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SITE Centers (SITC) Q3 FFO Top Estimates, Revenues Fall

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SITE Centers Corp. (SITC - Free Report) , previously known as DDR Corp., posted third-quarter 2018 operating funds from operations (FFO) per share of 33 cents, surpassing the Zacks Consensus Estimate of 30 cents. However, the figure compares unfavorably with the prior-year quarter figure of 60 cents. This year-over-year decline reflects the dilutive impact of the company’s recent spin-off of RVI.  

The company continued with its capital-recycling program in the quarter, divesting non-prime and non-income producing assets, and using the proceeds for reinvestment in premium U.S. shopping centers.

The company generated revenues of $129 million in the quarter under review, beating the Zacks Consensus Estimate of $124.3 million. However, the top-line figure fell short of the $220 million recorded in the comparable period last year.

Quarter in Detail

Same-store net operating income (NOI) for the total portfolio on a pro-rata basis was 2.2%. Further, the company, on a pro-rata basis for the total portfolio for the quarter, generated new leasing and renewal leasing spreads of 20.6% and 8.2%, respectively, in the third quarter.

SITE Centers reported a leased rate of 92.7% as of Sep 30, 2018, compared with 93.4% in the prior-year quarter, on a pro-rata basis for the total portfolio.

Annualized base rent per occupied square-foot for the total portfolio was $17.47 on a pro-rata basis as of Sep 30, 2018, up from $17.13 recorded a year ago.

Notably, SITE Centers sold 11 shopping centers and land parcels, for a total price of $261.5 million, during the reported quarter, thereby, aggregating $42.6 million at SITE Centers’ share.

SITE Centers exited the Sep-end quarter with $11.4 million in cash compared with $92.61 million as of Dec 31, 2017.

Outlook

SITE Centers reiterated its previously-issued guidance.

For fourth-quarter 2018, the company continues to expect Operating FFO to be at least 30 cents. Net income attributable to shareholders is expected to be three to seven cents per share.

For 2019, the company expects Operating FFO per share of $1.15- $1.20.

Bottom Line

SITE Centers is feeling the heat of the prevalent choppy retail real estate environment. In fact, the company witnessed significant decline in minimum rents and percentage rents as compared to the prior-year quarter. In the near term as well, e-retail is anticipated to limit demand for space, with e-retail taking precedence.

Nonetheless, following an extensive asset-pruning strategy, SITE Centers has achieved impressive leasing spreads on new and renewal leases.

SITE Centers carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

We now look forward to the earnings releases of other REITs like EPR Properties (EPR - Free Report) , Vornado Realty Trust (VNO - Free Report) and UDR Inc. (UDR - Free Report) . All three companies are scheduled to release their quarterly figures on Oct 29.

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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