SITE Centers (SITC) - 2021 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements – Unaudited This section presents the unaudited condensed consolidated financial statements of SITE Centers Corp for the quarter and nine months ended September 30, 2021 and 2020 Consolidated Balance Sheets The consolidated balance sheets show a slight decrease in total assets and liabilities from December 31, 2020, to September 30, 2021, while total equity increased Consolidated Balance Sheets | Metric | Sep 30, 2021 (in thousands) | Dec 31, 2020 (in thousands) | | :--- | :--- | :--- | | Total real estate assets, net | $3,546,383 | $3,562,331 | | Cash and cash equivalents | $61,924 | $69,742 | | Total Assets | $4,052,293 | $4,108,284 | | Total Indebtedness | $1,792,557 | $1,933,508 | | Total Liabilities | $2,033,826 | $2,163,461 | | Total Equity | $2,018,467 | $1,944,823 | Consolidated Statements of Operations (Three Months) For the three months ended September 30, 2021, the company reported a significant increase in net income attributable to common shareholders Consolidated Statements of Operations (Three Months) | Metric | Sep 30, 2021 (in thousands) | Sep 30, 2020 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Rental income | $120,569 | $95,874 | +25.76% | | Total Revenues from operations | $134,441 | $105,554 | +27.36% | | Total Rental operation expenses | $94,118 | $87,129 | +8.02% | | Net income attributable to common shareholders | $25,275 | $2,154 | +1073.30% | | Basic EPS | $0.12 | $0.01 | +1100.00% | | Diluted EPS | $0.12 | $0.01 | +1100.00% | Consolidated Statements of Operations (Nine Months) For the nine months ended September 30, 2021, net income attributable to common shareholders saw a substantial increase compared to the prior year Consolidated Statements of Operations (Nine Months) | Metric | Sep 30, 2021 (in thousands) | Sep 30, 2020 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Rental income | $366,689 | $306,482 | +19.66% | | Total Revenues from operations | $398,048 | $342,435 | +16.24% | | Total Rental operation expenses | $302,822 | $265,877 | +13.90% | | Net income attributable to common shareholders | $49,918 | $21,608 | +130.93% | | Basic EPS | $0.24 | $0.11 | +118.18% | | Diluted EPS | $0.24 | $0.11 | +118.18% | Consolidated Statements of Comprehensive Income Comprehensive income for the three and nine months ended September 30, 2021, significantly increased compared to the prior year Consolidated Statements of Comprehensive Income | Metric | Three Months Ended Sep 30, 2021 (in thousands) | Three Months Ended Sep 30, 2020 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2020 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Net income | $28,157 | $7,403 | $66,325 | $37,628 | | Total other comprehensive income (loss) | — | $(3,916) | $2,682 | $(3,237) | | Comprehensive income | $28,157 | $3,487 | $69,007 | $34,391 | | Total comprehensive income attributable to SITE Centers | $28,064 | $3,371 | $68,623 | $33,770 | Consolidated Statements of Equity The consolidated statements of equity show an increase in total equity from December 31, 2020, to September 30, 2021 Consolidated Statements of Equity | Metric | Dec 31, 2020 (in thousands) | Sep 30, 2021 (in thousands) | | :--- | :--- | :--- | | Preferred Shares | $325,000 | $175,000 | | Common Shares | $19,400 | $21,110 | | Additional Paid-in Capital | $5,705,164 | $5,942,466 | | Total SITE Centers shareholders' equity | $1,941,508 | $2,014,817 | | Total Equity | $1,944,823 | $2,018,467 | - The company redeemed $150 million of Class K Preferred Shares in April 2021, resulting in a non-cash charge of $5.1 million to net income attributable to common shareholders[49][124] - In March 2021, the company issued 17.25 million common shares, generating net proceeds of $225.2 million[46][123] Consolidated Statements of Cash Flows For the nine months ended September 30, 2021, cash flow from operating activities significantly increased while investing activities shifted to a net cash user Consolidated Statements of Cash Flows | Metric | Nine Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2020 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Net cash flow provided by operating activities | $217,364 | $125,934 | +72.60% | | Net cash flow (used for) provided by investing activities | $(64,731) | $102,370 | -163.04% | | Net cash flow used for financing activities | $(161,708) | $(189,941) | +14.86% | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(9,075) | $38,363 | -123.65% | | Cash, cash equivalents and restricted cash, end of period | $65,338 | $57,513 | +13.61% | - Operating cash flow increased by $91.4 million, driven by increased cash collected from tenants[117] - Investing activities decreased by $167.1 million, primarily due to a decrease in proceeds from disposition of real estate and an increase in real estate assets acquired[117] - Financing activities decreased cash used by $28.2 million, mainly due to $225.2 million net proceeds from the March 2021 common share offering[117] Notes to Condensed Consolidated Financial Statements The notes provide detailed information on the company's business, accounting policies, and specific financial items 1. Nature of Business and Financial Statement Presentation SITE Centers Corp is a REIT primarily engaged in acquiring, owning, developing, redeveloping, leasing, and managing shopping centers - SITE Centers Corp is a self-administered and self-managed Real Estate Investment Trust (REIT) focused on acquiring, owning, developing, redeveloping, leasing, and managing shopping centers[22][63] - The company's credit risk is concentrated in the retail industry, with a tenant base primarily consisting of national and regional retail chains and local tenants[22] 2. Revenue Recognition The COVID-19 pandemic significantly impacted revenue collection in 2020, but collections improved in 2021 - During the three and nine months ended September 30, 2021, the Company recorded net uncollectible revenue that resulted in rental income of $1.1 million and $8.3 million, respectively[29] - As of September 30, 2021, $1.7 million remains outstanding under deferral arrangements for tenants not on a cash basis[28] Fee and Other Income | Fee and Other Income Category | Three Months Ended Sep 30, 2021 (in thousands) | Three Months Ended Sep 30, 2020 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2020 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Asset and property management fees | $6,459 | $7,326 | $19,636 | $24,201 | | RVI Disposition fees | $5,500 | $856 | $6,092 | $2,622 | | Total revenue from contracts with customers | $12,901 | $9,100 | $28,964 | $32,466 | | Total fee and other income | $13,872 | $9,680 | $31,359 | $35,953 | 3. Investments in and Advances to Joint Ventures The company holds ownership interests in unconsolidated joint ventures, with equity in net income increasing significantly in 2021 - The Company had ownership interests in 55 unconsolidated joint venture shopping center properties as of September 30, 2021, down from 59 at December 31, 2020[32] - In February 2021, an unconsolidated joint venture sold undeveloped land in Richmond Hill, Ontario, generating $22.1 million in net proceeds for the Company's share[34][131] Joint Venture Financial Summary | Metric | Three Months Ended Sep 30, 2021 (in thousands) | Three Months Ended Sep 30, 2020 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2020 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Revenues from operations (JV) | $48,666 | $60,019 | $150,623 | $198,906 | | Net income (loss) attributable to unconsolidated joint ventures | $4,863 | $(4,748) | $53,525 | $(36,455) | | Equity in net income of joint ventures (SITE Centers' share) | $1,824 | $250 | $11,059 | $908 | 4. Investment in and Advances to Affiliate The Company held a $190.0 million preferred investment in Retail Value Inc (RVI), which was fully distributed on October 6, 2021 - On October 6, 2021, the Company received a distribution of $190.0 million on its RVI Preferred Shares, representing the full expected amount[59][119][132] Revenue from Contracts with RVI | Revenue from contracts with RVI | Three Months Ended Sep 30, 2021 (in millions) | Three Months Ended Sep 30, 2020 (in millions) | Nine Months Ended Sep 30, 2021 (in millions) | Nine Months Ended Sep 30, 2020 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Asset and property management fees | $3.6 | $4.4 | $11.5 | $14.1 | | Disposition fees | $5.5 | $0.8 | $6.1 | $2.6 | | Total revenue from contracts with RVI | $9.5 | $5.6 | $19.4 | $18.8 | 5. Acquisitions During the first nine months of 2021, the Company acquired three shopping centers for an aggregate purchase price of $79.8 million - The Company acquired three shopping centers for an aggregate purchase price of $79.8 million during the nine months ended September 30, 2021[37][70][129] - The acquisitions included $17.9 million of assumed mortgage indebtedness[38][129] - These three properties generated $1.6 million in total revenues for the Company from their acquisition dates through September 30, 2021[38] 6. Other Assets and Intangibles, net Total intangible assets, net, decreased from $90.4 million at December 31, 2020, to $78.0 million at September 30, 2021, primarily due to amortization - Amortization expense related to intangibles was $5.3 million for the three months and $16.3 million for the nine months ended September 30, 2021[39] Other Assets and Intangibles | Category | Sep 30, 2021 (in thousands) | Dec 31, 2020 (in thousands) | | :--- | :--- | :--- | | In-place leases, net | $49,455 | $56,756 | | Above-market leases, net | $7,032 | $8,387 | | Lease origination costs, net | $4,838 | $4,974 | | Tenant relationships, net | $16,680 | $20,301 | | Total intangible assets, net | $78,005 | $90,418 | | Total other assets, net | $117,857 | $130,690 | 7. Revolving Credit Facilities The Company maintains a $950 million unsecured revolving credit facility and a $20 million unsecured revolving credit facility, both maturing in January 2024 - The Company has an Unsecured Credit Facility of up to $950 million and a $20 million PNC Facility, both maturing in January 2024[40][41][109] - As of September 30, 2021, there were no outstanding balances on the Revolving Credit Facilities, and the Company was in compliance with all financial covenants[42][108][110] 8. Fair Value Measurements The fair value of the Company's total indebtedness was $1.92 billion at September 30, 2021, compared to a carrying amount of $1.79 billion Fair Value of Debt | Debt Type | Sep 30, 2021 Carrying Amount (in thousands) | Sep 30, 2021 Fair Value (in thousands) | Dec 31, 2020 Carrying Amount (in thousands) | Dec 31, 2020 Fair Value (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Senior Notes | $1,451,229 | $1,579,853 | $1,449,613 | $1,549,866 | | Revolving Credit Facilities and term loan | $99,767 | $100,000 | $234,635 | $235,000 | | Mortgage Indebtedness | $241,561 | $243,750 | $249,260 | $250,624 | | Total Indebtedness | $1,792,557 | $1,923,603 | $1,933,508 | $2,035,490 | 9. Equity The Company declared common share dividends of $0.12 per share for the three months and $0.35 per share for the nine months ended September 30, 2021 - In March 2021, the Company issued 17.25 million common shares, generating net proceeds of $225.2 million[46][123] - In April 2021, the Company redeemed all $150.0 million aggregate liquidation preference of its Class K Cumulative Redeemable Preferred Shares[49][124] Dividends Declared | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Common share dividends declared per share | $0.12 | — | $0.35 | $0.20 | 10. Other Comprehensive Income Accumulated Other Comprehensive (Loss) Income related to foreign currency items shifted from a loss to zero at September 30, 2021 - The reclassification adjustment for foreign currency translation was related to the sale of undeveloped land in Richmond Hill, Ontario[50] Accumulated Other Comprehensive Income (Loss) | Metric | Amount (in thousands) | | :--- | :--- | | Balance, December 31, 2020 | $(2,682) | | Other comprehensive loss before reclassifications | $(1) | | Reclassification adjustment for foreign currency translation | $2,683 | | Net current-period other comprehensive income | $2,682 | | Balance, September 30, 2021 | $— | 11. Impairment Charges For the nine months ended September 30, 2021, the Company recorded $7.3 million in impairment charges on consolidated assets - For the nine months ended September 30, 2021, the Company recorded impairment charges of $7.3 million on long-lived assets held and used[51][55] - These 2021 impairment charges were triggered by a change in hold period assumptions for an asset sold in the first quarter[51] - In 2020, the Company recorded net charges of $19.4 million related to a valuation allowance on preferred equity interests in BRE DDR joint ventures[52] 12. Earnings Per Share Basic and diluted EPS for the nine months ended September 30, 2021, significantly increased to $0.24 compared to $0.11 in the prior year - Dilutive securities considered in EPS for 2021 included Performance Restricted Stock Units (PRSUs) and forward equity agreements for approximately 1.7 million common shares[58] Earnings Per Share Calculation | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income attributable to common shareholders | $25,125 | $2,154 | $49,468 | $21,459 | | Basic—Average shares outstanding | 211,048 | 193,203 | 206,918 | 193,366 | | Diluted—Average shares outstanding | 212,191 | 193,365 | 208,074 | 193,366 | | Basic EPS | $0.12 | $0.01 | $0.24 | $0.11 | | Diluted EPS | $0.12 | $0.01 | $0.24 | $0.11 | 13. Subsequent Events On October 6, 2021, the Company received a $190.0 million distribution on its RVI Preferred Shares - On October 6, 2021, the Company received a distribution of $190.0 million on the RVI Preferred Shares, representing the full amount expected[59] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on SITE Centers Corp's financial condition, results of operations, and liquidity for the nine months ended September 30, 2021 EXECUTIVE SUMMARY SITE Centers reported improved financial metrics for the nine months ended September 30, 2021, with significant increases in net income and FFO - As of September 30, 2021, the Company's portfolio comprised 137 shopping centers with an aggregate occupancy of 90.2% and an average annualized base rent of $18.44 per occupied square foot[63] - As of October 15, 2021, 100% of the Company's tenants were open for business, and quarterly rent payment rates for Q2 and Q3 2021 reached 99%[66][67] - Key activities include receiving a $190.0 million distribution from RVI, repaying $87.6 million of mortgage debt, and acquiring three shopping centers for $79.8 million[70] Key Financial Metrics | Metric | Three Months Ended Sep 30, 2021 (in thousands) | Three Months Ended Sep 30, 2020 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2020 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Net income attributable to common shareholders | $25,275 | $2,154 | $49,918 | $21,608 | | FFO attributable to common shareholders | $66,504 | $42,262 | $176,510 | $128,911 | | Operating FFO attributable to common shareholders | $61,361 | $43,531 | $181,917 | $144,571 | | Earnings per share – Diluted | $0.12 | $0.01 | $0.24 | $0.11 | 2021 RESULTS OF OPERATIONS The Company's operational results for the nine months ended September 30, 2021, show strong leasing activity and increased rental income Revenues from Operations Total revenues from operations increased by $55.6 million for the nine months ended September 30, 2021, compared to the prior year - For the nine months ended September 30, 2021, base and percentage rental income increased by $15.8 million, with $19.1 million from acquisitions[74] - The aggregate occupancy rate for the pro rata combined shopping center portfolio was 90.2% at September 30, 2021, up from 89.7% at September 30, 2020[75] - The Company generated positive leasing spreads of 12.4% for new leases and 1.5% for renewals on a pro rata basis for the nine months ended September 30, 2021[73] Revenues from Operations | Metric | Three Months Ended Sep 30, 2021 (in thousands) | Three Months Ended Sep 30, 2020 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2020 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Rental income | $120,569 | $95,874 | $366,689 | $306,482 | | Fee and other income | $13,872 | $9,680 | $31,359 | $35,953 | | Total revenues | $134,441 | $105,554 | $398,048 | $342,435 | Expenses from Operations Total rental operation expenses increased by $36.9 million for the nine months ended September 30, 2021, compared to the prior year - For the nine months ended September 30, 2021, operating and maintenance expenses increased by $7.4 million, real estate taxes by $6.8 million, and depreciation by $12.4 million[78] - General and administrative expenses for the nine months ended September 30, 2021, included a $5.6 million expense related to mark-to-market adjustment for PRSUs[81] Expenses from Operations | Metric | Three Months Ended Sep 30, 2021 (in thousands) | Three Months Ended Sep 30, 2020 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2020 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Operating and maintenance | $18,562 | $15,775 | $58,200 | $50,774 | | Real estate taxes | $19,160 | $16,542 | $58,359 | $51,547 | | General and administrative | $11,727 | $13,664 | $41,547 | $38,542 | | Depreciation and amortization | $44,669 | $41,148 | $137,446 | $125,014 | | Impairment charges | — | — | $7,270 | — | | Total rental operation expenses | $94,118 | $87,129 | $302,822 | $265,877 | Other Income and Expenses Other income and expenses for the nine months ended September 30, 2021, showed a net improvement of $7.3 million compared to the prior year - The weighted-average debt outstanding decreased from $2.0 billion in 2020 to $1.8 billion in 2021, while the weighted-average interest rate increased from 3.8% to 4.0%[80] - Interest costs capitalized decreased from $0.8 million in 2020 to $0.5 million in 2021 for the nine months[81] Other Income and Expenses | Metric | Three Months Ended Sep 30, 2021 (in thousands) | Three Months Ended Sep 30, 2020 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2020 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Interest expense | $(19,170) | $(18,089) | $(57,701) | $(58,487) | | Other (expense) income, net | $(524) | $3,259 | $(1,214) | $(7,727) | | Total Other income (expense) | $(19,694) | $(14,830) | $(58,915) | $(66,214) | Other Items Other items for the nine months ended September 30, 2021, showed a significant increase in equity in net income of joint ventures - The increase in equity in net income of joint ventures was primarily due to the gain on sale of undeveloped land in Richmond Hill, Ontario[84] - The decrease in gain on sale of joint venture interests was mainly due to the significant gain from the sale of the Company's interest in the DDRTC joint venture in 2020[84] Other Items Summary | Metric | Nine Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2020 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Equity in net income of joint ventures | $11,059 | $908 | +$10,151 | | Reserve of preferred equity interests, net | — | $(19,393) | +$19,393 | | Gain on sale of joint venture interests | $13,943 | $45,635 | -$(31,692) | | Gain on disposition of real estate, net | $6,069 | $993 | +$5,076 | Net Income Net income attributable to SITE Centers increased by $28.9 million for the nine months ended September 30, 2021, compared to the prior year - The increase in net income was primarily attributable to net revenue relating to prior periods collected from cash basis tenants, gains from asset sales, and higher disposition fees[84][85] Net Income Summary | Metric | Nine Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2020 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Net income attributable to SITE Centers | $65,941 | $37,007 | +$28,934 | NON-GAAP FINANCIAL MEASURES This section defines and reconciles non-GAAP financial measures, including Funds from Operations (FFO) and Net Operating Income (NOI) Funds from Operations and Operating Funds from Operations FFO attributable to common shareholders increased by $47.6 million to $176.5 million for the nine months ended September 30, 2021 - The increase in FFO was primarily due to net revenue from prior periods collected from cash basis tenants and lower debt extinguishment costs[96] - Operating FFO is defined as FFO excluding certain non-comparable charges, income, and gains to better reflect core operating performance[90] FFO Reconciliation | Metric | Three Months Ended Sep 30, 2021 (in thousands) | Three Months Ended Sep 30, 2020 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2020 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | FFO attributable to common shareholders | $66,504 | $42,262 | $176,510 | $128,911 | | Operating FFO attributable to common shareholders | $61,361 | $43,531 | $181,917 | $144,571 | Net Operating Income and Same Store Net Operating Income Total Consolidated + Unconsolidated NOI at the Company's interest increased to $277.6 million for the nine months ended September 30, 2021 - The increase in SSNOI was primarily attributable to rental income paid in 2021 by cash basis tenants related to amounts originally owed in 2020[103] - NOI is calculated as property revenues less property-related expenses, while SSNOI focuses on comparable asset performance[99][100] NOI and SSNOI Summary | Metric | Nine Months Ended Sep 30, 2021 (at Company's Interest, in thousands) | Nine Months Ended Sep 30, 2020 (at Company's Interest, in thousands) | | :--- | :--- | :--- | | Consolidated NOI, net of non-controlling interests | $250,267 | $204,765 | | Unconsolidated NOI | $27,335 | $26,329 | | Total Consolidated + Unconsolidated NOI | $277,602 | $231,094 | | Total SSNOI including redevelopment | $278,092 | $240,799 | | Total SSNOI excluding redevelopment | $267,021 | $233,321 | | SSNOI % Change including redevelopment | 15.5% | | | SSNOI % Change excluding redevelopment | 14.4% | | LIQUIDITY, CAPITAL RESOURCES AND FINANCING ACTIVITIES The Company maintains a strong liquidity position with $61.9 million in cash and $970.0 million available under revolving credit facilities - As of September 30, 2021, the Company had an unrestricted cash balance of $61.9 million and $970.0 million available under its Revolving Credit Facilities[108] - Total consolidated debt outstanding was $1.8 billion at September 30, 2021, down from $1.9 billion at December 31, 2020[107] - The Company has $140.5 million of consolidated mortgage debt maturing prior to the end of 2022 and no unsecured debt maturities prior to 2023[108] Revolving Credit Facilities The Company's unsecured revolving credit facilities, totaling $970 million, were undrawn as of September 30, 2021 - The Company maintains a $950 million Unsecured Credit Facility and a $20 million PNC Facility, both with maturity dates in January 2024[109] - Borrowings under these facilities bear interest at variable rates, with a LIBOR spread of 0.90% at September 30, 2021[109] - As of September 30, 2021, the Company was in compliance with all financial and operating covenants under its credit facilities and indentures[110] Consolidated Indebtedness The Company is committed to maintaining low leverage and managing its debt maturities, with no unsecured debt maturities prior to 2023 - The Company's strategy is to maintain low leverage and manage debt maturities, with no unsecured debt maturities prior to 2023[108][111][112] - The Company continually evaluates financing and refinancing alternatives, including equity offerings and asset sales[105][112] Unconsolidated Joint Ventures' Mortgage Indebtedness Unconsolidated joint ventures have $126.5 million (Company's share) of mortgage debt maturing through October 2022 - Joint ventures are expected to fund these obligations through refinancing opportunities, extension options, or possible asset sales[116] - Future deterioration in rent collection due to COVID-19 could impact joint ventures' ability to satisfy covenants or debt service requirements[116] JV Debt Maturities through Oct 2022 | Joint Venture | Outstanding at Sep 30, 2021 (in millions) | At SITE Centers' Share (in millions) | | :--- | :--- | :--- | | DDR Domestic Retail Fund I | $462.5 | $92.5 | | RVIP IIIB | $61.3 | $15.8 | | Sun Center Limited | $18.7 | $14.9 | | DDR SAU Retail Fund LLC | $16.6 | $3.3 | | Total debt maturities through October 2022 | $559.1 | $126.5 | Cash Flow Activity For the nine months ended September 30, 2021, cash flow from operating activities increased by $91.4 million - Operating cash flow increased by $91.4 million due to higher tenant collections, partially offset by reduced interest income and fees[117] - Investing activities decreased by $167.1 million, mainly from lower proceeds from asset/JV sales and increased real estate acquisitions/developments[117] Cash Flow Summary | Metric | Nine Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2020 (in thousands) | | :--- | :--- | :--- | | Cash flow provided by operating activities | $217,364 | $125,934 | | Cash flow (used for) provided by investing activities | $(64,731) | $102,370 | | Cash flow used for financing activities | $(161,708) | $(189,941) | RVI Preferred Shares On October 6, 2021, the Company received a $190.0 million distribution on its RVI Preferred Shares - On October 6, 2021, the Company received a $190.0 million distribution on its RVI Preferred Shares, representing the full expected amount[119] - The Company does not expect to receive any additional amounts from RVI on account of its preferred investment[119] Dividend Distribution The Company declared common and preferred cash dividends totaling $84.8 million for the nine months ended September 30, 2021 - The Company declared common and preferred cash dividends of $84.8 million for the nine months ended September 30, 2021, compared to $54.3 million in 2020[120] - Quarterly cash dividends per common share were $0.11 for Q1 2021 and $0.12 for Q2 and Q3 2021[121] - The Company intends to distribute at least 100% of ordinary taxable income to maintain REIT status[120] SITE Centers' Equity In March 2021, the Company issued 17.25 million common shares, generating $225.2 million in net proceeds - In March 2021, the Company issued 17.25 million common shares, resulting in net proceeds of $225.2 million[123] - In April 2021, the Company redeemed all $150.0 million aggregate liquidation preference of its Class K Preferred Shares[124] - The Company offered and sold 1.7 million common shares on a forward basis under its $250 million continuous equity program[122] SOURCES AND USES OF CAPITAL The Company's capital strategy focuses on maintaining liquidity and low leverage through equity offerings, asset sales, and other investments - The Company acquired three shopping centers for an aggregate purchase price of $79.8 million during the nine months ended September 30, 2021[129] - Sales of four unconsolidated shopping centers and other parcels generated $84.6 million in proceeds ($41.9 million Company's share)[130] - The Company anticipates funding approximately $26 million for its pipeline of identified redevelopment projects[134] Strategic Transaction Activity The Company's strategic transaction activity is geared towards maintaining liquidity, managing debt duration, and keeping leverage low - The Company is committed to maintaining sufficient liquidity, managing debt duration, and maintaining low leverage[127] - Equity offerings, asset sales, and proceeds from the repayment of other investments are potential sources of funds[127] Equity Transactions In March 2021, the Company issued 17.25 million common shares, generating $225.2 million in net proceeds - In March 2021, the Company issued 17.25 million common shares, resulting in net proceeds of $225.2 million[128] - These proceeds were used, in part, to redeem all $150.0 million of Class K Preferred Shares in April 2021[128] Acquisitions During the first nine months of 2021, the Company acquired three shopping centers for an aggregate purchase price of $79.8 million - The Company acquired three shopping centers for an aggregate purchase price of $79.8 million during the nine months ended September 30, 2021[129] - The acquisitions included $17.9 million of assumed mortgage indebtedness[129] - The Company intends to leverage its financial position and cash resources to prudently grow its portfolio in wealthy suburban communities[129] Proceeds from Transactional Activity During the first nine months of 2021, the Company sold four unconsolidated shopping centers and other land parcels, generating $84.6 million in total proceeds - The Company sold four unconsolidated shopping centers and other parcels for aggregate proceeds of $84.6 million ($41.9 million Company's proportionate share)[130] - On October 6, 2021, the Company received a $190.0 million distribution on the RVI Preferred Shares[132] - The Company evaluates potential sale opportunities based on long-term growth prospects and use of proceeds[133] Redevelopment Opportunities Evaluating tactical redevelopment potential is a key component of the Company's long-term strategic plan - A key component of the Company's long-term strategic plan is the evaluation of additional tactical redevelopment potential within its portfolio[134] - The Company anticipates approximately $26 million to fund its pipeline of identified redevelopment projects as of September 30, 2021[134] Redevelopment Projects As of September 30, 2021, the Company had $42 million in construction in progress for various active consolidated redevelopment and other projects - As of September 30, 2021, the Company had $42 million in construction in progress for active consolidated redevelopment and other projects[135] Major Redevelopment Projects | Major Redevelopment Project | Estimated Stabilized Quarter | Estimated Gross Cost (in thousands) | Cost Incurred at Sep 30, 2021 (in thousands) | | :--- | :--- | :--- | :--- | | West Bay Plaza - Phase II | 2Q23 | $9,102 | $2,972 | | Woodfield Village Green | TBD | — | $663 | | Perimeter Pointe | TBD | — | $1,252 | | Total | | $9,102 | $4,887 | Tactical Redevelopment Projects | Tactical Redevelopment Project | Estimated Stabilized Quarter | Estimated Gross Cost (in thousands) | Cost Incurred at Sep 30, 2021 (in thousands) | | :--- | :--- | :--- | :--- | | Shoppers World | 4Q23 | $6,672 | $164 | | University Hills | 4Q23 | $4,589 | $519 | | Hamilton Marketplace | 4Q22 | $3,843 | $2,769 | | Carolina Pavilion | 4Q23 | $2,339 | $167 | | West Bay Plaza | 1Q22 | $335 | $100 | | Other Tactical Projects | N/A | $13,549 | $12,971 | | Total | | $31,327 | $16,690 | OFF-BALANCE SHEET ARRANGEMENTS The Company has unconsolidated joint ventures with aggregate outstanding indebtedness of $1.0 billion at September 30, 2021 - The Company's unconsolidated joint ventures had aggregate outstanding indebtedness to third parties of $1.0 billion at September 30, 2021[139] - These mortgages are generally non-recourse to the Company and its partners, but certain limited recourse situations exist[139] CAPITALIZATION As of September 30, 2021, the Company's debt to total market capitalization ratio was 0.34 to 1.0, a significant improvement from the prior year - At September 30, 2021, the Company's capitalization consisted of $1.8 billion of debt, $175.0 million of preferred shares, and $3.3 billion of market equity[141] - The debt to total market capitalization ratio improved to 0.34 to 1.0 at September 30, 2021, from 0.51 to 1.0 at September 30, 2020[141] - The Company's strategy is to operate with a conservative debt capitalization policy and maintain an investment-grade rating[142] CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS The Company has no consolidated debt maturing until January 2022 and expects to fund future maturities through various financing options - The Company has no consolidated debt maturing until January 2022[145] - Future maturities are expected to be funded through Revolving Credit Facilities, asset sales, operating cash flow, and/or additional financings[145] - As of September 30, 2021, the Company had commitments of approximately $19.7 million with general contractors and $6.4 million in purchase order obligations[147][148] ECONOMIC CONDITIONS Despite retailer bankruptcies in 2020, the Company experienced strong leasing momentum and improved rent collection rates in 2021 - The Company leased approximately 2.6 million square feet of GLA for the nine months ended September 30, 2021, exceeding 2020 levels[150] - As of October 15, 2021, quarterly rent payment rates for Q2 and Q3 2021 reached 99%, a significant improvement from April 2020's low of 45%[153][154] - The Company's portfolio benefits from locations in suburban, high household income communities and a diversified tenant base[151] FORWARD-LOOKING STATEMENTS This section contains forward-looking statements regarding future expectations and cautions readers that actual results may differ materially - Forward-looking statements include expectations for acquisitions, capital expenditures, financing sources, and regulatory effects[158] - Actual results may differ materially due to risks such as general real estate industry risks, economic conditions, and the impact of the COVID-19 pandemic[158][159][160] - Other risks include failure to integrate acquisitions, development delays, interest rate changes, and joint venture risks[159][160] Item 3. Quantitative and Qualitative Disclosures about Market Risk The Company's primary market risk is interest rate risk, with the majority of its consolidated and unconsolidated debt being fixed-rate - The Company's primary market risk exposure is interest rate risk[161] - A 100 basis-point increase in short-term market interest rates would result in an increase in interest expense of approximately $1.4 million for the Company[162] Debt Composition by Interest Rate Type | Debt Type | Company's Debt Sep 30, 2021 (Millions) | Company's Debt Dec 31, 2020 (Millions) | JV Debt Sep 30, 2021 (Company's Share, Millions) | JV Debt Dec 31, 2020 (Company's Share, Millions) | | :--- | :--- | :--- | :--- | :--- | | Fixed-Rate Debt | $1,605.1 (89.5%) | $1,602.4 (82.9%) | $176.9 (78.4%) | $178.2 (76.6%) | | Variable-Rate Debt | $187.5 (10.5%) | $331.1 (17.1%) | $48.6 (21.6%) | $54.4 (23.4%) | Item 4. Controls and Procedures The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of September 30, 2021 - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of September 30, 2021[165] - No material changes to internal control over financial reporting occurred during the three months ended September 30, 2021[166] PART II. OTHER INFORMATION 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 - The Company is subject to various legal proceedings, which are not expected to have a material adverse effect on its liquidity, financial position, or results of operations[169] - Most legal actions for personal injury or property damage are covered by insurance[169] Item 1A. Risk Factors There are no new material risk factors to report for the current period - No new material risk factors are reported for the current period[170] - For a comprehensive discussion of risk factors, refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2020[170] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the three months ended September 30, 2021, the Company purchased 25,499 common shares primarily to satisfy tax withholding obligations - These share purchases were primarily to satisfy statutory minimum tax withholding obligations related to equity-based compensation plans[173] - As of October 22, 2021, $42.1 million remained available under the $100 million common share repurchase program[171][174] Share Purchases (Q3 2021) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | July 1–31, 2021 | 129 | $15.06 | | August 1–31, 2021 | 20 | $15.86 | | September 1–30, 2021 | 25,350 | $15.28 | | Total | 25,499 | $15.28 | Item 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities for the period - No defaults upon senior securities were reported[175] Item 4. Mine Safety Disclosures This item is not applicable to the Company - This item is not applicable[176] Item 5. Other Information No other information is reported for the period - No other information is reported[177] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including financial statements formatted in iXBRL and various certifications - Exhibits include consolidated financial statements formatted in iXBRL, certifications of principal executive and financial officers, and XBRL taxonomy extension documents[180][181] - An Employment Agreement dated September 11, 2021, between the Company and Christa Vesy is incorporated by reference[181] SIGNATURES The report is duly signed on behalf of SITE Centers Corp by Christa A Vesy, Executive Vice President and Chief Accounting Officer - The report was signed by Christa A Vesy, Executive Vice President and Chief Accounting Officer, on October 28, 2021[184]