On May 27, we issued an updated research report on SITE Centers Corp. SITC.
The company has a diversified portfolio of shopping centers concentrated in prosperous regions. This has likely enabled it to enjoy demand from various tenants, specifically the off-price sector as well as discounters and service tenants, during the first quarter.
Further, exposure to day-to-day consumer necessity and essential businesses has been saving the grace of this retail REIT amid the COVID-19 outbreak-related store shutdowns. Notably, 80% of the company’s assets are anchored by grocers or well-known discount traffic drivers.
Moreover, with 56% of SITE Centers’ tenants deemed to be in essential businesses, all of the company’s properties remained open, operating for the entirety of the pandemic. In fact, the majority of the tenants at its shopping centers cater to day-to-day consumer needs, with a focus on value and convenience retailers.
Additionally, limited exposure to small shops — only 7% of total annual base rent (ABR) — is also advantageous in the current environment, since small shops are less likely to withstand significant economic disruptions.
Moreover, in light of the coronavirus pandemic, SITE Centers took some proactive measures to bolster its liquidity profile, resulting in an $839-million liquidity position as of the first-quarter end. To manage near-term capital commitments, it reduced capital spending on its redevelopment pipeline and has suspended second-quarter dividends. With the moves, SITE Centers is well-poised to navigate through the ongoing volatility and uncertainty.
However, the spread of coronavirus has forced several retailers to close their stores to contain the spread of the virus. Some retailers have also reduced store hours, while many others are keeping their e-retail operations running as consumers are now increasingly opting for online purchases.
This is translating to lower footfall, which is an added concern for retail REITs that have already been battling store closures and bankruptcy issues. In fact, SITE Centers’ tenants from the theater, fitness and local restaurant categories are being severely impacted. Further, the retail landlord collected only half of its April rents and has executed several rent deferrals, mostly for local small-shop tenants.
Additionally, near-term dilutive effect on earnings due to dispositions are concerning for the company. It sold one shopping center and land for $33.4 million during the first quarter. Moreover, the reduction in income due to properties sold in 2019 impacted its cash flow from operating activities in the first quarter.
Moreover, shares of the Zacks Rank #3 (Hold) company have plunged 53.6% over the past year compared with the industry’s decline of 26.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
Alexander Baldwin Holdings, Inc.’s ALEX Zacks Consensus Estimate for 2020 funds from operations (FFO) per share has moved upward to 83 cents over the past month. The company currently flaunts a Zacks Rank of 1.
One Liberty Properties, Inc.’s OLP FFO per share estimate for the ongoing year has been unchanged at $1.89 over the past 30 days. The company currently flaunts a Zacks Rank of 1.
Gladstone Land Corporation’s LAND FFO per share estimate for 2020 has moved 3% upward to 68 cents over the past month. Further, it currently carries a Zacks Rank of 2 (Buy).
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
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
One Liberty Properties, Inc. (OLP) : Free Stock Analysis Report
Alexander Baldwin Holdings, Inc. (ALEX) : Free Stock Analysis Report
Gladstone Land Corporation (LAND) : Free Stock Analysis Report
SITE CENTERS CORP. (SITC) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research