SITE Centers (SITC) - 2024 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents SITE Centers Corp.'s unaudited financial statements and management's analysis of its financial condition and operations Item 1. Financial Statements – Unaudited This section presents the unaudited condensed consolidated financial statements of SITE Centers Corp. for the period ended September 30, 2024, including balance sheets, statements of operations, comprehensive income, equity, and cash flows, along with detailed notes explaining the nature of business, significant accounting policies, acquisitions, indebtedness, and subsequent events like the Curbline spin-off Consolidated Balance Sheets The consolidated balance sheets show a significant decrease in total assets and liabilities from December 31, 2023, to September 30, 2024, primarily driven by real estate dispositions and debt repayments, while total equity increased | Metric | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | |:-----------------------------|:----------------------------|:----------------------------| | Total real estate assets, net| $1,857,114 | $3,260,782 | | Cash and cash equivalents | $1,063,088 | $551,968 | | Total Assets | $3,127,098 | $4,061,351 | | Indebtedness | $300,842 | $1,626,275 | | Total Liabilities | $475,172 | $1,885,808 | | Total Equity | $2,651,926 | $2,175,543 | Consolidated Statements of Operations (Three Months) For the three months ended September 30, 2024, SITE Centers reported a substantial increase in net income attributable to common shareholders, primarily due to a significant gain on disposition of real estate, despite a decrease in rental income and an increase in debt extinguishment costs | Metric | Q3 2024 (in thousands) | Q3 2023 (in thousands) | Change (YoY) | |:------------------------------------------|:-----------------------|:-----------------------|:-------------| | Total Revenues from operations | $90,763 | $144,759 | $(53,996) | | Total Rental operation expenses | $77,717 | $105,609 | $(27,892) | | Interest expense | $(16,706) | $(21,147) | $4,441 | | Interest income | $13,997 | $— | $13,997 | | Debt extinguishment costs | $(32,559) | $— | $(32,559) | | Gain on disposition of real estate, net | $368,139 | $31,047 | $337,092 | | Net income attributable to common shareholders | $320,164 | $45,853 | $274,311 | | Diluted EPS | $6.07 | $0.87 | $5.20 | Consolidated Statements of Operations (Nine Months) For the nine months ended September 30, 2024, the company reported a substantial increase in net income attributable to common shareholders, primarily driven by significant gains from real estate dispositions and increased interest income, despite higher impairment charges and transaction costs | Metric | 9M 2024 (in thousands) | 9M 2023 (in thousands) | Change (YoY) | |:------------------------------------------|:-----------------------|:-----------------------|:-------------| | Total Revenues from operations | $328,525 | $421,609 | $(93,084) | | Total Rental operation expenses | $324,372 | $328,973 | $(4,601) | | Impairment charges | $66,600 | $— | $66,600 | | Interest expense | $(54,045) | $(61,991) | $7,946 | | Interest income | $29,841 | $— | $29,841 | | Debt extinguishment costs | $(43,004) | $— | $(43,004) | | Gain on disposition of real estate, net | $633,169 | $31,230 | $601,939 | | Net income attributable to common shareholders | $529,279 | $60,912 | $468,367 | | Diluted EPS | $10.03 | $1.16 | $8.87 | Consolidated Statements of Comprehensive Income The consolidated statements of comprehensive income show a significant increase in total comprehensive income attributable to SITE Centers for both the three and nine months ended September 30, 2024, primarily driven by the higher net income, with minor impacts from changes in cash flow hedges | Metric | Q3 2024 (in thousands) | Q3 2023 (in thousands) | 9M 2024 (in thousands) | 9M 2023 (in thousands) | |:------------------------------------------|:-----------------------|:-----------------------|:-----------------------|:-----------------------| | Net income | $322,953 | $48,642 | $537,646 | $69,297 | | Change in cash flow hedges, net | $(2,459) | $1,930 | $(8) | $3,017 | | Total comprehensive income attributable to SITE Centers | $320,494 | $50,572 | $537,638 | $72,296 | Consolidated Statements of Equity The consolidated statements of equity reflect an increase in total equity from December 31, 2023, to September 30, 2024, primarily due to comprehensive income, partially offset by dividends declared | Metric | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | |:------------------------------------------|:----------------------------|:----------------------------| | Total Equity | $2,651,926 | $2,175,543 | | Common shares issued | 52,467,187 | 52,393,384 | | Accumulated distributions in excess of net income | $(3,460,210) | $(3,934,736) | Consolidated Statements of Cash Flows For the nine months ended September 30, 2024, cash flow from investing activities significantly increased due to proceeds from real estate dispositions, while cash flow from operating activities decreased and cash flow used for financing activities increased substantially due to debt repayments | Metric | 9M 2024 (in thousands) | 9M 2023 (in thousands) | |:------------------------------------------|:-----------------------|:-----------------------| | Net cash flow provided by operating activities | $143,199 | $192,049 | | Net cash flow provided by (used for) investing activities | $1,849,963 | $(57,512) | | Net cash flow used for financing activities | $(1,478,067) | $(92,490) | | Net increase in cash, cash equivalents and restricted cash | $515,095 | $42,047 | | Cash, cash equivalents and restricted cash, end of period | $1,084,126 | $63,261 | Notes to Condensed Consolidated Financial Statements The notes provide detailed explanations for the condensed consolidated financial statements, covering the company's business, accounting policies, recent acquisitions, joint venture activities, debt restructuring, financial instruments, earnings per share, impairment charges, and significant subsequent events, particularly the spin-off of Curbline Properties 1. Nature of Business and Financial Statement Presentation SITE Centers Corp. is a REIT primarily engaged in owning, leasing, and managing shopping centers, with a tenant base concentrated in the retail industry. The company completed the spin-off of Curbline Properties Corp. on October 1, 2024, which involved 79 convenience retail properties. Financial statements are prepared in accordance with GAAP, and all share and per share data retroactively reflect a one-for-four reverse stock split effective August 19, 2024 - SITE Centers Corp. is a Real Estate Investment Trust (REIT) focused on owning, leasing, acquiring, redeveloping, developing, and managing shopping centers[20] - On October 1, 2024, the Company completed the spin-off of 79 convenience retail properties (approximately 2.7 million square feet of GLA) into a separate publicly-traded company, Curbline Properties Corp[21] - A one-for-four reverse stock split of common shares was effected prior to August 19, 2024, with all share and per share data retroactively adjusted[25] | Metric | 9M 2024 (in millions) | 9M 2023 (in millions) | |:------------------------------------------|:----------------------|:----------------------| | Gross proceeds from real estate sales | $2,245.1 | $118.3 | | Gain on dispositions of real estate | $633.2 | $31.0 | 2. Acquisitions During the nine months ended September 30, 2024, SITE Centers acquired 15 convenience centers and land parcels for a total purchase price of $237.9 million, with the fair value allocated primarily to land and buildings. These acquisitions contributed $4.5 million in total revenues from their acquisition dates through September 30, 2024 | Acquisition Metric | 9M 2024 (in thousands) | |:----------------------------|:-----------------------| | Total Purchase Price | $237,890 | | Fair Value Allocation: | | | - Land | $104,632 | | - Buildings | $113,110 | | - In-place leases | $25,704 | | Net assets acquired | $234,894 | | Total revenues from acquired properties | $4,500 | 3. Investments in and Advances to Joint Ventures The company's investments in unconsolidated joint ventures decreased from $39.4 million at December 31, 2023, to $32.2 million at September 30, 2024. This change was influenced by equity in net loss, distributions, and the acquisition of an asset from the DDRM Properties Joint Venture, which resulted in a $2.7 million gain on sale and change in control of interests | Metric | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | |:------------------------------------------|:----------------------------|:----------------------------| | Investments in and Advances to Joint Ventures, net | $32,179 | $39,372 | | Equity in net loss (9M 2024) | $(895) | N/A | | Distributions (9M 2024) | $(1,400) | N/A | | Gain on Sale and Change in Control of Interests (9M 2024) | $2,669 | N/A | - Revenues from asset management, property management, and leasing/development services to joint ventures decreased to $4.1 million for the nine months ended September 30, 2024, from $5.2 million in the prior year[32] 4. Other Assets and Intangibles, net Total other assets, net, decreased from $126.5 million at December 31, 2023, to $114.8 million at September 30, 2024. This change includes a write-off of $21.2 million in fees related to a terminated $1.1 billion Mortgage Commitment, which was expensed to Debt extinguishment costs | Metric | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | |:------------------------------------------|:----------------------------|:----------------------------| | Total intangible assets, net | $77,022 | $68,990 | | Operating lease ROU assets | $16,086 | $17,373 | | Prepaid expenses | $11,007 | $5,104 | | Total other assets, net | $114,837 | $126,543 | | Below-market leases (liability) | $38,729 | $46,096 | - The Company wrote off $21.2 million in fees related to a $1.1 billion Mortgage Commitment to Debt extinguishment costs for the nine months ended September 30, 2024, after terminating the commitment[37] 5. Indebtedness SITE Centers significantly restructured its debt, repaying all outstanding senior unsecured indebtedness, including Senior Notes and a Term Loan, and terminating its Revolving Credit Facility. This was funded by cash on hand and proceeds from a new $530.0 million Mortgage Facility, which is secured by 23 properties and matures in September 2026 | Indebtedness Type | Dec 31, 2023 (in thousands) | |:--------------------------|:----------------------------| | Senior Notes, net | $1,303,243 | | Term Loan, net | $198,856 | | Revolving Credit Facility | $— | | Mortgage Indebtedness, net| $124,176 | | Total Indebtedness | $1,626,275 | - In August 2024, the Company repaid all outstanding senior unsecured indebtedness, including Senior Notes ($1.3 billion) and a Term Loan ($200.0 million), incurring $6.7 million and $0.9 million in Debt Extinguishment Costs, respectively[39][41] - The Revolving Credit Facility was terminated on August 15, 2024, resulting in $3.9 million in Debt Extinguishment Costs[42] - A new $530.0 million Mortgage Facility was closed and funded on August 7, 2024, secured by 23 properties, with an interest rate of 30-day term SOFR (floor 3.50%) plus 2.75%, maturing September 6, 2026[43][44][45] - As of September 30, 2024, the outstanding principal balance of the Mortgage Facility was $206.9 million, secured by 13 properties[48] 6. Financial Instruments and Fair Value Measurements The company's financial instruments, including debt and derivatives, are measured at fair value. Significant changes occurred with the termination of a swap agreement and the re-designation of an interest rate swap to the new Mortgage Facility, impacting cash flow hedges and derivative gains/losses | Debt Type | Sep 30, 2024 Carrying Amount (in thousands) | Sep 30, 2024 Fair Value (in thousands) | Dec 31, 2023 Carrying Amount (in thousands) | Dec 31, 2023 Fair Value (in thousands) | |:--------------------------|:--------------------------------------------|:---------------------------------------|:--------------------------------------------|:---------------------------------------| | Senior Notes | $— | $— | $1,303,243 | $1,278,186 | | Revolving Credit Facility and Term Loan | $— | $— | $198,856 | $200,000 | | Mortgage Indebtedness | $300,842 | $313,079 | $124,176 | $127,749 | - A swap agreement (included in Other Assets) with a fair value of $11.1 million at December 31, 2023, was terminated in August 2024[52] - An interest rate swap with a notional amount of $200.0 million was terminated and re-designated to the new Mortgage Facility, converting the variable SOFR rate to a fixed rate of 2.75%, and the Company received a cash payment of $6.8 million upon termination[54] - Swaption agreements hedging potential yield maintenance premiums on Senior Notes were terminated in August 2024, resulting in a $1.3 million cash payment and a non-cash loss of $4.4 million for the nine months ended September 30, 2024[56] 7. Other Comprehensive Income Accumulated Other Comprehensive Income remained relatively stable, with changes primarily driven by cash flow hedges and reclassifications to interest expense | Metric | 2024 (in thousands) | |:------------------------------------------|:--------------------| | Balance, December 31, 2023 | $6,121 | | Change in cash flow hedges | $3,391 | | Amounts reclassified to interest expense | $(3,399) | | Balance, September 30, 2024 | $6,113 | 8. Earnings Per Share Basic and diluted EPS significantly increased for both the three and nine months ended September 30, 2024, primarily due to higher net income attributable to common shareholders, with all share data adjusted for the one-for-four reverse stock split | Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 | |:------------------------------------------|:--------|:--------|:--------|:--------| | Net income attributable to common shareholders | $318,993 (in thousands) | $45,753 (in thousands) | $527,274 (in thousands) | $60,617 (in thousands) | | Basic EPS | $6.09 | $0.87 | $10.07 | $1.16 | | Diluted EPS | $6.07 | $0.87 | $10.03 | $1.16 | | Basic — Average shares outstanding | 52,400 (in thousands) | 52,322 (in thousands) | 52,381 (in thousands) | 52,376 (in thousands) | | Diluted — Average shares outstanding | 52,553 (in thousands) | 52,350 (in thousands) | 52,558 (in thousands) | 52,436 (in thousands) | - The Company declared cash dividends of $1.04 per common share for the nine months ended September 30, 2024, a decrease from $1.56 per common share in the prior year[61] 9. Impairment Charges For the nine months ended September 30, 2024, the Company recorded $66.6 million in impairment charges on long-lived assets held and used, triggered by a change in hold period assumptions. These valuations were determined using Level 3 fair value measurements, including indicative bids and income capitalization approaches - The Company recorded $66.6 million in impairment charges for the nine months ended September 30, 2024, due to changes in hold period assumptions[62] | Metric | Sep 30, 2024 (in millions) | |:------------------------------------------|:---------------------------| | Fair Value of Long-lived assets held and used | $138.2 | | Total Impairment Charges | $66.6 | | Valuation Technique (for $116.0M) | Income Capitalization Approach | | Unobservable Inputs (for $116.0M) | Market Capitalization Rate: 7.0%-7.7% | | Cost per square foot (for $116.0M) | $44 | 10. Subsequent Events On October 1, 2024, SITE Centers completed the spin-off of Curbline Properties Corp., distributing two shares of Curbline for every one SITE Centers common share. This involved a Separation and Distribution Agreement, Shared Services Agreement, and other related agreements. The Company also announced its intent to redeem all outstanding Class A Preferred Shares on November 26, 2024, expecting a non-cash charge of approximately $6.1 million - On October 1, 2024, the Company completed the spin-off of Curbline Properties Corp., transferring 79 convenience retail properties and $800.0 million of unrestricted cash to Curbline[67] - Common shareholders of SITE Centers received two shares of Curbline common stock for every one SITE Centers common share held[67] - The Company provided notice to redeem all outstanding 6.375% Class A Cumulative Redeemable Preferred Shares on November 26, 2024, expecting a non-cash charge of approximately $6.1 million in Q4 2024[69] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's Discussion and Analysis provides an overview of SITE Centers' financial condition, results of operations, and liquidity, highlighting the impact of the Curbline spin-off, significant asset dispositions, debt restructuring, and operational performance, also discussing non-GAAP financial measures, capital resources, and economic conditions affecting the company EXECUTIVE SUMMARY The Executive Summary outlines SITE Centers' business as a REIT owning and managing shopping centers, detailing key financial metrics, the strategic spin-off of Curbline Properties, recent acquisition and disposition activities, and strong operational accomplishments in leasing and rent growth - As of September 30, 2024, SITE Centers' portfolio consisted of 112 shopping centers (including 11 joint ventures), totaling approximately 11.5 million square feet of GLA[72] | Metric | Q3 2024 (in thousands) | Q3 2023 (in thousands) | 9M 2024 (in thousands) | 9M 2023 (in thousands) | |:------------------------------------------|:-----------------------|:-----------------------|:-----------------------|:-----------------------| | Net income attributable to common shareholders | $320,164 | $45,853 | $529,279 | $60,912 | | FFO attributable to common shareholders | $(13,495) | $67,845 | $78,614 | $187,263 | | Operating FFO attributable to common shareholders | $42,753 | $69,869 | $158,438 | $193,893 | | Diluted EPS | $6.07 | $0.87 | $10.03 | $1.16 | - The increase in 9M 2024 net income was primarily due to gains from real estate dispositions and increased interest income, partially offset by property dispositions, debt extinguishment costs, Curbline spin-off costs, and impairment charges[73] - From July 1, 2023, to September 30, 2024, the Company generated approximately $3.1 billion from property sales to acquire convenience properties, capitalize Curbline, and repay unsecured indebtedness[84] - Acquired 13 convenience centers and a land parcel for $193.6 million, plus a joint venture partner's 80% interest in Meadowmont Village for $35.4 million[87] - Sold 40 wholly-owned shopping centers and two joint venture assets for an aggregate sales price of $2,325.9 million ($2,261.3 million at the Company's share)[87] - Total portfolio average annualized base rent per square foot increased to $24.83 at September 30, 2024, from $20.35 at December 31, 2023[89] - Aggregate occupancy of the operating shopping center portfolio was 91.1% at September 30, 2024, compared to 92.0% at December 31, 2023[89] RESULTS OF OPERATIONS The results of operations show a decrease in total revenues from operations for both the three and nine months ended September 30, 2024, primarily due to property dispositions. However, net income significantly increased due to substantial gains on real estate dispositions and higher interest income, despite increased impairment charges and transaction costs | Metric (in thousands) | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 | |:------------------------------------------|:-----------|:-----------|:-----------|:-----------| | Total Revenues from operations | $90,763 | $144,759 | $328,525 | $421,609 | | Total Rental operation expenses | $77,717 | $105,609 | $324,372 | $328,973 | | Other income (expense) | $(58,361) | $(21,837) | $(102,019) | $(64,002) | | Gain on disposition of real estate, net | $368,139 | $31,047 | $633,169 | $31,230 | | Net income attributable to SITE Centers | $322,953 | $48,642 | $537,646 | $69,279 | - The decrease in base and percentage rental income for the nine months ended September 30, 2024, was primarily due to the disposition of shopping centers ($86.2 million decrease), partially offset by acquisitions ($8.9 million increase) and comparable portfolio properties ($3.5 million increase)[92][93] - Impairment charges of $66.6 million were recorded for the nine months ended September 30, 2024, triggered by changes in hold period assumptions[96][97] - Debt extinguishment costs for the nine months ended September 30, 2024, totaled $43.0 million, primarily from the write-off of loan costs and commitment fees related to the termination of the Mortgage Commitment, Revolving Credit Facility, Senior Notes redemption, Term Loan pay-off, and property releases from the Mortgage Facility[100][102] - Transaction costs and other expenses for the nine months ended September 30, 2024, included $30.3 million related to the Curbline spin-off[100][104] NON-GAAP FINANCIAL MEASURES This section defines and reconciles non-GAAP financial measures, Funds from Operations (FFO) and Operating FFO, which are used to assess the core operating performance of REITs. Both FFO and Operating FFO attributable to common shareholders decreased for the nine months ended September 30, 2024, primarily due to property dispositions, spin-off transaction costs, and debt extinguishment costs - FFO is defined as net income (loss) adjusted for preferred share dividends, gains/losses from real estate dispositions, impairment charges, gains/losses from changes in control, certain non-cash items (depreciation, amortization of intangibles, equity income from joint ventures), and the company's proportionate share of FFO from unconsolidated joint ventures[114] - Operating FFO further excludes non-comparable charges, income, and gains/losses such as write-off of preferred share original issuance costs, gains/losses on early extinguishment of debt, mark-to-market on derivative instruments, certain transaction fee income, transaction costs, and restructuring costs[115] | Metric (in thousands) | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 | |:------------------------------------------|:-----------|:-----------|:-----------|:-----------| | FFO attributable to common shareholders | $(13,495) | $67,845 | $78,614 | $187,263 | | Operating FFO attributable to common shareholders | $42,753 | $69,869 | $158,438 | $193,893 | - The decrease in FFO and Operating FFO for the nine months ended September 30, 2024, was primarily due to the impact of net property dispositions, Curbline spin-off transaction costs, and debt extinguishment costs, partially offset by increased interest income[121] LIQUIDITY, CAPITAL RESOURCES AND FINANCING ACTIVITIES SITE Centers significantly reduced its total consolidated debt from $1.6 billion to $0.3 billion by September 30, 2024, through asset sales and a new $530.0 million Mortgage Facility, which also capitalized Curbline Properties. The company terminated its Revolving Credit Facility and Term Loan, and repaid all senior unsecured indebtedness. Cash flow from operating activities decreased, while investing activities saw a substantial increase due to disposition proceeds, and financing activities increased due to debt repayments - Total consolidated debt outstanding decreased from $1.6 billion at December 31, 2023, to $0.3 billion at September 30, 2024[127] - As of September 30, 2024, the Company had an unrestricted cash balance of $1,063.1 million, with $800.0 million used to capitalize Curbline Properties, $21.0 million for spin-off transaction expenses, and $176.3 million for preferred share redemption[128] - The Revolving Credit Facility and Term Loan were fully terminated and repaid in August 2024[129][130] - All outstanding senior unsecured indebtedness, including $448.3 million of 4.700% Notes due 2027, $400.4 million of 3.625% Notes due 2025, and $370.1 million of 4.250% Notes due 2026, was redeemed in August 2024[131] - A $530.0 million Mortgage Facility was closed and funded on August 7, 2024, with an outstanding principal balance of $206.9 million at September 30, 2024, secured by 13 properties[132][138] | Cash Flow Activity (in thousands) | 9M 2024 | 9M 2023 | |:------------------------------------------|:-----------|:-----------| | Operating activities | $143,199 | $192,049 | | Investing activities | $1,849,963 | $(57,512) | | Financing activities | $(1,478,067)| $(92,490) | - Cash provided by investing activities increased by $1.9 billion, primarily due to a $2.0 billion increase in proceeds from real estate dispositions[142] - Cash used for financing activities increased by $1.4 billion, mainly due to $1.2 billion in Senior Notes repayments and a $33.5 million increase in dividends paid (including a special dividend in January 2024)[143] - The Company did not declare a common share dividend for Q3 2024 to maximize Curbline's capitalization and preserve funds[144] SOURCES AND USES OF CAPITAL The company's capital strategy focuses on maintaining liquidity, managing debt, and leveraging asset sales and debt financings. Following the Curbline spin-off and repayment of unsecured debt, the company plans to realize value through operations and potentially additional asset sales to repay debt and distribute to shareholders. It details recent acquisitions of convenience centers and extensive dispositions of wholly-owned shopping centers and joint venture assets - The Company completed the spin-off of Curbline on October 1, 2024, and used proceeds from the Mortgage Facility and asset sales to repay all outstanding unsecured indebtedness[150][151] - Acquired 15 convenience centers and land parcels for $237.9 million through September 30, 2024, all included in the Curbline spin-off (except portions of Meadowmont Village)[152][153] - Sold 40 wholly-owned shopping centers and one parcel for $2,245.1 million through September 30, 2024, with retained convenience retail GLA subsequently included in the Curbline portfolio[155][156][158] - The DDRM Properties Joint Venture sold its remaining assets, including one to the Company for $44.2 million and another for $36.5 million, with no remaining assets in the joint venture[159] - As of September 30, 2024, the Company had approximately $6 million in construction in progress for consolidated redevelopments and $33.7 million estimated cost to complete redevelopment projects at Curbline-owned properties[160] CAPITALIZATION As of September 30, 2024, SITE Centers' capitalization included $306.9 million of debt, $175.0 million of preferred shares, and $3.2 billion of market equity. The company announced the redemption of all its Class A Preferred Shares on November 26, 2024, and no longer maintains a revolving line of credit or an investment grade rating following debt restructuring | Metric | Sep 30, 2024 (in millions) | |:------------------------------------------|:---------------------------| | Debt | $306.9 | | Preferred shares | $175.0 | | Market equity | $3,200.0 | - The Company announced the redemption of all $175.0 million aggregate liquidation preference of its 6.375% Class A Cumulative Redeemable Preferred Shares on November 26, 2024[163] - Following the Curbline spin-off and debt repayment, the Company no longer maintains a revolving line of credit or an investment grade rating[164] CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS The Company has addressed all consolidated debt maturing in 2024 and expects to fund future maturities through cash on hand, asset sales, and debt financings. It also has commitments for redevelopment projects, including $33.7 million for Curbline properties, and a $12.3 million liability for guaranteed construction costs and deferred maintenance - All consolidated debt maturing in 2024 has been addressed[166] - Commitments with general contractors for consolidated properties totaled approximately $1.1 million at September 30, 2024[167] - The estimated cost to complete redevelopment projects at Curbline-owned properties is $33.7 million[168] - A liability of approximately $12.3 million exists for guaranteed additional construction costs and deferred maintenance related to property sales[169] ECONOMIC CONDITIONS SITE Centers benefits from steady retailer demand, driven by its portfolio concentration in suburban, high-income communities and tenants' reliance on physical stores. Despite macroeconomic challenges like inflation and rising interest rates, the company maintains strong occupancy and rent growth, with a diversified tenant base focused on daily necessities. However, risks remain from changing consumer behaviors and potential impacts on property sales and refinancing - The Company experiences steady retailer demand due to its portfolio in suburban, high household income communities, population growth, remote work trends, and limited new retail construction[171] - The tenant base is diversified, with no single tenant exceeding 3% of annualized consolidated revenues, and primarily consists of national tenants in value and convenience categories[172] | Metric | Sep 30, 2024 | Dec 31, 2023 | |:------------------------------------------|:-------------|:-------------| | Shopping center portfolio occupancy (pro rata) | 91.1% | 92.0% | | Total portfolio average annualized base rent (pro rata) | $24.83 | $20.35 | - Inflation, higher interest rates, and concerns over consumer spending pose risks, but the Company believes its portfolio is well-positioned to backfill vacant spaces[174] FORWARD-LOOKING STATEMENTS This section provides a cautionary statement regarding forward-looking statements within the report, emphasizing that actual results may differ materially due to various known and unknown risks and uncertainties. It lists numerous factors that could cause such differences, including real estate industry risks, market conditions, consumer behavior changes, competition, tenant financial health, disposition challenges, spin-off related liabilities, redevelopment risks, financing availability, interest rate changes, REIT compliance, joint venture risks, impairment losses, litigation, natural disasters, environmental liabilities, regulatory changes, and cybersecurity risks - Forward-looking statements involve known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from expectations[178] - Key risk factors include general real estate industry risks, local and national economic conditions, changes in consumer buying practices (e.g., e-commerce), competition, tenant financial health, challenges in property dispositions, potential liabilities from the Curbline spin-off, redevelopment project risks, debt financing availability and terms, interest rate fluctuations, REIT qualification compliance, and joint venture risks[178][179][180] Item 3. Quantitative and Qualitative Disclosures about Market Risk The Company's primary market risk exposure is interest rate risk, with its consolidated debt at September 30, 2024, consisting of 32.7% fixed-rate and 67.3% variable-rate debt. The company actively manages interest costs and may use swap positions, but rising interest rates could increase costs and impact refinancing ability | Debt Type | Amount (Millions) | Weighted-Average Maturity (Years) | Weighted-Average Interest Rate | Percentage of Total | |:--------------------|:------------------|:----------------------------------|:-------------------------------|:--------------------| | Fixed-Rate Debt | $98.5 | 4.1 | 6.7% | 32.7% | | Variable-Rate Debt | $202.3 | 1.9 | 7.9% | 67.3% | | Joint Venture Debt Type | JV Debt (Millions) | Company's Share (Millions) | Weighted-Average Maturity (Years) | Weighted-Average Interest Rate | |:------------------------|:-------------------|:---------------------------|:----------------------------------|:-------------------------------| | Fixed-Rate Debt | $364.4 | $72.9 | 4.3 | 6.4% | | Variable-Rate Debt | $61.4 | $30.5 | 0.2 | 3.0% | - A 100 basis-point increase in interest rates would increase the fair value of the Company's fixed-rate debt from $104.0 million to $100.5 million at September 30, 2024[184] Item 4. Controls and Procedures The CEO and CFO evaluated the effectiveness of the Company's disclosure controls and procedures as of September 30, 2024, concluding they were effective. No material changes in internal control over financial reporting occurred during the quarter - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of September 30, 2024[187] - No material changes in internal control over financial reporting occurred during the three months ended September 30, 2024[188] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, and other disclosures Item 1. LEGAL PROCEEDINGS The Company and its subsidiaries are involved in various legal proceedings, which are not expected to have a material adverse effect on the Company's liquidity, financial position, or results of operations - Legal proceedings are not expected to have a material adverse effect on the Company's liquidity, financial position, or results of operations[190] Item 1A. RISK FACTORS No new material risk factors were identified for the current reporting period. Readers are directed to the Company's Annual Report on Form 10-K for a comprehensive discussion of risk factors - No new material risk factors were reported for the quarter ended September 30, 2024[191] Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS The Company repurchased 37,026 common shares in September 2024 at an average price of $57.50 per share. As of September 30, 2024, the Company had repurchased 0.5 million common shares under its $100.0 million repurchase program at an aggregate cost of $26.6 million | Month (2024) | Total Shares Purchased | Average Price Paid per Share | |:-------------|:-----------------------|:-----------------------------| | September | 37,026 | $57.50 | - As of September 30, 2024, the Company repurchased 0.5 million common shares for $26.6 million under its $100.0 million repurchase program[191] Item 3. DEFAULTS UPON SENIOR SECURITIES No defaults upon senior securities were reported for the period - No defaults upon senior securities were reported[192] Item 4. MINE SAFETY DISCLOSURES This item is not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[192] Item 5. OTHER INFORMATION No other information was reported for the period - No other information was reported[192] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including various agreements related to the Mortgage Facility and Curbline spin-off, employment agreements, and certifications, with financial statements formatted in iXBRL - Exhibits include the Fourth Amended and Restated Articles of Incorporation, Loan Agreement for the Mortgage Facility, various employment agreements, and documents related to the Curbline spin-off and reverse stock split[193] - Consolidated financial statements are attached as Exhibit 101, formatted in iXBRL[195] SIGNATURES The report is duly signed on behalf of SITE Centers Corp. by Jeffrey A. Scott, Senior Vice President, Chief Accounting Officer, and Principal Accounting Officer, on October 30, 2024 - The report was signed by Jeffrey A. Scott, Senior Vice President, Chief Accounting Officer and Principal Accounting Officer, on October 30, 2024[198]