SITE Centers Reports Third Quarter 2024 Results

BEACHWOOD, Ohio--(BUSINESS WIRE)--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

Contacts

Gerald Morgan, EVP and
Chief Financial Officer
216-755-5500