SITE Centers Corp. (SITC - Free Report) posted fourth-quarter 2018 operating funds from operations (OFFO) per share of 31 cents, surpassing the Zacks Consensus Estimate of 30 cents. However, the figure compares unfavorably with the prior-year figure of 56 cents. This year-over-year decline reflects the dilutive impact of the company’s spin-off of RVI, partially offset by lower interest expense.
Healthy leasing activity, rent and same-store net operating income (NOI) growth primarily drove the company’s impressive performance.
The company generated revenues of $121.5 million in the quarter under review, missing the Zacks Consensus Estimate of $126.4 million. Further, the top-line figure came in lower than the $209.4 million recorded in the comparable period last year.
For full-year 2018, OFFO per share came in at $1.66, surpassing the Zacks Consensus Estimate by a whisker. However, the figure plunged 30% year over year. Revenues for full-year 2018 dipped 25% year over year to $661.7 million. Further, the reported figure missed the Zacks Consensus Estimate of $669.7 million.
Quarter in Detail
Same-store NOI for the total portfolio on a pro-rata basis was 2.1%. In addition, the company, on a pro-rata basis for the total portfolio for the quarter, generated new leasing and renewal leasing spreads of 14% and 5.3%, respectively, in the fourth quarter.
SITE Centers reported a leased rate of 92.7% as of Dec 31, 2018, compared with 93.5% in the previous year, on a pro-rata basis for the total portfolio. Notably, the bankruptcies of Toys “R” Us and Mattress Firm primarily resulted in the year-over-year decline.
Annualized base rent per occupied square-foot for the total portfolio was $17.86 on a pro-rata basis as of Dec 31, 2018, up from $17.20 recorded a year ago.
Notably, SITE Centers sold 15 shopping centers and land parcels, for a total price of $733.3 million, during the reported quarter, thereby, aggregating $530.3 million at the company’s share. Additionally, it acquired three shopping centers for $35.1 million from unconsolidated joint ventures (JV).
In November, SITE Centers formed a JV for a 10-property portfolio, referred to as the Dividend Trust Portfolio (DTP), of which 80% stake was sold to two Chinese institutional investors. The sale proceed was used to repay the company’s outstanding debts.
During the quarter, the company repurchased 3.1 million shares for $36.3 million under its $100-million share buyback program. Subsequent to year end, it repurchased an additional 1.2 million shares for $14.1 million.
SITE Centers exited the Dec-end quarter with $11.08 million in cash compared with $92.61 million as of Dec 31, 2017.
Outlook
For 2019, the company expects OFFO per share of $1.13- $1.18. The Zacks Consensus Estimate for the same is pegged at $1.16.
Net income attributable to shareholders for 2019 is expected to be 24-29 cents per share.
Bottom Line
SITE Centers made strategic efforts to reposition its portfolio and focus on opportunistic investments that will be accretive for long-term growth.
Nonetheless, the company’s leasing activity is being impacted by tenant bankruptcies. In the near term as well, e-retail is anticipated to limit demand for space, and take precedence over the brick-and-mortar retail space.
SITE CENTERS CORP. Price, Consensus and EPS Surprise
SITE Centers carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other REITs
Ventas, Inc. (VTR - Free Report) reported fourth-quarter 2018 normalized FFO of 96 cents, beating the Zacks Consensus Estimate of 95 cents. However, the figure came in lower than the year-ago tally of $1.03.
Host Hotels & Resorts, Inc. (HST - Free Report) recorded fourth-quarter 2018 adjusted FFO of 43 cents per share, which outpaced the Zacks Consensus Estimate of 41 cents. Adjusted FFO per share also increased from the year-ago tally of 42 cents.
Welltower Inc. (WELL - Free Report) posted normalized FFO per share of $1.01 for fourth-quarter 2018, which missed the Zacks Consensus Estimate of $1.03. Moreover, the figure compared unfavorably with the year-ago tally of $1.02.
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.
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SITE Centers Corp. (SITC - Free Report) posted fourth-quarter 2018 operating funds from operations (OFFO) per share of 31 cents, surpassing the Zacks Consensus Estimate of 30 cents. However, the figure compares unfavorably with the prior-year figure of 56 cents. This year-over-year decline reflects the dilutive impact of the company’s spin-off of RVI, partially offset by lower interest expense.
Healthy leasing activity, rent and same-store net operating income (NOI) growth primarily drove the company’s impressive performance.
The company generated revenues of $121.5 million in the quarter under review, missing the Zacks Consensus Estimate of $126.4 million. Further, the top-line figure came in lower than the $209.4 million recorded in the comparable period last year.
For full-year 2018, OFFO per share came in at $1.66, surpassing the Zacks Consensus Estimate by a whisker. However, the figure plunged 30% year over year. Revenues for full-year 2018 dipped 25% year over year to $661.7 million. Further, the reported figure missed the Zacks Consensus Estimate of $669.7 million.
Quarter in Detail
Same-store NOI for the total portfolio on a pro-rata basis was 2.1%. In addition, the company, on a pro-rata basis for the total portfolio for the quarter, generated new leasing and renewal leasing spreads of 14% and 5.3%, respectively, in the fourth quarter.
SITE Centers reported a leased rate of 92.7% as of Dec 31, 2018, compared with 93.5% in the previous year, on a pro-rata basis for the total portfolio. Notably, the bankruptcies of Toys “R” Us and Mattress Firm primarily resulted in the year-over-year decline.
Annualized base rent per occupied square-foot for the total portfolio was $17.86 on a pro-rata basis as of Dec 31, 2018, up from $17.20 recorded a year ago.
Notably, SITE Centers sold 15 shopping centers and land parcels, for a total price of $733.3 million, during the reported quarter, thereby, aggregating $530.3 million at the company’s share. Additionally, it acquired three shopping centers for $35.1 million from unconsolidated joint ventures (JV).
In November, SITE Centers formed a JV for a 10-property portfolio, referred to as the Dividend Trust Portfolio (DTP), of which 80% stake was sold to two Chinese institutional investors. The sale proceed was used to repay the company’s outstanding debts.
During the quarter, the company repurchased 3.1 million shares for $36.3 million under its $100-million share buyback program. Subsequent to year end, it repurchased an additional 1.2 million shares for $14.1 million.
SITE Centers exited the Dec-end quarter with $11.08 million in cash compared with $92.61 million as of Dec 31, 2017.
Outlook
For 2019, the company expects OFFO per share of $1.13- $1.18. The Zacks Consensus Estimate for the same is pegged at $1.16.
Net income attributable to shareholders for 2019 is expected to be 24-29 cents per share.
Bottom Line
SITE Centers made strategic efforts to reposition its portfolio and focus on opportunistic investments that will be accretive for long-term growth.
Nonetheless, the company’s leasing activity is being impacted by tenant bankruptcies. In the near term as well, e-retail is anticipated to limit demand for space, and take precedence over the brick-and-mortar retail space.
SITE CENTERS CORP. Price, Consensus and EPS Surprise
SITE Centers carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other REITs
Ventas, Inc. (VTR - Free Report) reported fourth-quarter 2018 normalized FFO of 96 cents, beating the Zacks Consensus Estimate of 95 cents. However, the figure came in lower than the year-ago tally of $1.03.
Host Hotels & Resorts, Inc. (HST - Free Report) recorded fourth-quarter 2018 adjusted FFO of 43 cents per share, which outpaced the Zacks Consensus Estimate of 41 cents. Adjusted FFO per share also increased from the year-ago tally of 42 cents.
Welltower Inc. (WELL - Free Report) posted normalized FFO per share of $1.01 for fourth-quarter 2018, which missed the Zacks Consensus Estimate of $1.03. Moreover, the figure compared unfavorably with the year-ago tally of $1.02.
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.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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