10-Q 1 sitc-20220930.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

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 1-11690

 

SITE Centers Corp.

(Exact name of registrant as specified in its charter)

 

 

Ohio

 

34-1723097

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

3300 Enterprise Parkway

Beachwood, OH

 

44122

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (216) 755-5500

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Shares, Par Value $0.10 Per Share

 

SITC

 

New York Stock Exchange

 

 

 

 

 

Depositary Shares, each representing 1/20 of a share of 6.375% Class A Cumulative Redeemable Preferred Shares without Par Value

 

SITC PRA

 

New York Stock Exchange

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. Yes No

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). Yes No

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.

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

 

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 No

As of October 21, 2022 the registrant had 212,512,324 shares of common stock, $0.10 par value per share, outstanding.

 

 


SITE Centers Corp.

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED September 30, 2022

 

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements – Unaudited

 

 

Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021

3

 

Consolidated Statements of Operations for the Three Months Ended September 30, 2022 and 2021

4

 

Consolidated Statements of Operations for the Nine Months Ended September 30, 2022 and 2021

5

 

Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2022 and 2021

6

 

Consolidated Statements of Equity for the Three and Nine Months Ended September 30, 2022 and 2021

7

 

Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021

8

 

Notes to Condensed Consolidated Financial Statements

9

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

17

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

35

Item 4.

Controls and Procedures

36

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

37

Item 1A.

Risk Factors

37

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

37

Item 3.

Defaults Upon Senior Securities

37

Item 4.

Mine Safety Disclosures

37

Item 5.

Other Information

37

Item 6.

Exhibits

38

SIGNATURES

39

 

 

2


SITE Centers Corp.

CONSOLIDATED BALANCE SHEETS

(unaudited; in thousands, except share amounts)

 

 

September 30, 2022

 

 

December 31, 2021

 

Assets

 

 

 

 

 

Land

$

1,095,662

 

 

$

1,011,401

 

Buildings

 

3,848,821

 

 

 

3,624,164

 

Fixtures and tenant improvements

 

587,962

 

 

 

556,056

 

 

 

5,532,445

 

 

 

5,191,621

 

Less: Accumulated depreciation

 

(1,672,242

)

 

 

(1,571,569

)

 

 

3,860,203

 

 

 

3,620,052

 

Construction in progress and land

 

59,812

 

 

 

47,260

 

Total real estate assets, net

 

3,920,015

 

 

 

3,667,312

 

Investments in and advances to joint ventures, net

 

46,001

 

 

 

64,626

 

Cash and cash equivalents

 

20,883

 

 

 

41,807

 

Restricted cash

 

3,119

 

 

 

1,445

 

Accounts receivable

 

59,446

 

 

 

61,382

 

Other assets, net

 

147,507

 

 

 

130,479

 

 

$

4,196,971

 

 

$

3,967,051

 

Liabilities and Equity

 

 

 

 

 

Unsecured indebtedness:

 

 

 

 

 

Senior notes, net

$

1,453,384

 

 

$

1,451,768

 

Term loan, net

 

198,437

 

 

 

99,810

 

Revolving credit facilities

 

80,000

 

 

 

 

 

 

1,731,821

 

 

 

1,551,578

 

Mortgage indebtedness, net

 

90,235

 

 

 

125,799

 

Total indebtedness

 

1,822,056

 

 

 

1,677,377

 

Accounts payable and other liabilities

 

226,952

 

 

 

218,779

 

Dividends payable

 

30,528

 

 

 

28,243

 

Total liabilities

 

2,079,536

 

 

 

1,924,399

 

Commitments and contingencies

 

 

 

 

 

SITE Centers Equity

 

 

 

 

 

Class A—6.375% cumulative redeemable preferred shares, without par value, $500 liquidation value;
   
750,000 shares authorized; 350,000 shares issued and outstanding at September 30, 2022 and
   December 31, 2021

 

175,000

 

 

 

175,000

 

Common shares, with par value, $0.10 stated value; 300,000,000 shares authorized; 214,370,870 and
   
211,286,874 shares issued at September 30, 2022 and December 31, 2021, respectively

 

21,437

 

 

 

21,129

 

Additional paid-in capital

 

5,974,001

 

 

 

5,934,166

 

Accumulated distributions in excess of net income

 

(4,044,178

)

 

 

(4,092,783

)

Deferred compensation obligation

 

4,865

 

 

 

4,695

 

Accumulated other comprehensive income

 

9,782

 

 

 

 

Less: Common shares in treasury at cost: 2,115,175 and 287,645 shares at September 30, 2022 and
   December 31, 2021, respectively

 

(29,266

)

 

 

(5,349

)

Total SITE Centers shareholders' equity

 

2,111,641

 

 

 

2,036,858

 

Non-controlling interests

 

5,794

 

 

 

5,794

 

Total equity

 

2,117,435

 

 

 

2,042,652

 

 

$

4,196,971

 

 

$

3,967,051

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

3


SITE Centers Corp.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited; in thousands, except per share amounts)

 

 

Three Months

 

 

Ended September 30,

 

 

2022

 

 

2021

 

Revenues from operations:

 

 

 

 

 

Rental income

$

135,123

 

 

$

120,569

 

Fee and other income

 

3,720

 

 

 

13,872

 

 

 

138,843

 

 

 

134,441

 

Rental operation expenses:

 

 

 

 

 

Operating and maintenance

 

22,314

 

 

 

18,562

 

Real estate taxes

 

20,423

 

 

 

19,160

 

General and administrative

 

10,799

 

 

 

11,727

 

Depreciation and amortization

 

51,179

 

 

 

44,669

 

 

 

104,715

 

 

 

94,118

 

Other income (expense):

 

 

 

 

 

Interest expense

 

(20,139

)

 

 

(19,170

)

Other expense, net

 

(501

)

 

 

(524

)

 

 

(20,640

)

 

 

(19,694

)

Income before earnings from equity method investments and other items

 

13,488

 

 

 

20,629

 

Equity in net income of joint ventures

 

25,918

 

 

 

1,824

 

Gain on sale of interests

 

228

 

 

 

35

 

Gain on disposition of real estate, net

 

26,837

 

 

 

5,871

 

Income before tax expense

 

66,471

 

 

 

28,359

 

Tax expense of taxable REIT subsidiaries and state franchise and income taxes

 

(258

)

 

 

(202

)

Net income

$

66,213

 

 

$

28,157

 

Income attributable to non-controlling interests, net

 

(18

)

 

 

(93

)

Net income attributable to SITE Centers

$

66,195

 

 

$

28,064

 

Preferred dividends

 

(2,789

)

 

 

(2,789

)

Net income attributable to common shareholders

$

63,406

 

 

$

25,275

 

 

 

 

 

 

 

Per share data:

 

 

 

 

 

Basic

$

0.30

 

 

$

0.12

 

Diluted

$

0.30

 

 

$

0.12

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


 

SITE Centers Corp.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited; in thousands, except per share amounts)

 

 

Nine Months

 

 

Ended September 30,

 

 

2022

 

 

2021

 

Revenues from operations:

 

 

 

 

 

Rental income

$

401,210

 

 

$

366,689

 

Fee and other income

 

12,635

 

 

 

31,359

 

 

 

413,845

 

 

 

398,048

 

Rental operation expenses:

 

 

 

 

 

Operating and maintenance

 

66,528

 

 

 

58,200

 

Real estate taxes

 

61,230

 

 

 

58,359

 

Impairment charges

 

2,536

 

 

 

7,270

 

General and administrative

 

34,403

 

 

 

41,547

 

Depreciation and amortization

 

152,564

 

 

 

137,446

 

 

 

317,261

 

 

 

302,822

 

Other income (expense):

 

 

 

 

 

Interest expense

 

(57,306

)

 

 

(57,701

)

Other expense, net

 

(2,152

)

 

 

(1,214

)

 

 

(59,458

)

 

 

(58,915

)

Income before earnings from equity method investments and other items

 

37,126

 

 

 

36,311

 

Equity in net income of joint ventures

 

27,468

 

 

 

11,059

 

Gain on sale and change in control of interests

 

45,554

 

 

 

13,943

 

Gain on disposition of real estate, net

 

31,292

 

 

 

6,069

 

Income before tax expense

 

141,440

 

 

 

67,382

 

Tax expense of taxable REIT subsidiaries and state franchise and income taxes

 

(863

)

 

 

(1,057

)

Net income

$

140,577

 

 

$

66,325

 

Income attributable to non-controlling interests, net

 

(55

)

 

 

(384

)

Net income attributable to SITE Centers

$

140,522

 

 

$

65,941

 

Write-off of preferred share original issuance costs

 

 

 

 

(5,156

)

Preferred dividends

 

(8,367

)

 

 

(10,867

)

Net income attributable to common shareholders

$

132,155

 

 

$

49,918

 

 

 

 

 

 

 

Per share data:

 

 

 

 

 

Basic

$

0.62

 

 

$

0.24

 

Diluted

$

0.62

 

 

$

0.24

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


SITE Centers Corp.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited; in thousands)

 

 

Three Months

 

 

Nine Months

 

 

Ended September 30,

 

 

Ended September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income

$

66,213

 

 

$

28,157

 

 

$

140,577

 

 

$

66,325

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of interest-rate contracts

 

9,782

 

 

 

 

 

 

9,782

 

 

 

 

Foreign currency translation, net

 

 

 

 

 

 

 

 

 

 

(1

)

Reclassification adjustment for foreign currency
   translation included in net income

 

 

 

 

 

 

 

 

 

 

2,683

 

Total other comprehensive income

 

9,782

 

 

 

 

 

 

9,782

 

 

 

2,682

 

Comprehensive income

$

75,995

 

 

$

28,157

 

 

$

150,359

 

 

$

69,007

 

Total comprehensive income attributable to non-controlling interests

 

(18

)

 

 

(93

)

 

 

(55

)

 

 

(384

)

Total comprehensive income attributable to SITE Centers

$

75,977

 

 

$

28,064

 

 

$

150,304

 

 

$

68,623

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

6


SITE Centers Corp.

CONSOLIDATED STATEMENTS OF EQUITY

(unaudited; in thousands)

 

 

SITE Centers Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Shares

 

 

Common
Shares

 

 

Additional
Paid-in
Capital

 

 

Accumulated Distributions
in Excess of
Net Income

 

 

Deferred
Compensation
Obligation

 

 

Accumulated Other Comprehensive Income

 

 

Treasury
Stock at
Cost

 

 

Non-
Controlling
Interests

 

 

Total

 

Balance, December 31, 2021

$

175,000

 

 

$

21,129

 

 

$

5,934,166

 

 

$

(4,092,783

)

 

$

4,695

 

 

$

 

 

$

(5,349

)

 

$

5,794

 

 

$

2,042,652

 

Issuance of common shares
   related to stock plans

 

 

 

 

65

 

 

 

6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

71

 

Issuance of common shares for
   cash offering

 

 

 

 

243

 

 

 

36,614

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

36,857

 

Stock-based compensation, net

 

 

 

 

 

 

 

2,649

 

 

 

 

 

 

8

 

 

 

 

 

 

(4,498

)

 

 

 

 

 

(1,841

)

Distributions to non-controlling
   interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(37

)

 

 

(37

)

Dividends declared-common shares

 

 

 

 

 

 

 

 

 

 

(55,810

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(55,810

)

Dividends declared-preferred shares

 

 

 

 

 

 

 

 

 

 

(5,578

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,578

)

Comprehensive income

 

 

 

 

 

 

 

 

 

 

74,327

 

 

 

 

 

 

 

 

 

 

 

 

37

 

 

 

74,364

 

Balance, June 30, 2022

 

175,000

 

 

 

21,437

 

 

 

5,973,435

 

 

 

(4,079,844

)

 

 

4,703

 

 

 

 

 

 

(9,847

)

 

 

5,794

 

 

 

2,090,678

 

Issuance of common shares
   related to stock plans

 

 

 

 

 

 

 

6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

Expenses for
   cash offering

 

 

 

 

 

 

 

(126

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(126

)

Stock-based compensation, net

 

 

 

 

 

 

 

686

 

 

 

 

 

 

162

 

 

 

 

 

 

581

 

 

 

 

 

 

1,429

 

Repurchase of common
   shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,000

)

 

 

 

 

 

(20,000

)

Distributions to non-controlling
   interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18

)

 

 

(18