UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Depositary Shares, each representing 1/20 of a share of 6.375% Class A |
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of April 22, 2022 the registrant had
SITE Centers Corp.
QUARTERLY REPORT ON FORM 10-Q
QUARTER ENDED March 31, 2022
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION |
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Item 1. |
Financial Statements – Unaudited |
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Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021 |
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Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021 |
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Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2022 and 2021 |
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Consolidated Statements of Equity for the Three Months Ended March 31, 2022 and 2021 |
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Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021 |
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7 |
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Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
30 |
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Item 4. |
31 |
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PART II. OTHER INFORMATION |
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Item 1. |
32 |
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Item 1A. |
32 |
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Item 2. |
32 |
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Item 3. |
32 |
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Item 4. |
32 |
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Item 5. |
32 |
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Item 6. |
33 |
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34 |
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1
SITE Centers Corp.
CONSOLIDATED BALANCE SHEETS
(unaudited; in thousands, except share amounts)
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March 31, 2022 |
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December 31, 2021 |
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Assets |
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Land |
$ |
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$ |
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Buildings |
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Fixtures and tenant improvements |
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Less: Accumulated depreciation |
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Construction in progress and land |
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Total real estate assets, net |
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Investments in and advances to joint ventures, net |
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Cash and cash equivalents |
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Restricted cash |
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Accounts receivable |
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Other assets, net |
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$ |
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$ |
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Liabilities and Equity |
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Unsecured indebtedness: |
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Senior notes, net |
$ |
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$ |
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Term loan, net |
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Revolving credit facilities |
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Mortgage indebtedness, net |
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Total indebtedness |
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Accounts payable and other liabilities |
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Dividends payable |
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Total liabilities |
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Commitments and contingencies |
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SITE Centers Equity |
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Class A— December 31, 2021 |
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Common shares, with par value, $ |
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Additional paid-in capital |
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Accumulated distributions in excess of net income |
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Deferred compensation obligation |
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Less: Common shares in treasury at cost: December 31, 2021, respectively |
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Total SITE Centers shareholders' equity |
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Non-controlling interests |
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Total equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
2
SITE Centers Corp.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in thousands, except per share amounts)
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Three Months |
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Ended March 31, |
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2022 |
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2021 |
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Revenues from operations: |
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Rental income |
$ |
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$ |
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Fee and other income |
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Rental operation expenses: |
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Operating and maintenance |
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Real estate taxes |
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Impairment charges |
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General and administrative |
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Depreciation and amortization |
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Other income (expense): |
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Interest expense |
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Other expense, net |
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Income (loss) before earnings from equity method investments and other items |
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Equity in net income of joint ventures |
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Gain on change in control of interests |
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Loss on disposition of real estate, net |
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Income before tax expense |
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Tax expense of taxable REIT subsidiaries and state franchise and income taxes |
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Net income |
$ |
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$ |
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Income attributable to non-controlling interests, net |
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Net income attributable to SITE Centers |
$ |
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$ |
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Preferred dividends |
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Net income attributable to common shareholders |
$ |
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$ |
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Per share data: |
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Basic |
$ |
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$ |
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Diluted |
$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
SITE Centers Corp.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited; in thousands)
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Three Months |
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Ended March 31, |
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2022 |
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2021 |
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Net income |
$ |
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$ |
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Other comprehensive income: |
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Foreign currency translation, net |
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Reclassification adjustment for foreign currency translation included in net income |
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Total other comprehensive income |
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Comprehensive income |
$ |
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$ |
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Total comprehensive income attributable to non-controlling interests |
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( |
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Total comprehensive income attributable to SITE Centers |
$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
SITE Centers Corp.
CONSOLIDATED STATEMENTS OF EQUITY
(unaudited; in thousands)
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SITE Centers Equity |
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Preferred Shares |
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Common Shares |
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Additional Paid-in Capital |
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Accumulated Distributions in Excess of Net Income |
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Deferred Compensation Obligation |
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Treasury Stock at Cost |
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Non- Controlling Interests |
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Total |
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Balance, December 31, 2021 |
$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Issuance of common shares related to stock plans |
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Issuance of common shares for cash offering |
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Stock-based compensation, net |
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( |
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( |
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( |
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Distributions to non-controlling interests |
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( |
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Dividends declared-common shares |
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( |
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Dividends declared-preferred shares |
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( |
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Comprehensive income |
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Balance, March 31, 2022 |
$ |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
( |
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$ |
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$ |
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SITE Centers Equity |
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Preferred Shares |
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Common Shares |
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Additional Paid-in Capital |
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Accumulated Distributions in Excess of Net Income |
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Deferred Compensation Obligation |
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Accumulated Other Comprehensive (Loss) Income |
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Treasury Stock at Cost |
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Non- Controlling Interests |
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Total |
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Balance, December 31, 2020 |
$ |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
( |
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$ |
( |
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$ |
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$ |
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Issuance of common shares related to stock plans |
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Issuance of common shares for cash offering |
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Stock-based compensation, net |
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( |
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Distributions to non-controlling interests |
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( |
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Dividends declared-common shares |
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( |
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Dividends declared-preferred shares |
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( |
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Comprehensive income |
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Balance, March 31, 2021 |
$ |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
SITE Centers Corp.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in thousands)
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Three Months |
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Ended March 31, |
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2022 |
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2021 |
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Cash flow from operating activities: |
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Net income |
$ |
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$ |
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Adjustments to reconcile net income to net cash flow provided by operating activities: |
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Depreciation and amortization |
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Stock-based compensation |
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Amortization and write-off of debt issuance costs and fair market value of debt adjustments |
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Equity in net income of joint ventures |
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( |
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( |
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Operating cash distributions from joint ventures |
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Gain on change in control of interests |
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( |
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( |
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Loss on disposition of real estate, net |
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Impairment charges |
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Net change in accounts receivable |
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Net change in accounts payable and accrued expenses |
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( |
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( |
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Net change in other operating assets and liabilities |
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( |
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( |
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Total adjustments |
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Net cash flow provided by operating activities |
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Cash flow from investing activities: |
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Real estate acquired, net of liabilities and cash assumed |
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( |
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Real estate developed and improvements to operating real estate |
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( |
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( |
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Proceeds from disposition of real estate |
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Equity contributions to joint ventures |
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( |
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( |
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Distributions from unconsolidated joint ventures |
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Net cash flow (used for) provided by investing activities |
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( |
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Cash flow from financing activities: |
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Proceeds from (repayment of) revolving credit facilities, net |
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( |
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Repayment of mortgage debt |
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( |
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( |
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Proceeds from issuance of common shares, net of offering expenses |
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Repurchase of common shares in conjunction with equity award plans and dividend reinvestment plan |
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( |
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( |
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Distributions to non-controlling interests and redeemable operating partnership units |
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( |
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( |
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Dividends paid |
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( |
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( |
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Net cash flow provided by financing activities |
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Effect of foreign exchange rate changes on cash and cash equivalents |
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( |
) |
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Net (decrease) increase in cash, cash equivalents and restricted cash |
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( |
) |
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Cash, cash equivalents and restricted cash, beginning of period |
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Cash, cash equivalents and restricted cash, end of period |
$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
6
Notes to Condensed Consolidated Financial Statements
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1. |
Nature of Business and Financial Statement Presentation |
Nature of Business
SITE Centers Corp. and its related consolidated real estate subsidiaries (collectively, the “Company” or “SITE Centers”) and unconsolidated joint ventures are primarily engaged in the business of acquiring, owning, developing, redeveloping, leasing and managing shopping centers. Unless otherwise provided, references herein to the Company or SITE Centers include SITE Centers Corp. and its wholly-owned subsidiaries. The Company’s tenant base primarily includes national and regional retail chains and local tenants. Consequently, the Company’s credit risk is concentrated in the retail industry.
Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the year. The Company considered impacts to its estimates related to COVID-19, as appropriate, within its unaudited condensed consolidated financial statements, and there may be changes to those estimates in future periods. The Company believes that its accounting estimates are appropriate after giving consideration to the uncertainties surrounding the severity and duration of the COVID-19 pandemic. Actual results could differ from those estimates.
Unaudited Interim Financial Statements
These financial statements have been prepared by the Company in accordance with GAAP for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all information and footnotes required by GAAP for complete financial statements. However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the results of the periods presented. The results of operations for the three months ended March 31, 2022 and 2021, are not necessarily indicative of the results that may be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
Principles of Consolidation
Statements of Cash Flows and Supplemental Disclosure of Non-Cash Investing and Financing Information
Non-cash investing and financing activities are summarized as follows (in millions):
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Three Months |
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Ended March 31, |
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2022 |
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2021 |
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Consolidation of the net assets of previously unconsolidated joint ventures |
$ |
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$ |
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Joint venture investments related to consolidation of net assets |
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Dividends declared, but not paid |
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Accounts payable related to construction in progress |
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Tax receivable - investment sale proceeds |
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2. |
Revenue Recognition |
Impact of the COVID-19 Pandemic on Revenue and Receivables
Beginning in March 2020, the retail sector was significantly impacted by the COVID-19 pandemic. Though the impact of the COVID-19 pandemic on tenant operations varied by tenant category, local conditions and applicable government mandates, a significant number of the Company’s tenants experienced a reduction in sales and foot traffic, and many tenants were forced to limit
7
their operations or close their businesses for a period of time, primarily in 2020. The COVID-19 pandemic also had a significant impact on the Company’s collection of rents from April 2020 through the end of 2020. The Company engaged in discussions with most of its larger tenants that failed to satisfy all or a portion of their rent obligations and agreed to terms on rent-deferral arrangements (and, in a small number of cases, rent abatements) and other lease modifications with a significant number of such tenants. As of March 31, 2022, the majority of these deferral arrangements for tenants that are not accounted for on the cash basis have been repaid.
During the three months ended March 31, 2022, the Company recorded net uncollectible revenue that resulted in rental income of $
For those tenants where the Company is unable to assert that collection of amounts due over the lease term is probable, regardless if the Company has entered into a deferral agreement to extend the payment terms, the Company has categorized these tenants on the cash basis of accounting. As a result, all existing accounts receivable relating to these tenants have been reserved in full, including straight-line rental income, and no rental income is recognized from such tenants once they have been placed on the cash basis of accounting until payments are received. The Company will remove the cash basis designation and resume recording rental income from such tenants on a straight-line basis at such time it believes collection from the tenants is probable based upon a demonstrated payment history, improved liquidity, the addition of credit-worthy guarantors or a recapitalization event.
Fee and Other Income
Fee and Other Income on the consolidated statements of operations includes revenue from contracts with customers, revenue from contracts with Retail Value Inc. (“RVI”) and other property-related income and is recognized in the period earned as follows (in thousands):
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Three Months |
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Ended March 31, |
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2022 |
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2021 |
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Revenue from contracts with customers: |
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Asset and property management fees |
$ |
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$ |
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Leasing commissions |
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Development fees |
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Total revenue from contracts with customers |
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Other property income |
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Revenue from contracts with RVI: |
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Asset and property management fees |
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Leasing commissions |
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