SITE Centers Corp. (NYSE: SITC) today announced operating
results for the quarter ended March 31, 2021.
“We had an excellent start to the year with another robust
quarter of leasing, over $200 million of growth capital raised and
continued improvements in both rent collection and deferral
repayment trends,” commented David R. Lukes, President and Chief
Executive Officer. “Our focused portfolio in affluent communities
is well positioned to benefit from the improving operating
environment.”
Results for the Quarter
- First quarter net income attributable to common shareholders
was $10.9 million, or $0.05 per diluted share, as compared to net
income of $29.2 million, or $0.15 per diluted share, in the
year-ago period. The year-over-year decrease in net income was
primarily attributable to the impact of the COVID-19 pandemic,
lower fee income, interest income and gain on sale of joint venture
interests and higher impairment charges, partially offset by lower
debt extinguishment costs and valuation allowance related to the
Company’s preferred investments in the BRE DDR ventures, which were
terminated in the fourth quarter of 2020.
- First quarter operating funds from operations attributable to
common shareholders (“Operating FFO” or “OFFO”) was $55.3 million,
or $0.28 per diluted share, compared to $61.2 million, or $0.32 per
diluted share, in the year-ago period. The year-over-year decrease
was primarily attributable to the impact of the COVID-19 pandemic,
lower interest income and joint venture fees related to the
termination of joint ventures in 2020. First quarter results
include $5.0 million of net revenue related to prior periods
primarily from cash basis tenants.
Significant First Quarter and Recent Activity
- In March 2021, issued 17.25 million common shares resulting in
net proceeds of $226 million.
- On April 7, 2021, redeemed all $150.0 million aggregate
liquidation preference of its outstanding 6.250% Series K
Cumulative Redeemable Preferred Shares. The Company will record a
non-cash charge of $5.1 million to net income attributable to
common shareholders in the second quarter of 2021, which represents
the difference between the redemption price and the carrying amount
immediately prior to redemption, which was recorded to additional
paid in capital upon original issuance.
- The Company, along with its partners, sold a parcel of
undeveloped land in Richmond Hill, Ontario. SITE Centers’ share of
net proceeds totaled $22.1 million after accounting for customary
closing costs and foreign currency translation.
- Sold a land parcel and the Hobby Lobby pad of a wholly owned
shopping center for an aggregate sales price of $11.5 million.
- The Company declared its first quarter 2021 common stock
dividend of $0.11 per share which was paid on April 6, 2021 to
shareholders of record at the close of business on March 18,
2021.
Key Quarterly Operating Results
- Reported a decrease of 1.4% in SSNOI on a pro rata basis for
the first quarter of 2021, including redevelopment. Excluding
redevelopment, reported a decrease of 2.1% in SSNOI on a pro rata
basis for the first quarter of 2021. Results were unfavorably
affected by the COVID-19 pandemic, Pier One’s bankruptcy and
uncollectible revenue related to cash basis tenants, partially
offset by rent commencements and revenue related to prior periods
primarily from cash basis tenants.
- Generated new leasing spreads of 8.3% and renewal leasing
spreads of 0.9%, both on a pro rata basis, for the trailing
twelve-month period and new leasing spreads of 14.9% and renewal
leasing spreads of -4.2%, both on a pro rata basis, for the first
quarter of 2021.
- Reported a leased rate of 91.4% at March 31, 2021 on a pro rata
basis, compared to 91.6% on a pro rata basis at December 31, 2020
and 92.9% at March 31, 2020. The sequential decline was primarily
related to the sale of a portion of a shopping center during the
quarter that was 100% occupied.
- As of March 31, 2021, the signed but not opened spread was 280
basis points representing $14.1 million of annualized base rent on
a pro rata basis.
- Annualized base rent per occupied square foot on a pro rata
basis was $18.39 at March 31, 2021, compared to $18.49 at March 31,
2020.
COVID-19 Update
- As of April 16, 2021, all of the Company’s properties remain
open and operational with 99% of tenants, at the Company’s share
and based on average base rents, open for business.
- As of April 16, 2021, the Company’s tenants had paid
approximately 96% of first quarter 2021 rents. The payment rates
for the Company’s tenants, at the Company’s share and based on
average base rents are reflected as follows:
2Q20
3Q20
4Q20
1Q21
As of April 16, 2021
84%
89%
95%
96%
As of February 12, 2021
79%
88%
94%
N/A
As of October 23, 2020
70%
84%
N/A
N/A
As of July 24, 2020
64%
N/A
N/A
N/A
- As of April 16, 2021, agreed upon rent deferral arrangements
with tenants that remain unpaid represented 6% of second quarter
2020 rents, 8% of third quarter 2020 rents, 1% of fourth quarter
2020 rents and 1% of first quarter 2021 rents.
Guidance
The Company has updated its 2021 full year guidance for net
income attributable to common shareholders and Operating FFO per
share to include the impact of the first quarter operating results,
as well as the impact of the above mentioned common share issuance
and redemption of the Class K Preferred Shares. RVI disposition and
refinancing fees, impairment charges, gains on sale of assets and
debt extinguishment are excluded from guidance. The guidance update
is as follows:
Reconciliation of Net Income Attributable to Common Shareholders
to FFO and Operating FFO estimates:
FY 2021E (original)
Per Share - Diluted
FY 2021E (revised)
Per Share - Diluted
Net (loss) income attributable to
Common Shareholders
($0.06) - $0.05
$0.04 - $0.13
Depreciation and amortization of real
estate
0.86 - 0.89
0.80 - 0.83
Equity in net (income) of JVs
(0.01)
(0.03)
JVs’ FFO
0.08 - 0.10
0.08 - 0.10
Gain on sale of joint venture interest,
net (first quarter actual)
N/A
(0.07)
Impairment of real estate (first quarter
actual)
N/A
0.03
FFO (NAREIT)
$0.90 - $1.00
$0.88 - $0.96
Mark-to-market adjustment (PRSUs) and
other (first quarter actual)
N/A
0.03
Write-off of Class K Preferred Share
original issuance costs
N/A
0.03
Operating FFO
$0.90 - $1.00
$0.94 - $1.02
Other key assumptions for 2021 guidance include:
FY 2021E (original)
FY 2021E (revised)
Joint Venture fee income
$11 – $15 million
$11 – $15 million
RVI fee income (excluding disposition
fees) (1)
$13 – $17 million
$13 – $17 million
(1)
Consistent with 2019 and 2020, guidance
excludes impact of disposition and refinancing fees from RVI for
the full year.
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
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 7826570 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 10152713 through May 22, 2021.
Copies of the Company’s Supplemental package and earnings slide
presentation are 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 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, 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.
In calculating the expected range for or amount of net (loss)
income attributable to common shareholders to estimate projected
FFO and Operating FFO for future periods, the Company does not
include a projection of gain and losses from the disposition of
real estate property, potential impairments and reserves of real
estate property and related investments, debt extinguishment costs,
certain transaction costs or certain fee income. Other real estate
companies may calculate expected 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 have been provided herein.
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 COVID-19 pandemic on the
Company’s ability to manage its properties and finance its
operations and on tenants’ ability to operate their businesses,
generate sales and meet their financial obligations, including the
obligation to pay ongoing and deferred rents; the Company’s ability
to pay dividends; 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 the Company’s 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; our
ability to maintain REIT status; and the finalization of the
financial statements for the period ended March 31, 2021. 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 impacts of the COVID-19 pandemic 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
1Q21
1Q20
Revenues:
Rental income (1)
$119,890
$112,529
Other property revenues
97
1,553
119,987
114,082
Expenses:
Operating and maintenance
20,216
18,480
Real estate taxes
19,664
17,657
39,880
36,137
Net operating income
80,107
77,945
Other income (expense):
Fee income (2)
8,152
15,228
Interest expense
(19,395)
(20,587)
Depreciation and amortization
(45,560)
(42,993)
General and administrative (3)
(17,395)
(11,376)
Other expense, net (4)
(366)
(13,924)
Impairment charges
(7,270)
0
(Loss) income before earnings from JVs and
other
(1,727)
4,293
Equity in net income of JVs
4,385
2,171
Reserve of preferred equity interests
0
(18,057)
Gain on sale of joint venture interest
13,908
45,681
(Loss) gain on disposition of real estate,
net
(20)
773
Tax expense
(365)
(233)
Net income
16,181
34,628
Non-controlling interests
(173)
(295)
Net income SITE Centers
16,008
34,333
Preferred dividends
(5,133)
(5,133)
Net income Common Shareholders
$10,875
$29,200
Weighted average shares – Basic –
EPS
198,534
193,726
Assumed conversion of diluted
securities
911
0
Weighted average shares – Basic &
Diluted – EPS
199,445
193,726
Earnings per common share –
Basic
$0.05
$0.15
Earnings per common share –
Diluted
$0.05
$0.15
(1)
Rental income:
Minimum rents
$78,894
$74,641
Ground lease minimum rents
6,344
5,468
Recoveries
30,595
27,199
Uncollectible revenue
1,398
(489)
Percentage and overage rent
1,021
601
Ancillary and other rental income
1,345
2,084
Lease termination fees
293
3,025
(2)
Fee Income:
JV and other fees
3,400
7,598
RVI fees
4,752
6,074
RVI disposition fees
0
1,556
(3)
Mark-to-market adjustment (PRSUs)
(5,589)
2,167
(4)
Other income (expense), net:
Transaction and other expense, net
(351)
(223)
Interest income
0
3,485
Debt extinguishment costs, net
(15)
(17,186)
SITE Centers Corp.
Reconciliation: Net Income
to FFO and Operating FFO
and Other Financial
Information
in thousands, except per share
1Q21
1Q20
Net income attributable to Common
Shareholders
$10,875
$29,200
Depreciation and amortization of real
estate
44,188
41,619
Equity in net income of JVs
(4,385)
(2,171)
JVs’ FFO
5,435
7,143
Non-controlling interests
16
28
Impairment of real estate
7,270
0
Reserve of preferred equity interests
0
18,057
Gain on sale of joint venture interest
(13,908)
(45,681)
Loss (gain) on disposition of real estate,
net
20
(773)
FFO attributable to Common
Shareholders
$49,511
$47,422
RVI disposition and refinancing fees
0
(1,556)
Mark-to-market adjustment (PRSUs)
5,589
(2,167)
Debt extinguishment, transaction, net
202
17,409
Joint ventures - debt extinguishment,
other
0
42
Total non-operating items, net
5,791
13,728
Operating FFO attributable to Common
Shareholders
$55,302
$61,150
Weighted average shares & units –
Basic: FFO & OFFO
198,674
193,867
Assumed conversion of dilutive
securities
911
0
Weighted average shares & units –
Diluted: FFO & OFFO
199,585
193,867
FFO per share – Basic
$0.25
$0.24
FFO per share – Diluted
$0.25
$0.24
Operating FFO per share – Basic
$0.28
$0.32
Operating FFO per share –
Diluted
$0.28
$0.32
Common stock dividends declared, per
share
$0.11
$0.20
Capital expenditures (SITE Centers
share):
Development and redevelopment costs
2,801
8,734
Maintenance capital expenditures
1,450
2,255
Tenant allowances and landlord work
11,170
10,383
Leasing commissions
1,434
968
Construction administrative costs
(capitalized)
611
840
Certain non-cash items (SITE Centers
share):
Straight-line rent
(301)
(1,342)
Straight-line fixed CAM
112
149
Amortization of (above)/below-market rent,
net
1,125
1,402
Straight-line ground rent expense
(37)
(70)
Debt fair value and loan cost
amortization
(1,180)
(1,110)
Capitalized interest expense
111
286
Stock compensation expense
(7,569)
176
Non-real estate depreciation expense
(1,306)
(1,316)
SITE Centers Corp.
Balance Sheet:
Consolidated Interests
$ in thousands
At Period End
1Q21
4Q20
Assets:
Land
$947,411
$953,556
Buildings
3,479,583
3,488,499
Fixtures and tenant improvements
519,550
509,866
4,946,544
4,951,921
Depreciation
(1,463,598)
(1,427,057)
3,482,946
3,524,864
Construction in progress and land
38,004
37,467
Real estate, net
3,520,950
3,562,331
Investments in and advances to JVs
75,982
77,297
Investment in and advances to affiliate
(1)
190,035
190,035
Cash
190,833
69,742
Restricted cash
2,868
4,672
Receivables and straight-line (2)
63,760
73,517
Intangible assets, net (3)
104,127
111,022
Other assets, net
26,825
19,668
Total Assets
4,175,380
4,108,284
Liabilities and Equity:
Revolving credit facilities
0
135,000
Unsecured debt
1,450,152
1,449,613
Unsecured term loan
99,679
99,635
Secured debt
230,632
249,260
1,780,463
1,933,508
Dividends payable
28,263
14,844
Other liabilities (4)
195,050
215,109
Total Liabilities
2,003,776
2,163,461
Preferred shares
325,000
325,000
Common shares
21,102
19,400
Paid-in capital
5,933,685
5,705,164
Distributions in excess of net income
(4,111,779)
(4,099,534)
Deferred compensation
4,511
5,479
Other comprehensive income
0
(2,682)
Common shares in treasury at cost
(4,387)
(11,319)
Non-controlling interests
3,472
3,315
Total Equity
2,171,604
1,944,823
Total Liabilities and Equity
$4,175,380
$4,108,284
(1)
Preferred investment in RVI
$190,000
$190,000
Receivable from RVI
35
35
(2)
SL rents (including fixed CAM), net
30,129
30,552
(3)
Operating lease right of use assets
20,047
$20,604
(4)
Operating lease liabilities
39,407
39,794
Below-market leases, net
55,748
57,348
SITE Centers Corp.
Reconciliation of Net Income
Attributable to SITE to Same Store NOI
$ in thousands
1Q21
1Q20
1Q21
1Q20
SITE Centers at 100%
At SITE Centers Share
(Non-GAAP)
GAAP
Reconciliation:
Net income attributable to SITE
Centers
$16,008
$34,333
$16,008
$34,333
Fee income
(8,152)
(15,228)
(8,152)
(15,228)
Interest expense
19,395
20,587
19,395
20,587
Depreciation and amortization
45,560
42,993
45,560
42,993
General and administrative
17,395
11,376
17,395
11,376
Other expense, net
366
13,924
366
13,924
Impairment charges
7,270
0
7,270
0
Equity in net income of joint ventures
(4,385)
(2,171)
(4,385)
(2,171)
Reserve of preferred equity interests
0
18,057
0
18,057
Tax expense
365
233
365
233
Gain on sale of joint venture interest
(13,908)
(45,681)
(13,908)
(45,681)
Loss (gain) on disposition of real estate,
net
20
(773)
20
(773)
Income from non-controlling interests
173
295
173
295
Consolidated NOI
80,107
77,945
80,107
77,945
SITE Centers’ consolidated JV
0
0
(368)
(476)
Consolidated NOI, net of
non-controlling interests
80,107
77,945
79,739
77,469
Net income (loss) from unconsolidated
joint ventures
33,516
(18,654)
4,378
1,981
Interest expense
10,947
17,755
2,701
3,329
Depreciation and amortization
17,117
30,104
3,884
5,196
Impairment charges
0
31,720
0
1,586
Preferred share expense
0
4,530
0
227
Other expense, net
2,964
4,657
742
936
Gain on disposition of real estate,
net
(28,401)
(8,906)
(2,841)
(1,739)
Unconsolidated NOI
$36,143
$61,206
8,864
11,516
Total Consolidated + Unconsolidated
NOI
88,603
88,985
Less: Non-Same Store NOI adjustments
1,102
1,973
Total SSNOI including
redevelopment
89,705
90,958
Less: Redevelopment Same Store NOI
adjustments
(3,191)
(2,572)
Total SSNOI excluding
redevelopment
$86,514
$88,386
SSNOI % Change including
redevelopment
(1.4%)
SSNOI % Change excluding
redevelopment
(2.1%)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210422005316/en/
Conor Fennerty EVP and Chief Financial Officer 216-755-5500
SITE Centers (NYSE:SITC)
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