SITE Centers Corp. (SITC) FY 2023 MD&A

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

EXECUTIVE SUMMARY

The Company is a self-administered and self-managed Real Estate Investment Trust (“REIT”) in the business of owning, leasing, acquiring, redeveloping, developing and managing shopping centers. As of December 31, 2023, the Company’s portfolio consisted of 114 shopping centers (including 13 shopping centers owned through unconsolidated joint ventures). At December 31, 2023, the Company owned 22.6 million square feet of gross leasable area (“GLA”) through all its properties (wholly-owned and joint venture). At December 31, 2023, the aggregate occupancy of the Company’s operating shopping center portfolio was 92.0% on a pro rata basis, and the average annualized base rent per occupied square foot was $20.35 on a pro rata basis.

Current Strategy

The overall investment, operating and financing policies of the Company, which govern a variety of activities, such as capital allocations, dividends and status as a REIT, are determined by management and the Board of Directors. The Board of Directors may amend or revise the Company’s policies from time to time without a vote of the Company’s shareholders.

The Company’s mission is to own and manage open-air shopping centers located in suburban, high household income communities. The Company strives to deliver total shareholder returns through earnings and cash flow growth, a sustainable dividend and a strong balance sheet that is well positioned through various economic cycles.

In October 2023, the Company announced a plan to spin off its convenience assets into a separate, publicly traded REIT to be named Curbline Properties Corp. (“Curbline”) in recognition of the distinct characteristics and opportunities within the Company’s unanchored and grocery and power center portfolios. Convenience properties are positioned on the curbline of well-trafficked intersections, offering enhanced access and visibility relative to other retail property types. The properties generally consist of a ubiquitous row of primarily small-shop units along with dedicated parking leased to a diversified mixture of national and local service and restaurant tenants that cater to daily convenience trips from the growing suburban population. The property type’s site plan and depth of leasing prospects generally reduce operating capital expenditures and provide significant tenant diversification.

In addition, the Company has obtained a financing commitment for a $1.1 billion mortgage facility (the “Mortgage Facility”) which is expected to close prior to the consummation of the spin-off with loan and additional asset sale proceeds expected to be used to repay all of the Company’s outstanding unsecured indebtedness.

As of December 31, 2023, the Company had a portfolio of 65 wholly-owned convenience assets that are expected to be included in the Curbline portfolio, including properties separated or in the process of being separated from existing Company properties. The median property size within the Curbline portfolio as of December 31, 2023 was approximately 20,000 square feet with 92% of base rent generated by units less than 10,000 square feet. The Company intends to acquire additional convenience properties prior to the spin-off that will be included in the Curbline portfolio, funded through additional Company dispositions, retained cash flow and cash on hand.

Curbline is expected to be in a net cash position at the time of its separation from the Company with cash on hand, a preferred investment in the Company, and an unsecured, undrawn line of credit. Curbline is not expected to have any debt outstanding at the time of its separation from the Company and therefore Curbline is expected to have significant capacity to utilize sources of debt capital in order to fund asset growth.

The Company currently expects to complete the separation of Curbline on or around October 1, 2024. Following the separation of Curbline, the Company intends to realize value through operations and, depending on market conditions, the sale of additional assets. The timing of certain sales may be impacted by interim leasing, tactical redevelopment activities, and other asset management initiatives intended to maximize values.

Growth opportunities within the Company’s portfolio include rental rate increases, continued lease-up of the portfolio, rent commencement with respect to recently executed leases and the adaptation of existing site plans and square footage to generate higher blended rental rates and operating cash flows.

Transaction and Capital Markets Highlights

Transaction and investment highlights during 2023 include the following:

•
Acquired 12 convenience centers in Arizona, Colorado, Florida, Georgia, Maryland, North Carolina, Texas and Virginia for an aggregate purchase price of $165.1 million;

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•
Sold 17 wholly-owned shopping centers for an aggregate gross sales price of $854.5 million;

•
Sold five joint venture shopping centers for an aggregate gross sales price of $112.2 million ($22.4 million at the Company’s share);

•
Closed on a five-year, $100.0 million mortgage financing for Nassau Park Pavilion (Princeton, New Jersey);

•
Closed on five-year, $380.6 million ($76.1 million at the Company’s share) mortgage secured by the 10-property Dividend Trust Portfolio joint venture portfolio;

•
Repurchased 1.5 million of its common shares in open market transactions at an aggregate cost of $20.0 million, or $13.43 per share (including fees);

•
Repurchased 140,633 Operating Partnership Units (“OP Units”) in a privately negotiated transaction at an aggregate cost of $1.7 million, or $12.34 per share and

•
Declared aggregate quarterly cash dividends of $0.52 per common share in addition to a special dividend on account of significant disposition activity of $0.16 per common share paid in January 2024.

Operational Accomplishments

The Company believes the strong leasing volumes are attributable to the concentration of the Company’s portfolio in suburban, high household income communities and to national tenants’ strong financial positions and increasing emphasis and reliance on physical store locations.

Operating highlights for 2023 included:

•
Signed new leases and renewals for approximately 3.3 million square feet of GLA, which included 0.6 million square feet of new leasing volume, both on a pro rata basis;

•
Achieved new cash lease spreads of 29.5% and renewal spreads of 6.5% at the Company’s pro rata share;

•
Increased annualized base rent per occupied square foot on a pro rata basis to $20.35 at December 31, 2023, as compared to $19.52 at December 31, 2022, primarily due to asset sales and was also favorably impacted by property acquisitions and leasing results and

•
Aggregate occupancy was 92.0% at December 31, 2023 on a pro rata basis compared to 92.4% at December 31, 2022. The year over year decline primarily was related to the recapture of units previously leased by Bed, Bath & Beyond and the sale of properties with an average occupancy rate of 97.2%, partially offset by new leasing activity.

Retail Environment

The Company continued to see demand from a broad range of tenants for its space in 2023, particularly as large national retailers launched new brand concepts and further incorporated omni-channel strategies leveraging brick and mortar infrastructure to fulfill online purchases and drive incremental business. Although certain retailers announced bankruptcies and/or store closures in 2023, other retailers, specifically those in the value and convenience category, continue to expand their store fleets and launch new concepts. As a result, the Company believes that its prospects to backfill spaces vacated by bankrupt or non-renewing tenants are generally good, though such re-tenanting efforts will likely require additional capital expenditures and opportunities to lease any vacant theater spaces may be more limited. Many of the Company’s largest tenants, including TJX Companies, Dick’s Sporting Goods, Ross and Burlington, remain well positioned with access to capital and have outperformed other retail categories on a relative basis.

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Company Fundamentals

The following table lists the Company’s tenants that equal or exceed 1.5% of the Company’s aggregate annualized shopping center base rental revenue and the respective Company-owned shopping center GLA as of December 31, 2023, for the following (1) the wholly-owned properties and the Company’s proportionate share of unconsolidated joint venture properties combined, (2) the wholly-owned properties and (3) the unconsolidated joint ventures presented at 100%:

(A)
Includes T.J. Maxx, Marshalls, HomeGoods, Sierra Trading, HomeSense and Combo Store

(B)
Includes Dick’s Sporting Goods and Golf Galaxy

(C)
Includes Ross Dress for Less and dd’s Discounts

(D)
Includes Gap, Old Navy and Banana Republic

(E)
Includes Kroger, Harris Teeter, King Soopers, Mariano’s and Lucky’s

The Company leased approximately 3.6 million square feet (3.3 million square feet at the Company’s share) of GLA in 2023 in its wholly-owned and joint venture portfolios, composed of 112 new leases and 327 renewals, for a total of 439 leases executed in 2023. At December 31, 2023, the Company had 205 leases expiring in 2024 with an average base rent per square foot of $18.35 on a pro rata basis. For the comparable leases executed in 2023, at the Company’s interest, the Company generated positive cash leasing spreads of 29.5% for new leases and 6.5% for renewals, or 9.0% on a blended basis. Cash leasing spreads are a key metric in real estate, representing the percentage increase of the tenant’s annual base rent in the first year of the newly executed or renewal lease, over the annual base rent applicable to the final year of the previous lease term, though leasing spreads exclude consideration of the amount of capital expended in connection with new leasing activity and exclude properties in redevelopment. The Company’s cash leasing spread calculation includes only those deals that were executed within one year of the date the prior tenant vacated, in addition to other factors that limit comparability, and as a result, is a good benchmark to compare the average annualized base rent of expiring leases with the comparable executed market rental rates.

For new leases executed during 2023, the Company expended a weighted-average cost of tenant improvements and lease commissions estimated at $4.90 per rentable square foot, on a pro rata basis, over the lease term, as compared to $7.42 per rentable square foot in 2022. The Company generally does not expend a significant amount of capital on lease renewals.

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Summary—2023 Financial Results

The following provides an overview of the Company’s key financial metrics (see “Non-GAAP Financial Measures” described later in this section) (in thousands except per share amounts):

For the year ended December 31, 2023, the increase in net income attributable to common shareholders, as compared to the prior year, primarily was attributable to higher gain on asset sales. The decrease in FFO and Operating FFO attributable to common shareholders generally was due to the impact of property sales and lower management fees from joint ventures partially offset by property Net Operating Income (“NOI”) growth and the impact of property acquisitions.

The following discussion of the Company’s financial condition and results of operations provides information that will assist in the understanding of the Company’s financial statements and the factors that accounted for changes in certain key items in the financial statements, as well as critical accounting estimates that affected these financial statements.

CRITICAL ACCOUNTING ESTIMATES

The consolidated financial statements of the Company include the accounts of the Company and all subsidiaries where the Company has financial or operating control. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying consolidated financial statements and related notes. In preparing these financial statements, management has used available information, including the Company’s history, industry standards and the current economic environment, among other factors, in forming its estimates and judgments of certain amounts included in the Company’s consolidated financial statements, giving due consideration to materiality. It is possible that the ultimate outcome as anticipated by management in formulating its estimates inherent in these financial statements might not materialize. Application of the critical accounting policies described below involves the exercise of judgment and the use of assumptions as to future uncertainties. Accordingly, actual results could differ from these estimates. In addition, other companies may use different estimates that may affect the comparability of the Company’s results of operations to those of companies in similar businesses.

Purchase Price Allocations of Property Acquisitions

For the acquisition of real estate assets, the Company allocates the purchase price to assets acquired and liabilities assumed at the date of acquisition. The Company applies various valuation methods, all of which require significant estimates by management, including discount rates, exit capitalization rates, estimated land values (per square foot), capitalization rates and certain market leasing assumptions. Further, the valuation of above- and below-market lease values are significantly impacted by management's estimate of fair market lease rates for each corresponding in-place lease. If the Company determines that an event has occurred after the initial allocation of the asset or liability that would change the estimated useful life of the asset, the Company will reassess the depreciation and amortization of the asset. The Company is required to make subjective estimates in connection with these valuations and allocations.

Real Estate and Long-Lived Assets

Impairment Assessment

On a periodic basis, management assesses whether there are any indicators that the value of real estate assets, including undeveloped land and construction in progress, and intangibles may be impaired. Impairment indicators are primarily related to a change in estimated hold periods and significant, prolonged decreases in projected cash flows; however, other impairment indicators could occur. A property’s value is impaired only if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property are less than the carrying value of the property. The determination of undiscounted cash flows may require significant estimates by management. In management’s estimate of projected cash flows, it considers factors such as hold period, expected future operating income (loss), trends and prospects, the effects of demand, competition and other factors. If the Company is evaluating the potential sale of an asset or development alternatives, the undiscounted future cash flows analysis is probability-weighted based upon management’s best estimate of the likelihood of the

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alternative courses of action. Subsequent changes in estimated undiscounted cash flows arising from changes in anticipated actions could affect the determination of whether an impairment exists and whether the effects could have a material impact on the Company’s net income. To the extent an impairment has occurred, the loss will be measured as the excess of the carrying amount of the property over the estimated fair value of the property.

The Company is required to make subjective assessments as to whether there are impairments in the value of its real estate properties and other investments. These assessments have a direct impact on the Company’s net income because recording an impairment charge results in an immediate negative adjustment to net income. If the Company’s estimates of the anticipated holding periods, projected future cash flows or market conditions change, its evaluation of the impairment charges may be different, and such differences could be material to the Company’s consolidated financial statements. Specifically, plans to hold properties over longer periods decrease the likelihood of recording impairment losses.

Measurement of Fair Value

The Company is required to periodically assess for impairment the value of its consolidated real estate assets. The fair value of real estate investments used in the Company’s impairment calculations is estimated based on the price that would be received for the sale of an asset in an orderly transaction between marketplace participants at the measurement date. Real estate assets without a public market are valued based on assumptions made and valuation techniques used by the Company. The availability of observable transaction data and inputs can make it more difficult and/or subjective to determine the fair value of such real estate assets. As a result, amounts ultimately realized by the Company from real estate assets sold may differ from the fair values presented, and the differences could be material.

The valuation of real estate assets for impairment is determined using widely accepted valuation techniques including the income capitalization approach or discounted cash flow analysis on the expected cash flows of each asset considering prevailing market capitalization rates, analysis of recent comparable sales transactions, actual sales negotiations, bona fide purchase offers received from third parties and/or consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence. In general, the Company utilizes a valuation technique that is based on the characteristics of the specific asset when measuring fair value of an investment. However, a single valuation technique is generally used for the Company’s property type. The significant assumptions include the capitalization rate used in the income capitalization valuation, as well as the projected property net operating income. Valuation of real estate assets is calculated based on market conditions and assumptions made by management at the measurement date, which may differ materially from actual results if market conditions or the underlying assumptions change.

RESULTS OF OPERATIONS

For the comparison of the Company’s 2023 performance to 2022 presented below, consolidated shopping center properties owned as of January 1, 2022, are referred to herein as the “Comparable Portfolio Properties.” The discussion of the Company’s 2022 performance compared to 2021 performance is set forth in “—Comparison of 2022 and 2021 Results of Operations” included in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Revenues from Operations (in thousands)

(A)
The following table summarizes the key components of rental income (in thousands):

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(1)
The changes in base and percentage rental income were due to the following (in millions):

The increase within the Comparable Portfolio Properties includes the write-off of approximately $8.4 million of below-market lease intangibles due to the early termination of tenant leases.

At December 31, 2023 and 2022, the Company owned 101 wholly-owned properties as of each balance sheet date that had an aggregate occupancy rate of 92.1% and 92.6%, respectively, and an average annualized base rent per occupied square foot of $20.46 and $19.61, respectively.

(2)
Recoveries from tenants were approximately 81.4% and 78.6% of operating expenses and real estate taxes for the years ended December 31, 2023 and 2022, respectively. The increase in the recovery percentage primarily was due to a combination of transactional activity and a decrease in non-recoverable landlord expenses.

(3)
The net amount reported was primarily attributable to the impact of tenants on the cash basis of accounting and related reserve adjustments.

(B) Fee and Other Income was primarily earned from the Company’s unconsolidated joint ventures. The decrease primarily relates to lower fee revenue from joint ventures as a result of asset sales. The components of Fee and Other Income are presented in Note 1, “Summary of Significant Accounting Policies - Fee and Other Income,” to the Company’s consolidated financial statements included herein. Decreases in the number of assets under management will impact the amount of revenue recorded in future periods. The Company’s joint venture partners may also elect to terminate their joint venture arrangements with the Company in connection with a change in investment strategy or otherwise. See “— Sources and Uses of Capital” included elsewhere herein.

Expenses from Operations (in thousands)

(A)
The changes were due to the following (in millions):

The increase in depreciation for the Comparable Portfolio Properties was primarily due to the acceleration of depreciation related to terminations and write-off of intangibles.

(B)
There were no impairment charges recorded for the year ended December 31, 2023. Changes in (i) an asset’s expected future undiscounted cash flows due to changes in market or leasing conditions, (ii) various courses of action that may occur or (iii) estimated holding periods could result in the recognition of additional impairment charges. Impairment charges are presented in Note 12, “Impairment Charges,” to the Company’s consolidated financial statements included herein.

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(C)
General and administrative expenses for the years ended December 31, 2023 and 2022, were approximately 7.9% and 6.8% of total revenues (excluding uncollectible revenue), respectively, including total revenues of unconsolidated joint ventures and managed properties for the comparable periods. The increase is primarily attributable to a May 2023 restructuring plan, which included a voluntary retirement offer and other costs to align the Company’s cost structure and technology platform with current and future expected operations and resulted in charges to general and administrative costs of $5.0 million for the year ended December 31, 2023. For the year ended December 31, 2023, general and administrative expenses of $50.9 million, less the separation charges and other costs of $5.0 million, were approximately 7.2% of total revenues. The Company continues to expense certain internal leasing salaries, legal salaries and related expenses associated with leasing and re-leasing of existing space.

Other Income and Expenses (in thousands)

(A)
The weighted-average debt outstanding and related weighted-average interest rate are as follows:

The Company’s overall balance sheet strategy is to continue to maintain substantial liquidity and prudent leverage levels. The weighted-average interest rate (based on contractual rates and excluding fair market value of adjustments and debt issuance costs) was 4.3% and 4.1% at December 31, 2023 and 2022, respectively. At December 31, 2023, the weighted-average maturity (without extensions) was 2.5 years. Interest costs capitalized in conjunction with redevelopment projects were $1.2 million and $1.1 million for the years ended December 31, 2023 and 2022, respectively.

(B)
In 2023, includes interest income, net of fees, of $4.4 million, derivative mark-to-market impact of $2.1 million related to the partial hedge on the potential interest rate impact to yield maintenance premiums on outstanding unsecured notes, partially offset by transaction costs and debt extinguishment costs totaling $3.3 million.

Other Items (in thousands)

(A)
The 2023 results include gains recorded on the sale of assets offset by the reduction of income as a result of asset sales closed in 2023 and 2022. At December 31, 2023 and 2022, the Company had an economic investment in unconsolidated joint ventures which owned 13 and 18 shopping center properties, respectively. Joint venture property sales could significantly impact the amount of income or loss recognized in future periods. See Note 3, “Investments in and Advances to Joint Ventures,” in the Company’s consolidated financial statements included herein.

(B)
In 2023, the Company recorded a gain related to additional proceeds received related to an unconsolidated joint venture that sold its sole asset, a parcel of undeveloped land in Richmond Hill, Ontario, which was considered contingent at the time of the sale. In 2022, the Company recorded a $3.3 million gain from the acquisition of its joint venture partner’s 80% equity interest in an asset (Casselberry Commons) owned by the DDRM Joint Venture, a $16.8 million gain from the sale of its 20% interest in the SAU Joint Venture to its partner and a $25.4 million gain from the sale of its 50% interest in Lennox Town Center to its partner.

(C)
The Company sold 17 wholly-owned shopping centers in 2023 and five wholly-owned shopping centers and land parcels in 2022. See “— Sources and Uses of Capital” included elsewhere herein.

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Net Income (in thousands)

The increase in net income attributable to SITE Centers, as compared to the prior-year period, was primarily attributable to the gain recorded from wholly-owned asset sales. Additionally, the 2023 results were also impacted by lower joint venture management fees, higher interest expense, higher depreciation expense and separation and charges included within general and administrative expenses, relating to the restructuring plan initiated in May 2023, partially offset by base rent growth, the write-off of below-market lease intangibles and the net impact of property acquisitions.

NON-GAAP FINANCIAL MEASURES

Funds from Operations and Operating Funds from Operations

Definition and Basis of Presentation

The Company believes that Funds from Operations (“FFO”) and Operating FFO, both non-GAAP financial measures, provide additional and useful means to assess the financial performance of REITs. FFO and Operating FFO are frequently used by the real estate industry, as well as securities analysts, investors and other interested parties, to evaluate the performance of REITs. 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 excludes GAAP historical cost depreciation and amortization of real estate and real estate investments, which assume that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions, and many companies use different depreciable lives and methods. Because FFO excludes depreciation and amortization unique to real estate and gains and losses from property dispositions, it can provide a performance measure that, when compared year over year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, interest costs and acquisition, disposition and development activities. This provides a perspective of the Company’s financial performance not immediately apparent from net income determined in accordance with GAAP.

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 real estate property and related investments, which are presented net of taxes, (iii) impairment charges on real estate property and related investments, (iv) gains and losses from changes in control and (v) 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 NAREIT.

The Company believes that certain charges, income and gains recorded in its operating results are not comparable or reflective of its core operating performance. 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. As a result, the Company also computes Operating FFO and discusses it with the users of its financial statements, in addition to other measures such as net income (loss) determined in accordance with GAAP and FFO. Operating FFO is generally defined and calculated by the Company as FFO excluding certain charges, income and gains that management believes are not comparable and indicative of the results of the Company’s operating real estate portfolio. Such adjustments include write-off of preferred share original issuance costs, gains/losses on the early extinguishment of debt, certain transaction fee income, transaction costs and other restructuring type costs, including employee separation costs. The disclosure of these adjustments is regularly requested by users of the Company’s financial statements.

The adjustment for these charges, income and gains may not be comparable to how other REITs or real estate companies calculate their results of operations, and the Company’s calculation of Operating FFO differs from NAREIT’s definition of FFO. Additionally, the Company provides no assurances that these charges, income and gains are non-recurring. These charges, income and gains could be reasonably expected to recur in future results of operations.

These measures of performance are used by the Company for several business purposes and by other REITs. The Company uses FFO and/or Operating FFO in part (i) as a disclosure to improve the understanding of the Company’s operating results among the investing public, (ii) as a measure of a real estate asset company’s performance, (iii) to influence acquisition, disposition and capital investment strategies and (iv) to compare the Company’s performance to that of other publicly traded shopping center REITs.

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For the reasons described above, management believes that FFO and Operating FFO provide the Company and investors with an important indicator of the Company’s operating performance. They provide recognized measures of performance other than GAAP net income, which may include non-cash items (often significant). Other real estate companies may calculate FFO and Operating FFO in a different manner.

Management recognizes the limitations of FFO and Operating FFO when compared to GAAP’s net income. FFO and Operating FFO do not represent amounts available for dividends, capital replacement or expansion, debt service obligations or other commitments and uncertainties. Management does not use FFO or Operating FFO as an indicator of the Company’s cash obligations and funding requirements for future commitments, acquisitions or development activities. Neither FFO nor Operating FFO represents cash generated from operating activities in accordance with GAAP, and neither is necessarily indicative of cash available to fund cash needs. Neither FFO nor Operating FFO should be considered an alternative to net income (computed in accordance with GAAP) or as an alternative to cash flow as a measure of liquidity. FFO and Operating FFO are simply used as additional indicators of the Company’s operating performance. The Company believes that to further understand its performance, FFO and Operating FFO should be compared with the Company’s reported net income (loss) and considered in addition to cash flows determined in accordance with GAAP, as presented in its consolidated financial statements. Reconciliations of these measures to their most directly comparable GAAP measure of net income (loss) have been provided below.

Reconciliation Presentation

FFO and Operating FFO attributable to common shareholders were as follows (in thousands):

The decrease in FFO for the year ended December 31, 2023, as compared to the prior-year period, was primarily attributable to lower management fees and income from joint ventures and higher interest and general and administrative expenses, partially offset by base rent growth, the write-off of below-market lease intangibles and the net impact of property acquisitions. The change in Operating FFO primarily was due to the same drivers impacting FFO but excludes the impact of the separation and other charges, included within general and administrative expenses, relating to the restructuring plan initiated in May 2023, transaction costs related to the spin-off of Curbline and derivative fair value adjustments.

The Company’s reconciliation of net income attributable to common shareholders computed in accordance with GAAP to FFO attributable to common shareholders and Operating FFO attributable to common shareholders is as follows (in thousands). The Company provides no assurances that these charges and gains are non-recurring. These charges and gains could reasonably be expected to recur in future results of operations.

(A)
At December 31, 2023 and 2022, the Company had an economic investment in unconsolidated joint ventures which owned 13 and 18 shopping center properties, respectively. These joint ventures represent the investments in which the Company recorded its share of equity in net income or loss and, accordingly, FFO and Operating FFO.

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Joint ventures’ FFO and Operating FFO are summarized as follows (in thousands):

Net Operating Income and Same Store Net Operating Income

Definition and Basis of Presentation

The Company uses NOI, which is 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 also presents NOI information on a same store basis, or Same Store Net Operating Income (“SSNOI”). The Company defines SSNOI as property revenues less property-related expenses, which exclude straight-line rental income (including reimbursements) and expenses, lease termination income, management fee expense, fair market value of leases and expense recovery adjustments. SSNOI includes assets owned in comparable periods (15 months for prior period comparisons). In addition, SSNOI is presented including activity associated with redevelopment. 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 at its effective ownership interest provides investors with additional information regarding the operating performance of comparable assets because it excludes certain non-cash and non-comparable items as noted above. SSNOI is frequently used by the real estate industry, as well as securities analysts, investors and other interested parties, to evaluate the performance of REITs.

SSNOI is not, and is not intended to be, a presentation in accordance with GAAP. SSNOI information has its limitations as it excludes any capital expenditures associated with the re-leasing of tenant space or as needed to operate the assets. SSNOI does not represent amounts available for dividends, capital replacement or expansion, debt service obligations or other commitments and uncertainties. Management does not use SSNOI as an indicator of the Company’s cash obligations and funding requirements for future commitments, acquisitions or development activities. SSNOI does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs. SSNOI should not be considered as an alternative to net income (computed in accordance with GAAP) or as an alternative to cash flow as a measure of liquidity. A reconciliation of NOI and SSNOI to their most directly comparable GAAP measure of net income (loss) is provided below.

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Reconciliation Presentation

The Company’s reconciliation of net income computed in accordance with GAAP to NOI and SSNOI for the Company at 100% and at its effective ownership interest of the assets is as follows (in thousands):

The SSNOI increase for the full year ended December 31, 2023, as compared to the prior-year period, was primarily attributable to minimum rent increases related to rent steps, favorable net recoveries, percentage, overage and ancillary rents offset by increases in uncollectible revenues.

LIQUIDITY, CAPITAL RESOURCES AND FINANCING ACTIVITIES

The Company periodically evaluates opportunities to issue and sell additional debt or equity securities, obtain credit facilities from lenders or repurchase or refinance long-term debt as part of its overall strategy to further strengthen its financial position. The Company remains committed to monitoring liquidity and the duration of its indebtedness and to maintaining prudent leverage levels in an effort to manage its overall risk profile.

The Company’s consolidated and unconsolidated debt obligations generally require monthly or semi-annual payments of principal and/or interest over the term of the obligation. While the Company currently believes it has several viable sources to obtain capital and fund its business, including capacity under its Revolving Credit Facility (as defined below), no assurance can be provided that these obligations will be refinanced or repaid as currently anticipated. Any new debt financings may also entail higher rates of interest than the indebtedness being refinanced, which could have an adverse effect on the Company’s operations.

The Company has historically accessed capital sources through both the public and private markets. Acquisitions and redevelopments are generally financed through cash provided from operating activities, the Revolving Credit Facility, mortgages

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assumed, secured debt, unsecured debt, common and preferred equity offerings, joint venture capital and asset sales. Total consolidated debt outstanding was $1.6 billion at December 31, 2023, as compared to $1.7 billion at December 31, 2022.

At December 31, 2023, the Company had an unrestricted cash balance of $552.0 million and a restricted cash balance of $17.1 million primarily related to asset sale proceeds available to fund future qualifying acquisitions as part of a forward like-kind exchange transaction. The Company has availability under its Revolving Credit Facility of $950.0 million (subject to satisfaction of applicable borrowing conditions). The Company has addressed all of its consolidated debt maturing in 2024. In 2025, the Company has $457.1 million aggregate principal amount of senior notes and $25.7 million of consolidated mortgage debt maturing. The Company’s unconsolidated joint ventures have $39.1 million of mortgage debt at the Company’s share maturing in 2024. As of December 31, 2023, the Company anticipates that it has approximately $9 million to be incurred on its pipeline of identified redevelopment projects. The Company declared aggregate common share dividends of $0.68 per share in 2023, including a special cash dividend of $0.16 per share paid in January 2024, and declared a dividend of $0.13 per share in the first quarter of 2024 payable in April 2024. The Company believes it has sufficient liquidity to operate its business at this time. At December 31, 2023, the Company had no borrowings outstanding on the Revolving Credit Facility. In May 2023, the Company repaid $87.2 million of senior notes due 2023 and in November 2023, the Company repaid $65.6 million of senior notes due 2024.

Revolving Credit Facility and Term Loan

The Company maintains an unsecured revolving credit facility with a syndicate of financial institutions and JPMorgan Chase Bank, N.A., as administrative agent (the “Revolving Credit Facility”) that provides for borrowings of up to $950 million, which limit may be increased to $1.45 billion provided that existing or new lenders agree to provide incremental commitments and subject to other conditions precedent. The Revolving Credit Facility matures in June 2026 subject to two six-month options to extend the maturity to June 2027 at the Company’s option (subject to the satisfaction of certain conditions). The Company’s borrowings under the Revolving Credit Facility bear interest at variable rates at the Company’s election, based on either (i) the Secured Overnight Financing Rate (“SOFR”) rate plus a 10-basis point credit spread adjustment plus an applicable margin (0.85% at December 31, 2023), or (ii) the alternative base rate plus an applicable margin (0.0% at December 31, 2023). The Revolving Credit Facility also provides for an annual facility fee, which was 20 basis points on the entire facility at December 31, 2023. The applicable margins and facility fee vary depending on the Company’s long-term senior unsecured debt ratings from Moody’s Investors Service, Inc. (“Moody’s”), S&P Global Ratings (“S&P”) and Fitch Investor Services Inc. (“Fitch”) (or their respective successors). The Revolving Credit Facility also features a sustainability-linked pricing component whereby the applicable interest rate margin can be adjusted by one or two basis points if the Company meets certain sustainability performance targets.

The Company also maintains a $200 million unsecured term loan with a syndicate of financial institutions and Wells Fargo Bank, National Association, as administrative agent (the “Term Loan”), that bears interest at variable rates, based on the Company's long-term senior unsecured debt ratings, equal to (i) the SOFR rate plus a 10-basis point credit spread adjustment plus an applicable margin (0.95% at December 31, 2023) or (ii) the alternative base rate plus an applicable margin (0.0% at December 31, 2023). The applicable margins vary depending on the Company’s long-term senior unsecured debt ratings from Moody’s, S&P and Fitch (or their respective successors). In August 2022, the Company swapped the portion of the Term Loan's interest rate calculated by reference to the variable SOFR rate to a fixed rate of 2.75% per annum. The Term Loan matures in June 2027. The Company may increase the principal amount of the Term Loan in the future to up to $800 million in the aggregate provided that existing or new lenders are identified to provide additional loan commitments subject to other customary conditions precedent. The Term Loan also features a sustainability-linked pricing component whereby the applicable interest rate margin can be adjusted by one to two basis points if the Company meets certain sustainability performance targets. The covenants governing the Term Loan are substantially identical to those governing the Revolving Credit Facility.

The Revolving Credit Facility, the Term Loan and the indentures under which the Company’s senior and subordinated unsecured indebtedness is, or may be, issued contain certain financial and operating covenants including, among other things, leverage ratios and debt service coverage and fixed-charge coverage ratios, as well as limitations on the Company’s ability to incur secured and unsecured indebtedness, sell all or substantially all of the Company’s assets and engage in certain mergers and acquisitions. The Revolving Credit Facility, the Term Loan and the indentures also contain customary default provisions including the failure to make timely payments of principal and interest payable thereunder, the failure to comply with the financial and operating covenants and the failure of the Company or its majority-owned subsidiaries (i.e., entities in which the Company has a greater than 50% interest) to pay, when due, certain indebtedness in excess of certain thresholds beyond applicable grace and cure periods. In the event the Company’s lenders or note holders declare a default, as defined in the applicable agreements governing the debt, the Company may be unable to obtain further funding, and/or an acceleration of any outstanding borrowings may occur. As of December 31, 2023, the Company was in compliance with all of its financial covenants in the agreements governing its debt. Although the Company believes it will continue to operate in compliance with these covenants, if the Company were to violate these covenants, the Company may be subject to higher finance costs and fees or accelerated maturities.

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Mortgage Financing Commitment

In October 2023, in preparation for the expected spin-off of the Company’s convenience properties, the Company obtained a commitment (the “Commitment”) from affiliates of Apollo, including Atlas SP Partners, L.P., to provide a $1.1 billion mortgage facility to be secured by approximately 40 of the Company’s retail properties (the “Mortgage Facility”). The Company may proceed to close and draw all or a portion of the Mortgage Facility on any date prior to October 25, 2024, subject to the satisfaction of various closing conditions set forth in the Commitment, including debt yield and loan-to-value thresholds, the lender’s receipt of acceptable third party reports and satisfaction of other customary closing requirements. To the extent that any of the collateral properties are sold prior to the closing of the Mortgage Facility, the amount available under the Commitment will be reduced. The Company currently expects to close and draw on the Mortgage Facility prior to the spin-off of Curbline, and to use loan and additional asset sale proceeds to redeem and/or repay all of its outstanding unsecured indebtedness and for general corporate purposes.

As set forth in the Commitment, the Mortgage Facility will mature on the second anniversary of the closing date subject to a one-year extension option at the Company’s election and subject to the satisfaction of certain conditions at the time of the extension. Following closing, the Company will be able to effectuate the release of properties serving as collateral for the Mortgage Facility by making a principal prepayment based on the amount of the loan allocated to such property.

The Company paid upfront commitment and structuring fees to the lender and its affiliates and will also pay the lender fees during the unfunded commitment period based on the committed loan amount (as such amount may be reduced from time to time by the Company) and a closing fee based on the amount of the loan funded at closing. The Company is not obligated to close or draw on the Mortgage Facility and no assurances can be given that the Company will satisfy the conditions to close the Mortgage Facility or that the Mortgage Facility will close on the terms set forth in the Commitment or at all.

Consolidated Indebtedness – as of December 31, 2023

As discussed above, the Company is committed to maintaining prudent leverage levels and may utilize proceeds from financings or the sale of properties or other investments to repay debt. These sources of funds could be affected by various risks and uncertainties. No assurance can be provided that the Company’s debt obligations will be refinanced or repaid as currently anticipated. See Item 1A. Risk Factors.

The Company continually evaluates its debt maturities and, based on management’s assessment, believes it has viable financing and refinancing alternatives (including the Mortgage Facility). The Company has sought to manage its debt maturities, increase liquidity, maintain prudent leverage levels and improve the Company’s credit profile with a focus of lowering the Company’s balance sheet risk and cost of capital.

Unconsolidated Joint Ventures’ Mortgage Indebtedness – as of December 31, 2023

The outstanding indebtedness of the Company’s unconsolidated joint ventures at December 31, 2023, which matures in the subsequent 14-month period (i.e., through February 28, 2025), is as follows (in millions):

(A) The joint venture expects to repay indebtedness with proceeds from future asset sales.

(B) Expected to be extended in accordance with the loan documents.

No assurance can be provided that these obligations will be refinanced or repaid as currently anticipated. Any future deterioration in property-level revenues may cause one or more of these joint ventures to be unable to refinance maturing obligations or satisfy applicable covenants, financial tests or debt service requirements or loan maturity extension conditions in the future, thereby allowing the mortgage lender to assume control of property cash flows, limit distributions of cash to joint venture members, declare a default, increase the interest rate or accelerate the loan’s maturity. In addition, rising interest rates or challenged transaction markets may adversely impact the ability of the Company’s joint ventures to sell assets at attractive prices in order to repay indebtedness.

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Cash Flow Activity

The Company’s cash flow activities are summarized as follows (in thousands):

Changes in cash flow for the year ended December 31, 2023, compared to the prior year are as follows:

Operating Activities: Cash provided by operating activities decreased by $18.7 million primarily due to changes in cash flow from dispositions, higher interest rates, higher general and administrative expenses attributable to the May 2023 restructuring plan and changes in working capital.

Investing Activities: Cash from investing activities increased by $727.5 million primarily due to the following:

•
Increase in proceeds from disposition of real estate of $619.9 million;

•
Decrease in real estate assets acquired, developed and improved of $177.1 million;

•
Decrease in distributions from unconsolidated joint ventures of $30.6 million;

•
Decrease in proceeds from disposition of joint venture interests of $35.8 million and

•
Payment of swaption agreement fees of $3.4 million.

Financing Activities: Cash used for financing activities increased by $138.9 million primarily due to the following:

•
Increase of $110.1 million of outstanding debt;

•
Decrease in proceeds of issuance of common shares of $36.7 million;

•
Decrease in repurchases of common shares of $15.6 million;

•
Payment of loan commitment fees of $13.5 million and

•
Decrease in debt issuance costs of $5.9 million.

Dividend Distribution

The Company satisfied its REIT requirement of distributing at least 90% of ordinary taxable income with declared common and preferred share cash dividends of $154.1 million in 2023, as compared to $122.3 million of cash dividends paid in 2022. Because actual distributions were greater than 100% of taxable income, federal income taxes were not incurred by the Company in 2023.

The Company declared aggregate cash dividends of $0.68 per common share in 2023, which includes a special cash dividend attributable to significant dispositions activity consummated in 2023 of $0.16 per common share, paid on January 12, 2024, to shareholders of record at the close of business on December 27, 2023. In February 2024, the Company declared its first quarter 2024 dividend of $0.13 per common share payable on April 5, 2024, to shareholders of record at the close of business on March 14, 2024.

The Board of Directors of the Company intends to monitor the Company’s dividend policy in order to maintain sufficient liquidity for operations and in order to maximize the Company’s free cash flow while still adhering to REIT payout requirements and minimizing federal income taxes (excluding federal income taxes applicable to its taxable REIT subsidiary activities). The Company’s future dividend policy may also be influenced by future asset sales, though the Company’s ability to distribute sale proceeds to shareholders will be subject to restrictions set forth in the terms of the Company’s indebtedness and preferred stock financings.

SITE Centers’ Equity

In December 2022, the Company’s Board of Directors authorized a common share repurchase program. Under the terms of the program, the Company is authorized to repurchase up to a maximum value of $100 million of its common shares. In 2023, the Company repurchased 1.5 million of its common shares in open market transactions at an aggregate cost of $20.0 million, or $13.43 per share. As of December 31, 2023, the Company had repurchased an aggregate of 2.0 million of its common shares under this program at an aggregate cost of $26.6 million.

The Company has a $250.0 million continuous equity program. At February 15, 2024, the Company had approximately $211.7 million available for the future offering of common shares under this program.

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SOURCES AND USES OF CAPITAL

The Company remains committed to maintaining sufficient liquidity, managing debt duration and maintaining prudent leverage levels in an effort to manage its overall risk profile while maintaining strategic flexibility. Equity offerings, debt financings (including the Mortgage Facility), asset sales and cash flow from operations continue to represent potential sources of proceeds to be used to achieve these objectives.

Curbline Separation

In October 2023, the Company announced a plan to separate its convenience assets into a separate, publicly traded REIT through the spin-off of Curbline. Prior to the spin-off of Curbline, the Company expects to use proceeds from the closing of the Mortgage Facility and additional asset sales to redeem and/or repay all of the Company’s outstanding unsecured indebtedness. Curbline is expected to be in a net cash position at the time of its separation from the Company with cash on hand, a preferred investment in the Company, and an unsecured, undrawn line of credit. Curbline is not expected to have any debt outstanding at the time of its separation from the Company and therefore Curbline is expected to have significant access to sources of debt capital in order to fund significant asset growth. The Company expects to acquire additional convenience properties prior to the spin-off that will be included in the Curbline portfolio, funded through additional Company dispositions, retained cash flow and cash on hand. Following the separation of Curbline, depending on market conditions, the Company intends to sell additional assets and use the proceeds to repay outstanding indebtedness, redeem Curbline’s preferred investment in the Company and make distributions to shareholders. The timing of certain sales may be impacted by interim leasing, tactical redevelopment activities, and other asset management initiatives intended to maximize values.

2024 Strategic Activity

Acquisitions

Through February 22, 2024, the Company acquired The Grove at Harpers Preserve in Conroe, Texas for $10.7 million. In addition, the DDRM Joint Venture acquired outparcels at its Meadowmont Village property for a purchase price of $8.1 million ($1.6 million at the Company’s share).

Dispositions

Through February 22, 2024, the Company sold the following wholly-owned shopping centers (in thousands):

(A)
Excludes 7,929 square feet retained by the Company (Shops at Casselberry).

Changes in investment and financings strategies for assets may impact the Company’s hold-period assumptions for those properties. Decisions to market or sell properties could result in changes in intended hold periods and trigger potential impairments or losses in future periods. The Company evaluates all potential sale opportunities to maximize shareholder value taking into account the growth prospects of the assets, the use of proceeds and the impact to the Company’s balance sheet, in addition to the impact on operating results.

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2023 Strategic Activity

Acquisitions

During 2023, the Company acquired the following convenience centers (in thousands):

Dispositions

During 2023, the Company sold the following wholly-owned shopping centers (in thousands):

(A)
Includes Shoppers World and Gateway Center. Excludes 19,017 square feet retained by the Company (Shops at Framingham).

(B)
Includes Lake Brandon Plaza, North Pointe Plaza and The Shoppes at New Tampa.

During 2023, unconsolidated shopping centers sold by the DDRM Joint Venture generated proceeds totaling $112.2 million of which the Company’s share was $22.4 million.

Equity Transactions

In the first quarter of 2023, the Company repurchased 1.5 million of its common shares in open market transactions at an aggregate cost of $20.0 million, or $13.43 per share with the remaining proceeds from the sale of wholly-owned properties in the fourth quarter of 2022 and proceeds from the sale of joint venture properties.

In the second quarter of 2023, the Company repurchased 140,633 OP units in a privately negotiated transaction at an aggregate cost of $1.7 million, or $12.34 per share. Following the repurchase, the Company has no outstanding OP units.

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Redevelopment Pipeline

The Company evaluates additional tactical redevelopment potential within the portfolio, particularly as it relates to the efficient use of the underlying real estate, which includes expanding, improving and re-tenanting various properties. The Company generally expects to commence construction on redevelopment projects only after substantial tenant leasing has occurred. At December 31, 2023, the Company had approximately $51 million in construction in progress in various active consolidated redevelopments and other projects and anticipates that it has approximately $9 million yet to be incurred on its pipeline of identified redevelopment projects. At December 31, 2023, the Company’s shopping center expansions, outparcel developments, construction of first-generation space and repurposing projects, were as follows (in thousands):

2022 Transaction Activity

Acquisitions

During 2022, the Company acquired the following shopping centers (in thousands)

(A)
Acquired its joint venture partner's 80% equity interest from the DDRM Joint Venture. This asset included a convenience center component. The purchase price was $44.5 million at 100% (or $35.6 million at 80%).

Dispositions of Assets and Joint Venture Investments

During 2022, the Company sold five wholly-owned shopping centers and land parcels at wholly-owned shopping centers in addition to three unconsolidated shopping centers generating proceeds totaling $265.2 million, of which the Company’s share was $223.9 million. In addition, the DDRM Joint Venture sold 13 shopping centers for an aggregate sales price of $387.6 million ($77.5 million at the Company’s share) with the related mortgage debt of $225.0 million repaid upon closing.

The Company sold its 20% interest in the SAU Joint Venture to its partner based on a gross asset value of $155.7 million (at 100%). In addition, the Company sold its 50% interest in Lennox Town Center to its partner based on a gross asset value of $77.0 million (at 100%). These transactions resulted in a Gain on Sale of Interests of $42.2 million.

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Equity Transactions

In the first and second quarters of 2022, the Company settled 2.4 million common shares which were offered and sold on a forward basis under its $250 million continuous equity program, resulting in gross proceeds of $38.3 million, or $15.79 per share. In the third and fourth quarters of 2022, the Company repurchased 3.7 million of its common shares in open market transactions at an aggregate cost of $48.9 million, or $13.09 per share.

Redevelopment Projects

The Company invested approximately $75 million in various consolidated active redevelopment and other projects during 2022.

CAPITALIZATION

At December 31, 2023, the Company’s capitalization consisted of $1.6 billion of debt, $175.0 million of preferred shares and $2.9 billion of market equity (calculated as common shares outstanding multiplied by $13.63, the closing price of the Company’s common shares on the New York Stock Exchange at December 29, 2023, the last trading day of 2023). At December 31, 2023, after giving effect to the swap of the variable-rate component of the Term Loan’s interest rate to a fixed rate, the Company’s total debt consisted entirely of fixed-rate debt.

Management seeks to maintain access to the capital resources necessary to manage the Company’s balance sheet and to repay upcoming maturities. Accordingly, the Company may seek to obtain funds through additional debt or equity financings and/or joint venture capital in a manner consistent with its intention to operate with a prudent debt capitalization policy and to reduce the Company’s cost of capital by maintaining an investment grade rating with Moody’s, S&P and Fitch. In the event the Company closes the Mortgage Facility in connection with the spin-off of Curbline, the Company expects to use loan proceeds together with proceeds from additional asset sales to repay all of the Company’s outstanding unsecured indebtedness in which case it would no longer maintain an investment grade rating. A security rating is not a recommendation to buy, sell or hold securities, as it may be subject to revision or withdrawal at any time by the rating organization. Each rating should be evaluated independently of any other rating. The Company may not be able to obtain financing on favorable terms, or at all, which may negatively affect future ratings.

The Revolving Credit Facility, Term Loan and the indentures under which the Company’s senior and subordinated unsecured indebtedness is, or may be, issued contain certain financial and operating covenants, including, among other things, debt service coverage and fixed-charge coverage ratios, as well as limitations on the Company’s ability to incur secured and unsecured indebtedness, sell all or substantially all of the Company’s assets, engage in certain mergers and acquisitions and make distribution to its shareholders. Although the Company intends to operate in compliance with these covenants, if the Company were to violate these covenants, the Company may be subject to higher finance costs and fees or accelerated maturities. In addition, the Revolving Credit Facility, Term Loan and the Company’s indentures permit the acceleration of maturity in the event certain other debt of the Company is in default or has been accelerated. Foreclosure on mortgaged properties or an inability to refinance existing indebtedness would have a negative impact on the Company’s financial condition and results of operations.

CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

The Company has addressed all of its consolidated debt maturing in 2024. The Company expects to fund future maturities from utilization of its Revolving Credit Facility, proceeds from asset sales and other investments, cash flow from operations and/or additional debt or equity financings including the Mortgage Facility. No assurance can be provided that these obligations will be repaid as currently anticipated or refinanced.

Other Guaranties

In conjunction with the redevelopment of shopping centers, the Company had entered into commitments with general contractors aggregating approximately $6.7 million for its consolidated properties as of December 31, 2023, which includes the assets in the redevelopment pipeline. These obligations, composed principally of construction contracts, are generally due within 12 to 24 months, as the related construction costs are incurred, and are expected to be financed through operating cash flow, asset sales or borrowings under the Revolving Credit Facility. These contracts typically can be changed or terminated without penalty.

In connection with the sale of two properties, the Company guaranteed additional construction costs to complete re-tenanting work at the properties and deferred maintenance, both of which were recorded as a liability and reduction of gain on sale of real estate of $5.4 million at December 31, 2023. The amount is recorded in accounts payable and other liabilities on the Company’s consolidated balance sheet.

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The Company routinely enters into contracts for the maintenance of its properties. These contracts typically can be canceled upon 30 to 60 days’ notice without penalty. At December 31, 2023, the Company had purchase order obligations, typically payable within one year, aggregating approximately $3.4 million related to the maintenance of its properties and general and administrative expenses.

At December 31, 2023, the Company had letters of credit outstanding of $12.9 million. The Company has not recorded any obligations associated with these letters of credit, the majority of which serve as collateral to secure the Company’s obligation to third-party insurers with respect to limited reinsurance provided by the Company’s captive insurance company.

The Company has entered into employment contracts with all four of its executive officers. These contracts generally provide for base salary, bonuses based on factors including the financial performance of the Company and personal performance, participation in the Company’s equity plans and retirement plans, health and welfare benefits and reimbursement of various qualified business expenses. These employment agreements also provide for certain perquisites (e.g., health insurance coverage, car service, reimbursement of life and disability insurance premiums, etc.) and severance payments and benefits for various departure scenarios. The employment agreement for the Company’s President and Chief Executive Officer extends through September 2024. The employment agreements for the Company’s Chief Financial Officer and Chief Investment Officer extend through September 2026. The employment agreement for the Company’s Chief Accounting Officer extends through September 2024. All of the agreements are subject to termination by either the Company or the executive without cause upon at least 90 days’ notice subject to the payment of severance and other amounts to the executive under certain circumstances.

ECONOMIC CONDITIONS

Despite current economic uncertainty, the Company continues to experience retailer demand for quality real estate locations within well-positioned shopping centers. During 2023, the Company executed new leases and renewals aggregating approximately 3.3 million square feet of space on a pro rata basis. The Company believes these strong leasing results and tenant demand are attributable to the concentration of the Company’s portfolio in suburban, high household income communities, pandemic-induced migration and work-from-home trends, limited new construction and tenants’ increasing use of physical store locations to improve the speed and efficiency of merchandise distribution.

The Company benefits from a diversified tenant base, with only one tenant whose annualized rental revenue equals or exceeds 3% of the Company’s annualized consolidated revenues plus the Company’s proportionate share of unconsolidated joint venture revenues (TJX Companies at 5.2%). Other significant national tenants generally have relatively strong financial positions, have outperformed other retail categories over time and the Company believes remain well-capitalized. Historically, these national tenants have provided a stable revenue base, and the Company believes that they will continue to provide a stable revenue base going forward, given the long-term nature of these leases. The majority of the tenants in the Company’s shopping centers provide day-to-day consumer necessities with a focus on value and convenience, versus discretionary items, which the Company believes will enable many of its tenants to outperform under a variety of economic conditions. The Company has relatively little reliance on overage or percentage rents generated by tenant sales performance.

The Company believes that its shopping center portfolio is well positioned, as evidenced by its recent leasing activity, historical property income growth and consistent growth in average annualized base rent per occupied square foot. Historical occupancy has generally ranged from 89% to 94% over the last 10 years. At December 31, 2023 and 2022, the shopping center portfolio occupancy, on a pro rata basis, was 92.0% and 92.4%, respectively, and the total portfolio average annualized base rent per occupied square foot, on a pro rata basis, was $20.35 and $19.52, respectively. The Company’s portfolio was impacted by tenant bankruptcies in 2023 and the Company expects to expend capital in coming periods in connection with leases executed to backfill these and other closures. Although the per square foot cost of leasing capital expenditures has been predominantly consistent with the Company’s historical trends, the high volume of the Company’s leasing activity in recent years will cause aggregate leasing capital expenditure levels to remain elevated. The weighted-average cost of tenant improvements and lease commissions estimated to be incurred over the expected lease term for new leases executed during the years ended December 31, 2023 and 2022, on a pro rata basis, was $4.90 and $7.42 per rentable square foot, respectively. The Company generally does not expend a significant amount of capital on lease renewals.

Although disruptions to the Company’s business stemming from the COVID-19 pandemic have subsided, inflation, higher interest rates, concerns over consumer spending along with the volatility of global capital markets continue to pose risks to the U.S. economy, the consumer and the Company’s tenants. In addition to these macroeconomic challenges, the retail sector has been affected by changing consumer behaviors following the COVID-19 pandemic, including the competitive nature of the retail business and the competition for share of the consumer wallet. The Company routinely monitors the credit profiles of its tenants and analyzes the possible impact of any potential tenant credit issues on the financial statements of the Company and its unconsolidated joint ventures. In some cases, changing conditions have resulted in weaker retailers and retail categories losing market share and declaring bankruptcy and/or closing stores. However, other retailers, specifically those in the value and convenience category, continue to

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express interest in launching new concepts and expanding their store fleets within the suburban, high household income communities in which the Company’s properties are located. As a result, the Company believes that its prospects to backfill spaces vacated by bankrupt or non-renewing tenants are generally good, though such re-tenanting efforts would likely require additional capital expenditures and the opportunities to lease any vacant theater spaces may be more limited. However, there can be no assurance that vacancy resulting from increasingly uncertain economic conditions will not adversely affect the Company’s operating results (see Item 1A. Risk Factors).

Inflation, rising interest rates and the availability of commercial real estate financing have also impacted, at certain times, real estate owners’ ability to acquire and sell assets and raise equity and debt financing. Although the Company has no consolidated indebtedness maturing in 2024, debt capital markets liquidity could adversely impact the Company’s business plan and ability to refinance future maturities, if needed, and the interest rates applicable thereto. Following the separation of Curbline, depending on market conditions, the Company intends to sell additional assets and use the proceeds to repay outstanding indebtedness, redeem Curbline’s preferred investment in the Company and make distributions to shareholders. The timing of certain sales may be impacted by interim leasing, tactical redevelopment activities, and other asset management initiatives intended to maximize values. Unfavorable changes in interest rates or the capital markets could adversely impact the Company’s ability to sell additional assets on favorable terms.

FORWARD-LOOKING STATEMENTS

MD&A should be read in conjunction with the Company’s consolidated financial statements and the notes thereto appearing elsewhere in this report. Historical results and percentage relationships set forth in the Company’s consolidated financial statements, including trends that might appear, should not be taken as indicative of future operations. The Company considers portions of this information 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 (the “Exchange Act”), both as amended, with respect to the Company’s expectations for future periods. Forward-looking statements include, without limitation, statements related to acquisitions (including any related pro forma financial information) and other business development activities, future capital expenditures, financing sources and availability and the effects of environmental and other regulations. Although the Company believes that the expectations reflected in these 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 statements of historical fact should be deemed to be forward-looking statements. Without limiting the foregoing, the words “will,” “believes,” “anticipates,” “plans,” “expects,” “seeks,” “estimates” and similar expressions are intended to identify forward-looking statements. Readers should exercise caution in interpreting and relying on forward-looking statements because such statements involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company’s control and that could cause actual results to differ materially from those expressed or implied in the forward-looking statements and that could materially affect the Company’s actual results, performance or achievements. For additional factors that could cause the results of the Company to differ materially from those indicated in the forward-looking statements (see Item 1A. Risk Factors).

Factors that could cause actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, but are not limited to, the following:

•
The Company is subject to general risks affecting the real estate industry, including the need to enter into new leases or renew leases on favorable terms to generate rental revenues, and any economic downturn may adversely affect the ability of the Company’s tenants, or new tenants, to enter into new leases or the ability of the Company’s existing tenants to renew their leases at rates at least as favorable as their current rates;

•
The Company could be adversely affected by changes in the local markets where its properties are located, as well as by adverse changes in national economic and market conditions;

•
The Company may fail to anticipate the effects on its properties of changes in consumer buying practices, including sales over the internet and the resulting retailing practices and space needs of its tenants, or a general downturn in its tenants’ businesses, which may cause tenants to close stores or default in payment of rent;

•
The Company is subject to competition for tenants from other owners of retail properties, and its tenants are subject to competition from other retailers and methods of distribution. The Company is dependent upon the successful operations and financial condition of its tenants, in particular its major tenants, and could be adversely affected by the bankruptcy of those tenants;

•
The Company leases the majority of its square footage to large tenants, which makes it vulnerable to changes in the business and financial condition of, or demand for its space by, such tenants;

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•
The Company may not realize the intended benefits of acquisition or merger transactions. The acquired assets may not perform as well as the Company anticipated, or the Company may not successfully integrate the assets and realize improvements in occupancy and operating results. The acquisition of certain assets may subject the Company to liabilities, including environmental liabilities;

•
The Company may fail to identify, acquire, construct or develop additional properties that produce a desired yield on invested capital, or may fail to effectively integrate acquisitions of properties or portfolios of properties. In addition, the Company may be limited in its acquisition opportunities due to competition, the inability to obtain financing on reasonable terms or any financing at all and other factors;

•
The Company may fail to dispose of properties on favorable terms, especially in regions experiencing deteriorating economic conditions. In addition, real estate investments can be illiquid, particularly as prospective buyers may experience increased costs of financing or difficulties obtaining financing due to local or global conditions, and could limit the Company’s ability to promptly make changes to its portfolio to respond to economic and other conditions;

•
The Company may fail to complete its previously announced spin-off of its convenience properties, or the closing of the related Mortgage Facility, which could adversely affect the market price of the Company’s common shares;

•
The Company may abandon a redevelopment opportunity after expending resources if it determines that the opportunity is not feasible due to a variety of factors, including a lack of availability of construction financing on reasonable terms, the impact of the economic environment on prospective tenants’ ability to enter into new leases, or pay contractual rent, or the inability of the Company to obtain all necessary zoning and other required governmental permits and authorizations;

•
The Company may not complete redevelopment projects on schedule as a result of various factors, many of which are beyond the Company’s control, such as weather, labor conditions, governmental approvals, material shortages or general economic downturn, resulting in limited availability of capital, increased debt service expense and construction costs and decreases in revenue;

•
The Company’s financial condition may be affected by required debt service payments, the risk of default, restrictions on its ability to incur additional debt or to enter into certain transactions under its Revolving Credit Facility and Term Loan and other documents governing its debt obligations and the risk of downgrades from debt rating services. In addition, the Company may encounter difficulties in obtaining permanent financing or refinancing existing debt. Borrowings under the Company’s Revolving Credit Facility are subject to certain representations and warranties and no default or event of default existing thereunder;

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Changes in interest rates could adversely affect the market price of the Company’s common shares, its ability to sell properties and prices realized, as well as its performance, interest expense levels and cash flow;

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Financing necessary for the Company to execute its strategies and operate its business may not be available or may not be available on favorable terms;

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Disruptions in the financial markets could affect the Company’s ability to obtain financing on reasonable terms and have other adverse effects on the Company and the market price of the Company’s common shares;

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Inflationary pressures could result in reductions in retailer profitability, consumer discretionary spending and tenant demand to lease space. Inflation could also increase the costs incurred by the Company to operate its properties and finance its operations and could adversely impact the valuation of its properties, all of which could have an adverse effect on the market price of the Company’s common shares;

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The Company is subject to complex regulations related to its status as a REIT and would be adversely affected if it failed to qualify as a REIT;

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The Company must make distributions to shareholders to continue to qualify as a REIT, and if the Company must borrow funds to make distributions, those borrowings may not be available on favorable terms or at all;

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Joint venture investments may involve risks not otherwise present for investments made solely by the Company, including the possibility that a partner or co-venturer may become bankrupt, may at any time have interests or goals different from those of the Company and may take action contrary to the Company’s instructions, requests, policies or objectives, including the Company’s policy with respect to maintaining its qualification as a REIT. In addition, a partner or co-venturer may not have access to sufficient capital to satisfy its funding obligations to the joint venture or may seek to

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terminate the joint venture, resulting in a loss to the Company of property revenues and management fees. The partner could cause a default under the joint venture loan for reasons outside the Company’s control. Furthermore, the Company could be required to reduce the carrying value of its equity investments if a loss in the carrying value of the investment is realized;

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The Company’s decision to dispose of real estate assets, including undeveloped land and construction in progress, would change the holding period assumption in the undiscounted cash flow impairment analyses, which could result in material impairment losses and adversely affect the Company’s financial results;

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The outcome of pending or future litigation, including litigation with tenants or joint venture partners, may adversely affect the Company’s results of operations and financial condition;

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Property damage, expenses related thereto and other business and economic consequences (including the potential loss of revenue) resulting from extreme weather conditions or natural disasters in locations where the Company owns properties may adversely affect the Company’s results of operations and financial condition;

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Sufficiency and timing of any insurance recovery payments related to damages and lost revenues from extreme weather conditions or natural disasters may adversely affect the Company’s results of operations and financial condition;

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The Company and its tenants could be negatively affected by the impacts of pandemics and other public health crises;

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The Company is subject to potential environmental liabilities;

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The Company may incur losses that are uninsured or exceed policy coverage due to its liability for certain injuries to persons, property or the environment occurring on its properties;

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The Company could be subject to potential liabilities, increased costs, reputation harm and other adverse effects on the Company’s business due to stakeholders’, including regulators’, views regarding the Company’s ESG goals and initiatives, and the impact of factors outside of the Company’s control on such goals and initiatives;

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The Company could incur additional expenses to comply with or respond to claims under the Americans with Disabilities Act or otherwise be adversely affected by changes in government regulations, including changes in environmental, zoning, tax and other regulations;

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The Company’s Board of Directors, which regularly reviews the Company’s business strategy and objectives, may change the Company’s strategic plan based on a variety of factors and conditions, including in response to changing market conditions and

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The Company and its vendors could sustain a disruption, failure or breach of their respective networks and systems, including as a result of cyber-attacks, which could disrupt the Company’s business operations, compromise the confidentiality of sensitive information and result in fines or penalties.