SITE Centers (SITC) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements – Unaudited The company's unaudited statements show a Q1 net loss of $23.6 million, a shift from prior-year income due to a significant impairment charge Consolidated Balance Sheet Summary (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $3,892,578 | $4,061,351 | | Total Real Estate Assets, Net | $3,113,287 | $3,260,782 | | Cash and Cash Equivalents | $551,285 | $551,968 | | Total Liabilities | $1,768,634 | $1,885,808 | | Total Indebtedness | $1,565,231 | $1,626,275 | | Total Equity | $2,123,944 | $2,175,543 | Consolidated Statement of Operations Summary (in thousands) | Account | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Total Revenues | $122,091 | $138,692 | | Impairment Charges | $66,600 | $0 | | Net (Loss) Income | ($23,552) | $15,302 | | Net (Loss) Income Attributable to Common Shareholders | ($26,341) | $12,495 | | Diluted (Loss) Earnings Per Share | ($0.13) | $0.06 | Consolidated Statement of Cash Flows Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | $39,952 | $42,167 | | Net Cash Flow from Investing Activities | $78,137 | ($50,826) | | Net Cash Flow from Financing Activities | ($130,402) | $12,904 | - During Q1 2024, the company acquired two convenience centers for a total of $19.1 million[24] - The company recorded significant impairment charges of $66.6 million in Q1 2024, triggered by a change in hold period assumptions for certain assets[53] - Subsequent to the quarter end, through April 26, 2024, the company sold two shopping centers for an aggregate price of $50.2 million[57] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the Q1 net loss, driven by dispositions and impairments, and outlines the planned spin-off of its convenience assets - The company plans to spin off its convenience assets into a separate, publicly traded REIT named Curbline Properties Corp., with an expected completion date around October 1, 2024[63][68] - In preparation for the spin-off, the company obtained a financing commitment for a $1.0 billion mortgage facility to repay all outstanding unsecured indebtedness[64] - Same Store Net Operating Income (SSNOI) at SITE's share increased by 1.5% for Q1 2024 compared to Q1 2023, driven by higher base rents for non-anchor tenants[101] Key Financial Metrics (in thousands, except per share) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net (loss) income attributable to common shareholders | ($26,341) | $12,495 | | FFO attributable to common shareholders | $51,931 | $61,899 | | Operating FFO attributable to common shareholders | $59,801 | $62,728 | | (Loss) earnings per share – Diluted | ($0.13) | $0.06 | Results of Operations Q1 2024 revenues decreased due to property dispositions, while operating expenses rose significantly from a $66.6 million impairment charge - A significant impairment charge of $66.6 million was recorded in Q1 2024, triggered by a change in the hold period assumptions for certain assets[77] - Interest income was $7.3 million in Q1 2024, compared to zero in the prior-year period, related to excess cash from sale proceeds held in money market accounts[79] Change in Base and Percentage Rental Income (in millions) | Component | Increase (Decrease) | | :--- | :--- | | Acquisition of shopping centers | $2.4 | | Comparable Portfolio Properties | $1.5 | | Disposition of shopping centers | ($17.1) | | Total | ($13.2) | Change in Key Operating Expenses (in millions) | Expense Category | Operating and Maintenance | Real Estate Taxes | Depreciation and Amortization | | :--- | :--- | :--- | :--- | | Acquisition of shopping centers | $0.4 | $0.3 | $1.6 | | Comparable Portfolio Properties | $0.5 | $0.1 | $0.0 | | Disposition of shopping centers | ($3.5) | ($3.7) | ($12.5) | | Total Change | ($2.6) | ($3.3) | ($10.9) | Non-GAAP Financial Measures Q1 2024 FFO decreased to $51.9 million due to net property dispositions, while Same Store Net Operating Income grew by 1.5% - The decrease in FFO was primarily due to the impact of net property dispositions, partially offset by property revenue growth and increased interest income[94] - Consolidated Same Store Net Operating Income (SSNOI) increased by 1.6% in Q1 2024 compared to Q1 2023[101] Reconciliation of Net (Loss) Income to FFO (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net (loss) income attributable to common shareholders | ($26,341) | $12,495 | | Depreciation and amortization of real estate investments | 41,819 | 52,717 | | Impairment of real estate | 66,600 | — | | Gain on disposition of real estate, net | (31,714) | (205) | | Joint ventures' FFO & other adjustments | 1,567 | (1,504) | | 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 | Liquidity, Capital Resources and Financing Activities The company maintains strong liquidity with $551.3 million in cash and full availability of its $950.0 million credit facility - At March 31, 2024, the company had $551.3 million in unrestricted cash and $950.0 million available under its Revolving Credit Facility[107] - The company has addressed all 2024 consolidated debt maturities and is preparing for $425.9 million in 2025 maturities[107] - Cash provided by investing activities increased by $129.0 million year-over-year, primarily due to a $111.9 million increase in proceeds from real estate dispositions[121] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk from interest rates is mitigated by having 100% of its consolidated debt at fixed rates - The company has mitigated interest rate risk on its $200.0 million variable-rate Term Loan by swapping the SOFR component to a fixed rate of 2.75%[158][159] - A hypothetical 100 basis-point increase in market interest rates would decrease the fair value of the company's fixed-rate debt from $1,546.4 million to $1,514.7 million[160] Consolidated Debt Summary (in millions) | Debt Type | Amount | Weighted Average Maturity (Years) | Weighted Average Interest Rate | Percentage of Total | | :--- | :--- | :--- | :--- | :--- | | Fixed-Rate Debt | $1,565.2 | 2.3 | 4.3% | 100.0% | | Variable-Rate Debt | $0 | — | — | 0.0% | Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2024, with no material changes - 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[164] - No changes in the Company's internal control over financial reporting occurred during Q1 2024 that materially affected, or are reasonably likely to materially affect, these controls[165] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is subject to ordinary course legal proceedings not expected to have a material adverse effect on its financial condition - The Company is subject to various legal proceedings which are not expected to have a material adverse effect on the Company[168] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's 2023 Annual Report on Form 10-K - No new risk factors are reported in this Form 10-Q[169] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 187,958 shares in Q1 2024, with $73.4 million remaining under its authorized share repurchase program - The company repurchased a total of 187,958 shares in Q1 2024, primarily to satisfy tax withholding obligations for employee equity plans[171] - As of March 31, 2024, the company has $73.4 million remaining under its $100 million share repurchase program authorized in December 2022[171][172] Item 6. Exhibits This section lists the exhibits filed with the report, including required officer certifications and interactive data files - Exhibits filed include CEO and CFO certifications pursuant to Sarbanes-Oxley Act rules[179] - The financial statements and notes have been formatted in iXBRL (Inline Extensible Business Reporting Language) and are attached as Exhibit 101[178]