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SITE Centers (SITC) Affirms '21 View, Receives 94% of February Rent

SITE Centers Corp. SITC recently affirmed its 2021 operating funds from operations (OFFO) guidance of 90 cents-$1.00 per share in the 2021 Citi Virtual Global Property CEO Conference.

According to David R. Lukes, president and chief executive officer of SITE Centers, even amid the anticipated impact of common shares offering, the affirmation of its 2021 OFFO guidance comes because of “strong operational and collections progress to date.”

The retail REIT has also issued an update on first-quarter 2021 operations. Particularly, as of Mar 4, on a pro rata basis, the company’s tenants had paid roughly 95% and 94% of aggregate base rents for January and February 2021, respectively.

The company also noted that 2020 collections continue to move higher with deferral payments. Rent collections have been 81%, 88%, and 95% for the second, third and fourth quarters of 2020, respectively. Moreover, 85% of deferral arrangements are to be repaid by year-end 2021.

As of Feb 28, signed but not opened ("SNO") pipeline aggregated $13 million of annualized base rent. The pipeline represents just under 4% of the retail REIT's share of fourth-quarter annualized bas rent.

Notably, the resumption of operations at its shopping centers, high composition of essential businesses at the REIT’s centers and a substantial percentage of national tenants in the tenant roster have likely supported rent collections. In fact, all of the company’s properties remain open, with 98% of tenants (at its share and based on average base rents) open for business, up 53% from Apr 5.

In addition, 56% of its tenants are deemed essential. Further, 90% of SITE Centers’ portfolio is composed of national tenants, on the basis of base rents. These retailers have significant access to capital that aids them during testing times. Also, national collection trends continue to trend higher exceeding local collections.

Lukes also commented that “We had a very good start to the year with tenant collections and leasing momentum continuing to build and $196 million of netcommon equity raised to reduce leverage and fund external growth prospects.”

The REIT’s open-air shopping centers located in suburban and wealthy regions are well poised to benefit from population shifts and remote-working scenarios that have been driving consistent traffic. Additionally, the company’s decent balance sheet and aggressive capital-recycling program bode well.

Shares of this Zacks Rank #3 (Hold) company have appreciated 30.7% over the past three months compared with the industry's rally of 8.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Nevertheless, businesses of physical stores widely depend on customer traffic but consumers are avoiding crowded public spaces due to the pandemic and increasingly opting for online purchases. This, in turn, is taking a huge toll on customer footfall and might affect store sales. As a result, retail REITs, which have already been battling store closures, bankruptcy issues and proliferation of e-commerce, are feeling the heat.

Apart from SITE Centers, the turbulence is affecting other retail REITs, including Macerich MAC, Simon Property SPG and Kimco KIM.

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Kimco Realty Corporation (KIM): Free Stock Analysis Report
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SITE CENTERS CORP. (SITC): Free Stock Analysis Report
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