SITE Centers Reports Fourth Quarter 2018 Operating Results

SITE Centers Corp. SITC today announced operating results for the quarter ended December 31, 2018.

"We successfully repositioned our portfolio, bolstered our balance sheet and began pivoting to growth in 2018," commented David R. Lukes, president and chief executive officer. "Additionally, we made progress on all three sources of growth in our long-term business plan, including 2.3% same store NOI growth in 2018, redevelopment completions, and $85 million of opportunistic investing, all supported by the $607 million DTP joint venture that brought debt to EBITDA to 5.6x at year-end."

Results for the Quarter

• Fourth quarter net income attributable to common shareholders was $172.5 million, or $0.93 per diluted share, as compared to net loss of $226.4 million, or $1.23 per diluted share, in the year ago-period. The year-over-year increase in net income is primarily attributable to a higher gain on sale of real estate and lower impairment charges partially offset by the dilutive impact of the spin-off of Retail Value Inc.("RVI")
• Fourth quarter operating funds from operations attributable to common shareholders ("Operating FFO" or "OFFO") was $58.0 million, or $0.31 per diluted share, compared to $103.8 million, or $0.56 per diluted share, in the year ago-period. The year-over-year decrease in OFFO is primarily attributable to the dilutive impact of the spin-off transaction partially offset by lower interest expense.

Significant Fourth Quarter Activity

• Formed the 10-asset Dividend Trust Portfolio joint venture valued at $607 million and sold an 80% interest to Chinese institutional investors. Proceeds were primarily used to repay $250 million in unsecured notes, $150 million of the $200 million unsecured term loan and $95 million in mortgage debt.
• Acquired three shopping centers for $35.1 million from unconsolidated joint ventures.
• Repurchased 3.1 million shares for $36.3 million in December 2018 under the Company's $100 million share repurchase program. Subsequent to year end, repurchased an additional 1.2 million shares for $14.1 million. The 4.3 million shares were repurchased at a weighted average price of $11.74.
• Sold 15 shopping centers and land parcels for an aggregate sales price of $733.3 million, totaling $530.3 million at SITE's share, including $7.0 million from the repayment of the Company's preferred equity investment in its two joint ventures with Blackstone.
• Completed and opened the majority of the $27 million redevelopment of West Bay Plaza (Phase I) with the remaining tenants set to open in the first half of 2019, ahead of prior expectations.

Significant Full Year Activity

• Sold 58 shopping centers and land parcels for an aggregate sales price of $1.8 billion, or $984.2 million at SITE's share, including $75.1 million from the repayment of the Company's preferred equity investment in its two joint ventures with Blackstone.
• On July 1, 2018, completed the previously announced spin-off of RVI, an independent company listed on the New York Stock Exchange under the ticker symbol RVI. RVI owned a portfolio of 48 assets that included 36 continental U.S. assets and all 12 of SITE's previously owned Puerto Rico assets at the time of the spin-off. SITE has retained a preferred stock investment of $190 million in RVI and will continue to manage the RVI assets.

Key Quarterly Operating Results

• Reported 2.1% same store net operating income growth on a pro rata basis for the quarter and 2.3% growth for the year ended December 31, 2018 as compared to guidance of at least 2.0%.
• Generated new leasing spreads of 14.0% and renewal leasing spreads of 5.3%, both on a pro rata basis for the quarter, and new leasing spreads of 20.9% and renewal leasing spreads of 6.7%, both on a pro rata basis for the trailing twelve-month period.
• Reported a leased rate of 92.7% at December 31, 2018 and September 30, 2018 on a pro rata basis, compared to 93.5% at December 31, 2017. The 80 basis point decline year-over-year primarily is related to the bankruptcies of Toys "R" Us and Mattress Firm.
• Annualized base rent per occupied square foot on a pro rata basis was $17.86 at December 31, 2018, compared to $17.20 at December 31, 2017.

Guidance

There has been no change in the Company's net income attributable to common shareholders or Operating FFO per share guidance since November 29, 2018. The Company continues to estimate net income attributable to common shareholders and Operating FFO for 2019 to be from $0.24 to $0.29 per diluted share and from $1.13 to $1.18 per diluted share, respectively. Disposition fees from RVI are excluded from guidance.

Reconciliations of Net Income Attributable to Common Shareholders to FFO and Operating FFO estimates:

Other key assumptions for 2019 guidance include:

About SITE Centers Corp.

SITE Centers is an owner and manager of open-air shopping centers that provide a highly-compelling shopping experience and merchandise mix for retail partners and consumers. The Company is a self-administered and self-managed REIT operating as a fully integrated real estate company, and is publicly traded on the New York Stock Exchange under the ticker symbol SITC. Additional information about the Company is available at https://www.sitecenters.com. To be included in the Company's e-mail distributions for press releases and other investor news, please click here.

Conference Call and Supplemental Information

The Company will hold its quarterly conference call today at 5:00 p.m. Eastern Time. To participate with access to the slide presentation, please visit the Investor Relations portion of SITE's website, ir.sitecenters.com, or for audio only, dial 888-317-6003 (U.S.), 866-284-3684 (Canada) or 412-317-6061 (international) using pass code 6731703 at least ten minutes prior to the scheduled start of the call. A replay of the conference call will also be available at ir.sitecenters.com for one year after the call. A copy of the Company's Supplemental package is available on the Company's website.

Non-GAAP Measures

Funds from Operations ("FFO") is a supplemental non-GAAP financial measure used as a standard in the real estate industry and is a widely accepted measure of real estate investment trust ("REIT") performance. Management believes that both FFO and Operating FFO provide additional indicators of the financial performance of a REIT. The Company also believes that FFO and Operating FFO more appropriately measure the core operations of the Company and provide benchmarks to its peer group.

FFO is generally defined and calculated by the Company as net income (loss) (computed in accordance with GAAP), adjusted to exclude (i) preferred share dividends, (ii) gains and losses from disposition of depreciable real estate property and related investments, which are presented net of taxes, (iii) impairment charges on depreciable real estate property and related investments and (iv) certain non-cash items. These non-cash items principally include real property depreciation and amortization of intangibles, equity income (loss) from joint ventures and equity income (loss) from non-controlling interests and adding the Company's proportionate share of FFO from its unconsolidated joint ventures and non-controlling interests, determined on a consistent basis. The Company's calculation of FFO is consistent with the definition of FFO provided by the National Association of Investment Trusts ("NAREIT"). The Company calculates Operating FFO by excluding certain non-operating charges, income and gains. Operating FFO is useful to investors as the Company removes non-comparable charges, income and gains to analyze the results of its operations and assess performance of the core operating real estate portfolio. Other real estate companies may calculate FFO and Operating FFO in a different manner.

In December 2018, NAREIT issued NAREIT Funds From Operations White Paper - 2018 Restatement ("2018 FFO White Paper"). The purpose of the 2018 FFO White Paper was not to change the fundamental definition of FFO but clarify existing guidance and consolidate into a single document, alerts and policy bulletins issued by NAREIT since the last FFO white paper was issued in 2002. The 2018 FFO White Paper is effective starting with first quarter 2019 reporting. Although early adoption for the year ended 2018 is permitted, the Company plans to adopt any changes in its calculation in 2019 on a retrospective basis. The Company is evaluating the clarifications in the 2018 FFO White Paper. The potential changes to the Company's calculation of FFO relate to the exclusion of gains or losses on the sale of land as well as related impairments, gains or losses from changes in control and the reserve adjustment of preferred equity interests.

In calculating the expected range for or amount of net (loss) income attributable to common shareholders to estimate projected FFO and Operating FFO for future periods, the Company does not include a projection of gain and losses from the disposition of real estate property, potential impairments and reserves of real estate property and related investments, hurricane-related activity, certain transaction costs or certain fee income. Other real estate companies may calculate expected FFO and Operating FFO in a different manner.

The Company also uses net operating income ("NOI"), a non-GAAP financial measure, as a supplemental performance measure. NOI is calculated as property revenues less property-related expenses. The Company believes NOI provides useful information to investors regarding the Company's financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level and, when compared across periods, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and disposition activity on an unleveraged basis.

The Company presents NOI information herein on a same store basis or "SSNOI." The Company defines SSNOI as property revenues less property-related expenses, which exclude straight-line rental income and expenses, lease termination income, management fee expense, fair market value of leases and expense recovery adjustments. SSNOI also excludes activity associated with development and major redevelopment and includes assets owned in comparable periods (15 months for quarter comparisons). SSNOI excludes all non-property and corporate level revenue and expenses. Other real estate companies may calculate NOI and SSNOI in a different manner. The Company believes SSNOI provides investors with additional information regarding the operating performances of comparable assets because it excludes certain non-cash and non-comparable items as noted above.

FFO, Operating FFO, NOI and SSNOI do not represent cash generated from operating activities in accordance with GAAP, are not necessarily indicative of cash available to fund cash needs and should not be considered as alternatives to net income computed in accordance with GAAP as indicators of the Company's operating performance or as alternatives to cash flow as a measure of liquidity. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in this release and the accompanying financial supplement. Reconciliation of 2019 SSNOI projected growth target to the most directly comparable GAAP financial measure is not provided because the Company is unable to provide such reconciliation without unreasonable effort.

Safe Harbor

SITE Centers Corp. considers portions of the information in this press release to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, with respect to the Company's expectation for future periods. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. For this purpose, any statements contained herein that are not historical fact may be deemed to be forward-looking statements. There are a number of important factors that could cause our results to differ materially from those indicated by such forward-looking statements, including, among other factors, local conditions such as supply of space or a reduction in demand for real estate in the area; competition from other available space; dependence on rental income from real property; the loss of, significant downsizing of or bankruptcy of a major tenant and the impact of any such event on rental income from other tenants and our properties; redevelopment and construction activities may not achieve a desired return on investment; our ability to buy or sell assets on commercially reasonable terms; our ability to complete acquisitions or dispositions of assets under contract; our ability to secure equity or debt financing on commercially acceptable terms or at all; our ability to enter into definitive agreements with regard to our financing and joint venture arrangements or our failure to satisfy conditions to the completion of these arrangements; the termination of any joint venture arrangements or arrangements to manage real property; property damage, expenses related thereto and other business and economic consequences (including the potential loss of rental revenues) resulting from extreme weather conditions in locations where we own properties, and the ability to estimate accurately the amounts thereof; sufficiency and timing of any insurance recovery payments related to damages from extreme weather conditions; any change in strategy; our ability to maintain REIT status; and the finalization of the financial statements for the period ended December 31, 2018. For additional factors that could cause the results of the Company to differ materially from those indicated in the forward-looking statements, please refer to the Company's most recent reports on Form 10-K for the year ended December 31, 2017 and subsequent reports on Form 10-Q. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

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