SITE Centers (SITC) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements – Unaudited Q1 2025 unaudited financials report a $3.1 million net income, a turnaround from a $23.6 million net loss in the prior year, primarily due to reduced impairment and interest expenses Consolidated Statements of Operations Highlights (in thousands) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Rental Income | $31,450 | $91,726 | ($60,276) | | Total Revenues | $42,623 | $94,052 | ($51,429) | | Impairment Charges | $0 | $66,600 | ($66,600) | | Interest Expense | ($5,565) | ($18,663) | $13,098 | | Income (Loss) from Continuing Operations | $3,085 | ($32,983) | $36,068 | | Net Income (Loss) | $3,085 | ($23,552) | $26,637 | | EPS (Diluted) | $0.06 | ($0.51) | $0.57 | Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Real Estate Assets, Net | $761,699 | $772,012 | | Cash and Cash Equivalents | $58,155 | $54,595 | | Total Assets | $929,755 | $933,602 | | Total Indebtedness | $301,643 | $301,373 | | Total Liabilities | $410,138 | $416,858 | | Total Equity | $519,617 | $516,744 | - On October 1, 2024, the company completed the spin-off of 79 convenience retail properties into a separate public company, Curbline Properties Corp. The financial results of these properties are now reported as discontinued operations for the three months ended March 31, 2024[24][52] - The company has ongoing obligations related to the Curbline spin-off, including completing redevelopment projects estimated to cost $32.0 million, which is recorded as a liability[54] Management's Discussion and Analysis of Financial Condition and Results of Operations Q1 2025 net income improved from higher fee income and lower expenses, despite reduced NOI post-spin-off, as the company focuses on asset sales to repay debt and fund distributions Executive Summary and Strategy SITE Centers' strategy focuses on realizing value through asset sales, with $95 million in Q2 2025 sales expected, to repay debt and fund distributions, while maintaining 89.4% portfolio occupancy and positive lease spreads - The company's forward-looking strategy is to realize value through operations and asset sales, using proceeds to repay debt and make shareholder distributions. The timing of sales depends on market conditions and asset management initiatives[70] - As of May 6, 2025, the company has agreements to sell two properties for an aggregate gross price of approximately $95 million, expected to close in Q2 2025[71] Key Operational Metrics (as of March 31, 2025) | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Portfolio Occupancy (pro rata) | 89.4% | 90.6% | 89.8% | | Average Annualized Base Rent/sqft (pro rata) | $19.75 | $19.64 | $19.55 | | Cash Lease Spreads (pro rata) | | | | | New Leases | 6.8% | - | - | | Renewals | 3.4% | - | - | Results of Operations Q1 2025 total revenues decreased by $51.4 million due to lower rental income from asset sales, partially offset by an $8.8 million increase in fee income, while operating and interest expenses significantly declined - Fee and other income for Q1 2025 included $8.4 million from a condemnation proceeding with the State of Florida, significantly boosting revenues for the period[28][77] - The decrease in rental income was primarily driven by the disposition of shopping centers, which accounted for a $43.0 million reduction in base and percentage rental income[77] - The absence of impairment charges in Q1 2025, compared to $66.6 million in Q1 2024, was a major contributor to the improved net income[78] - Interest expense fell significantly due to the weighted-average debt outstanding decreasing from $1.6 billion in Q1 2024 to $0.3 billion in Q1 2025, despite the weighted-average interest rate increasing from 4.5% to 6.5%[79] Non-GAAP Financial Measures Q1 2025 FFO decreased to $16.0 million and Operating FFO to $8.3 million, primarily due to the Curbline spin-off and lower NOI from dispositions Reconciliation of Net Income to FFO and Operating FFO (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income (loss) attributable to common shareholders | $3,085 | ($26,341) | | Depreciation and amortization of real estate | $12,414 | $32,619 | | Discontinued operations' depreciation | $0 | $9,200 | | Impairment of real estate | $0 | $66,600 | | Gain on disposition of real estate, net | ($1,029) | ($31,714) | | Joint ventures' FFO | $1,593 | $1,584 | | FFO attributable to common shareholders | $16,024 | $51,931 | | Adjustments (Condemnation revenue, transaction costs, etc.) | ($7,742) | $7,870 | | Operating FFO attributable to common shareholders | $8,282 | $59,801 | Liquidity, Capital Resources and Financing Activities As of March 31, 2025, the company held $58.2 million in cash and $306.3 million in debt, relying on operations and asset sales for capital, with no common dividends paid in Q1 2025 - The company's primary capital sources are cash flow from operations, debt financings, and proceeds from asset sales. It no longer maintains a revolving credit facility as of August 2024[99] - At March 31, 2025, the company had an unrestricted cash balance of $58.2 million and anticipates spending approximately $32.0 million to complete redevelopment projects for Curbline[102] - No dividends were declared or paid on common shares in Q1 2025. The future dividend policy will be influenced by operations and asset sales, rather than regular quarterly payments[106][107] Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate risk, with 67.5% of consolidated debt being variable-rate, where a 100 basis-point increase would raise quarterly interest expense by $0.5 million Consolidated Debt Profile (as of March 31, 2025) | Debt Type | Amount (Millions) | Weighted Avg. Maturity (Years) | Weighted Avg. Interest Rate | Percentage of Total | | :--- | :--- | :--- | :--- | :--- | | Fixed-Rate Debt | $98.1 | 3.6 | 6.7% | 32.5% | | Variable-Rate Debt | $203.5 | 1.4 | 7.1% | 67.5% | - A 100 basis-point increase in short-term market interest rates on variable-rate debt would result in an estimated increase in interest expense of approximately $0.5 million for the three months ended March 31, 2025[138] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[143] - No material changes were made to the company's internal control over financial reporting during the first quarter of 2025[144] PART II. OTHER INFORMATION Legal Proceedings The company is involved in ordinary course legal proceedings, which management does not expect to materially affect its financial condition or operations - The company states that ongoing legal proceedings are not expected to have a material adverse effect on the company[147] Risk Factors No new risk factors are reported in this quarterly report; refer to the Annual Report on Form 10-K for a comprehensive list - The report indicates no new risk factors during the period[148] Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase common shares in Q1 2025, with $73.4 million remaining available under its $100 million share repurchase program - No shares were repurchased during the three months ended March 31, 2025[150] - As of March 31, 2025, $73.4 million remains available for repurchase under the company's $100 million common share repurchase program[150]