SITE Centers Corp. - Annual Report: 2021 (Form 10-K)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2021

OR

For the transition period from                to               

Commission file number 1-11690

SITE Centers Corp.  

(Exact Name of Registrant as Specified in Its Charter)

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

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

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

None

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes ☑     No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes ☐     No ☑

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.  

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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐     No ☑

The aggregate market value of the voting stock held by non-affiliates of the registrant at June 30, 2021, was $2.7 billion.  

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.  

211,235,807 common shares outstanding as of February 10, 2022

DOCUMENTS INCORPORATED BY REFERENCE

The registrant incorporates by reference in Part III hereof portions of its definitive Proxy Statement for its 2022 Annual Meeting of Shareholders.  

TABLE OF CONTENTS

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PART I

Overview

SITE Centers Corp., an Ohio corporation (the “Company” or “SITE Centers”), a self-administered and self-managed Real Estate Investment Trust (“REIT”), is 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 and consolidated and unconsolidated joint ventures.  

The Company is self-administered and self-managed, and therefore, has not engaged, nor does it expect to retain, any REIT advisor.  The Company manages all of the Portfolio Properties as defined herein.  At December 31, 2021, the Company owned approximately 32.0 million square feet of gross leasable area (“GLA”) (42.2 million square feet of total GLA) through all its properties (wholly-owned and joint venture) and managed approximately 0.6 million total square feet of GLA for Retail Value Inc. (“RVI”), an owner and operator of one shopping center listed on the New York Stock Exchange.  

The primary source of the Company’s income is generated from the rental of the Company’s Portfolio Properties to tenants.  The Company’s shopping centers and land are collectively referred to as the “Portfolio Properties.”  In addition, the Company generates revenue from its management contracts with its unconsolidated joint ventures and RVI.  

On July 1, 2018, SITE Centers completed the spin-off of RVI.  At the time of the spin-off, RVI owned 48 shopping centers, composed of 36 continental U.S. assets and 12 of SITE Centers’ shopping centers in Puerto Rico, representing $2.7 billion of gross book asset value and 16 million square feet of GLA.  At December 31, 2021, RVI owned one remaining shopping center in Gulfport, Mississippi representing 0.6 million square feet of GLA.

Strategy

The overall investment, operating and financing policies of the Company, which govern a variety of activities, such as capital allocations, dividends and status as a REIT, are determined by management and the Board of Directors.  Although management and the Board of Directors have no present intention to materially amend or revise the Company’s policies, the Board of Directors may do so from time to time without a vote of the Company’s shareholders.  

The Company's mission is to own and manage open-air shopping centers located in suburban, high household income communities.  The Company strives to deliver attractive total shareholder returns through earnings and cash flow growth, a sustainable dividend and a strong balance sheet that is well positioned through various economic cycles.

Looking forward, growth opportunities within the core property operations include rental increases and continued lease-up of the portfolio and the adaptation of existing site plans and square footage to generate higher blended rental rates and operating cash flows.  Additional growth opportunities include acquisitions and tactical redevelopment. Management intends to use retained cash flow, proceeds from the sale of lower growth assets and proceeds from equity offerings and debt financings to fund capital expenditures relating to new leasing activity and acquisitions, including opportunistic investments and tactical redevelopment activity.  

The Company believes the following serve as cornerstones for the execution of its strategy:

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COVID-19 Pandemic

In March 2020, the World Health Organization categorized COVID-19 as a pandemic, and it continues to spread throughout the United States and other countries across the world.  Beginning in mid-March 2020, federal, state and local governments took various actions to limit the spread of COVID-19, including ordering the temporary closure of non-essential businesses (which included many of the Company’s tenants) and imposing significant social distancing guidelines and restrictions on the continued operations of essential businesses and the subsequent reopening of non-essential businesses.  In response to the COVID-19 pandemic, beginning in March 2020, the majority of the Company’s employees began to perform their responsibilities remotely, and the Company implemented safety protocols to protect those employees whose roles required them to be present in the Company’s offices.  In October 2020, the Company reopened its offices in order to allow all employees to return on a voluntary basis, and in September 2021, the Company began to require that all employees report to the office at least two times each week.  The Company continues to closely monitor local levels of infection associated with the COVID-19 pandemic and has taken additional steps as needed in order to protect the health and safety of its workforce, including a relaxation of office attendance requirements in late 2021 as a result of the Omicron variant and rising infection levels.

The COVID-19 pandemic had a significant impact on the collection of rents from April 2020 through December 2020. During the second half of 2020 and early 2021, the Company worked with tenants to maximize the collection of unpaid 2020 rents by offering rent deferment on a case-by-case basis, often in exchange for concessions in the form of tenant extensions of lease terms, the relaxation of leasing restrictions and co-tenancy provisions and, in some cases, alterations of control areas allowing for future redevelopment of the shopping center.

During the course of 2021, the Company’s rental collections normalized close to pre-pandemic levels.  As of December 31, 2021, a substantial majority of tenants, including tenants previously on the cash basis of accounting, were paying their monthly rent and any deferred rents relating to prior periods.  Included in 2021 results was $13.8 million of net revenue, at SITE Centers’ share, primarily related to contractual rents paid from cash-basis tenants that were contractually due in 2020.  The majority of the deferral arrangements relating to 2020 revenue were repaid during 2021, and therefore, the impact of 2020 rent collections is expected to be minimal in future periods.  At December 31, 2021, $0.2 million remained outstanding under deferral arrangements for tenants that are not accounted for on the cash basis.  

As of February 10, 2022, the Omicron variant has not had a material impact on the Company’s rent collections or leasing activity though some tenants have experienced challenges in maintaining regular operating hours as a result of related labor shortages.  Future rent collection may be negatively impacted by additional surges in COVID-19 contagion, the emergence of new COVID-19 variants that are more infectious or resistant to existing vaccines, decreases in the effectiveness of existing vaccines, and any implementation of additional restrictions on tenant businesses as a result thereof.  For a further discussion of the impact of the COVID‑19 pandemic on the Company’s business, see Item 1A. Risk Factors in Part I of this Report on Form 10-K and “Liquidity, Capital Resources and Financing Activities” and “Economic Conditions” included in Item 7. Management’s Discussion and Analysis of Financial Conditions and Results of Operations in Part II of this Report on Form 10-K.

Narrative Description of Business

The Company’s portfolio as of December 31, 2021, consisted of 136 shopping centers (including 47 centers owned through unconsolidated joint ventures) and approximately 60 acres of developable land.  The shopping centers are located in 21 states.  The following tables present the operating statistics affecting base and percentage rental revenues summarized by the following portfolios: pro rata combined shopping center portfolio, wholly-owned shopping center portfolio and joint venture shopping center portfolio:  

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Recent Developments

See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and Notes thereto included in Item 8 of this Annual Report on Form 10-K, which are incorporated herein by reference, for information on certain recent developments of the Company.  

Tenants and Competition

The Company has established close relationships with a large number of major national and regional tenants.  The Company’s management is associated with, and actively participates in, many shopping center and REIT industry organizations.  Notwithstanding these relationships, numerous real estate companies and developers, private and public, compete with the Company in leasing space in shopping centers to tenants.  The Company competes with other real estate companies and developers in terms of rental rate, property location, availability of space, management services and property condition.  

The Company’s five largest tenants based on the Company’s aggregate annualized base rental revenues, including its proportionate share of joint venture aggregate annualized base rental revenues, are TJX Companies, Inc., Dick's Sporting Goods, Inc., PetSmart, Inc., Michaels Companies, Inc. and Ross Stores, Inc., representing 5.8%, 2.7%, 2.6%, 2.3% and 1.9%, respectively, of the Company’s aggregate annualized base rental revenues at December 31, 2021.  For more information on the Company’s tenants, see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the caption “Company Fundamentals.”

Qualification as a Real Estate Investment Trust

As of December 31, 2021, the Company met the qualification requirements of a REIT under Sections 856-860 of the Internal Revenue Code of 1986, as amended (the “Code”).  As a result, the Company, with the exception of its taxable REIT subsidiary (“TRS”), will not be subject to federal income tax to the extent it meets certain requirements of the Code.  

Human Capital Management

As of December 31, 2021, the Company’s workforce was composed of 293 full-time equivalent employees compared to 323 full-time equivalent employees at December 31, 2020. At the end of 2021, the Company’s workforce was approximately 37% male and 63% female, and women represented approximately 46% of the Company’s managers (defined by reference to the EEO-1 job class categories to include executive/senior-level officials and managers and first/mid-level officials and managers). The ethnicity of the Company’s workforce at the end of 2021 was approximately 80% White, 12% Black, 4% Hispanic, 2% Asian and 2% other (based on EEO categories). During 2021, the size and the diversity of the Company’s workforce decreased as a result of RVI’s sale of its remaining Puerto Rico properties, which had been managed by local Company employees.  Of the Company’s employees, 73% of employees were assigned to work in the corporate headquarters in Beachwood, Ohio, with the rest working in regional offices or remotely. Many of the Company’s employees have a long tenure with the Company, with approximately 82% of the Company’s employees having been with the Company for over 5 years and 53% for over 10 years.

The Company’s primary human capital management objective is to attract, develop, engage and retain the highest quality talent. To support this objective, the Company offers competitive pay and benefit programs, a broad focus on wellness and flexible work arrangements designed to allow employees to meet personal and family needs. The Company also takes steps to measure and improve upon its level of employee engagement and to create a diverse and inclusive workplace.  The Company’s employees are expected to exhibit honest, ethical and respectful conduct in the workplace. At least once every two years the Company requires its employees to complete training modules on sexual harassment and discrimination and to acknowledge and certify their compliance with the Company’s Code of Business Conduct and Ethics. Senior members of its accounting, finance and capital markets departments are also required to acknowledge and agree to the Company’s Code of Ethics for Senior Financial Officers on an annual basis. The Company’s culture is also underpinned by its employees’ commitment to the Company’s core values of being Fearless, Authentic, Curious and Thoughtful (the Company’s Matters of FACT) in the conduct of their responsibilities.

In response to the COVID-19 pandemic, beginning in March 2020, the majority of the Company’s employees began to perform their responsibilities remotely, and the Company implemented safety protocols to protect those employees whose roles required them to be present in the Company’s offices.  In October 2020, the Company reopened its offices in order to allow all employees to return on a voluntary basis, and in September 2021, the Company began to require that all employees report to the office at least two times each week.  The Company continues to closely monitor local levels of infection associated with the COVID-19 pandemic and has taken additional steps as needed in order to protect the health and safety of its workforce, including a relaxation of office attendance requirements in late 2021 as a result of new COVID-19 variants and rising infection levels.

Information Technology and Cybersecurity

The Company depends on the proper functioning, availability and security of its information systems, including financial, data processing, communications and operating systems, as well as proprietary software programs that are important to the efficient

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operation of the business.  The Company also utilizes certain software applications provided by third parties, grants access to certain of the Company’s systems to third parties who provide outsourced functions or other services and increasingly stores and transmits data by means of connected information technology or “cloud” systems.  Any significant failures or other disruption of the Company’s critical information systems, including as a result of ransomware attacks or other cyber incidents, that impact the availability or other proper functioning of these systems or that result in the compromise of sensitive or confidential information, including information of tenants, employees and others, could result in liability to third parties and have a significant impact on the Company’s operations and reputation.

The frequency and sophistication of global cybersecurity threats have increased in recent years, primarily through phishing and ransomware campaigns.  The Company’s objective for managing increasing cybersecurity risk is to avoid or minimize the impacts of external threat events or other efforts to breach the Company’s systems. The Company works to achieve this objective by hardening its networks and systems against attack by adopting “defense-in-depth” and “zero-trust” methodologies.  The Company has a formal process in place for incident response and business continuity, which the Company refers to as its Cybersecurity Incident Response Plan, that encompasses tactics related to cybersecurity, systems and facilities availability and information privacy.  The Company has established an internal Security and Privacy Governance Committee comprised of members of management to help review and discuss cybersecurity risks on a periodic basis.  The role of the committee is to oversee the development and implementation of the Company’s Cybersecurity Incident Response Plan, to discuss the implementation of various security measures and to receive reports on the Company’s cybersecurity training and awareness program and engagement of third parties to conduct periodic external security testing.  The Company’s audit services and technology teams conduct third-party risk assessments during the procurement of solutions and services and annually on agreement renewal.  As a complement to these measures, the Company also conducts annual cybersecurity awareness training for all employees, new-hire cybersecurity training, periodic simulated phishing tests and additional training for employees who travel outside the United States.  The Company’s Audit Committee is briefed on information security matters, including current data security and recovery initiatives and external security testing results, at least once each year by the Company’s Senior Vice President of Information Technology and the Senior Director of Audit Services.  

The Company’s information technology systems are protected through physical and software safeguards, as well as backup systems the Company considers to be appropriate.  However, such safeguards may ultimately prove to be insufficient to protect against all incidents the Company experiences.  Furthermore, these systems are vulnerable to interruption from events beyond the Company’s control.  To mitigate the potential for such occurrences at the Company’s primary data center, the Company has implemented various systems, including redundant telecommunication facilities, replication of critical data and backups to multiple off-site locations, a fire suppression system to protect the Company’s on-site data center and electrical power protection and generation facilities.  The Company also has a catastrophic disaster recovery plan and alternate processing capability available for its critical data processes in the event of a catastrophe that renders the primary data center unusable.

The Company has not experienced any cyber-incidents that have materially obstructed the availability of its information systems and data.  The Company has experienced incidents involving malware, email phishing and other events intended to disrupt information systems, wrongfully obtain valuable information or cause other types of malicious events that could have resulted in harm to the business.  To the Company’s knowledge, the various protections the Company has employed have been effective in identifying these types of events at a point when the impacts on the business could be minimized.

The Company also maintains cybersecurity insurance; however, there is no assurance that the insurance the Company maintains will cover all cybersecurity breaches or that policy limits will be sufficient to cover all related losses.

Corporate Responsibility and Sustainability

At SITE Centers, the term “sustainability” is defined as: sustainable value, sustainable growth, sustainable property operations, sustainable employee health and wellness, sustainable governance policies and sustainable interaction with the Company’s stakeholders and communities. Detailed information regarding the Company’s approach to sustainability can be found on the Company's website in its Corporate Responsibility and Sustainability Report. This report is based on the Global Reporting Initiative (GRI) standard, which summarizes environmental and social performance, and includes disclosures with respect to certain Sustainability Accounting Standards Board (SASB) standards. The content of the Company’s sustainability reports is not incorporated by reference into this Annual Report on Form 10-K or in any other report or document filed with the SEC, unless expressly noted.

Information About the Company’s Executive Officers

The section below provides information regarding the Company’s executive officers as of February 10, 2022:

David R. Lukes, age 52, has served as President and Chief Executive Officer of SITE Centers and has been a member of SITE Centers’ Board of Directors since March 2017.  Prior to joining SITE Centers, Mr. Lukes served as Chief Executive Officer and President of Equity One, Inc., an owner, developer and operator of shopping centers, from June 2014 until March 2017 and served as its Executive Vice President from May 2014 to June 2014.  Mr. Lukes also served as President and Chief Executive Officer of Sears

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Holding Corporation affiliate Seritage Realty Trust, a REIT primarily engaged in the re-leasing of shopping centers, from 2012 through April 2014 and as President and Chief Executive Officer of Olshan Properties, a privately-owned real estate firm specializing in commercial real estate, from 2010 through 2012.  From 2002 to 2010, Mr. Lukes served in various senior management positions at Kimco Realty Corporation, including serving as its Chief Operating Officer from 2008 to 2010.  Mr. Lukes has also served as the President, Chief Executive Officer and Director of RVI since April 2018 and as an Independent Director of Citycon Oyj, an owner and manager of shopping centers in the Nordic region listed on the Nasdaq Helsinki, since 2017.  Mr. Lukes holds a Bachelor of Environmental Design from Miami University, a Master of Architecture from the University of Pennsylvania and a Master of Science in real estate development from Columbia University.

Conor M. Fennerty, age 36, has served as Executive Vice President, Chief Financial Officer and Treasurer of SITE Centers since November 2019.  From April 2017 to November 2019, Mr. Fennerty served as SITE Centers’ Senior Vice President of Capital Markets.  Prior to joining SITE Centers, Mr. Fennerty served as a Vice President and Senior Analyst at BlackRock, Inc., a global funds manager, from July 2014 to April 2017, an Analyst at Cohen & Steers Capital Management, a specialist asset manager focused on real assets, from May 2012 to July 2014, and prior to that, a member of the global investment research division of Goldman Sachs from May 2010 to May 2012.  Mr. Fennerty earned a Bachelor of Science in business administration with a major in finance from Georgetown University.  

Christa A. Vesy, age 51, is Executive Vice President and Chief Accounting Officer of SITE Centers, a position she assumed in March 2012.  From July 2016 to March 2017, Ms. Vesy also served as SITE Centers’ Interim Chief Financial Officer.  In these roles, Ms. Vesy has overseen the property and corporate accounting, tax and financial reporting functions for SITE Centers.  Previously, Ms. Vesy served as Senior Vice President and Chief Accounting Officer of SITE Centers since November 2006.  Ms. Vesy has also served as Chief Financial Officer and Treasurer of RVI since November 2019, as its Executive Vice President and Chief Accounting Officer since February 2018 and as its Director since May 2021.  Prior to joining SITE Centers, Ms. Vesy worked for The Lubrizol Corporation, where she served as manager of external financial reporting and then as controller for the lubricant additives business segment.  Prior to joining Lubrizol, from 1993 to September 2004, Ms. Vesy held various positions with the Assurance and Business Advisory Services group of PricewaterhouseCoopers LLP, a registered public accounting firm, including Senior Manager from 1999 to September 2004.  Ms. Vesy graduated with a Bachelor of Science in business administration from Miami University.  Ms. Vesy is a certified public accountant (CPA) and member of the American Institute of Certified Public Accountants (AICPA).

John M. Cattonar, age 40, has served as Executive Vice President and Chief Investment Officer of SITE Centers since May 2021.  Previously, Mr. Cattonar served as Senior Vice President of Investments of SITE Centers from April 2017 to May 2021.  Prior to joining SITE Centers, Mr. Cattonar served as Vice President of Asset Management for Equity One from August 2015 to March 2017 and at Sears Holding Corporation’s affiliate Seritage Realty Trust from July 2012 to July 2015.  Mr. Cattonar earned a Master of Science in Real Estate Development from Columbia University and holds a Bachelor of Arts in Economics from the University of North Carolina at Chapel Hill.

Corporate Headquarters

The Company is an Ohio corporation incorporated in 1992.  The Company’s executive offices are located at 3300 Enterprise Parkway, Beachwood, Ohio 44122, and its telephone number is (216) 755-5500.  The Company’s website is www.sitecenters.com.  The Company uses the Investors Relations section of its website as a channel for routine distribution of important information, including press releases, analyst presentations and financial information.  The information the Company posts to its website may be deemed to be material, and investors and others interested in the Company are encouraged to routinely monitor and review the information that the Company posts on its website in addition to following the Company’s press releases, SEC filings and public conference calls and webcasts.  The Company posts filings made with the SEC to its website as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC, including the Company’s annual, quarterly and current reports on Forms 10-K, 10-Q and 8-K, respectively, the Company’s proxy statements and any amendments to those reports or statements.  All such postings and filings are available on the Company’s website free of charge.  In addition, this website allows investors and other interested persons to sign up to automatically receive e-mail alerts when the Company posts news releases and financial information on its website.  The SEC also maintains a website (https://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.  The content on, or accessible through, any website referred to in this Annual Report on Form 10-K for the fiscal year ended December 31, 2021, is not incorporated by reference into, and shall not be deemed part of, this Form 10-K unless expressly noted.

Summary of Risk Factors

The following is a summary of material risks that could affect the Company’s business, results of operations, financial condition, liquidity and cash flows.  The risks summarized below are discussed in greater detail in the risk factors that follow and are not the only risks the Company faces.  The Company’s business operations could also be affected by additional factors that are not presently known to it or that the Company currently considers to be immaterial to its operations. Investors should carefully consider

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each of the following risks and all of the other information contained in this Annual Report on Form 10-K.  If any of the following risks actually occur, the Company’s business, financial condition or results of operations could be negatively affected.

Risks Related to the Company’s Business, Properties and Strategies

Risks Relating to the Company’s Indebtedness and Capital Structure

Risks Related to the Company’s Taxation as a REIT

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Risks Related to the Company’s Organization, Structure and Ownership

Risks Related to the Company’s Common Shares

General Risks Relating to Investments in the Company’s Securities

The risks summarized above are discussed in greater detail below.

Risks Related to the Company’s Business, Properties and Strategies

The Economic Performance and Value of the Company’s Shopping Centers Depend on Many Factors, Including the Economic Climate and Local Conditions, Each of Which Could Have an Adverse Impact on the Company’s Cash Flows and Operating Results

The economic performance and value of the Company’s real estate holdings can be affected by many factors, including the following:

Because the Company’s properties consist of retail shopping centers, the Company’s performance is linked to general economic conditions in the retail market, including conditions that affect consumers’ purchasing behaviors and disposable income.  The market for retail space has been, and may continue to be, adversely affected by weakness in the national, regional and local economies, the adverse financial condition of some large retailing companies, the ongoing consolidation in the retail sector, increases in consumer internet purchases and the excess amount of retail space in a number of markets.  The Company’s performance is affected by its tenants’ results of operations, which are impacted by macroeconomic factors that affect consumers’ ability to purchase goods and services.  If the price of the goods and services offered by its tenants materially increases, including as a result of increases in taxes or tariffs resulting from, among other things, potential changes in the Code, the operating results and the financial condition of the Company's tenants and demand for retail space could be adversely affected.  To the extent that any of these conditions occur, they are likely to affect market rents for retail space.  In addition, the Company may face challenges in the management and maintenance of its

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properties or incur increased operating costs, such as real estate taxes, insurance and utilities, that may make its properties unattractive to tenants.  

In addition, the Company’s properties compete with numerous shopping venues, including regional malls, outlet centers, other shopping centers and e-commerce, in attracting and retaining retailers.  As of December 31, 2021, leases at the Company’s properties (including the proportionate share of unconsolidated properties) were scheduled to expire on a total of approximately 7.1% of leased GLA during 2022.  For those leases that renew, rental rates upon renewal may be lower than current rates.  For those leases that do not renew, the Company may not be able to promptly re-lease the space on favorable terms or with reasonable capital investments.  In these situations, the Company’s financial condition, operating results and cash flows could be adversely impacted.

E-Commerce May Continue to Have an Adverse Impact on the Company’s Tenants and Business

E-commerce has been broadly embraced by the public, including throughout the COVID-19 pandemic, and growth in the e‑commerce share of overall consumer sales is likely to continue in the future. Some of the Company’s tenants have been negatively impacted by increasing competition from internet retailers and this trend could affect the way current and future tenants lease space. For example, the migration toward e-commerce has led some omni-channel retailers to reduce the number and size of their traditional “brick and mortar” locations, use such locations for curbside pickup of items ordered online and increasingly rely on e-commerce and alternative distribution channels. The Company cannot predict with certainty how a continuing growth in e-commerce will impact the demand for space at its properties or how much revenue will be generated at traditional store locations in the future. If the Company is unable to anticipate and respond promptly to trends in retailer and consumer behavior, or if demand for traditional retail space significantly decreases, the Company’s occupancy levels and operating results could be materially and adversely affected.

The COVID-19 Pandemic Has Had, and Could Continue to Have, a Significant Impact on the Company and Its Tenants’ Businesses

The Company’s business and the businesses of its tenants have been and could continue to be significantly impacted by the COVID-19 pandemic and the public perception of and reaction to the related risks. Beginning in March 2020, the COVID-19 pandemic resulted in the closure of many tenant businesses and substantially reduced foot traffic at open tenant businesses as a result of social distancing restrictions. Beginning in April 2020, a significant number of tenants failed to pay some or all of their monthly rent obligations, and the Company and its joint ventures agreed to defer a significant portion of these unpaid tenant rent obligations until 2021 and beyond.  The majority of these deferred amounts have been repaid by tenants as of December 31, 2021.  

Although the level and pace of tenant collections (including the payment of deferred rents) exceeded management’s expectations during 2021 and has largely reverted to pre-pandemic norms, the pandemic continues to pose risks to the Company and tenant operations.  If additional surges in contagion occur, or if new COVID-19 variants emerge that are more infectious or resistant to existing vaccines, or if there are decreases in the effectiveness of existing vaccines, tenant collections could be adversely impacted and such developments could lead to new restrictions on tenant operations, nonpayment of rents, additional tenant requests for rent relief and additional tenant closures and bankruptcies, all of which could adversely impact the Company’s results of operations.  Certain tenant categories remain especially vulnerable to the impacts of the COVID-19 pandemic, including movie theaters, restaurants that rely on in-person dining and entertainment.

In addition to the impacts and uncertainties listed above, the COVID-19 pandemic has significantly limited the ability of the Company’s employees to access the Company’s offices and properties, which could adversely impact the Company’s ability to manage its properties and complete other operating and administrative functions that are important to its business.  Efforts by the Company’s employees to work remotely could also expose the Company to additional risks, such as increased cybersecurity risk.  Furthermore, any exacerbation of the COVID-19 pandemic could negatively affect global capital markets, which, in turn, could negatively affect the Company’s ability to obtain necessary financing, including property-level refinancing for its joint ventures, on favorable terms, or at all.  Reduced rent collections from tenants could also impact the ability of the Company and its joint ventures to satisfy covenants and debt service obligations applicable to their financing arrangements, particularly with respect to mortgage loan indebtedness, and result in the recognition of impairment charges with respect to certain of the Company’s properties.  Reduced rent collections from tenants may also have the effect of decreasing management fees collected from the Company’s joint ventures, which are often based on property cash receipts, and may also impact decisions by the Company’s Board of Directors with respect to future dividend policy.  The Company’s periodic assessment of tenants’ ability to pay outstanding obligations, including rent obligations deferred because of the COVID-19 pandemic, may also result in reductions to rental revenue on account of previously accrued rents for which collection is no longer considered probable.  

The impact of the COVID-19 pandemic could also exacerbate the other risks described herein.  Any of the foregoing risks, or related risks that the Company is unable to predict due to changing circumstances relating to the impacts of the COVID-19 pandemic, could have a material adverse effect on the Company’s business, results of operations and financial condition.

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The Company Relies on Major Tenants, Making It Vulnerable to Changes in the Business and Financial Condition of, or Demand for Its Space by, Such Tenants

As of December 31, 2021, the annualized base rental revenues of the Company’s tenants that are equal to or exceed 1.5% of the Company’s aggregate annualized shopping center base rental revenues, including its proportionate share of joint venture aggregate annualized shopping center base rental revenues, are as follows:

The retail shopping sector has been affected by economic conditions, including increases in consumer internet purchases, as well as the competitive nature of the retail business and the competition for market share where stronger retailers have out-positioned some of the weaker retailers.  In many cases, these shifts have been accelerated by the COVID-19 pandemic and have resulted in weaker retailers losing market share and, in some cases, declaring bankruptcy and/or closing stores.  In some cases, major tenants may declare bankruptcy or might take advantage of early termination provisions in their leases in connection with a plan to close stores.  Bankruptcies, store closures and reduced expansion plans by conventional department stores and national chains in recent years have resulted in a smaller overall number of tenants requiring large store formats.  

As information becomes available regarding the status of the Company’s leases with tenants in financial distress or as the future plans for their spaces change, the Company may be required to write off and/or accelerate depreciation and amortization expense associated with a significant portion of the tenant-related deferred charges in future periods.  The Company’s income and ability to meet its financial obligations could also be adversely affected in the event of the bankruptcy, insolvency or significant downturn in the business of one of these tenants or any of the Company’s other major tenants.  In addition, the Company’s results could be adversely affected if any of these tenants do not renew their leases as they expire on terms favorable to the Company or at all.  

The Company’s Dependence on Rental Income May Adversely Affect Its Ability to Meet Its Debt Obligations and Make Distributions to Shareholders

Substantially all of the Company’s income is derived from rental income from real property.  As a result, the Company’s performance depends on its ability to collect rent from tenants.  The Company’s income and funds available for repayment of indebtedness and distribution to shareholders would be negatively affected if a significant number of its tenants, or any of its major tenants, were to do the following:

Any of these actions could result in the termination of tenants’ leases and the loss of rental income attributable to the terminated leases.  Lease terminations by an anchor tenant or a failure by that anchor tenant to occupy the premises may also permit other tenants in the same shopping centers to terminate their leases or reduce the amount of rent they pay under the terms of their leases.  In addition, the Company cannot be certain that any tenant whose lease expires will renew that lease or that the Company will be able to re-lease space on economically advantageous terms.  The loss of rental revenues from a number of the Company’s major tenants and

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its inability to replace such tenants may adversely affect the Company’s profitability and its ability to meet debt and other financial obligations and make distributions to shareholders.  

The Company’s Expenses May Remain Constant or Increase Even if Income from the Company’s Properties Decreases

Costs associated with the Company’s business, such as common area expenses, utilities, insurance, real estate taxes, mortgage payments and corporate expenses, are relatively inflexible and generally do not decrease in the event that a property is not fully occupied, rental rates decrease, a tenant fails to pay rent or other circumstances cause the Company’s revenues to decrease.  In addition, inflation could result in higher operating costs.  If the Company is unable to lower its operating costs when revenues decline and/or is unable to pass along cost increases to tenants, the Company’s cash flows, profitability and ability to make distributions to shareholders could be adversely impacted.

Property Ownership Through Partnerships and Joint Ventures Could Limit the Company’s Control of Those Investments and Reduce Its Expected Return

Partnership or joint venture investments may involve risks not otherwise present for investments made solely by the Company, including the possibility that the Company’s partner or co-venturer might become bankrupt, that its partner or co-venturer might at any time have different interests or goals than the Company and that its partner or co-venturer may take action contrary to the Company’s instructions, requests, policies or objectives, including the Company’s policy with respect to maintaining its qualification as a REIT.  In addition, the Company’s partner or co-venturer could have different investment criteria that would impact the assets held by the joint venture or its interest in the joint venture, which may also reduce the carrying value of its equity investments if a loss in the carrying value of the investment is realized.  These situations could have an impact on the Company’s revenues from its joint ventures.  Other risks of joint venture investments include impasse on decisions, such as the decision to sell or finance a property or leasing decisions with anchor tenants, because neither the Company’s partner or co-venturer nor the Company would have full control over the partnership or joint venture.  Joint venture platforms typically contain customary buy-sell provisions, which could result in either the sale of the Company’s interest or the use of available cash or borrowings to acquire the Company’s partner’s interest at inopportune times, as well as the termination of applicable management contracts and fees.  In addition, the Company is obligated to maintain the REIT status of the Dividend Trust Portfolio joint venture’s REIT subsidiary and may be obligated to maintain the REIT status of future joint venture platforms and the Company’s failure to do so could result in substantial liability to its partner.  These factors could limit the return that the Company receives from such investments, cause its cash flows to be lower than its estimates or lead to business conflicts or litigation.  There is no limitation under the Company’s Articles of Incorporation, or its Code of Regulations, as to the amount of funds that the Company may invest in partnerships or joint ventures.  In addition, a partner or co-venturer may not have access to sufficient capital to satisfy its funding obligations to the joint venture.  Furthermore, if credit conditions in the capital markets deteriorate, the Company could be required to reduce the carrying value of its equity method investments if a loss in the carrying value of the investment is realized or considered an other than temporary decline.  As of December 31, 2021, the Company had $64.6 million of investments in and advances to unconsolidated joint ventures holding 47 shopping centers.  

The Company’s Real Estate Assets May Be Subject to Impairment Charges

On a periodic basis, the Company assesses whether there are any indicators that the value of its real estate assets and other investments may be impaired.  A property’s value is impaired only if the estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property are less than the carrying value of the property.  In the Company’s estimate of projected cash flows, it considers factors such as expected future operating income, trends and prospects, the effects of demand, competition and other factors.  If the Company is evaluating the potential sale of an asset or development alternatives, the undiscounted future cash flows considerations include the most likely course of action at the balance sheet date based on current plans, intended holding periods and available market information.  The Company is required to make subjective assessments as to whether there are impairments in the value of its real estate assets and other investments.  These assessments have a direct impact on the Company’s earnings because recording an impairment charge results in an immediate negative adjustment to earnings.  There can be no assurance that the Company will not take additional charges in the future related to the impairment of its assets.  Any future impairment could have a material adverse effect on the Company’s results of operations in the period in which the charge is taken.  

The Company’s Acquisition Activities May Not Produce the Cash Flows That It Expects and May Be Limited by Competitive Pressures or Other Factors

The Company intends to acquire retail properties to the extent that suitable acquisitions can be made on advantageous terms.  Acquisitions of commercial properties entail risks such as the following:

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In addition, the Company may not be in a position or have the opportunity in the future to make suitable property acquisitions on advantageous terms due to competition for such properties with others engaged in real estate investment, some of which may have greater financial resources or a lower cost of capital than the Company.  The Company’s inability to successfully acquire new properties may affect the Company’s ability to achieve its anticipated return on investment, which could have an adverse effect on its results of operations.  

Real Estate Property Investments Are Illiquid; Therefore, the Company May Not Be Able to Dispose of Properties When Desired or on Favorable Terms

Real estate investments generally cannot be disposed of quickly.  In addition, the Code imposes restrictions, which are not applicable to other types of real estate companies, on the ability of a REIT to dispose of properties.  Therefore, the Company may not be able to diversify or alter its portfolio in response to economic conditions or trends in retailer or consumer behavior promptly or on favorable terms.  The Company’s inability to quickly respond to such changes or dispose of properties could adversely affect the value of the Company’s portfolio and its ability to repay indebtedness and make distributions to shareholders.  

The Company’s Development, Redevelopment and Construction Activities Could Affect Its Operating Results

The Company intends to continue the selective development, redevelopment and construction of retail properties as opportunities arise.  The Company’s development, redevelopment and construction activities include the following risks:

Additionally, the time frame required for development, redevelopment, construction and lease-up of these properties means that the Company may wait several years for a significant cash return.  If any of the above events occur, the development of properties may hinder the Company’s growth and have an adverse effect on its results of operations and cash flows.  In addition, new development activities, regardless of whether they are ultimately successful, typically require substantial time and attention from management.  

The Company’s Real Estate Investments May Contain Environmental Risks That Could Adversely Affect Its Results of Operations

The acquisition and ownership of properties may subject the Company to liabilities, including environmental liabilities.  The Company’s operating expenses could be higher than anticipated due to the cost of complying with existing or future environmental laws and regulations.  In addition, under various federal, state and local laws, ordinances and regulations, the Company may be

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considered an owner or operator of real property or to have arranged for the disposal or treatment of hazardous or toxic substances.  As a result, the Company may become liable for the costs of removal or remediation of certain hazardous substances released on or in its properties.  The Company may also be liable for other potential costs that could relate to hazardous or toxic substances (including governmental fines and injuries to persons and property).  The Company may incur such liability whether or not it knew of, or was responsible for, the presence of such hazardous or toxic substances.  Such liability could be of substantial magnitude and divert management’s attention from other aspects of the Company’s business and, as a result, could have a material adverse effect on the Company’s operating results and financial condition, as well as its ability to make distributions to shareholders.  

The Company’s Properties Could Be Subject to Damage from Natural Disasters and Weather-Related Factors; An Uninsured Loss on the Company’s Properties or a Loss That Exceeds the Limits of the Company’s Insurance Policies Could Subject the Company to Lost Capital or Revenue on Those Properties

The Company’s properties are generally open-air shopping centers.  Extreme weather conditions may impact the profitability of the Company’s tenants by decreasing traffic at or hindering access to the Company’s properties, which may decrease the amount of rent the Company collects.  Furthermore, a number of the Company’s properties are located in areas that are subject to natural disasters, including Florida and California.  Such properties could therefore be affected by rising sea levels, hurricanes, tropical storms and wildfires, whether caused by global climate changes or other factors.  In addition, the Company’s insurance premiums have increased in recent years and the potential increase in the frequency and intensity of natural disasters, extreme weather-related events and climate change in the future may limit the types of coverage and the coverage limits the Company is able to obtain on commercially reasonable terms.  

The Company currently maintains all-risk property insurance with limits of $150 million per occurrence and in the aggregate and general liability insurance with limits of $100 million per occurrence and in the aggregate, in each case subject to various conditions, exclusions, deductibles and sub-limits for certain perils such as flood and earthquake.  Coverage for a named windstorm for the Company’s continental U.S. properties is subject to a deductible of up to 5% of the total insured value of each property.  The amount of any insurance coverage for losses due to damage or business interruption may prove to be insufficient.  Should a loss occur that is uninsured or is in an amount exceeding the aggregate limits for the applicable insurance policy, or in the event of a loss that is subject to a substantial deductible under an insurance policy, the Company could lose all or part of its capital invested in, and anticipated revenue from, one or more of the properties, which could have a material adverse effect on the Company’s operating results and financial condition, as well as its ability to make distributions to shareholders.  

Violent Crime, Including Terrorism and Mass Shootings, or Civil Unrest May Affect the Markets in Which the Company Operates Its Business and Its Profitability

Certain of the Company’s properties are located in or near major metropolitan areas or other areas that have experienced, and remain susceptible to, violent crime, including terrorist attacks and mass shootings and civil unrest.  Any kind of violent criminal acts, including terrorist acts against public institutions or buildings or modes of public transportation (including airlines, trains or buses), or civil unrest could alter shopping habits, deter customers from visiting the Company’s shopping centers or result in damage to its properties, which would have a negative effect on the Company’s business, the operations of its tenants and the value of its properties.

A Disruption, Failure or Breach of the Company’s Networks or Systems, Including as a Result of Cyber-Attacks, Could Harm Its Business

The Company relies extensively on computer systems to manage its business.  While the Company maintains some of its own critical information technology systems, it also depends on third parties to provide important information technology services relating to several key business functions, such as payroll, human resources, electronic communications and certain finance functions.  These systems are subject to damage or interruption from power outages, facility damage, computer or telecommunications failures, computer viruses, security breaches, vandalism, natural disasters, catastrophic events, human error and potential cyber threats, including phishing attacks, ransomware and other sophisticated cyber-attacks.  Although the Company and such third parties employ a number of measures to prevent, detect and mitigate cyber threats, including password protection, firewalls, backup servers, threat monitoring and periodic penetration testing, the techniques used to obtain unauthorized access change frequently and there is no guarantee that such efforts will be successful.  Should they occur, these threats could compromise the confidential information of the Company’s tenants, employees and third-party vendors; disrupt the Company’s business operations and the availability and integrity of data in the Company’s systems; and result in litigation, violation of applicable privacy and other laws, investigations, actions, fines or penalties.  In the event of damage or disruption to the Company’s business due to these occurrences, the Company may not be able to successfully and quickly recover all of its critical business functions, assets and data.  Furthermore, while the Company maintains insurance, the coverage may not sufficiently cover all types of losses, claims or fines that may arise.  For additional information see Item 1 “Business—Information Technology and Cybersecurity” in Part I of this Annual Report on From 10-K.

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Risks Relating to the Company’s Indebtedness and Capital Structure

The Company Depends on External Sources of Capital. Disruptions in the Financial Markets Could Affect the Company’s Ability to Obtain Financing on Reasonable Terms and Have Other Adverse Effects on the Company and the Market Price of the Company’s Common Shares

To qualify as a REIT, the Company must, among other things, distribute at least 90% of its REIT taxable income (excluding any net capital gains) to its stockholders each year. Because of these distribution requirements, the Company has relied on third-party sources of capital, including debt and preferred equity financings, to fund growth opportunities and capital needs. The U.S. and global equity and credit markets have experienced significant price volatility, dislocations and liquidity disruptions in the past, which have caused market prices of many stocks to fluctuate substantially and the spreads on prospective debt financings to widen considerably.  These circumstances materially affected liquidity in the financial markets, making terms for certain financings less attractive and, in certain cases, resulting in the unavailability of financing for businesses and assets similar to those operated by the Company.  Uncertainty in the equity and credit markets may negatively affect the Company’s ability to access additional financing at reasonable terms or at all, which may negatively affect the Company’s ability to refinance its debt, obtain new financing or make acquisitions.  These circumstances may also adversely affect the Company’s tenants, including their ability to enter into new leases, pay their rents when due and renew their leases at rates at least as favorable as their current rates.  

A prolonged downturn in the equity or credit markets may cause the Company to seek alternative sources of potentially less attractive financing and may require it to adjust its business plan accordingly.  In addition, these factors may make it more difficult for the Company to sell properties or may adversely affect the price it receives for properties that it does sell, as prospective buyers may experience increased costs of financing or difficulties in obtaining financing.  These events in the equity and credit markets may make it more difficult or costly for the Company to raise capital through the issuance of its equity or debt securities.  These disruptions in the financial markets also may have a material adverse effect on the market value of the Company’s common shares and other adverse effects on the Company or the economy in general.  There can be no assurances that government responses to the disruptions in the financial markets will restore consumer confidence, stabilize the markets or increase liquidity and the availability of equity or credit financing.  

Changes in the Company’s Credit Ratings or the Debt Markets, as Well as Market Conditions in the Credit Markets, Could Adversely Affect the Company’s Publicly Traded Debt and Revolving Credit Facilities

The market value for the Company’s publicly traded debt depends on many factors, including the following:

The condition of the financial markets and prevailing interest rates have fluctuated in the past and are likely to fluctuate in the future.  The U.S. credit markets have experienced severe dislocations and liquidity disruptions in the past.  Furthermore, uncertain market conditions can be exacerbated by leverage.  The occurrence of these circumstances in the credit markets and/or additional fluctuations in the financial markets and prevailing interest rates could have an adverse effect on the Company’s ability to access capital and its cost of capital.  

In addition, credit rating agencies continually review their ratings for the companies they follow, including the Company.  For example, credit rating agencies may review and change their credit ratings for the Company as a result of disruptions to retail tenants and property-level revenues caused by macroeconomic trends or other developments such as the COVID-19 pandemic.  The credit rating agencies also evaluate the real estate industry as a whole and may change their credit rating for the Company based on their overall view of the industry.  Any rating organization that rates the Company’s publicly traded debt may lower the rating or decide, at its sole discretion, not to rate the Company’s publicly traded debt.  The ratings of the Company’s publicly traded debt are based primarily on the rating organization’s assessment of the likelihood of timely payment of interest when due and the payment of principal on the maturity date.  A negative change in the Company’s rating could have an adverse effect on the Company’s credit facilities and market price of the Company’s publicly traded debt, as well as the Company’s ability to access capital and its cost of capital.  

The Company’s Ability to Increase Its Debt Could Adversely Affect Its Cash Flows

At December 31, 2021, the Company had outstanding debt of $1.7 billion (excluding its proportionate share of unconsolidated joint venture mortgage debt aggregating $0.2 billion as of December 31, 2021).  The Company intends to maintain a conservative ratio

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of debt to asset value.  The Company is subject to limitations under its credit facilities and indentures relating to its ability to incur additional debt; however, the Company’s organizational documents do not contain any limitation on the amount or percentage of indebtedness it may incur.  If the Company were to become more highly leveraged, its cash needs to fund debt service would increase accordingly.  Under such circumstances, the Company’s risk of decreases in cash flow due to fluctuations in the real estate market, reliance on its major tenants, acquisition and development costs and the other factors discussed in these risk factors could subject the Company to an even greater adverse impact on its financial condition and results of operations.  In addition, increased leverage could increase the risk of default on the Company’s debt obligations, which could further reduce its cash available for distribution and adversely affect its ability to dispose of its portfolio on favorable terms, which could cause the Company to incur losses and reduce its cash flows.  

The Company’s Cash Flows and Operating Results Could Be Adversely Affected by Required Payments of Debt or Related Interest and Other Risks of Its Debt Financing

The Company is generally subject to the risks associated with debt financing.  These risks include the following:

If a property is mortgaged to secure payment of indebtedness and the Company cannot or does not make the mortgage payments, it may have to surrender the property to the lender with a consequent loss of any prospective income and equity value from such property, which may also adversely affect the Company’s credit ratings.  Any of these risks can place strains on the Company’s cash flows, reduce its ability to grow and adversely affect its results of operations.  

The Company’s Financial Condition Could Be Adversely Affected by Financial Covenants

The Company’s credit facilities and the indentures under which its senior unsecured indebtedness is, or may be, issued contain certain financial and operating covenants, including, among other things, leverage ratios and certain coverage ratios, as well as limitations on the Company’s ability to incur secured and unsecured indebtedness, sell all or substantially all of its assets and engage in mergers and certain acquisitions.  These credit facilities and indentures also contain customary default provisions including, but not limited to, the failure to pay principal and interest issued thereunder in a timely manner, the failure to comply with the Company’s financial and operating covenants and the failure of the Company or its majority-owned subsidiaries (i.e., entities in which the Company has a greater than 50% interest) to pay when due certain indebtedness in excess of certain thresholds beyond applicable grace and cure periods.  These covenants could limit the Company’s ability to obtain additional funds needed to address cash shortfalls or pursue growth opportunities or transactions that would provide substantial return to its shareholders.  In addition, a breach of these covenants could cause a default or accelerate some or all of the Company’s indebtedness, which could have a material adverse effect on its financial condition.  

The Company May Incur Significant Debt Prepayment Costs as a Result of Repaying Indebtedness Prior to Its Stated Maturity

In prudently managing its capital structure and refinancing risk, in the past, the Company has chosen to retire debt prior to its stated maturity date, and in doing so, has incurred prepayment or defeasance premiums in accordance with the relevant loan agreements.  If the Company chooses to retire debt prior to its stated maturity date in the future, it may incur significant debt prepayment costs or defeasance premiums, which could have an adverse effect on the Company’s cash flows and results of operations.  

The Company Has Variable-Rate Debt and Interest Rate Risk

The Company has indebtedness with interest rates that vary depending upon the market index.  In addition, the Company has revolving credit facilities that bear interest at a variable rate on any amounts drawn on the facilities.  The Company may incur

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additional variable-rate debt in the future.  Increases in interest rates on variable-rate debt would increase the Company’s interest expense, which would negatively affect net earnings and cash available for payment of its debt obligations and distributions to its shareholders.  

The Company May Be Adversely Affected by the Potential Discontinuation of LIBOR  

In July 2017, the Financial Conduct Authority (“FCA,” the United Kingdom authority that regulates LIBOR) announced that numerous banks had approached the FCA and expressed a desire to cease providing LIBOR-related quotations to ICE Benchmark Administration Limited (“IBA”) for the calculation of LIBOR after 2021.  The FCA went on to explain that it was negotiating an agreement with each of the LIBOR panel banks that would see those banks continue to voluntarily submit quotations to IBA through the end of 2021.  On November 24, 2017, the FCA confirmed that the LIBOR panel banks had agreed to support LIBOR until December 31, 2021, but banks made no commitment to continue doing so after that date.  

Subsequently, on March 5, 2021, IBA and the FCA made public statements regarding the future cessation of LIBOR.  In particular, with respect to the 1-week and 2-month U.S. dollar (“USD”) LIBOR settings, the FCA announced that IBA would permanently cease to publish them on December 31, 2021, which IBA in fact did.  With respect to the overnight, 1-month, 3-month, 6-month and 12-month USD LIBOR settings, the FCA announced that IBA would permanently cease publishing them in their current form on June 30, 2023.  It is unclear whether new methods of calculating LIBOR will be established such that it continues to exist after such end dates, and there is considerable uncertainty regarding the publication or representativeness of LIBOR beyond such end dates.  

In conjunction with the FCA’s and IBA’s announcements regarding the permanent cessation of LIBOR, the Board of Governors of the Federal Reserve System (the “Federal Reserve”) and other U.S. banking regulators issued guidance, including on October 20, 2021, encouraging supervised financial institutions to cease entering into new contracts that use USD LIBOR as a reference rate as soon as practicable and in any event by December 31, 2021, with limited exceptions, to avoid creating safety and soundness risks and otherwise facilitate an orderly LIBOR transition.

The Alternative Reference Rates Committee (“ARRC”), which is a group of private-market participants convened by the Federal Reserve to help ensure a successful transition from USD LIBOR to a more robust reference rate, has recommended rates derived from the Secured Overnight Financing Rate (“SOFR”) as alternatives to USD LIBOR for use in commercial loans, derivatives and other financial instruments.  On October 21, 2020, the U.S. Department of Treasury, the Federal Reserve and other U.S. regulators confirmed that the use of SOFR-based rates is voluntary, and market participants should seek to transition away from LIBOR in the manner that is most appropriate given their specific circumstances.  The emergence of alternatives to SOFR and their acceptance by market participants could impact contracts, securities and instruments that reference SOFR, including contracts, securities and instruments linked to USD LIBOR that would transition to SOFR upon a benchmark transition event.  

On April 6, 2021, the State of New York enacted legislation addressing LIBOR contracts governed by New York law.  It is purportedly designed to minimize legal uncertainty and adverse economic impacts associated with the transition from LIBOR.  Other states have enacted, or are considering enacting, similar legislation.  On December 8, 2021, the United States House of Representatives passed a bill called the Adjustable Interest Rate (LIBOR) Act of 2021 to address the impact of LIBOR’s permanent cessation on LIBOR contracts.  That bill remains under consideration by the United States Senate.  State and federal legislation, and other events could impact certain contracts, securities and instruments tied to USD LIBOR.  Similarly, in the United Kingdom, the FCA obtained power from Parliament to, among other things, compel IBA to change the methodology it currently uses to calculate LIBOR such that a “synthetic” LIBOR could be published for use in legacy contracts.  Actions taken by the FCA, including actions taken in accordance with its power to compel the calculation of “synthetic LIBOR,” could have an impact on contracts, securities and instruments linked to USD LIBOR.  So too could future announcements by the FCA, IBA or U.S. banking regulators that impact contracts, securities and instruments linked to USD LIBOR that contemplate transitioning to SOFR upon a benchmark transition event.  Likewise, contracts, securities and instruments linked to USD LIBOR may be impacted by decisions by USD LIBOR panel banks that give rise to or otherwise impact non-representativeness determinations that the FCA may be responsible for making before LIBOR ceases to be published.  The full impact of the expected transition away from LIBOR and the potential discontinuation of LIBOR is not known.  However, any replacement rate or alternative base rate could be higher or more volatile than LIBOR, which could adversely affect the Company’s cash flow, financial condition, risk management programs and operations.

The Company’s consolidated debt outstanding at December 31, 2021 included approximately $100 million of variable rate debt (maturing in January 2023) having an interest rate determined by reference to LIBOR.  Should the Company seek to replace this variable rate debt or extend the maturity date, it is likely that LIBOR will need to be replaced with an alternative rate of interest.  Additionally, the Company currently has the ability to elect that borrowings under its $970 million revolving credit facilities bear interest based on either LIBOR or the Alternative Base Rate.  The credit agreements governing the revolving credit facilities provide that the Company’s ability to request LIBOR-based loans may be suspended in the future in connection with the cessation of LIBOR’s publication, in which case the Company will be forced to borrow at an interest rate based on the Alternative Base Rate unless and until the Company and applicable lenders agree on an alternative rate of interest to LIBOR.  Any agreed upon amendment referencing an alternative rate to replace LIBOR could have adverse tax consequences to the Company. Borrowings based on the Alternative Base

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Rate or any alternative rate of interest to LIBOR also may result in higher borrowing costs to the Company.  Using alternative rates of interest to LIBOR, including SOFR-based rates such as the CME Group’s calculation of term SOFR, also may potentially create risks given various uncertainties regarding how they will behave in various economic environments, whether and to what extent they are adopted in the market, as well as how they are constructed.

Risks Related to the Company’s Taxation as a REIT

If the Company Fails to Qualify as a REIT in Any Taxable Year, It Will Be Subject to U.S. Federal Income Tax as a Regular Corporation and Could Have Significant Tax Liability

The Company intends to operate in a manner that allows it to qualify as a REIT for U.S. federal income tax purposes.  However, REIT qualification requires that the Company satisfy numerous requirements (some on an annual or quarterly basis) established under highly technical and complex provisions of the Code, for which there are a limited number of judicial or administrative interpretations.  The Company’s status as a REIT requires an analysis of various factual matters and circumstances that are not entirely within its control.  Accordingly, the Company’s ability to qualify and remain qualified as a REIT for U.S. federal income tax purposes is not certain.  Even a technical or inadvertent violation of the REIT requirements could jeopardize the Company’s REIT qualification.  Furthermore, Congress or the Internal Revenue Service (“IRS”) might change the tax laws or regulations and the courts could issue new rulings, in each case potentially having a retroactive effect that could make it more difficult or impossible for the Company to continue to qualify as a REIT.  If the Company fails to qualify as a REIT in any tax year, the following would result:

Even if the Company remains qualified as a REIT, it may face other tax liabilities that reduce its cash flow.  The Company’s TRS is subject to taxation, and any changes in the laws affecting the Company’s TRS may increase the Company’s tax expenses.  The Company may also be subject to certain federal, state and local taxes on its income and property either directly or at the level of its subsidiaries.  Any of these taxes would decrease cash available for debt service obligations and distribution to the Company’s shareholders.  

Compliance with REIT Requirements May Negatively Affect the Company’s Operating Decisions

To maintain its status as a REIT for U.S. federal income tax purposes, the Company must meet certain requirements on an ongoing basis, including requirements regarding its sources of income, the nature and diversification of its assets, the amounts the Company distributes to its shareholders and the ownership of its shares.  The Company may also be required to make distributions to its shareholders when it does not have funds readily available for distribution or at times when the Company’s funds are otherwise needed to fund capital expenditures or debt service obligations.  

As a REIT, the Company must distribute at least 90% of its annual net taxable income (excluding net capital gains) to its shareholders.  To the extent that the Company satisfies this distribution requirement, but distributes less than 100% of its net taxable income, the Company will be subject to U.S. federal corporate income tax on its undistributed taxable income.  In addition, the Company will be subject to a 4% non-deductible excise tax if the actual amount paid to its shareholders in a calendar year is less than the minimum amount specified under U.S. federal tax laws.  From time to time, the Company may generate taxable income greater than its income for financial reporting purposes, or its net taxable income may be greater than its cash flows available for distribution to its shareholders.  If the Company does not have other funds available in these situations, it could be required to borrow funds, sell its securities or a portion of its properties at unfavorable prices or find other sources of funds in order to meet the REIT distribution requirements and avoid corporate income tax and the 4% excise tax.  

In addition, the REIT provisions of the Code impose a 100% tax on income from “prohibited transactions.”  Prohibited transactions generally include sales of assets, other than foreclosure property, that constitute inventory or other property held for sale to customers in the ordinary course of business.  This 100% tax could affect the Company’s decisions to sell property if it believes such sales could be treated as a prohibited transaction.  However, the Company would not be subject to this tax if it were to sell assets

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through its TRS.  The Company will also be subject to a 100% tax on certain amounts if the economic arrangements between the Company and its TRS are not comparable to similar arrangements among unrelated parties.  

The Company May Be Forced to Borrow Funds to Maintain Its REIT Status, and the Unavailability of Such Capital on Favorable Terms at the Desired Times, or at All, May Cause the Company to Curtail Its Investment Activities and/or to Dispose of Assets at Inopportune Times, Which Could Materially and Adversely Affect the Company

To qualify as a REIT, the Company generally must distribute to shareholders at least 90% of its REIT taxable income each year, determined without regard to the dividends paid deduction and excluding any net capital gains, and the Company will be subject to regular corporate income taxes on its undistributed taxable income to the extent that the Company distributes less than 100% of its REIT taxable income, determined without regard to the dividends paid deduction and including any net capital gains, each year.  In addition, the Company will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions paid by the Company in any calendar year are less than the sum of 85% of the Company’s ordinary income, 95% of its capital gain net income and 100% of its undistributed income from prior years.  The Company could have a potential distribution shortfall as a result of, among other things, differences in timing between the actual receipt of cash and recognition of income for U.S. federal income tax purposes or the effect of nondeductible capital expenditures, the creation of reserves or required debt or amortization payments.  In order to maintain REIT status and avoid the payment of income and excise taxes, the Company may need to borrow funds to meet the REIT distribution requirements.  The Company may not be able to borrow funds on favorable terms or at all, and the Company’s ability to borrow may be restricted by the terms of the instruments governing the Company’s existing indebtedness.  The Company’s access to third-party sources of capital depends on a number of factors, including the market’s perception of the Company’s growth potential, current debt levels, the market price of common shares and current and potential future earnings.  The Company cannot assure shareholders that it will have access to such capital on favorable terms at the desired times, or at all, which may cause the Company to curtail its investment activities and/or to dispose of assets at inopportune times and could materially and adversely affect the Company.  The Company may make taxable in-kind distributions of common shares, which may cause shareholders to be required to pay income taxes with respect to such distributions in excess of any cash received, or the Company may be required to withhold taxes with respect to such distributions in excess of any cash shareholders receive.

Dividends Paid by REITs Generally Do Not Qualify for Reduced Tax Rates

In general, the maximum U.S. federal income tax rate for dividends paid to individual U.S. shareholders is 20%.  Due to its REIT status, the Company’s distributions to individual shareholders generally are not eligible for the reduced rates.  However, U.S. shareholders that are individuals, trusts and estates generally may deduct up to 20% of the ordinary dividends (e.g., REIT dividends that are not designated as capital gain dividends or qualified dividend income) received from a REIT for taxable years beginning after December 31, 2017, and before January 1, 2026.  Although this deduction reduces the effective tax rate applicable to certain dividends paid by REITs (generally to 29.6%, assuming the shareholder is subject to the 37% maximum rate), such tax rate is still higher than the tax rate applicable to corporate dividends that constitute qualified dividend income.  Accordingly, investors who are individuals, trusts and estates may perceive investments in REITs to be relatively less attractive than investments in stocks of non-REIT corporations that pay dividends, which could materially and adversely affect the value of the shares of REITs, including the per share trading price of the Company’s common shares.

Certain Foreign Shareholders May Be Subject to U.S. Federal Income Tax on Gain Recognized on a Disposition of the Company’s Common Shares if the Company Does Not Qualify as a “Domestically Controlled” REIT  

A foreign person disposing of a U.S. real property interest, including shares of a U.S. corporation whose assets consist principally of U.S. real property interests, is generally subject to U.S. federal income tax on any gain recognized on the disposition.  This tax does not apply, however, to the disposition of stock in a REIT if the REIT is “domestically controlled.”  In general, the Company will be a domestically controlled REIT if at all times during the five-year period ending on the applicable stockholder’s disposition of the Company’s stock, less than 50% in value of the stock was held directly or indirectly by non-U.S. persons.  If the Company were to fail to qualify as a domestically controlled REIT, gain recognized by a foreign stockholder on a disposition of the Company’s common shares would be subject to U.S. federal income tax unless the common shares were traded on an established securities market and the foreign stockholder did not at any time during a specific testing period directly or indirectly own more than 10% of the Company’s outstanding common stock.  

Legislative or Other Actions Affecting REITs Could Have a Negative Effect on the Company.

The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the Department of the Treasury.  Changes to the tax laws, with or without retroactive application, could materially and adversely affect the Company or its shareholders.  The Company cannot predict how changes in the tax laws might affect shareholders or the Company.  New legislation, Treasury regulations, administrative interpretations or court decisions could significantly and negatively affect the Company’s ability to qualify as a REIT, the U.S. federal income tax consequences of such qualification or the U.S. federal income tax consequences of an investment in the Company.  In addition, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive

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relative to an investment in a REIT.  Furthermore, potential amendments and technical corrections, as well as interpretations and implementation of regulations by the Treasury and IRS, may have or may in the future occur or be enacted, and, in each case, they could lessen or increase the impact of the Tax Cuts and Jobs Act of 2017 (the “TCJA”).  In addition, states and localities, which often use federal taxable income as a starting point for computing state and local tax liabilities, continue to react to the TCJA, and these may exacerbate its negative, or diminish its positive, effects on the Company.  It is impossible to predict the nature or extent of any new tax legislation, regulation or administrative interpretations, but such items could adversely affect the Company’s operating results, financial condition and/or future business planning.

Risks Related to the Company’s Organization, Structure and Ownership

Provisions of the Company’s Articles of Incorporation and Code of Regulations Could Have the Effect of Delaying, Deferring or Preventing a Change in Control, Even if That Change May Be Considered Beneficial by Some of the Company’s Shareholders

The Company’s Articles of Incorporation and Code of Regulations contain provisions that could have the effect of rendering more difficult, delaying or preventing an acquisition deemed undesirable by the Company’s Board of Directors.  Among other things, the Articles of Incorporation and Code of Regulations include provisions:

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in the Company’s management.  The Company believes these provisions protect its shareholders from coercive or otherwise unfair takeover tactics and are not intended to make the Company immune from takeovers.  However, these provisions apply even if the offer may be considered beneficial by some shareholders and could delay, defer or prevent an acquisition that the Board of Directors determines is not in the best interests of the Company and its shareholders, which under certain circumstances could reduce the market price of its common shares.

The Company Has Significant Shareholders Who May Exert Influence on the Company as a Result of Their Considerable Beneficial Ownership of the Company’s Common Shares, and Their Interests May Differ from the Interests of Other Shareholders

The Company has shareholders, including Mr. Alexander Otto, who is a member of the Board of Directors, who, because of their considerable beneficial ownership of the Company’s common shares, are in a position to exert significant influence over the Company.  These shareholders may exert influence with respect to matters that are brought to a vote of the Company’s Board of Directors and/or the holders of the Company’s common shares.  Among others, these matters include the election of the Company’s Board of Directors, corporate finance transactions and joint venture activity, merger, acquisition and disposition activity, and amendments to the Company’s Articles of Incorporation and Code of Regulations.  In the context of major corporate events, the interests of the Company’s significant shareholders may differ from the interests of other shareholders.  For example, if a significant shareholder does not support a merger, tender offer, sale of assets or other business combination because the shareholder judges it to be inconsistent with the shareholder’s investment strategy, the Company may be unable to enter into or consummate a transaction that would enable other shareholders to realize a premium over the then-prevailing market prices for common shares.  Furthermore, significant shareholders of the Company have sold in the past, and may sell in the future, substantial amounts of the Company’s common shares in the public market to enhance the shareholders’ liquidity positions, fund alternative investments or for other reasons. This has caused in the past and may cause in the future the trading price of the Company’s common shares to decline significantly, resulting in other shareholders being unable to sell their common shares at favorable prices.  The Company cannot predict or control how the Company’s significant shareholders may use the influence they have as a result of their common share holdings.

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The Company’s Board of Directors May Change Significant Corporate Policies Without Shareholder Approval

The Company’s strategies and investment, financing and dividend policies will be determined by its Board of Directors.  These strategies and policies may be amended or revised at any time at the discretion of the Board of Directors without a vote of the Company’s shareholders.  A change in any of these strategies and policies could have an adverse effect on the Company’s financial condition, operating results and cash flow and on its ability to pay dividends to shareholders.

Risks Related to the Company’s Common Shares

Changes in Market Conditions Could Adversely Affect the Market Price of the Company’s Publicly Traded Securities

As with other publicly traded securities, the market price of the Company’s publicly traded securities depends on various market conditions, which may change from time to time.  Among the market conditions that may affect the market price of the Company’s publicly traded securities are the following:

The Company May Issue Additional Securities Without Shareholder Approval

The Company can issue preferred shares and common shares without shareholder approval subject to certain limitations in the Company’s Articles of Incorporation.  Holders of preferred shares have priority over holders of common shares, and the issuance of additional shares reduces the ownership interest of existing holders in the Company.  

General Risks Relating to Investments in the Company’s Securities

The Company May Be Unable to Retain and Attract Key Management Personnel

The Company may be unable to retain and attract talented executives.  In the event of the loss of key management personnel to competitors, or upon unexpected death, disability or retirement, the Company may not be able to find replacements with comparable skill, ability and industry expertise.  The Company’s operating results and financial condition could be materially and adversely affected until suitable replacements are identified and retained, if at all.  

The Company Is Subject to Litigation That Could Adversely Affect Its Results of Operations

The Company is a defendant from time to time in lawsuits and regulatory proceedings relating to its business.  Due to the inherent uncertainties of litigation and regulatory proceedings, the Company cannot accurately predict the ultimate outcome of any such litigation or proceedings.  An unfavorable outcome could adversely affect the Company’s business, financial condition or results of operations.  Any such litigation could also lead to increased volatility of the trading price of the Company’s common shares.  For a further discussion of litigation risks, see “Legal Matters” in Note 11, “Commitments and Contingencies,” to the Company’s consolidated financial statements.  

Changes in Accounting Standards Issued by the Financial Accounting Standards Board or Other Standard-Setting Bodies May Adversely Affect the Company’s Business

The Company’s financial statements are subject to the application of U.S. generally accepted accounting principles (“GAAP”), which is periodically revised and/or expanded.  From time to time, the Company is required to adopt new or revised accounting standards issued by recognized authoritative bodies, including the FASB and the SEC.  It is possible that accounting standards the Company is required to adopt may require changes to the current accounting treatment that it applies to its consolidated financial

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statements and may require it to make significant changes to its systems.  Changes in accounting standards could result in a material adverse impact on the Company’s business, financial condition and results of operations.

None.

At December 31, 2021, the Portfolio Properties included 136 shopping centers (including 47 centers owned through unconsolidated joint ventures) and approximately 60 acres of developable land, including parcels located adjacent to certain of the shopping centers.  At December 31, 2021, the Portfolio Properties aggregated 32.0 million square feet of Company-owned GLA (42.2 million square feet of total GLA) located in 21 states.  These centers are principally located in suburban, higher household income communities in the Southeast with the highest concentrations in Florida, Georgia and North Carolina.  The Company also has significant concentrations in New Jersey and Ohio.  

At December 31, 2021, on a pro rata basis, the average annualized base rent per square foot was $18.33.  The average annualized base rent of the Company’s 89 wholly-owned shopping centers was $18.52 per square foot, and the average annualized base rent for the 47 shopping centers owned through unconsolidated joint ventures was $15.15 per square foot.  The Company’s average annualized base rent per square foot does not consider tenant expense reimbursements.    

The majority of the Company’s shopping centers are anchored by national tenant anchors and designed to provide a highly compelling shopping experience and merchandise mix for retail partners and consumers.  The tenants of the shopping centers typically cater to the consumer’s desire for value, service and convenience and offer day-to-day necessities rather than high-priced luxury items.  The properties often include discounters, specialty grocers, pet supply stores, fitness centers, quick-service restaurants and beauty supply retailers as additional anchors or tenants.  The Company has established close relationships with a large number of major national and regional tenants, many of which occupy space in its shopping centers.  

Information as to the Company’s 10 largest tenants based on total annualized rental revenues and Company-owned GLA at December 31, 2021, is set forth in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the caption “Executive Summary–Retail Environment and Company Fundamentals” of this Annual Report on Form 10-K.  For additional details related to property encumbrances for the Company’s wholly-owned assets, see “Real Estate and Accumulated Depreciation” (Schedule III) herein.  At December 31, 2021, the Company owned an investment in 47 properties through unconsolidated joint ventures, which properties served as collateral for joint venture mortgage debt aggregating approximately $0.9 billion (of which the Company’s proportionate share is $190.5 million) and is not reflected in the consolidated indebtedness.  The Company’s properties range in size from approximately 2,000 square feet to approximately 1,100,000 square feet of total GLA (with 52 properties exceeding 300,000 square feet of total GLA).  On a pro rata basis, the Company’s properties were 90.0% occupied as of December 31, 2021.

Tenant Lease Expirations and Renewals

The following table shows the impact of tenant lease expirations through 2031 at the Company’s 89 wholly-owned shopping centers, assuming that none of the tenants exercise any of their renewal options:

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The following table shows the impact of tenant lease expirations through 2031 at the Company’s 47 shopping centers owned through unconsolidated joint ventures, assuming that none of the tenants exercise any of their renewal options:

The rental payments under certain of these leases will remain constant until the expiration of their base terms, regardless of inflationary increases.  There can be no assurance that any of these leases will be renewed or that any replacement tenants will be obtained if not renewed.  

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SITE Centers Corp.

Shopping Center Property List at December 31, 2021

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SITE Centers Corp.

Shopping Center Property List at December 31, 2021

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SITE Centers Corp.

Shopping Center Property List at December 31, 2021