SITE Centers (SITC) - 2024 Q1 - Quarterly Results

Earnings Release & Financial Statements Press Release and First Quarter Results SITE Centers reported a net loss for Q1 2024, primarily due to property dispositions and impairment charges, while advancing its Curbline Properties Corp. spin-off - The company is advancing its plan to spin-off its Convenience assets into a new, publicly-traded REIT named Curbline Properties Corp. (CURB), expected around October 1, 2024, with 67 wholly-owned properties designated for the CURB portfolio[7][9] Q1 2024 Financial Highlights vs. Q1 2023 | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net (Loss) Income Attributable to Common Shareholders | ($26.3 million) | $12.5 million | | (Loss) Earnings per Diluted Share | ($0.13) | $0.06 | | Operating FFO (OFFO) | $59.8 million | $62.7 million | | OFFO per Diluted Share | $0.28 | $0.30 | - Year-to-date transaction activity includes the sale of five wholly-owned shopping centers for $169.6 million and the acquisition of two convenience shopping centers for $19.1 million[9] - The company recorded significant impairment charges of $66.6 million related to three wholly-owned assets due to changes in hold period assumptions[9] Key Quarterly Operating Results (Pro Rata Basis) | Metric | Q1 2024 | TTM Ended Q1 2024 | | :--- | :--- | :--- | | Same-Store NOI (SSNOI) Increase | 1.5% | - | | Cash New Leasing Spreads | 11.5% | 29.0% | | Cash Renewal Leasing Spreads | 8.0% | 6.5% | | Leased Rate (as of Mar 31, 2024) | 94.2% | - | | SNO Spread (Annualized Base Rent) | 260 bps ($13.1M) | - | Financial Statements Consolidated financial statements for Q1 2024 show a net loss of $23.6 million, primarily due to property dispositions and impairment charges, with total assets decreasing to $3.9 billion Consolidated Income Statement Summary (in thousands) | Account | 1Q24 | 1Q23 | | :--- | :--- | :--- | | Total Revenues | $120,621 | $136,833 | | Net Operating Income | $83,339 | $93,614 | | Impairment Charges | ($66,600) | $0 | | Gain on Disposition of Real Estate, net | $31,714 | $205 | | Net (Loss) Income | ($23,552) | $15,302 | | Net (Loss) Income Common Shareholders | ($26,341) | $12,495 | Reconciliation to Operating FFO (in thousands) | Line Item | 1Q24 | 1Q23 | | :--- | :--- | :--- | | Net (loss) income attributable to Common Shareholders | ($26,341) | $12,495 | | Adjustments (Depreciation, Impairment, Gains, etc.) | +$78,272 | +$49,404 | | FFO attributable to Common Shareholders | $51,931 | $61,899 | | Non-operating items, net | $7,870 | $829 | | Operating FFO attributable to Common Shareholders | $59,801 | $62,728 | Consolidated Balance Sheet Summary (in thousands) | Account | March 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Real estate, net | $3,113,287 | $3,260,782 | | Total Assets | $3,892,578 | $4,061,351 | | Total Debt (Unsecured + Secured) | $1,565,231 | $1,626,275 | | Total Liabilities | $1,768,634 | $1,885,808 | | Total Equity | $2,123,944 | $2,175,543 | Company Summary Portfolio Summary As of March 31, 2024, SITE Centers' pro-rata portfolio comprised 18.7 million square feet with a 94.2% leased rate and an average base rent of $20.69 per square foot Quarterly Operational Overview (Pro Rata Share) | Metric | 3/31/2024 | 12/31/2023 | 3/31/2023 | | :--- | :--- | :--- | :--- | | Owned GLA (in thousands) | 18,686 | 19,312 | 23,014 | | Base Rent PSF | $20.69 | $20.35 | $19.65 | | Leased Rate | 94.2% | 94.5% | 95.9% | | Commenced Rate | 91.6% | 92.0% | 92.9% | - The top 5 MSAs by Annualized Base Rent (ABR) are Miami (10%), Atlanta (9%), Orlando (7%), Chicago (7%), and Trenton (7%), indicating regional concentration[2][38] Capital Structure As of March 31, 2024, SITE Centers had a total market capitalization of $4.4 billion, with total debt of $1.7 billion and a pro-rata Net Debt to Adjusted EBITDA ratio of 4.3x Capitalization Overview (in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Common Shares Equity | $3,069,820 | $2,853,141 | | Total Debt (includes JVs at share) | $1,684,996 | $1,746,640 | | Net Debt | $1,116,271 | $1,164,880 | | Total Market Capitalization | $4,361,090 | $4,193,020 | Leverage Ratios | Ratio | March 31, 2024 | March 31, 2023 | | :--- | :--- | :--- | | Average Pro-Rata Net Debt / Adjusted EBITDA | 4.3x | 5.1x | | Fixed Charge Coverage Ratio | 3.9x | 4.1x | - Credit ratings as of March 31, 2024, include Moody's Baa3 (Negative), S&P BBB- (Negative), and Fitch BBB (Positive)[40] Same Store Metrics For Q1 2024, Same Store Net Operating Income (SSNOI) at SITE Centers' share increased by 1.5% year-over-year, driven by a 1.8% rise in same-store revenues Quarterly Same Store NOI Growth (at SITE Share) | Period | SSNOI Change vs. Prior Year | | :--- | :--- | | Q1 2024 | 1.5% | | Q1 2023 | 4.2% | Consolidated SSNOI Breakdown (Q1 2024 vs Q1 2023) | Component | Q1 2024 ($ thousands) | Q1 2023 ($ thousands) | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $109,659 | $107,742 | 1.8% | | Total Expenses | ($33,004) | ($32,265) | 2.3% | | Total Consolidated SSNOI | $76,655 | $75,477 | 1.6% | Leasing Summary In Q1 2024, SITE Centers executed 94 new and renewal leases totaling 594k square feet with a blended cash spread of 8.2%, reflecting strong leasing activity Leasing Spreads (Pro Rata Share) | Lease Type | Q1 2024 (Cash Spread) | TTM (Cash Spread) | Q1 2024 (Straight-lined) | TTM (Straight-lined) | | :--- | :--- | :--- | :--- | :--- | | New Leases | 11.5% | 29.0% | 26.9% | 40.3% | | Renewals | 8.0% | 6.5% | 12.4% | 11.0% | | New + Renewals | 8.2% | 8.8% | 13.1% | 13.9% | - For the trailing twelve months ended March 31, 2024, the company signed 3.5 million square feet of leases (new and renewals) on a pro-rata basis[37][45] Lease Expirations The company's lease expiration schedule shows a manageable near-term profile, with 3.0% of ABR expiring in the remainder of 2024, and significant expirations in 2027-2028 Lease Expirations by Year (% of Total ABR, No Options Exercised) | Year | % of Total ABR Expiring | | :--- | :--- | | 2024 (rem.) | 3.0% | | 2025 | 13.2% | | 2026 | 9.3% | | 2027 | 15.9% | | 2028 | 17.2% | - As of March 31, 2024, the Signed Not Opened (SNO) pipeline included 77 leases for 529,000 square feet, representing $13.1 million of future annualized base rent[48] Top 50 Tenants The tenant base is well-diversified, with the top 50 tenants accounting for 48.5% of total pro-rata annualized base rent, led by TJX Companies Top 5 Tenants by Pro Rata % of Total Base Rent | Tenant | Pro Rata % of Total Base Rent | Credit Rating (S&P/Moody's) | | :--- | :--- | :--- | | 1. TJX Companies | 5.0% | A/A2 | | 2. Dick's Sporting Goods | 2.6% | BBB/Baa3 | | 3. Ross Stores | 2.3% | BBB+/A2 | | 4. PetSmart | 2.2% | B+/B1 | | 5. Burlington | 2.1% | BB+/NR | - The top 10 tenants represent 21.7% of the total pro-rata base rent, indicating a diversified tenant roster with no single tenant having excessive concentration[51] Investments Redevelopment Pipeline The company's active redevelopment pipeline consists of three projects with estimated net costs of $24.7 million and an estimated yield of 10% Total Redevelopment Pipeline Summary (in thousands) | Metric | Amount | | :--- | :--- | | Estimated Net Costs | $24,705 | | Costs to Date | $20,282 | | Remaining Costs | $5,840 | | Estimated Yield | 10% | Transactions Year-to-date through April 2024, SITE Centers acquired $21.7 million in properties and disposed of $169.6 million, actively shaping its portfolio Transaction Summary YTD 2024 (at Share, in thousands) | Transaction Type | Price | | :--- | :--- | | Acquisitions | $21,730 | | Dispositions | $169,550 | Transaction Summary Q1 2024 (at Share, in thousands) | Transaction Type | Price | | :--- | :--- | | Acquisitions | $20,730 | | Dispositions | $119,400 | Debt Summary Debt Composition and Maturities As of March 31, 2024, SITE Centers' total debt was $1.7 billion, predominantly fixed-rate and unsecured, with a well-laddered maturity schedule Debt Composition (at SITE Share) | Debt Type | Amount (in thousands) | % of Total | | :--- | :--- | :--- | | Unsecured | $1,444,372 | 86.6% | | Secured (Mortgage) | $240,624 | 14.4% | | Total | $1,684,996 | 100.0% | Debt Maturities (at SITE Share, in thousands) | Year | Amount Maturing | | :--- | :--- | | 2024 | $9,107 | | 2025 | $427,628 | | 2026 | $426,795 | | 2027 | $651,861 | | 2028 | $94,633 | Debt Detail The company's debt portfolio includes a $200 million unsecured term loan and $1.24 billion in unsecured notes, with a weighted average maturity of 2.4 years Major Debt Tranches (at SITE Share, in thousands) | Debt Instrument | Balance | Maturity Date | GAAP Interest Rate | | :--- | :--- | :--- | :--- | | Unsecured Term Loan | $200,000 | Jun 2027 | 3.99% | | Unsecured Notes - 2025 | $400,129 | Feb 2025 | 3.79% | | Unsecured Notes - 2026 | $394,504 | Feb 2026 | 4.43% | | Unsecured Notes - 2027 | $449,739 | Jun 2027 | 4.80% | Debt/Adjusted EBITDA The company's Debt-to-Adjusted EBITDA ratio improved to 4.3x for the twelve months ending March 31, 2024, reflecting a reduction in net effective debt Debt/Adjusted EBITDA Ratio Trend | Ratio | TTM ended Mar 31, 2024 | TTM ended Mar 31, 2023 | | :--- | :--- | :--- | | Consolidated | 4.0x | 5.0x | | Pro Rata including JVs | 4.3x | 5.3x | - Pro-rata Adjusted EBITDA for the trailing twelve months was $349.8 million, with average pro-rata net effective debt at $1.49 billion[66] Unconsolidated Joint Ventures The company holds interests in 13 properties through three unconsolidated joint ventures, generating $16.2 million in NOI for Q1 2024 with total debt of $483.5 million Shopping Center Summary Property List This section provides a comprehensive list of all 114 shopping centers owned by SITE Centers, detailing location, ownership, GLA, ABR, and major tenants - The property list details 114 centers, including 101 wholly-owned properties and 13 joint venture properties[80][82][86] Reporting Policies and Other Notable Accounting and Supplemental Policies This section outlines key accounting policies, including revenue recognition, cost capitalization, and depreciation, along with definitions for leasing spread calculations - The company does not capitalize any executive officer compensation, including it in General and Administrative expenses[94] - Leasing spread calculations for 'Comparable' leases only include deals executed within one year of prior tenant vacating, excluding new leases at redevelopment properties or space vacant at acquisition[101] Non-GAAP Measures The company utilizes non-GAAP measures like FFO, OFFO, NOI, and SSNOI to provide insight into its core operating performance by excluding certain non-comparable items - FFO (Funds from Operations): Calculated per NAREIT definition, it excludes real estate depreciation and gains/losses on property sales to measure the operating performance of the real estate portfolio[105] - Operating FFO (OFFO): A further adjustment to FFO, removing non-comparable or non-core items like gains on debt extinguishment, transaction costs, and other restructuring charges to better reflect the core portfolio's performance[106] - SSNOI (Same Store Net Operating Income): Compares NOI for a consistent pool of properties owned for comparable periods (15 months), excluding non-cash and non-comparable items to show underlying operational trends[113] Detailed Leasing Metrics by Ownership This section provides granular portfolio and leasing statistics by ownership, showing Q1 2024 blended cash leasing spreads of 8.4% for wholly-owned and 2.8% for JV portfolios Leased Rate by Ownership (as of March 31, 2024) | Portfolio Segment | Leased Rate | | :--- | :--- | | Wholly Owned - SITE | 94.2% | | Joint Venture (100%) | 94.0% | Q1 2024 Blended (New + Renewal) Cash Leasing Spreads | Portfolio Segment | Cash Spread | | :--- | :--- | | Wholly Owned (100%) | 8.4% | | Unconsolidated JVs (100%) | 2.8% |