SITE Centers Corp. - Quarter Report: 2023 September (Form 10-Q)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended September 30, 2023

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

For the transition period from to

Commission file number 1-11690

SITE Centers Corp.

(Exact name of registrant as specified in its charter)


Ohio		34-1723097
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3300 Enterprise Parkway

Beachwood, OH

44122

(Address of principal executive offices)

(Zip Code)

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

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, Par Value $0.10 Per Share	SITC	New York Stock Exchange

Depositary Shares, each representing 1/20 of a share of 6.375% Class A Cumulative Redeemable Preferred Shares without Par Value	SITC PRA	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of October 27, 2023 the registrant had 209,317,553 shares of common stock, $0.10 par value per share, outstanding.

SITE Centers Corp.

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED September 30, 2023

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements – Unaudited
	Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	3
	Consolidated Statements of Operations for the Three Months Ended September 30, 2023 and 2022	4
	Consolidated Statements of Operations for the Nine Months Ended September 30, 2023 and 2022	5
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2023 and 2022	6
	Consolidated Statements of Equity for the Three and Nine Months Ended September 30, 2023 and 2022	7
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34
Item 4.	Controls and Procedures	35
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	37
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	38
SIGNATURES		39

SITE Centers Corp.

CONSOLIDATED BALANCE SHEETS

(unaudited; in thousands, except share amounts)


	September 30, 2023			December 31, 2022
Assets
Land	$	1,082,330		$	1,066,852
Buildings		3,717,850			3,733,805
Fixtures and tenant improvements		597,874			576,036
		5,398,054			5,376,693
Less: Accumulated depreciation		(1,730,179	)		(1,652,899	)
		3,667,875			3,723,794
Construction in progress and land		62,809			56,466
Total real estate assets, net		3,730,684			3,780,260
Investments in and advances to joint ventures, net		40,830			44,608
Cash and cash equivalents		26,560			20,254
Restricted cash		36,701			960
Accounts receivable		65,192			63,926
Other assets, net		125,155			135,009
	$	4,025,122		$	4,045,017
Liabilities and Equity
Unsecured indebtedness:
Senior notes, net	$	1,368,282		$	1,453,923
Term loan, net		198,772			198,521
Revolving credit facility		135,000			—
		1,702,054			1,652,444
Mortgage indebtedness, net		38,100			54,577
Total indebtedness		1,740,154			1,707,021
Accounts payable and other liabilities		208,151			214,985
Dividends payable		30,100			30,389
Total liabilities		1,978,405			1,952,395
Commitments and contingencies
SITE Centers Equity
Class A—6.375% cumulative redeemable preferred shares, without par value, $500 liquidation value; 750,000 shares authorized; 350,000 shares issued and outstanding at September 30, 2023 and December 31, 2022		175,000			175,000
Common shares, with par value, $0.10 stated value; 300,000,000 shares authorized; 214,373,180 and 214,371,498 shares issued at September 30, 2023 and December 31, 2022, respectively		21,437			21,437
Additional paid-in capital		5,972,902			5,974,216
Accumulated distributions in excess of net income		(4,067,355	)		(4,046,370	)
Deferred compensation obligation		5,053			5,025
Accumulated other comprehensive income		12,055			9,038
Less: Common shares in treasury at cost: 5,341,958 and 3,787,279 shares at September 30, 2023 and December 31, 2022, respectively		(72,375	)		(51,518	)
Total SITE Centers shareholders' equity		2,046,717			2,086,828
Non-controlling interests		—			5,794
Total equity		2,046,717			2,092,622
	$	4,025,122		$	4,045,017

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

SITE Centers Corp.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited; in thousands, except per share amounts)


	Three Months
	Ended September 30,
	2023			2022
Revenues from operations:
Rental income	$	142,498		$	135,123
Fee and other income		2,261			3,720
		144,759			138,843
Rental operation expenses:
Operating and maintenance		20,986			22,314
Real estate taxes		20,543			20,423
General and administrative		11,259			10,799
Depreciation and amortization		52,821			51,179
		105,609			104,715
Other income (expense):
Interest expense		(21,147	)		(20,139	)
Other income (expense), net		(690	)		(501	)
		(21,837	)		(20,640	)
Income before earnings from equity method investments and other items		17,313			13,488
Equity in net income of joint ventures		518			25,918
Gain on sale and change in control of interests		—			228
Gain on disposition of real estate, net		31,047			26,837
Income before tax expense		48,878			66,471
Tax expense of taxable REIT subsidiaries and state franchise and income taxes		(236	)		(258	)
Net income	$	48,642		$	66,213
Income attributable to non-controlling interests, net		—			(18	)
Net income attributable to SITE Centers	$	48,642		$	66,195
Preferred dividends		(2,789	)		(2,789	)
Net income attributable to common shareholders	$	45,853		$	63,406

Per share data:
Basic	$	0.22		$	0.30
Diluted	$	0.22		$	0.30

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

SITE Centers Corp.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited; in thousands, except per share amounts)


	Nine Months
	Ended September 30,
	2023			2022
Revenues from operations:
Rental income	$	414,324		$	401,210
Fee and other income		7,285			12,635
		421,609			413,845
Rental operation expenses:
Operating and maintenance		66,628			66,528
Real estate taxes		60,875			61,230
Impairment charges		—			2,536
General and administrative		35,935			34,403
Depreciation and amortization		165,535			152,564
		328,973			317,261
Other income (expense):
Interest expense		(61,991	)		(57,306	)
Other income (expense), net		(2,011	)		(2,152	)
		(64,002	)		(59,458	)
Income before earnings from equity method investments and other items		28,634			37,126
Equity in net income of joint ventures		6,495			27,468
Gain on sale and change in control of interests		3,749			45,554
Gain on disposition of real estate, net		31,230			31,292
Income before tax expense		70,108			141,440
Tax expense of taxable REIT subsidiaries and state franchise and income taxes		(811	)		(863	)
Net income	$	69,297		$	140,577
Income attributable to non-controlling interests, net		(18	)		(55	)
Net income attributable to SITE Centers	$	69,279		$	140,522
Preferred dividends		(8,367	)		(8,367	)
Net income attributable to common shareholders	$	60,912		$	132,155

Per share data:
Basic	$	0.29		$	0.62
Diluted	$	0.29		$	0.62

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

SITE Centers Corp.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited; in thousands)


	Three Months					Nine Months
	Ended September 30,					Ended September 30,
	2023		2022			2023			2022
Net income	$	48,642	$	66,213		$	69,297		$	140,577
Other comprehensive income:
Change in cash flow hedges, net of amount reclassed to earnings		1,930		9,782			3,017			9,782
Total other comprehensive income		1,930		9,782			3,017			9,782
Comprehensive income	$	50,572	$	75,995		$	72,314		$	150,359
Comprehensive income attributable to non-controlling interests		—		(18	)		(18	)		(55	)
Total comprehensive income attributable to SITE Centers	$	50,572	$	75,977		$	72,296		$	150,304

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

SITE Centers Corp.

CONSOLIDATED STATEMENTS OF EQUITY

(unaudited; in thousands)


	SITE Centers Equity

	Preferred Shares		Common Shares		Additional Paid-in Capital			Accumulated Distributions in Excess of Net Income			Deferred Compensation Obligation			Accumulated Other Comprehensive Income		Treasury Stock at Cost			Non- Controlling Interests			Total
Balance, December 31, 2022	$	175,000	$	21,437	$	5,974,216		$	(4,046,370	)	$	5,025		$	9,038	$	(51,518	)	$	5,794		$	2,092,622
Issuance of common shares related to stock plans		—		—		13			—			—			—		—			—			13
Repurchase of common shares		—		—		—			—			—			—		(26,611	)		—			(26,611	)
Stock-based compensation, net		—		—		(6,370	)		—			(84	)		—		5,303			—			(1,151	)
Repurchase of OP units		—		—		4,059			—			—			—		—			(5,794	)		(1,735	)
Distributions to non-controlling interests		—		—		—			—			—			—		—			(18	)		(18	)
Dividends declared-common shares		—		—		—			(54,586	)		—			—		—			—			(54,586	)
Dividends declared-preferred shares		—		—		—			(5,578	)		—			—		—			—			(5,578	)
Comprehensive income		—		—		—			20,637			—			1,087		—			18			21,742
Balance, June 30, 2023		175,000		21,437		5,971,918			(4,085,897	)		4,941			10,125		(72,826	)		-			2,024,698
Issuance of common shares related to stock plans		—		—		7			—			—			—		—			—			7
Stock-based compensation, net		—		—		977			—			112			—		451			—			1,540
Dividends declared-common shares		—		—		—			(27,311	)		—			—		—			—			(27,311	)
Dividends declared-preferred shares		—		—		—			(2,789	)		—			—		—			—			(2,789	)
Comprehensive income		—		—		—			48,642			—			1,930		—			—			50,572
Balance, September 30, 2023	$	175,000	$	21,437	$	5,972,902		$	(4,067,355	)	$	5,053		$	12,055	$	(72,375	)	$	—		$	2,046,717


	SITE Centers Equity

	Preferred Shares		Common Shares		Additional Paid-in Capital			Accumulated Distributions in Excess of Net Income			Deferred Compensation Obligation		Accumulated Other Comprehensive (Loss) Income		Treasury Stock at Cost			Non- Controlling Interests			Total
Balance, December 31, 2021	$	175,000	$	21,129	$	5,934,166		$	(4,092,783	)	$	4,695	$	—	$	(5,349	)	$	5,794		$	2,042,652
Issuance of common shares related to stock plans		—		65		6			—			—		—		—			—			71
Issuance of common shares for cash offering		—		243		36,614			—			—		—		—			—			36,857
Stock-based compensation, net		—		—		2,649			—			8		—		(4,498	)		—			(1,841	)
Distributions to non-controlling interests		—		—		—			—			—		—		—			(37	)		(37	)
Dividends declared-common shares		—		—		—			(55,810	)		—		—		—			—			(55,810	)
Dividends declared-preferred shares		—		—		—			(5,578	)		—		—		—			—			(5,578	)
Comprehensive income		—		—		—			74,327			—		—		—			37			74,364
Balance, June 30, 2022		175,000		21,437		5,973,435			(4,079,844	)		4,703		—		(9,847	)		5,794			2,090,678
Issuance of common shares related to stock plans		—		—		6			—			—		—		—			—			6
Expenses for cash offering		—		—		(126	)		—			—		—		—			—			(126	)
Stock-based compensation, net		—		—		686			—			162		—		581			—			1,429
Repurchase of common shares		—		—		—			—			—		—		(20,000	)		—			(20,000	)
Distributions to non-controlling interests		—		—		—			—			—		—		—			(18	)		(18	)
Dividends declared-common shares		—		—		—			(27,740	)		—		—		—			—			(27,740	)
Dividends declared-preferred shares		—		—		—			(2,789	)		—		—		—			—			(2,789	)
Comprehensive income		—		—		—			66,195			—		9,782		—			18			75,995
Balance, September 30, 2022	$	175,000	$	21,437	$	5,974,001		$	(4,044,178	)	$	4,865	$	9,782	$	(29,266	)	$	5,794		$	2,117,435

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

SITE Centers Corp.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited; in thousands)


	Nine Months
	Ended September 30,
	2023			2022
Cash flow from operating activities:
Net income	$	69,297		$	140,577
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation and amortization		165,535			152,564
Stock-based compensation		5,530			5,430
Amortization and write-off of debt issuance costs and fair market value of debt adjustments		3,217			3,929
Equity in net income of joint ventures		(6,495	)		(27,468	)
Operating cash distributions from joint ventures		258			1,111
Gain on sale and change in control of interests		(3,749	)		(45,554	)
Gain on disposition of real estate, net		(31,230	)		(31,292	)
Impairment charges		—			2,536
Assumption of buildings due to ground lease terminations		—			(2,900	)
Net change in accounts receivable		(1,180	)		95
Net change in accounts payable and accrued expenses		7,323			8,025
Net change in other operating assets and liabilities		(16,457	)		(1,567	)
Total adjustments		122,752			64,909
Net cash flow provided by operating activities		192,049			205,486
Cash flow from investing activities:
Real estate acquired, net of liabilities and cash assumed		(102,095	)		(329,570	)
Real estate developed and improvements to operating real estate		(80,782	)		(87,902	)
Proceeds from sale of joint venture interests		3,405			39,250
Proceeds from disposition of real estate		112,292			55,866
Equity contributions to joint ventures		(118	)		(143	)
Repayment of joint venture advance, net		318			—
Distributions from unconsolidated joint ventures		9,468			39,656
Net cash flow used for investing activities		(57,512	)		(282,843	)
Cash flow from financing activities:
Proceeds from revolving credit facility, net		135,000			80,000
Proceeds from unsecured term loan		—			100,000
Payment of debt issuance costs		—			(7,598	)
Repayment of senior notes		(87,209	)		—
Repayment of mortgage debt		(16,224	)		(35,577	)
Proceeds from issuance of common shares, net of offering expenses		—			36,731
Repurchase of common shares in conjunction with equity award plans and dividend reinvestment plan		(5,224	)		(5,873	)
Repurchase of common shares		(26,611	)		(20,000	)
Repurchase of operating partnership units		(1,735	)		—
Distributions to redeemable operating partnership units		(37	)		(53	)
Dividends paid		(90,450	)		(89,523	)
Net cash flow (used for) provided by financing activities		(92,490	)		58,107

Net increase (decrease) in cash, cash equivalents and restricted cash		42,047			(19,250	)
Cash, cash equivalents and restricted cash, beginning of period		21,214			43,252
Cash, cash equivalents and restricted cash, end of period	$	63,261		$	24,002

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

Notes to Condensed Consolidated Financial Statements

Nature of Business and Financial Statement Presentation

Nature of Business

SITE Centers Corp. and its related consolidated real estate subsidiaries (collectively, the “Company” or “SITE Centers”) and unconsolidated joint ventures are primarily engaged in the business of owning, leasing, acquiring, redeveloping, developing and managing shopping centers. Unless otherwise provided, references herein to the Company or SITE Centers include SITE Centers Corp. and its wholly-owned subsidiaries. The Company’s tenant base includes a mixture of national and regional retail chains and local tenants. Consequently, the Company’s credit risk is primarily concentrated in the retail industry.

Use of Estimates in Preparation of Financial Statements

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates.

Unaudited Interim Financial Statements

These financial statements have been prepared by the Company in accordance with GAAP for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all information and footnotes required by GAAP for complete financial statements. However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the results of the periods presented. The results of operations for the three and nine months ended September 30, 2023 and 2022, are not necessarily indicative of the results that may be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Principles of Consolidation

The consolidated financial statements include the results of the Company and all entities in which the Company has a controlling interest or has been determined to be the primary beneficiary of a variable interest entity. All significant intercompany balances and transactions have been eliminated in consolidation. Investments in real estate joint ventures in which the Company has the ability to exercise significant influence, but does not have financial or operating control, are accounted for using the equity method of accounting. Accordingly, the Company’s share of the earnings (or loss) of these joint ventures is included in consolidated net income (loss).

Statements of Cash Flows and Supplemental Disclosure of Non-Cash Investing and Financing Information

Non-cash investing and financing activities are summarized as follows (in millions):


	Nine Months
	Ended September 30,
	2023		2022
Consolidation of the net assets of previously unconsolidated joint ventures	$	—	$	42.8
Net assets acquired from an unconsolidated joint venture	—			8.5
Dividends declared, but not paid		30.1		30.5
Accounts payable related to construction in progress		12.0		12.6
Repurchase of OP units		4.1	—
Assumption of buildings due to ground lease terminations		—		2.9

Fee and Other Income

Fee and Other Income on the consolidated statements of operations includes revenue from contracts with customers, which is primarily from the Company’s unconsolidated joint ventures (Note 2).

Investments in and Advances to Joint Ventures

At September 30, 2023 and December 31, 2022, the Company had ownership interests in various unconsolidated joint ventures that had investments in 13 and 18 shopping center properties, respectively. Condensed combined financial information of the Company’s unconsolidated joint venture investments is as follows (in thousands):


	September 30, 2023			December 31, 2022
Condensed Combined Balance Sheets
Land	$	180,588		$	212,326
Buildings		556,898			643,334
Fixtures and tenant improvements		55,500			70,636
		792,986			926,296
Less: Accumulated depreciation		(181,799	)		(220,642	)
		611,187			705,654
Construction in progress and land		1,012			1,965
Real estate, net		612,199			707,619
Cash and restricted cash		51,363			44,809
Receivables, net		9,054			11,671
Other assets, net		29,051			36,272
	$	701,667		$	800,371

Mortgage debt	$	466,631		$	535,093
Notes and accrued interest payable to the Company		2,759			2,972
Other liabilities		38,469			41,588
		507,859			579,653
Accumulated equity		193,808			220,718
	$	701,667		$	800,371

Company's share of accumulated equity	$	37,442		$	42,644
Basis differentials		762			(707	)
Deferred development fees, net of portion related to the Company's interest		(133	)		(301	)
Amounts payable to the Company		2,759			2,972
Investments in and Advances to Joint Ventures, net	$	40,830		$	44,608


	Three Months					Nine Months
	Ended September 30,					Ended September 30,
	2023		2022			2023		2022
Condensed Combined Statements of Operations
Revenues from operations	$	21,682	$	25,855		$	70,442	$	105,666
Expenses from operations:
Operating expenses		5,552		6,975			18,234		28,991
Impairment charges		—		9,010			—		17,550
Depreciation and amortization		7,806		9,450			25,149		37,123
Interest expense		5,668		8,241			19,016		26,560
Other expense, net		2,084		6,120			7,022		11,114
		21,110		39,796			69,421		121,338
Income (loss) before gain on disposition of real estate		572		(13,941	)		1,021		(15,672	)
Gain on disposition of real estate, net		973		119,813			21,151		121,505
Net income attributable to unconsolidated joint ventures	$	1,545	$	105,872		$	22,172	$	105,833
Company's share of equity in net income of joint ventures	$	491	$	21,276		$	4,677	$	21,898
Basis differential adjustments(A)		27		4,642			1,818		5,570
Equity in net income of joint ventures	$	518	$	25,918		$	6,495	$	27,468

(A)

The difference between the Company’s share of net income, as reported above, and the amounts included in the Company’s consolidated statements of operations is attributable to the amortization of basis differentials, the recognition of deferred gains and differences in gain (loss) on sale of certain assets recognized due to the basis differentials.

Revenues earned by the Company related to all of the Company’s unconsolidated joint ventures are as follows (in millions):


	Three Months				Nine Months
	Ended September 30,				Ended September 30,
	2023		2022		2023		2022
Revenue from contracts:
Asset and property management fees	$	1.4	$	1.7	$	4.4	$	6.2
Leasing commissions and development fees		0.1		0.6		0.4		1.6
		1.5		2.3		4.8		7.8
Other		0.1		0.2		0.4		0.8
	$	1.6	$	2.5	$	5.2	$	8.6

Disposition of Shopping Centers

During the nine months ended September 30, 2023, the DDRM Joint Venture sold five shopping centers for an aggregate sales price of $112.2 million ($22.4 million at the Company’s share). The proceeds were used to repay mortgage indebtedness of the joint venture, general corporate purposes of the joint venture and distributions to the partners.

Disposition of Joint Venture Interests

In 2021, one of the Company’s unconsolidated joint ventures sold its sole asset, a parcel of undeveloped land. The transaction had contingent proceeds based upon finalization of the tax returns and dissolution of the partnership. In the first quarter of 2023, the contingencies were resolved and the Company recorded a Gain on Sale of Interests of $3.7 million.

In 2022, the Company acquired its joint venture partner’s 80% interest in one asset owned by the DDRM Properties Joint Venture (Casselberry Commons, Casselberry, Florida) and stepped up the previous 20% interest due to change in control, sold its 20% interest in the SAU Joint Venture to its partner, the State of Utah, and sold its 50% interest in Lennox Town Center to its partner. For the year ended December 31, 2022, these transactions aggregated a Gain on Sale and Change in Control of Interests of $45.5 million.

Acquisitions

During the nine months ended September 30, 2023, the Company acquired the following convenience centers (in millions):


Asset	Location	Date Acquired	Purchase Price
Parker Keystone	Denver, Colorado	January 2023	$	11.0
Foxtail Center	Baltimore, Maryland	January 2023		15.1
Barrett Corners	Atlanta, Georgia	April 2023		15.6
Alpha Soda Center	Atlanta, Georgia	May 2023		9.4
Briarcroft Center	Houston, Texas	May 2023		23.5
Towne Crossing Shops	Richmond, Virginia	July 2023		4.2
Oaks at Slaughter	Austin, Texas	August 2023		14.1
Marketplace at 249	Houston, Texas	September 2023		9.8

The fair value of the acquisitions above was allocated as follows (in thousands):


				Weighted-Average Amortization Period (in Years)
Land	$	35,608		N/A
Buildings		58,388		(A)
Tenant improvements		2,502		(A)
In-place leases (including lease origination costs and fair market value of leases)		10,425		7.1
		106,923
Less: Below-market leases		(4,181	)	14.6
Less: Other liabilities assumed		(647	)	N/A
Net assets acquired	$	102,095

(A)

Depreciated in accordance with the Company’s policy.

The total consideration for these assets was paid in cash. Included in the Company’s consolidated statements of operations for the three and nine months ended September 30, 2023, was $1.6 million and $3.4 million, respectively, in total revenues from the date of acquisition through September 30, 2023, for the properties acquired in 2023.

Other Assets and Intangibles, net

Other assets and intangibles consist of the following (in thousands):


	September 30, 2023		December 31, 2022
Intangible assets, net:
In-place leases	$	52,940	$	61,918
Above-market leases		5,061		6,206
Lease origination costs		8,103		8,093
Tenant relationships		8,358		11,531
Total intangible assets(A)		74,462		87,748
Operating lease ROU assets		17,665		18,197
Other assets:
Prepaid expenses		10,839		6,721
Swap receivable		11,520		8,138
Other assets		2,118		3,491
Deposits		2,676		3,188
Deferred charges, net		5,875		7,526
Total other assets, net	$	125,155	$	135,009

Below-market leases, net (other liabilities)(B)	$	48,833	$	59,825

(A)

The Company recorded amortization expense related to its intangibles, excluding above- and below-market leases, of $5.5 million and $7.1 million for the three months ended September 30, 2023 and 2022, respectively and $17.7 million and $20.7 million for the nine months ended September 30, 2023 and 2022, respectively.

(B)

Change as a result of the write-off of unamortized below-market lease intangibles due to the early termination of tenant leases of $8.6 million for the nine months ended September 30, 2023.

Revolving Credit Facility

As of September 30, 2023, the Company’s Revolving Credit Facility (as defined below) had outstanding borrowings of $135.0 million with a weighted-average interest rate of 6.0%. In March 2023, the Company entered into a 5.0% interest rate cap with respect to the variable-rate (the Secured Overnight Financing Rate or “SOFR”) component applicable to borrowings up to $100 million under the Revolving Credit Facility, of which $75.0 million was designated as an effective hedge at September 30, 2023. The interest rate cap expires in April 2024.

The Company maintains a revolving credit facility with a syndicate of financial institutions and JPMorgan Chase Bank, N.A., as administrative agent (the “Revolving Credit Facility”). The Revolving Credit Facility provides for borrowings of up to $950 million if certain borrowing conditions are satisfied, and an accordion feature for expansion of availability up to $1.45 billion, provided that new lenders agree to the existing terms of the facility or existing lenders increase their commitment level and subject to other customary conditions precedent. The Revolving Credit Facility maturity date is June 2026 subject to two six-month options to extend the maturity to June 2027 upon the Company’s request (subject to satisfaction of certain conditions).

The Company’s borrowings under the Revolving Credit Facility bear interest at variable rates at the Company’s election, based on either (i) the SOFR rate plus a 10 basis-point spread adjustment plus an applicable margin (0.85% at September 30, 2023) or (ii) the alternative base rate plus an applicable margin (0% at September 30, 2023). The Revolving Credit Facility also provides for an annual facility fee, which was 20 basis points on the entire facility at September 30, 2023. The applicable margins and facility fee vary depending on the Company’s long-term senior unsecured debt ratings from Moody’s Investors Service, Inc., S&P Global Ratings and Fitch Investor Services, Inc. (or their respective successors). The Revolving Credit Facility also features a sustainability-linked pricing component whereby the applicable interest rate margin can be adjusted by one or two basis points if the Company meets certain sustainability performance targets. The Company is required to comply with certain covenants under the Revolving Credit Facility relating to total outstanding indebtedness, secured indebtedness, value of unencumbered real estate assets and fixed charge coverage. The Company was in compliance with these financial covenants at September 30, 2023.

Financial Instruments and Fair Value Measurements

The following methods and assumptions were used by the Company in estimating fair value disclosures of financial instruments:

Measurement of Fair Value

At September 30, 2023, the Company used a pay-fixed interest rate swap to manage some of its exposure to changes in benchmark-interest rates. The estimated fair value was determined using the market standard methodology of netting the discounted fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of interest rates (forward curves) derived from observable market interest rate curves. In addition, credit valuation adjustments, which consider the impact of any credit enhancements to the contract, are incorporated in the fair value to account for potential non-performance risk, including the Company’s own non-performance risk and the respective counterparty’s non-performance risk. The Company determined that the significant inputs used to value its derivative fell within Level 2 of the fair value hierarchy.

Items Measured on Fair Value on a Recurring Basis

The Company maintains an interest rate swap agreement (included in Other Assets) measured at fair value on a recurring basis as of September 30, 2023. The following table presents information about the Company’s financial assets and liabilities and indicates the fair value hierarchy of the valuation techniques used by the Company to determine such fair value (in millions):


			Fair Value Measurements
Assets (Liabilities):	Level 1		Level 2		Level 3		Total
September 30, 2023
Derivative Financial Instruments	$	—	$	11.5	$	—	$	11.5
December 31, 2022
Derivative Financial Instruments	$	—	$	8.1	$	—	$	8.1

Cash and Cash Equivalents, Restricted Cash, Accounts Receivable, Accounts Payable and Other Liabilities

The carrying amounts reported in the Company’s consolidated balance sheets for these financial instruments approximated fair value because of their short-term maturities.

Debt

The following methods and assumptions were used by the Company in estimating fair value disclosures of debt. The fair market value of senior notes is determined using a pricing model to approximate the trading price of the Company’s public debt. The fair market value for all other debt is estimated using a discounted cash flow technique that incorporates future contractual interest and principal payments and a market interest yield curve with adjustments for duration, optionality and risk profile, including the Company’s non-performance risk and loan to value. The Company’s senior notes and all other debt are classified as Level 2 and Level 3, respectively, in the fair value hierarchy. Considerable judgment is necessary to develop estimated fair values of financial instruments. Accordingly, the estimates presented are not necessarily indicative of the amounts the Company could realize on disposition of the financial instruments.

Carrying values that are different from estimated fair values are summarized as follows (in thousands):


	September 30, 2023				December 31, 2022
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Senior Notes	$	1,368,282	$	1,291,178	$	1,453,923	$	1,378,485
Revolving Credit Facility and term loan		333,772		335,000		198,521		200,000
Mortgage Indebtedness		38,100		36,749		54,577		51,936
	$	1,740,154	$	1,662,927	$	1,707,021	$	1,630,421

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of its debt funding and, from time to time, through the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt

or payment of future known and uncertain cash amounts, the values of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to manage its exposure to interest rate movements. To accomplish this objective, the Company generally uses swaps and caps as part of its interest rate risk management strategy. The swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

As of September 30, 2023, the Company had one effective swap with a notional amount of $200.0 million, expiring in June 2027, which converts the variable-rate SOFR component of the interest rate applicable to its term loan to a fixed rate of 2.75%.

The effective portion of changes in the fair value of derivatives designated, and that qualify, as a cash flow hedge is recorded in Accumulated Other Comprehensive Income and is subsequently reclassified into earnings, into interest expense, in the period that the hedged forecasted transaction affects earnings. All components of the swap were included in the assessment of hedge effectiveness. The Company expects to reflect within the next 12 months, a decrease to interest expense (and a corresponding increase to earnings) of approximately $5.0 million.

The Company is exposed to credit risk in the event of non-performance by the counterparty to the swap if the derivative position has a positive balance. The Company believes it mitigates its credit risk by entering into swaps with major financial institutions. The Company continually monitors and actively manages interest costs on its variable-rate debt portfolio and may enter into additional interest rate swap positions or other derivative interest rate instruments based on market conditions. The Company has not entered, and does not plan to enter, into any derivative financial instruments for trading or speculative purposes.

Credit Risk-Related Contingent Features

The Company has an agreement with the swap counterparty that contains a provision whereby if the Company defaults on certain of its indebtedness, the Company could also be declared in default on the swap, resulting in an acceleration of payment under the swap.

Equity

Common Share Dividends


	Three Months				Nine Months
	Ended September 30,				Ended September 30,
	2023		2022		2023		2022
Common share dividends declared per share	$	0.13	$	0.13	$	0.39	$	0.39

Common Shares Repurchased

In the first quarter of 2023, the Company repurchased 1.5 million of its common shares in open market transactions at an aggregate cost of $20.0 million, or $13.43 per share. In late December 2022, the Company repurchased 0.5 million common shares at an aggregate cost of $6.6 million, which settled in January 2023.

Non-Controlling Interests

In May 2023, the Company repurchased 140,633 Operating Partnership units (“OP Units”) outstanding for cash at an aggregate cost of $1.7 million. The gain on the transaction was reflected in Additional Paid-in-Capital.

Other Comprehensive Income

The changes in Accumulated Other Comprehensive Income by component are as follows (in thousands):


Balance, December 31, 2022	$	9,038
Change in cash flow hedges		6,350
Amounts reclassified from accumulated other comprehensive income to interest expense		(3,333	)
Balance, September 30, 2023 (A)	$	12,055

(A) Includes derivative financial instruments entered into by the Company on its term loan (Note 6) and by an unconsolidated joint venture.

Earnings Per Share

The following table provides a reconciliation of net income and the number of common shares used in the computations of “basic” earnings per share (“EPS”), which utilizes the weighted-average number of common shares outstanding without regard to dilutive potential common shares, and “diluted” EPS, which includes all such shares (in thousands, except per share amounts).


	Three Months						Nine Months
	Ended September 30,						Ended September 30,
	2023			2022			2023			2022
Numerators – Basic and Diluted
Net income	$	48,642		$	66,213		$	69,297		$	140,577
Income attributable to non-controlling interests		—			(18	)		(18	)		(55	)
Preferred dividends		(2,789	)		(2,789	)		(8,367	)		(8,367	)
Earnings attributable to unvested shares and OP Units		(100	)		(117	)		(295	)		(368	)
Net income attributable to common shareholders after allocation to participating securities	$	45,753		$	63,289		$	60,617		$	131,787
Denominators – Number of Shares
Basic—Average shares outstanding		209,286			213,846			209,505			213,278
Assumed conversion of dilutive securities:
PRSUs		113			341			241			441
OP Units		—			141			—			141
Diluted—Average shares outstanding		209,399			214,328			209,746			213,860
Earnings Per Share:
Basic	$	0.22		$	0.30		$	0.29		$	0.62
Diluted	$	0.22		$	0.30		$	0.29		$	0.62

For the three and nine months ended September 30, 2023, Performance Restricted Stock Units (“PRSUs”) issued to certain executives in March 2021 were considered in the computation of diluted EPS. The PRSUs issued in March 2022 were considered in the computation of diluted EPS for the three months ended September 30, 2023 and not considered in the computation of diluted EPS for the nine months ended September 30, 2023, because they were antidilutive. The PRSUs issued in March 2023 were not considered in the computation of diluted EPS for the three months ended September 30, 2023, because they were antidilutive and were considered in the computation of diluted EPS for the nine months ended September 30, 2023. For the three and nine months ended September 30, 2022, PRSUs issued to certain executives in March 2020 were considered in the computation of diluted EPS, PRSUs issued in March 2021 and 2022 were not considered in the computation of diluted EPS, because they were antidilutive. In March 2023, the Company issued 559,559 common shares in settlement of PRSUs granted in 2020.

10.

Subsequent Events

In October 2023, the Company acquired two convenience centers for an aggregate price of $26.0 million and sold six shopping centers for an aggregate price of $527.3 million.

Also in October 2023, the Company closed on a five-year, $100 million mortgage financing for Nassau Park Pavilion (Princeton, New Jersey).

On October 30, 2023, the Company declared a dividend of $0.13 per common share, payable on January 5, 2024, to shareholders of record at the close of business on December 11, 2023.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) provides readers with a perspective from management on the financial condition, results of operations and liquidity of SITE Centers Corp. and its related consolidated real estate subsidiaries (collectively, the “Company” or “SITE Centers”) and other factors that may affect the Company’s future results. The Company believes it is important to read the MD&A in conjunction with its Annual Report on Form 10-K for the year ended December 31, 2022, as well as other publicly available information.

EXECUTIVE SUMMARY

The Company is a self-administered and self-managed Real Estate Investment Trust (“REIT”) in the business of owning, leasing, acquiring, redeveloping, developing and managing shopping centers. As of September 30, 2023, the Company’s portfolio consisted of 119 shopping centers (including 13 shopping centers owned through unconsolidated joint ventures). At September 30, 2023, the Company owned approximately 25.6 million square feet of gross leasable area (“GLA”) through all its properties (wholly-owned and joint venture).

The following provides an overview of the Company’s key financial metrics (see Non-GAAP Financial Measures described later in this section) (in thousands, except per share amounts):


	Three Months				Nine Months
	Ended September 30,				Ended September 30,
	2023		2022		2023		2022
Net income attributable to common shareholders	$	45,853	$	63,406	$	60,912	$	132,155
FFO attributable to common shareholders	$	67,845	$	61,637	$	187,263	$	188,729
Operating FFO attributable to common shareholders	$	69,869	$	62,833	$	193,893	$	190,845
Earnings per share – Diluted	$	0.22	$	0.30	$	0.29	$	0.62

For the nine months ended September 30, 2023, the decrease in net income attributable to common shareholders, as compared to the prior-year period, primarily was the result of the gain on sale of joint venture assets recognized in 2022. Additionally, results for the nine months ended September 30, 2023 were impacted by lower joint venture management fees and income, higher interest expense, higher depreciation expense and an employee separation charge included within general and administrative expenses relating to the restructuring plan initiated in May 2023, partially offset by base rent growth, the write-off of below-market lease intangibles and the net impact of property acquisitions. Third quarter 2023 included $8.1 million of income related to below-market lease adjustments primarily from terminated leases from units previously occupied by Bed, Bath & Beyond.

Plan to Separate Convenience Retail Portfolio

In October 2023, the Company announced a plan to spin off its unanchored convenience retail assets into a separate, publicly-traded REIT to be named Curbline Properties Corp. (“Curbline”) in recognition of the distinct characteristics and opportunities within the Company’s unanchored, grocery and power center portfolios. Convenience retail properties are positioned on the curbline of well-trafficked intersections, offering enhanced access and visibility relative to other retail property types. The properties generally consist of a ubiquitous row of primarily shop units along with dedicated parking leased to a diversified mixture of national and local service and restaurant tenants that cater to daily convenience trips from the growing suburban population. The property type’s site plan and depth of leasing prospects generally reduce operating capital expenditures and provide significant tenant diversification.

As of September 30, 2023, the Company’s portfolio of convenience assets consisted of 61 wholly-owned properties, including 27 assets separated or in the process of being separated from existing Company properties. The median asset size of the Curbline portfolio as of September 30, 2023 was approximately 20,000 square feet with 91% of base rent generated by units less than 10,000 square feet. Curbline is expected to be in a net cash position at the time of its separation from the Company with cash on hand, a preferred investment in the Company, and an unsecured, undrawn line of credit. Curbline is not expected to have any debt outstanding at the time of its separation from the Company and therefore Curbline is expected to have significant access to sources of debt capital in order to fund significant asset growth. The Company may acquire additional convenience properties prior to the spin-off, which will be included in the Curbline portfolio, funded through additional Company dispositions, retained cash flow and cash on hand. The Company currently expects to complete the separation of Curbline in the second half of 2024.

After giving effect to the spin-off of Curbline and dispositions consummated through September 30, 2023, the Company’s portfolio will include 83 properties, including 13 joint venture properties. The Company has obtained a delayed-draw financing commitment for a $1.1 billion mortgage facility (further described below), which is expected to close prior to the consummation of the

spin-off, with loan and additional asset sale proceeds expected to be used to repay of all of the Company’s outstanding unsecured indebtedness. Following the separation of Curbline, the Company intends to continue to maximize value though its leasing and tactical redevelopment activities and may opportunistically realize value through additional asset sales where appropriate.

Company Activity

The growth opportunities within the Company’s core property operations include rental rate increases, 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 external 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, acquisitions, including opportunistic investments, and tactical redevelopment activity. The Company expects that its future acquisition activity prior to the consummation of the Curbline spin-off will largely focus on unanchored, convenience retail properties that offer enhanced prospects for cash flow growth through rent increases and lower capital expenditure requirements.

Transactional and investment highlights for the Company through October 27, 2023, include the following:

•

Acquired ten convenience centers for an aggregate purchase price of $128.7 million, including Parker Keystone (Denver, Colorado) for $11.0 million, Estero Crossing (Estero, Florida) for $17.1 million, Alpha Soda Center (Atlanta, Georgia) for $9.4 million, Barrett Corners (Atlanta, Georgia) for $15.6 million, Foxtail Center (Baltimore, Maryland) for $15.1 million, Point at University (Charlotte, North Carolina) for $8.9 million, Oaks at Slaughter (Austin, Texas) for $14.1 million, Briarcroft Center (Houston, Texas) for $23.5 million, Marketplace at 249 (Houston, Texas) for $9.8 million and Towne Crossing Shops (Richmond, Virginia) for $4.2 million;

•

Sold 11 wholly-owned shopping centers for an aggregate sales price of $645.6 million;

•

Sold five unconsolidated shopping centers for an aggregate sales price of $112.2 million ($22.4 million at the Company’s share);

•

Closed on a five-year, $100 million mortgage financing for Nassau Park Pavilion (Princeton, New Jersey);

•

Repurchased 1.5 million of its common shares in open market transactions in the first quarter of 2023 at an aggregate cost of $20.0 million, or $13.43 per share, with the remaining proceeds from the sale of wholly‑owned properties in the fourth quarter of 2022 and proceeds from the sale of joint venture properties;

•

Repurchased 140,633 OP Units in a privately negotiated transaction at an aggregate cost of $1.7 million, or $12.34 per unit and

•

Recorded charges of $4.4 million through September 30, 2023 primarily related to employee separation costs as part of a restructuring plan to align the Company’s cost structure and technology platform with current and future expected operations.

Company Operational Highlights

Operational highlights for the Company through September 30, 2023, include the following:

•

Leased approximately 3.1 million square feet of GLA, including 91 new leases and 259 renewals for a total of 350 leases. As of September 30, 2023, the Company has addressed substantially all of its remaining 2023 lease expirations;

•

For the comparable leases executed in the nine months ended September 30, 2023, the Company generated cash lease spreads on a pro rata basis of 33.8% for new leases and 7.2% for renewals. Leasing spreads are a key metric in real estate, representing the percentage increase of rental rates on new and renewal leases over rental rates on existing leases, though leasing spreads exclude consideration of the amount of capital expended in connection with new leasing activity. The Company’s cash lease spreads calculation includes only those deals that were executed within one year of the date the prior tenant vacated, in addition to other factors that limit comparability, and as a result, is a useful benchmark to compare the average annualized base rent of expiring leases with the comparable executed market rental rates;

•

Total portfolio average annualized base rent per square foot increased to $20.20 at September 30, 2023, as compared to $19.89 at June 30, 2023 and $19.11 at September 30, 2022, all on a pro rata basis;

•

The aggregate occupancy of the Company’s operating shopping center portfolio was 92.2% at September 30, 2023, as compared to 92.3% at June 30, 2023 and 91.4% at September 30, 2022, all on a pro rata basis. The sequential decline was primarily related to the recapture of the remaining units leased by Bed, Bath & Beyond and the sale of properties with an average leased rate of 98.5%, partially offset by new leasing activity and

•

For new leases executed in the nine months ended September 30, 2023, the Company expended a weighted-average cost of tenant improvements and lease commissions estimated at $4.82 per rentable square foot, on a pro rata basis, over the lease term, as compared to $7.42 per rentable square foot in 2022. The Company generally does not expend a significant amount of capital on lease renewals.

RESULTS OF OPERATIONS

Consolidated shopping center properties owned as of January 1, 2022, are referred to herein as the “Comparable Portfolio Properties.”

Revenues from Operations (in thousands)


	Three Months
	Ended September 30,
	2023		2022		$ Change
Rental income(A)	$	142,498	$	135,123	$	7,375
Fee and other income		2,261		3,720		(1,459	)
Total revenues	$	144,759	$	138,843	$	5,916

	Nine Months
	Ended September 30,
	2023		2022		$ Change
Rental income(A)	$	414,324	$	401,210	$	13,114
Fee and other income(B)		7,285		12,635		(5,350	)
Total revenues	$	421,609	$	413,845	$	7,764

(A)

The following tables summarize the key components of the rental income (in thousands):


	Three Months
	Ended September 30,
Contractual Lease Payments	2023			2022			$ Change
Base and percentage rental income	$	106,827		$	99,326		$	7,501
Recoveries from tenants		34,753			33,214			1,539
Uncollectible revenue		(811	)		(381	)		(430	)
Lease termination fees, ancillary and other rental income		1,729			2,964			(1,235	)
Total contractual lease payments	$	142,498		$	135,123		$	7,375

	Nine Months
	Ended September 30,
Contractual Lease Payments	2023			2022			$ Change
Base and percentage rental income(1)	$	305,578		$	291,483		$	14,095
Recoveries from tenants(2)		104,570			99,811			4,759
Uncollectible revenue(3)		(1,126	)		1,889			(3,015	)
Lease termination fees, ancillary and other rental income		5,302			8,027			(2,725	)
Total contractual lease payments	$	414,324		$	401,210		$	13,114

(1)

The changes in base and percentage rental income for the nine months ended September 30, 2023, were due to the following (in millions):


	Increase (Decrease)
Acquisition of shopping centers	$	9.3
Comparable Portfolio Properties		15.6
Disposition of shopping centers		(10.5	)
Straight-line rents		(0.3	)
Total	$	14.1

The increase within the Comparable Portfolio Properties includes the write-off of approximately $8.4 million of below‑market lease intangibles due to the early termination of tenant leases.

At September 30, 2023 and 2022, the Company owned 106 and 103 wholly-owned properties, respectively, with an aggregate occupancy rate of 92.3% and 91.6%, respectively, and average annualized base rent per occupied square foot of $20.29 and $19.18, respectively.

(2)

Recoveries from tenants were approximately 82.0% and 78.1% of operating expenses and real estate taxes for the nine months ended September 30, 2023 and 2022, respectively.

(3)

The net amount reported was primarily attributable to the impact of tenants on the cash basis of accounting and related reserve adjustments.

(B)

Fee and Other Income was primarily earned from the Company’s unconsolidated joint ventures. The decrease primarily relates to lower fee revenue from joint ventures as a result of asset sales. Decreases in the number of assets under management will impact the amount of revenue recorded in future periods. The Company’s joint venture partners may also elect to terminate their joint venture arrangements with the Company in connection with a change in investment strategy or otherwise. See “— Sources and Uses of Capital” included elsewhere herein.

Expenses from Operations (in thousands)


	Three Months
	Ended September 30,
	2023		2022		$ Change
Operating and maintenance	$	20,986	$	22,314	$	(1,328	)
Real estate taxes		20,543		20,423		120
General and administrative		11,259		10,799		460
Depreciation and amortization		52,821		51,179		1,642
	$	105,609	$	104,715	$	894

	Nine Months
	Ended September 30,
	2023		2022		$ Change
Operating and maintenance(A)	$	66,628	$	66,528	$	100
Real estate taxes(A)		60,875		61,230		(355	)
Impairment charges		—		2,536		(2,536	)
General and administrative(B)		35,935		34,403		1,532
Depreciation and amortization(A)		165,535		152,564		12,971
	$	328,973	$	317,261	$	11,712

(A)

The changes for the nine months ended September 30, 2023, were due to the following (in millions):


	Operating and Maintenance			Real Estate Taxes			Depreciation and Amortization
Acquisition of shopping centers	$	2.3		$	2.7		$	6.0
Comparable Portfolio Properties		0.4			(0.1	)		13.7
Disposition of shopping centers		(2.6	)		(3.0	)		(6.7	)
	$	0.1		$	(0.4	)	$	13.0

The increase in depreciation for the Comparable Portfolio Properties was primarily the result of the change in useful life of several assets.

(B)

General and administrative expenses for the nine months ended September 30, 2023 and 2022, were approximately 7.3% and 6.6% of total revenues (excluding uncollectible revenue), respectively, including total revenues of unconsolidated joint ventures for the comparable periods. In May 2023, the Company initiated a restructuring plan that included a voluntary retirement offer (“VRO”) and other costs to align the Company’s cost structure and technology platform with current and future expected operations and has recorded aggregate charges to general and administrative costs of $4.0 million for the nine months ended September 30, 2023. The Company expects to record the balance of the charges in the fourth quarter of 2023. For the nine months ended September 30, 2023, general and administrative expenses of $35.9 million, less the separation charges of $4.0 million, were approximately 6.5% of total revenues described above. The Company continues to expense certain internal leasing salaries, legal salaries and related expenses associated with leasing space.

Other Income and Expenses (in thousands)


	Three Months
	Ended September 30,
	2023			2022			$ Change
Interest expense	$	(21,147	)	$	(20,139	)	$	(1,008	)
Other income (expense), net		(690	)		(501	)		(189	)
	$	(21,837	)	$	(20,640	)	$	(1,197	)

	Nine Months
	Ended September 30,
	2023			2022			$ Change
Interest expense(A)	$	(61,991	)	$	(57,306	)	$	(4,685	)
Other income (expense), net		(2,011	)		(2,152	)		141
	$	(64,002	)	$	(59,458	)	$	(4,544	)

(A)

The weighted-average debt outstanding and related weighted-average interest rate are as follows:


	Nine Months
	Ended September 30,
	2023			2022
Weighted-average debt outstanding (in billions)	$	1.8		$	1.8
Weighted-average interest rate		4.4	%		4.0	%

The Company’s overall balance sheet strategy is to continue to maintain substantial liquidity and prudent leverage levels and average debt maturities. The weighted-average interest rate (based on contractual rates and excluding fair market value of adjustments and debt issuance costs) was 4.3% and 4.1% at September 30, 2023 and 2022, respectively. At September 30, 2023, the weighted-average maturity (without extensions) was 2.5 years. Interest costs capitalized in conjunction with redevelopment projects were $0.3 million and $0.3 million for the three months ended September 30, 2023 and 2022, respectively, and $0.9 million and $0.8 million for the nine months ended September 30, 2023 and 2022, respectively.

Other Items (in thousands)


	Three Months
	Ended September 30,
	2023			2022			$ Change
Equity in net income of joint ventures	$	518		$	25,918		$	(25,400	)
Gain on sale and change in control of interests		—			228			(228	)
Gain on disposition of real estate, net		31,047			26,837			4,210
Tax expense of taxable REIT subsidiaries and state franchise and income taxes		(236	)		(258	)		22
Income attributable to non-controlling interests, net		—			(18	)		18

	Nine Months
	Ended September 30,
	2023			2022			$ Change
Equity in net income of joint ventures(A)	$	6,495		$	27,468		$	(20,973	)
Gain on sale and change in control of interests(B)		3,749			45,554			(41,805	)
Gain on disposition of real estate, net		31,230			31,292			(62	)
Tax expense of taxable REIT subsidiaries and state franchise and income taxes		(811	)		(863	)		52
Income attributable to non-controlling interests, net		(18	)		(55	)		37

(A)

The 2023 results include gains recorded on the sale of assets offset by the reduction of income as a result of asset sales that closed in 2023 and 2022. At September 30, 2023 and 2022, the Company had an economic investment in unconsolidated joint ventures which owned 13 and 19 shopping center properties, respectively. Joint venture property sales could significantly impact the amount of income or loss recognized in future periods and the amount of sale proceeds allocated to the Company may vary based on joint venture return calculations and promoted structures. See Note 2, “Investments in and Advances to Joint Ventures,” in the Company’s condensed consolidated financial statements included herein.

(B)

In 2023, the Company recorded a gain related to additional proceeds received related to an unconsolidated joint venture that sold a parcel of undeveloped land in Richmond Hill, Ontario, which was considered contingent at the time of the sale. In 2022, the Company recorded a gain from the acquisition of its joint venture partner’s 80% equity interest in one asset owned by the DDRM Joint Venture, a gain from the sale of its 20% interest in the SAU Joint Venture to its partner and a gain from the sale of its 50% interest in Lennox Town Center to its partner.

Net Income (in thousands)


	Three Months
	Ended September 30,
	2023		2022		$ Change
Net income attributable to SITE Centers	$	48,642	$	66,195	$	(17,553	)

	Nine Months
	Ended September 30,
	2023		2022		$ Change
Net income attributable to SITE Centers	$	69,279	$	140,522	$	(71,243	)

The decrease in net income attributable to SITE Centers, as compared to the prior-year period, was primarily attributable to the gain on sale of joint venture assets recognized in 2022. Additionally, results for the nine months ended September 30, 2023 were also impacted by lower joint venture management fees, higher interest expense, higher depreciation expense and an employee separation charge included within general and administrative expenses relating to the restructuring plan initiated in May 2023, partially offset by base rent growth, the write-off of below-market lease intangibles and the net impact of property acquisitions.

NON-GAAP FINANCIAL MEASURES

Funds from Operations and Operating Funds from Operations

Definition and Basis of Presentation

The Company believes that Funds from Operations (“FFO”) and Operating FFO, both non-GAAP financial measures, provide additional and useful means to assess the financial performance of REITs. FFO and Operating FFO are frequently used by the real estate industry, as well as securities analysts, investors and other interested parties, to evaluate the performance of REITs. The Company also believes that FFO and Operating FFO more appropriately measure the core operations of the Company and provide benchmarks to its peer group.

FFO excludes GAAP historical cost depreciation and amortization of real estate and real estate investments, which assume that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions, and many companies use different depreciable lives and methods. Because FFO excludes depreciation and amortization unique to real estate and gains and losses from property dispositions, it can provide a performance measure that, when compared year over year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, interest costs and acquisition, disposition and development activities. This provides a perspective of the Company’s financial performance not immediately apparent from net income determined in accordance with GAAP.

FFO is generally defined and calculated by the Company as net income (loss) (computed in accordance with GAAP), adjusted to exclude (i) preferred share dividends, (ii) gains and losses from disposition of real estate property and related investments, which are presented net of taxes, (iii) impairment charges on real estate property and related investments, (iv) gains and losses from changes in control and (v) certain non-cash items. These non-cash items principally include real property depreciation and amortization of intangibles, equity income (loss) from joint ventures and equity income (loss) from non-controlling interests and adding the Company’s proportionate share of FFO from its unconsolidated joint ventures and non-controlling interests, determined on a consistent basis. The Company’s calculation of FFO is consistent with the definition of FFO provided by the National Association of Real Estate Investment Trusts ("NAREIT").

The Company believes that certain charges, income and gains recorded in its operating results are not comparable or reflective of its core operating performance. Operating FFO is useful to investors as the Company removes non-comparable charges, income and gains to analyze the results of its operations and assess performance of the core operating real estate portfolio. As a result, the Company also computes Operating FFO and discusses it with the users of its financial statements, in addition to other measures such as net income (loss) determined in accordance with GAAP and FFO. Operating FFO is generally defined and calculated by the Company as FFO excluding certain charges, income and gains that management believes are not comparable and indicative of the results of the Company’s operating real estate portfolio. Such adjustments include write-off of preferred share original issuance costs, gains/losses on the early extinguishment of debt, certain transaction fee income, transaction costs and other restructuring type costs, including employee separation costs. The disclosure of these adjustments is regularly requested by users of the Company’s financial statements.

The adjustment for these charges, income and gains may not be comparable to how other REITs or real estate companies calculate their results of operations, and the Company’s calculation of Operating FFO differs from NAREIT’s definition of FFO. Additionally, the Company provides no assurances that these charges, income and gains are non-recurring. These charges, income and gains could be reasonably expected to recur in future results of operations.

These measures of performance are used by the Company for several business purposes and by other REITs. The Company uses FFO and/or Operating FFO in part (i) as a disclosure to improve the understanding of the Company’s operating results among the investing public, (ii) as a measure of a real estate asset company’s performance, (iii) to influence acquisition, disposition and capital investment strategies and (iv) to compare the Company’s performance to that of other publicly traded shopping center REITs.

For the reasons described above, management believes that FFO and Operating FFO provide the Company and investors with an important indicator of the Company’s operating performance. They provide recognized measures of performance other than GAAP net income, which may include non-cash items (often significant). Other real estate companies may calculate FFO and Operating FFO in a different manner.

Management recognizes the limitations of FFO and Operating FFO when compared to GAAP’s net income. FFO and Operating FFO do not represent amounts available for dividends, capital replacement or expansion, debt service obligations or other commitments and uncertainties. Management does not use FFO or Operating FFO as an indicator of the Company’s cash obligations and funding requirements for future commitments, acquisitions or development activities. Neither FFO nor Operating FFO represents cash generated from operating activities in accordance with GAAP, and neither is necessarily indicative of cash available to fund cash

needs. Neither FFO nor Operating FFO should be considered an alternative to net income (computed in accordance with GAAP) or as an alternative to cash flow as a measure of liquidity. FFO and Operating FFO are simply used as additional indicators of the Company’s operating performance. The Company believes that to further understand its performance, FFO and Operating FFO should be compared with the Company’s reported net income (loss) and considered in addition to cash flows determined in accordance with GAAP, as presented in its consolidated financial statements. Reconciliations of these measures to their most directly comparable GAAP measure of net income (loss) have been provided below.

Reconciliation Presentation

FFO and Operating FFO attributable to common shareholders were as follows (in thousands):


	Three Months
	Ended September 30,
	2023		2022		$ Change
FFO attributable to common shareholders	$	67,845	$	61,637	$	6,208
Operating FFO attributable to common shareholders		69,869		62,833		7,036

	Nine Months
	Ended September 30,
	2023		2022		$ Change
FFO attributable to common shareholders	$	187,263	$	188,729	$	(1,466	)
Operating FFO attributable to common shareholders		193,893		190,845		3,048

The decrease in FFO for the nine months ended September 30, 2023, as compared to the prior-year period, was primarily attributable to lower management fees and income from joint ventures and higher interest and general and administrative expenses, partially offset by base rent growth, the write-off of below-market lease intangibles and the net impact of property acquisitions. The change in Operating FFO primarily was due to the same drivers impacting FFO but excludes the impact of an employee separation charge included within general and administrative expenses, relating to the restructuring plan initiated in May 2023.

The Company’s reconciliation of net income attributable to common shareholders computed in accordance with GAAP to FFO attributable to common shareholders and Operating FFO attributable to common shareholders is as follows (in thousands). The Company provides no assurances that these charges and gains are non-recurring. These charges and gains could reasonably be expected to recur in future results of operations:


	Three Months						Nine Months
	Ended September 30,						Ended September 30,
	2023			2022			2023			2022
Net income attributable to common shareholders	$	45,853		$	63,406		$	60,912		$	132,155
Depreciation and amortization of real estate investments		51,412			49,925			161,480			148,828
Equity in net income of joint ventures		(518	)		(25,918	)		(6,495	)		(27,468	)
Joint ventures' FFO(A)		2,145			1,271			6,327			9,469
Non-controlling interests (OP Units)		—			18			18			55
Impairment of real estate		—			—			—			2,536
Gain on sale and change in control of interests		—			(228	)		(3,749	)		(45,554	)
Gain on disposition of real estate, net		(31,047	)		(26,837	)		(31,230	)		(31,292	)
FFO attributable to common shareholders		67,845			61,637			187,263			188,729
Separation and other charges		1,345			—			4,444			—
Transaction, debt extinguishment and other (at SITE's share)		679			1,196			2,186			2,501
RVI disposition fees		—			—			—			(385	)
Non-operating items, net		2,024			1,196			6,630			2,116
Operating FFO attributable to common shareholders	$	69,869		$	62,833		$	193,893		$	190,845

(A)

At September 30, 2023 and 2022, the Company had an economic investment in unconsolidated joint ventures which owned 13 and 19 shopping center properties, respectively. These joint ventures represent the investments in which the Company recorded its share of equity in net income or loss and, accordingly, FFO and Operating FFO.

Joint ventures’ FFO and Operating FFO are summarized as follows (in thousands):


	Three Months						Nine Months
	Ended September 30,						Ended September 30,
	2023			2022			2023			2022
Net income attributable to unconsolidated joint ventures	$	1,545		$	105,872		$	22,172		$	105,833
Depreciation and amortization of real estate investments		7,806			9,450			25,149			37,123
Impairment of real estate		—			9,010			—			17,550
Gain on disposition of real estate, net		(973	)		(119,813	)		(21,151	)		(121,505	)
FFO	$	8,378		$	4,519		$	26,170		$	39,001
FFO at SITE Centers' ownership interests	$	2,145		$	1,271		$	6,327		$	9,469
Operating FFO at SITE Centers' ownership interests	$	2,227		$	2,126		$	6,707		$	10,327

Net Operating Income and Same Store Net Operating Income

Definition and Basis of Presentation

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

The Company also presents NOI information on a same store basis, or Same Store Net Operating Income (“SSNOI”). The Company defines SSNOI as property revenues less property-related expenses, which exclude straight-line rental income (including reimbursements) and expenses, lease termination income, management fee expense, fair market value of leases and expense recovery adjustments. SSNOI includes assets owned in comparable periods (15 months for quarter comparisons). In addition, SSNOI is presented including activity associated with redevelopment. SSNOI excludes all non-property and corporate level revenue and expenses. Other real estate companies may calculate NOI and SSNOI in a different manner. The Company believes SSNOI at its effective ownership interest provides investors with additional information regarding the operating performances of comparable assets because it excludes certain non-cash and non-comparable items as noted above. SSNOI is frequently used by the real estate industry, as well as securities analysts, investors and other interested parties, to evaluate the performance of REITs.

SSNOI is not, and is not intended to be, a presentation in accordance with GAAP. SSNOI information has its limitations as it excludes any capital expenditures associated with the re-leasing of tenant space or as needed to operate the assets. SSNOI does not represent amounts available for dividends, capital replacement or expansion, debt service obligations or other commitments and uncertainties. Management does not use SSNOI as an indicator of the Company’s cash obligations and funding requirements for future commitments, acquisitions or development activities. SSNOI does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs. SSNOI should not be considered as an alternative to net income (computed in accordance with GAAP) or as an alternative to cash flow as a measure of liquidity. A reconciliation of NOI and SSNOI to their most directly comparable GAAP measure of net income (loss) is provided below.

Reconciliation Presentation

The Company’s reconciliation of net income computed in accordance with GAAP to NOI and SSNOI for the Company at 100% and at its effective ownership interest of the assets is as follows (in thousands):


	For the Nine Months Ended September 30,
	2023			2022			2023			2022
	At 100%						At the Company's Interest
Net income attributable to SITE Centers	$	69,279		$	140,522		$	69,279		$	140,522
Fee income		(5,307	)		(9,471	)		(5,307	)		(9,471	)
Interest expense		61,991			57,306			61,991			57,306
Depreciation and amortization		165,535			152,564			165,535			152,564
General and administrative		35,935			34,403			35,935			34,403
Other expense (income), net		2,011			2,152			2,011			2,152
Impairment charges		—			2,536			—			2,536
Equity in net income of joint ventures		(6,495	)		(27,468	)		(6,495	)		(27,468	)
Tax expense		811			863			811			863
Gain on sale and change in control of interests		(3,749	)		(45,554	)		(3,749	)		(45,554	)
Gain on disposition of real estate, net		(31,230	)		(31,292	)		(31,230	)		(31,292	)
Income from non-controlling interests		18			55			18			55
Consolidated NOI	$	288,799		$	276,616		$	288,799		$	276,616
Less: Non-Same Store NOI adjustments								(25,710	)		(20,747	)
Total Consolidated SSNOI							$	263,089		$	255,869

Consolidated SSNOI % Change								2.8	%

Net income from unconsolidated joint ventures	$	22,172		$	105,833		$	4,724		$	21,887
Interest expense		19,016			26,560			4,342			5,982
Depreciation and amortization		25,149			37,123			5,878			8,304
Impairment charges		—			17,550			—			3,510
Other expense (income), net		7,022			11,114			1,593			2,468
Gain on disposition of real estate, net		(21,151	)		(121,505	)		(4,232	)		(24,254	)
Unconsolidated NOI	$	52,208		$	76,675		$	12,305		$	17,897
Less: Non-Same Store NOI adjustments								(1,124	)		(6,969	)
Total Unconsolidated SSNOI at SITE share							$	11,181		$	10,928

Unconsolidated SSNOI % Change								2.3	%

SSNOI % Change at SITE Share								2.8	%

The SSNOI increase for the nine months ended September 30, 2023, as compared to the prior-year period, primarily related to increases in rents and recoveries attributable to sequential increases in occupancy for same-store assets.

LIQUIDITY, CAPITAL RESOURCES AND FINANCING ACTIVITIES

The Company periodically evaluates opportunities to issue and sell additional debt or equity securities, obtain credit facilities from lenders or repurchase or refinance long-term debt as part of its overall strategy to further strengthen its financial position. The Company remains committed to monitoring liquidity and the duration of its indebtedness and to maintaining prudent leverage levels in an effort to manage its overall risk profile.

The Company’s consolidated and unconsolidated debt obligations generally require monthly or semi-annual payments of principal and/or interest over the term of the obligation. While the Company currently believes it has several viable sources to obtain capital and fund its business, including capacity under its Revolving Credit Facility (as defined below), no assurance can be provided that these obligations will be refinanced or repaid as currently anticipated. Any new debt financings may also entail higher rates of interest than the indebtedness being refinanced, which could have an adverse effect on the Company’s operations.

The Company has historically accessed capital sources through both the public and private markets. Acquisitions and redevelopments are generally financed through cash provided from operating activities, the Revolving Credit Facility, mortgages assumed, secured debt, unsecured debt, common and preferred equity offerings, joint venture capital and asset sales. Total consolidated debt outstanding was $1.7 billion at September 30, 2023 and December 31, 2022.

At September 30, 2023, the Company had an unrestricted cash balance of $26.6 million and a restricted cash balance of $35.5 million related to asset sale proceeds available to fund future qualifying acquisitions as part of a forward like kind exchange transaction. The Company has availability under its Revolving Credit Facility of $815.0 million (subject to satisfaction of applicable borrowing conditions). The Company has no remaining consolidated debt maturing in 2023. In 2024, the Company has $65.6 million aggregate principal amount of senior notes and $12.2 million of consolidated mortgage debt maturing. The Company’s unconsolidated joint ventures have $112.1 million in mortgage debt at the Company’s share maturing in 2024. As of September 30, 2023, the Company anticipates that it has approximately $14 million to be incurred on its pipeline of identified redevelopment projects. The Company declared common share dividends of $0.39 per share in the aggregate in the nine months ended September 30, 2023 and also on October 30, 2023, the Company declared a dividend of $0.13 per common share, payable on January 5, 2024, to shareholders of record at the close of business on December 11, 2023. The Company believes it has sufficient liquidity to operate its business at this time. In March 2023, the Company entered into a 5.0% interest rate cap with respect to the variable-rate (the Secured Overnight Financing Rate or "SOFR") component applicable to borrowings up to $100 million under the Company's Revolving Credit Facility, which interest rate cap will remain in effect through the beginning of April 2024. In May 2023, the Company repaid $87.2 million of senior notes due 2023 with amounts drawn under its Revolving Credit Facility. At September 30, 2023, the Company had $135.0 million drawn on the Revolving Credit Facility.

Revolving Credit Facility

The Company maintains an unsecured Revolving Credit Facility with a syndicate of financial institutions and JPMorgan Chase Bank, N.A., as administrative agent that provides for borrowings of up to $950 million, which limit may be increased to $1.45 billion provided that existing or new lenders agree to provide incremental commitments and subject to other conditions precedent. The Revolving Credit Facility matures in June 2026 subject to two six-month options to extend the maturity to June 2027 at the Company's option (subject to the satisfaction of certain conditions). The Company’s borrowings under the Revolving Credit Facility bear interest at variable rates at the Company’s election, based on either (i) the SOFR rate plus a 10-basis point credit spread adjustment plus an applicable margin (0.85% at September 30, 2023) or (ii) the alternative base rate plus an applicable margin (0% at September 30, 2023). The Revolving Credit Facility also provides for an annual facility fee, which was 20 basis points on the entire facility at September 30, 2023. The applicable margins and facility fee vary depending on the Company’s long-term senior unsecured debt ratings from Moody’s, S&P Global Ratings (“S&P”) and Fitch (or their respective successors). The Revolving Credit Facility also features a sustainability-linked pricing component whereby the applicable interest-rate margin can be adjusted by one or two basis points if the Company meets certain sustainability performance targets.

The Revolving Credit Facility, the Company’s $200.0 million term loan facility and the indentures under which the Company’s senior and subordinated unsecured indebtedness are, or may be, issued contain certain financial and operating covenants including, among other things, leverage ratios and debt service coverage and fixed-charge coverage ratios, as well as limitations on the Company’s ability to incur secured and unsecured indebtedness, sell all or substantially all of the Company’s assets and engage in certain mergers and acquisitions. The Revolving Credit Facility, the term loan and the indentures also contain customary default provisions including the failure to make timely payments of principal and interest payable thereunder, 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. In the event the Company’s lenders or note holders declare a default, as defined in the applicable agreements governing the debt, the Company may be unable to obtain further funding, and/or an acceleration of any outstanding borrowings may occur. As of September 30, 2023, the Company was in compliance with all of its financial covenants in the agreements governing its debt. Although the Company believes it will continue to operate in compliance with these covenants, if the Company were to violate these covenants, the Company may be subject to higher finance costs and fees or accelerated maturities.

Mortgage Financing Commitment

In October 2023, in preparation for the eventual spin-off of the Company’s convenience retail properties, the Company obtained a commitment (the “Commitment”) from affiliates of Apollo, including ATLAS SP Partners, to provide a $1.1 billion delayed-draw mortgage facility to be secured by approximately 40 of the Company’s retail properties (the “Mortgage Facility”). The Company may proceed to close and draw all or a portion of the Mortgage Facility on any date prior to October 25, 2024 subject to the satisfaction of various closing conditions set forth in the Commitment, including debt yield and loan-to-value thresholds, the lender’s receipt of acceptable appraisal, title, survey, tenant estoppel and property inspection reports and satisfaction of other customary closing requirements. To the extent that any of the collateral properties are sold prior to the closing of the Mortgage Facility, the amount available under the Commitment will be reduced. The Company currently expects to close and draw on the Mortgage Facility prior to the spin-off of Curbline, and to use loan and additional asset sale proceeds to redeem and/or repay its outstanding unsecured indebtedness and for general corporate purposes.

As set forth in the Commitment, the Mortgage Facility will mature on the second anniversary of the closing date subject to a one-year extension option at the Company’s election and subject to the Company’s satisfaction of certain conditions at the time of the

extension. Following closing, the Company will be able to effectuate the release of properties serving as collateral for the Mortgage Facility by making a principal prepayment based on the amount of the loan amount allocated to such property.

The Company paid upfront commitment and structuring fees to the lender and its affiliates and will also pay the lender fees during the unfunded commitment period based on the committed loan amount (as such amount may be reduced from time to time by the Company) and a closing fee based on the amount of the loan funded at closing. The Company is not obligated to close or draw on the Mortgage Facility and no assurances can be given that the Company will satisfy the conditions to close the Mortgage Facility or that the Mortgage Facility will close on the terms set forth in the Commitment or at all.

Consolidated Indebtedness – as of September 30, 2023

As discussed above, the Company is committed to maintaining prudent leverage levels and may utilize proceeds from the sale of properties or other investments or equity offerings to repay additional debt. These sources of funds could be affected by various risks and uncertainties. No assurance can be provided that the Company’s debt obligations will be refinanced or repaid as currently anticipated. See Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

The Company continually evaluates its debt maturities and, based on management’s assessment, believes it has viable financing and refinancing alternatives including the Mortgage Facility. The Company has sought to manage its debt maturities, increase liquidity, maintain prudent leverage levels and improve the Company’s credit profile with a focus of lowering the Company’s balance sheet risk and cost of capital.

Unconsolidated Joint Ventures’ Mortgage Indebtedness – as of September 30, 2023

The outstanding indebtedness of the Company’s unconsolidated joint ventures at September 30, 2023, which matures in the subsequent 13-month period (i.e., through October 31, 2024), is as follows (in millions):


	Outstanding at September 30, 2023		At SITE Centers' Share
Dividend Trust Portfolio(A)	$	364.3	$	72.9
DDRM Joint Venture(B)		40.9		8.2
Total debt maturities through October 31, 2024	$	405.2	$	81.0

(A)

Expected to be refinanced.

(B)

The joint venture expects to repay indebtedness with proceeds from future asset sales.

No assurance can be provided that these obligations will be refinanced or repaid as currently anticipated. Any future deterioration in property-level revenues may cause one or more of these joint ventures to be unable to refinance maturing obligations or satisfy applicable covenants, financial tests or debt service requirements or loan maturity extension conditions in the future, thereby allowing the mortgage lender to assume control of property cash flows, limit distributions of cash to joint venture members, declare a default, increase the interest rate or accelerate the loan’s maturity. In addition, rising interest rates may adversely impact the ability of the Company’s joint ventures to sell assets at attractive prices in order to repay indebtedness.

Cash Flow Activity

The Company’s cash flow activities are summarized as follows (in thousands):


	Nine Months
	Ended September 30,
	2023			2022
Cash flow provided by operating activities	$	192,049		$	205,486
Cash flow used for investing activities		(57,512	)		(282,843	)
Cash flow (used for) provided by financing activities		(92,490	)		58,107

Changes in cash flow for the nine months ended September 30, 2023, compared to the prior comparable period, are as follows:

Operating Activities: Cash provided by operating activities decreased $13.4 million primarily due to changes in cash flow from dispositions, higher interest rates, higher general and administrative expenses attributable to the May 2023 restructuring plan and changes in working capital.

Investing Activities: Cash used for investing activities decreased $225.3 million primarily due to the following:

•

Decrease in real estate assets acquired, developed and improved of $234.6 million;

•

Decrease in distributions from unconsolidated joint ventures of $30.2 million and

•

Increase in proceeds from disposition of real estate and disposition of joint venture interest of $20.6 million.

Financing Activities: Cash from financing activities changed $150.6 million primarily due to the following:

•

Decrease in borrowings from the Revolving Credit Facility and term loan, net of mortgage debt and senior notes repayments of $112.9 million;

•

Changes in proceeds from issuance of common shares in 2022 of $36.7 million and changes in cash used for repurchases of common shares of $6.6 million;

•

Repurchase of operating partnership interest in 2023 of $1.7 million and

•

Decrease in debt issuance cost of $7.6 million.

Dividend Distribution

The Company declared common and preferred cash dividends of $90.3 million and $91.9 million for the nine months ended September 30, 2023 and 2022, respectively.

The Company intends to distribute at least 100% of ordinary taxable income in the form of common and preferred dividends with respect to the year ending December 31, 2023 in order to maintain compliance with REIT requirements and in order to not incur federal income taxes (excluding federal income taxes applicable to its taxable REIT subsidiary activities).

The Company declared a quarterly cash dividend of $0.13 per common share for each of the first three quarters of 2023. On October 30, 2023, the Company declared a dividend of $0.13 per common share, payable on January 5, 2024, to shareholders of record at the close of business on December 11, 2023.

As a result of significant disposition activity consummated during the nine months ended September 30, 2023 and additional asset sales likely to close during the fourth quarter of 2023, the Company also expects to declare and pay a special cash dividend of at least $0.10 per share prior to January 31, 2024, subject to the final approval of the Company’s Board of Directors.

The Board of Directors of the Company intends to monitor the Company’s dividend policy in order to maintain sufficient liquidity for operations and in order to maximize the Company’s free cash flow while still adhering to REIT payout requirements and minimizing federal income taxes (excluding federal income taxes applicable to its taxable REIT subsidiary activities). The Company’s future dividend policy may also be influenced by future transaction activity including asset sales.

SITE Centers’ Equity

In December 2022, the Company’s Board of Directors authorized a common share repurchase program. Under the terms of the program, the Company is authorized to repurchase up to a maximum value of $100 million of its common shares without an expiration date. In the first quarter of 2023, the Company repurchased 1.5 million of its common shares in open market transactions at an aggregate cost of $20.0 million, or $13.43 per share. Through September 30, 2023, the Company had repurchased under this program 2.0 million of its common shares in open market transactions at an aggregate cost of $26.6 million.

SOURCES AND USES OF CAPITAL

Strategic Transaction Activity

The Company remains committed to maintaining sufficient liquidity, managing debt duration and maintaining prudent leverage levels in an effort to manage its overall risk profile. Equity offerings, debt financings (including the Mortgage Facility), asset sales and cash flow from operations continue to represent potential sources of proceeds to be used to achieve these objectives.

Acquisitions

In October 2023, the Company acquired two convenience centers for an aggregate price of $26.0 million, including Estero Crossing (Estero, Florida) for $17.1 million and Point at University (Charlotte, North Carolina) for $8.9 million.

Through September 30, 2023, the Company acquired Parker Keystone (Denver, Colorado) for $11.0 million, Alpha Soda Center (Atlanta, Georgia) for $9.4 million, Barrett Corners (Atlanta, Georgia) for $15.6 million, Foxtail Center (Baltimore, Maryland) for $15.1 million, Oaks at Slaughter (Austin, Texas) for $14.1 million, Marketplace at 249 (Houston, Texas) for $9.8 million, Briarcroft Center (Houston, Texas) for $23.5 million and Towne Crossing Shops (Richmond, Virginia) for $4.2 million.

Dispositions

Through October 27, 2023, the Company sold 11 wholly-owned shopping centers (in thousands):


Date Sold	Property Name	City, State	Total Owned GLA		Gross Sales Price
08/10/23	Sharon Green	Cumming, Georgia		98	$	17,450
08/24/23	Terrell Plaza	San Antonio, Texas		108		25,106
08/28/23	Windsor Court	Windsor, Connecticut		79		19,000
09/08/23	Larkin's Corner	Boothwyn, Pennsylvania		225		26,000
09/22/23	Waterstone Center	Mason, Ohio		162		30,718
10/23/23	Boston Portfolio(A)	Boston, Massachusetts		1,354		319,000
10/24/23	Cotswold Village	Charlotte, North Carolina		263		110,400
10/27/23	Tampa Portfolio(B)	Tampa, Florida		441		97,900
				2,730	$	645,574

(A)

Includes Shoppers World and Gateway Center. Excludes 19,017 square feet retained by the Company(Shops at Framingham).

(B)

Includes Lake Brandon Plaza, North Pointe Plaza and The Shoppes at New Tampa.

In the nine months ended September 30, 2023, unconsolidated shopping centers sold by the DDRM Joint Venture generated proceeds totaling $112.2 million of which the Company’s share was $22.4 million.

As of October 27, 2023, the Company was under contract to sell, subject to standards closing conditions, an additional four wholly-owned properties for an aggregate sale price of $127.9 million, for which the buyers’ general due diligence condition expired.

Changes in investment strategies for assets may impact the Company’s hold-period assumptions for those properties. The disposition of certain assets could result in a loss or impairment recorded in future periods. The Company evaluates all potential sale opportunities taking into account the long-term growth prospects of the assets, the use of proceeds and the impact to the Company’s balance sheet, in addition to the impact on operating results.

Equity Transactions

In the first quarter of 2023, the Company repurchased 1.5 million of its common shares in open market transactions at an aggregate cost of $20.0 million, or $13.43 per share with the remaining proceeds from the sale of wholly-owned properties in the fourth quarter of 2022 and proceeds from the sale of joint venture properties.

In the second quarter of 2023, the Company repurchased 140,633 OP Units in a privately negotiated transaction at an aggregate cost of $1.7 million, or $12.34 per unit. Following the repurchase, the Company has no outstanding OP Units.

Redevelopment Pipeline

The Company evaluates additional tactical redevelopment potential within the portfolio, particularly as it relates to the efficient use of the underlying real estate, which includes to expand, improve and re-tenant various properties. The Company generally expects to commence construction on redevelopment projects only after substantial tenant leasing has occurred. At September 30, 2023, the Company had approximately $63 million in construction in progress in various active consolidated redevelopments and other projects and anticipates that it has approximately $14 million yet to be incurred on its pipeline of identified redevelopment projects. At September 30, 2023, the Company’s shopping center expansions, outparcel developments, construction of first-generation space and repurposing projects were as follows (in thousands):


Location	Estimated Stabilized Quarter	Estimated Cost		Costs Incurred at September 30, 2023
West Bay Plaza - Phase II (Cleveland, Ohio)	4Q23	$	7,941	$	7,155
Carolina Pavilion (Charlotte, North Carolina)	4Q23		2,721		2,486
Nassau Park Pavilion (Trenton, New Jersey)	1Q24		7,635		5,746
University Hills (Denver, Colorado)	3Q24		6,718		5,190
Shoppers World (Boston, Massachusetts)	2Q24		2,414		1,313
Tanasbourne Town Center (Portland, Oregon)	1Q26		13,769		4,966
Perimeter Pointe (Atlanta, Georgia)	TBD		—		1,417
Total		$	41,198	$	28,273

CAPITALIZATION

At September 30, 2023, the Company’s capitalization consisted of $1.7 billion of debt, $175.0 million of preferred shares and $2.6 billion of market equity (calculated as the common shares outstanding multiplied by $12.33, the closing price of the Company’s common shares on the New York Stock Exchange at September 29, 2023, the last trading day of September 2023). At September 30, 2023, after giving effect to the swap of the variable-rate component of the term loan's interest rate to a fixed rate, the Company’s total debt consisted of $1.6 billion of fixed-rate debt and $135.0 million of variable-rate debt.

Management seeks to maintain access to the capital resources necessary to manage the Company’s balance sheet and to repay upcoming maturities. Accordingly, the Company may seek to obtain funds through additional debt or equity financings and/or joint venture capital in a manner consistent with its intention to operate with a prudent debt capitalization policy and to reduce the Company’s cost of capital by maintaining an investment grade rating with Moody’s, S&P and Fitch. A security rating is not a recommendation to buy, sell or hold securities, as it may be subject to revision or withdrawal at any time by the rating organization. Each rating should be evaluated independently of any other rating. The Company may not be able to obtain financing on favorable terms, or at all, which may negatively affect future ratings.

The Revolving Credit Facility, term loan and the indentures under which the Company’s senior and subordinated unsecured indebtedness is, or may be, issued contain certain financial and operating covenants, including, among other things, debt service coverage and fixed charge coverage ratios, as well as limitations on the Company’s ability to incur secured and unsecured indebtedness, sell all or substantially all of the Company’s assets, engage in certain mergers and acquisitions and make distribution to its shareholders. Although the Company intends to operate in compliance with these covenants, if the Company were to violate these covenants, the Company may be subject to higher finance costs and fees or accelerated maturities. In addition, the Revolving Credit Facility, term loan and the Company’s indentures permit the acceleration of maturity in the event certain other debt of the Company is in default or has been accelerated. Foreclosure on mortgaged properties or an inability to refinance existing indebtedness would have a negative impact on the Company’s financial condition and results of operations.

CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

As of September 30, 2023, the Company has no remaining debt maturing in 2023. In 2024, the Company has $65.6 million aggregate principal amount of senior notes, $12.2 million of consolidated mortgage debt and $112.1 million of unconsolidated joint venture mortgage debt at the Company’s share maturing. The Company expects to fund future maturities from utilization of its Revolving Credit Facility, proceeds from asset sales and other investments, cash flow from operations and/or additional debt or equity financings including the Mortgage Facility. No assurance can be provided that these obligations will be repaid as currently anticipated or refinanced.

Other Guaranties

In conjunction with the redevelopment of shopping centers, the Company had entered into commitments with general contractors aggregating approximately $13.5 million for its consolidated properties at September 30, 2023, which includes the assets in the redevelopment pipeline. These obligations, composed principally of construction contracts, are generally due within 12 to 24 months, as the related construction costs are incurred, and are expected to be financed through operating cash flow, asset sales or borrowings under the Revolving Credit Facility. These contracts typically can be changed or terminated without penalty.

The Company routinely enters into contracts for the maintenance of its properties. These contracts typically can be canceled upon 30 to 60 days’ notice without penalty. At September 30, 2023, the Company had purchase order obligations, typically payable within one year, aggregating approximately $8.7 million related to the maintenance of its properties and general and administrative expenses.

ECONOMIC CONDITIONS

Despite current economic uncertainty, the Company continues to experience retailer demand for quality real estate locations within well-positioned shopping centers consistent with the Company’s owned properties. The Company executed new leases and renewals aggregating approximately 2.8 million square feet of space on a pro rata basis for the nine months ended September 30, 2023. The Company believes these strong leasing results and tenant demand are attributable to the concentration of the Company’s portfolio in suburban, high household income communities, pandemic-induced work-from-home trends, limited new construction and tenants’ increasing use of physical store locations to improve the speed and efficiency of merchandise distribution.

The Company benefits from a diversified tenant base, with only one tenant whose annualized rental revenue equals or exceeds 3% of the Company’s annualized consolidated revenues plus the Company’s proportionate share of unconsolidated joint venture revenues (TJX Companies at 6.1% as of September 30, 2023). Other significant national tenants generally have relatively strong

financial positions, have outperformed other retail categories over time and the Company believes remain well-capitalized. Historically these national tenants have provided a stable revenue base, and the Company believes that they will continue to provide a stable revenue base going forward, given the long-term nature of these leases. The majority of the tenants in the Company’s shopping centers provide day-to-day consumer necessities with a focus on value and convenience, versus discretionary items, which the Company believes will enable many of its tenants to outperform under a variety of economic conditions. The Company recognizes the risks posed by current economic conditions but believes the position of its portfolio and the general diversity and credit quality of its tenant base should enable it to successfully navigate through a potentially challenging economic environment. The Company has relatively little reliance on overage or percentage rents generated by tenant sales performance.

The Company believes that its shopping center portfolio is well positioned, as evidenced by its recent leasing activity, historical property income growth and consistent growth in average annualized base rent per occupied square foot. Historical occupancy has generally ranged from 89% to 94% over the last 10 years. At September 30, 2023 and December 31, 2022, the shopping center portfolio occupancy, on a pro rata basis, was 92.2% and 92.4%, respectively, and the total portfolio average annualized base rent per occupied square foot, on a pro rata basis, was $20.20 and $19.52, respectively. The Company’s portfolio has been impacted by tenant bankruptcies, and the Company expects to expend capital in coming periods in connection with leases executed to backfill these and other closures. Although the per square foot cost of leasing capital expenditures has been predominantly consistent with the Company’s historical trends, the high volume of the Company’s recent leasing activity will cause aggregate leasing capital expenditure levels to be elevated. The weighted-average cost of tenant improvements and lease commissions estimated to be incurred over the expected lease term for new leases executed during the nine months ended September 30, 2023 and 2022, on a pro rata basis, was $4.82 and $7.31 per rentable square foot, respectively. The Company generally does not expend a significant amount of capital on lease renewals.

Although disruptions to the Company’s business stemming from the COVID-19 pandemic have subsided, inflation, higher interest rates, reduced consumer spending, labor shortages, geopolitical tensions and the volatility of global capital markets pose risks to the U.S. economy and the Company’s tenants. In addition to these macroeconomic challenges, the retail sector has been affected by changing consumer behaviors following the COVID-19 pandemic, including the competitive nature of the retail business and the competition for the share of the consumer wallet. The Company routinely monitors the credit profiles of its tenants and analyzes the possible impact of any potential tenant credit issues on the financial statements of the Company and its unconsolidated joint ventures. In some cases, changing conditions have resulted in weaker retailers and retail categories losing market share and declaring bankruptcy and/or closing stores. However, other retailers, specifically those in the value and convenience category, continue to express interest in launching new concepts and expanding their store fleets within the suburban, high household income communities in which the Company’s properties are located. As a result, the Company believes that its prospects to backfill any spaces vacated by bankrupt or non-renewing tenants are generally good, though such re-tenanting efforts would likely require additional capital expenditures and the opportunities to lease any vacant theater spaces may be more limited. However, there can be no assurance that vacancy resulting from increasingly uncertain economic conditions will not adversely affect the Company’s operating results (see Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022).

Inflation, rising interest rates, the availability of commercial real estate financing have also impacted, in certain cases, real estate owners’ ability to acquire and sell assets and raise equity and debt financing. Although the Company has relatively small amounts of consolidated indebtedness maturing in 2024 (none remaining in 2023), debt capital markets liquidity could adversely impact the Company’s ability to refinance future maturities and the interest rates applicable thereto. To the extent that the interest rate environment does not moderate prior to the time of these refinancings, the Company’s interest expense levels would be adversely affected.

FORWARD-LOOKING STATEMENTS

MD&A should be read in conjunction with the Company’s consolidated financial statements and the notes thereto appearing elsewhere in this report. Historical results and percentage relationships set forth in the Company’s consolidated financial statements, including trends that might appear, should not be taken as indicative of future operations. The Company considers portions of this information to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, with respect to the Company’s expectations for future periods. Forward-looking statements include, without limitation, statements related to acquisitions (including any related pro forma financial information) and other business development activities, future capital expenditures, financing sources and availability and the effects of environmental and other regulations. Although the Company believes that the expectations reflected in these forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. For this purpose, any statements contained herein that are not statements of historical fact should be deemed to be forward-looking statements. Without limiting the foregoing, the words “will,” “believes,” “anticipates,” “plans,” “expects,” “seeks,” “estimates” and similar expressions are intended to identify forward-looking statements. Readers should exercise caution in interpreting and relying on forward-looking statements because such statements involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company’s control and that could cause actual results to differ materially from those expressed or implied in the forward-looking

statements and that could materially affect the Company’s actual results, performance or achievements. For additional factors that could cause the results of the Company to differ materially from those indicated in the forward-looking statements see Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Factors that could cause actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, but are not limited to, the following:

•

The Company is subject to general risks affecting the real estate industry, including the need to enter into new leases or renew leases on favorable terms to generate rental revenues, and any economic downturn may adversely affect the ability of the Company’s tenants, or new tenants, to enter into new leases or the ability of the Company’s existing tenants to renew their leases at rates at least as favorable as their current rates;

•

The Company could be adversely affected by changes in the local markets where its properties are located, as well as by adverse changes in national economic and market conditions;

•

The Company may fail to anticipate the effects on its properties of changes in consumer buying practices, including sales over the internet and the resulting retailing practices and space needs of its tenants, or a general downturn in its tenants’ businesses, which may cause tenants to close stores or default in payment of rent;

•

The Company is subject to competition for tenants from other owners of retail properties, and its tenants are subject to competition from other retailers and methods of distribution. The Company is dependent upon the successful operations and financial condition of its tenants, in particular its major tenants, and could be adversely affected by the bankruptcy of those tenants;

•

The Company leases the majority of its square footage to large tenants, which makes it vulnerable to changes in the business and financial condition of, or demand for its space by, such tenants;

•

The Company may not realize the intended benefits of acquisition or merger transactions. The acquired assets may not perform as well as the Company anticipated, or the Company may not successfully integrate the assets and realize improvements in occupancy and operating results. The acquisition of certain assets may subject the Company to liabilities, including environmental liabilities;

•

The Company may fail to identify, acquire, construct or develop additional properties that produce a desired yield on invested capital, or may fail to effectively integrate acquisitions of properties or portfolios of properties. In addition, the Company may be limited in its acquisition opportunities due to competition, the inability to obtain financing on reasonable terms or any financing at all and other factors;

•

The Company may fail to dispose of properties on favorable terms, especially in regions experiencing deteriorating economic conditions. In addition, real estate investments can be illiquid, particularly as prospective buyers may experience increased costs of financing or difficulties obtaining financing due to local or global conditions, and could limit the Company’s ability to promptly make changes to its portfolio to respond to economic and other conditions;

•

The Company may fail to complete its previously announced spin-off of its unanchored convenience properties, or the closing of the related Mortgage Facility, which could adversely affect the market price of the Company's common shares;

•

The Company may abandon a development or redevelopment opportunity after expending resources if it determines that the opportunity is not feasible due to a variety of factors, including a lack of availability of construction financing on reasonable terms, the impact of the economic environment on prospective tenants’ ability to enter into new leases or pay contractual rent, or the inability of the Company to obtain all necessary zoning and other required governmental permits and authorizations;

•

The Company may not complete development or redevelopment projects on schedule as a result of various factors, many of which are beyond the Company’s control, such as weather, labor conditions, governmental approvals, material shortages or general economic downturn, resulting in limited availability of capital, increased debt service expense and construction costs and decreases in revenue;

•

The Company’s financial condition may be affected by required debt service payments, the risk of default, restrictions on its ability to incur additional debt or to enter into certain transactions under its Revolving Credit Facility and term loan and other documents governing its debt obligations and the risk of downgrades from debt rating services. In addition, the Company may encounter difficulties in obtaining permanent financing or refinancing existing debt. Borrowings under the

Company’s Revolving Credit Facility are subject to certain representations and warranties and no default or event of default existing thereunder;

•

Changes in interest rates could adversely affect the market price of the Company’s common shares, its ability to sell properties and prices realized, as well as its performance, interest expense levels and cash flow;

•

Debt and/or equity financing necessary for the Company to continue to grow and operate its business may not be available or may not be available on favorable terms;

•

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;

•

Inflationary pressures could result in reductions in retailer profitability, consumer discretionary spending and tenant demand to lease space. Inflation could also increase the costs incurred by the Company to operate its properties and finance its operations and could adversely impact the valuation of its properties, all of which could have an adverse effect on the market price of the Company's common shares;

•

The Company is subject to complex regulations related to its status as a REIT and would be adversely affected if it failed to qualify as a REIT;

•

The Company must make distributions to shareholders to continue to qualify as a REIT, and if the Company must borrow funds to make distributions, those borrowings may not be available on favorable terms or at all;

•

Joint venture investments may involve risks not otherwise present for investments made solely by the Company, including the possibility that a partner or co-venturer may become bankrupt, may at any time have interests or goals different from those of the Company and 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, a partner or co‑venturer may not have access to sufficient capital to satisfy its funding obligations to the joint venture or may seek to terminate the joint venture, resulting in a loss to the Company of property revenues and management fees. The partner could cause a default under the joint venture loan for reasons outside the Company’s control. Furthermore, the Company could be required to reduce the carrying value of its equity investments if a loss in the carrying value of the investment is realized;

•

The Company’s decision to dispose of real estate assets, including undeveloped land and construction in progress, would change the holding period assumption in the undiscounted cash flow impairment analyses, which could result in material impairment losses and adversely affect the Company’s financial results;

•

The outcome of pending or future litigation, including litigation with tenants or joint venture partners, may adversely affect the Company’s results of operations and financial condition;

•

Property damage, expenses related thereto, and other business and economic consequences (including the potential loss of revenue) resulting from extreme weather conditions or natural disasters in locations where the Company owns properties may adversely affect the Company’s results of operations and financial condition;

•

Sufficiency and timing of any insurance recovery payments related to damages and lost revenues from extreme weather conditions or natural disasters may adversely affect the Company’s results of operations and financial condition;

•

The Company and its tenants could be negatively affected by the impacts of pandemics and other public health crises;

•

The Company is subject to potential environmental liabilities;

•

The Company may incur losses that are uninsured or exceed policy coverage due to its liability for certain injuries to persons, property or the environment occurring on its properties;

•

The Company could be subject to potential liabilities, increased costs, reputation harm and other adverse effects on the Company’s business due to stakeholders’, including regulators’, views regarding the Company's environmental, social and governance goals and initiatives, and the impact of factors outside of our control on such goals and initiatives;

•

The Company could incur additional expenses to comply with or respond to claims under the Americans with Disabilities Act or otherwise be adversely affected by changes in government regulations, including changes in environmental, zoning, tax and other regulations;

•

Changes in accounting standards or other standards may adversely affect the Company’s business;

•

The Company’s Board of Directors, which regularly reviews the Company’s business strategy and objectives, may change the Company’s strategic plan based on a variety of factors and conditions, including in response to changing market conditions and

•

The Company and its vendors could sustain a disruption, failure or breach of their respective networks and systems, including as a result of cyber-attacks, which could disrupt the Company’s business operations, compromise the confidentiality of sensitive information and result in fines or penalties.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company’s primary market risk exposure is interest rate risk. At September 30, 2023, the Company’s debt, excluding unconsolidated joint venture debt and adjusted to reflect the swap of the variable-rate (SOFR) component of interest rate applicable to the Company’s $200.0 million term loan to a fixed rate of 2.75%, is summarized as follows:


	September 30, 2023										December 31, 2022
	Amount (Millions)		Weighted- Average Maturity (Years)		Weighted- Average Interest Rate			Percentage of Total			Amount (Millions)		Weighted- Average Maturity (Years)		Weighted- Average Interest Rate			Percentage of Total
Fixed-Rate Debt	$	1,605.2		2.5		4.2	%		92.2	%	$	1,707.0		3.1		4.1	%		100.0	%
Variable-Rate Debt	$	135.0		2.7		6.0	%		7.8	%	$	—		—		—			0.0	%

The Company’s unconsolidated joint ventures’ indebtedness at its carrying value is summarized as follows:


	September 30, 2023									December 31, 2022
	Joint Venture Debt (Millions)		Company's Proportionate Share (Millions)		Weighted- Average Maturity (Years)		Weighted- Average Interest Rate			Joint Venture Debt (Millions)		Company's Proportionate Share (Millions)		Weighted- Average Maturity (Years)		Weighted- Average Interest Rate
Fixed-Rate Debt	$	364.0	$	72.8		0.5		4.8	%	$	363.5	$	72.7		1.3		4.8	%
Variable-Rate Debt	$	102.6	$	39.0		1.1		4.5	%	$	171.6	$	53.0		1.1		5.4	%

The Company intends to use retained cash flow, proceeds from asset sales, equity and debt financing including the Mortgage Facility and variable-rate indebtedness available under its Revolving Credit Facility to repay indebtedness and fund capital expenditures at the Company’s shopping centers. Thus, to the extent the Company incurs additional variable-rate indebtedness or needs to refinance existing fixed-rate indebtedness in a rising interest rate environment, its exposure to increases in interest rates in an inflationary period could increase.

The interest rate risk on a portion of the Company’s variable-rate debt has been mitigated through the use of an interest rate swap agreement with major financial institutions. At September 30, 2023, the variable (SOFR) component of the interest rate applicable to the Company’s $200.0 million consolidated term loan facility was swapped to a fixed rate. The Company is exposed to credit risk in the event of nonperformance by the counterparties to the swaps. The Company believes it mitigates its credit risk by entering into swaps with major financial institutions.

The carrying value of the Company’s fixed-rate debt is adjusted to include the $200.0 million of variable-rate debt that was swapped to a fixed rate at September 30, 2023. An estimate of the effect of a 100 basis-point increase at September 30, 2023 and December 31, 2022, is summarized as follows (in millions):


	September 30, 2023								December 31, 2022
	Carrying Value		Fair Value			100 Basis-Point Increase in Market Interest Rate			Carrying Value		Fair Value			100 Basis-Point Increase in Market Interest Rate
Company's fixed-rate debt	$	1,605.2	$	1,516.5	(A)	$	1,482.4	(B)	$	1,707.0	$	1,622.2	(A)	$	1,577.7	(B)
Company's proportionate share of joint venture fixed-rate debt	$	72.8	$	72.9		$	72.9		$	72.7	$	70.5		$	69.6

(A)

Includes the fair value of the swap, which was an asset of $11.4 million and $8.2 million at September 30, 2023 and December 31, 2022, respectively.

(B)

Includes the fair value of the swap, which was an asset of $17.5 million and $15.6 million at September 30, 2023 and December 31, 2022, respectively.

The sensitivity to changes in interest rates of the Company’s fixed-rate debt was determined using a valuation model based upon factors that measure the net present value of such obligations that arise from the hypothetical estimate as discussed above. A 100 basis-point increase in short-term market interest rates at September 30, 2023, would result in an increase in interest expense of approximately $0.3 million relating to the Company’s variable-rate debt outstanding for the nine months ended September 30, 2023. This exposure to interest rate risk was mitigated by the implementation of a 5.0% interest rate cap with respect to the variable (SOFR) component applicable to borrowings up to $100 million under the Company's Revolving Credit Facility through the beginning of April 2024. The estimated increase in interest expense does not give effect to possible changes in the daily balance of the Company’s outstanding variable-rate debt. All of the variable-rate debt outstanding at the unconsolidated joint ventures is subject to hedging agreements.

The Company and its joint ventures intend to continually monitor and actively manage interest costs on their variable-rate debt portfolio and may enter into swap positions based on market fluctuations. In addition, the Company believes it has the ability to obtain funds through additional equity and/or debt offerings and joint venture capital. Accordingly, the cost of obtaining such protection agreements versus the Company’s access to capital markets will continue to be evaluated. The Company has not entered, and does not plan to enter, into any derivative financial instruments for trading or speculative purposes. As of September 30, 2023, the Company had no other material exposure to market risk.

Item 4. CONTROLS AND PROCEDURES

The Company’s management, with the participation of the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), conducted an evaluation, pursuant to Securities Exchange Act of 1934 Rules 13a-15(b) and 15d-15(b), of the effectiveness of our disclosure controls and procedures. Based on their evaluation as required, the CEO and CFO have concluded that the Company’s disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) were effective as of the end of the period covered by this Quarterly Report on Form 10-Q to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and were effective as of the end of such period to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act is accumulated and communicated to the Company’s management, including its CEO and CFO, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

During the three months ended September 30, 2023, there were no changes in the Company’s internal control over financial reporting that materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

“PART II

OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

The Company and its subsidiaries are subject to various legal proceedings, which, taken together, are not expected to have a material adverse effect on the Company. The Company is also subject to a variety of legal actions for personal injury or property damage arising in the ordinary course of its business, most of which are covered by insurance. While the resolution of all matters cannot be predicted with certainty, management believes that the final outcome of such legal proceedings and claims will not have a material adverse effect on the Company’s liquidity, financial position or results of operations.

Item 1A. RISK FACTORS

Reference is made to Part 1, Item 1A. “Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The risk factors set forth below update, and should be read together with, such risk factors.

The Proposed Spin-off of the Company’s Curbline Convenience Assets into a Separate, Publicly-Traded REIT May Not Be Completed on the Currently Contemplated Timeline or Terms, or at All, and May Not Achieve the Intended Benefits

In October 2023, the Company announced a plan to spin off its convenience assets into Curbline, a separate, publicly-traded REIT, for the purpose of pursuing the acquisition and aggregation of unanchored convenience retail properties. The Company expects Curbline to elect to be treated as and qualify for taxation as a REIT for U.S. federal income tax purposes. The Company currently expects to complete the taxable spin-off in the second half of 2024, although there can be no assurances as to whether or when the spin-off will occur, what the final structure of Curbline will be or the tax treatment of Curbline as a separate entity or the tax effects of the spin-off on the Company.

The completion of the spin-off will be subject to various conditions, including effectiveness of a registration statement on Form 10 and final approval and declaration of the distribution of Curbline’s common stock to the Company’s shareholders by the Company’s Board of Directors. Satisfaction of such conditions and other unforeseen developments could delay or prevent the spin-off or cause the spin-off to occur on terms or conditions that are less favorable and/or different than anticipated. The Company may also elect not to proceed with the spin-off if it is unable to complete the closing of the related Mortgage Facility. Whether or not the spin-off is ultimately completed, the pendency of the spin-off may impose challenges on the Company and its business, including the diversion of management time on matters relating to the spin-off and potential impacts on the Company’s relationships with its employees, tenants and other counterparties. To the extent the Company is unable to complete the spin-off, the Company’s future performance and the trading price of its shares may be adversely affected. If the spin-off is consummated, the trading price of the Company’s common shares is expected to decrease significantly as a result of the value of the spin-off distribution, and the combined value of the common shares of the two publicly traded companies may not be equal to or greater than what the value of the Company’s common shares would have been had the spin-off not occurred. The Company also expects to incur significant expenses in connection with its pursuit of the spin-off.

In the event the spin-off is consummated, the Company and its shareholders may not be able to achieve the full strategic and financial benefits that are currently anticipated to result from the spin-off, or such benefits may be delayed, particularly if Curbline is unable to acquire additional convenience assets or if the Company is unable to maximize value through operations and opportunistic asset sales. Curbline’s ability to execute on its plan to acquire assets is dependent on many factors, including the availability of additional sources of capital, the level of supply and pricing for such assets and the internal resources required to pursue such acquisitions. The Company’s ability to maximize value through operations and additional opportunistic asset sales is dependent on many factors, including demand for space within the Company’s portfolio and the level of demand and pricing for its assets. Even if the Company disposes of additional assets, the ability to distribute sales proceeds to shareholders will be subject to any restrictions set forth in the terms of the Company’s then-outstanding indebtedness and preferred investments.

The Proposed Spin-Off May Create, or Appear to Create, Potential Conflicts of Interest for Certain of Our Directors and Officers Because of Their Positions or Relationships with Curbline

In the event the spin-off is consummated, members of the Company’s Board of Directors and management are expected to own shares of Curbline, including as a result of the distribution of Curbline shares made on account of Company shares currently owned by such individuals. Ownership of Curbline shares by these individuals could create, or appear to create, potential conflicts of interest when the Company’s directors and executive officers are faced with decisions that could have different implications for the Company and Curbline. It is expected that some of the Company’s current or former directors might also become directors of Curbline following the spin-off.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

ISSUER PURCHASES OF EQUITY SECURITIES


	(a)		(b)		(c)		(d)
	Total Number of Shares Purchased(A)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (Millions)
July 1–31, 2023		—		—		—	$	—
August 1–31, 2023		—		—		—		—
September 1–30, 2023		28,437	$	13.67		—		—
Total		28,437	$	13.67		—	$	73.4

(A)

Includes common shares surrendered or deemed surrendered to the Company to satisfy statutory minimum tax withholding obligations in connection with the vesting and/or exercise of awards under the Company’s equity-based compensation plans.

On December 20, 2022, the Company announced that its Board of Directors authorized a common share repurchase program. Under the terms of the program, the Company is authorized to repurchase up to a maximum value of $100 million of its common shares. From December 20, 2022 through September 30, 2023, the Company had repurchased 2.0 million of its common shares in the aggregate at a cost of $26.6 million under the program.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

None.

Item 6. EXHIBITS


10.1		Employment Agreement, dated as of September 15, 2023, by and between SITE Centers Corp. and Conor Fennerty

10.2		Employment Agreement, dated as of September 15, 2023, by and between SITE Centers Corp. and John Cattonar

31.1		Certification of principal executive officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 19341

31.2		Certification of principal financial officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 19341

32.1		Certification of chief executive officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of this report pursuant to the Sarbanes-Oxley Act of 20021,2

32.2		Certification of chief financial officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of this report pursuant to the Sarbanes-Oxley Act of 20021,2

101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document1

101.SCH		Inline XBRL Taxonomy Extension Schema Document1

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document1

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document1

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document1

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document1

104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 has been formatted in Inline XBRL and included in Exhibit 101.

Submitted electronically herewith.

Pursuant to SEC Release No. 34-4751, these exhibits are deemed to accompany this report and are not “filed” as part of this report.

Attached as Exhibit 101 to this report are the following formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022, (ii) Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022, (iii) Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2023 and 2022, (iv) Consolidated Statements of Equity for the Three and Nine Months Ended September 30, 2023 and 2022, (v) Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 and (vi) Notes to Condensed Consolidated Financial Statements.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	SITE CENTERS CORP.

	By:	/s/ Christa A. Vesy
		Name:	Christa A. Vesy
		Title:	Executive Vice President and Chief Accounting Officer (Principal Accounting Officer)
Date: November 1, 2023