|
|
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 |
|
( |
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
(Loss) earnings per common share – Diluted |
|
|
|
|
|
|
|
|
|
|
|
(1) |
Rental income: |
|
|
|
|
Minimum rents |
|
|
|
|
|
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.
|
||||
in thousands, except per share |
|
|||
|
1Q24 |
|
1Q23 |
|
Net (loss) income attributable to Common Shareholders |
( |
|
|
|
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 |
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
FFO per share – Diluted |
|
|
|
|
Operating FFO per share – Basic |
|
|
|
|
Operating FFO per share – Diluted |
|
|
|
|
Common stock dividends declared, per share |
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
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 |
|
|
|
|
|
|
|
|
(1) |
SL rents (including fixed CAM), net |
|
|
|
|
|
|
|
|
(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 |
|
At SITE Centers Share
|
|||||
GAAP Reconciliation: |
|
|
|
|
|
|
|
|
Net (loss) income attributable to SITE Centers |
( |
|
|
|
( |
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated SSNOI % Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
3,830 |
|
4,194 |
|
Less: Non-Same Store NOI adjustments |
|
|
|
|
(164) |
|
(547) |
|
Total Unconsolidated SSNOI at SITE share |
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Unconsolidated SSNOI % Change |
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SSNOI % Change at SITE Share |
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View source version on businesswire.com: https://www.businesswire.com/news/home/20240430566713/en/
Conor Fennerty, EVP and Chief Financial Officer
216-755-5500
Source: SITE Centers Corp.
FAQ
What was SITE Centers' net loss in the first quarter of 2024?
What caused the decrease in Operating FFO in the first quarter of 2024?
When is the expected completion date for the spin-off of Convenience assets into Curbline Properties Corp.?
What were the key operating results for SITE Centers in the first quarter of 2024?
What are the property NOI projections for 2024?
