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SITE Centers Corp. SITC has been seeing green shoots of recovery, per data provided as part of its fourth-quarter 2020 operational update.
As of Jan 7, 2021, the company collected around 75% and 86% of aggregate base rents for the second and third quarters of 2020, respectively. As of the same date, collections for the fourth quarter improved to 93%. With collections ongoing, these figures are likely to advance further.
Notably, the resumption of operations at its shopping centers, high composition of essential businesses at its centers and a substantial percentage of national tenants in its tenant roster have likely supported rent collections. In fact, all of the company’s properties remain open, with 98% of tenants (at its share and based on average base rents) open for business, up 53% from Apr 5.
Moreover, 56% of its tenants are deemed essential. Further, 89% of SITE Centers’ portfolio is composed of national tenants, on the basis of annual base rents at share. Also, these retailers have significant access to capital, aiding them during these testing times.
Markedly, the company’s open-air shopping centers are enjoying higher demand for retail space from traditionally mall-based retailers. In fact, in fourth-quarter 2020, SITE Centers witnessed the highest level of leasing since third-quarter 2018.
Management also notes, “Our leasing pipeline continues to grow, and I would expect continued progress backfilling existing vacancies in 2021 as retailers target locations in the highest-income suburban communities where our properties are located.”
Such strong leasing is likely to provide revenue visibility and strengthen SITE Centers’ cash flow from operations. This along with limited debt maturities in the current year provides the company with decent financial flexibility to navigate through the ongoing volatility and uncertainty, and withstand any credit crisis.
Shares of this Zacks Rank #3 (Hold) company have jumped 42.3% over the past three months compared with the industry's rally of 8.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Nevertheless, businesses of physical stores widely depend on customer traffic but consumers are avoiding crowded public spaces due to the pandemic and increasingly opting for online purchases. This, in turn, is taking a huge toll on customer footfall and is likely to affect store sales. As a result, retail REITs, which have already been battling store closures, bankruptcy issues and proliferation of e-commerce, are feeling the heat.
Apart from SITE Centers, the turbulence is affecting other retail REITs, including Macerich MAC, Simon Property SPG and Kimco KIM.
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Kimco Realty Corporation (KIM) : Free Stock Analysis Report
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SITE CENTERS CORP. (SITC) : Free Stock Analysis Report
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