SITE Centers Reports Fourth Quarter and Full-Year 2022 Operating Results

SITE Centers Corp. (NYSE: SITC), an owner of open-air shopping centers in suburban, high household income communities, announced today operating results for the quarter and year ended December 31, 2022.

“SITE Centers had a very productive fourth quarter with results ahead of plan as we continued to execute on our leasing and operational goals,” commented David R. Lukes, President and Chief Executive Officer. "In the last two years, we have executed over 2.0 million square feet of new leases increasing the Company’s leased rate over 380 bp to 95.4% highlighting the quality and strength of our focused portfolio of assets concentrated in the top sub-markets of the country. Additionally, over the course of 2022, we were able to opportunistically recycle capital into Convenience properties improving the Company’s long-term growth profile and expanding on the Company’s investment in this property type. Going forward, SITE remains well positioned with minimal near-term maturities, significant liquidity and a $19 million Signed but Not Opened (SNO) pipeline.”

Results for the Fourth Quarter

• Fourth quarter net income attributable to common shareholders was $25.4 million, or $0.12 per diluted share, as compared to net income of $56.2 million, or $0.26 per diluted share, in the year-ago period. The decrease year-over-year primarily was the result of asset sales within the DDRM Joint Venture and lower management fees, partially offset by base rent growth and the net impact of property acquisitions.
• Fourth quarter operating funds from operations attributable to common shareholders (“Operating FFO” or “OFFO”) was $62.5 million, or $0.29 per diluted share, compared to $63.8 million, or $0.30 per diluted share, in the year-ago period. Fourth quarter net operating income was higher year-over-year driven by base rent growth and the net impact of property acquisitions, offset by lower management fees and uncollectible revenue. Fourth quarter OFFO results included $0.8 million of rental income at SITE Centers’ share related to prior periods primarily from cash basis tenants.

Results for the Year

• Net income attributable to common shareholders for the year ended December 31, 2022 was $157.6 million, or $0.73 per diluted share, as compared to net income of $106.1 million, or $0.51 per diluted share, for the prior year.
• Operating FFO was $253.3 million, or $1.18 per diluted share for the full year 2022, which compares to $245.7 million, or $1.17 per diluted share for 2021. 2022 Operating FFO results included $3.6 million of rental income at SITE Centers’ share related to prior periods primarily from cash basis tenants.

Significant Fourth Quarter 2022 and Recent Activity

• Acquired one convenience shopping center during the fourth quarter, Shops on Montview (Denver, CO), for $5.8 million.
• Sold four shopping centers and land parcels during the fourth quarter for an aggregate price of $166.7 million ($158.2 million at share).
• Repurchased 2.2 million of the Company's common shares in open market transactions at an aggregate cost of $28.8 million, or an average cost of $13.33 per common share, in the fourth quarter with proceeds from the sale of wholly-owned properties.
• In January 2023, acquired two convenience shopping centers for an aggregate price of $26.1 million, including Parker Keystone (Parker, CO) for $11.0 million and Foxtail Center (Timonium, MD) for $15.1 million.

Significant Full-Year 2022 Activity

• Issued the Company’s eighth Corporate Responsibility and Sustainability Report. The Report was completed in alignment with the Global Reporting Initiative ("GRI") and with the Sustainability Accounting Standards Board ("SASB") metrics and frameworks. The report intends to provide updates on the annual results of the Company’s corporate responsibility and sustainability programs and can be found at https://www.sitecenters.com/2021CSR.
• Acquired 16 shopping centers (including through the acquisition of a partner's interest) for an aggregate price of $342.4 million at SITE's share.
• Sold 33 shopping centers and land parcels for $885.5 million ($371.1 million at share), including the Company's 20% interest in the SAU Joint Venture based on a gross asset value of $155.7 million (at 100%) and the Company’s 20% interest in DDRM Pool A based on a gross asset value of $387.6 million (at 100%).
• In June 2022, amended and restated its $950 million revolving credit facility with a fully extended maturity date of June 2027 and refinanced its unsecured term loan facility. The Company also upsized the term loan facility to $200 million from $100 million with the additional proceeds drawn in the second quarter, extended its maturity to June 2027 and swapped the unsecured term loan to a fixed rate of 3.80% (3.99% GAAP) through the loan's maturity in June 2027.
• In the first and second quarters, settled the forward sale of 2.4 million common shares at $15.79 per common share under the ATM program generating proceeds of $38.3 million.
• In the third and fourth quarters, repurchased 3.7 million of the Company's common shares in open market transactions at an aggregate cost of $48.8 million, or an average cost of $13.07 per common share, funded via proceeds from property dispositions.

Key Operating Results

• Reported an increase of 1.8% in SSNOI on a pro rata basis for the fourth quarter of 2022, including redevelopment, as compared to the year-ago period. The fourth quarter of 2021 SSNOI included $1.0 million of rental income at SITE Centers’ share related to 2020 primarily from cash basis tenants, which was a 110 basis-point headwind to fourth quarter 2022 SSNOI growth.
• Reported an increase of 0.8% in SSNOI on a pro rata basis for the full year 2022, including redevelopment, as compared to 2021. 2021 SSNOI included $12.8 million of rental income at SITE Centers’ share related to 2020 primarily from cash basis tenants, which was a 360 basis-point headwind to 2022 SSNOI growth.
• Generated cash new leasing spreads of 26.0% and cash renewal leasing spreads of 6.4%, both on a pro rata basis, for the trailing twelve-month period ended December 31, 2022 and cash new leasing spreads of 55.2% and cash renewal leasing spreads of 7.6%, both on a pro rata basis, for the fourth quarter of 2022.
• Generated straight-lined new leasing spreads of 40.4% and straight-lined renewal leasing spreads of 9.9%, both on a pro rata basis, for the trailing twelve-month period ended December 31, 2022 and straight-lined new leasing spreads of 72.1% and straight-lined renewal leasing spreads of 11.2%, both on a pro rata basis, for the fourth quarter of 2022.
• Reported a leased rate of 95.4% at December 31, 2022 on a pro rata basis, compared to 95.0% on a pro rata basis at September 30, 2022 and 92.7% on a pro rata basis at December 31, 2021. The sequential increase was primarily driven by small-shop (less than 10,000 square feet) leasing activity.
• As of December 31, 2022, the SNO spread was 290 basis points, representing $18.9 million of annualized base rent on a pro rata basis.
• Annualized base rent per occupied square foot on a pro rata basis was $19.52 at December 31, 2022, compared to $18.33 at December 31, 2021.

Guidance

The Company estimates net income attributable to common shareholders for 2023 to be from $0.16 to $0.24 per diluted share and Operating FFO to be from $1.10 to $1.16 per diluted share. The Company does not include a projection of gains or losses on asset sales, impairment charges, transaction or debt extinguishment costs in guidance.

Reconciliation of Net Income Attributable to Common Shareholders to FFO and Operating FFO estimates:

In reliance on the exception provided by Item 10(e)(1)(i)(B) of Regulation S-K, reconciliation of the assumed range of 2023 SSNOI growth to the most directly comparable GAAP financial measure is not provided because the Company is unable to provide such reconciliation without unreasonable effort due to the multiple components of the calculation which only includes properties owned for comparable periods and excludes all corporate level activity as described below under Non-GAAP Measures and Other Operational Metrics. Key assumptions for 2023 guidance include the following:

About SITE Centers Corp.

SITE Centers is an owner and manager of open-air shopping centers located in suburban, high household income communities. The Company is a self-administered and self-managed REIT operating as a fully integrated real estate company, and is publicly traded on the New York Stock Exchange under the ticker symbol SITC. Additional information about the Company is available at www.sitecenters.com. To be included in the Company’s e-mail distributions for press releases and other investor news, please click here.

Conference Call and Supplemental Information

The Company will hold its quarterly conference call today at 8:30 a.m. Eastern Time. To participate with access to the slide presentation, please visit the Investor Relations portion of SITE's website, ir.sitecenters.com, or for audio only, dial 888-317-6003 (U.S.), 866-284-3684 (Canada) or 412-317-6061 (international) using pass code 4603833 at least ten minutes prior to the scheduled start of the call. The call will also be webcast and available in a listen-only mode on SITE Centers’ website at ir.sitecenters.com. If you are unable to participate during the live call, a replay of the conference call will also be available at ir.sitecenters.com for further review. You may also access the telephone replay by dialing 877-344-7529 (U.S.), 855-669-9658 (Canada) or 412-317-0088 (international) using passcode 8477474 through March 8, 2023. Copies of the Company’s supplemental package and earnings slide presentation are available on the Company’s website.

Non-GAAP Measures and Other Operational Metrics

Funds from Operations (“FFO”) is a supplemental non-GAAP financial measure used as a standard in the real estate industry and is a widely accepted measure of real estate investment trust (“REIT”) performance. Management believes that both FFO and Operating FFO provide additional indicators of the financial performance of a REIT. The Company also believes that FFO and Operating FFO more appropriately measure the core operations of the Company and provide benchmarks to its peer group.

FFO is generally defined and calculated by the Company as net income (loss) (computed in accordance with generally accepted accounting principles in the United States (“GAAP”)), adjusted to exclude (i) preferred share dividends, (ii) gains and losses from disposition of real estate property and related investments, which are presented net of taxes, (iii) impairment charges on real estate property and related investments, (iv) gains and losses from changes in control and (v) certain non-cash items. These non-cash items principally include real property depreciation and amortization of intangibles, equity income (loss) from joint ventures and equity income (loss) from non-controlling interests and adding the Company’s proportionate share of FFO from its unconsolidated joint ventures and non-controlling interests, determined on a consistent basis. The Company’s calculation of FFO is consistent with the definition of FFO provided by NAREIT. The Company calculates Operating FFO as FFO excluding certain non-operating charges, income and gains. Operating FFO is useful to investors as the Company removes non-comparable charges, income and gains to analyze the results of its operations and assess performance of the core operating real estate portfolio. Other real estate companies may calculate FFO and Operating FFO in a different manner.

In calculating the expected range for or amount of net (loss) income attributable to common shareholders to estimate projected FFO and Operating FFO for future periods, the Company does not include a projection of gain and losses from the disposition of real estate property, potential impairments and reserves of real estate property and related investments, debt extinguishment costs or certain transaction costs. Other real estate companies may calculate expected FFO and Operating FFO in a different manner.

The Company also uses net operating income (“NOI”), a non-GAAP financial measure, as a supplemental performance measure. NOI is calculated as property revenues less property-related expenses. The Company believes NOI provides useful information to investors regarding the Company’s financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level and, when compared across periods, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and disposition activity on an unleveraged basis.

The Company presents NOI information herein on a same store basis or “SSNOI.” The Company defines SSNOI as property revenues less property-related expenses, which exclude straight-line rental income and reimbursements and expenses, lease termination income, management fee expense, fair market value of leases and expense recovery adjustments. SSNOI includes assets owned in comparable periods (15 months for prior period comparisons). In addition, SSNOI is presented including activity associated with major and tactical redevelopment. SSNOI excludes all non-property and corporate level revenue and expenses. Other real estate companies may calculate NOI and SSNOI in a different manner. The Company believes SSNOI at its effective ownership interest provides investors with additional information regarding the operating performances of comparable assets because it excludes certain non-cash and non-comparable items as noted above.

FFO, Operating FFO, NOI and SSNOI do not represent cash generated from operating activities in accordance with GAAP, are not necessarily indicative of cash available to fund cash needs and should not be considered as alternatives to net income computed in accordance with GAAP, as indicators of the Company’s operating performance or as alternatives to cash flow as a measure of liquidity. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures have been provided herein. In reliance on the exception provided by Item 10(e)(1)(i)(B) of Regulation S-K, reconciliation of the assumed rate of 2023 SSNOI growth to the most directly comparable GAAP financial measure is not provided because the Company is unable to provide such reconciliation without unreasonable effort due to the multiple components of the calculation which only includes properties owned for comparable periods and excludes all corporate level activity as noted above.

The Company calculates Cash Leasing Spreads by comparing the prior tenant's annual base rent in the final year of the prior lease to the executed tenant's annual base rent in the first year of the executed lease. Straight-Lined Leasing Spreads are calculated by comparing the prior tenant's average base rent over the prior lease term to the executed tenant's average base rent over the term of the executed lease. For both Cash and Straight-Lined Leasing Spreads, the reported calculation includes only comparable leases which are deals executed within one year of the date that the prior tenant vacated. Deals executed after one year of the date the prior tenant vacated, deals which are a combination of existing units, new leases at major redevelopment properties, and deals for units vacant at the time of acquisition are considered non-comparable and excluded from the calculation.

Safe Harbor

SITE Centers Corp. considers portions of the information in this press release to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, with respect to the Company's expectation for future periods. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. For this purpose, any statements contained herein that are not historical fact may be deemed to be forward-looking statements. There are a number of important factors that could cause our results to differ materially from those indicated by such forward-looking statements, including, among other factors, local conditions such as the supply of, and demand for, retail real estate space in the area; the impact of e-commerce; dependence on rental income from real property; the loss of, significant downsizing of or bankruptcy of a major tenant and the impact of any such event on rental income from other tenants and our properties; redevelopment and construction activities may not achieve a desired return on investment; our ability to buy or sell assets on commercially reasonable terms; our ability to complete acquisitions or dispositions of assets under contract; our ability to secure equity or debt financing on commercially acceptable terms or at all; impairment charges; our ability to enter into definitive agreements with regard to our financing and joint venture arrangements and the Company’s ability to satisfy conditions to the completion of these arrangements; valuation and risks relating to our joint venture investments; the termination of any joint venture arrangements or arrangements to manage real property; property damage, expenses related thereto and other business and economic consequences (including the potential loss of rental revenues) resulting from extreme weather conditions or natural disasters in locations where we own properties, and the ability to estimate accurately the amounts thereof; sufficiency and timing of any insurance recovery payments related to damages from extreme weather conditions or natural disasters; any change in strategy; the impact of pandemics (including the COVID-19 pandemic) and other public health crises; our ability to maintain REIT status; and the finalization of the financial statements for the period ended December 31, 2022. For additional factors that could cause the results of the Company to differ materially from those indicated in the forward-looking statements, please refer to the Company's most recent reports on Forms 10-K and 10-Q. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

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