Shares of SITE Centers Corp.’s SITC gained 2.5% in response to fourth-quarter 2019 results. Operating funds from operations (OFFO) per share of 33 cents surpassed the Zacks Consensus Estimate of 28 cents. Also, the bottom line compared favorably with the prior-year quarter’s reported figure of 31 cents.
Healthy leasing activity, rent and same-store net operating income (NOI) growth primarily drove the company’s performance. However, fall in rental income and other property revenues partially offset the positive.
The company generated revenues of $110.9 million in the quarter, missing the Zacks Consensus Estimate of $112 million. Also, the top line came in lower than the $120.7 million recorded a year ago.
In full-year 2019, OFFO per share came in at $1.27, surpassing the Zacks Consensus Estimate of 1.22. However, the figure plunged 23.5% year over year. Full-year 2019 revenues fell 31.8% year over year to $443.4 million. Further, the reported figure missed the Zacks Consensus Estimate of $446.4 million.
Quarter in Detail
Same-store NOI growth on a pro-rata basis was 5.1% in the quarter. SITE Centers reported a leased rate of 93.8% as of Dec 31, 2019, up 110 basis points from the prior-year quarter’s end, on a pro-rata basis.
Annualized base rent per occupied square foot was $18.25 on a pro-rata basis as of Dec 31, 2019, up 2.2% from $17.86 as of Dec 31, 2018. The company, on a pro-rata basis, generated new and renewal leasing spreads of 14.5% and 1.4%, respectively, in the fourth quarter.
SITE Centers sold two shopping centers and land for $287.6 million ($76.4 million at the company’s share) during the reported quarter. This included $46.6 million from the repayment of SITC Centers’ preferred equity investment in two joint ventures with Blackstone.
Finally, SITE Centers exited the December quarter with $16.1 million in cash compared with approximately $11.1 million as of Dec 31, 2018.
2020 Outlook
For 2020, the company expects OFFO per share of $1.10-$1.14. The Zacks Consensus Estimate for the same is currently pegged at $1.13.
Conclusion
Healthy leasing momentum is likely to support SITE Centers’ financials in the upcoming period. Moreover, the company remains on track with its five-year growth plan. Additionally, emphasis on redevelopment opportunities will likely result in rent and occupancy growth at its properties. It is also focused on revamping its portfolio through asset sales and reinvesting the proceeds in accretive acquisitions. Nevertheless, shrinking footfall at malls amid shift of consumers toward online channels, store closures and bankruptcy of retailers is likely to keep affecting the retail real estate sector and dent the company’s growth in the near term.