SITE Centers (SITC) - 2022 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the Company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements – Unaudited This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, equity, and cash flows, along with their accompanying notes, providing a detailed overview of the Company's financial position and performance for the reported periods Consolidated Balance Sheets This section provides a snapshot of the Company's financial position, detailing assets, liabilities, and equity at specific reporting dates Consolidated Balance Sheets (in thousands) | Metric | Sep 30, 2022 (in thousands) | Dec 31, 2021 (in thousands) | | :----------------------------- | :-------------------------- | :-------------------------- | | Total Assets | $4,196,971 | $3,967,051 | | Total Liabilities | $2,079,536 | $1,924,399 | | Total Equity | $2,117,435 | $2,042,652 | | Total Real Estate Assets, net | $3,920,015 | $3,667,312 | | Total Indebtedness | $1,822,056 | $1,677,377 | Consolidated Statements of Operations (Three Months) This section details the Company's financial performance over the three-month period, including revenue, expenses, and net income Consolidated Statements of Operations (Three Months Ended Sep 30, in thousands) | Metric | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Sep 30, 2021 (in thousands) | | :------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net Income Attributable to Common Shareholders | $63,406 | $25,275 | | Rental Income | $135,123 | $120,569 | | Fee and Other Income | $3,720 | $13,872 | | Gain on Disposition of Real Estate, net | $26,837 | $5,871 | | Equity in Net Income of Joint Ventures | $25,918 | $1,824 | | Basic EPS | $0.30 | $0.12 | Consolidated Statements of Operations (Nine Months) This section presents the Company's cumulative financial performance over the nine-month period, outlining key revenue and income figures Consolidated Statements of Operations (Nine Months Ended Sep 30, in thousands) | Metric | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | | :------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net Income Attributable to Common Shareholders | $132,155 | $49,918 | | Rental Income | $401,210 | $366,689 | | Fee and Other Income | $12,635 | $31,359 | | Gain on Disposition of Real Estate, net | $31,292 | $6,069 | | Equity in Net Income of Joint Ventures | $27,468 | $11,059 | | Basic EPS | $0.62 | $0.24 | Consolidated Statements of Comprehensive Income This section reports the Company's total comprehensive income, encompassing net income and other comprehensive income items not recognized in the income statement Consolidated Statements of Comprehensive Income (Three Months Ended Sep 30, in thousands) | Metric | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Sep 30, 2021 (in thousands) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Total Comprehensive Income Attributable to SITE Centers | $75,977 | $28,064 | | Change in Fair Value of Interest-Rate Contracts | $9,782 | — | Consolidated Statements of Comprehensive Income (Nine Months Ended Sep 30, in thousands) | Metric | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | | :------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Total Comprehensive Income Attributable to SITE Centers | $150,304 | $68,623 | | Change in Fair Value of Interest-Rate Contracts | $9,782 | — | Consolidated Statements of Equity This section details changes in the Company's equity, reflecting the impact of net income, dividends, share issuances, and repurchases Consolidated Statements of Equity (in thousands) | Metric | Sep 30, 2022 (in thousands) | Dec 31, 2021 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Total SITE Centers Shareholders' Equity | $2,111,641 | $2,036,858 | | Total Equity | $2,117,435 | $2,042,652 | - Total equity increased from December 31, 2021, to September 30, 2022, primarily due to comprehensive income ($150,359k) and issuance of common shares ($36,857k), partially offset by dividends declared ($83,550k for common shares) and common share repurchases ($20,000k)[19] Consolidated Statements of Cash Flows This section outlines the Company's cash inflows and outflows from operating, investing, and financing activities, providing insights into liquidity Consolidated Statements of Cash Flows (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Net Cash Flow Provided by Operating Activities | $205,486 | $217,364 | | Net Cash Flow Used for Investing Activities | $(282,843) | $(64,731) | | Net Cash Flow Provided by (Used for) Financing Activities | $58,107 | $(161,708) | | Real Estate Acquired, net of liabilities and cash assumed | $(329,570) | $(62,610) | | Proceeds from (repayment of) revolving credit facilities, net | $80,000 | $(135,000) | | Proceeds from issuance of common shares, net of offering expenses | $36,731 | $225,166 | - Cash provided by operating activities decreased by $11.9 million, primarily due to decreased cash collected from tenants related to prior periods and lower fees from joint ventures, partially offset by increased income from acquired properties[126][127] - Cash used for investing activities increased by $218.1 million, mainly due to a $299.2 million increase in real estate acquired, developed, and improved, partially offset by increased proceeds from dispositions and distributions from joint ventures[126][127] - Cash provided by financing activities increased by $219.8 million, driven by a $305.0 million increase in net borrowings from the Revolving Credit Facility and Term Loan, partially offset by a decrease in net proceeds from common share offerings and preferred stock redemptions[128] Notes to Condensed Consolidated Financial Statements This section provides essential supplementary information and explanations for the figures presented in the condensed consolidated financial statements 1. Nature of Business and Financial Statement Presentation This note describes the Company's business as a REIT and the basis for preparing its unaudited interim financial statements - SITE Centers Corp. is a Real Estate Investment Trust (REIT) primarily engaged in owning, leasing, acquiring, redeveloping, developing, and managing shopping centers[24] - The Company's credit risk is primarily concentrated in the retail industry[24] - The interim financial statements are unaudited, prepared in accordance with GAAP, and include normal recurring adjustments based on management's estimates[25][26] - Consolidated financial statements include entities with controlling interest or primary beneficiary of a VIE; joint ventures with significant influence are accounted for using the equity method[27] 2. Revenue Recognition This note details the Company's policies and practices for recognizing revenue, including the impact of the COVID-19 pandemic on rent collections - The COVID-19 pandemic significantly impacted the retail sector, leading to rent deferral arrangements and cash-basis accounting for tenants where collection was not probable[29][30][31] - Net uncollectible revenue for the nine months ended September 30, 2022, was $1.9 million, primarily from prior-period payments by cash-basis tenants[32] Fee and Other Income (Three Months Ended Sep 30, in thousands) | Metric | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Sep 30, 2021 (in thousands) | | :--------------------- | :--------------------------------------------- | :--------------------------------------------- | | Fee and Other Income | $3,720 | $13,872 | Fee and Other Income (Nine Months Ended Sep 30, in thousands) | Metric | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | | :--------------------- | :-------------------------------------------- | :-------------------------------------------- | | Fee and Other Income | $12,635 | $31,359 | - The decrease in Fee and Other Income was primarily due to lower fee revenue from Retail Value Inc. (RVI) and joint ventures as a result of asset sales[33][84] 3. Investments in and Advances to Joint Ventures This note outlines the Company's investments in unconsolidated joint ventures, including changes in properties and financial performance - The number of unconsolidated joint venture shopping center properties decreased from 47 at December 31, 2021, to 19 at September 30, 2022[34] Joint Venture Financials (in thousands) | Metric | Sep 30, 2022 (in thousands) | Dec 31, 2021 (in thousands) | | :-------------------------- | :-------------------------- | :-------------------------- | | Joint Venture Real Estate, net | $718,098 | $1,158,563 | | Joint Venture Mortgage Debt | $539,897 | $873,336 | | Company's Share of Accumulated Equity | $43,886 | $59,286 | Company's Share of Equity in Net Income of Joint Ventures (Three Months Ended Sep 30, in thousands) | Metric | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Sep 30, 2021 (in thousands) | | :------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Company's Share of Equity in Net Income of Joint Ventures | $25,918 | $1,824 | | Net Income Attributable to Unconsolidated Joint Ventures | $105,872 | $4,863 | | Gain (loss) on disposition of real estate, net (JV) | $119,813 | $(455) | Company's Share of Equity in Net Income of Joint Ventures (Nine Months Ended Sep 30, in thousands) | Metric | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | | :------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Company's Share of Equity in Net Income of Joint Ventures | $27,468 | $11,059 | | Net Income Attributable to Unconsolidated Joint Ventures | $105,833 | $53,525 | | Gain (loss) on disposition of real estate, net (JV) | $121,505 | $36,132 | - The DDRM Joint Venture sold 13 shopping centers for $387.6 million ($77.5 million at the Company's share) and two additional shopping centers for $41.0 million ($8.2 million at the Company's share), resulting in a $27.3 million gain for the Company[37] - The Company sold its 20% interest in the SAU Joint Venture and its 50% interest in Lennox Town Center, resulting in a Gain on Sale of Interests of $42.2 million[38] 4. Acquisitions This note details the Company's property acquisitions during the period, including purchase prices and their contribution to revenue - During the nine months ended September 30, 2022, the Company acquired 14 shopping centers for an aggregate purchase price of $301.1 million[40] - The Company also acquired its joint venture partner's 80% interest in Casselberry Commons for $35.6 million, resulting in a Gain on Change in Control of Interests of $3.3 million[39][40][42] - These acquired properties generated $11.1 million in total revenues from the date of acquisition through September 30, 2022[42] 5. Other Assets and Intangibles, net This note provides a breakdown of the Company's other assets and intangible assets, along with related amortization expenses Other Assets and Intangibles, net (in thousands) | Metric | Sep 30, 2022 (in thousands) | Dec 31, 2021 (in thousands) | | :-------------------------- | :-------------------------- | :-------------------------- | | Total Intangible Assets, net | $98,553 | $94,059 | | Swap Receivable | $8,895 | — | | Total Other Assets, net | $147,507 | $130,479 | Amortization Expense (Intangibles, in millions) | Amortization Expense (Intangibles) | Three Months Ended Sep 30, 2022 (in millions) | Three Months Ended Sep 30, 2021 (in millions) | | :--------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Amortization Expense | $7.1 | $5.3 | Amortization Expense (Intangibles, in millions) | Amortization Expense (Intangibles) | Nine Months Ended Sep 30, 2022 (in millions) | Nine Months Ended Sep 30, 2021 (in millions) | | :--------------------------------- | :------------------------------------------- | :------------------------------------------- | | Amortization Expense | $20.7 | $16.3 | 6. Revolving Credit Facilities This note describes the Company's revolving credit facilities, including outstanding borrowings, interest rates, maturity, and compliance with covenants - As of September 30, 2022, the Company's Revolving Credit Facility had outstanding borrowings of $80.0 million with a weighted-average interest rate of 3.9%[45] - The Revolving Credit Facility was amended in June 2022, extending its maturity date to June 2026 (with two six-month extension options to June 2027) and changing the interest rate benchmark from LIBOR to SOFR[46] - The facility includes a sustainability-linked pricing component, allowing for interest rate margin adjustments based on sustainability performance targets[47] - The Company was in compliance with all financial covenants under the Revolving Credit Facility at September 30, 2022[47] 7. Term Loan This note details the Company's term loan, including outstanding amounts, effective interest rates, maturity, and compliance with covenants - As of September 30, 2022, the Company's Term Loan had outstanding borrowings of $200.0 million, converted to an effective fixed interest rate of 3.8% through a swap[49] - The Term Loan was amended in June 2022, extending its maturity to June 2027, adding a $100 million delayed draw feature (drawn in June 2022), and changing the interest rate benchmark from LIBOR to SOFR[50][51] - The Term Loan also features a sustainability-linked pricing component and the Company was in compliance with its financial covenants at September 30, 2022[51] 8. Financial Instruments and Fair Value Measurements This note discusses the Company's use of derivative financial instruments to manage interest rate risk and provides fair value measurements of debt - The Company uses a pay-fixed interest rate swap to manage exposure to changes in benchmark interest rates, converting $200.0 million of SOFR rate debt to a fixed rate of 2.75% expiring in June 2027[52][58][59] Derivative Financial Instruments (in millions) | Metric | Sep 30, 2022 (in millions) | | :-------------------------- | :------------------------- | | Derivative Financial Instruments | $8.9 | Debt Fair Value Measurements (in thousands) | Debt Type | Sep 30, 2022 Carrying Amount (in thousands) | Sep 30, 2022 Fair Value (in thousands) | | :-------------------------------- | :---------------------------------------- | :------------------------------------- | | Senior Notes | $1,453,384 | $1,374,206 | | Revolving Credit Facilities and Term Loan | $278,437 | $280,000 | | Mortgage Indebtedness | $90,235 | $87,535 | | Total Indebtedness | $1,822,056 | $1,741,741 | - The Company expects a decrease to interest expense (and a corresponding increase to earnings) of approximately $2.8 million within the next 12 months due to the swap[60] 9. Equity This note provides details on common share dividends, share repurchases, and proceeds from common share offerings Common Share Dividends Declared per Share (Three Months Ended Sep 30) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Common Share Dividends Declared per Share | $0.13 | $0.12 | Common Share Dividends Declared per Share (Nine Months Ended Sep 30) | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Common Share Dividends Declared per Share | $0.39 | $0.35 | - In the third quarter of 2022, the Company repurchased 1.6 million common shares in open market transactions at an aggregate cost of $20.0 million, or $12.74 per share[64] - In March 2022, the Company settled 2.2 million common shares from a 2021 forward offering, resulting in gross proceeds of $35.1 million. In the second quarter of 2022, an additional 201,800 common shares were sold for gross proceeds of $3.2 million[65] 10. Other Comprehensive Income This note explains the components of other comprehensive income, primarily related to cash flow hedges Accumulated Other Comprehensive Income (in thousands) | Metric | Amount (in thousands) | | :-------------------------------- | :-------------------- | | Balance, December 31, 2021 | $— | | Comprehensive income from cash flow hedges | $9,782 | | Balance, September 30, 2022 | $9,782 | - The increase in Accumulated Other Comprehensive Income is entirely attributable to comprehensive income from cash flow hedges[66] 11. Impairments This note details impairment charges recorded during the period, specifically related to a tenant's purchase option - For the nine months ended September 30, 2022, the Company recorded an impairment charge of $2.5 million due to a tenant exercising a $7.0 million fixed-price purchase option for their building[67] 12. Earnings Per Share This note presents the basic and diluted earnings per share, reflecting the Company's profitability on a per-share basis Earnings Per Share (Three Months Ended Sep 30) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | | :--------------------- | :------------------------------ | :------------------------------ | | Basic EPS | $0.30 | $0.12 | | Diluted EPS | $0.30 | $0.12 | Earnings Per Share (Nine Months Ended Sep 30) | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $0.62 | $0.24 | | Diluted EPS | $0.62 | $0.24 | - The significant increase in EPS for both periods reflects higher net income attributable to common shareholders[14][69] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition, results of operations, and liquidity, highlighting key financial metrics, operational activities, and the impact of economic conditions. It also discusses non-GAAP financial measures and forward-looking statements EXECUTIVE SUMMARY This section provides a high-level overview of the Company's portfolio, key financial results, and significant operational activities during the period - As of September 30, 2022, the Company's portfolio consisted of 122 shopping centers (including 19 unconsolidated joint ventures), totaling approximately 28.2 million square feet of gross leasable area (GLA)[73] Portfolio Occupancy and Rent (pro rata) | Metric | Sep 30, 2022 | Sep 30, 2021 | | :------------------------------------ | :----------- | :----------- | | Aggregate Occupancy of Operating Shopping Center Portfolio (pro rata) | 91.4% | 90.2% | | Average Annualized Base Rent per Occupied Square Foot (pro rata) | $19.11 | $18.44 | Net Income and Operating FFO (Nine Months Ended Sep 30, in thousands) | Metric | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Net Income Attributable to Common Shareholders | $132,155 | $49,918 | | Operating FFO Attributable to Common Shareholders | $190,845 | $181,917 | - The increase in net income for the nine months ended September 30, 2022, was primarily due to higher gains on asset sales, base rent growth, property acquisitions, and the write-off of preferred share original issuance costs in 2021, partially offset by lower fee income[74] - Rent collection rates improved to pre-pandemic levels by year-end 2021, with $1.9 million of prior-period net revenue collected in the nine months ended September 30, 2022, primarily from cash basis tenants[76] - Key operational highlights for the nine months ended September 30, 2022, include: acquiring 14 shopping centers for $301.1 million, selling 2 wholly-owned and 2 unconsolidated shopping centers for $98.4 million, amending and restating credit facilities to extend maturities and switch to SOFR, repurchasing $20.0 million of common shares, and leasing approximately 4.2 million square feet of GLA with positive leasing spreads (20.0% for new leases, 6.0% for renewals)[79][80] RESULTS OF OPERATIONS This section analyzes the Company's revenues, expenses, and net income, explaining the drivers behind changes in financial performance Consolidated Results of Operations (Nine Months Ended Sep 30, in thousands) | Metric | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | | :------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Total Revenues | $413,845 | $398,048 | | Rental Income | $401,210 | $366,689 | | Fee and Other Income | $12,635 | $31,359 | | Total Rental Operation Expenses | $317,261 | $302,822 | | General and Administrative Expenses | $34,403 | $41,547 | | Net Income Attributable to SITE Centers | $140,522 | $65,941 | - The $34.5 million increase in rental income for the nine months ended September 30, 2022, was driven by $18.3 million from acquisitions and $8.8 million from Comparable Portfolio Properties[82] - Uncollectible revenue decreased by $6.4 million for the nine months ended September 30, 2022, primarily due to improved collections from cash basis tenants[82] - Fee and Other Income decreased by $18.7 million, mainly due to lower fee revenue from RVI and joint ventures resulting from asset sales[82][84] - General and administrative expenses decreased by $7.1 million, partly due to a $5.6 million mark-to-market adjustment on PRSUs recorded in 2021[85][86] - Net income attributable to SITE Centers increased by $74.6 million, primarily due to higher gains on asset sales (wholly-owned and joint venture) and improved operating results[90][92] NON-GAAP FINANCIAL MEASURES This section presents and reconciles non-GAAP financial measures like FFO and Operating FFO, used to evaluate the Company's core operating performance - The Company uses non-GAAP financial measures, Funds from Operations (FFO) and Operating FFO, to assess core operating performance, excluding real estate depreciation, amortization, and certain non-comparable items[94][95][96][97] FFO and Operating FFO (Nine Months Ended Sep 30, in thousands) | Metric | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | FFO Attributable to Common Shareholders | $188,729 | $176,510 | | Operating FFO Attributable to Common Shareholders | $190,845 | $181,917 | - The increase in FFO was primarily attributable to higher operating results (base rent growth, acquisitions) and lower general and administrative expenses, partially offset by lower management fees[103] SSNOI (Nine Months Ended Sep 30, in thousands) | Metric | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Total SSNOI including redevelopment | $274,909 | $273,923 | | SSNOI % Change including redevelopment | 0.4% | — | - SSNOI for the nine months ended September 30, 2022, included $1.9 million in uncollectible revenue, a decrease from $8.3 million in the prior year, reflecting improved rent collections[110] LIQUIDITY, CAPITAL RESOURCES AND FINANCING ACTIVITIES This section discusses the Company's financial resources, debt structure, cash flow, and strategies for managing liquidity and capital - The Company's total consolidated debt outstanding was $1.8 billion at September 30, 2022, compared to $1.7 billion at December 31, 2021[115] - As of September 30, 2022, the Company had an unrestricted cash balance of $20.9 million and $870.0 million available under its Revolving Credit Facility[116] - The Company has no remaining debt maturing in 2022, with $87.2 million in senior notes and $35.3 million in consolidated mortgage debt maturing in 2023[116] - The Revolving Credit Facility ($950 million capacity, extendable to $1.45 billion) matures in June 2026 (with extension options to June 2027) and the Term Loan ($200 million outstanding) matures in June 2027, both utilizing SOFR as the interest rate benchmark and featuring sustainability-linked pricing[117][118][119] - Cash flow provided by operating activities decreased by $11.9 million, while cash used for investing activities increased by $218.1 million, primarily due to increased real estate acquisitions[126][127] - Cash provided by financing activities increased by $219.8 million, mainly due to increased borrowings from the Revolving Credit Facility and Term Loan, net of mortgage debt repayments[128] - The Company declared common and preferred cash dividends of $91.9 million for the nine months ended September 30, 2022, and intends to distribute at least 100% of ordinary taxable income to maintain REIT compliance[128] - The Company repurchased $20.0 million of common shares in Q3 2022, with $22.1 million remaining under its $100 million repurchase program. Approximately $211.7 million is available for future common share offerings[130][131] SOURCES AND USES OF CAPITAL This section details how the Company generated and utilized capital through share transactions, acquisitions, dispositions, and redevelopment projects - In Q3 2022, the Company repurchased 1.6 million common shares for $20.0 million. In March 2022, 2.2 million common shares from a forward offering were settled for $35.1 million, and an additional 201,800 common shares were sold for $3.2 million in Q2 2022[134][135] - During the nine months ended September 30, 2022, the Company acquired 14 shopping centers for $301.1 million and its joint venture partner's 80% interest in Casselberry Commons for $35.6 million, resulting in a $3.3 million gain on change in control[136][137] - Dispositions in the nine months ended September 30, 2022, included two wholly-owned and two unconsolidated shopping centers for $98.4 million (total proceeds), and the DDRM Joint Venture sold 13 shopping centers for $387.6 million ($77.5 million Company's share)[138] - The Company sold its interests in the SAU Joint Venture and Lennox Town Center, generating a $42.2 million Gain on Sale of Interests[139] - The Company anticipates approximately $25 million to be incurred on its pipeline of identified redevelopment projects, with approximately $60 million in construction in progress for active consolidated redevelopment projects[141][142] ECONOMIC CONDITIONS This section assesses the impact of broader economic trends, including inflation and interest rates, on the Company's operations and market demand - Despite economic uncertainties, the Company observes strong retailer demand for its well-located shopping centers in suburban, high household income communities, evidenced by leasing approximately 3.5 million square feet of space in the nine months ended September 30, 2022[153] Shopping Center Portfolio Occupancy and Rent (pro rata) | Metric | Sep 30, 2022 | Dec 31, 2021 | | :------------------------------------ | :----------- | :----------- | | Shopping Center Portfolio Occupancy (pro rata) | 91.4% | 90.0% | | Total Portfolio Average Annualized Base Rent per Occupied Square Foot (pro rata) | $19.11 | $18.33 | - The Company's diversified tenant base, with a focus on day-to-day consumer necessities, is expected to provide a stable revenue base, with only one tenant (TJX Companies) exceeding 3% of annualized consolidated revenues (5.8%)[154][155] - While COVID-19 rent collection disruptions have subsided, new surges or variants, along with inflation, labor shortages, and supply chain disruptions, continue to pose risks, particularly for vulnerable tenant categories like movie theaters and fitness centers[157][158] - Inflationary pressures and rising interest rates could impact consumer spending, retailer profitability, rent growth, operating costs, and the transaction market, though the Company has not been significantly impacted to date[158] FORWARD-LOOKING STATEMENTS This section provides cautionary language regarding future expectations, outlining inherent risks and uncertainties that could cause actual results to differ - This section contains forward-looking statements regarding future expectations, including acquisitions, capital expenditures, financing, and regulatory effects, which are not historical facts[160][161] - Readers are cautioned that actual results may differ materially from expectations due to known and unknown risks, uncertainties, and other factors, many beyond the Company's control[161] - Key risk factors include general real estate industry risks, local and national economic conditions, changes in consumer buying practices, competition, tenant financial health, acquisition/disposition challenges, development project risks, debt obligations, interest rate changes, REIT qualification, joint venture risks, and potential environmental or cyber liabilities[162][163][164] Item 3. Quantitative and Qualitative Disclosures about Market Risk The Company's primary market risk is interest rate risk, with a significant portion of its consolidated debt being fixed-rate or effectively fixed through swaps. A hypothetical 100 basis-point increase in short-term interest rates would have a limited impact on interest expense, and the Company actively manages this risk through derivative instruments and access to capital markets - The Company's primary market risk exposure is interest rate risk[165] Debt Composition (Sep 30, 2022) | Debt Type | Sep 30, 2022 Amount (Millions) | Sep 30, 2022 Weighted Average Interest Rate | Sep 30, 2022 Percentage of Total | | :---------------- | :----------------------------- | :---------------------------------------- | :------------------------------- | | Fixed-Rate Debt | $1,742.1 | 4.1% | 95.6% | | Variable-Rate Debt | $80.0 | 3.9% | 4.4% | - The fixed-rate debt includes $200.0 million of variable-rate debt that has been effectively swapped to a fixed rate of 2.75% at September 30, 2022[165][166] - A hypothetical 100 basis-point increase in short-term market interest rates would result in an increase in interest expense of approximately $0.6 million for the Company and $0.1 million for its proportionate share of joint ventures' interest expense for the nine months ended September 30, 2022[169] - The Company mitigates credit risk by entering into swaps with major financial institutions and does not use derivative financial instruments for trading or speculative purposes[166][171] Item 4. Controls and Procedures The Company's management, including the CEO and CFO, concluded that its disclosure controls and procedures were effective as of September 30, 2022, ensuring timely and accurate reporting. No material changes in internal control over financial reporting occurred during the third quarter of 2022 - The CEO and CFO evaluated the effectiveness of the Company's disclosure controls and procedures and concluded they were effective as of September 30, 2022[172] - No changes in the Company's internal control over financial reporting materially affected or are reasonably likely to materially affect internal control over financial reporting during the three months ended September 30, 2022[173] PART II. OTHER INFORMATION This section provides additional disclosures on legal proceedings, risk factors, equity sales, defaults, and other relevant information not covered in the financial statements Item 1. Legal Proceedings The Company and its subsidiaries are involved in various legal proceedings, primarily for personal injury or property damage, which are generally covered by insurance. Management believes these proceedings will not have a material adverse effect on the Company's financial condition or operations - The Company is subject to various legal proceedings, including for personal injury or property damage, most of which are covered by insurance[176] - Management believes the final outcome of such legal proceedings and claims will not have a material adverse effect on the Company's liquidity, financial position, or results of operations[176] Item 1A. Risk Factors This section indicates that there are no new material risk factors to report that were not already disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 - No new material risk factors are reported in this quarterly filing[177] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the third quarter of 2022, the Company repurchased 1.6 million common shares for $20.0 million under its share repurchase program, with $22.1 million remaining available. Additionally, common shares were surrendered to cover tax withholding obligations related to equity awards Common Share Repurchases (Sep 1–30, 2022) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | :----------------- | :----------------------------- | :--------------------------- | :----------------------------------------------------------------- | | Sep 1–30, 2022 | 1,598,226 | $12.75 | 1,569,602 | - The Company repurchased 1.6 million common shares for $20.0 million ($12.74 per share) in Q3 2022 under its share repurchase program, which has $22.1 million remaining available[179][180] - 30,492 common shares were surrendered or deemed surrendered to satisfy statutory minimum tax withholding obligations in connection with equity awards during July-September 2022[179][180] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities were reported[181] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the Company's operations - Mine safety disclosures are not applicable to the Company[182] Item 5. Other Information This section indicates that there is no other material information to disclose that is not covered elsewhere in the report - No other material information is reported[183] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including iXBRL formatted financial statements and various certifications from the principal executive and financial officers - Exhibits include iXBRL formatted Consolidated Balance Sheets, Statements of Operations, Comprehensive Income, Equity, Cash Flows, and Notes to Condensed Consolidated Financial Statements[186] - Certifications from the principal executive officer and principal financial officer pursuant to Rule 13a-14(a) and 18 U.S.C. Section 1350 are included[187] SIGNATURES The report is officially signed on behalf of SITE Centers Corp. by Christa A. Vesy, Executive Vice President and Chief Accounting Officer, on October 27, 2022 - The report was signed by Christa A. Vesy, Executive Vice President and Chief Accounting Officer, on October 27, 2022[189][190]