SITE Centers (SITC) Stock Declines 3.7% Despite Q2 FFO Beat
SITE Centers Corp. SITC reported second-quarter 2023 operating funds from operations (OFFO) per share of 29 cents, beating the Zacks Consensus Estimate by a penny.
Results reflect better-than-anticipated revenues on healthy leasing activity and year-over-year growth in base rent per square foot. The company also revised its outlook for 2023.
SITE Centers generated revenues of $136.4 million in the reported quarter, outpacing the Zacks Consensus Estimate of $135.3 million.
However, on a year-over-year basis, the top line declined marginally year over year, and FFO per share fell 6.5%. While SITC's shares lost 3.64% on Jul 25 during regular trading hours on the NYSE, it regained 3.77% in the after-hours market trading.
Per David R. Lukes, president and CEO of SITC, “Second-quarter results were ahead of expectations and demand for space across unit sizes in our high-quality portfolio remains elevated.”
Quarter in Detail
SITC reported a leased rate of 95.5% on a pro-rata basis as of Jun 30, 2023, down from 95.9% as of Mar 31, 2023. The rejection of four wholly-owned Bed, Bath & Beyond leases, with one of the units released in the second quarter, attributed to this decline. Nonetheless, the figure compared favorably with the prior-year quarter’s tally of 94.4%.
The base rent per square foot was $19.89 as of Jun 30, 2023, improving from $18.86 recorded a year ago.
SITE Centers, on a pro-rata basis, generated cash new and cash renewal leasing spreads of 14.8% and 7.2%, respectively, in the second quarter.
Moreover, the same-store net operating income (NOI) improved 1.7% on a pro-rata basis in the reported quarter, inclusive of redevelopment, from the prior-year quarter.
SITE Centers exited the second quarter of 2023 with $28 million of cash, up from $25 million as of Mar 31, 2023.
Major Q2 Activity
In the second quarter, SITC acquired three convenience shopping centers for $48.5 million. These included Alpha Soda Center in Atlanta, GA, for $9.4 million, Barrett Corners in Atlanta, GA, for $15.6 million and Briarcroft Center in Houston, TX, for $23.5 million.
The company disposed of two shopping centers for $72 million ($14.4 million at company share).
2023 Outlook Revised
SITE Centers revised its guidance for 2023.
It now expects OFFO per share in the range of $1.13-$1.17, up from the earlier guided range of $1.11-$1.17. The Zacks Consensus Estimate for the same is currently pegged at $1.14, which lies within the guided range.
Growth in same-store NOI (adjusted for 2022 uncollectible revenue impact) has been revised to 1-4% from 0.5-4%.
SITE Centers currently carries a Zacks Rank #3 (Hold).
SITE CENTERS CORP. Price, Consensus and EPS Surprise
SITE CENTERS CORP. price-consensus-eps-surprise-chart | SITE CENTERS CORP. Quote
Upcoming Earnings Releases
We are looking forward to the earnings releases of other REITs like SBA Communications SBAC and Host Hotels & Resorts HST, which are slated to report their results on Jul 31 and Aug 3, respectively.
The Zacks Consensus Estimate for SBA Communications’ second-quarter 2023 FFO per share is pegged at $3.14, suggesting year-over-year growth of 2.3%. SBAC currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Host Hotels & Resorts’ second-quarter 2023 FFO per share is pegged at 56 cents, implying a year-over-year decrease of 3.5%. HST currently carries a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Host Hotels & Resorts, Inc. (HST) : Free Stock Analysis Report
SBA Communications Corporation (SBAC) : Free Stock Analysis Report
SITE CENTERS CORP. (SITC) : Free Stock Analysis Report
