SITE Centers Corp.: Form 10-Q for the period ended Sep 30, 2024

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 consolidated 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, 2023, 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, 2024, the Company’s portfolio consisted of 112 shopping centers (including 11 shopping centers owned through unconsolidated joint ventures). At September 30, 2024, the Company owned approximately 11.5 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):

For the nine months ended September 30, 2024, the increase in net income attributable to common shareholders, as compared to the prior-year period, primarily was the result of the gains from dispositions of real estate recognized in 2024 and an increase in interest income, partially offset by the impact of net property dispositions, the write-off of fees related to the Mortgage Commitment (defined below), debt extinguishment costs, Curbline (defined below) spin-off transaction costs and impairment charges.

Curbline Spin-Off

In October 2023, the Company announced a plan to spin off a portfolio of convenience retail assets into a separate, publicly traded company to be named Curbline Properties Corp. (“Curbline” or “Curbline Properties”) in recognition of the distinct characteristics and opportunities within the Company’s unanchored and grocery, lifestyle and power center portfolios. Convenience properties are generally positioned on the curbline of well-trafficked intersections, and major vehicular corridors, offering enhanced access and visibility along with dedicated parking and often include drive-thru units. The properties generally consist of a homogeneous row of primarily small-shop units leased to a diversified mixture of national and local service and restaurant tenants that cater to daily convenience trips from the growing suburban population.

As of September 30, 2024, the Curbline portfolio consisted of 79 wholly-owned convenience retail assets consisting of approximately 2.7 million square feet of GLA. The separation of Curbline was completed on October 1, 2024.

On October 1, 2024, the Company, Curbline and Curbline Properties LP (the “Operating Partnership”) entered into a Separation and Distribution Agreement (the “Separation and Distribution Agreement”), which provided for the principal transactions necessary to consummate the spin-off, including the allocation among the Company, Curbline and the Operating Partnership of the Company’s assets, liabilities and obligations attributable to periods both prior to and following the spin-off. In particular, the Separation and Distribution Agreement provided, among other things, that certain assets relating to Curbline’s business were to be transferred to the Operating Partnership or the applicable Curbline subsidiary, including equity interests of certain Company subsidiaries that held assets and liabilities related to Curbline, interests in real property, certain tangible personal property, cash and cash equivalents held in Curbline accounts (including the transfer to Curbline of unrestricted cash of $800.0 million upon consummation of the spin-off) and other assets primarily used or held primarily for use in Curbline’s business. The Separation and Distribution Agreement also provided that certain liabilities relating to Curbline’s business were to be transferred to the Operating Partnership or the applicable Curbline subsidiary, including liabilities relating to or arising out of the operation of Curbline’s business after the effective time of the spin-off and liabilities expressly allocated to Curbline or one of its subsidiaries by the Separation and Distribution Agreement or certain other agreements entered into in connection with the spin-off.

Additionally, the Separation and Distribution Agreement contains provisions that obligate the Company to complete certain redevelopment projects at properties that are owned by Curbline. As of September 30, 2024, these redevelopment projects were estimated to cost $33.7 million to complete.

On October 1, 2024, the Company, Curbline and the Operating Partnership also entered into a Shared Services Agreement (the “Shared Services Agreement”), which provides that, subject to the supervision of the Company’s Board of Directors and executives, the Operating Partnership or its affiliates will provide the Company (i) leadership and management services that are of a nature customarily performed by leadership and management overseeing the business and operation of a REIT similarly situated to the Company, including supervising various business functions of the Company necessary for the day-to-day management operations of the Company and its affiliates and (ii) transaction services that are of a nature customarily performed by a dedicated transactions team within an organization similarly situated to the Company, including the provision of personnel at both the leadership and operational levels necessary to ensure effective and efficient preparation, negotiation, execution and implementation of real estate transactions, as well as overseeing post-transaction activities and alignment with the Company’s strategic objectives. It is expected that the Operating Partnership or its affiliates will provide the Company with a Chief Executive Officer and Chief Investment Officer but that the Company will employ its own Chief Financial Officer, Chief Accounting Officer and General Counsel.

The Shared Services Agreement also requires the Company to provide the Operating Partnership and its affiliates the services of its employees and the use or benefit of the Company’s assets, offices and other resources as may be necessary or useful to establish and operate various business functions of the Operating Partnership and its affiliates in a manner as would be established and operated for a REIT similarly situated to Curbline.

The Operating Partnership will have the authority to supervise the employees of the Company and its affiliates and direct and control the day-to-day activities of such employees while such employees are providing services to the Operating Partnership or its affiliates under the Shared Services Agreement.

The Operating Partnership will pay the Company a fee in the aggregate amount of 2.0% of Curbline’s Gross Revenue (as defined in the Shared Services Agreement) during the term of the Shared Services Agreement to be paid in monthly installments each month in arrears no later than the tenth calendar day of each month based upon Curbline’s Gross Revenue for the prior month. There is no separate fee paid by the Company in connection with the provision of services by the Operating Partnership or its affiliates under the Shared Services Agreement. Unless terminated earlier, the term of the Shared Services Agreement will expire on October 1, 2027. In the event of certain early terminations of the Shared Services Agreement, the Company will be obligated to pay a termination fee to the Operating Partnership equal to $2.5 million multiplied by the number of whole or partial fiscal quarters remaining in the Shared Services Agreement’s three-year term (or $12.0 million in the event the Company terminates the agreement for convenience on its second anniversary).

The Company, Curbline and the Operating Partnership also entered into a tax matters agreement, which governs the rights, responsibilities and obligations of the parties following the spin-off with respect to various tax matters and provides for the allocation of tax-related assets, liabilities and obligations. In addition, the Company, Curbline and the Operating Partnership entered into an employee matters agreement, which governs the respective rights, responsibilities, and obligations of the parties following the spin-off with respect to transitioning employees, equity plans and retirement plans, health and welfare benefits, and other employment, compensation, and benefit-related matters.

SITE Centers Strategy

From July 1, 2023 to September 30, 2024, the Company generated approximately $3.1 billion of gross proceeds from sales of properties for the purpose of acquiring additional convenience properties, capitalizing Curbline and, together with proceeds from the closing and funding of the Mortgage Facility (defined below), redeeming and/or repaying all of the Company’s outstanding unsecured indebtedness. As of October 1, 2024, the Company had completed the sale of substantially all of the properties that had been in its active disposition pipeline prior to the spin-off of Curbline. Going forward, the Company intends to realize value through operations and to consider various factors, including market conditions and differences between the public and private valuations of its portfolio, in evaluating whether and when to pursue additional asset sales. The timing of any additional sales may also be impacted by interim leasing, tactical redevelopment activities and other asset management initiatives intended to maximize value. The Company expects to use proceeds from any additional asset sales to repay outstanding indebtedness and make distributions to shareholders.

The Company expects that rental income and net income will decrease in future periods as a result of the spin-off of Curbline and the significant volume of dispositions completed in recent quarters. The Company expects that its future dividend policy will be influenced by operations and asset sales, though the Company’s distribution of any sale proceeds to shareholders will be subject to restrictions set forth in the terms of the Company’s indebtedness and management of liquidity and overall leverage levels in connection with ongoing operations.

Company Activity

Growth opportunities within the Company’s portfolio include rental rate increases, continued lease up of the portfolio, rent commencement with respect to recently executed leases and the adaptation of existing site plans and square footage to generate higher blended rental rates and operating cash flows.

Transactional and investment highlights for the Company through October 25, 2024, in addition to the Curbline spin-off, include the following:

• Acquired 13 convenience centers and a fee interest in a land parcel in Arizona, California, Colorado, Florida, Georgia, Illinois, Ohio, Tennessee and Texas for an aggregate purchase price of $193.6 million, as well as the joint venture partner’s 80% interest in a property in North Carolina (Meadowmont Village) for $35.4 million;
• Sold 40 wholly-owned shopping centers (excluding certain retained convenience parcels), a parcel at a shopping center and two joint venture assets for an aggregate sales price of $2,325.9 million ($2,261.3 million at the Company’s share);
• Effected a reverse stock split of its common shares at a ratio of one-for-four;
• Closed and funded a $530.0 million Mortgage Facility which had an outstanding principal balance of $206.9 million as of September 30, 2024;
• Repaid in full the $200.0 million Term Loan (defined below) and terminated the Revolving Credit Facility (defined below) and recorded associated debt extinguishment costs of $0.9 million and $3.9 million, respectively;
• Repurchased $88.3 million aggregate principal amount of outstanding senior notes due in 2025, 2026 and 2027 (the “Senior Notes”) for total cash consideration including expenses of $87.1 million and recorded a gain on debt retirement of $1.0 million;
• Redeemed all of its remaining outstanding Senior Notes for total cash consideration including expenses of $1,223.0 million and recorded debt extinguishment costs of $6.7 million;
• Repaid two wholly-owned mortgages due in 2025 for $25.5 million in aggregate and a joint venture mortgage loan for DDRM Properties Joint Venture due in 2024 for $40.9 million ($8.2 million at the Company’s share) and
• Provided notice of its intent to redeem all of its outstanding 6.375% Class A Cumulative Redeemable Preferred Shares and the associated depositary shares. In connection with the redemption, the Company expects to record a non-cash charge of approximately $6.1 million to net income attributable to common shareholders in the fourth quarter of 2024.

Operational Accomplishments

The Company believes its recent strong leasing results are attributable to national tenants’ strong financial positions and increasing emphasis and reliance on physical store locations and the concentration of the Company’s portfolio in primarily suburban, high household income communities which have witnessed significant population growth, changes in remote work and work-from-home trends, and limited new construction of competing retail properties.

Operational highlights for the Company through September 30, 2024, include the following:

• Total portfolio average annualized base rent per square foot increased to $24.83 at September 30, 2024, as compared to $20.35 at December 31, 2023 and $20.20 at September 30, 2023, all on a pro rata basis;
• The aggregate occupancy of the Company’s operating shopping center portfolio was 91.1% at September 30, 2024, as compared to 92.0% at December 31, 2023 and 92.2% at September 30, 2023, all on a pro rata basis and
• Leased approximately 2.3 million square feet of GLA, including 55 new leases and 208 renewals for a total of 263 leases. As of September 30, 2024, the Company has addressed substantially all of its remaining 2024 lease expirations.

The comparability of year-over-year and period-over-period operating metrics have been increasingly impacted by the level and composition of the Company’s disposition activities.

RESULTS OF OPERATIONS

Consolidated shopping center properties owned as of January 1, 2023, are referred to herein as the “Comparable Portfolio Properties.”

Revenues from Operations (in thousands)

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

(1) The changes in base and percentage rental income for the nine months ended September 30, 2024, were due to the following (in millions):

At September 30, 2024 and 2023, the Company owned 101 and 106 wholly-owned properties, respectively, with an aggregate occupancy rate of 91.2% and 92.3%, respectively, and average annualized base rent per occupied square foot of $25.58 and $20.29, respectively.

(2) Recoveries from tenants were approximately 79.5% and 82.0% of operating expenses and real estate taxes for the nine months ended September 30, 2024 and 2023, respectively. The decrease in recoveries from tenants is attributable to property dispositions that occurred in 2024.

(B) Fee and Other Income was primarily earned from the Company’s unconsolidated joint ventures. Changes 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 management arrangements with the Company in connection with a change in investment strategy or otherwise.

Expenses from Operations (in thousands)

(A) The changes for the nine months ended September 30, 2024, were due to the following (in millions):

(B) The Company recorded impairment charges triggered by a change in the hold period assumptions. Impairment charges are presented in Note 9, “Impairment Charges”, to the Company’s consolidated financial statements included herein.

(C) General and administrative expenses for the nine months ended September 30, 2024 and 2023, were approximately 10.0% and 7.3% 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 and recorded a charge to general and administrative costs of $4.0 million for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, the Company recorded separation and other charges of $1.3 million.

Other Income and Expenses (in thousands)

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

In the third quarter of 2024, the Company simplified its debt structure. As of September 30, 2024, the Company had only two mortgages outstanding (the Mortgage Facility and a mortgage loan encumbering Nassau Park Pavilion) with a weighted average interest rate (based on contractual rates and excluding fair market value adjustments and debt issuance costs) of 7.5% at September 30, 2024. At September 30, 2024, the weighted-average term (without extensions) was 2.6 years. At September 30, 2023, the weighted average interest rate (based on contractual rates and excluding fair market value adjustments and debt issuance costs) was 4.3%.

(B) Income earned related to excess cash as a result of sale proceeds maintained in money market accounts.

(C) Related primarily to write off of loan costs and commitment fees and payment of debt extinguishment costs due to the termination of the Mortgage Commitment ($21.2 million), the Revolving Credit Facility ($3.9 million), redemption of the Senior Notes ($6.7 million), pay-off of the Term Loan ($0.9 million) and the release of properties from the Mortgage Facility ($10.1 million).

(D) Related to the repurchase of a portion of the Senior Notes for total cash consideration, including expenses, of $87.1 million and the write-off of a fair value discount.

(E) Derivative mark-to-market impact related to the partial hedge on the potential interest rate impact to yield maintenance premiums on the Senior Notes. The hedge was terminated in conjunction with the redemption of the Senior Notes and the Company received a cash payment of $1.3 million during the three months ended September 30, 2024.

(F) In 2024, primarily consists of $30.3 million of transaction costs relating to the spin-off of Curbline.

Other Items (in thousands)

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(A) The reduction of income is the result of gains recognized in 2023 from joint venture assets sales. During the nine months ended September 30, 2023, the DDRM Properties Joint Venture sold five shopping centers for an aggregate sales price of $112.2 million ($22.4 million at the Company’s share). During the nine months ended September 30, 2024, the DDRM Properties Joint Venture sold one shopping center for $36.5 million ($7.3 million at the Company’s share) in addition to selling its remaining asset to the Company for $44.2 million ($35.4 million at the Company’s share), for which the Company recorded a Gain on sale and change in control of interest. At September 30, 2024 and 2023, the Company had an economic investment in unconsolidated joint ventures which owned 11 and 13 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.

(B) In May 2024, the Company acquired its partner’s 80% interest in one asset previously owned by the DDRM Properties Joint Venture (Meadowmont Village, Chapel Hill, North Carolina) for $35.4 million and stepped up its 20% interest due to change in control. In 2023, the Company recorded a gain related to additional proceeds received related to an unconsolidated joint venture that sold its sole asset, a parcel of undeveloped land in Richmond Hill, Ontario, which was considered contingent at the time of the sale.

(C) The Company sold 40 wholly-owned shopping centers (excluding certain retained convenience parcels) and one parcel at a wholly-owned shopping center in 2024. See “— Sources and Uses of Capital” included elsewhere herein.

Net Income (in thousands)

The increase in net income attributable to SITE Centers, as compared to the prior-year period, was primarily the result of the gains from dispositions and higher interest income, partially offset by the impact of net property dispositions, debt extinguishment costs (including the write-off of fees related to the Mortgage Commitment), Curbline Properties spin-off transaction costs and impairment charges.

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 from joint ventures and equity income 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/losses 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/losses 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/losses 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, mark to market on derivative instruments, 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/losses 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/losses are non-recurring. These charges, income and gains/losses 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):

The decrease in FFO for the nine months ended September 30, 2024, as compared to the prior-year period, was primarily attributable to the impact from net property dispositions, transaction costs related to the Curbline Properties spin-off and debt extinguishment costs, partially offset by increased interest income. The decrease in Operating FFO for the nine months ended September 30, 2024, as compared to the prior-year period, was primarily attributable to the impact from net property dispositions, partially offset by increased interest income.

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:

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(A) At September 30, 2024 and 2023, the Company had an economic investment in unconsolidated joint ventures which owned 11 and 13 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):

(B) For the three and nine months ended September 30, 2024, includes $32.6 million and $43.0 million, respectively, of debt extinguishment costs and $23.2 million and $30.3 million, respectively of transaction costs relating to the spin-off of Curbline.

LIQUIDITY, CAPITAL RESOURCES AND FINANCING ACTIVITIES

The Company requires capital to fund its operating expenses and capital expenditures. The Company’s primary capital sources include cash flow from operations, debt financings and proceeds from asset sales. The Company remains committed to monitoring the duration of its indebtedness, to maintaining prudent leverage levels in an effort to manage its overall risk profile while maintaining strategic flexibility and to closely monitoring liquidity and its cash position following the termination of its Revolving Credit Facility in August 2024.

The Company’s consolidated and unconsolidated debt obligations generally require monthly payments of principal and/or interest over the term of the obligation. While the Company currently believes it has several options to obtain capital and fund its business, 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. See Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

The Company expects that redevelopment activities and capital expenditures will generally be financed through cash provided from operating activities and asset sales. Total consolidated debt outstanding was $0.3 billion and $1.6 billion at September 30, 2024 and December 31, 2023, respectively.

At September 30, 2024, the Company had an unrestricted cash balance of $1,063.1 million of which $800.0 million was used to capitalize Curbline Properties, approximately $21.0 million is expected to be used in the fourth quarter to pay outstanding transaction expenses relating to the spin-off of Curbline and approximately $176.3 million is expected to be used in November to redeem all of the Company’s outstanding preferred shares and associated depositary shares. The Company has addressed all of its consolidated debt maturing in 2024. As of September 30, 2024, the Company anticipates that it has approximately $33.7 million to be incurred to complete redevelopment projects at properties owned by Curbline pursuant to the terms of the Separation and Distribution Agreement. The Company believes it has sufficient liquidity to operate its business at this time.

Termination of Revolving Credit Facility and Term Loan

On August 15, 2024, the Company terminated all of the lenders’ commitments under its unsecured revolving credit facility with a syndicate of financial institutions and JPMorgan Chase Bank, N.A., as administrative agent (the “Revolving Credit Facility”) and paid all related fees and expenses then outstanding. At the time of termination of the lenders’ commitments, there were no loans outstanding under the Revolving Credit Facility.

On August 15, 2024, the Company also repaid in full all outstanding amounts under its unsecured term loan with a syndicate of financial institutions and Wells Fargo Bank, National Association, as administrative agent (the “Term Loan”). At the time of the repayment, the principal amount of the Term Loan was approximately $200.0 million.

Repayment of Other Senior Unsecured Indebtedness

On August 21, 2024, the Company redeemed the entire outstanding principal amount of its 4.700% Notes due 2027 ($448.3 million). On August 23, 2024, the Company redeemed the entire outstanding principal amount of its 3.625% Notes due 2025 ($400.4 million) and 4.250% Notes due 2026 ($370.1 million).

Mortgage Facility

On August 7, 2024, the Company closed and funded a $530.0 million mortgage loan (the “Mortgage Facility”) provided by affiliates of Atlas SP Partners, L.P. and Athene Annuity and Life Company (collectively, the “Lenders”). The Company used proceeds from the closing together with cash on hand from asset sales to repay its outstanding senior unsecured indebtedness as described above and to capitalize Curbline.

In connection with the Mortgage Facility’s closing, certain wholly-owned subsidiaries of the Company (collectively, the “Borrowers”) delivered certain promissory notes (collectively, the “Notes”) evidencing their obligation to pay principal, interest and other amounts under the Mortgage Facility. The Notes are secured by, among other things, mortgages encumbering the Borrowers’ respective properties (a total of 23 properties at closing) (the “Properties”) and related personal property, leases and rents.

The Mortgage Facility will mature on September 6, 2026 subject to two one-year extensions at the Borrowers’ option (subject to satisfaction of certain conditions). The interest rate applicable to the Notes is equal to 30-day term SOFR (subject to a rate index floor of 3.50%) plus a spread of 2.75% per annum. The Borrowers are required to maintain an interest rate cap with respect to the principal amount of the Notes having a 30-day term SOFR strike rate equal to 6.25%. During the continuance of an event of default, the contract rate of interest on the Notes will increase to the lesser of (i) the maximum rate allowed by law or (ii) 4% above the interest rate then otherwise applicable.

The Mortgage Facility is structured as an interest only loan throughout the initial two-year term and any exercised extension periods. The principal amount outstanding under the Mortgage Facility may be prepaid (in whole or in part) by the Borrowers at any time without penalty, provided that prepayments made prior to the first anniversary of the closing date in excess of 35% of the initial principal amount of the Mortgage Facility will be subject to the Borrowers’ payment of a spread maintenance premium equal to 2.75% per annum based on the number of days remaining prior to the first anniversary of the closing date. So long as no event of default then exists and subject to other customary release conditions, the Borrowers may cause the Lenders to release Properties from the Mortgage Facility in connection with their sale by paying 115% of the initial loan amount allocated to such Property (plus the spread maintenance premium, if applicable) provided that after giving effect to such release the debt yield of the remaining Properties is equal to or greater than (i) the debt yield on the Mortgage Facility’s closing date and (ii) the debt yield in effect immediately prior to such release.

All Property rents will be deposited into lockbox accounts in the name of the Borrowers for the benefit of and controlled by the Lenders. So long as no Trigger Period (as defined below) is continuing, Borrowers shall have control over all funds in such lockbox accounts. During a Trigger Period, substantially all amounts in the lockbox accounts will be remitted to a cash management account controlled by the Lenders on a daily basis and will be used by the Lenders to fund monthly debt service, real estate taxes, insurance, required reserves, other amounts owing to the Lenders and other property-level operating costs, with all remaining amounts to be held by the Lenders as additional collateral for the Mortgage Facility. A “Trigger Period” commences (i) upon the occurrence of any event of default under the Mortgage Facility (and ends upon the cure or waiver of the event of default); (ii) when the debt yield falls below 10.5% (and ends when the debt yield exceeds 10.5% for one calendar quarter); or (iii) upon any bankruptcy action with respect to any Borrower or manager of a Property that has not been discharged within 60 days of filing.

Throughout the term of the Mortgage Facility, the Company is required to maintain (i) a net worth of not less than 15% of the then outstanding principal amount of the loan (but in no event less than $100.0 million) and (ii) minimum liquid assets of not less than 5% of the then outstanding principal amount of the loan (but in no event less than $15.0 million).

The Company is required to comply with certain other covenants under the Mortgage Facility. The Company was in compliance with these covenants at September 30, 2024.

As of September 30, 2024, the Mortgage Facility had an outstanding principal balance of $206.9 million and was secured by 13 Properties.

Termination of Mortgage Commitment

In connection with the Mortgage Facility’s closing, the Company terminated the commitment (the “Mortgage Commitment”) that it had obtained from the Lenders in October 2023 to provide a $1.1 billion financing secured by 40 of the Company’s properties.

Consolidated Indebtedness – as of September 30, 2024

In addition to amounts outstanding under the Mortgage Facility, the Company had outstanding consolidated indebtedness at September 30, 2024 of $100.0 million, which consisted of a mortgage loan encumbering one property (Nassau Park Pavilion, Princeton, New Jersey), maturing in November 2028.

Unconsolidated Joint Ventures’ Mortgage Indebtedness – as of September 30, 2024

The outstanding indebtedness of the Company’s unconsolidated joint ventures at September 30, 2024, which matures in the subsequent 13-month period (i.e., through October 2025), consists of $61.4 million ($30.6 million at SITE Centers’ share) for RVIP IIIB, which is expected to be extended in accordance with the loan documents.

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 the Company or one or more of its 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 or challenged transaction markets may adversely impact the ability of the Company or its 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):

Changes in cash flow for the nine months ended September 30, 2024, compared to the prior comparable period, are as follows:

Operating Activities: Cash provided by operating activities decreased $48.9 million primarily due to lower rental income as a result of disposition activity partially offset by an increase in interest income.

Investing Activities: Cash provided by investing activities increased $1.9 billion primarily due to the following:

• Increase in real estate assets acquired, developed and improved of $101.1 million;
• Increase in proceeds from disposition of real estate and joint ventures of $2.0 billion and
• Decrease in distributions from unconsolidated joint venture of $8.1 million.

Financing Activities: Cash used for financing activities increased $1.4 billion primarily due to the following:

• Increase in repayment of Senior Notes of $1.2 billion;
• Proceeds from draws on the Revolving Credit Facility in 2023 of $135.0 million;
• Increase in dividends paid in 2024 of $33.5 million due to a special dividend paid in January 2024;
• Proceeds from the termination of derivative contracts of $8.1 million;
• Payment of debt extinguishment costs of $8.1 million in 2024;
• Increase in debt issuance costs, commitment fees and Curbline loan costs of $24.6 million and
• Repurchases of common shares in 2023 of $26.6 million.

Dividend Distribution

The Company declared common and preferred cash dividends of $63.1 million and $90.3 million for the nine months ended September 30, 2024 and 2023, respectively. In order to maximize the capitalization of Curbline and preserve funds for operations, the Company did not declare a dividend on its common shares with respect to the third quarter of 2024.

The Company intends to distribute at least 100% of ordinary taxable income in the form of common and preferred dividends (including the distribution of Curbline common shares) with respect to the year ending December 31, 2024 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 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 disposition activity, though the Company’s ability to distribute sale proceeds to shareholders will be subject to restrictions set forth in the terms of the Company’s indebtedness and prudent management of liquidity levels in connection with ongoing operations.

SITE Centers’ Equity

In 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 $100.0 million of its common shares. Through September 30, 2024, the Company had repurchased under this program 0.5 million of its common shares in open market transactions at an aggregate cost of $26.6 million.

In May 2024, the Company terminated its $250.0 million “at the market” continuous equity program.

Prior to the commencement of trading on August 19, 2024, in anticipation of the Curbline spin-off transaction, the Company effected a reverse stock split of its common shares, at a ratio of one-for-four.

SOURCES AND USES OF CAPITAL

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 while maintaining strategic flexibility. Debt financings, asset sales and cash flow from operations continue to represent potential sources of proceeds to be used to achieve these objectives.

Curbline Separation

On October 1, 2024, the Company completed the spin-off of Curbline. For additional information on the Curbline spin-off, see the “Executive Summary—Curbline Spin-Off” section of this MD&A.

Prior to the spin-off of Curbline, the Company used proceeds from the closing and funding of the Mortgage Facility and assets sales to redeem and/or repay all of the Company’s outstanding unsecured indebtedness. As of October 1, 2024, the Company had completed the sale of substantially all of the properties that had been in its active disposition pipeline prior to the spin-off of Curbline. Going forward, the Company intends to realize value through operations and to consider various factors, including market conditions and differences between the public and private valuations of its portfolio, in evaluating whether and when to pursue additional asset sales. The timing of any additional sales may also be impacted by interim leasing, tactical redevelopment activities and other asset management initiatives intended to maximize value. The Company expects to use proceeds from any additional asset sales to repay outstanding indebtedness (including the Mortgage Facility) and make distributions to shareholders. Following the termination of the Company’s Revolving Credit Facility in August 2024, the Company also plans to conservatively manage its cash position in order to ensure adequate resources to fund ongoing operations.

Acquisitions

Through September 30, 2024, the Company acquired the following convenience centers and land (in thousands) all of which were included in the Curbline Properties spin-off (other than certain portions of Meadowmont Village):

(A) Acquired the fee interest in a land parcel at this center.

(B) Acquired from the DDRM Properties Joint Venture. Meadowmont Village, consisting of 62,116 square feet of GLA was included in the spin-off of Curbline.

In addition, in February 2024, the DDRM Properties Joint Venture acquired two outparcels at its Meadowmont Village property for a purchase price of $8.1 million ($1.6 million at the Company’s share).

Dispositions

Through October 25, 2024, the Company sold the following wholly-owned shopping centers (in thousands):

(A) Excludes 7,929 square feet of convenience retail GLA retained by the Company (Shops at Casselberry).

(B) Excludes 8,515 square feet of convenience retail GLA retained by the Company (Plaza at Market Square).

(C) Sold Arrowhead Crossing (Phoenix, Arizona), The Fountains (Miami, Florida), Easton Market (Columbus, Ohio), Kenwood Square (Cincinnati, Ohio), Polaris Towne Center (Columbus, Ohio) and Tanasbourne Town Center (Portland, Oregon). Excludes 14,159 square feet of convenience retail GLA retained by the Company at The Fountains (Shops at the Fountains), 70,971 square feet of convenience retail GLA retained by the Company at Polaris Towne Center (Shops on Polaris) and 8,477 square feet of convenience retail GLA retained by the Company at Tanasbourne Town Center (Shops at Tanasbourne).

(D) Excludes 14,998 square feet of convenience retail GLA retained by the Company (Shops at Carillon).

(E) Sold Cumming Marketplace and Cumming Towne Center (Cumming, Georgia). Excludes 43,577 and 36,805 square feet of convenience retail GLA retained by the Company at Cumming Marketplace (Marketplace Plaza South) and Cumming Towne Center (Marketplace Plaza North), respectively.

(F) Excludes 10,002 square feet of convenience retail GLA retained by the Company (Shops at Midway).

(G) Excludes 3,000 square feet of convenience retail GLA retained by the Company (Bandera Corner).

(H) Sold Carolina Pavilion (Charlotte, North Carolina), Millenia Crossing (Orlando, Florida) and Lake Brandon Village (Brandon, Florida). Excludes 9,652 square feet of convenience GLA retained by the Company at Carolina Pavilion (Carolina Station) and 11,964 square feet of convenience GLA retained by the Company at Lake Brandon Village (Shops at Lake Brandon).

(I) Excludes 27,158 square feet of convenience retail GLA retained by the Company (Shops on Summit).

(J) Excludes 34,150 square feet of convenience retail GLA retained by the Company (White Oak Plaza).

(K) Excludes 61,623 square feet of convenience retail GLA retained by the Company (Shops at Hamilton).

(L) Excludes 118,976 square feet of convenience retail GLA retained by the Company (Collection at Midtown Miami).

(M) Excludes 56,867 square feet of convenience retail GLA retained by the Company (Creekside Shops).

(N) Excludes 4,117 square feet of convenience retail GLA retained by the Company (Shops at Echelon Village).

(O) Sold Village at Stone Oak (San Antonio, Texas), Fairfax Town Center (Fairfax, Virginia) and Presidential Commons Snellville, Georgia). Excludes 9,618 square feet of convenience GLA retained by the Company at Presidential Commons (Presidential Plaza).

(P) Excludes 25,820 square feet of convenience retail GLA retained by the Company (Shops at University Hills).

Convenience retail GLA retained by the Company in connection with these dispositions was subsequently included in the Curbline Properties portfolio spun off from the Company on October 1, 2024.

Joint Venture Dispositions

In May 2024, the Company acquired one asset owned by the DDRM Properties Joint Venture (Meadowmont Village, Chapel Hill, North Carolina) for $44.2 million ($8.8 million at the Company’s share). In June 2024, the DDRM Properties Joint Venture sold one asset (Hilltop Plaza, Richmond, California) for $36.5 million of which the Company’s share was $7.3 million. There are no remaining assets in this joint venture.

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 projects 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, 2024, the Company had approximately $6 million in construction in progress in various active consolidated redevelopments and other projects. At September 30, 2024, the estimated cost to complete redevelopment projects at properties owned by Curbline pursuant to the terms of the Separation and Distribution Agreement was approximately $33.7 million.

CAPITALIZATION

At September 30, 2024, the Company’s capitalization consisted of $306.9 million of debt, $175.0 million of preferred shares and $3.2 billion of market equity (calculated as the common shares outstanding multiplied by $60.50, the closing price of the Company’s common shares on the New York Stock Exchange at September 30, 2024, the last trading day of September 2024).

In July 2024, the Company announced a one-for-four reverse stock split of its common shares. Split-adjusted trading began on the New York Stock Exchange at the opening of trading on August 19, 2024.

On October 24, 2024, the Company announced that it intends to redeem all $175.0 million aggregate liquidation preference of its 6.375% Class A Cumulative Redeemable Preferred Shares (the “Class A Preferred Share”) at a redemption price of $500 per Class A Preferred Share (or $25.00 per depository share) plus accrued and unpaid dividends of $3.6302 per Class A Preferred Share (or $0.1815 per depositary share) on November 26, 2024.

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 asset sales. In connection with the spin-off of Curbline, the Company used proceeds from the Mortgage Facility closing together with proceeds from asset sales to repay all of the Company’s outstanding unsecured indebtedness and therefore no longer maintains a revolving line of credit or an investment grade rating. The Company may not be able to obtain financing on favorable terms, or at all.

The Mortgage Facility contains certain operating and financial covenants, including, net worth and liquidity requirements, and includes provisions that could restrict the Company’s access and use of rent collections from mortgaged properties in the event the debt yield falls below a certain threshold or an event of default occurs. 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 Mortgage Facility permits the acceleration of maturity and foreclosure in the event of breaches of affirmative or negative covenants. 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

The Company has addressed all of its consolidated debt maturing in 2024. The Company expects to fund repayment of future maturities from cash on hand, proceeds from asset sales and other investments, cash flow from operations and/or additional debt financings. 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 $1.1 million for its consolidated properties at September 30, 2024, which includes the assets in the Company’s 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 cash on hand, operating cash flows or asset sales. These contracts typically can be changed or terminated without penalty.

Additionally, the Separation and Distribution Agreement contains obligations to complete certain redevelopment projects at properties that are owned by Curbline. As of September 30, 2024, such redevelopment projects were estimated to cost $33.7 million to complete.

In connection with the sale of two properties in 2024 and two properties in 2023, the Company guaranteed additional construction costs to complete re-tenanting work at the properties and deferred maintenance, all of which were recorded as a liability. As of September 30, 2024, the Company had a liability of approximately $12.3 million. The amount is recorded in accounts payable and other liabilities on the Company’s consolidated balance sheet.

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, 2024, the Company had purchase order obligations, typically payable within one year, aggregating approximately $1.4 million related to the maintenance of its properties and general and administrative expenses.

ECONOMIC CONDITIONS

The Company continues to experience steady retailer demand which it believes is attributable to the concentration of the Company’s portfolio in primarily suburban, high household income communities experiencing population growth, positive changes in remote and work-from-home trends, limited new construction of competing retail properties 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 no tenant’s annualized rental revenue equal to or exceeding 3% of the Company’s annualized consolidated revenues plus the Company’s proportionate share of unconsolidated joint venture revenues. 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 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. The Company executed new leases and renewals aggregating approximately 1.7 million square feet of space on a pro rata basis for the nine months ended September 30, 2024. At September 30, 2024 and December 31, 2023, the shopping center portfolio occupancy, on a pro rata basis, was 91.1% and 92.0%, respectively, and the total portfolio average annualized base rent, on a pro rata basis, was $24.83 and $20.35, respectively. Historical occupancy has generally ranged from 89% to 94% over the last 10 years. 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, 2024 and 2023, on a pro rata basis, was $5.78 and $4.82 per rentable square foot, respectively. The Company generally does not expend a significant amount of capital on lease renewals. The comparability of period-over-period operating metrics has been increasingly impacted by the level and composition of the Company’s disposition activities.

Inflation, higher interest rates and concerns over consumer spending, along with the volatility of global capital markets continue to pose risks to the U.S. economy, retail sales, and the Company’s tenants. In addition to these macroeconomic challenges, the retail sector has been affected by changing consumer behaviors, 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 launch new concepts and expand their store fleets within the suburban, high household income communities in which many of the Company’s properties are located. As a result, the Company believes that its prospects to backfill vacant spaces 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, 2023).

Inflation, rising interest rates and the availability of commercial real estate financing have also impacted, at certain times, real estate owners’ ability to acquire and sell assets and raise equity and debt financing. Although the Company has no consolidated indebtedness maturing in 2024, debt capital markets could adversely impact the Company’s ability to sell properties and its ability to refinance future maturities and the interest rates applicable thereto.

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 (the “Exchange Act”), 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, 2023.

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 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 be subject to potential exposure to unexpected claims, liabilities or costs under the Company’s agreements with Curbline and the Operating Partnership or otherwise in connection with the spin-off;
• The Company may abandon a 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 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 debt obligations. In addition, the Company may encounter difficulties in obtaining permanent financing or refinancing existing debt;
• 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;
• Financing necessary for the Company to 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;
• 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.

The Company’s primary market risk exposure is interest rate risk. At September 30, 2024, the Company’s debt, excluding unconsolidated joint venture debt and excluding the impact of the reclassification from accumulated other comprehensive income to interest expense related to the terminated interest rate swap, is summarized as follows:

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

The Company intends to use retained cash flow, proceeds from asset sales, and debt financing 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.

Prior to the payoff of the Term Loan, the variable-rate (SOFR) component of the interest rate applicable to the Company’s $200.0 million consolidated Term Loan was swapped to a fixed rate.

The carrying value of the Company’s fixed-rate debt was adjusted to include the $200.0 million of variable-rate debt that was swapped to a fixed rate at December 31, 2023. An estimate of the effect of a 100 basis-point increase at September 30, 2024 and December 31, 2023, is summarized as follows (in millions):

38

(A) Includes the fair value of the swap, which was an asset of $5.6 million at December 31, 2023.

(B) Includes the fair value of the swap, which was an asset of $11.5 million at December 31, 2023.

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.

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 debt financing. 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, 2024, the Company had no other material exposure to market risk.

The Company’s management, with the participation of the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), conducted an evaluation, pursuant to Exchange Act 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 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 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 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, 2024, 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