It has been about a month since the last earnings report for SITE CENTERS CORP. (SITC). Shares have lost about 7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is SITE CENTERS CORP. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
SITE Centers’ OFFO & Revenues Surpass Estimates in Q4
SITE Centers reported fourth-quarter 2022 operating FFO (OFFO) per share of 29 cents, beating the Zacks Consensus Estimate by a penny. However, the figure was lower than the prior-year quarter’s 30 cents.
Results reflected healthy leasing activity and a year-over-year improvement in annualized base rent.
SITE Centers generated revenues of $136.4 million in the reported quarter, outpacing the Zacks Consensus Estimate of $135.3 million. Moreover, the top line improved 9.5% year over year.
Per David R. Lukes, president and CEO of SITC, “SITE Centers had a very productive fourth quarter with results ahead of plan as we continued to execute on our leasing and operational goals. In the last two years, we have executed over 2.0 million square feet of new leases increasing the Company’s leased rate over 380 bp to 95.4% highlighting the quality and strength of our focused portfolio of assets concentrated in the top sub-markets of the country.”
Quarter in Detail
SITC reported a leased rate of 95.4% on a pro-rata basis as of Dec 31, 2022, which compared favorably with the prior-year quarter’s 92.7%. The rise was driven by healthy small-shop (less than 10,000 square feet) leasing activity.
The annualized base rent per occupied square foot was $19.52 on a pro-rata basis as of Dec 31, 2022, compared with $18.33 a year ago.
SITE Centers, on a pro-rata basis, generated cash new and cash renewal leasing spreads of 55.2% and 7.6%, respectively, in the fourth quarter.
Moreover, the same-store net operating income (NOI) improved 1.8% on a pro-rata basis in the reported quarter, inclusive of redevelopment, from the prior-year quarter.
SITE Centers exited the fourth quarter with $20.3 million of cash, slightly down from $20.9 million as of Sep 30, 2022.
In the December quarter, SITC acquired one convenience shopping center — Shops on Montview in Denver, CO — for $5.8 million.
SITE Centers disposed of four shopping centers land parcels for $166.7 million ($158.2 million at company share).
The company repurchased 2.2 million of its common shares in open market transactions for a total cost of $28.8 million or an average cost of $13.33 per share. This was carried out with the proceeds generated from the sale of wholly-owned properties.
SITE Centers issued guidance for 2023.
It expects OFFO per share in the range of $1.10-$1.16.
Growth in same-store NOI (adjusted for 2022 uncollectible revenue impact) is expected in the band of 0-3.5%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
At this time, SITE CENTERS CORP. has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren’t focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, SITE CENTERS CORP. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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