SITE Centers Corp. (NYSE: SITC) — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual report, not a standalone fourth-quarter filing; the figures below compare full-year 2021 with full-year 2020 unless stated otherwise.
Business context
SITE Centers is a self-managed REIT focused on acquiring, owning, leasing, managing and redeveloping open-air shopping centers, primarily in suburban, higher-income communities. At year-end, it owned interests in 136 centers across 21 states, representing 32.0 million square feet of company-owned GLA (42.2 million square feet total GLA), plus approximately 60 acres of developable land. Its income is principally rental income, with additional management and other fees.
Financial and operating performance
| Metric | 2021 | 2020 |
|---|---|---|
| Total revenue | $532.9 million | $460.3 million |
| Net income attributable to SITE Centers | $124.9 million | $35.7 million |
| Net income attributable to common shareholders | $106.1 million | $15.2 million |
| Diluted EPS | $0.51 | $0.08 |
| FFO attributable to common shareholders | $242.8 million | $176.6 million |
| Operating FFO attributable to common shareholders | $245.7 million | $192.8 million |
| Cash provided by operating activities | $282.5 million | $190.2 million |
Same-store NOI at the company’s effective ownership interest increased 15.1% including redevelopment and 13.9% excluding redevelopment. Management attributed much of the improvement to collections in 2021 of rents deferred or contractually due in 2020. The filing does not provide a single operating-margin figure.
- Occupancy: Pro rata portfolio occupancy was 90.0%, up from 89.0%. Average annualized base rent per occupied square foot was $18.33, down from $18.50, primarily reflecting joint-venture acquisitions.
- Leasing: SITE reported 3.5 million square feet of leasing and renewals on a pro rata basis. New lease spreads were 13.1%, renewal spreads 2.2%, and blended spreads 3.7%.
- Cash flows: Investing activities provided $74.5 million; financing activities used $388.1 million. Cash and cash equivalents were $41.8 million at year-end.
- Debt and liquidity: Consolidated debt was $1.68 billion, down from $1.93 billion. SITE had no revolver borrowings and $970 million of revolving credit availability, subject to borrowing conditions. Its share of unconsolidated joint-venture mortgage debt was approximately $190.5 million.
- Debt profile: Approximately 94.1% of consolidated debt was fixed-rate, with a 3.8-year weighted-average maturity. The weighted-average interest rate on debt outstanding was 4.1% for 2021. SITE reported compliance with debt covenants at year-end.
- Dividends: Common dividends declared were $0.47 per share for 2021. In February 2022, the company declared a $0.13-per-share first-quarter dividend.
Changes, transactions and unusual items
- Revenue rose $72.5 million year over year. Rental income increased $75.9 million, including a $41.3 million favorable change in uncollectible revenue: 2021 included rent collected from cash-basis tenants for amounts due in 2020, while 2020 included pandemic-related reserves and reductions.
- Net income growth also reflected joint-venture asset-sale gains and other transaction effects. Results included $19.2 million of net gain on sale and change in control of interests, $6.1 million of real-estate disposition gains, and $7.3 million of impairment charges.
- Operating cash flow increased by $92.3 million, primarily from higher tenant collections. The comparison is also affected by prior-year preferred-investment interest income and other investment activity.
- SITE received a $190 million distribution on its RVI preferred shares in October 2021; RVI repurchased those shares for $1 in December, ending SITE’s investment and future distributions from them.
- The company issued 17.25 million common shares in March 2021, generating $225.3 million net proceeds, and redeemed $150 million of 6.25% Class K preferred shares. It also entered into forward equity sales expected to generate $35.1 million gross proceeds; none had settled by year-end.
- SITE acquired interests in shopping centers and other assets during 2021 and sold interests and properties. It agreed to sell its 20% interest in the SAU joint venture, with closing expected by June 2022.
Outlook, risks and contingencies
Management’s strategy is to grow cash flows through leasing, rental increases, acquisitions, capital recycling and tactical redevelopment, while maintaining prudent leverage and liquidity. At year-end, the company anticipated approximately $35 million of future spending on identified redevelopment projects. It expected lower fee income in 2022 as assets under management declined. No formal earnings or FFO guidance is provided in the supplied filing text.
- Management said rent collections had normalized close to pre-pandemic levels; most deferred rents had been repaid, with $0.2 million remaining under deferral arrangements for tenants not on cash-basis accounting. As of February 10, 2022, Omicron had not materially affected collections or leasing, though labor shortages challenged some tenants’ operating hours.
- Key risks include further pandemic disruptions, tenant bankruptcies or store closures, e-commerce and changing retail demand, lease expirations, rising property costs, redevelopment execution, joint-venture partner and refinancing risks, interest-rate exposure, and access to capital.
- Approximately 7.1% of leased GLA was scheduled to expire in 2022 on a pro rata basis. The company cautions that renewals or replacement leases may be at lower rents or require additional capital.
- Approximately $100 million of consolidated variable-rate debt referenced LIBOR and matured in January 2023; the company also identified LIBOR transition risk for its credit facilities. A 100-basis-point increase in short-term rates was estimated to add about $1.0 million of annual interest expense for SITE and $0.4 million for its proportionate share of joint ventures’ debt, based on year-end balances.
- Redevelopment construction commitments were approximately $16.9 million; outstanding letters of credit were $13.2 million, principally supporting insurance obligations. Management stated that ordinary-course legal proceedings were not expected to have a material adverse effect.
Investor verification points
- Separate recurring rental and property performance from the effects of deferred-rent collections, asset-sale gains, the $190 million RVI distribution, and other nonrecurring or timing-related items.
- Review the reconciliation and definitions of FFO, Operating FFO and same-store NOI; these are non-GAAP measures and are not substitutes for GAAP earnings or cash flow.
- Confirm the status and terms of 2022–2023 debt maturities, joint-venture refinancing and LIBOR replacement, as well as covenant headroom and available revolver capacity.
- Track leasing costs, anchor vacancies and lease expirations alongside occupancy and rental spreads; reported spreads exclude leasing capital costs.
- Verify completion, costs and expected returns of redevelopment projects, and the timing and proceeds of the planned SAU joint-venture sale.
PricewaterhouseCoopers LLP issued an unqualified opinion on the consolidated financial statements and internal control over financial reporting; management reported effective controls as of December 31, 2021.