Be
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☑
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
OR
For the transition period from to
Commission file number 1-11690
SITE Centers Corp.
(Exact Name of Registrant as Specified in Its Charter)
Ohio
(State or Other Jurisdiction of Incorporation or Organization)
3300 Enterprise Parkway, Beachwood, Ohio
(Address of Principal Executive Offices)
34-1723097
(I.R.S. Employer Identification No.)
44122
(Zip Code)
Registrant’s telephone number, including area code (216) 755-5500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Shares, Par Value $0.10 Per Share
Depositary Shares, each representing 1/20 of a share of 6.375% Class A Cumulative
Redeemable Preferred Shares without Par Value
Trading
Symbol(s)
SITC
Name of each exchange on which registered
New York Stock Exchange
SITC PRA New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or
an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☑
Non-accelerated filer☐
Accelerated filer ☐
Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared
or issued its audit report. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
The aggregate market value of the voting stock held by non-affiliates of the registrant at June 30, 2021, was $2.7 billion.
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
211,235,807 common shares outstanding as of February 10, 2022
DOCUMENTS INCORPORATED BY REFERENCE
The registrant incorporates by reference in Part III hereof portions of its definitive Proxy Statement for its 2022 Annual Meeting of Shareholders.
Item No.
1. Business
1A. Risk Factors
1B. Unresolved Staff Comments
2. Properties
3. Legal Proceedings
4. Mine Safety Disclosures
TABLE OF CONTENTS
PART I
PART II
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
6. [Reserved]
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
7A. Quantitative and Qualitative Disclosures About Market Risk
8. Financial Statements and Supplementary Data
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
9A. Controls and Procedures
9B. Other Information
9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections
PART III
10. Directors, Executive Officers and Corporate Governance
11. Executive Compensation
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
13. Certain Relationships and Related Transactions, and Director Independence
14. Principal Accountant Fees and Services
15. Exhibits and Financial Statement Schedules
16. Form 10-K Summary
PART IV
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Item 1.
BUSINESS
Overview
PART I
SITE Centers Corp., an Ohio corporation (the “Company” or “SITE Centers”), a self-administered and self-managed Real Estate Investment Trust
(“REIT”), is in the business of acquiring, owning, developing, redeveloping, leasing and managing shopping centers. Unless otherwise provided,
references herein to the Company or SITE Centers include SITE Centers Corp. and its wholly-owned subsidiaries and consolidated and unconsolidated
joint ventures.
The Company is self-administered and self-managed, and therefore, has not engaged, nor does it expect to retain, any REIT advisor. The Company
manages all of the Portfolio Properties as defined herein. At December 31, 2021, the Company owned approximately 32.0 million square feet of gross
leasable area (“GLA”) (42.2 million square feet of total GLA) through all its properties (wholly-owned and joint venture) and managed approximately 0.6
million total square feet of GLA for Retail Value Inc. (“RVI”), an owner and operator of one shopping center listed on the New York Stock Exchange.
The primary source of the Company’s income is generated from the rental of the Company’s Portfolio Properties to tenants. The Company’s
shopping centers and land are collectively referred to as the “Portfolio Properties.” In addition, the Company generates revenue from its management
contracts with its unconsolidated joint ventures and RVI.
On July 1, 2018, SITE Centers completed the spin-off of RVI. At the time of the spin-off, RVI owned 48 shopping centers, composed of 36
continental U.S. assets and 12 of SITE Centers’ shopping centers in Puerto Rico, representing $2.7 billion of gross book asset value and 16 million square
feet of GLA. At December 31, 2021, RVI owned one remaining shopping center in Gulfport, Mississippi representing 0.6 million square feet of GLA.
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. Although management and the Board of Directors have no present
intention to materially amend or revise the Company’s policies, the Board of Directors may do so 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 attractive 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.
Looking forward, growth opportunities within the core property operations include rental increases and continued lease-up of the portfolio and the
adaptation of existing site plans and square footage to generate higher blended rental rates and operating cash flows. Additional
growth opportunities include acquisitions and tactical redevelopment. Management intends to use retained cash flow, proceeds
from the sale of lower growth assets and proceeds from equity offerings and debt financings to fund capital expenditures relating
to new leasing activity and acquisitions, including opportunistic investments and tactical redevelopment activity.
The Company believes the following serve as cornerstones for the execution of its strategy:
• Maximization of recurring cash flows through strong leasing and core property operations;
•
•
•
•
Growth in Company cash flows through capital recycling, especially the redeployment of capital from mature, slower growing assets into
acquisitions that offer operational and tactical redevelopment potential;
Enhancement of property cash flows through creative, proactive tactical redevelopment efforts that result in the profitable adaptation of site
plans to better suit retail tenant and community demands;
Risk mitigation through continuous focus on maintaining prudent leverage levels and lengthy average debt maturities, as well as access to a
diverse selection of capital sources, including the secured and unsecured debt markets, unsecured lines of credit, common equity and capital
from a wide range of joint venture partners and
Sustainability of growth through a constant focus on relationships with investor, tenant, employee, community and environmental
constituencies.
4
COVID-19 Pandemic
In March 2020, the World Health Organization categorized COVID-19 as a pandemic, and it continues to spread throughout the United States and
other countries across the world. Beginning in mid-March 2020, federal, state and local governments took various actions to limit the spread of COVID-
19, including ordering the temporary closure of non-essential businesses (which included many of the Company’s tenants) and imposing significant social
distancing guidelines and restrictions on the continued operations of essential businesses and the subsequent reopening of non-essential businesses. In
response to the COVID-19 pandemic, beginning in March 2020, the majority of the Company’s employees began to perform their responsibilities remotely,
and the Company implemented safety protocols to protect those employees whose roles required them to be present in the Company’s offices. In October
2020, the Company reopened its offices in order to allow all employees to return on a voluntary basis, and in September 2021, the Company began to
require that all employees report to the office at least two times each week. The Company continues to closely monitor local levels of infection associated
with the COVID-19 pandemic and has taken additional steps as needed in order to protect the health and safety of its workforce, including a relaxation of
office attendance requirements in late 2021 as a result of the Omicron variant and rising infection levels.
The COVID-19 pandemic had a significant impact on the collection of rents from April 2020 through December 2020. During the second half of
2020 and early 2021, the Company worked with tenants to maximize the collection of unpaid 2020 rents by offering rent deferment on a case-by-case basis,
often in exchange for concessions in the form of tenant extensions of lease terms, the relaxation of leasing restrictions and co-tenancy provisions and, in
some cases, alterations of control areas allowing for future redevelopment of the shopping center.
During the course of 2021, the Company’s rental collections normalized close to pre-pandemic levels. As of December 31, 2021, a substantial
majority of tenants, including tenants previously on the cash basis of accounting, were paying their monthly rent and any deferred rents relating to prior
periods. Included in 2021 results was $13.8 million of net revenue, at SITE Centers’ share, primarily related to contractual rents paid from cash-basis
tenants that were contractually due in 2020. The majority of the deferral arrangements relating to 2020 revenue were repaid during 2021, and therefore, the
impact of 2020 rent collections is expected to be minimal in future periods. At December 31, 2021, $0.2 million remained outstanding under deferral
arrangements for tenants that are not accounted for on the cash basis.
As of February 10, 2022, the Omicron variant has not had a material impact on the Company’s rent collections or leasing activity though some
tenants have experienced challenges in maintaining regular operating hours as a result of related labor shortages. Future rent collection may be negatively
impacted by additional surges in COVID-19 contagion, the emergence of new COVID-19 variants that are more infectious or resistant to existing vaccines,
decreases in the effectiveness of existing vaccines, and any implementation of additional restrictions on tenant businesses as a result thereof. For a further
discussion of the impact of the COVID‑19 pandemic on the Company’s business, see Item 1A. Risk Factors in Part I of this Report on Form 10-K and
“Liquidity, Capital Resources and Financing Activities” and “Economic Conditions” included in Item 7. Management’s Discussion and Analysis of
Financial Conditions and Results of Operations in Part II of this Report on Form 10-K.
Narrative Description of Business
The Company’s portfolio as of December 31, 2021, consisted of 136 shopping centers (including 47 centers owned through unconsolidated joint
ventures) and approximately 60 acres of developable land. The shopping centers are located in 21 states. The following tables present the operating
statistics affecting base and percentage rental revenues summarized by the following portfolios: pro rata combined shopping center portfolio, wholly-
owned shopping center portfolio and joint venture shopping center portfolio:
Centers owned (at 100%)
Aggregate occupancy rate
Average annualized base rent per occupied square foot
Centers owned
Aggregate occupancy rate
Average annualized base rent per occupied
square foot
Pro Rata Combined
Shopping Center Portfolio
December 31,
2021
2020
136
90.0%
$
18.33
$
138
89.0%
18.50
Wholly-Owned
Shopping Centers
December 31,
Joint Venture
Shopping Centers
December 31,
2021
2020
2021
2020
89
90.0%
78
89.2%
47
89.4%
60
87.3%
$
18.52
$
18.75
$
15.15
$
15.36
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Recent Developments
See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements
and Notes thereto included in Item 8 of this Annual Report on Form 10-K, which are incorporated herein by reference, for information on certain recent
developments of the Company.
Tenants and Competition
The Company has established close relationships with a large number of major national and regional tenants. The Company’s management is
associated with, and actively participates in, many shopping center and REIT industry organizations. Notwithstanding these relationships, numerous real
estate companies and developers, private and public, compete with the Company in leasing space in shopping centers to tenants. The Company competes
with other real estate companies and developers in terms of rental rate, property location, availability of space, management services and property
condition.
The Company’s five largest tenants based on the Company’s aggregate annualized base rental revenues, including its proportionate share of joint
venture aggregate annualized base rental revenues, are TJX Companies, Inc., Dick's Sporting Goods, Inc., PetSmart, Inc., Michaels Companies, Inc. and
Ross Stores, Inc., representing 5.8%, 2.7%, 2.6%, 2.3% and 1.9%, respectively, of the Company’s aggregate annualized base rental revenues at
December 31, 2021. For more information on the Company’s tenants, see Item 7. “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” under the caption “Company Fundamentals.”
Qualification as a Real Estate Investment Trust
As of December 31, 2021, the Company met the qualification requirements of a REIT under Sections 856-860 of the Internal Revenue Code of
1986, as amended (the “Code”). As a result, the Company, with the exception of its taxable REIT subsidiary (“TRS”), will not be subject to federal income
tax to the extent it meets certain requirements of the Code.
Human Capital Management
As of December 31, 2021, the Company’s workforce was composed of 293 full-time equivalent employees compared to 323 full-time equivalent
employees at December 31, 2020. At the end of 2021, the Company’s workforce was approximately 37% male and 63% female, and women represented
approximately 46% of the Company’s managers (defined by reference to the EEO-1 job class categories to include executive/senior-level officials and
managers and first/mid-level officials and managers). The ethnicity of the Company’s workforce at the end of 2021 was approximately 80% White, 12%
Black, 4% Hispanic, 2% Asian and 2% other (based on EEO categories). During 2021, the size and the diversity of the Company’s workforce decreased as
a result of RVI’s sale of its remaining Puerto Rico properties, which had been managed by local Company employees. Of the Company’s employees, 73%
of employees were assigned to work in the corporate headquarters in Beachwood, Ohio, with the rest working in regional offices or remotely. Many of the
Company’s employees have a long tenure with the Company, with approximately 82% of the Company’s employees having been with the Company for
over 5 years and 53% for over 10 years.
The Company’s primary human capital management objective is to attract, develop, engage and retain the highest quality talent. To support this
objective, the Company offers competitive pay and benefit programs, a broad focus on wellness and flexible work arrangements designed to allow
employees to meet personal and family needs. The Company also takes steps to measure and improve upon its level of employee engagement and to create
a diverse and inclusive workplace. The Company’s employees are expected to exhibit honest, ethical and respectful conduct in the workplace. At least
once every two years the Company requires its employees to complete training modules on sexual harassment and discrimination and to acknowledge and
certify their compliance with the Company’s Code of Business Conduct and Ethics. Senior members of its accounting, finance and capital markets
departments are also required to acknowledge and agree to the Company’s Code of Ethics for Senior Financial Officers on an annual basis. The Company’s
culture is also underpinned by its employees’ commitment to the Company’s core values of being Fearless, Authentic, Curious and Thoughtful (the
Company’s Matters of FACT) in the conduct of their responsibilities.
In response to the COVID-19 pandemic, beginning in March 2020, the majority of the Company’s employees began to perform their responsibilities
remotely, and the Company implemented safety protocols to protect those employees whose roles required them to be present in the Company’s offices. In
October 2020, the Company reopened its offices in order to allow all employees to return on a voluntary basis, and in September 2021, the Company began
to require that all employees report to the office at least two times each week. The Company continues to closely monitor local levels of infection
associated with the COVID-19 pandemic and has taken additional steps as needed in order to protect the health and safety of its workforce, including a
relaxation of office attendance requirements in late 2021 as a result of new COVID-19 variants and rising infection levels.
Information Technology and Cybersecurity
The Company depends on the proper functioning, availability and security of its information systems, including financial, data processing,
communications and operating systems, as well as proprietary software programs that are important to the efficient
6
operation of the business. The Company also utilizes certain software applications provided by third parties, grants access to certain of the Company’s
systems to third parties who provide outsourced functions or other services and increasingly stores and transmits data by means of connected information
technology or “cloud” systems. Any significant failures or other disruption of the Company’s critical information systems, including as a result of
ransomware attacks or other cyber incidents, that impact the availability or other proper functioning of these systems or that result in the compromise of
sensitive or confidential information, including information of tenants, employees and others, could result in liability to third parties and have a significant
impact on the Company’s operations and reputation.
The frequency and sophistication of global cybersecurity threats have increased in recent years, primarily through phishing and ransomware
campaigns. The Company’s objective for managing increasing cybersecurity risk is to avoid or minimize the impacts of external threat events or other
efforts to breach the Company’s systems. The Company works to achieve this objective by hardening its networks and systems against attack by adopting
“defense-in-depth” and “zero-trust” methodologies. The Company has a formal process in place for incident response and business continuity, which the
Company refers to as its Cybersecurity Incident Response Plan, that encompasses tactics related to cybersecurity, systems and facilities availability and
information privacy. The Company has established an internal Security and Privacy Governance Committee comprised of members of management to help
review and discuss cybersecurity risks on a periodic basis. The role of the committee is to oversee the development and implementation of the Company’s
Cybersecurity Incident Response Plan, to discuss the implementation of various security measures and to receive reports on the Company’s cybersecurity
training and awareness program and engagement of third parties to conduct periodic external security testing. The Company’s audit services and
technology teams conduct third-party risk assessments during the procurement of solutions and services and annually on agreement renewal. As a
complement to these measures, the Company also conducts annual cybersecurity awareness training for all employees, new-hire cybersecurity training,
periodic simulated phishing tests and additional training for employees who travel outside the United States. The Company’s Audit Committee is briefed
on information security matters, including current data security and recovery initiatives and external security testing results, at least once each year by the
Company’s Senior Vice President of Information Technology and the Senior Director of Audit Services.
The Company’s information technology systems are protected through physical and software safeguards, as well as backup systems the Company
considers to be appropriate. However, such safeguards may ultimately prove to be insufficient to protect against all incidents the Company
experiences. Furthermore, these systems are vulnerable to interruption from events beyond the Company’s control. To mitigate the potential for such
occurrences at the Company’s primary data center, the Company has implemented various systems, including redundant telecommunication facilities,
replication of critical data and backups to multiple off-site locations, a fire suppression system to protect the Company’s on-site data center and electrical
power protection and generation facilities. The Company also has a catastrophic disaster recovery plan and alternate processing capability available for its
critical data processes in the event of a catastrophe that renders the primary data center unusable.
The Company has not experienced any cyber-incidents that have materially obstructed the availability of its information systems and data. The
Company has experienced incidents involving malware, email phishing and other events intended to disrupt information systems, wrongfully obtain
valuable information or cause other types of malicious events that could have resulted in harm to the business. To the Company’s knowledge, the various
protections the Company has employed have been effective in identifying these types of events at a point when the impacts on the business could be
minimized.
The Company also maintains cybersecurity insurance; however, there is no assurance that the insurance the Company maintains will cover all
cybersecurity breaches or that policy limits will be sufficient to cover all related losses.
Corporate Responsibility and Sustainability
At SITE Centers, the term “sustainability” is defined as: sustainable value, sustainable growth, sustainable property operations, sustainable
employee health and wellness, sustainable governance policies and sustainable interaction with the Company’s stakeholders and communities. Detailed
information regarding the Company’s approach to sustainability can be found on the Company's website in its Corporate Responsibility and Sustainability
Report. This report is based on the Global Reporting Initiative (GRI) standard, which summarizes environmental and social performance, and includes
disclosures with respect to certain Sustainability Accounting Standards Board (SASB) standards. The content of the Company’s sustainability reports is not
incorporated by reference into this Annual Report on Form 10-K or in any other report or document filed with the SEC, unless expressly noted.
Information About the Company’s Executive Officers
The section below provides information regarding the Company’s executive officers as of February 10, 2022:
David R. Lukes, age 52, has served as President and Chief Executive Officer of SITE Centers and has been a member of SITE Centers’ Board of
Directors since March 2017. Prior to joining SITE Centers, Mr. Lukes served as Chief Executive Officer and President of Equity One, Inc., an owner,
developer and operator of shopping centers, from June 2014 until March 2017 and served as its Executive Vice President from May 2014 to June
2014. Mr. Lukes also served as President and Chief Executive Officer of Sears
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Holding Corporation affiliate Seritage Realty Trust, a REIT primarily engaged in the re-leasing of shopping centers, from 2012 through April 2014 and as
President and Chief Executive Officer of Olshan Properties, a privately-owned real estate firm specializing in commercial real estate, from 2010 through
2012. From 2002 to 2010, Mr. Lukes served in various senior management positions at Kimco Realty Corporation, including serving as its Chief Operating
Officer from 2008 to 2010. Mr. Lukes has also served as the President, Chief Executive Officer and Director of RVI since April 2018 and as an
Independent Director of Citycon Oyj, an owner and manager of shopping centers in the Nordic region listed on the Nasdaq Helsinki, since 2017. Mr.
Lukes holds a Bachelor of Environmental Design from Miami University, a Master of Architecture from the University of Pennsylvania and a Master of
Science in real estate development from Columbia University.
Conor M. Fennerty, age 36, has served as Executive Vice President, Chief Financial Officer and Treasurer of SITE Centers since November
2019. From April 2017 to November 2019, Mr. Fennerty served as SITE Centers’ Senior Vice President of Capital Markets. Prior to joining SITE Centers,
Mr. Fennerty served as a Vice President and Senior Analyst at BlackRock, Inc., a global funds manager, from July 2014 to April 2017, an Analyst at Cohen
& Steers Capital Management, a specialist asset manager focused on real assets, from May 2012 to July 2014, and prior to that, a member of the global
investment research division of Goldman Sachs from May 2010 to May 2012. Mr. Fennerty earned a Bachelor of Science in business administration with a
major in finance from Georgetown University.
Christa A. Vesy, age 51, is Executive Vice President and Chief Accounting Officer of SITE Centers, a position she assumed in March 2012. From
July 2016 to March 2017, Ms. Vesy also served as SITE Centers’ Interim Chief Financial Officer. In these roles, Ms. Vesy has overseen the property and
corporate accounting, tax and financial reporting functions for SITE Centers. Previously, Ms. Vesy served as Senior Vice President and Chief Accounting
Officer of SITE Centers since November 2006. Ms. Vesy has also served as Chief Financial Officer and Treasurer of RVI since November 2019, as its
Executive Vice President and Chief Accounting Officer since February 2018 and as its Director since May 2021. Prior to joining SITE Centers, Ms. Vesy
worked for The Lubrizol Corporation, where she served as manager of external financial reporting and then as controller for the lubricant additives
business segment. Prior to joining Lubrizol, from 1993 to September 2004, Ms. Vesy held various positions with the Assurance and Business Advisory
Services group of PricewaterhouseCoopers LLP, a registered public accounting firm, including Senior Manager from 1999 to September 2004. Ms. Vesy
graduated with a Bachelor of Science in business administration from Miami University. Ms. Vesy is a certified public accountant (CPA) and member of
the American Institute of Certified Public Accountants (AICPA).
John M. Cattonar, age 40, has served as Executive Vice President and Chief Investment Officer of SITE Centers since May 2021. Previously, Mr.
Cattonar served as Senior Vice President of Investments of SITE Centers from April 2017 to May 2021. Prior to joining SITE Centers, Mr. Cattonar served
as Vice President of Asset Management for Equity One from August 2015 to March 2017 and at Sears Holding Corporation’s affiliate Seritage Realty Trust
from July 2012 to July 2015. Mr. Cattonar earned a Master of Science in Real Estate Development from Columbia University and holds a Bachelor of Arts
in Economics from the University of North Carolina at Chapel Hill.
Corporate Headquarters
The Company is an Ohio corporation incorporated in 1992. The Company’s executive offices are located at 3300 Enterprise Parkway, Beachwood,
Ohio 44122, and its telephone number is (216) 755-5500. The Company’s website is www.sitecenters.com. The Company uses the Investors Relations
section of its website as a channel for routine distribution of important information, including press releases, analyst presentations and financial
information. The information the Company posts to its website may be deemed to be material, and investors and others interested in the Company are
encouraged to routinely monitor and review the information that the Company posts on its website in addition to following the Company’s press releases,
SEC filings and public conference calls and webcasts. The Company posts filings made with the SEC to its website as soon as reasonably practicable after
they are electronically filed with, or furnished to, the SEC, including the Company’s annual, quarterly and current reports on Forms 10-K, 10-Q and 8-K,
respectively, the Company’s proxy statements and any amendments to those reports or statements. All such postings and filings are available on the
Company’s website free of charge. In addition, this website allows investors and other interested persons to sign up to automatically receive e-mail alerts
when the Company posts news releases and financial information on its website. The SEC also maintains a website (https://www.sec.gov) that contains
reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. The content on, or accessible
through, any website referred to in this Annual Report on Form 10-K for the fiscal year ended December 31, 2021, is not incorporated by reference into,
and shall not be deemed part of, this Form 10-K unless expressly noted.
Item 1A.
RISK FACTORS
Summary of Risk Factors
The following is a summary of material risks that could affect the Company’s business, results of operations, financial condition, liquidity and cash
flows. The risks summarized below are discussed in greater detail in the risk factors that follow and are not the only risks the Company faces. The
Company’s business operations could also be affected by additional factors that are not presently known to it or that the Company currently considers to be
immaterial to its operations. Investors should carefully consider
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each of the following risks and all of the other information contained in this Annual Report on Form 10-K. If any of the following risks actually occur, the
Company’s business, financial condition or results of operations could be negatively affected.
Risks Related to the Company’s Business, Properties and Strategies
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
The economic performance and value of the Company’s shopping centers depend on many factors, including the economic climate and local
conditions, each of which could have an adverse impact on the Company’s cash flows and operating results.
E-commerce may continue to have an adverse impact on the Company’s tenants and business.
The COVID-19 pandemic has had, and could continue to have, a significant impact on the Company and its tenants’ businesses.
The Company relies on major tenants, making it vulnerable to changes in the business and financial condition of, or demand for its space by,
such tenants.
The Company’s dependence on rental income may adversely affect its ability to meet its debt obligations and make distributions to
shareholders.
The Company’s expenses may remain constant or increase even if income from the Company’s properties decreases.
Property ownership through partnerships and joint ventures could limit the Company’s control of those investments and reduce its expected
return.
The Company’s real estate assets may be subject to impairment charges.
The Company’s acquisition activities may not produce the cash flows that it expects and may be limited by competitive pressures or other
factors.
Real estate property investments are illiquid; therefore, the Company may not be able to dispose of properties when desired or on favorable
terms.
The Company’s development, redevelopment and construction activities could affect its operating results.
The Company’s real estate investments may contain environmental risks that could adversely affect its results of operations.
The Company’s properties could be subject to damage from natural disasters and weather-related factors; an uninsured loss on the Company’s
properties or a loss that exceeds the limits of the Company’s insurance policies could subject the Company to lost capital or revenue on those
properties.
Violent crime, including terrorism and mass shootings, or civil unrest may affect the markets in which the Company operates its business and
its profitability.
A disruption, failure or breach of the Company’s networks or systems, including as a result of cyber-attacks, could harm its business.
Risks Relating to the Company’s Indebtedness and Capital Structure
•
•
•
•
•
•
•
•
The Company depends on external sources of capital. 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.
Changes in the Company’s credit ratings or the debt markets, as well as market conditions in the credit markets, could adversely affect the
Company’s publicly traded debt and revolving credit facilities.
The Company’s ability to increase its debt could adversely affect its cash flows.
The Company’s cash flows and operating results could be adversely affected by required payments of debt or related interest and other risks
of its debt financing.
The Company’s financial condition could be adversely affected by financial covenants.
The Company may incur significant debt prepayment costs as a result of repaying indebtedness prior to its stated maturity.
The Company has variable-rate debt and interest rate risk.
The Company may be adversely affected by the potential discontinuation of LIBOR.
Risks Related to the Company’s Taxation as a REIT
•
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•
•
If the Company fails to qualify as a REIT in any taxable year, it will be subject to U.S. federal income tax as a regular corporation and could
have significant tax liability.
Compliance with REIT requirements may negatively affect the Company’s operating decisions.
The Company may be forced to borrow funds to maintain its REIT status, and the unavailability of such capital on favorable terms at the
desired times, or at all, may cause the Company to curtail its investment activities and/or to dispose of assets at inopportune times, which
could materially and adversely affect the Company.
Dividends paid by REITs generally do not qualify for reduced tax rates.
Certain foreign shareholders may be subject to U.S. federal income tax on gain recognized on a disposition of the Company’s common shares
if the Company does not qualify as a “domestically controlled” REIT.
9
•
Legislative or other actions affecting REITs could have a negative effect on the Company.
Risks Related to the Company’s Organization, Structure and Ownership
•
•
•
Provisions of the Company’s Articles of Incorporation and Code of Regulations could have the effect of delaying, deferring or preventing a
change in control, even if that change may be considered beneficial by some of the Company’s shareholders.
The Company has significant shareholders who may exert influence on the Company as a result of their considerable beneficial ownership of
the Company’s common shares, and their interests may differ from the interests of other shareholders.
The Company’s Board of Directors may change significant corporate policies without shareholder approval.
Risks Related to the Company’s Common Shares
•
•
Changes in market conditions could adversely affect the market price of the Company’s publicly traded securities.
The Company may issue additional securities without shareholder approval.
General Risks Relating to Investments in the Company’s Securities
•
•
•
The Company may be unable to retain and attract key management personnel.
The Company is subject to litigation that could adversely affect its results of operations.
Changes in accounting standards issued by the Financial Accounting Standards Board ("FASB") or other standard-setting bodies may
adversely affect the Company’s business.
The risks summarized above are discussed in greater detail below.
Risks Related to the Company’s Business, Properties and Strategies
The Economic Performance and Value of the Company’s Shopping Centers Depend on Many Factors, Including the Economic Climate and Local
Conditions, Each of Which Could Have an Adverse Impact on the Company’s Cash Flows and Operating Results
The economic performance and value of the Company’s real estate holdings can be affected by many factors, including the following:
•
•
•
•
•
•
•
Changes in the national, regional, local and international economic climate, including as a result of the COVID-19 pandemic;
Local conditions, such as an oversupply of space or a reduction in demand for real estate in the area and population, demographic and
employment trends;
The attractiveness of the properties to tenants;
The increase in consumer purchases through the internet;
The Company’s ability to provide adequate management services and to maintain its properties;
Increased operating costs if these costs cannot be passed through to tenants and
The expense of periodically renovating, repairing and re-letting spaces.
Because the Company’s properties consist of retail shopping centers, the Company’s performance is linked to general economic conditions in the
retail market, including conditions that affect consumers’ purchasing behaviors and disposable income. The market for retail space has been, and may
continue to be, adversely affected by weakness in the national, regional and local economies, the adverse financial condition of some large retailing
companies, the ongoing consolidation in the retail sector, increases in consumer internet purchases and the excess amount of retail space in a number of
markets. The Company’s performance is affected by its tenants’ results of operations, which are impacted by macroeconomic factors that affect
consumers’ ability to purchase goods and services. If the price of the goods and services offered by its tenants materially increases, including as a result of
increases in taxes or tariffs resulting from, among other things, potential changes in the Code, the operating results and the financial condition of the
Company's tenants and demand for retail space could be adversely affected. To the extent that any of these conditions occur, they are likely to affect
market rents for retail space. In addition, the Company may face challenges in the management and maintenance of its
10
properties or incur increased operating costs, such as real estate taxes, insurance and utilities, that may make its properties unattractive to tenants.
In addition, the Company’s properties compete with numerous shopping venues, including regional malls, outlet centers, other shopping centers and
e-commerce, in attracting and retaining retailers. As of December 31, 2021, leases at the Company’s properties (including the proportionate share of
unconsolidated properties) were scheduled to expire on a total of approximately 7.1% of leased GLA during 2022. For those leases that renew, rental rates
upon renewal may be lower than current rates. For those leases that do not renew, the Company may not be able to promptly re-lease the space on
favorable terms or with reasonable capital investments. In these situations, the Company’s financial condition, operating results and cash flows could be
adversely impacted.
E-Commerce May Continue to Have an Adverse Impact on the Company’s Tenants and Business
E-commerce has been broadly embraced by the public, including throughout the COVID-19 pandemic, and growth in the e‑commerce share of
overall consumer sales is likely to continue in the future. Some of the Company’s tenants have been negatively impacted by increasing competition from
internet retailers and this trend could affect the way current and future tenants lease space. For example, the migration toward e-commerce has led some
omni-channel retailers to reduce the number and size of their traditional “brick and mortar” locations, use such locations for curbside pickup of items
ordered online and increasingly rely on e-commerce and alternative distribution channels. The Company cannot predict with certainty how a continuing
growth in e-commerce will impact the demand for space at its properties or how much revenue will be generated at traditional store locations in the future.
If the Company is unable to anticipate and respond promptly to trends in retailer and consumer behavior, or if demand for traditional retail space
significantly decreases, the Company’s occupancy levels and operating results could be materially and adversely affected.
The COVID-19 Pandemic Has Had, and Could Continue to Have, a Significant Impact on the Company and Its Tenants’ Businesses
The Company’s business and the businesses of its tenants have been and could continue to be significantly impacted by the COVID-19 pandemic
and the public perception of and reaction to the related risks. Beginning in March 2020, the COVID-19 pandemic resulted in the closure of many tenant
businesses and substantially reduced foot traffic at open tenant businesses as a result of social distancing restrictions. Beginning in April 2020, a significant
number of tenants failed to pay some or all of their monthly rent obligations, and the Company and its joint ventures agreed to defer a significant portion of
these unpaid tenant rent obligations until 2021 and beyond. The majority of these deferred amounts have been repaid by tenants as of December 31, 2021.
Although the level and pace of tenant collections (including the payment of deferred rents) exceeded management’s expectations during 2021 and
has largely reverted to pre-pandemic norms, the pandemic continues to pose risks to the Company and tenant operations. If additional surges in contagion
occur, or if new COVID-19 variants emerge that are more infectious or resistant to existing vaccines, or if there are decreases in the effectiveness of
existing vaccines, tenant collections could be adversely impacted and such developments could lead to new restrictions on tenant operations, nonpayment
of rents, additional tenant requests for rent relief and additional tenant closures and bankruptcies, all of which could adversely impact the Company’s
results of operations. Certain tenant categories remain especially vulnerable to the impacts of the COVID-19 pandemic, including movie theaters,
restaurants that rely on in-person dining and entertainment.
In addition to the impacts and uncertainties listed above, the COVID-19 pandemic has significantly limited the ability of the Company’s employees
to access the Company’s offices and properties, which could adversely impact the Company’s ability to manage its properties and complete other operating
and administrative functions that are important to its business. Efforts by the Company’s employees to work remotely could also expose the Company to
additional risks, such as increased cybersecurity risk. Furthermore, any exacerbation of the COVID-19 pandemic could negatively affect global capital
markets, which, in turn, could negatively affect the Company’s ability to obtain necessary financing, including property-level refinancing for its joint
ventures, on favorable terms, or at all. Reduced rent collections from tenants could also impact the ability of the Company and its joint ventures to satisfy
covenants and debt service obligations applicable to their financing arrangements, particularly with respect to mortgage loan indebtedness, and result in the
recognition of impairment charges with respect to certain of the Company’s properties. Reduced rent collections from tenants may also have the effect of
decreasing management fees collected from the Company’s joint ventures, which are often based on property cash receipts, and may also impact decisions
by the Company’s Board of Directors with respect to future dividend policy. The Company’s periodic assessment of tenants’ ability to pay outstanding
obligations, including rent obligations deferred because of the COVID-19 pandemic, may also result in reductions to rental revenue on account of
previously accrued rents for which collection is no longer considered probable.
The impact of the COVID-19 pandemic could also exacerbate the other risks described herein. Any of the foregoing risks, or related risks that the
Company is unable to predict due to changing circumstances relating to the impacts of the COVID-19 pandemic, could have a material adverse effect on
the Company’s business, results of operations and financial condition.
11
The Company Relies on Major Tenants, Making It Vulnerable to Changes in the Business and Financial Condition of, or Demand for Its Space by,
Such Tenants
As of December 31, 2021, the annualized base rental revenues of the Company’s tenants that are equal to or exceed 1.5% of the Company’s
aggregate annualized shopping center base rental revenues, including its proportionate share of joint venture aggregate annualized shopping center base
rental revenues, are as follows:
Tenant
TJX Companies, Inc.
Dick's Sporting Goods, Inc.
PetSmart, Inc.
Michaels Companies, Inc.
Ross Stores, Inc.
Bed Bath & Beyond Inc.
Ulta Beauty, Inc.
Gap Inc.
Nordstrom, Inc.
Best Buy Co., Inc.
Kohl's Department Stores, Inc.
The Kroger Co.
AMC Entertainment Holdings, Inc.
Burlington Stores, Inc.
% of Annualized Base
Rental Revenues
5.8%
2.7%
2.6%
2.3%
1.9%
1.9%
1.9%
1.9%
1.8%
1.8%
1.7%
1.7%
1.5%
1.5%
The retail shopping sector has been affected by economic conditions, including increases in consumer internet purchases, as well as the competitive
nature of the retail business and the competition for market share where stronger retailers have out-positioned some of the weaker retailers. In many cases,
these shifts have been accelerated by the COVID-19 pandemic and have resulted in weaker retailers losing market share and, in some cases, declaring
bankruptcy and/or closing stores. In some cases, major tenants may declare bankruptcy or might take advantage of early termination provisions in their
leases in connection with a plan to close stores. Bankruptcies, store closures and reduced expansion plans by conventional department stores and national
chains in recent years have resulted in a smaller overall number of tenants requiring large store formats.
As information becomes available regarding the status of the Company’s leases with tenants in financial distress or as the future plans for their
spaces change, the Company may be required to write off and/or accelerate depreciation and amortization expense associated with a significant portion of
the tenant-related deferred charges in future periods. The Company’s income and ability to meet its financial obligations could also be adversely affected in
the event of the bankruptcy, insolvency or significant downturn in the business of one of these tenants or any of the Company’s other major tenants. In
addition, the Company’s results could be adversely affected if any of these tenants do not renew their leases as they expire on terms favorable to the
Company or at all.
The Company’s Dependence on Rental Income May Adversely Affect Its Ability to Meet Its Debt Obligations and Make Distributions to
Shareholders
Substantially all of the Company’s income is derived from rental income from real property. As a result, the Company’s performance depends on its
ability to collect rent from tenants. The Company’s income and funds available for repayment of indebtedness and distribution to shareholders would be
negatively affected if a significant number of its tenants, or any of its major tenants, were to do the following:
•
•
•
•
•
Experience a downturn in their business that significantly weakens their ability to meet their obligations to the Company;
Delay lease commencements;
Decline to extend or renew leases upon expiration;
Fail to make rental payments when due or
Close stores or declare bankruptcy.
Any of these actions could result in the termination of tenants’ leases and the loss of rental income attributable to the terminated leases. Lease
terminations by an anchor tenant or a failure by that anchor tenant to occupy the premises may also permit other tenants in the same shopping centers to
terminate their leases or reduce the amount of rent they pay under the terms of their leases. In addition, the Company cannot be certain that any tenant
whose lease expires will renew that lease or that the Company will be able to re-lease space on economically advantageous terms. The loss of rental
revenues from a number of the Company’s major tenants and
12
its inability to replace such tenants may adversely affect the Company’s profitability and its ability to meet debt and other financial obligations and make
distributions to shareholders.
The Company’s Expenses May Remain Constant or Increase Even if Income from the Company’s Properties Decreases
Costs associated with the Company’s business, such as common area expenses, utilities, insurance, real estate taxes, mortgage payments and
corporate expenses, are relatively inflexible and generally do not decrease in the event that a property is not fully occupied, rental rates decrease, a tenant
fails to pay rent or other circumstances cause the Company’s revenues to decrease. In addition, inflation could result in higher operating costs. If the
Company is unable to lower its operating costs when revenues decline and/or is unable to pass along cost increases to tenants, the Company’s cash flows,
profitability and ability to make distributions to shareholders could be adversely impacted.
Property Ownership Through Partnerships and Joint Ventures Could Limit the Company’s Control of Those Investments and Reduce Its
Expected Return
Partnership or joint venture investments may involve risks not otherwise present for investments made solely by the Company, including the
possibility that the Company’s partner or co-venturer might become bankrupt, that its partner or co-venturer might at any time have different interests or
goals than the Company and that its partner or co-venturer 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, the Company’s partner or co-venturer could have
different investment criteria that would impact the assets held by the joint venture or its interest in the joint venture, which may also reduce the carrying
value of its equity investments if a loss in the carrying value of the investment is realized. These situations could have an impact on the Company’s
revenues from its joint ventures. Other risks of joint venture investments include impasse on decisions, such as the decision to sell or finance a property or
leasing decisions with anchor tenants, because neither the Company’s partner or co-venturer nor the Company would have full control over the partnership
or joint venture. Joint venture platforms typically contain customary buy-sell provisions, which could result in either the sale of the Company’s interest or
the use of available cash or borrowings to acquire the Company’s partner’s interest at inopportune times, as well as the termination of applicable
management contracts and fees. In addition, the Company is obligated to maintain the REIT status of the Dividend Trust Portfolio joint venture’s REIT
subsidiary and may be obligated to maintain the REIT status of future joint venture platforms and the Company’s failure to do so could result in substantial
liability to its partner. These factors could limit the return that the Company receives from such investments, cause its cash flows to be lower than its
estimates or lead to business conflicts or litigation. There is no limitation under the Company’s Articles of Incorporation, or its Code of Regulations, as to
the amount of funds that the Company may invest in partnerships or joint ventures. In addition, a partner or co-venturer may not have access to sufficient
capital to satisfy its funding obligations to the joint venture. Furthermore, if credit conditions in the capital markets deteriorate, the Company could be
required to reduce the carrying value of its equity method investments if a loss in the carrying value of the investment is realized or considered an other
than temporary decline. As of December 31, 2021, the Company had $64.6 million of investments in and advances to unconsolidated joint ventures
holding 47 shopping centers.
The Company’s Real Estate Assets May Be Subject to Impairment Charges
On a periodic basis, the Company assesses whether there are any indicators that the value of its real estate assets and other investments may be
impaired. A property’s value is impaired only if the 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. In the Company’s estimate of projected cash flows, it considers factors such as expected
future operating income, 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 considerations include the most likely course of action at the balance sheet date based
on current plans, intended holding periods and available market information. The Company is required to make subjective assessments as to whether there
are impairments in the value of its real estate assets and other investments. These assessments have a direct impact on the Company’s earnings because
recording an impairment charge results in an immediate negative adjustment to earnings. There can be no assurance that the Company will not take
additional charges in the future related to the impairment of its assets. Any future impairment could have a material adverse effect on the Company’s
results of operations in the period in which the charge is taken.
The Company’s Acquisition Activities May Not Produce the Cash Flows That It Expects and May Be Limited by Competitive Pressures or Other
Factors
The Company intends to acquire retail properties to the extent that suitable acquisitions can be made on advantageous terms. Acquisitions of
commercial properties entail risks such as the following:
•
•
The Company may be unable to identify, or may have difficulty identifying, acquisition opportunities that fit its investment strategy and cost
of capital;
The Company’s estimates on expected occupancy and rental rates may differ from actual conditions;
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•
•
•
•
•
The Company’s estimates of the costs of any redevelopment or repositioning of acquired properties may prove to be inaccurate;
The Company may be unable to operate successfully in new markets where acquired properties are located due to a lack of market knowledge
or understanding of local economies;
The properties may become subject to environmental liabilities that the Company was unaware of at the time the Company acquired the
property;
The Company may be unable to successfully integrate new properties into its existing operations or
The Company may have difficulty obtaining financing on acceptable terms or paying the operating expenses and debt service associated with
acquired properties prior to sufficient occupancy.
In addition, the Company may not be in a position or have the opportunity in the future to make suitable property acquisitions on advantageous
terms due to competition for such properties with others engaged in real estate investment, some of which may have greater financial resources or a lower
cost of capital than the Company. The Company’s inability to successfully acquire new properties may affect the Company’s ability to achieve its
anticipated return on investment, which could have an adverse effect on its results of operations.
Real Estate Property Investments Are Illiquid; Therefore, the Company May Not Be Able to Dispose of Properties When Desired or on Favorable
Terms
Real estate investments generally cannot be disposed of quickly. In addition, the Code imposes restrictions, which are not applicable to other types
of real estate companies, on the ability of a REIT to dispose of properties. Therefore, the Company may not be able to diversify or alter its portfolio in
response to economic conditions or trends in retailer or consumer behavior promptly or on favorable terms. The Company’s inability to quickly respond to
such changes or dispose of properties could adversely affect the value of the Company’s portfolio and its ability to repay indebtedness and make
distributions to shareholders.
The Company’s Development, Redevelopment and Construction Activities Could Affect Its Operating Results
The Company intends to continue the selective development, redevelopment and construction of retail properties as opportunities arise. The
Company’s development, redevelopment and construction activities include the following risks:
•
•
•
•
•
•
•
Construction costs of a project may exceed the Company’s original estimates;
Occupancy rates and rents at a newly completed property may not be sufficient to make the property profitable;
Rental rates per square foot could be less than projected;
Financing may not be available to the Company on favorable terms for development of a property;
The Company may not complete construction and lease-up on schedule, resulting in increased debt service expense and construction costs;
The Company may not be able to obtain, or may experience delays in obtaining, necessary zoning, land use, building, occupancy and other
required governmental permits and authorizations and
The Company may abandon development or redevelopment opportunities after expending resources to determine feasibility.
Additionally, the time frame required for development, redevelopment, construction and lease-up of these properties means that the Company may
wait several years for a significant cash return. If any of the above events occur, the development of properties may hinder the Company’s growth and have
an adverse effect on its results of operations and cash flows. In addition, new development activities, regardless of whether they are ultimately successful,
typically require substantial time and attention from management.
The Company’s Real Estate Investments May Contain Environmental Risks That Could Adversely Affect Its Results of Operations
The acquisition and ownership of properties may subject the Company to liabilities, including environmental liabilities. The Company’s operating
expenses could be higher than anticipated due to the cost of complying with existing or future environmental laws and regulations. In addition, under
various federal, state and local laws, ordinances and regulations, the Company may be
14
considered an owner or operator of real property or to have arranged for the disposal or treatment of hazardous or toxic substances. As a result, the
Company may become liable for the costs of removal or remediation of certain hazardous substances released on or in its properties. The Company may
also be liable for other potential costs that could relate to hazardous or toxic substances (including governmental fines and injuries to persons and
property). The Company may incur such liability whether or not it knew of, or was responsible for, the presence of such hazardous or toxic
substances. Such liability could be of substantial magnitude and divert management’s attention from other aspects of the Company’s business and, as a
result, could have a material adverse effect on the Company’s operating results and financial condition, as well as its ability to make distributions to
shareholders.
The Company’s Properties Could Be Subject to Damage from Natural Disasters and Weather-Related Factors; An Uninsured Loss on the
Company’s Properties or a Loss That Exceeds the Limits of the Company’s Insurance Policies Could Subject the Company to Lost Capital or
Revenue on Those Properties
The Company’s properties are generally open-air shopping centers. Extreme weather conditions may impact the profitability of the Company’s
tenants by decreasing traffic at or hindering access to the Company’s properties, which may decrease the amount of rent the Company
collects. Furthermore, a number of the Company’s properties are located in areas that are subject to natural disasters, including Florida and
California. Such properties could therefore be affected by rising sea levels, hurricanes, tropical storms and wildfires, whether caused by global climate
changes or other factors. In addition, the Company’s insurance premiums have increased in recent years and the potential increase in the frequency and
intensity of natural disasters, extreme weather-related events and climate change in the future may limit the types of coverage and the coverage limits the
Company is able to obtain on commercially reasonable terms.
The Company currently maintains all-risk property insurance with limits of $150 million per occurrence and in the aggregate and general liability
insurance with limits of $100 million per occurrence and in the aggregate, in each case subject to various conditions, exclusions, deductibles and sub-limits
for certain perils such as flood and earthquake. Coverage for a named windstorm for the Company’s continental U.S. properties is subject to a deductible
of up to 5% of the total insured value of each property. The amount of any insurance coverage for losses due to damage or business interruption may prove
to be insufficient. Should a loss occur that is uninsured or is in an amount exceeding the aggregate limits for the applicable insurance policy, or in the event
of a loss that is subject to a substantial deductible under an insurance policy, the Company could lose all or part of its capital invested in, and anticipated
revenue from, one or more of the properties, which could have a material adverse effect on the Company’s operating results and financial condition, as well
as its ability to make distributions to shareholders.
Violent Crime, Including Terrorism and Mass Shootings, or Civil Unrest May Affect the Markets in Which the Company Operates Its Business
and Its Profitability
Certain of the Company’s properties are located in or near major metropolitan areas or other areas that have experienced, and remain susceptible to,
violent crime, including terrorist attacks and mass shootings and civil unrest. Any kind of violent criminal acts, including terrorist acts against public
institutions or buildings or modes of public transportation (including airlines, trains or buses), or civil unrest could alter shopping habits, deter customers
from visiting the Company’s shopping centers or result in damage to its properties, which would have a negative effect on the Company’s business, the
operations of its tenants and the value of its properties.
A Disruption, Failure or Breach of the Company’s Networks or Systems, Including as a Result of Cyber-Attacks, Could Harm Its Business
The Company relies extensively on computer systems to manage its business. While the Company maintains some of its own critical information
technology systems, it also depends on third parties to provide important information technology services relating to several key business functions, such as
payroll, human resources, electronic communications and certain finance functions. These systems are subject to damage or interruption from power
outages, facility damage, computer or telecommunications failures, computer viruses, security breaches, vandalism, natural disasters, catastrophic events,
human error and potential cyber threats, including phishing attacks, ransomware and other sophisticated cyber-attacks. Although the Company and such
third parties employ a number of measures to prevent, detect and mitigate cyber threats, including password protection, firewalls, backup servers, threat
monitoring and periodic penetration testing, the techniques used to obtain unauthorized access change frequently and there is no guarantee that such efforts
will be successful. Should they occur, these threats could compromise the confidential information of the Company’s tenants, employees and third-party
vendors; disrupt the Company’s business operations and the availability and integrity of data in the Company’s systems; and result in litigation, violation of
applicable privacy and other laws, investigations, actions, fines or penalties. In the event of damage or disruption to the Company’s business due to these
occurrences, the Company may not be able to successfully and quickly recover all of its critical business functions, assets and data. Furthermore, while the
Company maintains insurance, the coverage may not sufficiently cover all types of losses, claims or fines that may arise. For additional information see
Item 1 “Business—Information Technology and Cybersecurity” in Part I of this Annual Report on From 10-K.
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Risks Relating to the Company’s Indebtedness and Capital Structure
The Company Depends on External Sources of Capital. 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
To qualify as a REIT, the Company must, among other things, distribute at least 90% of its REIT taxable income (excluding any net capital gains) to
its stockholders each year. Because of these distribution requirements, the Company has relied on third-party sources of capital, including debt and
preferred equity financings, to fund growth opportunities and capital needs. The U.S. and global equity and credit markets have experienced significant
price volatility, dislocations and liquidity disruptions in the past, which have caused market prices of many stocks to fluctuate substantially and the spreads
on prospective debt financings to widen considerably. These circumstances materially affected liquidity in the financial markets, making terms for certain
financings less attractive and, in certain cases, resulting in the unavailability of financing for businesses and assets similar to those operated by the
Company. Uncertainty in the equity and credit markets may negatively affect the Company’s ability to access additional financing at reasonable terms or at
all, which may negatively affect the Company’s ability to refinance its debt, obtain new financing or make acquisitions. These circumstances may also
adversely affect the Company’s tenants, including their ability to enter into new leases, pay their rents when due and renew their leases at rates at least as
favorable as their current rates.
A prolonged downturn in the equity or credit markets may cause the Company to seek alternative sources of potentially less attractive financing and
may require it to adjust its business plan accordingly. In addition, these factors may make it more difficult for the Company to sell properties or may
adversely affect the price it receives for properties that it does sell, as prospective buyers may experience increased costs of financing or difficulties in
obtaining financing. These events in the equity and credit markets may make it more difficult or costly for the Company to raise capital through the
issuance of its equity or debt securities. These disruptions in the financial markets also may have a material adverse effect on the market value of the
Company’s common shares and other adverse effects on the Company or the economy in general. There can be no assurances that government responses to
the disruptions in the financial markets will restore consumer confidence, stabilize the markets or increase liquidity and the availability of equity or credit
financing.
Changes in the Company’s Credit Ratings or the Debt Markets, as Well as Market Conditions in the Credit Markets, Could Adversely Affect the
Company’s Publicly Traded Debt and Revolving Credit Facilities
The market value for the Company’s publicly traded debt depends on many factors, including the following:
•
•
•
•
The Company’s credit ratings with major credit rating agencies;
The prevailing interest rates being paid by, or the market price for publicly traded debt issued by, other companies similar to the Company;
The Company’s financial condition, liquidity, leverage, financial performance and prospects and
The overall condition of the financial markets.
The condition of the financial markets and prevailing interest rates have fluctuated in the past and are likely to fluctuate in the future. The U.S.
credit markets have experienced severe dislocations and liquidity disruptions in the past. Furthermore, uncertain market conditions can be exacerbated by
leverage. The occurrence of these circumstances in the credit markets and/or additional fluctuations in the financial markets and prevailing interest rates
could have an adverse effect on the Company’s ability to access capital and its cost of capital.
In addition, credit rating agencies continually review their ratings for the companies they follow, including the Company. For example, credit rating
agencies may review and change their credit ratings for the Company as a result of disruptions to retail tenants and property-level revenues caused by
macroeconomic trends or other developments such as the COVID-19 pandemic. The credit rating agencies also evaluate the real estate industry as a whole
and may change their credit rating for the Company based on their overall view of the industry. Any rating organization that rates the Company’s publicly
traded debt may lower the rating or decide, at its sole discretion, not to rate the Company’s publicly traded debt. The ratings of the Company’s publicly
traded debt are based primarily on the rating organization’s assessment of the likelihood of timely payment of interest when due and the payment of
principal on the maturity date. A negative change in the Company’s rating could have an adverse effect on the Company’s credit facilities and market price
of the Company’s publicly traded debt, as well as the Company’s ability to access capital and its cost of capital.
The Company’s Ability to Increase Its Debt Could Adversely Affect Its Cash Flows
At December 31, 2021, the Company had outstanding debt of $1.7 billion (excluding its proportionate share of unconsolidated joint venture
mortgage debt aggregating $0.2 billion as of December 31, 2021). The Company intends to maintain a conservative ratio
16
of debt to asset value. The Company is subject to limitations under its credit facilities and indentures relating to its ability to incur additional debt;
however, the Company’s organizational documents do not contain any limitation on the amount or percentage of indebtedness it may incur. If the
Company were to become more highly leveraged, its cash needs to fund debt service would increase accordingly. Under such circumstances, the
Company’s risk of decreases in cash flow due to fluctuations in the real estate market, reliance on its major tenants, acquisition and development costs and
the other factors discussed in these risk factors could subject the Company to an even greater adverse impact on its financial condition and results of
operations. In addition, increased leverage could increase the risk of default on the Company’s debt obligations, which could further reduce its cash
available for distribution and adversely affect its ability to dispose of its portfolio on favorable terms, which could cause the Company to incur losses and
reduce its cash flows.
The Company’s Cash Flows and Operating Results Could Be Adversely Affected by Required Payments of Debt or Related Interest and Other
Risks of Its Debt Financing
The Company is generally subject to the risks associated with debt financing. These risks include the following:
•
•
•
•
•
•
The Company’s cash flows may not satisfy required payments of principal and interest;
The Company may not be able to refinance existing indebtedness on its properties as necessary, or the interest rate and other terms of the
refinancing may be less favorable to the Company than the interest rate and terms applicable to the existing debt;
Required debt payments are not reduced if the economic performance of any property declines;
Debt service obligations could reduce funds available for distribution to the Company’s shareholders and funds available for development,
redevelopment and acquisitions;
Any default on the Company’s indebtedness could result in acceleration of those obligations, which could result in the acceleration of other
debt obligations and possible loss of property to foreclosure and
The Company may not be able to finance necessary capital expenditures for purposes such as re-leasing space on favorable terms or at all.
If a property is mortgaged to secure payment of indebtedness and the Company cannot or does not make the mortgage payments, it may have to
surrender the property to the lender with a consequent loss of any prospective income and equity value from such property, which may also adversely affect
the Company’s credit ratings. Any of these risks can place strains on the Company’s cash flows, reduce its ability to grow and adversely affect its results of
operations.
The Company’s Financial Condition Could Be Adversely Affected by Financial Covenants
The Company’s credit facilities and the indentures under which its senior unsecured indebtedness is, or may be, issued contain certain financial and
operating covenants, including, among other things, leverage ratios and certain coverage ratios, as well as limitations on the Company’s ability to incur
secured and unsecured indebtedness, sell all or substantially all of its assets and engage in mergers and certain acquisitions. These credit facilities and
indentures also contain customary default provisions including, but not limited to, the failure to pay principal and interest issued thereunder in a timely
manner, the failure to comply with the Company’s 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. These covenants could limit the Company’s ability to obtain additional funds needed to address cash shortfalls or pursue growth
opportunities or transactions that would provide substantial return to its shareholders. In addition, a breach of these covenants could cause a default or
accelerate some or all of the Company’s indebtedness, which could have a material adverse effect on its financial condition.
The Company May Incur Significant Debt Prepayment Costs as a Result of Repaying Indebtedness Prior to Its Stated Maturity
In prudently managing its capital structure and refinancing risk, in the past, the Company has chosen to retire debt prior to its stated maturity date,
and in doing so, has incurred prepayment or defeasance premiums in accordance with the relevant loan agreements. If the Company chooses to retire debt
prior to its stated maturity date in the future, it may incur significant debt prepayment costs or defeasance premiums, which could have an adverse effect on
the Company’s cash flows and results of operations.
The Company Has Variable-Rate Debt and Interest Rate Risk
The Company has indebtedness with interest rates that vary depending upon the market index. In addition, the Company has revolving credit
facilities that bear interest at a variable rate on any amounts drawn on the facilities. The Company may incur
17
additional variable-rate debt in the future. Increases in interest rates on variable-rate debt would increase the Company’s interest expense, which would
negatively affect net earnings and cash available for payment of its debt obligations and distributions to its shareholders.
The Company May Be Adversely Affected by the Potential Discontinuation of LIBOR
In July 2017, the Financial Conduct Authority (“FCA,” the United Kingdom authority that regulates LIBOR) announced that numerous banks had
approached the FCA and expressed a desire to cease providing LIBOR-related quotations to ICE Benchmark Administration Limited (“IBA”) for the
calculation of LIBOR after 2021. The FCA went on to explain that it was negotiating an agreement with each of the LIBOR panel banks that would see
those banks continue to voluntarily submit quotations to IBA through the end of 2021. On November 24, 2017, the FCA confirmed that the LIBOR panel
banks had agreed to support LIBOR until December 31, 2021, but banks made no commitment to continue doing so after that date.
Subsequently, on March 5, 2021, IBA and the FCA made public statements regarding the future cessation of LIBOR. In particular, with respect to
the 1-week and 2-month U.S. dollar (“USD”) LIBOR settings, the FCA announced that IBA would permanently cease to publish them on December 31,
2021, which IBA in fact did. With respect to the overnight, 1-month, 3-month, 6-month and 12-month USD LIBOR settings, the FCA announced that IBA
would permanently cease publishing them in their current form on June 30, 2023. It is unclear whether new methods of calculating LIBOR will be
established such that it continues to exist after such end dates, and there is considerable uncertainty regarding the publication or representativeness of
LIBOR beyond such end dates.
In conjunction with the FCA’s and IBA’s announcements regarding the permanent cessation of LIBOR, the Board of Governors of the Federal
Reserve System (the “Federal Reserve”) and other U.S. banking regulators issued guidance, including on October 20, 2021, encouraging supervised
financial institutions to cease entering into new contracts that use USD LIBOR as a reference rate as soon as practicable and in any event by December 31,
2021, with limited exceptions, to avoid creating safety and soundness risks and otherwise facilitate an orderly LIBOR transition.
The Alternative Reference Rates Committee (“ARRC”), which is a group of private-market participants convened by the Federal Reserve to help
ensure a successful transition from USD LIBOR to a more robust reference rate, has recommended rates derived from the Secured Overnight Financing
Rate (“SOFR”) as alternatives to USD LIBOR for use in commercial loans, derivatives and other financial instruments. On October 21, 2020, the U.S.
Department of Treasury, the Federal Reserve and other U.S. regulators confirmed that the use of SOFR-based rates is voluntary, and market participants
should seek to transition away from LIBOR in the manner that is most appropriate given their specific circumstances. The emergence of alternatives to
SOFR and their acceptance by market participants could impact contracts, securities and instruments that reference SOFR, including contracts, securities
and instruments linked to USD LIBOR that would transition to SOFR upon a benchmark transition event.
On April 6, 2021, the State of New York enacted legislation addressing LIBOR contracts governed by New York law. It is purportedly designed to
minimize legal uncertainty and adverse economic impacts associated with the transition from LIBOR. Other states have enacted, or are considering
enacting, similar legislation. On December 8, 2021, the United States House of Representatives passed a bill called the Adjustable Interest Rate (LIBOR)
Act of 2021 to address the impact of LIBOR’s permanent cessation on LIBOR contracts. That bill remains under consideration by the United States
Senate. State and federal legislation, and other events could impact certain contracts, securities and instruments tied to USD LIBOR. Similarly, in the
United Kingdom, the FCA obtained power from Parliament to, among other things, compel IBA to change the methodology it currently uses to calculate
LIBOR such that a “synthetic” LIBOR could be published for use in legacy contracts. Actions taken by the FCA, including actions taken in accordance
with its power to compel the calculation of “synthetic LIBOR,” could have an impact on contracts, securities and instruments linked to USD LIBOR. So
too could future announcements by the FCA, IBA or U.S. banking regulators that impact contracts, securities and instruments linked to USD LIBOR that
contemplate transitioning to SOFR upon a benchmark transition event. Likewise, contracts, securities and instruments linked to USD LIBOR may be
impacted by decisions by USD LIBOR panel banks that give rise to or otherwise impact non-representativeness determinations that the FCA may be
responsible for making before LIBOR ceases to be published. The full impact of the expected transition away from LIBOR and the potential
discontinuation of LIBOR is not known. However, any replacement rate or alternative base rate could be higher or more volatile than LIBOR, which could
adversely affect the Company’s cash flow, financial condition, risk management programs and operations.
The Company’s consolidated debt outstanding at December 31, 2021 included approximately $100 million of variable rate debt (maturing in
January 2023) having an interest rate determined by reference to LIBOR. Should the Company seek to replace this variable rate debt or extend the maturity
date, it is likely that LIBOR will need to be replaced with an alternative rate of interest. Additionally, the Company currently has the ability to elect that
borrowings under its $970 million revolving credit facilities bear interest based on either LIBOR or the Alternative Base Rate. The credit agreements
governing the revolving credit facilities provide that the Company’s ability to request LIBOR-based loans may be suspended in the future in connection
with the cessation of LIBOR’s publication, in which case the Company will be forced to borrow at an interest rate based on the Alternative Base Rate
unless and until the Company and applicable lenders agree on an alternative rate of interest to LIBOR. Any agreed upon amendment referencing an
alternative rate to replace LIBOR could have adverse tax consequences to the Company. Borrowings based on the Alternative Base
18
Rate or any alternative rate of interest to LIBOR also may result in higher borrowing costs to the Company. Using alternative rates of interest to LIBOR,
including SOFR-based rates such as the CME Group’s calculation of term SOFR, also may potentially create risks given various uncertainties regarding
how they will behave in various economic environments, whether and to what extent they are adopted in the market, as well as how they are constructed.
Risks Related to the Company’s Taxation as a REIT
If the Company Fails to Qualify as a REIT in Any Taxable Year, It Will Be Subject to U.S. Federal Income Tax as a Regular Corporation and
Could Have Significant Tax Liability
The Company intends to operate in a manner that allows it to qualify as a REIT for U.S. federal income tax purposes. However, REIT qualification
requires that the Company satisfy numerous requirements (some on an annual or quarterly basis) established under highly technical and complex provisions
of the Code, for which there are a limited number of judicial or administrative interpretations. The Company’s status as a REIT requires an analysis of
various factual matters and circumstances that are not entirely within its control. Accordingly, the Company’s ability to qualify and remain qualified as a
REIT for U.S. federal income tax purposes is not certain. Even a technical or inadvertent violation of the REIT requirements could jeopardize the
Company’s REIT qualification. Furthermore, Congress or the Internal Revenue Service (“IRS”) might change the tax laws or regulations and the courts
could issue new rulings, in each case potentially having a retroactive effect that could make it more difficult or impossible for the Company to continue to
qualify as a REIT. If the Company fails to qualify as a REIT in any tax year, the following would result:
•
•
•
The Company would be taxed as a regular domestic corporation, which, among other things, means that it would be unable to deduct
distributions to its shareholders in computing its taxable income and would be subject to U.S. federal income tax on its taxable income at
regular corporate rates;
Any resulting tax liability could be substantial and would reduce the amount of cash available for distribution to shareholders and could force
the Company to liquidate assets or take other actions that could have a detrimental effect on its operating results and
Unless the Company were entitled to relief under applicable statutory provisions, it would be disqualified from treatment as a REIT for the
four taxable years following the year during which the Company lost its qualification, and its cash available for debt service obligations and
distribution to its shareholders, therefore, would be reduced for each of the years in which the Company does not qualify as a REIT.
Even if the Company remains qualified as a REIT, it may face other tax liabilities that reduce its cash flow. The Company’s TRS is subject to
taxation, and any changes in the laws affecting the Company’s TRS may increase the Company’s tax expenses. The Company may also be subject to
certain federal, state and local taxes on its income and property either directly or at the level of its subsidiaries. Any of these taxes would decrease cash
available for debt service obligations and distribution to the Company’s shareholders.
Compliance with REIT Requirements May Negatively Affect the Company’s Operating Decisions
To maintain its status as a REIT for U.S. federal income tax purposes, the Company must meet certain requirements on an ongoing basis, including
requirements regarding its sources of income, the nature and diversification of its assets, the amounts the Company distributes to its shareholders and the
ownership of its shares. The Company may also be required to make distributions to its shareholders when it does not have funds readily available for
distribution or at times when the Company’s funds are otherwise needed to fund capital expenditures or debt service obligations.
As a REIT, the Company must distribute at least 90% of its annual net taxable income (excluding net capital gains) to its shareholders. To the extent
that the Company satisfies this distribution requirement, but distributes less than 100% of its net taxable income, the Company will be subject to
U.S. federal corporate income tax on its undistributed taxable income. In addition, the Company will be subject to a 4% non-deductible excise tax if the
actual amount paid to its shareholders in a calendar year is less than the minimum amount specified under U.S. federal tax laws. From time to time, the
Company may generate taxable income greater than its income for financial reporting purposes, or its net taxable income may be greater than its cash flows
available for distribution to its shareholders. If the Company does not have other funds available in these situations, it could be required to borrow funds,
sell its securities or a portion of its properties at unfavorable prices or find other sources of funds in order to meet the REIT distribution requirements and
avoid corporate income tax and the 4% excise tax.
In addition, the REIT provisions of the Code impose a 100% tax on income from “prohibited transactions.” Prohibited transactions generally
include sales of assets, other than foreclosure property, that constitute inventory or other property held for sale to customers in the ordinary course of
business. This 100% tax could affect the Company’s decisions to sell property if it believes such sales could be treated as a prohibited
transaction. However, the Company would not be subject to this tax if it were to sell assets
19
through its TRS. The Company will also be subject to a 100% tax on certain amounts if the economic arrangements between the Company and its TRS are
not comparable to similar arrangements among unrelated parties.
The Company May Be Forced to Borrow Funds to Maintain Its REIT Status, and the Unavailability of Such Capital on Favorable Terms at the
Desired Times, or at All, May Cause the Company to Curtail Its Investment Activities and/or to Dispose of Assets at Inopportune Times, Which
Could Materially and Adversely Affect the Company
To qualify as a REIT, the Company generally must distribute to shareholders at least 90% of its REIT taxable income each year, determined without
regard to the dividends paid deduction and excluding any net capital gains, and the Company will be subject to regular corporate income taxes on its
undistributed taxable income to the extent that the Company distributes less than 100% of its REIT taxable income, determined without regard to the
dividends paid deduction and including any net capital gains, each year. In addition, the Company will be subject to a 4% nondeductible excise tax on the
amount, if any, by which distributions paid by the Company in any calendar year are less than the sum of 85% of the Company’s ordinary income, 95% of
its capital gain net income and 100% of its undistributed income from prior years. The Company could have a potential distribution shortfall as a result of,
among other things, differences in timing between the actual receipt of cash and recognition of income for U.S. federal income tax purposes or the effect of
nondeductible capital expenditures, the creation of reserves or required debt or amortization payments. In order to maintain REIT status and avoid the
payment of income and excise taxes, the Company may need to borrow funds to meet the REIT distribution requirements. The Company may not be able
to borrow funds on favorable terms or at all, and the Company’s ability to borrow may be restricted by the terms of the instruments governing the
Company’s existing indebtedness. The Company’s access to third-party sources of capital depends on a number of factors, including the market’s
perception of the Company’s growth potential, current debt levels, the market price of common shares and current and potential future earnings. The
Company cannot assure shareholders that it will have access to such capital on favorable terms at the desired times, or at all, which may cause the
Company to curtail its investment activities and/or to dispose of assets at inopportune times and could materially and adversely affect the Company. The
Company may make taxable in-kind distributions of common shares, which may cause shareholders to be required to pay income taxes with respect to such
distributions in excess of any cash received, or the Company may be required to withhold taxes with respect to such distributions in excess of any cash
shareholders receive.
Dividends Paid by REITs Generally Do Not Qualify for Reduced Tax Rates
In general, the maximum U.S. federal income tax rate for dividends paid to individual U.S. shareholders is 20%. Due to its REIT status, the
Company’s distributions to individual shareholders generally are not eligible for the reduced rates. However, U.S. shareholders that are individuals, trusts
and estates generally may deduct up to 20% of the ordinary dividends (e.g., REIT dividends that are not designated as capital gain dividends or qualified
dividend income) received from a REIT for taxable years beginning after December 31, 2017, and before January 1, 2026. Although this deduction reduces
the effective tax rate applicable to certain dividends paid by REITs (generally to 29.6%, assuming the shareholder is subject to the 37% maximum rate),
such tax rate is still higher than the tax rate applicable to corporate dividends that constitute qualified dividend income. Accordingly, investors who are
individuals, trusts and estates may perceive investments in REITs to be relatively less attractive than investments in stocks of non-REIT corporations that
pay dividends, which could materially and adversely affect the value of the shares of REITs, including the per share trading price of the Company’s
common shares.
Certain Foreign Shareholders May Be Subject to U.S. Federal Income Tax on Gain Recognized on a Disposition of the Company’s Common
Shares if the Company Does Not Qualify as a “Domestically Controlled” REIT
A foreign person disposing of a U.S. real property interest, including shares of a U.S. corporation whose assets consist principally of U.S. real
property interests, is generally subject to U.S. federal income tax on any gain recognized on the disposition. This tax does not apply, however, to the
disposition of stock in a REIT if the REIT is “domestically controlled.” In general, the Company will be a domestically controlled REIT if at all times
during the five-year period ending on the applicable stockholder’s disposition of the Company’s stock, less than 50% in value of the stock was held directly
or indirectly by non-U.S. persons. If the Company were to fail to qualify as a domestically controlled REIT, gain recognized by a foreign stockholder on a
disposition of the Company’s common shares would be subject to U.S. federal income tax unless the common shares were traded on an established
securities market and the foreign stockholder did not at any time during a specific testing period directly or indirectly own more than 10% of the
Company’s outstanding common stock.
Legislative or Other Actions Affecting REITs Could Have a Negative Effect on the Company.
The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and
the Department of the Treasury. Changes to the tax laws, with or without retroactive application, could materially and adversely affect the Company or its
shareholders. The Company cannot predict how changes in the tax laws might affect shareholders or the Company. New legislation, Treasury regulations,
administrative interpretations or court decisions could significantly and negatively affect the Company’s ability to qualify as a REIT, the U.S. federal
income tax consequences of such qualification or the U.S. federal income tax consequences of an investment in the Company. In addition, the law relating
to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive
20
relative to an investment in a REIT. Furthermore, potential amendments and technical corrections, as well as interpretations and implementation of
regulations by the Treasury and IRS, may have or may in the future occur or be enacted, and, in each case, they could lessen or increase the impact of the
Tax Cuts and Jobs Act of 2017 (the “TCJA”). In addition, states and localities, which often use federal taxable income as a starting point for computing
state and local tax liabilities, continue to react to the TCJA, and these may exacerbate its negative, or diminish its positive, effects on the Company. It is
impossible to predict the nature or extent of any new tax legislation, regulation or administrative interpretations, but such items could adversely affect the
Company’s operating results, financial condition and/or future business planning.
Risks Related to the Company’s Organization, Structure and Ownership
Provisions of the Company’s Articles of Incorporation and Code of Regulations Could Have the Effect of Delaying, Deferring or Preventing a
Change in Control, Even if That Change May Be Considered Beneficial by Some of the Company’s Shareholders
The Company’s Articles of Incorporation and Code of Regulations contain provisions that could have the effect of rendering more difficult, delaying
or preventing an acquisition deemed undesirable by the Company’s Board of Directors. Among other things, the Articles of Incorporation and Code of
Regulations include provisions:
•
•
•
•
•
•
Prohibiting any person, except for certain shareholders (including the family of Mr. Alexander Otto) as set forth in the Company’s Articles of
Incorporation, from owning more than 5% of the Company’s outstanding common shares in order to maintain the Company’s status as a
REIT;
Authorizing “blank check” preferred stock, which could be issued by the Board of Directors without shareholder approval and may contain
voting, liquidation, dividend and other rights superior to the Company’s common shares;
Providing that any vacancy on the Board of Directors may be filled only by the affirmative vote of a majority of the remaining directors then
in office;
Providing that no shareholder may cumulate the shareholder’s voting power in the election of directors;
Providing that shareholders may not act by written consent unless such written consent is unanimous and
Requiring advance notice of shareholder proposals for business to be conducted at meetings of the Company’s shareholders and for
nominations of candidates for election to the Board of Directors.
These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in the Company’s management. The
Company believes these provisions protect its shareholders from coercive or otherwise unfair takeover tactics and are not intended to make the Company
immune from takeovers. However, these provisions apply even if the offer may be considered beneficial by some shareholders and could delay, defer or
prevent an acquisition that the Board of Directors determines is not in the best interests of the Company and its shareholders, which under certain
circumstances could reduce the market price of its common shares.
The Company Has Significant Shareholders Who May Exert Influence on the Company as a Result of Their Considerable Beneficial Ownership
of the Company’s Common Shares, and Their Interests May Differ from the Interests of Other Shareholders
The Company has shareholders, including Mr. Alexander Otto, who is a member of the Board of Directors, who, because of their considerable
beneficial ownership of the Company’s common shares, are in a position to exert significant influence over the Company. These shareholders may exert
influence with respect to matters that are brought to a vote of the Company’s Board of Directors and/or the holders of the Company’s common
shares. Among others, these matters include the election of the Company’s Board of Directors, corporate finance transactions and joint venture activity,
merger, acquisition and disposition activity, and amendments to the Company’s Articles of Incorporation and Code of Regulations. In the context of major
corporate events, the interests of the Company’s significant shareholders may differ from the interests of other shareholders. For example, if a significant
shareholder does not support a merger, tender offer, sale of assets or other business combination because the shareholder judges it to be inconsistent with
the shareholder’s investment strategy, the Company may be unable to enter into or consummate a transaction that would enable other shareholders to
realize a premium over the then-prevailing market prices for common shares. Furthermore, significant shareholders of the Company have sold in the past,
and may sell in the future, substantial amounts of the Company’s common shares in the public market to enhance the shareholders’ liquidity positions, fund
alternative investments or for other reasons. This has caused in the past and may cause in the future the trading price of the Company’s common shares to
decline significantly, resulting in other shareholders being unable to sell their common shares at favorable prices. The Company cannot predict or control
how the Company’s significant shareholders may use the influence they have as a result of their common share holdings.
21
The Company’s Board of Directors May Change Significant Corporate Policies Without Shareholder Approval
The Company’s strategies and investment, financing and dividend policies will be determined by its Board of Directors. These strategies and
policies may be amended or revised at any time at the discretion of the Board of Directors without a vote of the Company’s shareholders. A change in any
of these strategies and policies could have an adverse effect on the Company’s financial condition, operating results and cash flow and on its ability to pay
dividends to shareholders.
Risks Related to the Company’s Common Shares
Changes in Market Conditions Could Adversely Affect the Market Price of the Company’s Publicly Traded Securities
As with other publicly traded securities, the market price of the Company’s publicly traded securities depends on various market conditions, which
may change from time to time. Among the market conditions that may affect the market price of the Company’s publicly traded securities are the
following:
•
•
•
•
•
•
•
The extent of institutional investor interest in the Company and the properties it owns;
The reputation of REITs generally and the reputation of REITs with similar portfolios;
The attractiveness of the securities of REITs in comparison to securities issued by other entities (including securities issued by other real
estate companies or sovereign governments), bank deposits or other investments;
The Company’s financial condition and performance;
The market’s perception of the Company’s growth potential and future cash dividends;
An increase in market interest rates, which may lead prospective investors to demand a higher distribution rate in relation to the price paid for
the Company’s shares and
General economic and financial market conditions.
The Company May Issue Additional Securities Without Shareholder Approval
The Company can issue preferred shares and common shares without shareholder approval subject to certain limitations in the Company’s Articles
of Incorporation. Holders of preferred shares have priority over holders of common shares, and the issuance of additional shares reduces the ownership
interest of existing holders in the Company.
The Company May Be Unable to Retain and Attract Key Management Personnel
General Risks Relating to Investments in the Company’s Securities
The Company may be unable to retain and attract talented executives. In the event of the loss of key management personnel to competitors, or upon
unexpected death, disability or retirement, the Company may not be able to find replacements with comparable skill, ability and industry expertise. The
Company’s operating results and financial condition could be materially and adversely affected until suitable replacements are identified and retained, if at
all.
The Company Is Subject to Litigation That Could Adversely Affect Its Results of Operations
The Company is a defendant from time to time in lawsuits and regulatory proceedings relating to its business. Due to the inherent uncertainties of
litigation and regulatory proceedings, the Company cannot accurately predict the ultimate outcome of any such litigation or proceedings. An unfavorable
outcome could adversely affect the Company’s business, financial condition or results of operations. Any such litigation could also lead to increased
volatility of the trading price of the Company’s common shares. For a further discussion of litigation risks, see “Legal Matters” in Note 11, “Commitments
and Contingencies,” to the Company’s consolidated financial statements.
Changes in Accounting Standards Issued by the Financial Accounting Standards Board or Other Standard-Setting Bodies May Adversely Affect
the Company’s Business
The Company’s financial statements are subject to the application of U.S. generally accepted accounting principles (“GAAP”), which is periodically
revised and/or expanded. From time to time, the Company is required to adopt new or revised accounting standards issued by recognized authoritative
bodies, including the FASB and the SEC. It is possible that accounting standards the Company is required to adopt may require changes to the current
accounting treatment that it applies to its consolidated financial
22
statements and may require it to make significant changes to its systems. Changes in accounting standards could result in a material adverse impact on the
Company’s business, financial condition and results of operations.
Item 1B.
UNRESOLVED STAFF COMMENTS
None.
Item 2.
PROPERTIES
At December 31, 2021, the Portfolio Properties included 136 shopping centers (including 47 centers owned through unconsolidated joint ventures)
and approximately 60 acres of developable land, including parcels located adjacent to certain of the shopping centers. At December 31, 2021, the Portfolio
Properties aggregated 32.0 million square feet of Company-owned GLA (42.2 million square feet of total GLA) located in 21 states. These centers are
principally located in suburban, higher household income communities in the Southeast with the highest concentrations in Florida, Georgia and North
Carolina. The Company also has significant concentrations in New Jersey and Ohio.
At December 31, 2021, on a pro rata basis, the average annualized base rent per square foot was $18.33. The average annualized base rent of the
Company’s 89 wholly-owned shopping centers was $18.52 per square foot, and the average annualized base rent for the 47 shopping centers owned
through unconsolidated joint ventures was $15.15 per square foot. The Company’s average annualized base rent per square foot does not consider tenant
expense reimbursements.
The majority of the Company’s shopping centers are anchored by national tenant anchors and designed to provide a highly compelling shopping
experience and merchandise mix for retail partners and consumers. The tenants of the shopping centers typically cater to the consumer’s desire for value,
service and convenience and offer day-to-day necessities rather than high-priced luxury items. The properties often include discounters, specialty grocers,
pet supply stores, fitness centers, quick-service restaurants and beauty supply retailers as additional anchors or tenants. The Company has established close
relationships with a large number of major national and regional tenants, many of which occupy space in its shopping centers.
Information as to the Company’s 10 largest tenants based on total annualized rental revenues and Company-owned GLA at December 31, 2021, is
set forth in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the caption “Executive Summary–
Retail Environment and Company Fundamentals” of this Annual Report on Form 10-K. For additional details related to property encumbrances for the
Company’s wholly-owned assets, see “Real Estate and Accumulated Depreciation” (Schedule III) herein. At December 31, 2021, the Company owned an
investment in 47 properties through unconsolidated joint ventures, which properties served as collateral for joint venture mortgage debt aggregating
approximately $0.9 billion (of which the Company’s proportionate share is $190.5 million) and is not reflected in the consolidated indebtedness. The
Company’s properties range in size from approximately 2,000 square feet to approximately 1,100,000 square feet of total GLA (with 52 properties
exceeding 300,000 square feet of total GLA). On a pro rata basis, the Company’s properties were 90.0% occupied as of December 31, 2021.
Tenant Lease Expirations and Renewals
The following table shows the impact of tenant lease expirations through 2031 at the Company’s 89 wholly-owned shopping centers, assuming that
none of the tenants exercise any of their renewal options:
Expiration
Year
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
Total
No. of
Leases
Expiring
236
286
313
257
227
139
97
87
91
75
1,808
Approximate GLA
in Square Feet
(Thousands)
1,308
2,805
2,829
2,509
2,126
1,989
901
863
774
772
16,876
$
$
Annualized Base
Rent Under
Expiring Leases
(Thousands)
26,361
49,335
49,927
47,715
35,736
35,426
16,804
17,564
14,946
13,005
306,819
23
Average Base Rent
per Square Foot
Under Expiring
Leases
20.15
17.59
17.65
19.02
16.81
17.81
18.65
20.35
19.31
16.85
18.18
$
$
Percentage of
Total GLA
Represented by
Expiring Leases
4.5%
9.7%
9.8%
8.7%
7.3%
6.9%
3.1%
3.0%
2.7%
2.6%
58.3%
Percentage of
Total Base Rental
Revenues
Represented by
Expiring Leases
8.0%
15.0%
15.2%
14.5%
10.8%
10.8%
5.1%
5.3%
4.5%
3.9%
93.1%
The following table shows the impact of tenant lease expirations through 2031 at the Company’s 47 shopping centers owned through unconsolidated
joint ventures, assuming that none of the tenants exercise any of their renewal options:
Expiration
Year
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
Total
No. of
Leases
Expiring
103
133
151
111
132
72
38
33
22
31
826
Approximate GLA
in Square Feet
(Thousands)
342
1,053
1,610
938
1,080
854
461
268
186
355
7,147
Annualized Base
Rent Under
Expiring Leases
(Thousands)
7,352
16,151
20,740
13,165
16,048
13,405
6,778
4,826
2,824
5,921
107,210
Average Base Rent
per Square Foot
Under Expiring
Leases
21.50
15.34
12.88
14.04
14.86
15.70
14.70
18.01
15.18
16.68
15.00
$
$
$
$
Percentage of
Total GLA
Represented by
Expiring Leases
3.4%
10.4%
15.9%
9.3%
10.7%
8.4%
4.5%
2.6%
1.8%
3.5%
70.5%
Percentage of
Total Base Rental
Revenues
Represented by
Expiring Leases
6.4%
14.2%
18.2%
11.5%
14.1%
11.8%
5.9%
4.2%
2.5%
5.2%
94.0%
The rental payments under certain of these leases will remain constant until the expiration of their base terms, regardless of inflationary
increases. There can be no assurance that any of these leases will be renewed or that any replacement tenants will be obtained if not renewed.
24
SITE Centers Corp.
Shopping Center Property List at December 31, 2021
Location
Center
Arizona
Phoenix, AZ
1
Ahwatukee Foothills
Towne Center
Year
Developed/
Redeveloped
Year
Acquired
SITE
Ownership
Interest
Owned
GLA
(000's)
Total
Annualized
Base Rent
(000's)
Average Base
Rent
(Per SF)(1)
2013
1998
20%
691
$
11,630
$
17.56
2
Phoenix, AZ
Arrowhead Crossing
1995
1996
100%
352
$
4,860
$
15.92
3
Phoenix, AZ
Deer Valley Towne
Center
4
Phoenix, AZ
Paradise Village
Gateway
5
6
7
8
California
Buena Park, CA
Fontana, CA
Buena Park Place
Falcon Ridge Town
Center
Long Beach, CA
Oakland, CA
The Pike Outlets(2)
Whole Foods at Bay
Place
9
Richmond, CA
Hilltop Plaza
10
Roseville, CA
Ridge at Creekside
11
San Francisco, CA
1000 Van Ness
1996
2004
2009
2005
2015
2006
2000
2007
1998
1999
2003
2004
2013
DEV
2013
2002
2014
2002
100%
197
$
3,479
$
20.98
100%
295
$
3,839
$
28.38
AMC Theatres, Best Buy, Big Lots, Burlington,
HomeGoods, Jo-Ann, Lina Home Furnishing,
Marshalls, Michaels, OfficeMax, Ross Dress for
Less, Sprouts Farmers Market
DSW, Golf Galaxy, Hobby Lobby, HomeGoods,
Nordstrom Rack, Savers (Not Owned), Staples,
T.J. Maxx
AMC Theatres (Not Owned), Michaels, PetSmart,
Ross Dress for Less, Target (Not Owned)
PetSmart, Ross Dress for Less
100%
100%
213
277
100%
100%
392
57
$
$
$
$
3,625
6,167
5,169
2,654
$
$
$
$
17.45
23.56
22.61
46.39
Aldi, Kohl's, Michaels
24 Hour Fitness, Michaels, Ross Dress for Less,
Stater Bros Markets, Target (Not Owned)
Cinemark, H & M, Nike, Restoration Hardware
Whole Foods
20%
246
$
3,827
$
17.34
100%
275
$
5,918
$
21.94
100%
122
$
3,142
$
29.51
99 Cents Only, Century Theatre, City Sports
Club,
dd's Discounts, Ross Dress for Less
Bed Bath & Beyond, buybuy BABY, Cost Plus
World Market, Macy's Furniture Gallery, REI
CGV Cinemas, The Studio Mix
Colorado
Centennial, CO
12
Centennial Promenade
2002
1997
100%
443
$
7,388
$
20.43
13
Colorado Springs, CO Chapel Hills
2000
2011
100%
450
$
5,353
$
13.30
14
15
Denver, CO
Parker, CO
University Hills
FlatAcres MarketCenter/
Parker Pavilions(2)
1997
2003
2003
2003
100%
100%
241
233
$
$
4,298
4,173
$
$
19.87
19.06
Conn's, Golf Galaxy, HomeGoods, IKEA (Not
Owned), Michaels, Ross Dress for Less, Stickley
Furniture,
Total Wine & More
Barnes & Noble, Best Buy, Burlington, DSW,
Michaels (Not Owned), Nordstrom Rack,
North Academy Fitness, Old Navy, Pep Boys,
PetSmart, Ross Dress for Less, Whole Foods
King Soopers, Marshalls, Michaels
24 Hour Fitness, Bed Bath & Beyond, Home
Depot (Not Owned), Kohl's (Not Owned),
Michaels, Office Depot, Walmart (Not Owned)
Connecticut
Guilford, CT
Plainville, CT
16
17
Guilford Commons
Connecticut Commons
18
Windsor, CT
Windsor Court
Florida
Boynton Beach, FL
Bradenton, FL
19
20
Village Square at Golf
Creekwood Crossing
21
Brandon, FL
Lake Brandon Plaza
2015
2013
1993
2002
2001
2014
DEV
DEV
2007
2007
2007
2009
100%
20%
127
561
$
$
2,075
6,889
$
$
18.04
13.47
100%
79
$
1,540
$
19.62
Bed Bath & Beyond, The Fresh Market
AMC Theatres, Dick's Sporting Goods, DSW,
Kohl's, Lowe's, Marshalls, Old Navy, PetSmart
HomeGoods (Not Owned), Stop & Shop,
Target (Not Owned)
100%
20%
135
235
$
$
1,944
2,828
$
$
16.05
12.01
100%
178
$
2,360
$
13.73
—
Bealls, Bealls Outlet, Big Lots, Circustrix,
Lowe's (Not Owned)
Jo-Ann, Nordstrom Rack, Publix, Total Wine &
More
25
Year
Developed/
Redeveloped
2004
Year
Acquired
2003
SITE
Ownership
Interest
100%
Owned
GLA
(000's)
114
Total
Annualized
Base Rent
(000's)
$
1,478
Average Base
Rent
(Per SF)(1)
15.64
$
SITE Centers Corp.
Shopping Center Property List at December 31, 2021
Location
Center
22
Brandon, FL
Lake Brandon Village
23
Brandon, FL
24
25
26
Casselberry, FL
Dania, FL
Delray Beach, FL
The Collection at
Brandon Boulevard(2)
Casselberry Commons
Sheridan Square
Shoppes at Addison
Place
27
Fort Walton Beach, FL Shoppes at Paradise
Pointe
28
29
Jupiter, FL
Melbourne, FL
Concourse Village
Melbourne Shopping
Center
30
Miami, FL
The Shops at Midtown
Miami
31
32
Miramar, FL
Naples, FL
River Run
Carillon Place
33
34
Naples, FL
Orlando, FL
35
Orlando, FL
Countryside Shoppes
Chickasaw Trail
Shopping Center
Lee Vista Promenade
36
37
Orlando, FL
Orlando, FL
Millenia Crossing
Skyview Plaza
38
Oviedo, FL
Oviedo Park Crossing
39
40
Palm Beach Gardens,
FL
Palm Harbor, FL
Northlake Commons
The Shoppes of Boot
Ranch
41
42
Pembroke Pines, FL
Plantation, FL
Flamingo Falls
The Fountains
43
44
45
46
Tamarac, FL
Tampa, FL
Tampa, FL
Wesley Chapel, FL
Midway Plaza
North Pointe Plaza
Southtown Center
The Shoppes at New
Tampa
47
Winter Garden, FL
Winter Garden Village
2021
2010
1991
2000
2000
2004
1999
2006
1989
1994
1997
1994
2016
2009
1998
1999
2003
1990
2001
2010
1985
1990
2005
2002
2007
IPO
2007
2007
2021
2007
2015
2007
DEV
2007
1995
2007
2007
DEV
2015
2007
DEV
2007
1995
2007
2007
2007
IPO
2019
2007
2013
100%
222
$
2,960
$
13.46
20%
20%
100%
246
67
56
$
$
$
2,767
708
2,370
$
$
$
16.29
11.61
44.64
Key Tenants
buybuy BABY, Lowe's (Not Owned), PetSmart,
Sprouts Farmers Market
Bealls Outlet, Chuck E. Cheese's, Crunch Fitness,
Kane Furniture
Publix, Ross Dress for Less, T.J. Maxx
Walmart Neighborhood Market
—
100%
84
$
848
$
12.48
Publix
100%
100%
134
210
$
$
2,268
1,250
$
$
17.56
8.68
Ross Dress for Less, T.J. Maxx
Big Lots, Indian River Antique Mall, Publix
100%
467
$
9,041
$
20.76
20%
100%
94
265
$
$
1,293
4,217
$
$
14.21
15.90
20%
20%
73
75
$
$
870
855
$
$
12.31
11.65
100%
311
$
4,999
$
17.88
100%
20%
100
264
$
$
2,324
2,159
$
$
26.61
13.63
20%
186
$
2,000
$
11.04
20%
124
$
1,750
$
15.85
100%
52
$
1,282
$
27.04
20%
100%
108
430
100%
100%
100%
100%
228
108
44
159
$
$
$
$
$
$
2,346
6,519
2,834
1,591
1,514
1,912
$
$
$
$
$
$
23.84
16.21
14.50
14.99
35.98
15.46
100%
759
$
14,209
$
19.98
26
Dick's Sporting Goods, HomeGoods, Marshalls,
Nordstrom Rack, Ross Dress for Less, Target,
west elm
Publix
Bealls Outlet, DSW, OfficeMax, Ross Dress for
Less,
T.J. Maxx, Total Wine & More,
Walmart Neighborhood Market
Aldi, Athletica Health & Fitness
Presidente Supermarket
Academy Sports, Bealls Outlet, Epic Theatres,
HomeGoods, Michaels, Ross Dress for Less
Nordstrom Rack
Badcock Home Furniture &more, dd's Discounts,
Presidente Supermarket, Ross Dress for Less
Bed Bath & Beyond, Lowe's (Not Owned),
Michaels, OfficeMax, Ross Dress for Less, T.J.
Maxx
Home Depot (Not Owned), Jo-Ann, Ross Dress
for Less
Publix (Not Owned), Target (Not Owned)
LA Fitness (Not Owned), The Fresh Market
Dick's Sporting Goods, Jo-Ann, Kohl's,
Marshalls/HomeGoods, Total Wine & More,
Urban Air Trampoline & Adventure Park
Publix, Ross Dress for Less
Publix, Walmart (Not Owned)
—
Office Depot (Not Owned), Publix, Ross Dress
for Less
Bealls, Bed Bath & Beyond, Best Buy,
Burlington, Forever 21, Havertys, Jo-Ann, LA
Fitness, Lowe's (Not Owned), Marshalls,
PetSmart, Ross Dress for Less, Staples, Target
(Not Owned)
Year
Developed/
Redeveloped
Year
Acquired
SITE
Ownership
Interest
Owned
GLA
(000's)
Total
Annualized
Base Rent
(000's)
Average Base
Rent
(Per SF)(1)
SITE Centers Corp.
Shopping Center Property List at December 31, 2021
Location
Center
Georgia
Atlanta, GA
Atlanta, GA
Atlanta, GA
Atlanta, GA
Atlanta, GA
48
49
50
51
52
Brookhaven Plaza(3)
Cascade Corners(3)
Cascade Crossing(3)
Hammond Springs
Perimeter Pointe
53
54
Canton, GA
Canton, GA
Hickory Flat Village(3)
Riverstone Plaza
55
Cumming, GA
Cumming Marketplace
56
Cumming, GA
Cumming Town Center
57
58
59
60
61
Cumming, GA
Decatur, GA
Decatur, GA
Douglasville, GA
Ellenwood, GA
Sharon Greens
Flat Shoals Crossing(3)
Hairston Crossing
Market Square
Paradise Shoppes of
Ellenwood
62
Marietta, GA
Towne Center Prado
63
64
Roswell, GA
Snellville, GA
Sandy Plains Village
Presidential Commons
65
66
Stone Mountain, GA Deshon Plaza(3)
Suwanee, GA
Johns Creek Town
Center
Illinois
Chicago, IL
Chicago, IL
67
68
3030 North Broadway
The Maxwell
1993
1993
1994
2008
2002
2000
1998
1999
2007
2001
1994
2002
1990
2003
2002
2013
2000
1994
2004
2016
2014
69
Deer Park, IL
Deer Park Town Center
2004
70
Schaumburg, IL
Woodfield Village Green
2015
2007
2007
2007
2021
1995
2007
2007
2003
2013
2007
2007
2007
2007
2007
1995
2007
2007
2007
2003
2017
2014
DEV
1995
20%
20%
20%
100%
100%
70
67
63
69
360
20%
20%
74
308
$
$
$
$
$
$
$
983
528
692
1,839
4,443
1,076
3,582
$
$
$
$
$
$
$
23.48
7.90
10.93
28.70
19.05
14.53
13.04
100%
310
$
4,200
$
13.89
100%
311
$
4,917
$
15.79
100%
20%
20%
100%
100%
98
70
58
125
68
$
$
$
$
$
1,057
748
544
1,509
423
$
$
$
$
$
12.31
10.74
9.57
12.49
12.64
20%
287
$
3,233
$
13.51
100%
100%
174
376
20%
100%
64
303
$
$
$
$
2,255
4,604
696
4,118
$
$
$
$
13.76
12.29
11.28
15.66
100%
100%
132
240
$
$
4,345
5,616
$
$
32.98
27.18
50%
357
$
9,110
$
32.53
100%
490
$
7,560
$
22.35
71
Tinley Park, IL
Brookside Marketplace
2013
2012
20%
317
$
4,459
$
15.34
Indiana
Highland, IN
72
Highland Grove
Shopping Center
2001
2007
20%
312
$
4,131
$
15.20
27
Key Tenants
—
Kroger
Publix
—
Dick's Sporting Goods, HomeGoods, LA Fitness,
Regal Cinemas
Publix
Bealls Outlet, Belk, Michaels, Publix,
Ross Dress for Less
Home Depot (Not Owned), Lowe's, Marshalls,
Michaels, OfficeMax, Walmart (Not Owned)
Ashley Furniture HomeStore, Best Buy, Dick's
Sporting Goods, Staples, T.J. Maxx/HomeGoods
Kroger
Publix
Goodwill
Aaron's
—
Dick's Sporting Goods Warehouse, Publix,
Ross Dress for Less
Movie Tavern, Painted Tree Marketplace
Burlington, buybuy BABY, Home Depot, Jo-Ann,
Kroger
Publix
Kohl's, Michaels, PetSmart, Sprouts Farmers
Market, Staples
Mariano's, XSport Fitness
Burlington, Dick's Sporting Goods, Nordstrom
Rack,
T.J. Maxx
Barnes & Noble (Not Owned), Century Theatre,
Crate & Barrel, Gap
Bloomingdale's The Outlet Store, Container
Store,
Costco (Not Owned), HomeGoods, Marshalls,
Michaels, Nordstrom Rack, PetSmart, Sierra
Trading Post,
Trader Joe's
Best Buy, Dick's Sporting Goods, HomeGoods,
Kohl's (Not Owned), Michaels, PetSmart, Ross
Dress for Less, T.J. Maxx, Target (Not Owned)
Best Buy (Not Owned), Burlington, Dick's
Sporting Goods (Not Owned), Kohl's, Michaels,
Target (Not Owned)
SITE Centers Corp.
Shopping Center Property List at December 31, 2021
Location
Center
Year
Developed/
Redeveloped
Year
Acquired
SITE
Ownership
Interest
Owned
GLA
(000's)
Total
Annualized
Base Rent
(000's)
Average Base
Rent
(Per SF)(1)
Kansas
Merriam, KS
73
Merriam Town Center /
2005
2004
100%
363
$
4,689
$
14.42
Merriam Village
Massachusetts
Everett, MA
74
Gateway Center
75
Framingham, MA
Shoppers World
2001
1994
DEV
1995
100%
640
$
5,935
$
17.16
100%
782
$
16,514
$
25.34
76
West Springfield, MA Riverdale Shops
2003
2007
20%
274
$
3,725
$
15.38
Key Tenants
Bob's Discount Furniture, Cinemark, Dick's
Sporting Goods, Home Depot (Not Owned),
IKEA (Not Owned), Marshalls, OfficeMax,
PetSmart
Costco, Dollar Tree, Home Depot, Michaels, Old
Navy, Target, Total Wine & More
AMC Theatres, Barnes & Noble, Best Buy, DSW,
Golf Galaxy, Hobby Lobby, HomeSense, Kohl's,
Macy's Furniture Gallery, Marshalls, Michaels,
Nordstrom Rack, PetSmart, Sierra Trading Post,
T.J. Maxx
Kohl's, Stop & Shop
Missouri
Brentwood, MO
77
The Promenade at
Brentwood
78
Independence, MO
Independence Commons
New Jersey
East Hanover, NJ
East Hanover Plaza
Edgewater, NJ
Freehold, NJ
Hamilton, NJ
Edgewater Towne Center
Freehold Marketplace
Hamilton Marketplace
79
80
81
82
83
Lyndhurst, NJ
Lewandowski
Commons(3)
84
Princeton, NJ
Nassau Park Pavilion
85
Union, NJ
Route 22 Retail Center
86
87
Voorhees, NJ
West Long Branch, NJ Consumer Centre
Echelon Village Plaza
88
Woodland Park, NJ
West Falls Plaza
1998
1999
1994
2000
2005
2004
1998
2021
1997
2002
1993
1995
1998
1995
2007
2007
DEV
2003
2007
1997
2007
2015
2004
2007
100%
338
$
5,236
$
15.50
20%
386
$
5,590
$
15.18
Burlington, Micro Center, PetSmart, Target,
Trader Joe's
AMC Theatres, Best Buy, Bob's Discount
Furniture, Kohl's, Marshalls, Ross Dress for Less
100%
98
$
1,920
$
20.49
100%
100%
100%
76
21
548
$
$
$
1,488
705
9,657
$
$
$
28.78
34.14
19.73
20%
78
$
1,590
$
24.21
100%
750
$
11,484
$
15.86
20%
112
$
1,562
$
15.90
100%
100%
89
293
$
$
791
3,647
$
$
12.81
13.91
20%
91
$
1,976
$
21.72
Costco (Not Owned), HomeGoods, HomeSense,
Target (Not Owned)
Whole Foods
Sam's Club (Not Owned), Walmart (Not Owned)
Barnes & Noble, Bed Bath & Beyond, BJ's
Wholesale Club (Not Owned), Kohl's, Lowe's
(Not Owned), Michaels, Ross Dress for Less,
ShopRite, Staples, Walmart (Not Owned)
Stop & Shop
At Home, Best Buy, Burlington, buybuy BABY,
Dick's Sporting Goods, Home Depot (Not
Owned),
HomeGoods, HomeSense, Michaels, PetSmart,
Raymour & Flanigan, Target (Not Owned), T.J.
Maxx, Wegmans
Big Lots, Dick's Sporting Goods, Target (Not
Owned)
The Edge Fitness Clubs
buybuy BABY, Dick's Sporting Goods, DSW,
Home Depot
andThat!, Cost Plus World Market
New York
Hempstead, NY
89
North Carolina
Chapel Hill, NC
Charlotte, NC
90
91
The Hub
2001
2015
100%
249
$
3,169
$
12.94
Home Depot, Super Stop & Shop
Meadowmont Village
Belgate Shopping Center
2002
2017
2007
DEV
20%
100%
211
289
$
$
2,762
4,506
$
$
22.65
16.32
Harris Teeter
Burlington, Cost Plus World Market, Furniture
Row (Not Owned), Hobby Lobby, IKEA (Not
Owned), Marshalls,
Old Navy, PetSmart, T.J. Maxx, Walmart (Not
Owned)
28
SITE Centers Corp.
Shopping Center Property List at December 31, 2021
Location
92
Charlotte, NC
Center
Carolina Pavilion
Year
Developed/
Redeveloped
1997
Year
Acquired
2012
SITE
Ownership
Interest
100%
Owned
GLA
(000's)
701
Total
Annualized
Base Rent
(000's)
$
9,587
Average Base
Rent
(Per SF)(1)
13.91
$
93
94
95
Charlotte, NC
Clayton, NC
Cornelius, NC
Cotswold Village
Clayton Corners
The Shops at The Fresh
Market
96
Fayetteville, NC
Fayetteville Pavilion
97
98
Fuquay Varina, NC
Raleigh, NC
Sexton Commons
Poyner Place
2013
1999
2001
2001
2002
2012
2011
2007
2007
2007
2007
2012
100%
20%
100%
262
126
131
$
$
$
6,096
1,437
1,528
$
$
$
24.62
13.17
16.60
20%
274
$
2,801
$
13.11
20%
20%
49
252
$
$
346
3,853
$
$
26.51
16.09
99
Wilmington, NC
University Centre
2001
IPO
20%
418
$
4,335
$
11.07
100
Winston Salem, NC Shoppes at Oliver's
2003
2007
20%
77
$
1,042
$
14.41
Crossing
Ohio
Cincinnati, OH
101
Kenwood Square
2017
2013
100%
427
$
7,005
$
18.51
102
Columbus, OH
Easton Market
2013
1998
100%
502
$
7,388
$
14.96
103
104
Columbus, OH
Columbus, OH
Hilliard Rome Commons
Lennox Town Center
105
Columbus, OH
Polaris Towne Center
106
107
Dublin, OH
Mason, OH
Perimeter Center
Waterstone Center
108
Stow, OH
Stow Community Center
109
110
Toledo, OH
Westlake, OH
Springfield Commons
West Bay Plaza
2001
1997
1999
1996
1998
2008
1999
2020
2007
1998
2011
1998
2014
DEV
DEV
IPO
20%
50%
106
374
$
$
1,457
4,756
$
$
14.46
12.72
100%
459
$
6,823
$
16.63
100%
100%
136
161
$
$
2,412
2,368
$
$
17.67
17.35
100%
406
$
4,083
$
11.84
20%
100%
272
147
$
$
2,415
2,827
$
$
11.63
24.06
Oregon
Hillsboro, OR
111
Tanasbourne Town
2001
1996
100%
285
$
4,826
$
20.77
Center
112
Portland, OR
The Blocks
2001
2019
100%
97
$
2,324
$
35.20
29
Key Tenants
AMC Theatres, American Freight Outlet Stores,
AutoZone, Bed Bath & Beyond, Big Lots,
Burlington, buybuy BABY, Conn's, Floor &
Decor, Frontgate Outlet Store, Jo-Ann, Nordstrom
Rack, Old Navy, Ross Dress for Less, Target (Not
Owned), Value City Furniture
Harris Teeter, Marshalls, PetSmart
Lowes Foods
The Fresh Market
Christmas Tree Shops, Food Lion, Marshalls,
Michaels, PetSmart
—
Cost Plus World Market, Marshalls, Michaels,
Ross Dress for Less, Target (Not Owned), Urban
Air Trampoline & Adventure Park
Bed Bath & Beyond, Lowe's, Old Navy, Ollie's
Bargain Outlet, Ross Dress for Less, Sam's Club
(Not Owned)
Lowes Foods
Dick's Sporting Goods, Macy's Furniture Gallery,
Marshalls/HomeGoods, Michaels, T.J. Maxx,
The Fresh Market
Bed Bath & Beyond, buybuy BABY, DSW,
HomeGoods, Marshalls, Michaels, Nordstrom
Rack, PetSmart,
Ross Dress for Less, Sierra Trading Post, T.J.
Maxx, Value City Furniture
Burlington, HomeGoods
Barnes & Noble, Marshalls, Phoenix Theatres,
Staples, Target
Best Buy, Big Lots, Jo-Ann, Kroger, Lowe's (Not
Owned), OfficeMax, Target (Not Owned), T.J.
Maxx
Giant Eagle
Best Buy, Costco (Not Owned), Michaels,
Target (Not Owned)
Giant Eagle, Hobby Lobby, Kohl's, Target (Not
Owned)
Burlington, Kohl's, Planet Fitness
Fresh Thyme Farmers Market, HomeSense
Bed Bath & Beyond, Best Buy (Not Owned),
Marshalls, Michaels, Nordstrom Rack (Not
Owned), Ross Dress for Less, Sierra Trading Post,
Target (Not Owned)
—
2015
2015
2015
2014
2003
2007
1995
2007
2000
2007
2013
2019
DEV
SITE Centers Corp.
Shopping Center Property List at December 31, 2021
Location
Pennsylvania
Boothwyn, PA
Downingtown, PA
Easton, PA
113
114
115
Center
Larkin's Corner
Ashbridge Square
Southmont Plaza
South Carolina
Anderson, SC
Charleston, SC
Greenville, SC
Mount Pleasant, SC Wando Crossing
Midtowne Park
Ashley Crossing
The Point(3)
116
117
118
119
120
Myrtle Beach, SC
The Plaza at Carolina
Forest(3)
Tennessee
Brentwood, TN
121
Cool Springs Pointe
122
Memphis, TN
American Way(3)
Texas
Highland Village, TX The Marketplace at
123
124
125
Round Rock, TX
San Antonio, TX
Highland Village
Vintage Plaza
Bandera Pointe
126
127
San Antonio, TX
San Antonio, TX
Terrell Plaza
Village at Stone Oak
Virginia
Charlottesville, VA
Charlottesville, VA
Fairfax, VA
Emmet Street North
Emmet Street Station
Fairfax Towne Center
Midlothian, VA
Richmond, VA
Richmond, VA
Commonwealth Center
Downtown Short Pump
White Oak Village
128
129
130
131
132
133
134
Springfield, VA
Springfield Center
135
136
Virginia Beach, VA
Winchester, VA
Kroger Plaza(3)
Apple Blossom Corners
1994
1999
2004
2008
2011
2005
2000
1999
2004
1988
2007
2003
2002
2012
2007
2020
2018
1994
2002
2000
2008
1999
1997
1997
Year
Developed/
Redeveloped
Year
Acquired
SITE
Ownership
Interest
Owned
GLA
(000's)
Total
Annualized
Base Rent
(000's)
Average Base
Rent
(Per SF)(1)
100%
100%
100%
225
386
251
$
$
$
2,107
2,614
3,823
$
$
$
9.56
9.37
16.46
Key Tenants
ACME, Walmart
Christmas Tree Shops, Home Depot, Jo-Ann
Barnes & Noble, Bed Bath & Beyond, Best Buy,
Dick's Sporting Goods, Lowe's (Not Owned),
Michaels, Staples
100%
20%
20%
100%
167
208
104
214
$
$
$
$
1,655
2,077
1,848
2,586
$
$
$
$
9.89
10.67
17.98
14.99
20%
138
$
1,868
$
14.31
Dick's Sporting Goods, HomeGoods, Kohl's
Food Lion, Jo-Ann, Kohl's, Marshalls
REI, Whole Foods
Marshalls, Michaels, T.J. Maxx, Total Wine &
More, Walmart (Not Owned)
Kroger
100%
198
$
3,220
$
16.26
20%
110
$
214
$
6.30
Best Buy, Restoration Hardware, Ross Dress for
Less
—
100%
207
$
3,665
$
18.32
100%
100%
41
490
$
$
845
5,424
$
$
27.01
11.94
2007
DEV
100%
100%
108
450
$
$
1,928
5,903
$
$
20.12
18.23
DSW, LA Fitness, T.J. Maxx/HomeGoods,
Walmart (Not Owned)
—
Barnes & Noble, Gold's Gym, Jo-Ann,
Kohl's (Not Owned), Lowe's, Old Navy,
PetSmart,
Ross Dress for Less, Spec's Wine, Spirits & Finer
Foods, Target (Not Owned), T.J. Maxx,Urban Air
Trampoline & Adventure Park
Ross Dress for Less, Target (Not Owned)
Alamo Drafthouse Cinema, Hobby Lobby,
HomeGoods, Target (Not Owned)
2021
2021
1995
2007
2007
2014
2007
2007
IPO
100%
100%
100%
2
11
253
20%
100%
100%
166
126
432
$
$
$
$
$
$
200
488
4,970
2,059
2,748
6,286
$
$
$
$
$
$
86.32
51.82
20.23
18.27
22.90
15.68
100%
177
$
4,199
$
23.76
20%
20%
68
243
$
$
240
2,893
$
$
3.63
12.04
—
—
Bed Bath & Beyond, Jo-Ann, Regal Cinemas,
Safeway, T.J. Maxx
Michaels, The Fresh Market
Barnes & Noble, Regal Cinemas
JCPenney, K&G Fashion Superstore,
Lowe's (Not Owned), Michaels, PetSmart, Publix,
Target (Not Owned)
Barnes & Noble, Bed Bath & Beyond, DSW,
Marshalls, Michaels, The Tile Shop
Kroger
Books-A-Million, HomeGoods, Kohl's, Martin's
(1) Calculated as total annualized base rentals divided by Company-owned rent commenced GLA as of December 31, 2021.
(2)
(3) The Company agreed to sell these assets to its joint venture partner. The transaction is expected to close by June 2022.
Indicates the asset or a portion of the asset is subject to a ground lease. All other assets are owned fee simple.
30
Item 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are subject to various legal proceedings, which, taken together, are not expected to have a material adverse effect on
the Company. The Company is also subject to a variety of legal actions for personal injury or property damage arising in the ordinary course of its
business, most of which are covered by insurance. While the resolution of all matters cannot be predicted with certainty, management believes that the
final outcome of such legal proceedings and claims will not have a material adverse effect on the Company’s liquidity, financial position or results of
operations.
Item 4. MINE SAFETY DISCLOSURES
Not Applicable.
31
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
The Company’s common shares are listed on the NYSE under the ticker symbol “SITC.” As of February 10, 2022, there were
3,913 record holders. This total excludes beneficial or non-registered holders that held their shares through various brokerage firms. This figure
does not represent the actual number of beneficial owners of the Company’s common shares because common shares are frequently held in “street
name” by securities dealers and others for the benefit of beneficial owners who may vote the shares.
The Company’s Board of Directors is responsible for establishing and, if appropriate, modifying the Company’s dividend
policy. The Board of Directors intends to pursue a dividend policy retaining sufficient free cash flow to support the Company’s
capital needs while still adhering to REIT payout requirements. In February 2022, the Company declared its first-quarter 2022
dividend of $0.13 per common share, payable on April 7, 2022, to shareholders of record at the close of business on March 17,
2022.
The decision to declare and pay future dividends on the Company’s common shares, as well as the timing, amount and
composition of any such future dividends, will be at the discretion of the Company’s Board of Directors and will be subject to the
Company’s cash flow from operations, earnings, financial condition, capital and debt service requirements and such other factors
as the Board of Directors considers relevant. The Company is required by the Code to distribute at least 90% of its REIT taxable
income. The Company intends to continue to declare quarterly dividends on its common shares; however, there can be no
assurances as to the timing and amounts of future dividends.
Certain of the Company’s indentures contain financial and operating covenants including the requirement that the cumulative
dividends declared or paid from December 31, 1993, through the end of the current period cannot exceed Funds From Operations (as defined in the
agreement) plus an additional $20.0 million for the same period unless required to maintain REIT status.
The Company has a dividend reinvestment plan under which shareholders may elect to reinvest their dividends automatically
in common shares. Under the plan, the Company may, from time to time, elect that common shares be purchased in the open
market on behalf of participating shareholders or may issue new common shares to such shareholders.
ISSUER PURCHASES OF EQUITY SECURITIES
(a)
(b)
(c)
October 1–31, 2021
November 1–30, 2021
December 1–31, 2021
Total
Total
Number of
Shares
Purchased(1)
Average
Price Paid
per Share
$
71,872
4,091
20
75,983
$
15.48
17.26
15.06
15.57
Total Number
of Shares Purchased
as Part of
Publicly Announced
Plans or Programs
(d)
Maximum Number
(or Approximate
Dollar Value) of
Shares That May Yet
Be Purchased Under
the Plans or Programs
(Millions)
$
—
—
—
5,112,078
$
—
—
—
42.1
(1)
Common shares surrendered or deemed surrendered to the Company to satisfy statutory minimum tax withholding obligations in connection with the vesting and/or exercise of awards
under the Company’s equity-based compensation plans.
On November 29, 2018, the Company announced that its Board of Directors authorized a common share repurchase program. Under the terms of the
program, the Company may purchase up to a maximum value of $100 million of its common shares and the program has no expiration date. As of
February 10, 2022, the Company had repurchased 5.1 million of its common shares under this program in open market transactions at an aggregate cost of
approximately $57.9 million, or $11.33 per share. As of February 10, 2022, the Company had not repurchased any shares under the program in 2021 or
2022.
Item 6.
[RESERVED]
32
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 acquiring, owning, developing,
redeveloping, leasing and managing shopping centers. As of December 31, 2021, the Company’s portfolio consisted of 136 shopping centers (including 47
shopping centers owned through unconsolidated joint ventures). At December 31, 2021, the Company owned approximately 32.0 million square feet of
gross leasable area (“GLA”) (42.2 million square feet of total GLA) through all its properties (wholly-owned and joint venture) and managed
approximately 0.6 million total square feet of GLA owned by Retail Value Inc. (“RVI”), an owner and operator of one shopping center listed on the New
York Stock Exchange. As of December 31, 2021, the Company owned approximately 60 acres of developable land. At December 31, 2021, the aggregate
occupancy of the Company’s operating shopping center portfolio was 90.0%, and the average annualized base rent per occupied square foot was $18.33,
both on a pro rata basis.
COVID-19 Pandemic
In March 2020, the World Health Organization categorized COVID-19 as a pandemic, and it continues to spread throughout the United States and
other countries across the world. Beginning in mid-March 2020, federal, state and local governments took various actions to limit the spread of COVID-
19, including ordering the temporary closure of non-essential businesses (which included many of the Company’s tenants) and imposing significant social
distancing guidelines and restrictions on the continued operations of essential businesses and the subsequent reopening of non-essential businesses. In
order to safeguard the health of its employees and their families, the Company closed all of its offices in March 2020 and successfully transitioned to
working remotely. The Company reopened its Corporate Headquarters in Cleveland, Ohio, and select regional offices on a voluntary basis in October 2020
and in September 2021, the Company began to require that all employees report to the office at least two times each week. The Company continues to
closely monitor local levels of infection associated with the COVID-19 pandemic and has taken additional steps as needed in order to protect the health and
safety of its workforce, including a relaxation of office attendance requirements in late 2021 as a result of the Omicron variant and rising infection
levels. To date, the Company’s leasing and administrative operations have not been adversely impacted by the pandemic, as the Company’s significant
investments in its information technology infrastructure and systems in prior years facilitated the transition to remote and hybrid working environments.
The COVID-19 pandemic had a significant impact on the collection of rents from April 2020 through December 2020. During the second half of
2020 and early 2021, the Company worked with tenants to maximize the collection of unpaid 2020 rents by offering rent deferment on a case-by-case basis
often in exchange for concessions in the form of tenant extensions of lease terms, the relaxation of leasing restrictions and co-tenancy provisions and, in
some cases, alterations of control areas allowing for future redevelopment of the shopping center.
During the course of 2021, the Company’s rental collections normalized close to pre-pandemic levels. As of December 31, 2021, a substantial
majority of tenants, including tenants previously on the cash basis of accounting, were paying their monthly rent and any deferred rents relating to prior
periods. Included in 2021 results was $13.8 million of net revenue, at SITE Centers’ share, primarily related to contractual rents paid from cash-basis
tenants that were contractually due in 2020. The majority of the deferral arrangements relating to 2020 revenue were repaid during 2021, and therefore, the
impact of 2020 rent collections is expected to be minimal in future periods. At December 31, 2021, $0.2 million remained outstanding under deferral
arrangements for tenants that are not accounted for on the cash basis.
As of February 10, 2022, the Omicron variant has not had a material impact on the Company’s rent collections or leasing activity though some tenants
have experienced challenges in maintaining regular operating hours as a result of related labor shortages. Future rent collections may be negatively
impacted by additional surges in COVID-19 contagion, the emergence of new COVID-19 variants that are more infectious or resistant to existing vaccines,
decreases in the effectiveness of existing vaccines, and any implementation of additional restrictions on tenant businesses as a result thereof. For a further
discussion of the impact of the COVID-19 pandemic on the Company’s business, see “Liquidity, Capital Resources and Financing Activities” and
“Economic Conditions” included in this section and Item 1A. Risk Factors in Part I of this Annual Report on Form 10-K.
Current Strategy
The growth opportunities within the Company’s core property operations include rental rate increases, continued lease-up of
the portfolio and the adaptation of existing site plans and square footage to generate higher blended rental rates and operating
cash flows. Additional growth opportunities include external acquisitions and tactical redevelopment. Management intends to
use retained cash flow, proceeds from the sale of lower growth assets and proceeds from equity offerings and debt financings to
fund capital expenditures relating to new leasing activity, acquisitions, including opportunistic investments, and tactical
redevelopment activity.
33
The Company believes the following serve as cornerstones for the execution of its strategy:
• Maximization of recurring cash flows through strong leasing and core property operations;
• Growth in Company cash flows through capital recycling, especially the redeployment of capital from mature, slower growing assets into
acquisitions that offer operational and tactical redevelopment potential;
• Enhancement of property cash flows through creative, proactive tactical redevelopment efforts that result in the profitable adaptation of site plans
to better suit tenant and community demands;
• Risk mitigation through continuous focus on maintaining prudent leverage levels and lengthy average debt maturities, as well as access to a
diverse selection of capital sources, including the secured and unsecured debt markets, unsecured lines of credit, common equity and capital
from a wide range of joint venture partners and
•
Sustainability of growth through a constant focus on relationships with investor, tenant, employee, community and environmental constituencies.
Transaction and Capital Markets Highlights
Transaction and investment highlights for the Company during 2021 include the following:
• Acquired partner Madison International’s 80% interest in six assets for $107.2 million ($134.0 million at 100%) with the mortgage debt related
to the properties repaid at closing;
• Acquired its partner’s 33% interest in a consolidated joint venture that owned one shopping center, Paradise Village Gateway (Phoenix,
Arizona), for $15.1 million ($45.8 million at 100%) with the mortgage debt related to the property repaid at closing. The partner’s 33%
ownership was previously reflected as non-controlling interest on the Company’s balance sheet;
• Acquired four shopping centers (one each in Delray Beach, Florida and Atlanta, Georgia and two in Charlottesville, Virginia), one income
producing parcel adjacent to Nassau Park Pavilion (Princeton, New Jersey) and one land parcel adjacent to Belgate Shopping Center (Charlotte,
North Carolina) for an aggregate purchase price of $100.5 million;
•
Sold six unconsolidated shopping centers, several wholly-owned land parcels and the Hobby Lobby parcel of a shopping center for an aggregate
sales price of $166.6 million, or $96.5 million at the Company’s share;
• One of the Company’s unconsolidated joint ventures sold its sole asset, which was a parcel of undeveloped land (approximating 70 acres) in
Richmond Hill, Ontario. The Company’s share of net proceeds totaled $22.1 million after accounting for customary closing costs and foreign
currency translation but before income taxes;
• Agreed to sell its 20% interest in the SAU Joint Venture to its partner, State of Utah, based on a gross asset value of $155.7 million (at
100%). The transaction is expected to close by June 2022;
•
•
•
•
In October 2021, the Company received a cash distribution of $190.0 million on the RVI Preferred Shares. In December 2021, RVI repurchased
all of the outstanding RVI Preferred Shares from the Company for an aggregate purchase price of $1.00. As a result, the Company no longer
maintains an investment in RVI and will not receive any further distributions on account of the RVI Preferred Shares;
Sold 2,225,698 common shares on a forward basis under its continuous equity offering program at a weighted average price of $15.77 per share
before issuance costs, generating expected gross proceeds before issuance costs of $35.1 million with no shares settled to date;
In March 2021, issued and sold 17.25 million common shares resulting in net proceeds of $225.3 million;
In April 2021, redeemed all of its 6.250% Class K Cumulative Redeemable Preferred Shares (the “Class K Preferred Shares”) having an
aggregate liquidation preference of $150.0 million and
• Declared aggregate cash dividends of $0.47 per common share.
34
Operational Accomplishments
The COVID‑19 pandemic caused a slow-down in leasing activity in 2020; however, leasing volume rebounded in late 2020,
and the Company’s 2021 leasing activity exceeded 2020 levels. Although there may be some additional disruption among
existing tenants due to the continuing impact of the COVID-19 pandemic and its effect on supply chains and labor markets, the
Company believes that recent strong leasing volumes are attributable to the location of the Company’s portfolio in suburban, high
household income communities (which have been impacted less by the pandemic on a relative basis) and to national tenants’
strong financial positions and increasing emphasis and reliance on physical store locations to improve the speed and efficiency of
fulfillment of online purchases.
Operating highlights for 2021 included:
•
Signed new leases and renewals for approximately 3.5 million square feet of GLA, which included 0.9 million square feet of new leasing
volume, both on a pro rata share;
• Achieved new lease spreads of 13.1% and renewal spreads of 2.2% at the Company’s pro rata share;
• Annualized base rent per occupied square foot on a pro rata basis decreased to $18.33 at December 31, 2021, as compared to $18.50 at
December 31, 2020, primarily due to the 2021 joint venture acquisitions and
• Continued to maintain strong aggregate occupancy on a pro rata basis of 90.0% at December 31, 2021, as compared to 89.0% at December 31,
2020.
Retail Environment
The Company continues to see demand from a broad range of tenants for its space, particularly as larger national retailers
launch new brand concepts and incorporate omni-channel strategies that leverage brick and mortar infrastructure to drive
incremental business. Value-oriented retailers continue to take market share from conventional and national chain department
stores. As a result, while certain of those conventional and national department stores have announced bankruptcies, store
closures and/or reduced expansion plans, other retailers, specifically those in the value and convenience category, continue to
expand their store fleets and launch new concepts. Many of the Company’s largest tenants, including TJX Companies, Dick’s
Sporting Goods, Ross, Burlington and Five Below, have remained well positioned with access to capital while outperforming
other retail categories on a relative basis despite the COVID-19 pandemic.
Company Fundamentals
The following table lists the Company’s 10 largest tenants at its wholly-owned properties and its proportionate share of
unconsolidated joint venture properties combined as of December 31, 2021:
Tenant
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
TJX Companies(A)
Dick's Sporting Goods(B)
PetSmart
Michaels
Ross Stores(C)
Bed, Bath & Beyond(D)
Ulta
Gap(E)
Nordstrom Rack
Best Buy
35
At SITE Centers' Share
% of Total
Shopping Center
Base Rental
Revenues
5.8%
2.7%
2.6%
2.3%
1.9%
1.9%
1.9%
1.9%
1.8%
1.8%
% of Company-
Owned Shopping
Center GLA
6.4%
2.8%
2.3%
2.3%
2.5%
2.4%
1.2%
1.5%
1.5%
1.8%
The following table lists the Company’s 10 largest tenants at 100% as of December 31, 2021:
Tenant
TJX Companies(A)
Dick's Sporting Goods(B)
PetSmart
Michaels
Bed, Bath & Beyond(D)
Nordstrom Rack
Ulta
Best Buy
Ross Stores(C)
Gap(E)
Wholly-Owned Properties
Joint Venture Properties
At 100%
% of
Shopping Center
Base Rental Revenues
6.0%
2.8%
2.7%
2.3%
2.0%
2.0%
2.0%
1.9%
1.9%
1.8%
% of Company-
Owned Shopping
Center GLA
4.8%
2.1%
1.8%
1.7%
1.9%
1.1%
0.9%
1.3%
1.7%
1.1%
% of
Shopping Center
Base Rental Revenues
3.4%
1.7%
1.2%
1.9%
0.5%
0.0%
1.3%
1.6%
3.1%
2.2%
% of Company-
Owned Shopping
Center GLA
3.4%
1.7%
0.9%
1.8%
0.6%
0.0%
0.7%
1.3%
3.8%
1.4%
(A)
Includes T.J. Maxx, Marshalls, HomeGoods, Sierra Trading Post, 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 Bed Bath & Beyond and buybuy BABY
(E)
Includes Gap, Old Navy, Banana Republic and Athleta
The Company leased approximately 5.0 million square feet (3.5 million square feet at the Company’s share) of GLA in 2021
in its wholly-owned and joint venture portfolios, comprised of 240 new leases and 363 renewals, for a total of 603 leases
executed in 2021. At December 31, 2021, the Company had 339 leases expiring in 2022 with an average base rent per square
foot of $20.31 on a pro rata basis. For the comparable leases executed in 2021, at the Company’s interest, the Company
generated positive leasing spreads of 13.1% for new leases and 2.2% for renewals, or 3.7% on a blended basis. Leasing spreads
are a key metric in real estate, representing the percentage increase over rental rates on existing leases versus rental rates on new
and renewal leases, 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 leasing spread calculation includes only those deals
that were executed within one year of the date the prior tenant vacated 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 2021, the Company expended a weighted-average cost of tenant improvements and lease
commissions estimated at $8.34 per rentable square foot, on a pro rata basis, over the lease term, as compared to $6.81 per
rentable square foot in 2020. The increase in the weighted-average cost of tenant improvements was due to the higher percentage
of anchor leases executed in 2021. The Company generally does not expend a significant amount of capital on lease renewals.
Summary—2021 Financial Results
The following provides an overview of the Company’s key financial metrics (see “Non-GAAP Financial Measures”) (in thousands except per share
amounts):
Net income attributable to common shareholders
FFO attributable to common shareholders
Operating FFO attributable to common shareholders
Earnings per share – Diluted
For the Year Ended
December 31,
2021
2020
$
$
$
$
106,123 $
242,774 $
245,687 $
0.51 $
15,190
176,562
192,824
0.08
For the year ended December 31, 2021, the increase in net income attributable to common shareholders, as compared to the prior year, was primarily
attributable to the impact of net revenue relating to prior periods (including deferred rents) collected from cash-basis tenants in the current year, higher
gains associated with the sale of joint venture assets and the valuation allowance reversal
36
recognized in 2020 related to the Company’s preferred investments in the BRE DDR Joint Ventures, partially offset by lower gain on sale of joint venture
interests and lower interest income resulting from the termination of the Company’s preferred investment in the BRE DDR Joint Ventures in the fourth
quarter of 2020.
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.
Revenue Recognition and Accounts Receivable
Rental income has been reduced for the elimination of unpaid contractual lease payments for tenants that are on the cash basis of accounting due to
collectability concerns. When a tenant comes off the cash basis, there could be a reinstatement of the straight-line rent receivable, which would result in
additional recognition of straight-line income.
The Company makes estimates of the collectability of its accounts receivable related to base rents, including straight-line rentals, expense
reimbursements and other revenue or income. The Company analyzes tenant credit worthiness, as well as both current economic and tenant-specific sector
trends, when evaluating the probability of collection of accounts receivable. In evaluating tenant credit worthiness, the Company’s assessment may include
a review of payment history, tenant sales performance and financial position. For larger national tenants, the Company also evaluates projected liquidity, as
well as the tenant’s access to capital and the overall health of the particular sector. In addition, with respect to tenants in bankruptcy, the Company makes
estimates of the expected recovery of pre-petition and post-petition claims in assessing the probability of collection of the related receivable. The time to
resolve these claims may exceed one year. These estimates have a direct impact on the Company’s earnings because once the amount is considered not
probable of being collected, earnings are reduced by a corresponding amount until the receivable is collected.
Real Estate and Long-Lived Assets
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 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 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.
37
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.
Measurement of Fair Value—Real Estate and Unconsolidated Joint Ventures
The Company is required to assess for impairment the value of certain consolidated and unconsolidated joint venture
investments, as well as the underlying collateral for other investments. 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. Investments 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 investments. As a result, amounts ultimately realized
by the Company from investments sold may differ from the fair values presented, and the differences could be material.
The valuation of real estate assets, investments and real estate collateral 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.
For operational real estate assets, the significant assumptions include the capitalization rate used in the income capitalization
valuation, as well as the projected property net operating income. For investments in unconsolidated joint ventures, the Company
also considers the valuation of any underlying joint venture debt. 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.
Deferred Tax Assets and Tax Liabilities—Valuation Allowance
The Company accounts for income taxes related to its taxable REIT subsidiary (“TRS”) under the asset and liability method,
which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have
been included in the financial statements. The Company records net deferred tax assets to the extent it believes it is more likely
than not that these assets will be realized. In making such determinations, the Company considers all available positive and
negative evidence, including forecasts of future taxable income, the reversal of other existing temporary differences, available net
operating loss carryforwards, tax planning strategies and recent results of operations. Several of these considerations require
assumptions and significant judgment about the forecasts of future taxable income that are consistent with the plans and estimates
that the Company is utilizing to manage its business. Based on this assessment, management must evaluate the need for, and
amount of, valuation allowances against the Company’s deferred tax assets. The Company records a valuation allowance to
reduce deferred tax assets if and when it has determined that an uncertainty exists regarding their realization, which would
increase the provision for income taxes. To the extent facts and circumstances change in the future, adjustments to the valuation
allowances may be required. In the event the Company were to determine that it would be able to realize the deferred income tax
assets in the future in excess of their net recorded amount, the Company would adjust the valuation allowance, which would
reduce the provision for income taxes. The Company makes certain estimates in the determination of the use of valuation
reserves recorded for deferred tax assets. These estimates could have a direct impact on the Company’s earnings, as a difference
in the tax provision would impact the Company’s earnings.
The Company has made estimates in assessing the impact of the uncertainty of income taxes. Accounting standards
prescribe a recognition threshold and measurement attribute criteria for the financial statement recognition and measurement of a
tax position taken or expected to be taken in a tax return. The standards also provide guidance on de-recognition, classification,
interest and penalties, accounting in interim periods, disclosure and transition. These estimates have a direct impact on the
Company’s net income because higher tax expense will result in reduced earnings.
COMPARISON OF 2021 AND 2020 RESULTS OF OPERATIONS
For the comparison of the Company’s 2021 performance to 2020 presented below, consolidated shopping center properties
owned as of January 1, 2020, but excluding properties under redevelopment and those subsequently sold by the Company, are
referred
38
to herein as the “Comparable Portfolio Properties.” The discussion of the Company’s 2020 performance compared to 2019 performance is set
forth in — “Comparison of 2020 and 2019 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, 2020.
Revenues from Operations (in thousands)
Rental income(A)
Fee and other income(B)
Total revenues
2021
2020
$ Change
$
$
490,799 $
42,065
532,864 $
414,864 $
45,469
460,333 $
75,935
(3,404)
72,531
(A) The following table summarizes the key components of the 2021 rental income as compared to 2020 (in thousands):
Contractual Lease Payments
Base and percentage rental income(1)
Recoveries from tenants(2)
Uncollectible revenue(3)
Lease termination fees, ancillary and other rental income
Total contractual lease payments
2021
2020
$ Change
$
$
353,067 $
120,530
9,383
7,819
490,799 $
329,165 $
107,132
(31,908)
10,475
414,864 $
23,902
13,398
41,291
(2,656)
75,935
(1) The changes in base and percentage rental income were due to the following (in millions):
Acquisition of shopping centers
Comparable Portfolio Properties
Redevelopment properties
Straight-line rents
Total
Increase (Decrease)
$
$
22.8
(3.3)
1.8
2.6
23.9
The decrease in base and percentage rental income for the Comparable Portfolio Properties is due to the timing of tenant bankruptcies and store
closures in 2020 resulting from the COVID-19 pandemic, partially offset by rent commencements in 2021 of the vacated space.
The following tables present the statistics for the Company’s assets affecting base and percentage rental income summarized by the following
portfolios: pro rata combined shopping center portfolio, wholly-owned shopping center portfolio and joint venture shopping center portfolio:
Centers owned (at 100%)
Aggregate occupancy rate
Average annualized base rent per occupied square foot
Centers owned
Aggregate occupancy rate
Average annualized base rent per occupied square foot
Centers owned
Aggregate occupancy rate
Average annualized base rent per occupied square foot
39
Pro Rata Combined
Shopping Center Portfolio
December 31,
2021
2020
136
90.0%
$
18.33
138
89.0%
18.50
Wholly-Owned Shopping Centers
December 31,
2021
2020
89
90.0%
18.52
$
78
89.2%
18.75
Joint Venture Shopping Centers
December 31,
2021
2020
47
89.4%
15.15
$
60
87.3%
15.36
$
$
$
At December 31, 2021 and 2020, the wholly-owned Comparable Portfolio Properties’ aggregate occupancy rate was
91.4% and 90.7%, respectively, and the average annualized base rent per occupied square foot was $18.60 and $18.92,
respectively.
(2) Recoveries from tenants for the Comparable Portfolio Properties were approximately 80.0% and 81.9% of reimbursable
operating expenses and real estate taxes for the years ended December 31, 2021 and 2020, respectively. The decrease in
the recovery rate is a result of increased operating expenses, primarily management fee expense (on increased prior-year
cash receipts) and property insurance expense, which generally have lower recovery percentages based upon individual
tenant leases as well as higher real estate tax expense.
(3) Primarily relates to the impact of the COVID-19 pandemic on rent collections, including the impact of lease
modification accounting and the initial establishment of reserves in 2020 for tenants placed on the cash basis of
accounting due to collectability concerns. In 2021, the net amount reported as income was primarily attributable to
rental income paid in 2021 from tenants on the cash basis of accounting, which related to amounts (including deferred
rents) contractually owed in 2020.
(B)
Increased disposition fees from RVI asset sales (primarily due to the sale of RVI’s Puerto Rico portfolio and a portfolio of five RVI U.S. assets in
August 2021 and October 2021, respectively) aggregating $5.9 million were offset by lower asset management fees, property management fees and
leasing commissions earned due to a decrease in the number of assets under management because of asset sales by both RVI and the Company’s joint
ventures, as well as the termination of several joint ventures in 2021 and 2020 (including the BRE DDR Joint Ventures in the fourth quarter of
2020). The components of Fee and Other Income are presented in Note 2, “Revenue Recognition,” to the Company’s consolidated financial
statements included herein.
In 2022, the Company expects to record less fee income due to the continued decrease in assets under management as
compared to prior years related to both RVI and joint ventures. RVI owned one asset as of December 31, 2021 (as compared
to the initial portfolio of 48 properties at the time of its spin-off from the Company in July 2018). As a result, the Company
entered into a new management agreement with RVI that went into effect in January 2022 and includes a property
management fee for RVI’s remaining property and a reduced asset management fee to effectuate a wind-up of its
operations. In addition, the Company agreed to sell its 20% interest in the 11 assets owned by the SAU Joint Venture to its
joint venture partner. This transaction is expected to close by June 2022. Fee income from the SAU Joint Venture totaled
$1.0 million in 2021. The Company also purchased six properties from the DDRM Properties Joint Venture in the fourth quarter of 2021 and
expects that this joint venture may sell additional assets in 2022. Changes in the number of assets under management or the fee
structures applicable to such arrangements will adversely impact the amount of revenue recorded in future periods. The
Company’s other 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)
Operating and maintenance(A)
Real estate taxes(A)
Impairment charges(B)
General and administrative(C)
Depreciation and amortization(A)
(A) The changes were due to the following (in millions):
Acquisition of shopping centers
Comparable Portfolio Properties
Redevelopment properties
2021
2020
$ Change
76,716 $
76,071
7,270
55,052
185,768
400,877 $
68,801 $
69,601
5,200
52,881
170,669
367,152 $
7,915
6,470
2,070
2,171
15,099
33,725
Operating
and
Maintenance
Real Estate
Taxes
Depreciation
and
Amortization
4.9 $
2.9
0.1
7.9 $
6.3 $
1.1
(0.9)
6.5 $
15.6
(3.6)
3.1
15.1
$
$
$
$
The change in operating and maintenance for the Comparable Portfolio Properties is primarily a result of higher insurance expense as well
as higher maintenance expenses. The change in depreciation and amortization for the Comparable Portfolio Properties is primarily a result
of decreases attributable to fewer tenant write-offs and intangibles that became fully amortized in
40
2021, partially offset by accelerated depreciation on a redevelopment project and increased depreciation on building
improvements.
(B) For the year ended December 31, 2021, the Company recorded impairment charges that were triggered by a change in hold period assumptions. For
the year ended December 31, 2020, the Company recorded impairment charges related to an outlot and undeveloped land marketed for sale, both
triggered by indicative bids received.
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) holding periods could result in the recognition of additional impairment charges. Impairment charges are presented in Note 14,
“Impairment Charges and Reserves,” to the Company’s consolidated financial statements included herein.
(C) General and administrative expenses (including mark-to-market activity for the PRSUs) for the years ended December 31, 2021 and 2020, were
approximately 6.7% and 5.5% of total revenues (excluding uncollectible revenue), respectively, including total revenues of unconsolidated joint
ventures and managed properties for the comparable periods. For the years ended December 31, 2021 and 2020, the Company recorded $5.6 million
of expense and $0.7 million of income, respectively, related to the mark-to-market adjustment for certain PRSUs that were granted in 2018 and settled
in 2021. Excluding this mark-to-market activity, general and administrative expenses for the years ended December 31, 2021 and 2020, were 6.0%
and 5.6%, respectively, of total revenues. In 2020, the Company recorded a separation charge of $1.7 million related to the elimination of the Chief
Operating Officer executive position. 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)
Interest income(A)
Interest expense(B)
Other expense, net(C)
2021
2020
$ Change
$
$
— $
(76,383)
(1,185)
(77,568) $
11,888 $
(77,604)
(18,400)
(84,116) $
(11,888)
1,221
17,215
6,548
(A)
In the fourth quarter of 2020, the Company terminated its preferred equity investments in the BRE DDR Joint Ventures and, accordingly, interest
income was no longer recorded (see “Sources and Uses of Capital” included elsewhere herein).
(B) The weighted-average debt outstanding and related weighted-average interest rate are as follows:
Weighted-average debt outstanding (in billions)
Weighted-average interest rate
For the Year Ended December 31,
2021
2020
$
$
1.8
4.1%
2.0
3.8%
The Company’s overall balance sheet strategy is to continue to maintain liquidity, prudent leverage levels and lengthy average debt maturities. The
weighted-average interest rate (based on contractual rates and excluding fair market value of adjustments and debt issuance costs) was 4.0% and 3.7%
at December 31, 2021 and 2020, respectively.
Interest costs capitalized in conjunction with redevelopment projects were $0.6 million and $0.9 million for the years ended December 31, 2021 and
2020, respectively. The decrease in the amount of interest costs capitalized is a result of lower redevelopment activity in 2021, partly as a result of the
COVID-19 pandemic.
(C) In 2020, the Company recorded debt extinguishment costs of $16.6 million related to its Senior Notes due 2022.
Other Items (in thousands)
Equity in net income of joint ventures(A)
Reserve of preferred equity interests, net(B)
Gain on sale and change in control of interests, net(C)
Gain on disposition of real estate, net(D)
Tax expense of taxable REIT subsidiaries and state
franchise and income taxes
Income attributable to non-controlling interests, net(E)
$
2021
2020
$ Change
47,297 $
—
19,185
6,065
(1,550)
(481)
1,516 $
(19,393)
45,464
1,069
(1,131)
(869)
45,781
19,393
(26,279)
4,996
(419)
388
41
(A) The increase primarily was the result of increased gain on sale of joint venture assets in 2021 as compared to 2020 plus the impact of the COVID-19
pandemic, including rental income paid to joint ventures in 2021 from tenants on the cash basis of accounting that related to amounts (including
deferred rents) contractually owed in 2020. See “Sources and Uses of Capital” included elsewhere herein. 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,” to the
Company’s consolidated financial statements included herein.
(B)
In the fourth quarter of 2020, the Company terminated its preferred equity investments in the BRE DDR Joint Ventures.
(C) The net gain reported in 2021 relates primarily to two transactions. In December 2021, the Company acquired the equity interest in six assets owned
by the DDRM Properties Joint Venture, which resulted in a Gain on Change in Control of Interests of $7.2 million. In addition, in February 2021, one
of the Company’s unconsolidated joint ventures sold its sole asset, which was a parcel of undeveloped land (approximating 70 acres) in Richmond
Hill, Ontario and recorded a net gain of $12.1 million primarily related to the Company’s promoted interest on the investment disposition, as well as
the write-off of the accumulated foreign currency translation. In 2020, the Company sold its 15% interest in the DDRTC Joint Venture to its partner,
which resulted in a Gain on Sale of Joint Venture Interests of $45.6 million, and terminated the BRE DDR Joint Ventures, which resulted in a Loss on
Sale of Joint Venture Interests of $0.2 million. See “Sources and Uses of Capital” included elsewhere herein.
(D) The Company sold several land parcels in 2021 and 2020.
(E)
In December 2021, the Company acquired its partner’s 33% non-controlling ownership interest in Paradise Village Gateway (Phoenix, Arizona),
which represents the entire amount of the non-controlling interest recorded by the Company.
Net Income (in thousands)
Net income attributable to SITE Centers
2021
2020
$ Change
$
124,935 $
35,721 $
89,214
The increase in net income attributable to SITE Centers was primarily a result of the impact of net revenue relating to prior periods (including
deferred rents) that was collected from cash-basis tenants in the current year, gains recorded from unconsolidated joint venture asset sales, higher RVI
disposition fees, lower debt extinguishment costs and the valuation allowance reversal recognized in 2020 related to the Company’s preferred investments
in the BRE DDR Joint Ventures, partially offset by lower gain on sale of joint venture interests and lower interest income resulting from the termination of
the Company’s preferred investment in the BRE DDR Joint Ventures in 2020.
Funds from Operations and Operating Funds from Operations
Definition and Basis of Presentation
NON-GAAP FINANCIAL MEASURES
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, including reserve adjustments of preferred equity interests, (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
42
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 gains/losses on the early
extinguishment of debt, certain transaction fee income, transaction costs and other restructuring type 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.
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):
FFO attributable to common shareholders
Operating FFO attributable to common shareholders
For the Year Ended
December 31,
$
2021
242,774 $
245,687
2020
176,562 $
192,824
$ Change
66,212
52,863
The increase in FFO primarily was attributable to the impact of net revenue relating to prior periods (including deferred rent) collected from cash-
basis tenants in the current year and lower debt extinguishment costs partially offset by the write-off of preferred share original issuance costs and lower
interest income and the higher mark-to-market expense on the PRSUs. The increase in Operating FFO primarily was due to the impact of net revenue
relating to prior periods (including deferred rents) collected from cash‑basis tenants in the current year, partially offset by lower interest income.
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
43
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.
Net income attributable to common shareholders
Depreciation and amortization of real estate investments
Equity in net income of joint ventures
Joint ventures' FFO(A)
Non-controlling interests (OP Units)
Impairment of real estate
Reserve of preferred equity interests
Gain on sale and change in control of interests, net
Gain on disposition of real estate, net
FFO attributable to common shareholders
RVI disposition fees
Mark-to-market adjustment (PRSUs)
Executive separation charge
Debt extinguishment and other, net
Joint ventures – debt extinguishment and other, net
Write-off of preferred share original issuance costs
Non-operating items, net
Operating FFO attributable to common shareholders
For the Year Ended December 31,
2021
2020
106,123 $
180,158
(47,297)
21,703
67
7,270
—
(19,185)
(6,065)
242,774
(9,016)
5,589
—
1,047
137
5,156
2,913
245,687 $
15,190
165,122
(1,516)
19,671
35
5,200
19,393
(45,464)
(1,069)
176,562
(3,142)
(688)
1,650
18,400
42
—
16,262
192,824
$
$
(A) At December 31, 2021 and 2020, the Company had an economic investment in unconsolidated joint ventures which owned 47 and 59 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.
Joint ventures’ FFO and Operating FFO are summarized as follows (in thousands):
Net income (loss) attributable to unconsolidated
joint ventures
Depreciation and amortization of real estate investments
Impairment of real estate
Gain on disposition of real estate, net
FFO
FFO at SITE Centers' ownership interests
Operating FFO at SITE Centers' ownership interests
Net Operating Income and Same Store Net Operating Income
Definition and Basis of Presentation
For the Year Ended December 31,
2021
2020
$
$
$
$
110,032 $
66,618
—
(89,935)
86,715 $
21,703 $
21,840 $
(37,370)
99,779
33,240
(9,257)
86,392
19,671
19,713
The Company uses Net Operating Income (“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 (12
months for year-end comparisons). In addition, SSNOI is presented both including and excluding activity associated with development and major
redevelopment. In addition, SSNOI excludes all non-property and corporate level revenue and expenses. Other real estate companies may calculate NOI
and SSNOI in a different
44
manner. The Company believes SSNOI at its effective ownership interest 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. 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.
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):
For the Year Ended December 31,
2021
2020
2021
2020
Net income attributable to SITE Centers
Fee income
Interest income
Interest expense
Depreciation and amortization
General and administrative
Other expense, net
Impairment charges
Equity in net income of joint ventures
Reserve of preferred equity interests
Tax expense
Gain on sale and change in control of interests, net
Gain on disposition of real estate, net
Income from non-controlling interests
Consolidated NOI
SITE Centers' consolidated joint venture
Consolidated NOI, net of non-controlling interests
Net income (loss) from unconsolidated joint ventures
Interest expense
Depreciation and amortization
Impairment charges
Preferred share expense
Other expense, net
Gain on disposition of real estate, net
Unconsolidated NOI
Total Consolidated + Unconsolidated NOI
Less: Non-Same Store NOI adjustments
Total SSNOI including redevelopment
Less: Redevelopment Same Store NOI adjustments
Total SSNOI excluding redevelopment
SSNOI % Change including redevelopment
SSNOI % Change excluding redevelopment
$
$
$
$
$
45
At 100%
$
124,935
(40,521)
—
76,383
185,768
55,052
1,185
7,270
(47,297)
—
1,550
(19,185)
(6,065)
481
339,556
—
339,556
$
$
$
110,032
43,379
66,618
—
—
12,074
(89,935)
142,168
$
35,721
(43,574)
(11,888)
77,604
170,669
52,881
18,400
5,200
(1,516)
19,393
1,131
(45,464)
(1,069)
869
278,357
—
278,357
(37,370)
60,010
99,779
33,240
15,708
13,796
(9,257)
175,906
$
$
$
$
$
$
$
$
$
At the Company's Interest
124,935
(40,521)
—
76,383
185,768
55,052
1,185
7,270
(47,297)
—
1,550
(19,185)
(6,065)
481
339,556
(1,286)
338,270
35,721
(43,574)
(11,888)
77,604
170,669
52,881
18,400
5,200
(1,516)
19,393
1,131
(45,464)
(1,069)
869
278,357
(1,652)
276,705
$
$
892
12,068
18,251
1,890
785
2,946
(1,784)
35,048
311,753
15,452
327,205
(9,655)
317,550
49,459
10,557
15,107
—
—
2,951
(42,897)
35,177
373,447
3,061
376,508
(14,945)
361,563
$
$
$
$
$
15.1%
13.9%
The increase in SSNOI at the Company’s effective ownership interest for the year ended December 31, 2021, as compared to 2020, primarily was
attributable to rental income paid in 2021 by cash-basis tenants that related to amounts (including deferred rent) contractually owed in 2020 in connection
with disruption caused by the COVID-19 pandemic and redevelopment stabilization.
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 debt duration in addition to maintaining low leverage 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 credit facilities described below, no assurance can be provided that these obligations will be refinanced or repaid as currently anticipated.
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, Revolving Credit Facilities (as defined
below), mortgages assumed, secured debt, unsecured debt, common and preferred equity offerings, joint venture capital and asset
sales. Total consolidated debt outstanding was $1.7 billion at December 31, 2021, compared to $1.9 billion at December 31,
2020.
The Company had an unrestricted cash balance of $41.8 million at December 31, 2021, no outstanding balance on its Revolving Credit Facilities and,
accordingly, availability under the Revolving Credit Facilities of $970.0 million (subject to satisfaction of applicable borrowing conditions). The Company
has $34.3 million of consolidated mortgage debt maturing in 2022 and $87.2 million of senior notes, $100.0 million outstanding on an unsecured term loan
and $35.8 million of consolidated mortgage debt maturing in 2023. The Company’s unconsolidated joint ventures have $74.3 million of mortgage debt at
the Company’s share maturing in 2022 and no further maturities until April 2024. The Company’s consolidated debt outstanding at December 31, 2021
included $100.0 million of variable rate debt (maturing in January 2023) having an interest rate determined by reference to LIBOR; additionally, the
Company currently has the ability to elect that borrowings under the Revolving Credit Facilities bear interest based on either LIBOR or the Alternative
Base Rate, though the LIBOR-based option is expected to be replaced in the future by an alternative benchmark rate of interest to be agreed upon by the
Company and the applicable lenders as a result of the cessation of LIBOR’s publication expected to occur in June 2023. As of December 31, 2021, the
Company anticipates that it has approximately $35 million to be incurred on its pipeline of identified redevelopment projects. The Company declared
dividends of $0.47 per share in 2021 and declared a dividend of $0.13 per share in the first quarter of 2022. The Company believes it has sufficient
liquidity to operate its business at this time.
Revolving Credit Facilities
The Company maintains an unsecured revolving credit facility with a syndicate of financial institutions, arranged by Wells
Fargo Securities, LLC, J.P. Morgan Chase Bank, N.A., Citizens Bank, N.A., RBC Capital Markets and U.S. Bank National
Association (the “Unsecured Credit Facility”). The Unsecured Credit Facility provides for borrowings of up to $950 million (which may be
increased to $1.45 billion provided that the new lenders agree to existing terms of the facility or existing lenders increase their
incremental commitments) and a maturity date of January 2024, with two six-month options to extend the maturity to January
2025 upon the Company’s request (subject to satisfaction of certain conditions). The Company also maintains an unsecured
revolving credit facility with PNC Bank, National Association, which provides for borrowings of up to $20 million (the “PNC
Facility,” and together with the Unsecured Credit Facility, the “Revolving Credit Facilities”), and has terms substantially the
same as those contained in the Unsecured Credit Facility. The Company’s borrowings under the Revolving Credit Facilities bear
interest at variable rates at the Company’s election, based on either LIBOR plus a specified spread (0.9% at December 31, 2021),
or the Alternate Base Rate, as defined in the respective facility, plus a specified spread (0% at December 31, 2021). The credit
agreements governing the Revolving Credit Facilities provide that the Company’s ability to request LIBOR-based loans may be suspended in the future in
connection with the cessation of LIBOR’s publication, in which case the Company and the applicable lenders will agree on an alternative rate of interest to
LIBOR which gives due consideration to prevailing market conventions for similar credit facilities. Should market conventions for similar credit facilities
fail to standardize, legal risks could arise. See Item 1A., “Risk Factors—The Company May Be Adversely Affected by the Potential Discontinuation of
LIBOR” in Part I of this Annual Report on Form 10-K. The Company also pays an annual facility fee of 20 basis points on the aggregate
commitments applicable to each Revolving Credit Facility. The specified spreads and commitment fees 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”), Fitch Investor Services Inc. (“Fitch”) and their successors.
The Revolving Credit Facilities and the indentures under which the Company’s senior and subordinated unsecured indebtedness are, 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 mergers and certain acquisitions. These credit
46
facilities and 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 Company’s 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,
2021, 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.
Consolidated Indebtedness – as of December 31, 2021
As discussed above, the Company is committed to maintaining low leverage and may utilize proceeds from equity offerings
or the sale of properties or other investments to repay additional 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. The Company has sought to manage its debt maturities through executing a strategy to extend debt duration, increase liquidity,
maintain low leverage 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, 2021
The Company’s unconsolidated joint ventures had aggregate outstanding indebtedness to third parties of $0.9 billion and $1.0 billion at December 31,
2021 and 2020, respectively. Such mortgages are generally non-recourse to the Company and its partners; however, certain mortgages may have recourse
to the Company and its partners in certain limited situations, such as misappropriation of funds, impermissible transfer, environmental contamination and
material misrepresentation. The outstanding indebtedness of the Company’s unconsolidated joint ventures at December 31, 2021, which matures in the
subsequent 14-month period (i.e., through February 28, 2023), is as follows (in millions):
DDR – Domestic Retail Fund I(A)
DDR SAU Retail Fund LLC(B)
Total debt maturities through February 2023
(A)
Expected to be extended at the joint venture’s option in accordance with the loan agreement.
(B)
The Company agreed to sell its interest to its joint venture partner which is expected to close by June 2022.
Outstanding
at December 31, 2021
$
At SITE Centers'
Share
71.0
3.3
74.3
355.1 $
16.5
371.6 $
$
It is expected that the joint ventures will generally fund these obligations from refinancing opportunities, including extension options, or possible asset
sales. No assurance can be provided that these obligations will be refinanced or repaid as currently anticipated. Similar to SITE Centers, the Company’s
joint ventures experienced a reduction in rent collections, beginning in the second quarter of 2020, as a result of the impact of the COVID‑19
pandemic. Though rent collections at the Company’s joint ventures have improved during 2021, any future deterioration in rent collections 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.
Cash Flow Activity
The Company’s cash flow activities are summarized as follows (in thousands):
Cash flow provided by operating activities
Cash flow provided by investing activities
Cash flow used for financing activities
47
For the Year Ended December 31,
2021
2020
$
282,515 $
74,451
(388,127)
190,170
102,478
(237,363)
Changes in cash flow for the year ended December 31, 2021, compared to the prior year are as follows:
Operating Activities: Cash provided by operating activities increased $92.3 million primarily due to the following:
Increase in cash collected from tenants and
•
• Reduction in interest income received from preferred investments.
Investing Activities: Cash provided by investing activities decreased $28.0 million primarily due to the following:
Increase in real estate assets acquired and developed of $143.3 million;
•
• Decrease in proceeds from disposition of real estate and joint venture interests of $112.3 million;
•
•
Increase in distributions from joint ventures of $47.7 million and
Proceeds from the distribution by RVI of $190.0 million on account of the Company’s preferred investment in RVI.
Financing Activities: Cash used for financing activities increased $150.8 million primarily due to the following:
Increase in net debt repayments, including Revolving Credit Facilities, of $221.8 million;
•
• Redemption of the Class K Preferred Shares of $150.0 million and
•
Increase in proceeds from issuance of common shares, net of offering expenses, of $225.0 million.
RVI Preferred Shares
In 2018, RVI issued to the Company 1,000 shares of its series A preferred stock (the “RVI Preferred Shares”), which were noncumulative and had no
mandatory dividend rate or maturity date. The RVI Preferred Shares ranked, with respect to dividend rights and rights upon liquidation, dissolution or
winding up of RVI, senior in preference and priority to RVI’s common shares and any other class or series of RVI capital stock. Subject to the requirement
that RVI distribute to its common shareholders the minimum amount required to be distributed with respect to any taxable year in order for RVI to maintain
its status as a REIT and to avoid U.S. federal income taxes, the RVI Preferred Shares were entitled to a dividend preference for all dividends declared on
RVI’s capital stock at any time up to a “preference amount” equal to $190.0 million in the aggregate which amount could have increased by up to an
additional $10 million if the aggregate gross proceeds of RVI asset sales subsequent to July 1, 2018 exceeded $2.06 billion. In October 2021, the Company
received a cash distribution of $190.0 million on the RVI Preferred Shares. In December 2021, in recognition of the advanced stage of RVI’s dispositions
and the aggregate value of sales relative to the $2.06 billion threshold, RVI repurchased all of the outstanding RVI Preferred Shares from the Company for
an aggregate purchase price of $1.00. As a result, the Company no longer maintains an investment in RVI and will not receive any further distributions on
account of the RVI Preferred Shares.
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 $113.0 million in 2021, as compared to $69.2 million of cash dividends paid in 2020. Because actual distributions were greater than 100% of
taxable income, federal income taxes were not incurred by the Company in 2021.
The Company declared cash dividends of $0.47 per common share in 2021. In February 2022, the Company declared its
first quarter 2022 dividend of $0.13 per common share payable on April 7, 2022, to shareholders of record at the close of
business on March 17, 2022. The Board of Directors of the Company intends to monitor the Company’s dividend policy in order
to maintain sufficient liquidity for operating and in order to maximize the Company’s free cash flow while still adhering to REIT
payout requirements.
SITE Centers’ Equity
In 2021, the Company offered and sold 2,225,698 of its common shares on a forward basis under its $250 million continuous equity offering program
at a weighted-average forward price of $15.77 per share before issuance costs, generating expected gross proceeds before issuance costs of $35.1 million,
with no shares settled to date. The 2021 transactions may be settled at any time before the applicable settlement date at various dates through December 8,
2022. At February 10, 2022, the Company had approximately $214.9 million available for the future offering of common shares under this program.
In March 2021, the Company issued and sold 17.25 million common shares resulting in net proceeds of $225.3 million.
In April 2021, the Company redeemed all $150.0 million aggregate liquidation preference of its 6.250% Class K Preferred Shares at a redemption
price of $500 per Class K Preferred Share (or $25.00 per depositary share) plus accrued and unpaid dividends of $7.2049 per Class K Preferred Share (or
$0.3602 per depositary share). The Company recorded a non-cash charge of $5.1 million to net income attributable to common shareholders in 2021,
which represents the difference between the redemption price and the carrying amount immediately prior to redemption, which was recorded to additional
paid-in capital upon original issuance.
48
In November 2018, the Company’s Board of Directors authorized a common share repurchase program. Under the terms of the program, the
Company may purchase up to a maximum value of $100 million of its common shares. Through February 10, 2022, the Company had repurchased 5.1
million of its common shares under this program in open market transactions at an aggregate cost of approximately $57.9 million, or $11.33 per share. As
of February 10, 2022, the Company had not repurchased any shares under the program during 2021 or 2022.
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. Equity offerings, debt financings, asset sales and cash flow from operations continue to represent a potential source of
proceeds to be used to achieve these objectives.
SOURCES AND USES OF CAPITAL
2022 Transaction Activity
Acquisitions
In the first quarter of 2022, the Company acquired Artesia Village (Scottsdale, Arizona) for $14.5 million. The Company also acquired its partner’s
80% interest in Casselberry Commons (Casselberry, Florida) owned by the DDRM Properties Joint Venture for $35.6 million ($44.5 million at 100%).
Joint Venture Investments
The Company agreed to sell its 20% interest in the SAU Joint Venture to its partner, the State of Utah, based on a gross asset value of $155.7 million
(at 100%). The transaction is expected to close by June 2022. Fee income from the SAU Joint Venture totaled $1.0 million in 2021.
2021 Strategic Transaction Activity
Equity Transactions
In 2021, the Company issued and sold 17.25 million common shares resulting in net proceeds of $225.3 million.
Acquisitions
During 2021, the Company purchased four shopping centers (one each in Delray Beach, Florida and Atlanta, Georgia and two in Charlottesville,
Virginia), one income producing parcel adjacent to Nassau Park Pavilion (Princeton, New Jersey) and one land parcel adjacent to Belgate Shopping Center
(Charlotte, North Carolina) for an aggregate purchase price of $100.5 million. The Company also acquired its partner’s 33% interest in a consolidated joint
venture that owned Paradise Village Gateway (Phoenix, Arizona), for $15.1 million ($45.8 million at 100%) with the $27.6 million mortgage debt repaid at
closing.
In December 2021, the Company acquired the equity interest in six assets owned by the DDRM Properties Joint Venture (Village Square at Golf,
Boynton Beach, Florida; Shoppes at Paradise Point, Fort Walton Beach, Florida; Midway Plaza, Tamarac, Florida; North Point Plaza, Tampa, Florida; The
Shoppes at New Tampa, Wesley Chapel, Florida and Paradise Shoppes of Ellenwood, Ellenwood, Georgia) for $107.2 million ($134.0 million at 100%)
with $73.9 million of mortgage debt related to the properties repaid at closing. The transaction resulted in a Gain on Change in Control of Interests of $7.2
million.
The Company remains committed to taking advantage of its financial position and elevated cash resources to prudently grow its portfolio of assets in
wealthy suburban communities.
Proceeds from Transactional Activity
In 2021, one of the Company’s unconsolidated joint ventures sold its sole asset, which was a parcel of undeveloped land (approximating 70 acres) in
Richmond Hill, Ontario. The Company’s share of net proceeds totaled $22.1 million, after accounting for customary closing costs and foreign currency
translation but before income tax. The net proceeds include $6.1 million that are held in escrow, of which $2.1 million is expected to be released to the
Company in 2022 after the receipt of certain tax clearance certificates from the Canadian taxing authorities, and the remaining $4.0 million is considered
contingent and should be released upon final dissolution of the partnership. The Company recorded an aggregate gain on the transaction of $14.9 million,
which included its $2.8 million share of the gain reported by the joint venture, as well as $12.1 million related to the Company’s promoted interest on the
disposition of the investment net of the write-off of the accumulated foreign currency translation and contingent estimated income taxes. Subsequent to the
transaction, the Company has no other investments outside the United States.
49
During 2021, the Company sold six unconsolidated shopping centers, aggregating 1.0 million square feet, several wholly owned land parcels, and the
Hobby Lobby parcel of a shopping center. These sales collectively generated proceeds totaling $166.6 million, of which the Company’s proportionate
share of the proceeds was $96.5 million. The Company’s pro rata share of proceeds is before giving effect to the repayment of indebtedness and transaction
costs.
In October 2021, the Company received a cash distribution of $190.0 million on the RVI Preferred Shares, which represents the full amount to be paid
by RVI on account of the Company’s preferred investment.
Changes in investment strategies for assets may impact the Company’s hold-period assumptions for those properties. The disposition of certain assets
could result in a loss or impairment recorded in future periods. The Company evaluates all potential sale opportunities taking into account the long-term
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.
Redevelopment Opportunities
One key component of the Company’s long-term strategic plan will be the evaluation of additional tactical redevelopment potential within the
portfolio, particularly as it relates to the efficient use of the underlying real estate. The Company will generally commence construction on redevelopment
projects only after substantial tenant leasing has occurred. At December 31, 2021, the Company anticipates that it has approximately $35 million to be
incurred on its pipeline of identified redevelopment projects.
Redevelopment Projects
As part of its strategy to expand, improve and re-tenant various properties, at December 31, 2021, the Company had approximately $47 million in
construction in progress in various active consolidated redevelopment and other projects on a net basis. The Company’s major redevelopment projects are
typically substantially complete within two years of the construction commencement date. At December 31, 2021, the Company’s large-scale shopping
center expansion and repurposing projects were as follows (in thousands):
West Bay Plaza - Phase II (Cleveland, Ohio)
Perimeter Pointe (Atlanta, Georgia)
Total
Location
Estimated
Stabilized
Quarter
2Q23
TBD
Estimated
Gross Cost
$
$
9,102 $
N/A
9,102 $
Cost Incurred at
December 31, 2021
5,360
1,271
6,631
At December 31, 2021, the Company’s tactical redevelopment projects, including outparcels, first generation space and small-scale shopping center
expansions and other capital improvements, were as follows (in thousands):
Location
Tanasbourne Town Center (Portland, Oregon)
Nassau Park Pavilion (Trenton, New Jersey)
Shoppers World (Boston, Massachusetts)
University Hills (Denver, Colorado)
Hamilton Marketplace (Trenton, New Jersey)
Carolina Pavilion (Charlotte, North Carolina)
West Bay Plaza (Cleveland, Ohio)
Other Tactical Projects
Total
Estimated
Stabilized
Quarter
2Q24
3Q23
4Q23
4Q23
4Q22
4Q23
1Q22
N/A
Estimated
Gross Cost
$
$
11,540 $
7,635
6,672
4,589
3,843
2,339
335
9,060
46,013 $
Cost Incurred at
December 31, 2021
850
937
316
716
2,913
252
100
8,411
14,495
No major redevelopment projects were completed in 2021. For tactical redevelopment and larger retenanting projects completed in 2021, the assets
placed in service were completed at a cost of approximately $106 per square foot.
50
2020 Strategic Transaction Activity
Acquisitions
In the fourth quarter of 2020, the Company transferred and redeemed its preferred equity interests in the BRE DDR Joint Ventures in exchange for the
acquisition of certain of the underlying assets of the joint ventures as follows:
• On October 15, 2020, an affiliate of Blackstone transferred its common equity interest in BRE DDR IV to the Company for consideration of $1.00
and the Company’s preferred investment in the BRE DDR IV joint venture was redeemed, thereby leaving the Company as the sole owner of (i)
the properties previously owned by BRE DDR IV, including Ashbridge Square, The Hub, Southmont Plaza, Millenia Crossing, Concourse Village
and two properties, Echelon Village Plaza and Larkin’s Corner, in which the Company did not previously have a material economic interest, and
(ii) $5.4 million in net cash.
• On November 20, 2020, the Company transferred its common and preferred equity interests in BRE DDR III to an affiliate of Blackstone in
exchange for BRE DDR III’s interests in the single-purpose subsidiaries which owned White Oak Village and Midtowne Park and $4.9 million in
net cash.
Proceeds from Transactional Activity
In 2020, the Company sold its 15% interest in the DDRTC Joint Venture to its partner, an affiliate of TIAA-CREF, resulting in net proceeds to the
Company of $140.4 million.
In 2020, the Company consummated the sale of certain land parcels and the Company’s unconsolidated joint ventures sold two shopping center assets,
aggregating 0.2 million square feet. These sales collectively generated proceeds totaling $28.7 million, of which the Company’s proportionate share of the
proceeds was $6.6 million. The Company’s pro rata share of proceeds is before giving effect to the repayment of indebtedness and transaction costs. The
Company also received $7.5 million related to the repayment of a third-party loan investment.
Redevelopment Projects
The Company invested approximately $42 million in various consolidated active redevelopment and other projects during 2020.
CAPITALIZATION
At December 31, 2021, the Company’s capitalization consisted of $1.7 billion of debt, $175.0 million of preferred shares and
$3.3 billion of market equity (market equity is defined as common shares and OP Units outstanding multiplied by $15.83, the
closing price of the Company’s common shares on the New York Stock Exchange at December 31, 2021), resulting in a debt to
total market capitalization ratio of 0.32 to 1.0, as compared to the ratio of 0.46 to 1.0 at December 31, 2020. The closing price of
the Company’s common shares on the New York Stock Exchange was $10.12 at December 31, 2020. At December 31, 2021 and
2020, the Company’s total debt consisted of $1.6 billion (for both periods) of fixed-rate debt and $0.1 billion and $0.3 billion of
variable-rate debt, respectively.
Management’s strategy is 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 conservative 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. 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 Company’s credit facilities and the indentures under which the Company’s senior and subordinated unsecured
indebtedness are, 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 mergers and certain 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, certain of the Company’s credit facilities and 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.
51
CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS
The Company has no consolidated debt maturing until September 2022. The Company expects to fund future maturities
from utilization of its Revolving Credit Facilities, proceeds from asset sales and other investments, cash flow from operations and
/or additional debt or equity financings. No assurance can be provided that these obligations will be repaid as currently
anticipated or refinanced.
Other Guarantees
In conjunction with the redevelopment of shopping centers, the Company had entered into commitments with general
contractors aggregating approximately $16.9 million for its consolidated properties at December 31, 2021. 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
Facilities. These contracts typically can be changed or terminated without penalty. In addition, 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 and are typically payable within one year.
At December 31, 2021, the Company had letters of credit outstanding of $13.2 million. The Company has not recorded any
obligations associated with these letters of credit, the majority of which are collateral for insurance obligations as the Company is
self-insured up to certain limits on several policies.
The Company has entered into employment contracts with its four 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, Chief Investment Officer and Chief Accounting Officer extend
through February 2024, May 2024 and September 2024, respectively. 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 an increase in retailer bankruptcies in 2020 stemming from the onset of the COVID-19 pandemic, the Company
experienced strong momentum in new lease discussions and renewal negotiations with tenants in the second half of 2020, which
continued through 2021. Ultimately, the Company executed new leases and renewals aggregating approximately 3.5 million
square feet of space during the year ended December 31, 2021, on a pro rata basis, which exceeded 2020 leasing
levels. Although there may be some additional disruption among existing tenants due to the continuing impact of the COVID-19
pandemic and related supply chain and labor shortages, the Company believes that recent strong leasing volumes are attributable
to the location of the Company’s portfolio in suburban, high household income communities (which have been impacted less by
the pandemic on a relative basis) and to its national tenants’ strong financial positions and increasing emphasis and reliance on
physical store locations to improve the speed and efficiency of fulfillment of online purchases.
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 5.8%). Other significant tenants include Dick’s Sporting Goods, Ross Stores, Burlington
and Five Below, all of which have relatively strong financial positions, have outperformed other retail categories over time and
the Company believes remain well-capitalized. Historically, these 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 recognizes the risks posed by current economic conditions but believes that the
position of its portfolio and the general diversity and credit quality of its tenant base should enable it to successfully navigate
through a potentially challenging economic environment. 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 historical property income growth and consistent
growth in average annualized base rent per occupied square foot. Historical occupancy has generally ranged from 89% to 96% since the Company’s initial
public offering in 1993. At December 31, 2021 and 2020, the shopping center portfolio occupancy, on a pro rata basis, was 90.0% and 89.0%, respectively,
and the total portfolio average annualized base rent per occupied
52
square foot, on a pro rata basis, was $18.33 and $18.50, respectively. The decrease in the average annualized base rent per occupied square foot primarily
is due to the 2021 joint venture acquisitions. The Company’s portfolio has been impacted by tenant bankruptcies and lease expirations in recent years
(which increased in number and pace in 2020 following the onset of the COVID-19 pandemic), and the Company expects to expend significant amounts of
capital in coming periods in connection with recently executed anchor leases and in order to re-lease remaining anchor vacancies. 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 recent
anchor leasing activity 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 2021 and 2020, on a pro rata basis, was $8.34 and
$6.81 per rentable square foot, respectively. The increase in the weighted-average cost of tenant improvements was due to the higher
percentage of anchor leases in 2021. The Company generally does not expend a significant amount of capital on lease renewals.
Beginning in March 2020, the retail sector was significantly impacted by the COVID-19 pandemic. Though the impact of
the COVID-19 pandemic on tenant operations has varied by tenant category, local conditions and applicable government
mandates, a significant number of the Company’s tenants experienced a reduction in sales and foot traffic, and many tenants were
forced to limit their operations or close their businesses for a period of time. The COVID-19 pandemic had a significant impact on the
collection of rents from April 2020 through December 2020. During the second half of 2020 and early 2021, the Company worked with tenants to
maximize the collection of unpaid 2020 rents by offering rent deferment on a case-by-case basis often in exchange for concessions in the form of tenant
extensions of lease terms, the relaxation of leasing restrictions and co-tenancy provisions and, in some cases, alterations of control areas allowing for future
redevelopment of the shopping center. During the course of 2021, the Company’s rent collections normalized close to pre-pandemic levels. As of
December 31, 2021, a substantial majority of tenants, including tenants previously on the cash basis of accounting, were paying their monthly rent and any
deferred rents relating to prior periods. Included in 2021 results was $13.8 million, at SITE Centers’ share, of net revenue primarily related to contractual
rents paid from cash-basis tenants that was contractually due in 2020. The majority of the deferral arrangements relating to 2020 revenue were repaid
during 2021, and therefore, the impact of 2020 rent collections is expected to be minimal in future periods. At December 31, 2021, $0.2 million remained
outstanding under deferral arrangements for tenants that are not accounted for on the cash basis. As of February 10, 2022, the Omicron variant had not had
a material impact on the Company’s rent collections or leasing activity, though some tenants have experienced challenges in maintaining regular operating
hours as a result of related labor shortages.
The Company is unable to forecast the duration of the disruption to tenant and Company operations caused by the COVID-
19 pandemic, or the ultimate level of collections of rents and other unpaid amounts owed by tenants that were deferred or unpaid
during 2020. However, the level and pace of collections of such deferred rents and other unresolved amounts exceeded
management’s expectations during 2021, especially with respect to collections from tenants previously placed on the cash basis
of accounting. If new surges in contagion were to occur, or if new COVID-19 variants in addition to Omicron were to emerge
that are more resistant to vaccines, or if there are decreases in the effectiveness of such vaccines, the Company’s recent success in
leasing space and the collection of deferred rents and unresolved amounts could be adversely impacted and such developments
could lead to new restrictions on tenant operations, nonpayment of contractual and previously deferred rents, additional tenant
requests for rent relief and additional tenant closures and bankruptcies, all of which could adversely impact the Company’s
results of operations in the future. Certain tenant categories remain especially vulnerable to the impacts of the COVID-19
pandemic, including movie theaters, fitness centers and local restaurants. For additional risks relating to the COVID-19
pandemic, see Item 1A. Risk Factors.
New Accounting Standards are more fully described in Note 1, “Summary of Significant Accounting Policies,” of the
Company’s consolidated financial statements included herein.
NEW ACCOUNTING STANDARDS
FORWARD-LOOKING STATEMENTS
This Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 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, 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
53
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). The
impact of the COVID-19 pandemic may also exacerbate the risks discussed therein and herein, any of which could have a
material effect on the Company.
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 relies on major tenants, which makes it vulnerable to changes in the business and financial condition of, or
demand for its space by, such tenants;
• 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 abandon a development or 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 development or 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 credit facilities 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 Facilities are subject to certain representations and warranties and customary events of default,
including
54
any event that has had or could reasonably be expected to have a material adverse effect on the Company’s business or
financial condition;
• Changes in interest rates could adversely affect the market price of the Company’s common shares, as well as its
performance and cash flow;
• Debt and/or equity financing necessary for the Company to continue to grow and operate its business may not be
available or may not be available on favorable terms;
• 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;
• 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;
• 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;
•
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
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, including preferred investments, if a loss in the
carrying value of the investment is realized;
• 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;
• 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;
• 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;
• 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;
• The Company and its tenants could be negatively affected by the impacts of pandemics and other public health crises,
including the COVID-19 pandemic;
• The Company is subject to potential environmental liabilities;
• 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;
• 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;
• Changes in accounting standards or other standards may adversely affect the Company’s business;
• 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
55
• 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.
Item 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company’s primary market risk exposure is interest rate risk. The Company’s debt, excluding unconsolidated joint
venture debt, is summarized as follows:
Fixed-Rate Debt
Variable-Rate Debt
December 31, 2021
Weighted-
Average
Maturity
(Years)
Weighted-
Average
Interest
Rate
Percentage
of Total
Amount
(Millions)
December 31, 2020
Weighted-
Average
Maturity
(Years)
Weighted-
Average
Interest
Rate
Percentage
of Total
3.8
1.1
4.1%
1.1%
94.1% $ 1,602.4
331.1
5.9% $
4.7
1.9
4.1%
1.5%
82.9%
17.1%
Amount
(Millions)
$ 1,577.6
99.8
$
The Company’s unconsolidated joint ventures’ indebtedness at its carrying value is summarized as follows:
Joint
Venture
Debt
(Millions)
December 31, 2021
Company's
Proportionate
Share
(Millions)
Weighted-
Average
Maturity
(Years)
Weighted-
Average
Interest
Rate
Joint
Venture
Debt
(Millions)
December 31, 2020
Company's
Proportionate
Share
(Millions)
Weighted-
Average
Maturity
(Years)
Weighted-
Average
Interest
Rate
Fixed-Rate Debt
Variable-Rate Debt
$
$
673.9 $
199.4 $
146.2
43.5
2.4
1.4
4.2% $
2.2% $
757.5 $
272.1 $
178.2
54.4
2.9
0.5
4.4%
2.5%
The Company intends to use retained cash flow, proceeds from asset sales, equity and debt financing and variable-rate
indebtedness available under its Revolving Credit Facilities to repay indebtedness and fund capital expenditures at the
Company’s shopping centers. Thus, to the extent the Company incurs additional variable-rate indebtedness or needs to refinance
existing fixed-rate indebtedness in a rising interest rate environment, its exposure to increases in interest rates in an inflationary
period could increase. The Company does not believe, however, that increases in interest expense as a result of inflation will
significantly impact the Company’s distributable cash flow.
The carrying value and the fair value of the Company’s fixed-rate debt are adjusted to include the Company’s proportionate
share of the joint venture fixed-rate debt. An estimate of the effect of a 100 basis-point increase at December 31, 2021 and 2020,
is summarized as follows (in millions):
Company's fixed-rate debt
Company's proportionate share of
joint venture fixed-rate debt
$
$
December 31, 2021
December 31, 2020
Carrying
Value
1,577.6 $
Fair
Value
1,687.5 $
100 Basis-Point
Increase in
Market Interest
Rate
1,630.3 $
Carrying
Value
1,602.4
$
Fair
Value
1,704.0 $
100 Basis-Point
Increase in
Market Interest
Rate
1,634.3
146.2 $
149.7 $
146.8 $
178.2 $
181.6 $
177.2
The sensitivity to changes in interest rates of the Company’s fixed-rate debt was determined using a valuation model based
upon factors that measure the net present value of such obligations that arise from the hypothetical estimate as discussed above.
A 100 basis-point increase in short-term market interest rates on variable-rate debt at December 31, 2021, would result in an
increase in interest expense of approximately $1.0 million for the Company and $0.4 million representing the Company’s
proportionate share of the joint ventures’ interest expense relating to variable-rate debt outstanding for the 12-month period
ended December 31, 2021. The estimated increase in interest expense for the year does not give effect to possible changes in the
daily balance of the Company’s or joint ventures’ outstanding variable-rate debt or to refinancing fixed-rate debt at maturity at
higher interest rates.
The Company and its joint ventures intend to continually monitor and actively manage interest costs on their variable-rate
debt portfolio and may enter into swap positions based on market fluctuations. In addition, the Company believes it has the
ability to obtain funds through additional equity and/or debt offerings and joint venture capital. Accordingly, the cost of
obtaining such protection agreements versus the Company’s access to capital markets will continue to be evaluated. The
Company has not entered, and does not plan to enter, into any derivative financial instruments for trading or speculative
purposes. As of December 31, 2021, the Company had no other material exposure to market risk.
56
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is included in a separate section at the end of this Annual Report on Form 10-K beginning on
page F-1 and is incorporated herein by reference thereto.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
Item 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Company’s management, with the participation of the Chief Executive Officer (“CEO”) and Chief Financial Officer
(“CFO”), conducted an evaluation, pursuant to Exchange Act Rules 13a-15(b) and 15d-15(b), of the effectiveness of our
disclosure controls and procedures. Based on their evaluation as required, the CEO and CFO have concluded that the Company’s
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) were effective as of
December 31, 2021, to ensure that information required to be disclosed by the Company in reports that it files or submits under
the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and
were effective as of December 31, 2021, to ensure that information required to be disclosed by the Company in reports that it
files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its CEO
and CFO, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial
reporting as defined in Exchange Act Rule 13a-15(f) or 15d-15(f). Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. Management assessed the effectiveness of its internal control over financial
reporting based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control—Integrated Framework (2013). Based on those criteria, management concluded that the Company’s internal
control over financial reporting was effective as of December 31, 2021.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2021, has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm as stated in their report which appears herein and
is incorporated in this Item 9A. by reference thereto.
Changes in Internal Control over Financial Reporting
During the three months ended December 31, 2021, there were no changes in the Company’s internal control over financial
reporting that materially affected or are reasonably likely to materially affect the Company’s internal control over financial
reporting.
Item 9B. OTHER INFORMATION
None.
Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
57
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The Company’s Board of Directors has adopted the following corporate governance documents:
PART III
• Corporate Governance Guidelines that guide the Board of Directors in the performance of its responsibilities to serve the best interests of the
Company and its shareholders;
• Written charters of the Audit Committee, Compensation Committee and Nominating and ESG Committee;
• Code of Ethics for Senior Financial Officers that applies to the Company’s senior financial officers, including the president, chief executive
officer, chief financial officer, chief accounting officer, controllers, treasurer and chief internal auditor among others designated by the Company,
if any (amendments to, or waivers from, the Code of Ethics for Senior Financial Officers will be disclosed on the Company’s website) and
• Code of Business Conduct and Ethics that governs the actions and working relationships of the Company’s employees, officers and directors with
current and potential customers, consumers, fellow employees, competitors, government and self-regulatory agencies, investors, the public, the
media and anyone else with whom the Company has or may have contact.
Copies of the Company’s corporate governance documents are available on the Company’s website, www.sitecenters.com, under “Investor Relations
—Corporate Governance.”
Certain other information required by this Item 10 is incorporated herein by reference to the information under the headings “Proposal One: Election
of Seven Directors—Director Nominees for Election at the Annual Meeting” and “Board Governance” contained in the Company’s Proxy Statement for the
Company’s 2022 annual meeting of shareholders to be filed with the SEC pursuant to Regulation 14A (“2022 Proxy Statement”), and the information under
the heading “Information About the Company’s Executive Officers” in Part I of this Annual Report on Form 10‑K.
Item 11. EXECUTIVE COMPENSATION
Information required by this Item 11 is incorporated herein by reference to the information under the headings “Board Governance—Compensation of
Directors,” “Executive Compensation Tables and Related Disclosure,” “Compensation Discussion and Analysis” and “Proposal Two: Approval, on an
Advisory Basis, of the Compensation of the Company’s Named Executive Officers—Compensation Committee Report” and “—Compensation Committee
Interlocks and Insider Participation” contained in the 2022 Proxy Statement.
58
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
Certain information required by this Item 12 is incorporated herein by reference to the “Board Governance—Security Ownership of Directors and
Management” and “Corporate Governance and Other Matters—Security Ownership of Certain Beneficial Owners” sections of the 2022 Proxy
Statement. The following table sets forth the number of securities issued and outstanding under the Company’s existing stock compensation plans, as of
December 31, 2021, as well as the weighted-average exercise price of outstanding options.
EQUITY COMPENSATION PLAN INFORMATION
Plan category
Equity compensation plans approved by security
holders(1)
Equity compensation plans not approved by security
holders
Total
(a)
(b)
Number of Securities
to Be Issued upon
Exercise of
Outstanding
Options, Warrants
and Rights
Weighted-Average
Exercise Price of
Outstanding
Options, Warrants
and Rights
(c)
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(excluding securities
reflected in column (a))
2,591,812 (2) $
26.96 (3)
1,781,922 (4)
—
2,591,812
$
—
26.96
—
1,781,922
(1)
(2)
(3)
(4)
Includes the Company’s 2002 Equity-Based Award Plan, 2004 Equity-Based Award Plan, 2008 Equity-Based Award Plan, 2012 Equity and Incentive Compensation Plan and 2019 Equity
and Incentive Compensation Plan.
Includes 273,545 stock options outstanding, 877,590 restricted stock units that are expected to be settled in shares upon vesting and 1,440,677 performance awards assuming maximum
payout (as a result, this aggregate reported number may overstate actual dilution).
Restricted stock units and performance awards are not taken into account in the weighted-average exercise price as such awards have no exercise price.
All of these shares may be issued with respect to award vehicles other than just stock options or share appreciation rights or other rights to acquire shares.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information required by this Item 13 is incorporated herein by reference to the “Proposal One: Election of Seven Directors—
Transactions with the Otto Family” and “Proposal One: Election of Seven Directors—Independent Directors” and “Corporate
Governance and Other Matters—Policy Regarding Related-Party Transactions” sections of the Company’s 2022 Proxy Statement.
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Incorporated herein by reference to the “Proposal Three: Ratification of PricewaterhouseCoopers LLP as the Company’s
Independent Registered Public Accounting Firm—Fees Paid to PricewaterhouseCoopers LLP” section of the Company’s 2022
Proxy Statement.
59
Item 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
a) 1. Financial Statements
PART IV
The following documents are filed as part of this report:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income
Consolidated Statements of Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
2. Financial Statement Schedules
The following financial statement schedules are filed herewith as part of this Annual Report on Form 10-K and should be
read in conjunction with the consolidated financial statements of the registrant:
Schedule
II — Valuation and Qualifying Accounts and Reserves
III — Real Estate and Accumulated Depreciation
IV — Mortgage Loans on Real Estate
Schedules not listed above have been omitted because they are not applicable or because the information required to be set
forth therein is included in the Company’s consolidated financial statements or notes thereto.
Financial statements of the Company’s unconsolidated joint venture companies have been omitted because they do not meet
the significant subsidiary definition of Rule 1-02(w) of Regulation S-X.
Exhibits — The following exhibits are filed as part of, or incorporated by reference into, this report:
Form
10-K
Exhibit
No.
2.1
3.1
3.2
4.1
4.2
4.3
4.4
4.5
Description
Filed or Furnished
Herewith or Incorporated
Herein by Reference
Separation and Distribution Agreement, dated July 1, 2018, by and
between DDR Corp. and Retail Value Inc.
Current Report on Form 8-K (Filed with the SEC on July 3,
2018; File No. 001-11690)
Fourth Amended and Restated Articles of Incorporation
Amended and Restated Code of Regulations
Specimen Certificate for Common Shares
Specimen Certificate for 6.375% Class A Cumulative Redeemable
Preferred Shares
Deposit Agreement, dated as of June 5, 2017, among the Company,
Computershare Inc. and its wholly owned subsidiary, Computershare
Trust Company, N.A., jointly as Depositary, and all holders from time
to time of depositary shares
Indenture, dated as of May 1, 1994, by and between the Company and
The Bank of New York (as successor to JP Morgan Chase Bank, N.A.,
successor to Chemical Bank), as Trustee
Indenture, dated as of May 1, 1994, by and between the Company and
U.S. Bank National Association (as successor to U.S. Bank Trust
National Association (as successor to National City Bank)), as Trustee
60
Quarterly Report on Form 10-Q (Filed with the SEC on
November 2, 2018; File No. 001-11690)
Quarterly Report on Form 10-Q (Filed with the SEC on
November 2, 2018; File No. 001-11690)
Annual Report on Form 10-K (Filed with the SEC on
February 28, 2012; File No. 001-11690)
Registration Statement on Form 8-A (Filed with the SEC
on June 2, 2017; File No. 001-11690)
Current Report on Form 8-K (Filed with the SEC on June
5, 2017; File No. 001-11690)
Form S-3 Registration No. 333-108361 (Filed with the SEC
on August 29, 2003)
Form S-3 Registration No. 333-108361 (Filed with the SEC
on August 29, 2003)
Form
10-K
Exhibit
No.
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.15
4.16
Description
First Supplemental Indenture, dated as of May 10, 1995, by and
between the Company and U.S. Bank National Association (as
successor to U.S. Bank Trust National Association (successor to
National City Bank)), as Trustee
Second Supplemental Indenture, dated as of July 18, 2003, by and
between the Company and U.S. Bank National Association (as
successor to U.S. Bank Trust National Association (successor to
National City Bank)), as Trustee
Third Supplemental Indenture, dated as of January 23, 2004, by and
between the Company and U.S. Bank National Association (as
successor to U.S. Bank Trust National Association (successor to
National City Bank)), as Trustee
Fourth Supplemental Indenture, dated as of April 22, 2004, by and
between the Company and U.S. Bank National Association (as
successor to U.S. Bank Trust National Association (successor to
National City Bank)), as Trustee
Fifth Supplemental Indenture, dated as of April 28, 2005, by and
between the Company and U.S. Bank National Association (as
successor to U.S. Bank Trust National Association (successor to
National City Bank)), as Trustee
Sixth Supplemental Indenture, dated as of October 7, 2005, by and
between the Company and U.S. Bank National Association (as
successor to U.S. Bank Trust National Association (successor to
National City Bank)), as Trustee
Seventh Supplemental Indenture, dated as of August 28, 2006, by and
between the Company and U.S. Bank National Association (as
successor to U.S. Bank Trust National Association (successor to
National City Bank)), as Trustee
Eighth Supplemental Indenture, dated as of March 13, 2007, by and
between the Company and U.S. Bank National Association (as
successor to U.S. Bank Trust National Association (successor to
National City Bank)), as Trustee
Ninth Supplemental Indenture, dated as of September 30, 2009, by and
between the Company and U.S. Bank National, Association (as
successor to U.S. Bank Trust National Association (successor to
National City Bank)), as Trustee
Tenth Supplemental Indenture, dated as of March 19, 2010, by and
between the Company and U.S. Bank National, Association (as
successor to U.S. Bank Trust National Association (successor to
National City Bank)), as Trustee
Eleventh Supplemental Indenture, dated as of August 12, 2010, by and
between the Company and U.S. Bank National, Association (as
successor to U.S. Bank Trust National Association (successor to
National City Bank)), as Trustee
61
Filed or Furnished
Herewith or Incorporated
Herein by Reference
Form S-3 Registration No. 333-108361 (Filed with the SEC
on August 29, 2003)
Form S-3 Registration No. 333-108361 (Filed with the SEC
on August 29, 2003)
Form S-4 Registration No. 333-117034 (Filed with the SEC
on June 30, 2004)
Form S-4 Registration No. 333-117034 (Filed with the SEC
on June 30, 2004)
Annual Report on Form 10-K (Filed with the SEC on
February 21, 2007; File No. 001-11690)
Annual Report on Form 10-K (Filed with the SEC on
February 21, 2007; File No. 001-11690)
Current Report on Form 8-K (Filed with the SEC on
September 1, 2006; File No. 001-11690)
Current Report on Form 8-K (Filed with the SEC on March
16, 2007; File No. 001-11690)
Form S-3 Registration No. 333-162451 (Filed on October
13, 2009)
Quarterly Report on Form 10-Q (Filed with the SEC on
May 7, 2010; File No. 001-11690)
Quarterly Report on Form 10-Q (Filed with the SEC on
November 8, 2010; File No. 001-11690)
Form
10-K
Exhibit
No.
4.17
4.18
4.19
4.20
4.21
4.22
4.23
4.24
4.25
4.26
4.27
4.28
Description
Twelfth Supplemental Indenture, dated as of November 5, 2010, by and
between the Company and U.S. Bank National, Association (as
successor to U.S. Bank Trust National Association (successor to
National City Bank)), as Trustee
Thirteenth Supplemental Indenture, dated as of March 7, 2011, by and
between the Company and U.S. Bank National Association (as
successor to U.S. Bank Trust National Association (successor to
National City Bank)), as Trustee
Fourteenth Supplemental Indenture, dated as of June 22, 2012, by and
between the Company and U.S. Bank National Association (as
successor to U.S. Bank Trust National Association (successor to
National City Bank)), as Trustee
Fifteenth Supplemental Indenture, dated as of November 27, 2012, by
and between the Company and U.S. Bank National Association (as
successor to U.S. Bank Trust National Association (successor to
National City Bank)), as Trustee
Sixteenth Supplemental Indenture, dated as of May 23, 2013, by and
between the Company and U.S. Bank National Association (as
successor to U.S. Bank Trust National Association (successor to
National City Bank)), as Trustee
Seventeenth Supplemental Indenture, dated as of November 26, 2013,
by and between the Company and U.S. Bank National Association (as
successor to U.S. Bank Trust National Association (successor to
National City Bank)), as Trustee
Eighteenth Supplemental Indenture, dated as of January 22, 2015, by
and between the Company and U.S. Bank National Association (as
successor to U.S. Bank Trust National Association (as successor to
National City Bank))
Nineteenth Supplemental Indenture, dated as of October 21, 2015, by
and between the Company and U.S. Bank National Association (as
successor to U.S. Bank Trust National Association (as successor to
National City Bank))
Twentieth Supplemental Indenture, dated as of May 26, 2017, by and
between the Company and U.S. Bank National Association (as
successor to U.S. Bank Trust National Association (as successor to
National City Bank))
Twenty-first Supplemental Indenture, dated as of August 16, 2017, by
and between the Company and U.S. Bank National Association (as
successor to U.S. Bank Trust National Association (as successor to
National City Bank))
Twenty-second Supplemental Indenture, dated as of February 16, 2018,
by and between the Company and U.S. Bank National Association (as
successor to U.S. Bank Trust National Association (as successor to
National City Bank))
Third Amended and Restated Credit Agreement, dated as of July 26,
2019, among SITE Centers Corp., the lenders party thereto and
JPMorgan Chase Bank, N.A., as administrative agent
62
Filed or Furnished
Herewith or Incorporated
Herein by Reference
Annual Report on Form 10-K (Filed with the SEC on
February 28, 2011; File No. 001-11690)
Quarterly Report on Form 10-Q (Filed with the SEC on
May 9, 2011; File No. 001-11690)
Form S-3 Registration No. 333-184221 (Filed with the SEC
on October 1, 2012)
Annual Report on Form 10-K (Filed with the SEC on
March 1, 2013; File No. 001-11690)
Quarterly Report on Form 10-Q (Filed with the SEC on
August 8, 2013; File No. 001-11690)
Annual Report on Form 10-K (Filed with the SEC on
February 28, 2014; File No. 001-11690)
Current Report on Form 8-K (Filed with the SEC on
January 22, 2015; File No. 001-11690)
Current Report on Form 8-K (Filed with the SEC on
October 21, 2015; File No. 001-11690)
Current Report on Form 8-K (Filed with the SEC on May
26, 2017; File No. 001-11690)
Current Report on Form 8-K (Filed with the SEC on
August 16, 2017; File No. 001-11690)
Quarterly Report on Form 10-Q (Filed with the SEC on
May 4, 2018; File No. 001-11690)
Current Report on Form 8-K (Filed with the SEC on July
29, 2019; File No. 001-11690)
Form
10-K
Exhibit
No.
4.29
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
Description
Description of Securities Registered Under Section 12 of the Securities
Exchange Act of 1934
2005 Directors’ Deferred Compensation Plan (May 9, 2019
Restatement)*
Elective Deferred Compensation Plan (May 9, 2019 Restatement)*
Adoption Agreement Elective Deferred Compensation Plan (May 9,
2019 Restatement)*
2005 Equity Deferred Compensation Plan (May 9, 2019 Restatement)*
2012 Equity and Incentive Compensation Plan*
2019 Equity and Incentive Compensation Plan*
Form of 2019 Plan Restricted Share Units Award Memorandum
(governing grants made through February 2021)*
Form of 2019 Plan Restricted Share Units Award Memorandum
(governing November 2019 grant made to the CFO)*
Form of 2019 Plan Restricted Share Units Award Memorandum
(governing certain grants made in 2020, 2021 and 2022)*
Form of 2012 Plan Performance-Based Restricted Share Units Award
Memorandum (governing grants made in 2018 and 2019)*
Form of 2019 Plan Performance-Based Restricted Share Units Award
Memorandum (governing grants made in 2020)*
Form of 2019 Plan Performance-Based Restricted Share Units Award
Memorandum (governing grants made in 2021)*
Form of Non-Qualified Stock Option Agreement*
Form of Incentive Stock Option Agreement*
Form of Stock Option Award Memorandum*
Employment Agreement, dated as of September 11, 2020, by and
between DDR Corp. and David R. Lukes*
Amended and Restated Employment Agreement, dated as of February
17, 2021, by and between SITE Centers Corp. and Conor Fennerty*
Employment Agreement, dated as of September 11, 2021, by and
between SITE Centers Corp. and Christa A. Vesy*
Employment Agreement, dated as of May 11, 2021, by and between
SITE Centers Corp. and John Cattonar*
Form of Indemnification Agreement*
Investors’ Rights Agreement, dated as of May 11, 2009, by and between
the Company and Alexander Otto
Waiver Agreement, dated as of May 11, 2009, by and between the
Company and Alexander Otto
63
Filed or Furnished
Herewith or Incorporated
Herein by Reference
Submitted electronically herewith
Quarterly Report on 10-Q (Filed with the SEC on August 5,
2019; File No. 001-11690)
Quarterly Report on Form 10-Q (Filed with the SEC on
August 5, 2019; File No. 001-11690)
Quarterly Report on Form 10-Q (Filed with the SEC on
August 5, 2019; File No. 001-11690)
Quarterly Report on Form 10-Q (Filed with the SEC on
August 5, 2019; File No. 001-11690)
Form S-8 Registration No. 333-181422 (Filed with the SEC
on May 15, 2012)
Form S-8 Registration No. 333-231319 (Filed with the SEC
on May 9, 2019)
Quarterly Report on 10-Q (Filed with the SEC on August 5,
2019; File No. 001-11690)
Annual Report on Form 10-K (Filed with the SEC on
February 27, 2020; File No. 001-11690)
Quarterly Report on Form 10-Q (Filed with the SEC
October 30, 2020; File No. 001-11690)
Quarterly Report on Form 10-Q (Filed with the SEC on
May 4, 2018; File No. 001-11690)
Quarterly Report on Form 10-Q (Filed with the SEC on
August 5, 2019; File No. 001-11690)
Quarterly Report on Form 10-Q (Filed with the SEC on
April 29, 2021, File No. 001-11690)
Quarterly Report on Form 10-Q (Filed with the SEC May
10, 2013; File No. 001-11690)
Quarterly Report on Form 10-Q (Filed with the SEC May
10, 2013; File No. 001-11690)
Quarterly Report on Form 10-Q (Filed with the SEC May
4, 2016; File No. 001-11690)
Current Report on Form 8-K (Filed with the SEC on
September 15, 2020; File No. 001-11690)
Current Report on Form 8-K (Filed with the SEC on
February 19, 2021, File No. 001-11690)
Current Report on form 8-K (Filed with the SEC on
September 13, 2021, File No. 001-11690)
Quarterly Report on Form 10-Q (Filed with the SEC on
July 29, 2021, File No. 001-11690)
Current Report on Form 8-K (Filed with the SEC on
November 13, 2017; File No. 001-11690)
Current Report on Form 8-K (Filed with the SEC on May
11, 2009; File No. 001-11690)
Current Report on Form 8-K (Filed with the SEC on May
11, 2009; File No. 001-11690)
Form
10-K
Exhibit
No.
21.1
23.1
31.1
31.2
32.1
32.2
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104
Description
List of Subsidiaries
Consent of PricewaterhouseCoopers LLP
Certification of principal executive officer pursuant to Rule 13a-14(a)
of the Securities Exchange Act of 1934
Certification of principal financial officer pursuant to Rule 13a-14(a) of
the Securities Exchange Act of 1934
Certification of chief executive officer pursuant to Rule 13a-14(b) of
the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350
Certification of chief financial officer pursuant to Rule 13a-14(b) of the
Securities Exchange Act of 1934 and 18 U.S.C. Section 1350
Inline XBRL Instance Document – the instance document does not
appear in the Interactive Data File because its XBRL tags are embedded
within the Inline XBRL document.
Inline XBRL Taxonomy Extension Schema Document
Inline XBRL Taxonomy Extension Calculation Linkbase Document
Inline XBRL Taxonomy Extension Definition Linkbase Document
Inline XBRL Taxonomy Extension Label Linkbase Document
Inline XBRL Taxonomy Extension Presentation Linkbase Document
The cover page from the Company’s Annual Report on Form 10-K for
the year ended December 31, 2021 has been formatted in Inline XBRL.
Filed or Furnished
Herewith or Incorporated
Herein by Reference
Submitted electronically herewith
Submitted electronically herewith
Submitted electronically herewith
Submitted electronically herewith
Submitted electronically herewith
Submitted electronically herewith
Submitted electronically herewith
Submitted electronically herewith
Submitted electronically herewith
Submitted electronically herewith
Submitted electronically herewith
Submitted electronically herewith
Submitted electronically herewith
* Management contracts and compensatory plans or arrangements required to be filed as an exhibit pursuant to Item 15(b) of Form 10-K.
Item 16. FORM 10-K SUMMARY
None.
64
SITE Centers Corp.
INDEX TO FINANCIAL STATEMENTS
Financial Statements:
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 238)
Consolidated Balance Sheets at December 31, 2021 and 2020
Consolidated Statements of Operations for the three years ended December 31, 2021
Consolidated Statements of Comprehensive Income for the three years ended December 31, 2021
Consolidated Statements of Equity for the three years ended December 31, 2021
Consolidated Statements of Cash Flows for the three years ended December 31, 2021
Notes to Consolidated Financial Statements
Financial Statement Schedules:
II — Valuation and Qualifying Accounts and Reserves for the three years ended December 31, 2021
III — Real Estate and Accumulated Depreciation at December 31, 2021
IV — Mortgage Loans on Real Estate at December 31, 2021
Page
F-2
F-5
F-6
F-7
F-8
F-9
F-10
F-36
F-37
F-41
All other schedules are omitted because they are not applicable, or the required information is shown in the consolidated financial statements or
notes thereto.
Financial statements of the Company’s unconsolidated joint venture companies have been omitted because they do not
meet the significant subsidiary definition of S-X 210.1-02(w).
F-1
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of SITE Centers Corp.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of SITE Centers Corp. and its subsidiaries (the “Company”) as of December 31, 2021 and
2020, and the related consolidated statements of operations, of comprehensive income, of equity and of cash flows for each of the three years in the period
ended December 31, 2021, including the related notes and financial statement schedules listed in the accompanying index (collectively referred to as the
“consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on
criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of
December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in
conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting,
and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial
Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's
internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective
internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing
such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control
over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely
F-2
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were
communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated
financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not
alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below,
providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Valuation and Related Purchase Price Allocations of Properties Acquired from an Unconsolidated Joint Venture
As described in Notes 1, 3 and 5 to the consolidated financial statements, as of December 31, 2021, the Company holds a 20% equity interest in the DDRM
Properties Joint Venture with Madison International Realty. In December 2021, the Company acquired the 80% equity interest in six properties owned by
the DDRM Properties Joint Venture for $107.2 million and stepped up the previous 20% interest due to a change in control, resulting in recognition of a
$7.2 million gain on sale and change in control of interests and recognition of the aggregate gross fair value (at 100%) of the properties acquired of $134.0
million. Management used a discounted cash flow analysis to estimate the fair value for each property. The discounted cash flow analyses used to estimate
the fair value of the properties acquired involves significant estimates and assumptions, including discount rates, exit capitalization rates and certain market
leasing assumptions. Property fair values were then further allocated to the property level tangible assets and liabilities acquired, consisting of land,
building and improvements and intangible assets and liabilities, generally including above- and below-market leases and in-place leases. As disclosed by
management, the allocation process includes various valuation methods and involves significant estimates and assumptions by management related to
discount rates, exit capitalization rates, estimated land values (per square foot), capitalization rates and certain market leasing assumptions. The fair value
of land of an acquired property considers the value of land as if the site was unimproved based on comparable market transactions. The fair value of the
building is determined as if it were vacant by applying a capitalization rate to market leasing assumptions. Above- and below-market lease values are
calculated based on the present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between contractual
rents and estimated market rents, measured over a period equal to the remaining term of the lease for above-market leases and the remaining term plus the
estimated term of any below-market, renewal options for below-market leases. The value of acquired in-place leases is recorded based on the present value
of the estimated gross monthly market rental rate for each individual lease multiplied by the estimated period of time it would take to lease the space to a
new tenant.
The principal considerations for our determination that performing procedures relating to the valuation and related purchase price allocations of properties
acquired from an unconsolidated joint venture is a critical audit matter are the significant judgment by management in determining and allocating the
aggregate gross fair value of the properties acquired to each individual property for purposes of establishing a basis for the purchase price allocations to the
individual properties acquired and subsequent allocation of the purchase price to the property level tangible and intangible assets and liabilities acquired
associated with each property; this in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating
management’s significant assumptions related to the discount rates, exit capitalization rates, and certain market leasing assumptions used to estimate the
fair value of the individual properties acquired and the discount rates, estimated land values (per square foot), capitalization rates, and certain market
leasing assumptions used to estimate the fair value of certain property level tangible and intangible assets and liabilities acquired, and the audit effort
involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated
financial statements. These procedures included testing the effectiveness of controls relating to the Company’s acquisition accounting process, including
controls over the valuation and related purchase price allocations of the properties acquired. These procedures also included, among others, (i) reading the
respective purchase and sale agreements and (ii) testing management’s process for estimating the fair value of the individual properties
F-3
acquired and estimating the fair value of certain property level tangible and intangible assets and liabilities acquired. Testing management’s process
included (i) evaluating the appropriateness of the valuation methods, (ii) testing the completeness and accuracy of data provided by management, (iii)
evaluating the reasonableness of the significant assumptions related to the discount rates, exit capitalization rates, and certain market leasing assumptions
used to estimate the fair value of the individual properties acquired and the discount rates, estimated land values (per square foot), capitalization rates, and
certain market leasing assumptions used to estimate the fair value of certain property level tangible and intangible assets and liabilities acquired, and (iv)
for certain individual properties and property level tangible and intangible assets and liabilities acquired, the involvement of professionals with specialized
skill and knowledge to assist in evaluating the reasonableness of the aforementioned significant assumptions. Evaluating the reasonableness of significant
assumptions relating to the discount rates, exit capitalization rates, estimated land values (per square foot), capitalization rates, and certain market leasing
assumptions involved considering whether the assumptions used were consistent with evidence obtained in other areas of the audit and third party market
data.
Identification and Evaluation of Impairment Indicators for Real Estate Assets
As described in Notes 1 and 6 to the consolidated financial statements, the carrying value of the Company’s total net real estate assets was $3,667.3 million
and net intangible assets was $34.4 million as of December 31, 2021. Management reviews its individual real estate assets, including undeveloped land and
construction in progress, and intangibles for potential impairment indicators whenever events or changes in circumstances indicate that the carrying value
may not be recoverable. Impairment indicators are primarily the result of a change in hold period or significant, prolonged decreases in projected cash
flows. For assets with impairment indicators, management determines if the undiscounted future cash flows are sufficient to recover the asset’s carrying
value.
The principal considerations for our determination that performing procedures relating to the identification and evaluation of impairment indicators for real
estate assets is a critical audit matter are the significant judgment by management to identify and evaluate events or changes in circumstances indicating
that the carrying value may not be recoverable, which led to a high degree of auditor judgment in evaluating audit evidence relating to management’s
identification and evaluation of impairment indicators.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated
financial statements. These procedures included testing the effectiveness of controls relating to the Company’s impairment process, including controls over
the identification and evaluation of events or changes in circumstances that indicate the carrying value may not be recoverable. These procedures also
included, among others, testing management’s process for identifying individual real estate assets with potential impairment indicators. Testing
management’s process included evaluating management’s identification and evaluation of impairment indicators.
/s/ PricewaterhouseCoopers LLP
Cleveland, Ohio
February 24, 2022
We have served as the Company’s auditor since 1992.
F-4
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
December 31,
2021
2020
Assets
Land
Buildings
Fixtures and tenant improvements
Less: Accumulated depreciation
Construction in progress and land
Total real estate assets, net
Investments in and advances to joint ventures, net
Investment in and advances to affiliate
Cash and cash equivalents
Restricted cash
Accounts receivable
Other assets, net
Liabilities and Equity
Unsecured indebtedness:
Senior notes, net
Term loan, net
Revolving credit facilities
Mortgage indebtedness, net
Total indebtedness
Accounts payable and other liabilities
Dividends payable
Total liabilities
Commitments and contingencies (Note 11)
SITE Centers Equity
Class A—6.375% cumulative redeemable preferred shares, without par value, $500 liquidation value;
750,000 shares authorized; 350,000 shares issued and outstanding at December 31, 2021 and
December 31, 2020
Class K—6.25% cumulative redeemable preferred shares, without par value, $500 liquidation value;
750,000 shares authorized; 300,000 shares issued and outstanding at December 31, 2020
Common shares, with par value, $0.10 stated value; 300,000,000 shares authorized; 211,286,874 and
193,995,499 shares issued at December 31, 2021 and December 31, 2020, respectively
Additional paid-in capital
Accumulated distributions in excess of net income
Deferred compensation obligation
Accumulated other comprehensive loss
Less: Common shares in treasury at cost: 287,645 and 898,267 shares at December 31, 2021 and
December 31, 2020, respectively
Total SITE Centers shareholders' equity
Non-controlling interests
Total equity
$
$
$
$
1,011,401 $
3,624,164
556,056
5,191,621
(1,571,569)
3,620,052
47,260
3,667,312
64,626
—
41,807
1,445
61,382
130,479
3,967,051 $
1,451,768 $
99,810
—
1,551,578
125,799
1,677,377
218,779
28,243
1,924,399
175,000
—
21,129
5,934,166
(4,092,783)
4,695
—
(5,349)
2,036,858
5,794
2,042,652
3,967,051 $
953,556
3,488,499
509,866
4,951,921
(1,427,057)
3,524,864
37,467
3,562,331
77,297
190,035
69,742
4,672
73,517
130,690
4,108,284
1,449,613
99,635
135,000
1,684,248
249,260
1,933,508
215,109
14,844
2,163,461
175,000
150,000
19,400
5,705,164
(4,099,534)
5,479
(2,682)
(11,319)
1,941,508
3,315
1,944,823
4,108,284
The accompanying notes are an integral part of these consolidated financial statements.
F-5
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
For the Year Ended December 31,
2021
2020
2019
Revenues from operations:
Rental income
Fee and other income
Business interruption income
Rental operation expenses:
Operating and maintenance
Real estate taxes
Impairment charges
General and administrative
Depreciation and amortization
Other income (expense):
Interest income
Interest expense
Other (expense) income, net
Income before earnings from equity method investments and other items
Equity in net income of joint ventures
Reserve of preferred equity interests, net
Gain on sale and change in control of interests, net
Gain on disposition of real estate, net
Income before tax expense
Tax expense of taxable REIT subsidiaries and state franchise and income taxes
Net income
Income attributable to non-controlling interests, net
Net income attributable to SITE Centers
Write-off of preferred share original issuance costs
Preferred dividends
Net income attributable to common shareholders
Per share data:
Basic
Diluted
$ 490,799 $ 414,864 $ 443,421
63,682
885
507,988
45,469
—
460,333
42,065
—
532,864
76,716
76,071
7,270
55,052
185,768
400,877
68,801
69,601
5,200
52,881
170,669
367,152
71,355
68,308
3,370
58,384
165,087
366,504
—
(76,383)
(1,185)
(77,568)
54,419
47,297
—
19,185
6,065
126,966
(1,550)
$ 125,416 $
(481)
$ 124,935 $
(5,156)
(13,656)
$ 106,123 $
18,009
11,888
(84,721)
(77,604)
357
(18,400)
(66,355)
(84,116)
75,129
9,065
11,519
1,516
(15,544)
(19,393)
—
45,464
31,380
1,069
102,484
37,721
(1,131)
(659)
36,590 $ 101,825
(869)
(1,126)
35,721 $ 100,699
—
(20,531)
15,190 $
(7,176)
(32,231)
61,292
$
$
0.51 $
0.51 $
0.08 $
0.08 $
0.33
0.33
The accompanying notes are an integral part of these consolidated financial statements.
F-6
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Net income
Other comprehensive income:
Foreign currency translation, net
Reclassification adjustment for foreign currency
translation included in net income
Change in cash flow hedges reclassed to earnings
Total other comprehensive income (loss)
Comprehensive income
Total comprehensive income attributable to
non-controlling interests
Total comprehensive income attributable to SITE Centers
2021
For the Year Ended December 31,
2020
2019
125,416 $
36,590 $
101,825
(1)
(3,363)
2,683
—
2,682
128,098 $
(481)
127,617 $
—
1,172
(2,191)
34,399 $
(869)
33,530 $
421
—
469
890
102,715
(1,126)
101,589
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
F-7
Balance, December 31, 2018
Issuance of common shares
related to stock plans
Issuance of common shares
for cash offering
Repurchase of common shares
Redemption of preferred
shares
Stock-based compensation, net
Distributions to
non-controlling interests
Dividends declared-
common shares
Dividends declared-
preferred shares
Comprehensive income
Balance, December 31, 2019
Issuance of common shares
related to stock plans
Repurchase of common shares
Stock-based compensation, net
Distributions to
non-controlling interests
Dividends declared-
common shares
Dividends declared-
preferred shares
Comprehensive income (loss)
Balance, December 31, 2020
Issuance of common shares
related to stock plans
Issuance of common shares
for cash offering
Redemption of preferred
shares
Stock-based compensation, net
Distributions to
non-controlling interests
Acquisition of
non-controlling interest
Dividends declared-
common shares
Dividends declared-
preferred shares
Comprehensive income
Balance, December 31, 2021
CONSOLIDATED STATEMENTS OF EQUITY
(In thousands)
Common Shares
SITE Centers Equity
Preferred
Shares
$ 525,000
Shares
184,712
Amounts
18,471
$
Additional
Paid-in
Capital
$ 5,544,220
Accumulated
Distributions
in Excess of
Net Income
$ (3,980,151) $
Deferred
Compensation
Obligation
8,193
Accumulated
Other
Comprehensive
Loss
$
(1,381) $
Treasury
Stock at
Cost
(44,278) $
Non-
Controlling
Interests
2,928
Total
$ 2,073,002
—
—
—
(200,000)
—
—
—
30
9,081
—
—
—
—
—
3
908
—
—
—
—
—
145
145,048
—
7,145
3,842
—
—
—
—
325,000
—
—
193,823
—
—
19,382
—
—
5,700,400
—
—
—
—
—
172
—
—
—
—
18
—
—
—
—
(108)
—
4,872
—
—
—
—
—
(7,176)
—
—
(147,674)
(31,797)
100,699
(4,066,099)
—
—
—
—
(48,625)
—
—
325,000
—
—
193,995
—
—
19,400
—
—
5,705,164
(20,531)
35,721
(4,099,534)
—
—
331
33
230
16,961
1,696
219,355
—
—
—
—
—
—
(264)
—
—
—
—
7,929
—
—
(2,450)
—
—
—
—
5,479
—
—
(150,000)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
5,137
13,489
—
(9,209)
—
—
—
(99,711)
(5,156)
—
—
(784)
—
—
—
—
—
—
—
—
—
—
—
890
(491)
—
—
—
—
—
—
(2,191)
(2,682)
—
—
—
—
—
—
—
1,926
48,714
(14,069)
—
—
—
—
—
(7,707)
3,888
(7,500)
—
—
—
—
—
(11,319)
—
3,923
—
2,047
—
—
—
—
—
—
—
—
2,074
194,670
(14,069)
(200,031)
3,578
(990)
(990)
—
(147,674)
—
1,126
3,064
(31,797)
102,715
1,981,478
—
—
—
3,798
(7,500)
2,422
(618)
(618)
—
(48,625)
—
869
3,315
(20,531)
34,399
1,944,823
—
—
—
—
263
224,974
(150,019)
14,752
(67)
(67)
2,065
(7,144)
—
(99,711)
—
—
$ 175,000
—
—
211,287
$
—
—
21,129
—
—
$ 5,934,166
(13,317)
124,935
$ (4,092,783) $
—
—
4,695
$
—
2,682
—
$
—
—
(5,349) $
—
481
5,794
(13,317)
128,098
$ 2,042,652
The accompanying notes are an integral part of these consolidated financial statements.
F-8
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Cash flow from operating activities:
Net income
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation and amortization
Stock-based compensation
Amortization and write-off of debt issuance costs and fair market value of debt adjustments
Loss on debt extinguishment
Equity in net income of joint ventures
Reserve of preferred equity interests, net
Operating cash distributions from joint ventures
Gain on sale and change in control of interests, net
Gain on disposition of real estate, net
Impairment charges
Assumption of buildings due to ground lease terminations
Change in notes receivable accrued interest
Net change in accounts receivable
Net change in accounts payable and accrued expenses
Net change in other operating assets and liabilities
Total adjustments
Net cash flow provided by operating activities
Cash flow from investing activities:
Real estate acquired, net of liabilities and cash assumed
Real estate developed and improvements to operating real estate
Proceeds from disposition of real estate
Proceeds from sale of joint venture interests
Proceeds from distribution of preferred investment
Equity contributions to joint ventures
Distributions from unconsolidated joint ventures
Repayment of joint venture advances, net
Repayment of notes receivable
Net transactions with RVI
Net cash flow provided by (used for) investing activities
Cash flow from financing activities:
(Repayment of) proceeds from revolving credit facilities, net
Repayment of senior notes, including repayment costs
Repayment of term loan and mortgage debt
Payment of debt issuance costs
Proceeds from mortgage payable and term loan
Redemption of preferred shares
Proceeds from issuance of common shares, net of offering expenses
Repurchase of common shares in conjunction with equity award plans and dividend
reinvestment plan
Repurchase of common shares
Acquisition of non-controlling interest
Distributions to non-controlling interests and redeemable operating partnership units
Dividends paid
Net cash flow used for financing activities
Effect of foreign exchange rate changes on cash and cash equivalents
Net increase in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash, beginning of year
Cash, cash equivalents and restricted cash, end of year
For the Year Ended December 31,
2020
2019
2021
$
125,416
$
36,590
$
101,825
185,768
13,533
4,312
—
(47,297)
—
5,103
(19,185)
(6,065)
7,270
—
—
15,873
(2,986)
773
157,099
282,515
(130,570)
(76,563)
29,696
—
190,000
(4,599)
65,558
929
—
—
74,451
(135,000)
—
(215,285)
—
—
(150,019)
224,974
(6,056)
—
(7,144)
(56)
(99,541)
(388,127)
170,669
8,800
4,601
16,568
(1,516)
19,393
3,258
(45,464)
(1,069)
5,200
(3,025)
4,128
(11,654)
(7,749)
(8,560)
153,580
190,170
—
(63,816)
1,553
140,441
—
(1,068)
17,868
—
7,500
—
102,478
130,000
(216,568)
(41,881)
—
—
—
—
(2,425)
(7,500)
—
(641)
(98,348)
(237,363)
(1)
(31,161)
74,414
43,252
$
(4)
55,285
19,133
74,414
$
$
165,087
9,890
3,976
—
(11,519)
15,544
12,168
—
(31,380)
3,370
—
1,348
4,361
(4,771)
255
168,329
270,154
(75,623)
(109,364)
109,509
—
—
(64,237)
22,339
62,246
11,139
33,596
(10,395)
(95,000)
—
(2,372)
(4,998)
50,000
(200,031)
194,598
(718)
(14,069)
—
(990)
(180,698)
(254,278)
2
5,481
13,650
19,133
The accompanying notes are an integral part of these consolidated financial statements.
F-9
Notes to Consolidated Financial Statements
1.
Summary of Significant Accounting Policies
Nature of Business
SITE Centers Corp. and its related consolidated real estate subsidiaries (collectively, the “Company” or “SITE Centers”) and unconsolidated joint
ventures are primarily engaged in the business of acquiring, owning, developing, redeveloping, leasing, and managing shopping centers. Unless otherwise
provided, references herein to the Company or SITE Centers include SITE Centers Corp. and its wholly-owned subsidiaries. The Company’s tenant base
primarily includes national and regional retail chains and local tenants. Consequently, the Company’s credit risk is concentrated in the retail industry.
Amounts relating to the number of properties, joint ventures’ interests and acreage are unaudited.
Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported
amounts of revenues and expenses during the year. The Company considered impacts to its estimates related to COVID-19, as appropriate, within its
consolidated financial statements, and there may be changes to those estimates in future periods. The Company believes that its accounting estimates are
appropriate after giving consideration to the uncertainties surrounding the severity and duration of the COVID-19 pandemic. Actual results could differ
from those estimates.
Principles of Consolidation
The consolidated financial statements include the results of the Company and all entities in which the Company has a controlling interest or has
been determined to be the primary beneficiary of a variable interest entity (“VIE”). All significant inter-company balances and transactions have been
eliminated in consolidation. Investments in real estate joint ventures in which the Company has the ability to exercise significant influence, but does not
have financial or operating control, are accounted for using the equity method of accounting. Accordingly, the Company’s share of the earnings (or loss) of
these joint ventures is included in consolidated net income (loss).
Statements of Cash Flows and Supplemental Disclosure of Non-Cash Investing and Financing Information
Non-cash investing and financing activities are summarized as follows (in millions):
Consolidation of the net assets (excluding mortgages as disclosed
below) of previously unconsolidated joint ventures
Acquisition of non-controlling interest
Joint venture investments related to consolidation of net assets
Mortgages assumed, of previously unconsolidated joint ventures
Mortgages assumed, shopping center acquisitions
Accounts payable related to construction in progress
Tax receivable
Assumption of buildings due to ground lease terminations
Dividends declared, but not paid
Write-off of preferred share original issuance costs
Real Estate
2021
For the Year Ended December 31,
2020
2019
$
132.3 $
2.1
11.6
73.9
17.9
13.4
2.1
—
28.2
5.1
272.6 $
—
86.4
196.6
—
6.3
—
3.0
14.8
—
—
—
—
—
9.1
11.0
—
—
44.0
7.2
Real estate assets, which include construction in progress and undeveloped land, are stated at cost less accumulated depreciation. Depreciation and
amortization is recorded on a straight-line basis over the estimated useful lives of the assets as follows:
Buildings
Building improvements and fixtures
Tenant improvements
Useful lives, ranging from 31.5 to 40 years
Useful lives, ranging from 3 to 20 years
Shorter of economic life or lease terms
F-10
The Company periodically assesses the useful lives of its depreciable real estate assets and accounts for any revisions, which are not material for the
periods presented, prospectively. Expenditures for maintenance and repairs are charged to operations as incurred. Significant expenditures that improve or
extend the life of the asset are capitalized.
Construction in Progress and Land includes undeveloped land, as well as construction in progress related to shopping center developments and
expansions. The Company capitalized certain direct costs (salaries and related personnel) and incremental internal construction costs of $3.1 million, $3.0
million and $3.8 million in 2021, 2020 and 2019, respectively.
Purchase Price Accounting
The Company’s acquisitions were accounted for as asset acquisitions, and the Company capitalized the acquisition costs incurred. Upon acquisition
of properties, the Company estimates the fair value of acquired tangible assets, consisting of land, building and improvements and intangibles, generally
including above- and below-market leases and in-place leases. The Company allocates the purchase price to assets acquired and liabilities assumed on a
gross basis based on their relative fair values at the date of acquisition.
The fair value of land of an acquired property considers the value of land as if the site was unimproved based on comparable market transactions. The fair
value of the building is determined as if it were vacant by applying a capitalization rate to market leasing assumptions. Above- and below-market lease
values are calculated based on the present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between
contractual rents and estimated market rents, measured over a period equal to the remaining term of the lease for above-market leases and the remaining
term plus the estimated term of any below-market, renewal options for below-market leases. The capitalized above- and below-market lease values are
amortized to base rental revenue over the related lease term plus fixed-rate renewal options, as appropriate. The value of acquired in-place leases is
recorded based on the present value of the estimated gross monthly market rental rate for each individual lease multiplied by the estimated period of time it
would take to lease the space to a new tenant. Such amounts are amortized to expense over the remaining initial lease term.
Real Estate Impairment Assessment
The Company reviews its individual real estate assets, including undeveloped land and construction in progress, and intangibles for potential
impairment indicators whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Impairment indicators are
primarily related to changes in estimated hold periods and significant, prolonged decreases in projected cash flows, however other impairment indicators could
occur. Decreases in cash flows may be caused by declines in occupancy, projected losses on potential future sales, market factors, significant changes in
projected development costs or completion dates and sustainability of development projects. An asset with impairment indicators is considered impaired when
the undiscounted future cash flows are not sufficient to recover the asset’s carrying value. The determination of anticipated undiscounted cash flows is
inherently subjective, requiring significant estimates made by management, and considers the most likely expected course of action at the balance sheet date
based on current plans, intended holding periods and available market information. If the Company is evaluating the potential sale of an asset, the
undiscounted future cash flows analysis is probability-weighted based upon management’s best estimate of the likelihood of the alternative courses of action as
of the balance sheet date. If an asset’s carrying value is not recoverable, an impairment loss is recognized based on the excess of the carrying amount of the
asset over its fair value. The Company recorded aggregate impairment charges of $7.3 million, $5.2 million and $3.4 million, related to consolidated real estate
investments, during the years ended December 31, 2021, 2020 and 2019, respectively (Note 14).
Disposition of Real Estate and Real Estate Investments
Sales of nonfinancial assets, such as real estate, are recognized when control of the asset transfers to the buyer, which will occur when the buyer has
the ability to direct the use of, or obtain substantially all of the remaining benefits from, the asset. This generally occurs when the transaction closes and
consideration is exchanged for control of the asset.
A discontinued operation includes only the disposal of a component of an entity and represents a strategic shift that has (or will have) a major effect
on an entity’s financial results. The disposition of the Company’s individual properties did not qualify for discontinued operations presentation, and thus,
the results of the properties that have been sold remain in income from continuing operations, and any associated gains or losses from the disposition are
included in Gain on Disposition of Real Estate.
Real Estate Held for Sale
The Company generally considers assets to be held for sale when management believes that a sale is probable within a year. This generally occurs
when a sales contract is executed with no substantive contingencies and the prospective buyer has significant funds at risk. Assets that are classified as
held for sale are recorded at the lower of their carrying amount or fair value, less cost to sell. The Company evaluated its property portfolio and did not
identify any properties that would meet the above-mentioned criteria for held for sale as of December 31, 2021 and 2020.
F-11
Interest and Real Estate Taxes
Interest and real estate taxes incurred relating to the construction and redevelopment of shopping centers are capitalized and depreciated over the
estimated useful life of the building. This includes interest incurred on funds invested in or advanced to unconsolidated joint ventures with qualifying
development activities. The Company will cease the capitalization of these costs when construction activities are substantially completed and the property
is available for occupancy by tenants. If the Company suspends substantially all activities related to development of a qualifying asset, the Company will
cease capitalization of interest and taxes until activities are resumed.
Interest paid during the years ended December 31, 2021, 2020 and 2019 aggregated $70.2 million, $76.0 million and $79.5 million, respectively, of
which $0.6 million, $0.9 million and $1.3 million, respectively, was capitalized.
Investments in and Advances to Joint Ventures and Affiliate
To the extent that the Company’s cost basis in an unconsolidated joint venture is different from the basis reflected at the joint venture level, the basis
difference is amortized over the life of the related assets and included in the Company’s share of equity in net income (loss) of the joint venture and, if the
related asset is sold, the basis difference is written off. Periodically, management assesses whether there are any indicators that the value of the Company’s
investments in unconsolidated joint ventures may be impaired. An investment is impaired only if the Company’s estimate of the fair value of the
investment is less than the carrying value of the investment and such difference is deemed to be other than temporary. Investment impairment charges
create a basis difference between the Company’s share of accumulated equity as compared to the investment balance of the respective unconsolidated joint
venture. The Company allocates the aggregate impairment charge to each of the respective properties owned by the joint venture on a relative fair value
basis and amortizes this basis differential as an adjustment to the equity in net income (loss) recorded by the Company over the estimated remaining useful
lives of the underlying assets.
The Retail Value Inc. (“RVI”) series A preferred stock (“RVI Preferred Shares”) were classified as Investment in and Advances to Affiliate on the
Company’s consolidated balance sheet. The RVI Preferred Shares had a liquidation and dividend preference over the common stock, but did not have any
substantive voting rights, with limited exceptions, or conversion rights and did not have a stated coupon. The RVI Preferred Shares were carried at cost,
subject to adjustments in certain circumstances, and were periodically evaluated for impairment. In October 2021, the Company received a cash
distribution of $190.0 million on the RVI Preferred Shares. In December 2021, RVI repurchased all of the outstanding RVI Preferred Shares from the
Company for an aggregate purchase price of $1.00. As a result, the Company no longer maintains an investment in RVI and will not receive any further
distributions on account of the RVI Preferred Shares.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company
maintains cash deposits with major financial institutions, which from time to time may exceed federally insured limits. The Company periodically assesses
the financial condition of these institutions and believes that the risk of loss is minimal.
Restricted Cash
Restricted cash represents amounts on deposit with financial institutions primarily for debt service payments, real estate taxes, capital improvements
and operating reserves as required pursuant to the respective loan agreement. For purposes of the Company’s consolidated statements of cash flows,
changes in restricted cash are aggregated with cash and cash equivalents.
Accounts Receivable
The Company makes estimates of the collectability of its accounts receivable related to base rents, including straight-line rentals, expense
reimbursements and other revenue or income. Rental income has been reduced for amounts the Company believes are not probable of being collected. The
Company analyzes tenant credit worthiness, as well as current economic and tenant-specific sector trends when evaluating the probability of collection of
accounts receivable. In evaluating tenant credit worthiness, the Company’s assessment may include a review of payment history, tenant sales performance
and financial position. For larger national tenants, the Company also evaluates projected liquidity, as well as the tenant’s access to capital and the overall
health of the particular sector. In addition, with respect to tenants in bankruptcy, the Company makes estimates of the expected recovery of pre-petition and
post-petition claims in assessing the probability of collection of the related receivable. The time to resolve these claims may exceed one year. These
estimates have a direct impact on the Company’s earnings because once the amount is not considered probable of being collected, earnings are reduced by a
corresponding amount until the receivable is collected. See discussion below under Revenue Recognition regarding cash-basis tenants.
Accounts receivable, excluding straight-line rents receivable, do not include estimated amounts not probable of being collected (including contract
disputes) of $3.0 million and $4.7 million at December 31, 2021 and 2020, respectively. Accounts receivable are generally expected to be collected within
one year. At December 31, 2021 and 2020, straight-line rents receivable, net of a provision for uncollectible amounts of $1.6 million and $2.1 million,
respectively, aggregated $29.8 million and $29.3 million, respectively.
F-12
Deferred Charges
External costs and fees incurred in obtaining indebtedness are included in the Company’s consolidated balance sheets as a direct deduction from the
related debt liability. Debt issuance costs related to the Company’s revolving credit facilities remain classified as an asset on the consolidated balance
sheets as these costs are, at the outset, not associated with an outstanding borrowing. The aggregate costs are amortized over the terms of the related debt
agreements. Such amortization is reflected in Interest Expense in the Company’s consolidated statements of operations.
Treasury Shares
The Company’s share repurchases are reflected as treasury shares utilizing the cost method of accounting and are presented as a reduction to
consolidated shareholders’ equity. Reissuances of the Company’s treasury shares at an amount below cost are recorded as a charge to paid-in capital due to
the Company’s cumulative distributions in excess of net income.
Revenue Recognition
For the real estate industry, leasing transactions are not within the scope of the standard. A majority of the Company’s tenant-related revenue is
recognized pursuant to lease agreements and is governed by the leasing guidance. Historically, the majority of the Company’s lease commission revenue
was recognized 50% upon lease execution and 50% upon tenant rent commencement. Upon adoption of Topic 606, lease commission revenue is generally
recognized in its entirety upon lease execution.
Rental Income
•
Rental Income on the consolidated statements of operations includes contractual lease payments that generally consist of the following:
Fixed-lease payments, which include fixed payments associated with expense reimbursements from tenants for common area
•
maintenance, taxes and insurance from tenants in shopping centers and are recognized on a straight-line basis over the non-cancelable
term of the lease, which generally ranges from one month to 30 years, and include the effects of applicable rent steps and abatements.
Variable lease payments, which include percentage and overage income, recognized after a tenant’s reported sales have exceeded the
applicable sales breakpoint set forth in the applicable lease.
Variable lease payments associated with expense reimbursements from tenants for common area maintenance, taxes, insurance and other
property operating expenses, based upon the tenant’s lease provisions, which are recognized in the period the related expenses are
incurred.
Lease termination payments, which are recognized upon the effective termination of a tenant’s lease when the Company has no further
obligations under the lease.
Ancillary and other property-related rental payments, primarily composed of leasing vacant space to temporary tenants, kiosk income,
and parking income, which are recognized in the period earned.
•
•
•
For those tenants where the Company is unable to assert that collection of amounts due over the lease term is probable, the
Company has categorized these tenants on the cash basis of accounting. As a result, no rental income is recognized from such
tenants once they have been placed on the cash basis of accounting until payments are received.
Revenues from Contracts with Customers
The Company’s revenues from contracts with customers generally relate to asset and property management fees, leasing commissions and
development fees. These revenues are derived from the Company’s management agreements with RVI and unconsolidated joint ventures and, in the case
of unconsolidated joint ventures, are recognized to the extent attributable to the unaffiliated ownership in the unconsolidated joint venture to which it
relates. Termination rights under these contracts vary by contract but generally include termination for cause by either party, or generally due to sale of the
property.
Asset and Property Management Fees
Asset and property management services include property maintenance, tenant coordination, accounting and financial services. Asset
and property management services represent a series of distinct daily services. Accordingly, the Company satisfies the performance
obligation as services are rendered over time.
The Company is compensated for property management services through a monthly management fee, which is typically, earned based
on a specified percentage of the monthly rental receipts generated from the property under
F-13
management. The Company is compensated for asset management services through a fee that is billed to the customer monthly and
recognized as revenue monthly as the services are rendered, based on a percentage of aggregate asset value or capital contributions for
assets under management at the end of the quarter. The asset management fee under the RVI external management agreement is paid
monthly based on the initial aggregate appraised value of the RVI properties. RVI property management fees are paid monthly generally
based on the average gross revenue collected during the three months immediately preceding the most recent December 31 or June 30. The
Company received a supplemental fee from RVI for the period July 1, 2020 to June 30, 2021 to negate the adverse impact of the COVID-19
pandemic on revenue collection and the resulting reduction to the property management fee payable to the Company. The fee arrangement
was amended and modified beginning January 1, 2022.
Property Leasing
The Company provides strategic advice and execution to third parties, including RVI and certain joint ventures, in connection with the
leasing of retail space. The Company is compensated for services in the form of a commission. The commission is paid upon the
occurrence of certain contractual events that may be contingent. For example, a portion of the commission may be paid upon execution of
the lease by the tenant, with the remaining paid upon occurrence of another future contingent event (e.g., payment of first month’s rent or
tenant move-in). The Company typically satisfies its performance obligation at a point in time when control is transferred, generally, at the
time of the first contractual event where there is a present right to payment. The Company looks to history, experience with a customer and
deal-specific considerations to support its judgment that the second contingency will be met. Therefore, the Company typically accelerates
the recognition of revenue associated with the second contingent event (if any) to the point in time when control of its service is transferred.
Development Services
Development services consist of construction management oversight services such as hiring general contractors, reviewing plans and
specifications, performing inspections, reviewing documentation and providing accounting services. These services represent a series of
distinct services and are recognized over time as services are rendered. The Company is compensated monthly for services based on
percentage of aggregate amount spent on the construction during the month.
Disposition Fees
The Company receives disposition fees equal to 1% of the gross sales price of each RVI asset sold. The Company is compensated at
the time of the closing of the sale transaction.
Contract Assets
Contract assets represent assets for revenue that have been recognized in advance of billing the customer and for which the right to
bill is contingent upon something other than the passage of time. This is common for contingent portions of commissions. The portion of
payments retained by the customer until the second contingent event is not considered a significant financing component because the right
to payment is expected to become unconditional within one year or less. Contract assets are transferred to receivables when the right to
payment becomes unconditional.
Leases
The Company’s accounting policies include the following:
•
•
•
As a lessee — short-term lease exception for the Company’s office leases;
As a lessor — to include operating lease liabilities in the asset group and include the associated operating lease payments in the
undiscounted cash flows when considering recoverability of a long-lived asset group and
As a lessor — to exclude from lease payments taxes assessed by a governmental authority that are both imposed on and concurrent with
lease revenue-producing activity and collected by the lessor from the lessee (e.g., sales tax).
ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to
make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at the commencement date based on the
present value of lease payments over the lease term. As most of the Company’s leases do not include an implicit rate, the Company used its incremental
borrowing rate based on the information available at the commencement date of the standard in determining the present value of lease payments. For each
lease, the Company utilized a market-based approach to estimate the incremental borrowing rate (“IBR”), which required significant judgment. The
Company estimated base IBRs based on an analysis of (i) yields on the Company’s outstanding public debt, as well as comparable companies, (ii)
observable mortgage rates and (iii) unlevered property yields and discount rates. The Company applied adjustments to the base IBRs to account for full
collateralization and lease term. Operating lease ROU assets also include any lease payments made. The Company has
F-14
options to extend certain of the ground and office leases; however, these options were not considered as part of the lease term when calculating the lease
liability, as they were not reasonably certain to be exercised. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
General and Administrative Expenses
General and administrative expenses include certain internal leasing and legal salaries and related expenses associated with the re-leasing of existing
space, which are charged to operations as incurred.
Equity-Based Plans
Compensation cost relating to stock-based payment transactions classified as equity is recognized in the financial statements based upon the grant
date fair value. The forfeiture rate is based on actual experience. Stock-based compensation cost recognized by the Company was $13.0 million, $8.0
million and $9.2 million for the years ended December 31, 2021, 2020 and 2019, respectively.
Income Taxes
The Company has made an election to qualify, and believes it is operating so as to qualify, as a real estate investment trust (“REIT”) for federal
income tax purposes. Accordingly, the Company generally will not be subject to federal income tax, provided that it makes distributions to its shareholders
equal to at least the amount of its REIT taxable income as defined under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the
“Code”), and continues to satisfy certain other requirements.
In connection with the REIT Modernization Act, the Company is permitted to participate in certain activities and still maintain its qualification as a
REIT, so long as these activities are conducted in entities that elect to be treated as taxable subsidiaries (a “TRS”) under the Code. As such, the Company
is subject to federal and state income taxes on the income from these activities.
In the normal course of business, the Company or one or more of its subsidiaries is subject to examination by federal, state and local tax
jurisdictions, as well as certain jurisdictions outside the United States, in which it operates, where applicable. The Company expects to recognize interest
and penalties related to uncertain tax positions, if any, as income tax expense. For the three years ended December 31, 2021, the Company recognized no
material adjustments regarding its tax accounting treatment for uncertain tax provisions. As of December 31, 2021, the tax years that remain subject to
examination by the major tax jurisdictions under applicable statutes of limitations are generally the year 2018 and forward.
Deferred Tax Assets
The Company accounts for income taxes related to its TRS under the asset and liability method, which requires the recognition of deferred tax assets
and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets
and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect
for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the
income statement in the period that includes the enactment date.
The Company records net deferred tax assets to the extent it believes it is more likely than not that these assets will be realized. A valuation
allowance is recorded against the deferred tax assets when the Company determines that an uncertainty exists regarding their realization, which would
increase the provision for income taxes. In making such determination, the Company considers all available positive and negative evidence, including
forecasts of future taxable income, the reversal of other existing temporary differences, available net operating loss carryforwards, tax planning strategies
and recent results of operations. Several of these considerations require assumptions and significant judgment about the forecasts of future taxable income
and must be consistent with the plans and estimates that the Company is utilizing to manage its business. As a result, to the extent facts and circumstances
change, an assessment of the need for a valuation allowance should be made.
Segments
For the year ended December 31, 2021, the Company had only one reportable operating segment. For the years ended December 31, 2020 and 2019
F-15
, the Company had two reportable operating segments: shopping centers and loan investments. In the fourth quarter of 2020, the Company transferred and
redeemed its loan investments (preferred equity interests) in BRE DDR Retail Holdings III (“BRE DDR III”) and BRE DDR Retail Holdings IV (“BRE
DDR IV,” and together with BRE DDR III, the “BRE DDR Joint Ventures”) in exchange for the acquisition of certain of the underlying assets of two joint
ventures. The Company’s chief operating decision maker may review operational and financial data on a property basis and does not differentiate among
properties on a geographical basis for purposes of allocating resources or capital. The Company evaluates individual property performance primarily based
on net operating income before depreciation, amortization and certain nonrecurring items. Each consolidated shopping center is considered a separate
operating segment; however, each shopping center, on a stand-alone basis, represents less than 10% of revenues, profit or loss, and assets of the combined
reported operating segment and meets the majority of the aggregations criteria under the applicable standard.
Fair Value Hierarchy
The standard Fair Value Measurements specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques
reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs). The following
summarizes the fair value hierarchy:
• Level 1
Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;
• Level 2
Quoted prices for identical assets and liabilities in markets that are inactive, quoted prices for similar assets and liabilities in active markets
or financial instruments for which significant inputs are observable, either directly or indirectly, such as interest rates and yield curves that
are observable at commonly quoted intervals and
• Level 3
Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair
value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the
fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety
requires judgment and considers factors specific to the asset or liability.
2.
Revenue Recognition
Impact of the COVID-19 Pandemic on Revenue and Receivables
Beginning in March 2020, the retail sector was significantly impacted by the COVID‑19 pandemic. Though the impact of
the COVID-19 pandemic on tenant operations varied by tenant category, local conditions and applicable government mandates, a
significant number of the Company’s tenants experienced a reduction in sales and foot traffic, and many tenants were forced to
limit their operations or close their businesses for a period of time, primarily in 2020. The COVID‑19 pandemic also had a
significant impact on the Company’s collection of rents for April 2020 through the end of 2020. The Company engaged in
discussions with most of its larger tenants that failed to satisfy all or a portion of their rent obligations and agreed to terms on
rent-deferral arrangements (and, in a small number of cases, rent abatements) and other lease modifications with a significant
number of such tenants. As of December 31, 2021 and 2020, $0.2 million and $13.1 million, respectively, remained outstanding
under these deferral arrangements for tenants that are not accounted for on the cash basis.
During the year ended December 31, 2021, the Company recorded net uncollectible revenue that resulted in rental income
of $9.4 million (the Company’s share of unconsolidated joint ventures was $1.6 million), primarily due to rental income paid in
2021 related to outstanding amounts owed from tenants on the cash basis of accounting that were contractually due in
2020. During the year ended December 31, 2020, tenants on the cash basis of accounting and other related reserves resulted in a
reduction of rental income of $31.9 million (the Company’s share of unconsolidated joint ventures was $4.4 million). These
amounts also include reductions in contractual rental payments due from tenants as compared to pre-modification payments due
to the impact of lease modifications, with a partial increase in straight-line rent to offset a portion of the impact on net income.
For those tenants where the Company is unable to assert that collection of amounts due over the lease term is probable,
regardless if the Company has entered into a deferral agreement to extend the payment terms, the Company has categorized these
tenants on the cash basis of accounting. As a result, all existing accounts receivable relating to these tenants have been reserved
in full, including straight-line rental income, and no rental income is recognized from such tenants once they have been placed on
the cash basis of accounting until payments are received. The Company will remove the cash basis designation and resume
recording rental income from such tenants on a straight-line basis at such time it believes collection from the tenants is probable
based upon a demonstrated payment history, improved liquidity, the addition of credit-worthy guarantors or a recapitalization
event.
F-16
Fee and Other Income
Fee and Other Income on the consolidated statements of operations includes revenue from contracts with customers and other property-related
income and is recognized in the period earned as follows (in thousands):
Revenue from contracts:
Asset and property management fees
Leasing commissions
Development fees
RVI disposition fees
RVI credit facility guaranty and refinancing fees
Total revenue from contracts with customers
Other property income:
Other
Total fee and other income
For the Year Ended December 31,
2020
2019
2021
$
$
25,798 $
3,184
694
9,016
60
38,752
31,255 $
5,528
1,428
3,142
60
41,413
3,313
42,065 $
4,056
45,469 $
42,355
6,300
2,019
3,454
1,860
55,988
7,694
63,682
The aggregate amount of receivables from contracts with customers was $1.3 million and $1.4 million as of December 31, 2021 and 2020,
respectively.
Contract assets
Contract assets are included in Other Assets, net on the consolidated balance sheets. The significant changes in the leasing commission balances
during the year ended December 31, 2021, are as follows (in thousands):
Balance as of January 1, 2021
Contract assets recognized
Contract assets billed
Balance as of December 31, 2021
$
$
513
673
(804)
382
All revenue from contracts with customers meets the exemption criteria for variable consideration directly allocable to wholly unsatisfied
performance obligations or unsatisfied promise within a series, and therefore, the Company does not disclose the value of transaction price allocated to
unsatisfied performance obligations. There is no fixed consideration included in the transaction price for any of these revenues.
3.
Investments in and Advances to Joint Ventures
The Company’s equity method joint ventures, which are included in Investments in and Advances to Joint Ventures in the Company’s consolidated
balance sheet at December 31, 2021, are as follows:
Unconsolidated Real Estate Ventures
DDRM Properties
Dividend Trust Portfolio JV LP
DDR – SAU Retail Fund, LLC
Other Joint Venture Interests
Partner
Madison International Realty
Chinese Institutional Investors
State of Utah
Various
F-17
Effective
Ownership
Percentage
20.0%
20.0
20.0
25.75–50.0
Operating
Properties
24
10
11
2
Condensed combined financial information of the Company’s unconsolidated joint venture investments is as follows (in thousands):
December 31,
2021
2020
Condensed Combined Balance Sheets
Land
Buildings
Fixtures and tenant improvements
Less: Accumulated depreciation
Construction in progress and land
Real estate, net
Cash and restricted cash
Receivables, net
Other assets, net
Mortgage debt
Notes and accrued interest payable to the Company
Other liabilities
Accumulated equity
Company's share of accumulated equity
Basis differentials
Deferred development fees, net of portion related to the Company's interest
Amounts payable to the Company
Investments in and Advances to Joint Ventures, net
Condensed Combined Statements of Operations
Revenues from operations
Expenses from operations:
Operating expenses
Impairment charges(A)
Depreciation and amortization
Interest expense
Preferred share expense
Other expense, net
Income (loss) before gain on disposition of real estate
Gain on disposition of real estate, net
Net income (loss) attributable to unconsolidated joint ventures
Company's share of equity in net income of joint ventures
Basis differential adjustments(B)
Equity in net income of joint ventures
$
$
$
$
$
$
378,442 $
1,092,245
123,313
1,594,000
(441,215)
1,152,785
5,778
1,158,563
37,535
16,854
49,029
1,261,981 $
873,336 $
3,331
51,473
928,140
333,841
1,261,981 $
59,286 $
2,946
(937)
3,331
64,626 $
441,412
1,258,879
137,663
1,837,954
(492,288)
1,345,666
58,201
1,403,867
35,212
25,719
61,381
1,526,179
1,029,579
4,375
57,349
1,091,303
434,876
1,526,179
72,555
1,644
(1,277)
4,375
77,297
2021
For the Year Ended December 31,
2020
2019
$
195,559 $
252,946 $
428,281
53,391
—
66,618
43,379
—
12,074
175,462
20,097
89,935
110,032 $
49,417 $
(2,120)
47,297 $
77,040
33,240
99,779
60,010
15,708
13,796
299,573
(46,627)
9,257
(37,370) $
1,109 $
407
1,516 $
118,412
13,807
149,749
93,887
21,832
20,563
418,250
10,031
67,011
77,042
10,743
776
11,519
$
$
$
(A)
(B)
For the years ended December 31, 2020 and 2019, the Company’s proportionate share was $1.9 million and $2.5 million, respectively. The Company’s share of the impairment charges
was reduced by the impact of the other than temporary impairment charges previously recorded on these investments, as appropriate, as discussed below.
The difference between the Company’s share of net income, as reported above, and the amounts included in the Company’s consolidated statements of operations is attributable to the
amortization of basis differentials, unrecognized preferred PIK, the recognition of deferred gains, differences in gain (loss) on sale of certain assets recognized due to the basis
differentials and other than temporary impairment charges.
F-18
The impact of the COVID-19 pandemic on revenues and receivables for the Company’s joint ventures is more fully described in Note 2.
Revenues earned by the Company related to all of the Company’s unconsolidated joint ventures and interest income on its preferred interests are as
follows (in millions):
Revenue from contracts:
Asset and property management fees
Development fees, leasing commissions and other
Other:
Interest income(A)
Other
2021
For the Year Ended December 31,
2020
2019
$
$
10.6 $
2.2
12.8
—
1.7
1.7
14.5 $
12.8 $
4.2
17.0
12.0
2.1
14.1
31.1 $
19.7
5.2
24.9
16.7
3.2
19.9
44.8
(A)
Interest income recorded in 2020 and 2019 related to preferred equity interests in the BRE DDR Joint Ventures, which were transferred or redeemed in the fourth quarter of 2020.
The Company’s joint venture agreements generally include provisions whereby each partner has the right to trigger a purchase or sale of its interest
in the joint venture or to initiate a purchase or sale of the properties after a certain number of years or if either party is in default of the joint venture
agreements. The Company is not obligated to purchase the interests of its outside joint venture partners under these provisions.
Disposition of Shopping Centers, Undeveloped Land and Joint Venture Interests
In 2021, one of the Company’s unconsolidated joint ventures sold its sole asset, which was a parcel of undeveloped land (approximating 70 acres) in
Richmond Hill, Ontario. The Company’s share of net proceeds totaled $22.1 million, after accounting for customary closing costs and foreign currency
translation but before income tax. The net proceeds include $6.1 million that are held in escrow, of which $2.1 million is expected to be released to the
Company in 2022 after the receipt of certain tax clearance certificates from the Canadian taxing authorities, and the remaining $4.0 million is considered
contingent and should be released upon final dissolution of the partnership. The Company recorded an aggregate gain on the transaction of $14.9 million,
which included its $2.8 million share of the gain reported by the joint venture, as well as $12.1 million related to the Company’s promoted interest on the
disposition of the investment net of the write-off of the accumulated foreign currency translation and contingent estimated income taxes. Subsequent to the
transaction, the Company has no other investments outside the United States.
In December 2021, the Company acquired the 80% equity interest in six assets owned by the DDRM Properties Joint Venture (Village Square at
Golf, Boynton Beach, Florida; Shoppes at Paradise Point, Fort Walton Beach, Florida; Midway Plaza, Tamarac, Florida; North Point Plaza, Tampa, Florida;
The Shoppes at New Tampa, Wesley Chapel, Florida and Paradise Shoppes of Ellenwood, Ellenwood, Georgia) for $107.2 million, and stepped up the
previous 20% interest due to change in control, with $73.9 million of mortgage debt related to the properties repaid at closing. The transaction resulted in a
Gain on Sale and Change in Control of Interests of $7.2 million (Note 5).
In connection with estimating the fair value of the net assets acquired from the DDRM assets, the fair value of each property was estimated, and the
aggregate gross fair value of the properties acquired was estimated to be $134.0 million ( at 100%). The valuation technique used to value the properties
was a discounted cash flow analysis for each property. The discounted cash flow analyses used to estimate the fair value of properties acquired involves
significant estimates and assumptions, including discount rates, exit capitalization rates and certain market leasing assumptions.
Excluding the Richmond Hill and DDRM Properties Joint Venture transactions noted above, the Company’s joint ventures sold six, two and six
shopping centers and land parcels for an aggregate sales price of $135.5 million, $27.7 million and $356.3 million, respectively, of which the Company’s
share of the gain on sale was $36.6 million, $1.8 million and $4.2 million for the years ended December 31, 2021, 2020 and 2019, respectively.
In 2020, the Company sold its 15% interest in the DDRTC Joint Venture to its partner, an affiliate of TIAA-CREF, which resulted in net proceeds to
the Company of $140.4 million. The Company recorded a Gain on Sale of Joint Venture Interests of $45.6 million in connection with this sale. In addition,
in the fourth quarter of 2020, the Company transferred and redeemed its common and preferred equity interests in the BRE DDR Joint Ventures in
exchange for the acquisition of certain of the underlying assets resulting in a Loss on Sale of Joint Venture Interests of $0.2 million.
All transactions with the Company’s equity affiliates are described above.
F-19
4.
Investment In and Advances to Affiliate
On July 1, 2018, the Company completed the spin-off of RVI. At the time of the spin-off, RVI owned 48 shopping centers, comprised of 36 continental
U.S. assets and 12 of SITE Centers’ shopping centers in Puerto Rico, representing $2.7 billion of gross book asset value and $1.27 billion of mortgage
debt. At December 31, 2021, RVI owned one retail shopping center in Gulfport, Mississippi.
In connection with the spin-off, on July 1, 2018, the Company and RVI entered into a separation and distribution agreement, pursuant to which,
among other things, the Company agreed to transfer the properties and certain related assets, liabilities and obligations to RVI and to distribute 100% of the
outstanding common shares of RVI to holders of record of SITE Centers’ common shares as of the close of business on June 26, 2018, the record date. On
the spin-off date, holders of SITE Centers’ common shares received one common share of RVI for every ten shares of SITE Centers’ common stock held
on the record date. In connection with the spin-off of RVI, RVI issued 1,000 of the RVI Preferred Shares to the Company, which were noncumulative and
had no mandatory dividend rate. The RVI Preferred Shares ranked, with respect to dividend rights, and rights upon liquidation, dissolution or winding up
of RVI, senior in preference and priority to RVI’s common shares and any other class or series of RVI’s capital stock. Subject to the requirement that RVI
distribute to its common shareholders the minimum amount required to be distributed with respect to any taxable year in order for RVI to maintain its status
as a REIT and to avoid U.S. federal income taxes, the RVI Preferred Shares were entitled to a dividend preference for all dividends declared on RVI’s
capital stock at any time up to a “preference amount” equal to $190.0 million in the aggregate, which amount could have increased by up to an additional
$10 million if the aggregate gross proceeds of RVI asset sales subsequent to the spin-off date exceeded $2.06 billion. In October 2021, the Company
received a cash distribution of $190.0 million on the RVI Preferred Shares. In December 2021, in recognition of the advanced stage of RVI’s dispositions
and the aggregate value of sales relative to the $2.06 billion threshold, RVI repurchased all of the outstanding RVI Preferred Shares from the Company for
an aggregate purchase price of $1.00. As a result, the Company no longer maintains an investment in RVI and will not receive any further distributions on
account of the RVI Preferred Shares.
On July 1, 2018, the Company and RVI also entered into an external management agreement, which, together with various property management
agreements, governed the fees, terms and conditions pursuant to which SITE Centers managed RVI and its properties through December 31, 2021. The
Company and RVI entered into a new external management agreement effective January 1, 2022 to govern the Company’s management of RVI’s remaining
property and the wind-up of its operations. Pursuant to these management agreements, the Company has provided RVI with day-to-day management,
subject to supervision and certain discretionary limits and authorities granted by the RVI Board of Directors. RVI does not have any employees. The
Company and RVI also entered into a tax matters agreement, which governs the rights and responsibilities of the parties following the spin-off with respect
to various tax matters and provides for the allocation of tax-related assets, liabilities and obligations.
Revenue from contracts with RVI is included in Fee and Other Income on the consolidated statements of operations and was composed of the
following (in millions):
Revenue from contracts with RVI:
Asset and property management fees
Leasing commissions
Disposition fees
Credit facility guaranty and refinancing fees
Total revenue from contracts with RVI
For the Year Ended December 31,
2021
2020
2019
$
$
15.2 $
1.7
9.0
0.1
26.0 $
18.4 $
2.8
3.1
0.1
24.4 $
21.7
3.1
3.3
1.9
30.0
F-20
5.
Acquisitions
In 2021 and 2020, the Company acquired the following shopping centers (in millions):
Asset
Shoppes at Addison Place
Emmett Street Station
Hammond Springs
Belgate Shopping Center (land parcel)
Emmet Street North
At Home (Single Box)
Village Square at Golf
Shoppes at Paradise Point
Midway Plaza
North Point Plaza
The Shoppes at New Tampa
Paradise Shoppes of Ellenwood
Paradise Village Gateway
Concourse Village
Millenia Crossing
Echelon Village Plaza
The Hub
Larkins Corner
Ashbridge Square
Southmont Plaza
Midtowne Park
White Oak Village
Location
Delray Beach, Florida
Charlottesville, Virginia
Atlanta, Georgia
Charlotte, North Carolina
Charlottesville, Virginia
Princeton, New Jersey
Boynton Beach, Florida
Fort Walton Beach, Florida
Tamarac, Florida
Tampa, Florida
Wesley Chapel, Florida
Ellenwood, Georgia
Phoenix, Arizona
Jupiter, Florida
Orlando, Florida
Voorhees, New Jersey
Hempstead, New York
Boothwyn, Pennsylvania
Downingtown, Pennsylvania
Easton, Pennsylvania
Anderson, South Carolina
Richmond, Virginia
Date
Acquired
May 2021
May 2021
September 2021
November 2021
December 2021
December 2021
December 2021
December 2021
December 2021
December 2021
December 2021
December 2021
December 2021
October 2020
October 2020
October 2020
October 2020
October 2020
October 2020
October 2020
November 2020
November 2020
Purchase
Price
$
Face Value of
Mortgage Debt
Assumed
17.9
—
—
—
—
—
(A)
(A)
(A)
(A)
(A)
(A)
(B)
13.0
20.7
5.4
28.0
16.4
32.4
30.7
15.7
34.3
40.0 $
8.8
31.0
1.1
3.9
15.8
(A)
(A)
(A)
(A)
(A)
(A)
(B)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(D)
(D)
(A) Acquired 80% interest from the DDRM Properties Joint Venture. The purchase price of $134.0 million at 100% (or $107.2 million at 80%) is equal to the estimated fair value of the
properties plus transaction costs incurred. Mortgage debt of $73.9 million was repaid at closing (Note 3).
(B) Acquired its partner’s 33% interest in a consolidated joint venture, Paradise Village Gateway. The partner’s 33% ownership was previously reflected as non-controlling interest on
the Company’s balance sheet. The Company repaid the mortgage debt of $27.6 million at closing.
(C) Acquired from the DDR BRE IV joint venture. The purchase price is equal to the estimated fair value of the properties plus transaction costs incurred.
(D) Acquired from the DDR BRE III joint venture. The purchase price is equal to the estimated fair value of the properties plus transaction costs incurred.
The fair value of acquisitions was allocated as follows (in thousands):
Land
Buildings
Tenant improvements
Construction in progress
In-place leases (including lease origination costs and fair
market value of leases)
Other assets assumed (including cash and restricted cash)(B)
Less: Mortgage debt assumed at fair value
Less: Below-market leases
Less: Other liabilities assumed
Fair value of non-controlling interest
Net assets acquired
(A)
Depreciated in accordance with the Company’s policy (Note 1).
Weighted-Average
Amortization Period
(in Years)
2021
2020
$
75,732 $
135,537
3,620
1,109
27,829
1,005
244,832
(91,833)
(8,504)
(2,336)
7,144
149,303 $
$
72,991
163,723
2,854
—
50,167
10,711
300,446
(196,654)
(15,890)
(1,664)
—
86,238
2021
N/A
(A)
(A)
N/A
5.6
N/A
N/A
16.0
N/A
N/A
2020
N/A
(A)
(A)
N/A
5.8
N/A
N/A
14.6
N/A
N/A
(B)
Cash and restricted cash assumed is reflected as Distributions from Unconsolidated Joint Ventures in the Company’s consolidated statements of cash flows.
F-21
Consideration:
Cash (including debt repaid at closing)
Gain (loss) on Sale and Change in Control of Interests
Carrying value of previously held common equity interests (A)
Transfer and redemption of preferred equity interests
Total consideration
2021
2020
$
$
137,714 $
7,210
4,379
—
149,303 $
—
(173)
(2,698)
89,109
86,238
(A)
The significant inputs used to value the previously held equity interests were determined to be Level 3 for all of the applicable acquisitions. In 2021 and 2020, the weighted-average
discount rate applied to cash flows was approximately 7.3% and 7.9%, respectively, and the weighted-average residual capitalization rate applied was approximately 6.8% and 8.2%,
respectively.
Included in the Company’s consolidated statements of operations are $3.9 million, $7.3 million and $1.1 million in total revenues from the date of
acquisition through December 31, 2021, 2020 and 2019, respectively, for properties acquired during each of the respective years.
6.
Other Assets and Intangibles, net
Other assets and intangibles consist of the following (in thousands):
Intangible assets:
In-place leases, net
Above-market leases, net
Lease origination costs, net
Tenant relationships, net
Total intangible assets, net(A)
Operating lease ROU assets
Other assets:
Prepaid expenses
Other assets
Deposits
Deferred charges, net
Total other assets, net
Below-market leases, net (other liabilities)
(A)
Operating lease ROU assets are discussed further in Note 7.
December 31,
2021
2020
64,464 $
7,390
6,636
15,569
94,059
19,047
7,722
1,708
3,796
4,147
130,479 $
56,756
8,387
4,974
20,301
90,418
20,604
7,416
2,348
3,767
6,137
130,690
59,690 $
57,348
$
$
$
Amortization expense related to the Company’s intangibles, excluding above- and below-market leases, was as follows (in millions):
Year
2021
2020
2019
Expense
$
Estimated net future amortization associated with the Company’s intangibles is as follows (in millions):
Year
2022
2023
2024
2025
2026
Income
Expense
$
4.2 $
4.2
4.2
4.3
4.3
F-22
21.6
15.8
17.7
23.5
18.3
14.3
9.0
5.1
7.
Leases
Lessee
The Company is engaged in the operation of shopping centers that are either owned or, with respect to certain shopping centers, operated under
long-term ground leases that expire at various dates through 2070. The Company also leases office space in the ordinary course of business under lease
agreements that expire at various dates through 2029. Certain of the lease agreements include variable payments for reimbursement of common area
expenses. The Company determines if an arrangement is a lease at inception.
Operating lease ROU assets and operating lease liabilities are included in the Company’s consolidated balance sheets as follows (in thousands):
Operating Lease ROU Assets
Operating Lease Liabilities
Classification
Other Assets, Net
Accounts Payable and Other Liabilities
December 31,
2021
2020
$
19,047 $
38,491
20,604
39,794
Operating lease expenses, including straight-line expense, included in Operating and Maintenance Expense for the Company’s ground leases and
General and Administrative expense for its office leases are as follows (in thousands):
Classification
Operating and Maintenance
General and Administrative(A)
Total lease costs
2021
December 31,
2020
$
$
2,645 $
2,405
5,050 $
2,716 $
2,627
5,343 $
2019
3,495
2,837
6,332
(A)
Includes short-term leases and variable lease costs, which are immaterial.
Supplemental balance sheet information related to operating leases was as follows:
Weighted-Average Remaining Lease Term
Weighted-Average Discount Rate
Cash paid for amounts included in the measurement —
operating cash flows from lease liabilities (in thousands)
December 31,
2021
35.5 years
7.4%
2020
35.2 years
7.4%
$
4,342
$
4,414
As determined under Topic 842, maturities of lease liabilities were as follows for the years ended December 31, (in thousands):
Year
2022
2023
2024
2025
2026
Thereafter
Total lease payments
Less imputed interest
Total
Lessor
$
$
December 31,
4,113
3,595
3,521
3,577
3,672
110,470
128,948
(90,457)
38,491
Space in the Company’s shopping centers is leased to tenants pursuant to agreements that provide for terms generally ranging from one month to 30
years and for rents which, in some cases, are subject to upward adjustments based on operating expense levels, sales volume or contractual increases as
defined in the lease agreements.
F-23
The scheduled future minimum rental income from rental properties under the terms of all non-cancelable tenant leases (including those on the cash
basis), assuming no new or renegotiated leases or option extensions, as determined under Topic 842 for such premises for the years ending December 31,
were as follows (in thousands):
Year
2022
2023
2024
2025
2026
Thereafter
Total
8.
Revolving Credit Facilities
$
$
December 31,
359,177
314,497
263,152
210,002
163,525
517,852
1,828,205
The following table discloses certain information regarding the Company’s Revolving Credit Facilities (as defined below) (in millions):
Unsecured Credit Facility
PNC Facility
Carrying Amount at
December 31,
2021
2020
$
— $
—
135.0
—
Weighted-Average
Interest Rate(A) at
December 31,
2021
N/A
N/A
2020
1.0%
N/A
Maturity Date at
December 31, 2021
January 2024
January 2024
(A)
Interest rate on variable-rate debt was calculated using the base rate and spreads effective at December 31, 2020.
The Company maintains an unsecured revolving credit facility with a syndicate of financial institutions, arranged by Wells Fargo Securities, LLC,
J.P. Morgan Chase Bank, N.A., Citizens Bank, N.A., RBC Capital Markets and U.S. Bank National Association (the “Unsecured Credit Facility”). The
Unsecured Credit Facility provides for borrowings of up to $950 million if certain financial covenants are maintained and certain borrowing conditions are
satisfied, and an accordion feature for expansion of availability up to $1.45 billion, provided that new lenders agree to the existing terms of the facility or
existing lenders increase their commitment level, and a maturity date of January 2024, with two six-month options to extend the maturity to January 2025
upon the Company’s request (subject to satisfaction of certain conditions). The Unsecured Credit Facility includes a competitive bid option on periodic
interest rates for up to 50% of the facility. The Unsecured Credit Facility also provides for an annual facility fee, which was 20 basis points on the entire
facility at December 31, 2021.
The Company maintains a $20 million unsecured revolving credit facility with PNC Bank, National Association (“PNC,” the “PNC Facility” and,
together with the Unsecured Credit Facility, the “Revolving Credit Facilities”) which includes substantially the same terms as those contained in the
Unsecured Credit Facility. Additionally, the Company provided an unconditional guaranty to PNC with respect to any obligations of RVI outstanding from
time to time under a $30 million revolving credit agreement entered into by RVI with PNC in 2018. The revolving credit agreement between RVI and
PNC, as well as the Company’s guaranty, was terminated in 2021.
The Company’s borrowings under the Revolving Credit Facilities bear interest at variable rates at the Company’s election, based on either LIBOR
plus a specified spread (0.90% at
F-24
December 31, 2021) or the Alternative Base Rate, as defined in the respective facilities, plus a specified spread (0% at December 31, 2021). The specified
spreads vary depending on the Company’s long-term senior unsecured debt rating from Moody’s Investors Service, Inc., S&P Global Ratings, Fitch
Investor Services, Inc. and their successors. The Company is required to comply with certain covenants under the Revolving Credit Facilities relating to
total outstanding indebtedness, secured indebtedness, value of unencumbered real estate assets and fixed-charge coverage. The Company was in
compliance with these financial covenants at December 31, 2021 and 2020.
9.
Unsecured and Secured Indebtedness
The following table discloses certain information regarding the Company’s unsecured and secured indebtedness (in millions):
Unsecured indebtedness:
Senior notes(B)
Senior notes – discount, net
Net unamortized debt issuance costs
Total Senior Notes
Term Loan
Net unamortized debt issuance costs
Total Term Loan
Carrying Value at
December 31,
2021
2020
Interest Rate(A) at
December 31,
2021
2020
$
1,460.0
$ 1,460.0
3.375%–4.700%
3.375%–4.700%
Maturity Date at
December 31, 2021
May 2023–
June 2027
(3.1)
(5.1)
(4.0)
(6.4)
1,451.8 $ 1,449.6
100.0 $
(0.2)
99.8 $
100.0
(0.4)
99.6
$
$
$
1.1%
1.1%
January 2023
Secured indebtedness:
Mortgage indebtedness – Fixed Rate
$
126.5 $
153.8
Mortgage indebtedness – Variable Rate
Net unamortized debt issuance costs
Total Mortgage Indebtedness
$
—
(0.7)
125.8 $
96.5
(1.0)
249.3
4.2%
N/A
4.4%
2.3%
September 2022–
May 2025
N/A
(A)
The interest rates reflected above for the senior notes represent the range of the coupon rate of the notes outstanding. All other interest rates presented are a weighted average of the
outstanding debt. Interest rate on variable-rate debt was calculated using the base rate and spreads in effect at December 31, 2021 and 2020.
(B)
Effective interest rates ranged from 3.5% to 4.8% at December 31, 2021.
Senior Notes
The Company’s various fixed-rate senior notes have interest coupon rates that averaged 4.1% per annum at December 31, 2021 and 2020. The
senior notes may be redeemed prior to maturity based upon a yield maintenance calculation. The fixed-rate senior notes were issued pursuant to indentures
that contain certain covenants, including limitations on incurrence of debt, maintenance of unencumbered real estate assets and debt service coverage. The
covenants also require that the cumulative dividends declared or paid from December 31, 1993, through the end of the current period cannot exceed Funds
From Operations (as defined in the agreement) plus an additional $20.0 million for the same period unless required to maintain REIT status. Interest is
paid semiannually in arrears. At December 31, 2021 and 2020, the Company was in compliance with all of the financial covenants under the indentures.
Term Loan
The Company maintains a term loan with Wells Fargo Bank, National Association, as administrative agent, and PNC and KeyBank National
Association, as syndication agents (the “Term Loan”). The Term Loan accrues interest at a variable rate based on LIBOR) or the Alternative Base Rate, as
defined in the facility, plus a specified spread based on the Company’s long-term senior unsecured debt ratings (1.0% at December 31, 2021). The maturity
date is January 2023. The Company may increase the amount of the facility provided that lenders agree to certain terms. The Company is required to
comply with covenants similar to those contained in the Revolving Credit Facilities. The Company was in compliance with these financial covenants at
December 31, 2021 and 2020.
Mortgages Payable
Mortgages payable, collateralized by real estate with a net book value of $203.2 million at December 31, 2021, and related tenant leases are
generally due in monthly installments of principal and/or interest. Fixed contractual interest rates on mortgages payable range from approximately 3.6% to
4.9% per annum.
F-25
Scheduled Principal Repayments
The scheduled principal payments of the Revolving Credit Facilities ($0 at December 31, 2021, Note 8) and unsecured and secured indebtedness,
excluding extension options, as of December 31, 2021, are as follows (in thousands):
Year
2022
2023
2024
2025
2026
Thereafter
Unamortized fair market value of assumed debt
Net unamortized debt issuance costs
Total indebtedness
$
$
Amount
36,032
223,573
93,349
481,204
398,556
449,554
1,682,268
1,165
(6,056)
1,677,377
Total gross fees paid by the Company for the Revolving Credit Facilities and term loans in 2021, 2020 and 2019 aggregated $2.1 million,
$2.6 million and $2.5 million, respectively.
10.
Financial Instruments and Fair Value Measurements
The following methods and assumptions were used by the Company in estimating fair value disclosures of financial instruments:
Other Fair Value Instruments
See discussion of fair value considerations of joint venture investments in Note 14.
Cash and Cash Equivalents, Restricted Cash, Accounts Receivable, Accounts Payable and Other Liabilities
The carrying amounts reported in the Company’s consolidated balance sheets for these financial instruments approximated fair value because of
their short-term maturities.
Debt
The fair market value of senior notes is determined using a pricing model to approximate the trading price of the Company’s public debt. The fair
market value for all other debt is estimated using a discounted cash flow technique that incorporates future contractual interest and principal payments and
a market interest yield curve with adjustments for duration, optionality and risk profile, including the Company’s non-performance risk and loan to
value. The Company’s senior notes and all other debt are classified as Level 2 and Level 3, respectively, in the fair value hierarchy.
Considerable judgment is necessary to develop estimated fair values of financial instruments. Accordingly, the estimates presented are not
necessarily indicative of the amounts the Company could realize on disposition of the financial instruments.
Carrying values that are different from estimated fair values are summarized as follows (in thousands):
Senior Notes
Revolving Credit Facilities and Term Loan
Mortgage Indebtedness
11.
Commitments and Contingencies
Legal Matters
December 31, 2021
December 31, 2020
Carrying
Amount
1,451,768 $
99,810
125,799
1,677,377 $
$
$
Fair
Value
1,559,973 $
100,000
127,488
1,787,461 $
Carrying
Amount
1,449,613 $
234,635
249,260
1,933,508 $
Fair
Value
1,549,866
235,000
250,624
2,035,490
The Company and its subsidiaries are subject to various legal proceedings, which, taken together, are not expected to have a material adverse effect
on the Company. The Company is also subject to a variety of legal actions for personal injury or property damage arising in the ordinary course of its
business, most of which are covered by insurance. While the resolution of all matters
F-26
cannot be predicted with certainty, management believes that the final outcome of such legal proceedings and claims will not have a material adverse effect
on the Company’s liquidity, financial position or results of operations.
Separation Charges
The Company recorded separation charges aggregating $1.7 million in 2020, which are included in General and Administrative Expenses.
Commitments and Guaranties
In conjunction with the redevelopment of various shopping centers, the Company has entered into commitments with general contractors for the
construction or redevelopment of shopping centers aggregating approximately $16.9 million as of December 31, 2021. These contracts typically can be
changed or terminated without penalty.
At December 31, 2021, the Company had letters of credit outstanding of $13.2 million. The Company has not recorded any obligation associated
with these letters of credit. The majority of the letters of credit are collateral for insurance obligations as the Company is self-insured up to certain limits on
several policies.
12.
Non-Controlling Interests, Preferred Shares, Common Shares and Common Shares in Treasury
Non-Controlling Interests
In December 2021, the Company acquired its partner’s 33% interest in Paradise Village Gateway (Phoenix, Arizona) for $7.1 million, which is
reflected as Additional Paid-in Capital in the Company’s Statement of Shareholder’s Equity (Note 5).
The Company had 140,633 Operating Partnership Units (“OP Units”) outstanding to one partnership at December 31, 2021 and 2020. These
OP Units are exchangeable at the election of the OP Unit holder and, under certain circumstances at the option of the Company, for an equivalent number
of the Company’s common shares or for the equivalent amount of cash. These OP Units are subject to registration rights agreements covering shares
equivalent to the number of OP Units held by the holder if the Company elects to settle in its common shares. The OP Units are classified on the
Company’s consolidated balance sheets as Non-Controlling Interests.
Preferred Shares
In 2021, the Company redeemed all $150.0 million aggregate liquidation preference of its 6.250% Class K Cumulative Redeemable Preferred
Shares (the “Class K Preferred Shares”) at a redemption price of $500 per Class K Preferred Share (or $25.00 per depositary share) plus accrued and unpaid
dividends of $7.2049 per Class K Preferred Share (or $0.3602 per depositary share). The Company recorded a charge of $5.1 million to net income
attributable to common shareholders, which represents the difference between the redemption price and the carrying amount immediately prior to
redemption, which was recorded to additional paid-in capital upon original issuance.
The depositary shares, representing the Class A Cumulative Redeemable Preferred Shares (“Class A Preferred Shares”), each represent 1/20 of a
Class A Preferred Share and have a liquidation value of $500 per share. The Class A depositary shares are not redeemable by the Company prior to June 5,
2022, except in certain circumstances relating to the preservation of the Company’s status as a REIT.
The Company’s authorized preferred shares consist of the following:
•
•
•
750,000 of each: Class A, Class B, Class C, Class D, Class E, Class F, Class G, Class H, Class I, Class J and Class K Cumulative Redeemable
Preferred Shares, without par value
750,000 Non-Cumulative Preferred Shares, without par value
2,000,000 Cumulative Voting Preferred Shares, without par value
Common Share Dividends
Common share dividends declared per share
For the Year Ended December 31,
2020
2019
2021
$
0.47 $
0.25 $
0.80
F-27
Common Shares Issuance
In 2021, the Company issued and sold 17.25 million common shares resulting in net proceeds of $225.3 million.
Common Shares – Continuous Equity Program
In 2021, the Company offered and sold 2,225,698 common shares on a forward basis under its $250 million continuous equity program at a weighted-
average forward price of $15.77 per share before issuance costs, generating expected gross proceeds before issuance costs of $35.1 million. The actual
proceeds to be received by the Company will vary depending upon the settlement date, the number of shares designated for settlement on that settlement date
and the method of settlement. The forward price will be subsequently adjusted for a floating interest rate factor equal to a specified daily rate plus a spread and
scheduled dividends during the applicable term. The 2021 transactions may be settled at any time before at various dates through December 8, 2022. Under
limited circumstances or certain unanticipated events, the forward purchaser also has the ability to require the Company to physically settle the forward equity
sale in shares prior to the applicable settlement date. The Company intends to use proceeds received upon settlement of the transactions to fund acquisitions
and capital expenditures and for general corporate purposes. As of December 31, 2021, the Company had not settled any portion of the transactions. The
agreement to offer and sell shares on a forward basis is accounted for as an equity instrument. The fair value will not be adjusted so long as the Company
continues to meet the accounting requirements for equity instruments.
Common Shares in Treasury
In 2018, the Company’s Board of Directors authorized a $100 million common share repurchase program. In 2020 and 2019, the Company repurchased
0.8 million shares and 1.2 million shares at an aggregate cost of $7.5 million and $14.1 million, respectively. These shares were recorded as Treasury Shares on
the Company’s consolidated balance sheets.
13.
Other Comprehensive Income (Loss)
The changes in Accumulated OCI by component are as follows (in thousands):
Balance, December 31, 2018
Other comprehensive income before reclassifications
Change in cash flow hedges reclassed to earnings(A)
Net current-period other comprehensive income
Balance, December 31, 2019
Other comprehensive loss before reclassifications
Change in cash flow hedges reclassed to earnings(A)
Net current-period other comprehensive income (loss)
Balance, December 31, 2020
Other comprehensive loss before reclassifications
Reclassification adjustment for foreign currency translation(B)
Net current-period other comprehensive income
Balance, December 31, 2021
Gains and Losses
on Cash Flow
Hedges
Foreign
Currency
Items
Total
$
$
(1,641) $
—
469
469
(1,172)
—
1,172
1,172
—
—
—
—
— $
$
260
421
—
421
681
(3,363)
—
(3,363)
(2,682)
(1)
2,683
2,682
— $
(1,381)
421
469
890
(491)
(3,363)
1,172
(2,191)
(2,682)
(1)
2,683
2,682
—
(A)
(B)
Classified in Interest Expense in the Company’s consolidated statements of operations. For the year ended December 31, 2020, $1.1 million is classified as other expense in the
Company’s consolidated statement of operations.
Represents the release of foreign currency translation related to the sale of a parcel of undeveloped land in Richmond Hill, Ontario, owned by one of the Company’s joint ventures (Note
3).
14.
Impairment Charges and Reserves
The Company recorded impairment charges and reserves based on the difference between the carrying value of the assets or investments and the
estimated fair market value as follows (in millions):
Reserve of preferred equity interests(A)
Assets marketed for sale(B)
Undeveloped land(B)
Total impairment charges
2021
For the Year Ended December 31,
2020
2019
— $
7.3
—
7.3 $
19.4 $
3.2
2.0
24.6 $
15.5
0.6
2.8
18.9
$
$
F-28
(A)
(B)
As a result of an aggregate valuation allowance on its preferred equity interests in the BRE DDR Joint Ventures that were transferred or redeemed in the fourth quarter of 2020.
In 2021, the impairment charges recorded were triggered by a change in the hold period assumptions. In 2020 and 2019, impairments recorded were triggered by indicative bids
received.
Items Measured at Fair Value
For the valuation of the preferred equity interests, prior to the closing of the transactions with Blackstone, the significant assumptions used in the
discounted cash flow analysis included the discount rate, projected net operating income, the timing of the expected redemption and the exit capitalization
rates. For operational real estate assets, the significant valuation assumptions included the capitalization rate used in the income capitalization valuation, as
well as the projected property net operating income. For projects under development or not at stabilization, the significant assumptions included the
discount rate, the timing and the estimated costs for the construction completion and project stabilization, projected net operating income and the exit
capitalization rate. These valuations were calculated based on market conditions and assumptions made by management at the time the valuation
adjustments and impairments were recorded, which may differ materially from actual results if market conditions or the underlying assumptions change.
The following table presents information about the fair value of real estate that was impaired, and therefore, measured on a fair value basis, along
with the related impairment charge, for the years ended December 31, 2021, 2020 and 2019. The table also indicates the fair value hierarchy of the
valuation techniques used by the Company to determine such fair value (in millions).
December 31, 2021
Long-lived assets held and used
December 31, 2020
Long-lived assets held and used
Preferred equity interests
December 31, 2019
Long-lived assets held and used
Preferred equity interests
Fair Value Measurements
Level 1
Level 2
Level 3
Total
$
— $
— $
10.0 $
10.0 $
—
—
—
—
—
—
—
—
11.5
94.2
5.0
108.5
11.5
94.2
5.0
108.5
Total
Impairment
Charges
7.3
5.2
19.4
3.4
15.5
The following table presents quantitative information about the significant unobservable inputs used by the Company to determine the fair value for
the year ended December 31, 2021 (in millions):
Description
Impairment of consolidated assets
$
Fair Value
10.0
Quantitative Information About Level 3 Fair Value Measurements
Valuation
Technique
Indicative Bid(A)
Unobservable Inputs
Indicative Bid(A)
Range
N/A
Weighted
Average
N/A
The following table presents quantitative information about the significant unobservable inputs used by the Company to determine the fair value for
the year ended December 31, 2020 (in millions):
Description
Impairment of consolidated assets
Preferred equity interests
Fair Value
$
11.5
94.2
Quantitative Information About Level 3 Fair Value Measurements
Valuation
Technique
Indicative Bid(A)
Discounted
Cash Flow
Unobservable Inputs
Indicative Bid(A)
Discount Rate
Range
N/A
6.6%–10.6%
Weighted
Average
N/A
7.9%
Terminal
Capitalization Rate
NOI Growth Rate
6.6%–10.5%
8.2%
0%
0%
(A)
Fair value measurements based upon an indicative bid and developed by third-party sources (including offers and comparable sales values), subject to the Company’s corroboration for
reasonableness. The Company does not have access to certain unobservable inputs used by these third parties to determine these estimated fair values.
F-29
15.
Stock-Based Compensation Plans and Employee Benefits
Stock-Based Compensation
The Company’s equity-based award plans provide for grants to Company employees and directors of incentive and non-qualified options to
purchase common shares, rights to receive the appreciation in value of common shares, awards of common shares subject to restrictions on transfer, awards
of common shares issuable in the future upon satisfaction of certain conditions and rights to purchase common shares and other awards based on common
shares. Under the terms of the plans, 1.8 million common shares were available for grant under future awards as of December 31, 2021.
Stock Options
Stock options may be granted at per-share prices not less than fair market value at the date of grant and must be exercised within the maximum
contractual term of 10 years thereof. The fair values for option awards granted were estimated at the date of grant using the Black-Scholes option pricing
model. No option awards have been granted since December 31, 2017. The following table reflects the stock option activity:
Number of Options
(Thousands)
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual Term
(Years)
Aggregate
Intrinsic
Value
(Thousands)
Balance December 31, 2018
Exercised
Forfeited
Balance December 31, 2019
Forfeited
Balance December 31, 2020
Forfeited
Balance December 31, 2021
Options exercisable at December 31,
2021
2020
2019
446 $
(12)
(84)
350
(27)
323
(50)
273 $
273 $
323
333
25.71
9.73
25.04
26.42
22.20
26.77
25.71
26.96
26.96
26.77
26.58
3.1 $
3.1 $
4.0
4.7
—
—
—
—
As of December 31, 2021, all stock option compensation cost was recognized. For the year ended December 31, 2019, cash received for employee
stock option exercises that were primarily settled with newly issued common shares or with treasury shares was $0.1 million.
Restricted Share Units
The Board of Directors approved grants to officers of the Company of restricted common share units (“RSUs”) of 0.4 million in 2021, 0.5 million in
2020 and 0.3 million in 2019. These grants generally vest in equal annual amounts over a three- to four-year period. RSUs generally receive cash
payments which are equivalent to the cash dividends paid on the Company’s common shares. These grants have a weighted-average fair value at the date
of grant ranging from $7.87 to $22.47, which was equal to the market value of the Company’s common shares at the date of grant. As a component of
compensation to the Company’s non-employee directors, the Company issued 0.1 million common shares to the non-employee directors for the years
ended December 31, 2021 and 2020. The grant value was equal to the market value of the Company’s common shares at the date of grant and these
common shares were fully vested upon grant.
Performance-Based Restricted Share Units (PRSUs)
In 2021, the Board of Directors approved grants to the chief executive officer and the chief financial officer, and in 2020, 2019 and 2018, the Board
of Directors approved grants to the chief executive officer of PRSUs covering a “target” number of shares, subject to three-year performance periods
beginning on March 1, 2021, March 1, 2020, March 1, 2019 and March 1, 2018, and ending on February 28, 2024, February 28, 2023, February 28, 2022
and February 28, 2021, respectively. In addition, in 2020 the Board of Directors approved grants to the chief financial officer covering a “target” number
of shares, subject to one-year, two-year and three-year performance periods beginning on March 1, 2020. In 2017, the Board of Directors approved grants
to the chief executive officer and the former chief operating officer of PRSUs covering a “target” number of shares, subject to one-year, two-year and three-
year performance periods beginning on March 1, 2017.
F-30
The payout of the PRSUs will vary based on relative total shareholder return performance measured over the applicable performance period, with
the ultimate payout ranging from a level of 0% of target to a maximum level of 200% of target (in the case of PRSUs issued prior to 2021,subject to
reduction by one-third in the event that SITE Centers’ absolute total shareholder return during the applicable performance period is negative). In March
2021, the Company issued 570,295 common shares in settlement of certain PRSUs granted in 2018 and 2020. In December 2020, in connection with the
termination without cause of the chief operating officer, a settlement of the PRSUs granted in 2020, 2019 and 2018 resulted in the issuance of 257,168
common shares. For the PRSUs in which the performance period ended in February 2020 and February 2019, no shares were granted. The 2021, 2020 and
2019 grants had a grant date fair value aggregating $3.3 million, $4.5 million and $5.6 million, respectively, to be amortized ratably over the performance
period ending three years from the date of grant.
Under the anti-dilution provisions of the Company’s equity incentive plan and the respective PRSU award agreement, the PRSUs issued in 2017 and
2018 were adjusted as of the spin-off of RVI, effective July 1, 2018, as determined by the Company’s compensation committee. The number of PRSUs was
adjusted so as to retain the same intrinsic value immediately after the spin-off that the PRSU awards had immediately prior to the spin-off. In particular,
upon consummation of the spin-off of RVI, the 2017 and 2018 PRSU awards were adjusted to: (1) retain the original SITE Centers’ relative total
shareholder return (“RTSR”) peer group; (2) retain the SITE Centers’ beginning share price used for RTSR purposes and (3) measure ending share price as
SITE Centers’ ending price plus RVI’s split-adjusted ending price (with any dividends paid during the performance period deemed reinvested into
additional SITE Centers shares). Effective at the date of the spin-off, because these awards are dual-indexed to both the Company’s and RVI’s stock
performance, the 2017 and 2018 PRSU awards are accounted for as liability awards and marked to fair value on a quarterly basis. In 2021, 2020 and 2019,
the Company recorded a mark-to-market adjustment of $5.6 million as expense, $0.7 million as income and $1.9 million as expense, respectively, in
connection with the PRSUs granted primarily in March 2018.
Summary of Unvested Share Awards
The following table reflects the activity for the unvested awards pursuant to all restricted stock grants:
Unvested at December 31, 2020
Granted
Vested
Forfeited
Unvested at December 31, 2021
Awards
(Thousands)
Weighted-Average
Grant Date
Fair Value
902 $
405
(419)
(26)
862 $
11.35
13.12
13.37
13.20
11.14
As of December 31, 2021, total unrecognized compensation for the restricted awards granted under the plans as summarized above was
$9.7 million, which is expected to be recognized over a weighted-average 1.6-year term, which includes the performance-based and time-based vesting
periods.
Deferred Compensation Plans
The Company maintains a 401(k) defined contribution plan covering substantially all of the officers and employees of the Company in accordance
with the provisions of the Code. Also, for certain officers, the Company maintains the Elective Deferred Compensation Plan and Equity Deferred
Compensation Plan, both non-qualified plans, which permit the deferral of base salaries, commissions and annual performance-based cash bonuses or
receipt of restricted shares. In addition, directors of the Company are permitted to defer all or a portion of their fees pursuant to the Directors’ Deferred
Compensation Plan, a non-qualified plan. All of these plans were fully funded at December 31, 2021.
F-31
16.
Earnings Per Share
The following table provides a reconciliation of net income and the number of common shares used in the computations of “basic” earnings per
share (“EPS”), which utilizes the weighted-average number of common shares outstanding without regard to dilutive potential common shares, and
“diluted” EPS, which includes all such shares (in thousands, except per share amounts).
Numerators – Basic and Diluted
Net income
Income attributable to non-controlling interests
Write-off of preferred share original issuance costs
Preferred dividends
Earnings attributable to unvested shares and OP Units
Net income attributable to common shareholders after
allocation to participating securities
Denominators – Number of Shares
Basic – Average shares outstanding
Assumed conversion of dilutive securities:
PRSUs
Forward equity
OP units
Diluted – Average shares outstanding
Earnings Per Share:
Basic
Diluted
2021
For the Year Ended December 31,
2020
2019
$
125,416 $
(481)
(5,156)
(13,656)
(572)
36,590 $
(869)
—
(20,531)
(204)
101,825
(1,126)
(7,176)
(32,231)
(687)
$
105,551 $
14,986 $
60,605
208,004
193,336
183,026
973
25
141
209,143
441
—
—
193,777
$
$
0.51 $
0.51
$
0.08 $
0.08
$
228
—
—
183,254
0.33
0.33
Basic average shares outstanding do not include restricted shares totaling 0.9 million, 0.9 million and 0.7 million that were not vested at
December 31, 2021, 2020 and 2019, respectively (Note 15).
The following potentially dilutive securities were considered in the calculation of EPS:
•
•
•
•
For the year ended December 31, 2021, PRSUs issued to certain executives in March 2021, March 2020 and March 2019 were considered in
the computation of dilutive EPS. For the year ended December 31, 2020, PRSUs issued to certain executives in March 2020, March 2019
and March 2018 were considered in the computation of dilutive EPS. For the year ended December 31, 2019, the PRSUs issued in March
2019 and March 2018 were considered in the computation of dilutive EPS and the PRSUs issued in March 2017 were not considered in the
computation of dilutive EPS, as the calculation was anti-dilutive.
The agreements to offer and sell shares on a forward basis for approximately 2.2 million common shares were considered in the computation
of diluted EPS for the year ended December 31, 2021 (Note 12). These agreements were not outstanding in 2020 or 2019.
The exchange into common shares associated with OP Units was included in the computation of diluted EPS for the year ending December
31, 2021. The exchange into common shares associated with OP Units was not included in the computation of diluted EPS for December 31,
2020 and 2019, because the effect of assuming conversion was anti-dilutive (Note 12).
Options to purchase 0.3 million common shares were outstanding for each of the years ending December 31, 2021, 2020 and 2019
(Note 15). These outstanding options were not considered in the computation of diluted EPS, as the options were anti-dilutive.
17.
Income Taxes
The Company elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended, commencing with its taxable year ended
December 31, 1993. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that
the Company distribute at least 90% of its taxable income to its shareholders. It is management’s current intention to adhere to these requirements and
maintain the Company’s REIT status. As a REIT, the Company generally will not be subject to corporate level federal income tax on taxable income it
distributes to its shareholders. As the
F-32
Company distributed sufficient taxable income for each of the three years ended December 31, 2021, no U.S. federal income or excise taxes were
incurred.
If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income taxes at regular corporate rates and may not be
able to qualify as a REIT for the four subsequent taxable years. Even if the Company qualifies for taxation as a REIT, the Company may be subject to
certain foreign, state and local taxes on its income and property and to federal income and excise taxes on its undistributed taxable income. In addition, the
Company has a TRS that is subject to federal, state and local income taxes on any taxable income generated from its operational activity.
In order to maintain its REIT status, the Company must meet certain income tests to ensure that its gross income consists of passive income and not
income from the active conduct of a trade or business. The Company utilizes its TRS to the extent certain fee and other miscellaneous non-real estate-
related income cannot be earned by the REIT.
For the years ended December 31, 2021, 2020 and 2019, the Company made a net payment of $0.6 million, $0.7 million and $0.7 million,
respectively, related to taxes.
The following represents the combined activity of the Company’s TRS (in thousands):
Book (loss) income before income taxes
Current
Deferred
Total income tax expense
For the Year Ended December 31,
2021
2020
2019
(3,420) $
(240) $
7,258
— $
—
— $
39 $
—
39 $
34
—
34
$
$
$
The differences between total income tax expense and the amount computed by applying the statutory income tax rate to income before taxes with
respect to its TRS activity were as follows (in thousands):
TRS
Statutory Rate
Statutory rate applied to pre-tax (loss) income
State tax expense net of federal income tax
Deferred tax impact of contributions of assets
Deferred tax impact of tax rate change
Valuation allowance decrease based on impact
of tax rate change
Valuation allowance (decrease) increase – other deferred
Expiration of capital loss carryforward
Other
Total expense
Effective tax rate
For the Year Ended December 31,
2021
2020
2019
21%
(718) $
—
(2,410)
(366)
366
(1,087)
3,584
631
—
$
$
21%
(50)
33
(3,617)
(300)
300
3,854
(181)
39
$
—%
(16.20%)
21%
1,524
27
—
(89)
89
(1,608)
91
34
0.47%
$
$
Deferred tax assets and liabilities of the Company’s TRS were as follows (in thousands):
Deferred tax assets(A)
Deferred tax liabilities
Valuation allowance
Net deferred tax asset
For the Year Ended December 31,
2021
2020
$
$
31,844 $
(84)
(31,760)
— $
32,651
(170)
(32,481)
—
(A)
At December 31, 2021, primarily attributable to $20.5 million of net operating losses and $3.8 million of book/tax differences in joint venture investments. At December 31,
2020, primarily attributable to $14.8 million of net operating losses, $9.3 million of book/tax differences in joint venture investments and $3.7 million of capital loss
carryforward. The TRS net operating loss carryforwards will expire in varying amounts between the years 2024 and 2035, except for approximately $5.0 million that was
generated in 2021 and does not expire.
F-33
Reconciliation of GAAP net income attributable to SITE Centers to taxable income is as follows (in thousands):
GAAP net income attributable to SITE Centers
Plus: Book depreciation and amortization(A)
Less: Tax depreciation and amortization(A)
Book/tax differences on losses from capital transactions
Joint venture equity (earnings) loss, net(A)
Deferred income
Compensation expense
Impairment charges
Miscellaneous book/tax differences, net
Taxable income before adjustments
Less: Net operating loss carryforward
Taxable income subject to the 90% dividend requirement
For the Year Ended December 31,
2021
2020
2019
$
$
124,935 $
162,342
(115,735)
(28,114)
(15,480)
(1,158)
11,534
7,270
(20,183)
125,411
(28,576)
96,835 $
35,721 $
154,051
(105,385)
(45,808)
10,572
(13,197)
4,031
24,593
549
65,127
—
65,127 $
100,699
152,707
(107,830)
(52,733)
(9,189)
(417)
6,608
18,914
1,020
109,779
—
109,779
(A)
Depreciation expense from majority-owned subsidiaries and affiliates, which is consolidated for financial reporting purposes but not for tax reporting purposes, is included in the
reconciliation item “Joint venture equity (earnings) loss, net.”
Reconciliation between cash and stock dividends paid and the dividends paid deduction is as follows (in thousands):
Dividends paid
Less: Dividends designated to prior year
Plus: Dividends designated from the following year
Less: Return of capital
Dividends paid deduction
18.
Segment Information
For the Year Ended December 31,
2021
2020
2019
96,835 $
(5,133)
5,133
—
96,835 $
98,073 $
(5,133)
5,133
(32,946)
65,127 $
180,092
(8,383)
5,133
(67,063)
109,779
$
$
In the fourth quarter of 2020, the Company transferred and redeemed its loan investments (preferred equity interests) in the BRE DDR Joint
Ventures in exchange for the acquisition of certain of the underlying assets of the two joint ventures. As such, beginning on January 1, 2021, the Company
has one reportable operating segment. The tables below present information about the Company’s reportable operating segments (in thousands):
Rental income
Other income
Total revenues
Rental operation expenses
Net operating income
Impairment charges
Depreciation and amortization
Interest income
Other expense, net
Unallocated expenses(A)
Equity in net income of joint ventures
Reserve of preferred equity interests, net
Gain on sale and change in control of interests, net
Gain on disposition of real estate, net
Income before tax expense
As of December 31, 2020:
Total gross real estate assets
For the Year Ended December 31, 2020
Shopping
Centers
Loan
Investments
Other
Total
$
414,864 $
45,456
460,320
(138,402)
321,918
(5,200)
(170,669)
1,516
45,464
1,069
—
13
13
—
13
11,888
$
(19,393)
$
(18,400)
(130,485)
$
414,864
45,469
460,333
(138,402)
321,931
(5,200)
(170,669)
11,888
(18,400)
(130,485)
1,516
(19,393)
45,464
1,069
37,721
$
4,989,388
$
4,989,388
F-34
Rental income
Other income
Business interruption income
Total revenues
Rental operation expenses
Net operating income
Impairment charges
Depreciation and amortization
Interest income
Other expense, net
Unallocated expenses(A)
Equity in net income of joint ventures
Reserve of preferred equity interests
Gain on disposition of real estate, net
Income before tax expense
As of December 31, 2019:
Total gross real estate assets
Notes receivable, net(B)
For the Year Ended December 31, 2019
Shopping
Centers
Loan
Investments
Other
Total
$
443,421 $
63,632
885
507,938
(139,653)
368,285
(3,370)
(165,087)
11,519
31,380
—
50
—
50
(10)
40
18,009
$
(15,544)
$
357
(143,105)
$
443,421
63,682
885
507,988
(139,663)
368,325
(3,370)
(165,087)
18,009
357
(143,105)
11,519
(15,544)
31,380
102,484
$
4,709,812
$
4,709,812
$
120,130 $
(112,589) $
7,541
(A)
(B)
19.
Unallocated expenses consist of General and Administrative Expenses and Interest Expense as listed in the Company’s consolidated statements of operations.
In 2019, amount includes BRE DDR Joint Venture preferred investment interests. This note receivable was used as part of the consideration paid to acquire certain of the underlying
assets of two joint ventures.
Subsequent Events
In the first quarter of 2022, the Company acquired Artesia Village (Scottsdale, Arizona) for $14.5 million. The Company also acquired its partner’s
80% interest in Casselberry Commons (Casselberry, Florida) owned by the DDRM Properties Joint Venture for $35.6 million ($44.5 million at 100%).
F-35
SITE Centers Corp.
Valuation and Qualifying Accounts and Reserves
For the Years Ended December 31, 2021, 2020 and 2019
(In thousands)
SCHEDULE II
Year ended December 31, 2021
Allowance for uncollectible accounts(A)
Valuation allowance for deferred tax assets(B)
Year ended December 31, 2020
Allowance for uncollectible accounts(A)
Valuation allowance for deferred tax assets(B)
Year ended December 31, 2019
Allowance for uncollectible accounts(A)
Valuation allowance for deferred tax assets(B)
Balance at
Beginning of
Year
Charged to
Expense
Deductions
Balance at
End of
Year
$
$
$
$
$
$
7,402
32,481
109,710
28,413
88,814
29,846
$
$
$
$
$
$
1,051
—
25,605
4,068
21,448
—
$
$
$
$
$
$
3,733
721
127,913
—
552
1,433
$
$
$
$
$
$
4,720
31,760
7,402
32,481
109,710
28,413
(A)
Includes allowances on straight-line rents and reserve of preferred equity interests and accrued interest ($105.3 million at December 31, 2019).
(B)
Amounts charged to expense are discussed further in Note 17.
F-36
SCHEDULE III
SITE Centers Corp.
Real Estate and Accumulated Depreciation
December 31, 2021
(In thousands)
Location
Phoenix, AZ
Phoenix, AZ
Phoenix, AZ
Buena Park, CA
Fontana, CA
Long Beach, CA
Oakland, CA
Roseville, CA
San Francisco, CA
Centennial, CO
Colorado Springs, CO
Denver, CO
Parker, CO
Guilford, CT
Windsor Court, CT
Boynton Beach, FL
Brandon, FL
Brandon, FL
Brandon, FL
Delray Beach, FL
Fort Walton Beach, FL
Jupiter, FL
Melbourne, FL
Miami, FL
Naples, FL
Orlando, FL
Orlando, FL
Palm Harbor, FL
Plantation, FL
Tamarac, FL
Tampa, FL
Tampa, FL
Wesley Chapel, FL
Winter Garden, FL
Atlanta, GA
Atlanta, GA
Cumming, GA
Cumming, GA
Cumming, GA
Initial Cost
Buildings &
Improvements
18,929
$
24,414
36,880
21,427
57,931
147,918
33,538
67,031
25,730
35,550
47,671
22,818
38,256
41,892
11,745
9,256
4,111
13,117
13,685
26,006
5,612
20,051
7,325
30,457
39,342
56,684
16,424
4,089
37,331
22,139
10,907
15,874
21,567
130,382
41,050
17,103
23,653
49,659
8,218
Land
$ 18,701
15,352
15,090
27,269
23,861
—
4,361
23,574
10,464
7,833
9,001
20,733
4,632
4,588
6,090
6,048
—
4,775
2,938
12,664
3,643
8,764
3,111
11,626
10,172
8,528
9,451
1,137
21,729
16,730
10,000
6,800
8,080
38,945
14,078
12,358
14,249
6,851
3,391
$
Total Cost(1)
Buildings &
Improvements(3)
24,597
29,130
42,553
27,405
64,180
197,363
33,538
68,854
31,146
68,789
60,890
30,343
42,830
64,406
12,616
9,256
27,484
19,400
18,884
26,006
5,612
20,310
12,557
121,805
43,609
82,233
16,480
5,342
96,247
22,139
11,090
15,874
21,567
139,688
48,077
17,103
29,242
50,752
8,754
Land(2)
$ 18,701
15,352
18,399
27,269
23,861
—
4,361
23,574
10,464
9,075
9,001
20,804
4,632
6,457
6,090
6,048
—
4,775
2,938
12,664
3,643
8,764
3,111
26,743
10,172
13,057
9,451
1,137
22,112
16,730
10,000
6,800
8,080
38,945
14,078
12,358
14,249
6,851
3,391
F-37
Total
$ 43,298
44,482
60,952
54,674
88,041
197,363
37,899
92,428
41,610
77,864
69,891
51,147
47,462
70,863
18,706
15,304
27,484
24,175
21,822
38,670
9,255
29,074
15,668
148,548
53,781
95,290
25,931
6,479
118,359
38,869
21,090
22,674
29,647
178,633
62,155
29,461
43,491
57,603
12,145
$
Accumulated
Depreciation(4)
12,002
18,887
15,039
6,300
16,120
104,791
9,612
17,165
14,730
47,401
18,778
17,811
10,940
12,122
6,085
—
3,836
8,571
4,313
602
—
903
1,235
55,003
11,461
14,166
734
4,119
50,138
—
868
—
—
40,675
18,825
229
16,567
14,922
1,113
Total Cost,
Net of
Accumulated
$
Depreciation
31,296
25,595
45,913
48,374
71,921
92,572
28,287
75,263
26,880
30,463
51,113
33,336
36,522
58,741
12,621
15,304
23,648
15,604
17,509
38,068
9,255
28,171
14,433
93,545
42,320
81,124
25,197
2,360
68,221
38,869
20,222
22,674
29,647
137,958
43,330
29,232
26,924
42,681
11,032
$
Encumbrances(5)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
17,578
—
12,721
—
—
—
—
20,018
—
—
—
9,100
—
—
—
—
—
—
—
—
Date of
Construction (C)
Acquisition (A)
1999 (A)
2003 (A)
2012 (A)
2015 (A)
2014 (A)
2005 (C)
2013 (A)
2014 (A)
2002 (A)
1997 (C)
2011 (A)
2003 (A)
2013 (A)
2015 (C)
2007 (A)
2021 (A)
1972 (C)
2009 (A)
2013 (A)
2021 (A)
2021 (A)
2020 (A)
2018 (A)
2006 (C)
2013 (A)
2016 (C)
2020 (A)
1995 (A)
2007 (A)
2021 (A)
2019 (A)
2021 (A)
2021 (A)
2013 (A)
2009 (A)
2021 (A)
2003 (A)
2013 (A)
2018 (A)
SCHEDULE III
SITE Centers Corp.
Real Estate and Accumulated Depreciation
December 31, 2021
(In thousands)
Location
Douglasville, GA
Ellenwood, GA
Roswell, GA
Snellville, GA
Suwanee, GA
Chicago, IL
Chicago, IL
Schaumburg, IL
Merriam, KS
Everett, MA
Framingham, MA
Brentwood, MO
East Hanover, NJ
Edgewater, NJ
Freehold, NJ
Hamilton, NJ
Princeton, NJ
Voorhees, NJ
West Long Branch, NJ
Hempstead, NY
Charlotte, NC
Charlotte, NC
Charlotte, NC
Cornelius, NC
Cincinnati, OH
Columbus, OH
Columbus, OH
Dublin, OH
Mason, OH
Stow, OH
Westlake, OH
Portland, OR
Portland, OR
Boothwyn, PA
Downingtown, PA
Easton, PA
Initial Cost
Land
2,839
1,285
6,566
10,185
13,479
22,642
23,588
27,466
15,043
9,311
75,675
10,018
3,847
7,714
2,460
8,039
17,991
1,350
14,131
26,487
27,707
11,224
3,600
4,382
19,572
12,922
18,716
3,609
2,032
993
424
20,208
10,122
6,370
4,175
7,691
Buildings &
Improvements
5,511
4,841
15,005
51,815
23,923
82,754
45,632
84,679
55,028
44,647
191,594
32,053
23,798
30,473
2,475
49,896
82,063
1,837
51,982
14,418
45,021
82,124
30,392
15,184
54,495
46,006
64,617
11,546
23,788
9,028
4,004
50,738
37,457
16,931
15,678
20,405
Total Cost(1)
Buildings &
Improvements(3)
7,333
4,841
29,180
61,386
34,873
83,275
45,954
92,209
50,350
60,446
204,956
41,035
29,551
38,453
3,766
92,699
122,850
4,960
82,553
14,651
51,938
99,612
54,782
21,669
78,245
72,976
72,158
15,957
28,009
42,895
30,357
65,338
37,895
17,013
15,925
20,772
Land(2)
2,839
1,285
7,894
10,342
13,335
22,642
23,588
24,646
9,601
9,462
75,675
10,018
3,847
7,714
3,166
10,014
18,998
1,350
14,131
26,479
27,707
11,224
8,463
4,382
19,572
14,078
20,666
3,609
2,032
993
424
20,208
10,122
6,370
4,175
7,691
F-38
Total
10,172
6,126
37,074
71,728
48,208
105,917
69,542
116,855
59,951
69,908
280,631
51,053
33,398
46,167
6,932
102,713
141,848
6,310
96,684
41,130
79,645
110,836
63,245
26,051
97,817
87,054
92,824
19,566
30,041
43,888
30,781
85,546
48,017
23,383
20,100
28,463
Accumulated
Depreciation(4)
1,118
—
13,398
29,090
19,745
21,464
8,603
25,986
13,196
37,109
56,382
26,195
13,887
15,662
1,548
49,999
72,156
135
41,151
731
18,839
30,551
12,822
11,391
19,365
49,461
24,132
11,380
7,282
26,089
6,312
22,950
2,950
951
932
1,202
Total Cost,
Net of
Accumulated
Depreciation
9,054
6,126
23,676
42,638
28,463
84,453
60,939
90,869
46,755
32,799
224,249
24,858
19,511
30,505
5,384
52,714
69,692
6,175
55,533
40,399
60,806
80,285
50,423
14,660
78,452
37,593
68,692
8,186
22,759
17,799
24,469
62,596
45,067
22,432
19,168
27,261
Encumbrances(5)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
15,979
—
—
Date of
Construction (C)
Acquisition (A)
2018 (A)
2021 (A)
2007 (A)
2007 (A)
2003 (A)
2014 (A)
2017 (A)
2013 (A)
2013 (A)
2001 (C)
2013 (A)
1998 (A)
2007 (A)
2007 (A)
2005 (C)
2003 (A)
1997 (A)
2020 (A)
2004 (A)
2020 (A)
2011 (A)
2012 (A)
2013 (C)
2007 (A)
2014 (A)
1998 (A)
2011 (A)
1998 (A)
2014 (A)
1969 (C)
1974 (C)
2012 (A)
2019 (A)
2020 (A)
2020 (A)
2020 (A)
SITE Centers Corp.
Real Estate and Accumulated Depreciation
December 31, 2021
(In thousands)
Location
Anderson, SC
Mount Pleasant, SC
Brentwood, TN
Highland Village, TX
Round Rock, TX
San Antonio, TX
San Antonio, TX
San Antonio, TX
Charlottesville, VA
Charlottesville, VA
Fairfax, VA
Richmond, VA
Richmond, VA
Springfield, VA
Portfolio Balance (SITE)
Initial Cost
Buildings &
Land
Improvements
Land(2)
1,372
2,430
6,101
5,545
3,467
3,475
5,602
2,381
2,181
1,400
15,681
11,879
7,331
17,016
15,051
1,372
2,341
6,101
5,545
3,467
4,873
10,158
2,381
2,181
1,400
15,681
11,879
7,330
17,016
15,051
$ 982,392 $ 3,249,802 $ 1,019,655
11,656
10,470
25,956
28,365
8,839
37,327
39,196
6,487
6,571
2,537
68,536
34,736
49,278
40,038
202,200
Total Cost(1)
Buildings &
Improvements(3)
11,756
31,164
28,234
30,742
8,804
53,641
115,143
24,567
6,571
2,537
71,587
37,302
51,034
44,931
202,200
4,219,226
$
Total
13,128
33,505
34,335
36,287
12,271
58,514
125,301
26,948
8,752
3,937
87,268
49,181
58,364
61,947
217,251
$ 5,238,881
Accumulated
Depreciation(4)
466
17,421
8,227
10,010
722
30,566
50,053
12,635
133
7
19,338
17,528
1,908
20,790
111,538
1,571,569
$
(1)
(2)
(3)
(4)
The aggregate cost for federal income tax purposes was approximately $5.5 billion at December 31, 2021.
Includes $8.3 million of undeveloped land at December 31, 2021.
Includes $39.0 million of construction in progress at December 31, 2021.
Depreciation and amortization is recorded on a straight-line basis over the estimated useful lives of the assets as follows:
Buildings
Building improvements and fixtures
Tenant improvements
Useful lives, 31.5 to 40 years
Useful lives, ranging from 3 to 20 years
Shorter of economic life or lease terms
(5)
Excludes fair market value of debt adjustments and net loan costs aggregating $0.4 million.
F-39
SCHEDULE III
Date of
Construction (C)
Acquisition (A)
2020 (A)
1995 (A)
2013 (A)
2013 (A)
2019 (A)
2002 (C)
2007 (C)
2007 (A)
2021 (A)
2021 (A)
2013 (A)
2007 (A)
2020 (A)
2007 (A)
Total Cost,
Net of
Accumulated
Depreciation
12,662
16,084
26,108
26,277
11,549
27,948
75,248
14,313
8,619
3,930
67,930
31,653
56,456
41,157
105,713
Encumbrances(5)
15,736
—
—
—
—
—
—
—
—
—
—
—
34,250
—
—
125,382
$ 3,667,312 $
The changes in Total Real Estate Assets are as follows (in thousands):
Balance at beginning of year
Acquisitions
Developments, improvements and expansions
Adjustments of property carrying values (Impairments)
Disposals(A)
Balance at end of year
(A)
Includes the write-off of fully amortized tenant improvements.
The changes in Accumulated Depreciation and Amortization are as follows (in thousands):
Balance at beginning of year
Depreciation for year
Disposals
Balance at end of year
F-40
SCHEDULE III
For the Year Ended December 31,
2021
4,989,388 $
215,998
84,130
(7,270)
(43,365)
5,238,881 $
2020
2019
4,709,812 $
242,593
59,126
(5,200)
(16,943)
4,989,388 $
4,627,866
80,771
109,830
(3,370)
(105,285)
4,709,812
For the Year Ended December 31,
2021
1,427,057 $
164,200
(19,688)
1,571,569 $
2020
2019
1,289,148 $
154,906
(16,997)
1,427,057 $
1,172,357
147,372
(30,581)
1,289,148
$
$
$
$
SITE Centers Corp.
Mortgage Loans on Real Estate
December 31, 2021
(In thousands)
SCHEDULE IV
The Company did not have any mortgage loans outstanding at December 31, 2021 and 2020. Changes in mortgage loans are summarized below (in
thousands):
Balance at beginning of period
Additions during period:
Interest
Deductions during period:
Provision for loan loss reserve
Collections of principal and interest
Balance at close of period
For the Year Ended December 31,
2020
2019
120,130 $
209,566
12,150
(19,393)
(112,887)
— $
18,285
(15,544)
(92,177)
120,130
$
$
F-41
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
SITE Centers Corp.
By: /s/ David R. Lukes
David R. Lukes, Chief Executive Officer,
President & Director
Date: February 24, 2022
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the
Registrant and in the capacities indicated on the 24th day of February, 2022.
/s/ David R. Lukes
David R. Lukes
/s/ Conor Fennerty
Conor Fennerty
/s/ Christa A. Vesy
Christa A. Vesy
/s/ Linda B. Abraham
Linda B. Abraham
/s/ Terrance R. Ahern
Terrance R. Ahern
/s/ Jane E. DeFlorio
Jane E. DeFlorio
/s/ Thomas Finne
Thomas Finne
/s/ Victor B. MacFarlane
Victor B. MacFarlane
/s/ Alexander Otto
Alexander Otto
/s/ Dawn M. Sweeney
Dawn M. Sweeney
Chief Executive Officer, President & Director
(Principal Executive Officer)
Executive Vice President, Chief Financial Officer & Treasurer
(Principal Financial Officer)
Executive Vice President & Chief Accounting Officer
(Principal Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
DESCRIPTION OF SECURITIES
REGISTERED UNDER SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
Exhibit 4.29
As of the end of its most recent fiscal year, SITE Centers Corp., an Ohio corporation (the “Company”), had two classes of equity
securities registered under Section 12 of the Securities Exchange Act of 1934, as amended:
•
•
common shares, $0.10 par value per share (“common shares”); and
depositary shares (“Class A depositary shares” or “depositary shares”), each representing 1/20 of a share of the
6.375% Class A Cumulative Redeemable Preferred Shares, without par value (“6.375% Class A Shares” or
“Designated Preferred Shares”).
The following description of the Company’s capital stock is a summary and is qualified in its entirety by provisions of Ohio law
and by reference to the terms and provisions of the Company’s articles of incorporation and code of regulations, which are
incorporated herein by reference and attached as exhibits to the Company’s most recent Annual Report on Form 10‑K filed with
the Securities and Exchange Commission.
The Company’s authorized capital stock consists of:
•
•
•
•
•
•
•
•
•
•
•
•
300,000,000 common shares;
750,000 Class A Cumulative Preferred Shares, without par value (“Class A Shares”), of which 350,000 shares have
been designated as 6.375% Class A Shares;
750,000 Class B Cumulative Preferred Shares, without par value (“Class B Shares”);
750,000 Class C Cumulative Preferred Shares, without par value (“Class C Shares”);
750,000 Class D Cumulative Preferred Shares, without par value (“Class D Shares”);
750,000 Class E Cumulative Preferred Shares, without par value (“Class E Shares”);
750,000 Class F Cumulative Preferred Shares, without par value (“Class F Shares”);
750,000 Class G Cumulative Preferred Shares, without par value (“Class G Shares”);
750,000 Class H Cumulative Preferred Shares, without par value (“Class H Shares”);
750,000 Class I Cumulative Preferred Shares, without par value (“Class I Shares”);
750,000 Class J Cumulative Preferred Shares, without par value (“Class J Shares”);
750,000 Class K Cumulative Preferred Shares, without par value (“Class K Shares”);
•
•
750,000 Noncumulative Preferred Shares, without par value (“noncumulative shares”); and
2,000,000 Cumulative Voting Preferred Shares, without par value (“cumulative voting preferred shares”).
The Class A Shares, the Class B Shares, the Class C Shares, the Class D Shares, the Class E Shares, the Class F Shares, the Class
G Shares, the Class H Shares, the Class I Shares, the Class J Shares, the Class K Shares and the noncumulative shares are
referred to collectively herein as the “nonvoting preferred shares.” The nonvoting preferred shares and the cumulative voting
preferred shares are referred to collectively herein as the “Authorized Preferred Shares.”
Authorized Preferred Shares may be issued in one or more series, with such designations, powers, preferences and rights of the
shares of each series of each class and the qualifications, limitations or restrictions thereon, including, but not limited to, the
fixing of the dividend rate or rates, conversion rights and terms of redemption (including sinking fund provisions), the
redemption price or prices, and the liquidation preferences, in each case, if any, as the Company’s board of directors (the
“Board”) or any authorized committee thereof may determine by adoption of an amendment to the Company’s articles of
incorporation, without any further vote or action by the shareholders.
DESCRIPTION OF DEPOSITARY SHARES
Preferred Shares General
Except as discussed below, the nonvoting preferred shares rank on a parity with each other and are identical to each other. The
cumulative voting preferred shares rank equally, except with respect to voting rights, with all of the nonvoting preferred
shares. Dividends on the Class A Shares, the Class B Shares, the Class C Shares, the Class D Shares, the Class E Shares, the
Class F Shares, the Class G Shares, the Class H Shares, the Class I Shares, the Class J Shares, the Class K Shares and the
cumulative voting preferred shares will be cumulative, while dividends on the noncumulative shares will not be cumulative.
Prior to the issuance of shares of each series of each class of nonvoting preferred shares, the Board may, under the Company’s
articles of incorporation and Ohio law, fix:
•
•
•
•
the designation of the series;
the authorized number of shares of the series. The Board may, except when otherwise provided in the creation of the
series, increase or decrease the authorized number of shares before or after issuance of the series (but not below the
number of shares of such series then outstanding);
the dividend rate or rates of the series, including the means by which such rates may be established;
the date(s) from which dividends shall accrue and be cumulative and, with respect to all nonvoting preferred shares,
the date on which and the period(s) for which dividends, if
2
declared, shall be payable, including the means by which such date(s) and period(s) may be established;
redemption rights and prices, if any;
the terms and amounts of the sinking fund, if any;
the amounts payable on shares of the series in the event of any voluntary or involuntary liquidation, dissolution or
winding-up of the Company’s affairs;
whether the shares of the series shall be convertible into common shares or shares of any other class;
if the shares are convertible, the conversion rate(s) or price(s), any adjustments to the rate or price and all other terms
and conditions upon which such conversion may be made; and
restrictions on the issuance of shares of the same or any other class or series.
•
•
•
•
•
•
All preferred shares will be equal to all other preferred shares with respect to dividend rights (subject to dividends on
noncumulative shares being noncumulative) and rights upon the Company’s liquidation, dissolution or winding-up.
The preferred shares will:
•
•
rank prior to all classes of common shares and to all other equity securities ranking junior to such preferred shares
with respect to dividend rights and rights upon the Company’s liquidation, dissolution or winding-up;
be equal to all of the Company’s equity securities the terms of which specifically provide that such equity securities
are equal to the preferred shares with respect to dividend rights and rights upon the Company’s liquidation, dissolution
or winding-up; and • be junior to all of the Company’s equity securities the terms of which specifically provide that
such equity securities rank prior to the preferred shares with respect to dividend rights and rights upon the Company’s
liquidation, dissolution or winding-up.
Class A Depositary Shares General
Each Class A depositary share represents a 1/20th fractional interest in a share of the 6.375% Class A Shares, deposited with
Computershare Shareowner Services LLC, Jersey City, New Jersey, as depositary (the “Preferred Shares Depositary”), under a
deposit agreement between the Company, the Preferred Shares Depositary and the holders from time to time of the depositary
receipts (the “Class A depositary receipts” or the “depositary receipts”) issued by the Preferred Shares Depositary and evidencing
the Class A depositary shares. Subject to the terms of such deposit agreement, each holder of a Class A depositary receipt
evidencing a Class A depositary share will be entitled to all the rights and preferences of a fractional interest in a 6.375% Class A
Share (including dividend, voting, redemption and liquidation rights and preferences).
3
The Class A depositary shares are listed on the New York Stock Exchange (“NYSE”) under the symbol “SITC PRA”
The 6.375% Class A Shares and the Class A depositary shares do not have a stated maturity and are not subject to any sinking
fund or mandatory redemption provisions (except as provided under “—Restrictions on Ownership” below).
Dividends
Holders of the 6.375% Class A Shares will be entitled to receive, when and as declared by the Board, out of funds legally
available for the payment of dividends, cumulative preferential cash dividends at the rate of 6.375% of the liquidation preference
per year (equivalent to $1.59375 per year per Class A depositary share, or $0.39844 per quarterly period per Class A depositary
share).
Such dividends will be cumulative from, and including, the date of original issuance or the most recent Dividend Payment Date
(as defined below) on which dividends have been paid, as applicable, and will be payable quarterly in arrears on the fifteenth day
of each January, April, July and October or, if not a business day, the next succeeding business day (each, a “Dividend Payment
Date”). Any dividend payable on the Designated Preferred Shares for any period shorter or longer than a full dividend period
will be computed on the basis of the 360-day year consisting of twelve 30-day months. The Preferred Shares Depositary will
distribute dividends received in respect of the Designated Preferred Shares to the record holders of the depositary receipts as of
the close of business on the applicable record date, which will be the first day of the calendar month in which the applicable
Dividend Payment Date falls or on such other date designated by the Board for the payment of dividends that is not more than 30
nor less than 10 days prior to such Dividend Payment Date (each, a “Dividend Record Date”), in each case whether or not such
day is a business day.
No dividends on the Designated Preferred Shares may be declared by the Board or paid or set apart for payment by the Company
at any time if the terms and provisions of any agreement to which the Company is a party, including any agreement relating to the
Company’s indebtedness, prohibit such declaration, payment or setting apart for payments or provide that such declaration,
payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration or payment
is restricted or prohibited by law.
Notwithstanding the foregoing, dividends on the Designated Preferred Shares will accrue whether or not the Company has
earnings, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends
are declared. Accrued but unpaid dividends on the Designated Preferred Shares will not bear interest. Holders of the Designated
Preferred Shares and the depositary shares will not be entitled to any dividends in excess of full cumulative dividends as
described above. Any dividend payment made on the Designated Preferred Shares will first be credited against the earliest
accrued but unpaid dividend due with respect to such shares which remains payable.
If preferred shares are outstanding, dividends may not be paid or declared or set apart for any series of preferred shares for any
dividend period unless at the same time:
4
•
•
a proportionate dividend for the dividend periods terminating on the same or any earlier date for all issued and
outstanding shares of all series of such class entitled to receive such dividend (but, if such series are series of
noncumulative shares, then only with respect to the current dividend period), ratably in proportion to the respective
annual dividend rates fixed therefor, have been paid or declared or set apart; and
the dividends payable for the dividend periods terminating on the same or any earlier date for all other classes of
issued and outstanding preferred shares entitled to receive such dividends (but, with respect to noncumulative shares,
only with respect to the then-current dividend period), ratably in proportion to the respective dividend rates fixed
therefor, have been paid or declared and set apart.
If any series of preferred shares is outstanding, a dividend shall not be paid or declared or any distribution made in respect of the
common shares or any other shares ranking junior to such series of preferred shares, and common shares or any other shares
ranking junior to such series of preferred shares shall not be purchased, retired or otherwise acquired by the Company unless:
•
•
all accrued and unpaid dividends on all classes of outstanding preferred shares, including the full dividends for all
current dividend periods for the nonvoting preferred shares (except, with respect to noncumulative shares, for the
then-current dividend period only), have been declared and paid or a sum sufficient for payment thereof set apart; and
with respect to the nonvoting preferred shares, there are no arrearages with respect to the redemption of any series of
any class of preferred shares from any sinking fund provided for such class in accordance with the articles of
incorporation. However, common shares and any other shares ranking junior to such series of preferred shares may be
purchased, retired or otherwise acquired using the proceeds of a sale of common shares or other shares junior to such
preferred shares received subsequent to the first date of issuance of such preferred shares. In addition, the Company
may pay or declare or distribute dividends payable in common shares or other shares ranking junior to such preferred
shares.
The preceding restrictions on the payment of dividends or other distributions on, or on the purchase, redemption, retirement or
other acquisition of, common shares or any other shares ranking equal to or junior to any class of preferred shares generally will
be inapplicable to:
•
•
•
any payments in lieu of issuance of fractional shares, upon any merger, conversion, stock dividend or otherwise in the
case of the nonvoting preferred shares;
the conversion of preferred shares into common shares; or
the exercise of the Company’s rights to repurchase shares of capital stock in order to preserve the Company’s status as
a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”).
When dividends are not paid in full (or a sum sufficient for full payment is not set apart) upon the preferred shares of any series
and the shares of any other series of preferred shares ranking
5
on a parity as to dividends with such series, all dividends declared upon preferred shares of such series and any other series of
preferred shares ranking on a parity as to dividends with such preferred shares shall be declared pro rata so that the amount of
dividends declared per share on the shares of such series of preferred shares shall in all cases bear to each other the same ratio
that accrued dividends per share on the preferred shares of such series (which shall not include any accumulation in respect of
unpaid dividends for prior dividend periods for noncumulative shares) and such other series bear to each other.
Ranking
With respect to the payment of dividends and amounts upon liquidation, the Designated Preferred Shares will rank equally with
all of the Company’s other preferred shares, when issued (subject to dividends on noncumulative shares being noncumulative)
and will rank senior to the common shares.
Liquidation Preference
In the event of the Company’s voluntary liquidation, dissolution or winding up, the holders of the Designated Preferred Shares
will be entitled to be paid out of the Company’s assets legally available for distribution to the Company’s shareholders a
liquidation preference of $500.00 per share (equivalent to $25.00 per depositary share), plus an amount equal to accrued and
unpaid dividends to, but not including, the date of payment, before any distribution of assets is made to holders of the Company’s
common shares or any other capital stock that rank junior to the Designated Preferred Shares as to liquidation rights. After
payment of the full amount of the liquidating distributions to which they are entitled, the holders of Designated Preferred Shares
will have no right or claim to any of the Company’s remaining assets. In the event the Company’s assets legally available for
distribution to the Company’s shareholders are insufficient to permit the payment upon the Designated Preferred Shares (and the
depositary shares) and all outstanding Authorized Preferred Shares of the full preferential amount to which they are respectively
entitled, then such assets will be distributed ratably upon the Designated Preferred Shares (and the depositary shares) and all
other outstanding Authorized Preferred Shares in proportion to the full preferential amount to which each such share is entitled.
If liquidating distributions are made in full to all holders of preferred shares, the Company’s remaining assets will be distributed
among the holders of any other classes or series of capital stock ranking junior to the preferred shares upon liquidation,
dissolution or winding-up. The distributions will be made according to the holders’ respective rights and preferences and, in each
case, according to their respective number of shares. The Company’s merger or consolidation into or with any other corporation,
or the sale, lease or conveyance of all or substantially all of the Company’s assets, shall not constitute a dissolution, liquidation or
winding-up.
Optional Redemption
Except in certain circumstances relating to the preservation of the Company’s status as a REIT and except as described below
under “—Special Optional Redemption,” the Company may not redeem the 6.375% Class A Shares prior to June 5, 2022. On
and after June 5, 2022, the
6
Company may redeem the 6.375% Class A Shares at the Company’s option upon not less than 30 nor more than 60 days’ written
notice (and the Preferred Shares Depositary will redeem the number of depositary shares representing interests in the Designated
Preferred Shares so redeemed upon not less than 30 days’ and no more than 60 days’ written notice to the holders thereof), in
whole or in part, at any time or from time to time, for cash at a redemption price of $500.00 per share (equivalent to $25.00 per
depositary share), plus accrued and unpaid dividends to, but not including, the date of redemption (except as provided below),
without interest.
Holders of depositary receipts evidencing depositary shares to be redeemed will surrender such depositary receipts at the place
designated in such notice and will be entitled to the redemption price and any accrued and unpaid dividends payable upon such
redemption following such surrender. If fewer than all the outstanding depositary shares of any series are to be redeemed, the
depositary shares to be redeemed will be selected pro rata (as nearly as may be practicable without creating fractional depositary
shares) or by any other equitable method determined by the Company that will not result in the issuance of any Designated
Preferred Shares in excess of the ownership limit described below (see “—Ownership Limit”). If the Company elects to redeem
any of the Designated Preferred Shares as described in this paragraph, the Company may use any available cash to pay the
redemption price, and the Company will not be required to pay the redemption price only out of the proceeds from the issuance
of other classes and series of the Company’s shares or any other specific source. The Company may not purchase or redeem less
than all of the outstanding shares of any series of Designated Preferred Shares except in accordance with a stock purchase offer
made to all holders of record of such series, unless all dividends on such series for previous and current dividend periods have
been declared and paid or funds set apart. However, the Company may repurchase or redeem Designated Preferred Shares in
order to preserve the Company’s status as a REIT.
The Company will give the Preferred Shares Depositary not less than 10 days’ prior written notice of redemption of the deposited
Designated Preferred Shares. A similar notice will be mailed by the Preferred Shares Depositary, postage prepaid, not less than
30 nor more than 60 days prior to the redemption date, addressed to the respective holders of record of the depositary shares to be
redeemed at their respective addresses as they appear on the records of the Preferred Shares Depositary. No failure to give such
notice or any defect thereto or in the mailing thereof will affect the validity of the proceedings for the redemption of any
Designated Preferred Share or depositary share except as to the holder to whom notice was defective or not given. A redemption
notice that has been mailed in the manner provided herein will be conclusively presumed to have been duly given on the date
mailed whether or not the holder received the redemption notice. Each notice will state: (i) the redemption date; (ii) the
redemption price; (iii) the number of Designated Preferred Shares and the number of depositary shares to be redeemed; (iv) the
place or places where the depositary receipts are to be surrendered for payment of the redemption price; and (v) that dividends on
the shares to be redeemed will cease to accrue on such redemption date. If less than all the shares of any series of Designated
Preferred Shares are to be redeemed, the notices mailed to the Preferred Shares Depositary and any holder of depositary shares
will also specify the number of such Designated Preferred Shares and depositary shares to be redeemed. The Company will also
cause notice of redemption to be published in a newspaper of general circulation in the City of New York at least once a week for
two successive weeks commencing not less than 30 days nor more than 60 days prior to the date of redemption.
7
If the Company and the Preferred Shares Depositary have mailed a notice of redemption and if the Company has set aside
sufficient funds for the redemption in trust for the benefit of the holders of the Designated Preferred Shares (or the depositary
shares, as applicable) called for redemption, and the Company directs that there be paid to the respective holders of the
Designated Preferred Shares (or the depositary shares, as applicable) so to be redeemed amounts equal to the redemption price,
plus accrued and unpaid dividends to, but not including, the date of redemption, on surrender of the Designated Preferred Shares
(or the depositary shares, as applicable), those Designated Preferred Shares (or the depositary shares, as applicable) will be
treated as no longer being outstanding, no further dividends will accrue and all other rights of the holders of those Designated
Preferred Shares (and the depositary shares) will terminate. The holders of those Designated Preferred Shares (and the depositary
shares) will retain only their right to receive the redemption price for their shares and any accrued and unpaid dividends to, but
not including, the redemption date.
The holders of depositary shares at the close of business on a Dividend Record Date will be entitled to receive the dividend
payable with respect to the underlying Designated Preferred Shares on the corresponding Dividend Payment Date
notwithstanding the redemption thereof after such Dividend Record Date and on or prior to such Dividend Payment Date or the
Company’s default in the payment of the dividend due on such Dividend Payment Date. Except as provided above, the Company
will make no payment or allowance for unpaid dividends, whether or not in arrears, on Designated Preferred Shares called for
redemption.
Special Optional Redemption
Upon the occurrence of a Change of Control (as defined below), the Company may, at the Company’s option upon not less than
30 nor more than 60 days’ written notice, redeem the Designated Preferred Shares (and the depositary shares), in whole or in part
within 120 days after the first date on which such Change of Control occurred, by paying $500.00 per share (equivalent to $25.00
per depositary share), plus accrued and unpaid dividends to, but not including, the date of redemption. If, prior to the Change of
Control Conversion Date (as defined below), the Company has provided or provides notice of exercise of any of the Company’s
redemption rights relating to the Designated Preferred Shares (and the depositary shares) (whether pursuant to the Company’s
optional redemption right described above or this special optional redemption right), the holders of depositary shares representing
interests in the Designated Preferred Shares will not be permitted to exercise the conversion right described below under “—
Conversion Rights” in respect of their shares called for redemption. If fewer than all the outstanding depositary shares are to be
redeemed, the depositary shares to be redeemed will be selected pro rata (as nearly as may be practicable without creating
fractional depositary shares) or by any other equitable method determined by the Company that will not result in the issuance of
any Designated Preferred Shares in excess of the ownership limit described below (see “—Ownership Limit”). If the Company
elects to redeem any of the Designated Preferred Shares as described in this paragraph, the Company may use any available cash
to pay the redemption price, and the Company will not be required to pay the redemption price only out of the proceeds from the
issuance of other classes and series of the Company’s shares or any other specific source.
8
The Company may not purchase or redeem less than all of the outstanding shares of any series of Designated Preferred Shares
except in accordance with a stock purchase offer made to all holders of record of such series, unless all dividends on such series
for previous and current dividend periods have been declared and paid or funds set apart. However, the Company may
repurchase or redeem Designated Preferred Shares in order to preserve the Company’s status as a REIT.
The Company will give the Preferred Shares Depositary not less than 10 days’ prior written notice of redemption of the deposited
Designated Preferred Shares. A similar notice will be mailed by the Preferred Shares Depositary, postage prepaid, not less than
30 nor more than 60 days prior to the redemption date, addressed to the respective holders of record of the depositary shares to be
redeemed at their respective addresses as they appear on the records of the Preferred Shares Depositary. No failure to give such
notice or any defect thereto or in the mailing thereof will affect the validity of the proceedings for the redemption of any
Designated Preferred Share or depositary share except as to the holder to whom notice was defective or not given. A redemption
notice that has been mailed in the manner provided herein will be conclusively presumed to have been duly given on the date
mailed whether or not the holder received the redemption notice. Each notice will state: (i) the redemption date; (ii) the
redemption price; (iii) the number of Designated Preferred Shares and the number of depositary shares to be redeemed; (iv) the
place or places where the depositary receipts are to be surrendered for payment of the redemption price; (v) that the Designated
Preferred Shares and depositary shares are being redeemed pursuant to the Company’s special optional redemption right in
connection with the occurrence of a Change of Control and a brief description of the transaction or transactions constituting such
Change of Control; (vi) that the holders of depositary shares representing interests in the Designated Preferred Shares to which
the notice relates will not be able to tender such Designated Preferred Shares for conversion in connection with the Change of
Control and each Designated Preferred Share tendered for conversion that is selected, prior to the Change of Control Conversion
Date, for redemption will be redeemed on the related date of redemption instead of converted on the Change of Control
Conversion Date; and (vii) that dividends on the shares to be redeemed will cease to accrue on such redemption date. If less than
all the shares of any series of Designated Preferred Shares are to be redeemed, the notices mailed to the Preferred Shares
Depositary and any holder of depositary shares will also specify the number of Designated Preferred Shares and depositary shares
to be redeemed. The Company will also cause notice of redemption to be published in a newspaper of general circulation in the
City of New York at least once a week for two successive weeks commencing not less than 30 days nor more than 60 days prior
to the date of redemption.
If the Company and the Preferred Shares Depositary have mailed a notice of redemption and if the Company has set aside
sufficient funds for the redemption in trust for the benefit of the holders of the Designated Preferred Shares (or the depositary
shares, as applicable) called for redemption, and the Company directs that there be paid to the respective holders of the
Designated Preferred Shares (or the depositary shares, as applicable) so to be redeemed amounts equal to the redemption price,
plus accrued and unpaid dividends to, but not including, the date of redemption, on surrender of the Designated Preferred Shares
(or the depositary shares, as applicable), those Designated Preferred Shares (or the depositary shares, as applicable) will be
treated as no longer being outstanding, no further dividends will accrue and all other rights of the holders of those Designated
Preferred Shares (and the depositary shares) will terminate. The holders of those Designated Preferred Shares (and the depositary
shares) will retain only their
9
right to receive the redemption price for their shares and any accrued and unpaid dividends to, but not including, the redemption
date.
The holders of depositary shares at the close of business on a Dividend Record Date will be entitled to receive the dividend
payable with respect to the underlying Designated Preferred Shares on the corresponding Dividend Payment Date
notwithstanding the redemption thereof after such Dividend Record Date and on or prior to such Dividend Payment Date or the
Company’s default in the payment of the dividend due on such Dividend Payment Date. Except as provided above, the Company
will make no payment or allowance for unpaid dividends, whether or not in arrears, on Designated Preferred Shares called for
redemption.
A “Change of Control” is when, after the original issuance of the Designated Preferred Shares, the following have occurred and
are continuing:
•
•
the acquisition by any person, including any syndicate or group deemed to be a “person” under Section 13(d)(3) of the
Exchange Act, of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition
transaction or series of purchases, mergers or other acquisition transactions of shares of the Company entitling that
person to exercise more than 50% of the total voting power of all shares of the Company entitled to vote generally in
elections of directors (except that such person will be deemed to have beneficial ownership of all securities that such
person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence
of a subsequent condition); and
following the closing of any transaction referred to in the bullet point above, neither the Company nor the acquiring or
surviving entity has a class of common securities (or American Depositary Receipts (“ADRs”) representing such
securities) listed on the NYSE, the NYSE MKT or the NASDAQ Stock Market (“NASDAQ”), or listed or quoted on
an exchange or quotation system that is a successor to the NYSE, the NYSE MKT or NASDAQ.
Conversion Rights
Upon the occurrence of a Change of Control, each holder of depositary shares representing interests in the Designated Preferred
Shares will have the right (unless, prior to the Change of Control Conversion Date, the Company has provided or provides notice
of the Company’s election to redeem the Designated Preferred Shares (and the depositary shares) as described above under “—
Optional Redemption” or “—Special Optional Redemption”) to direct the Preferred Shares Depositary, on such holder’s behalf,
to convert some or all of the Designated Preferred Shares underlying the depositary shares held by such holder (the “Change of
Control Conversion Right”) on the Change of Control Conversion Date into a number of the Company’s common shares (or
equivalent value of Alternative Conversion Consideration (as defined below)) per 6.375% Class A Share to be converted (the
“Class A Common Shares Conversion Consideration” or the “Common Shares Conversion Consideration”) equal to the lesser of:
•
the quotient obtained by dividing (1) the sum of $500.00 per share (equivalent to $25.00 per Class A depositary share)
plus the amount of any accrued and unpaid dividends to,
10
but not including, the applicable Change of Control Conversion Date (unless such Change of Control Conversion Date
is after a Dividend Record Date and prior to the corresponding Dividend Payment Date, in which case no additional
amount for such accrued and unpaid dividends will be included in this sum) by (2) the Common Share Price; and
•
111.60714 (equivalent to 5.58036 per Class A depositary share) (the “Share Cap”), subject to certain adjustments.
Anything in the articles of incorporation to the contrary notwithstanding and except as otherwise required by law, the persons
who are the holders of record of Designated Preferred Shares and the depositary shares at the close of business on a Dividend
Record Date will be entitled to receive the dividend payable on the corresponding Dividend Payment Date notwithstanding the
conversion of those shares after such Dividend Record Date and on or prior to such Dividend Payment Date and, in such case, the
full amount of such dividend will be paid on such Dividend Payment Date to the persons who were the holders of record at the
close of business on such Dividend Record Date.
The Share Cap is subject to pro rata adjustments for any share splits (including those effected pursuant to a distribution of the
Company’s common shares), subdivisions or combinations, including the 1-for-2 reverse stock split of the Company’s issued and
outstanding common shares that became effective as of May 18, 2018 (in each case, a “Share Split”), with respect to the
Company’s common shares as follows: the adjusted Share Cap as the result of a Share Split will be the number of the Company’s
common shares that is equivalent to the product obtained by multiplying (1) the Share Cap in effect immediately prior to such
Share Split by (2) a fraction, the numerator of which is the number of the Company’s common shares outstanding after giving
effect to such Share Split and the denominator of which is the number of the Company’s common shares outstanding immediately
prior to such Share Split.
For the avoidance of doubt, subject to the immediately succeeding sentence, the aggregate number of the Company’s common
shares (or equivalent Alternative Conversion Consideration, as applicable) issuable in connection with the exercise of the Change
of Control Conversion Right and in respect of the 6.375% Class A Shares underlying the Class A depositary shares will not
exceed 39,062,520 common shares (or equivalent Alternative Conversion Consideration, as applicable) (the “Exchange
Cap”). The Exchange Cap is subject to pro rata adjustments for any Share Splits on the same basis as the corresponding
adjustment to the Share Cap and is subject to increase in the event that additional Designated Preferred Shares or depositary
shares are issued in the future.
In the case of a Change of Control pursuant to which the Company’s common shares will be converted into cash, securities or
other property or assets (including any combination thereof) (the “Alternative Form Consideration”), a holder of depositary
shares representing interests in the Designated Preferred Shares will receive upon conversion of such Designated Preferred
Shares the kind and amount of Alternative Form Consideration that such holder would have owned or been entitled to receive
upon the Change of Control had such holder held a number of the Company’s common shares equal to the Common Shares
Conversion Consideration immediately prior to the effective time of the Change of Control (the “Alternative Conversion
11
Consideration,” and the Common Shares Conversion Consideration or the Alternative Conversion Consideration, as may be
applicable to a Change of Control, is referred to as the “Conversion Consideration”).
If the holders of the Company’s common shares have the opportunity to elect the form of consideration to be received in the
Change of Control, the consideration that the holders of the depositary shares representing interests in the Designated Preferred
Shares will receive will be in the form and proportion of the aggregate consideration elected by the holders of the Company’s
common shares who participate in the determination (based on the weighted average of elections) and will be subject to any
limitations to which all holders of the Company’s common shares are subject, including, without limitation, pro rata reductions
applicable to any portion of the consideration payable in the Change of Control.
The Company will not issue fractional common shares upon the conversion of the Designated Preferred Shares. Instead, the
Company will pay the cash value of such fractional shares in lieu of such fractional shares. Because each depositary share
represents a 1/20th interest in a Designated Preferred Share, the number of common shares ultimately received for each
depositary share will be equal to the number of common shares received upon conversion of each Designated Preferred Shares
divided by 20. In the event that the conversion would result in the issuance of fractional common shares, the Company will pay
the holder of depositary shares the cash value of such fractional shares in lieu of such fractional shares.
Within 15 days following the occurrence of a Change of Control, the Company will provide to holders of the depositary shares
representing interests in the Designated Preferred Shares a notice of occurrence of the Change of Control that describes the
resulting Change of Control Conversion Right. This notice will state the following:
•
•
•
•
•
•
the events constituting the Change of Control;
the date of the Change of Control;
the last date on which the holders of the depositary shares representing interests in the Designated Preferred Shares
may exercise their Change of Control Conversion Right;
the method and period for calculating the Common Share Price; the Change of Control Conversion Date;
that if, prior to the Change of Control Conversion Date, the Company has provided or provides notice of the
Company’s election to redeem all or any portion of the Designated Preferred Shares or the depositary shares, holders
will not be able to convert the Designated Preferred Shares and such shares will be redeemed on the related
redemption date, even if such shares have already been tendered for conversion pursuant to the Change of Control
Conversion Right;
if applicable, the type and amount of Alternative Conversion Consideration entitled to be received per Designated
Preferred Share;
12
•
•
•
the name and address of the paying agent and the conversion agent;
the procedures that the holders of the depositary shares representing interests in the Designated Preferred Shares must
follow to exercise the Change of Control Conversion Right; and
the last date on which the holders of the depositary shares representing interests in the Designated Preferred Shares
may withdraw shares surrendered for conversion and the procedures that such holders must follow to effect such a
withdrawal.
The Company will issue a press release for publication on the Dow Jones & Company, Inc., Business Wire, PR Newswire or
Bloomberg Business News (or, if these organizations are not in existence at the time of issuance of the press release, such other
news or press organization as is reasonably calculated to broadly disseminate the relevant information to the public), or post
notice on the Company’s website, in any event prior to the opening of business on the first business day following any date on
which the Company provides the notice described above to the holders of the depositary shares representing interests in the
Designated Preferred Shares.
To exercise the Change of Control Conversion Right, each holder of depositary shares representing interests in the Designated
Preferred Shares will be required to deliver, on or before the close of business on the Change of Control Conversion Date, the
depositary receipts or certificates, if any, evidencing the depositary shares or Designated Preferred Shares, respectively, to be
converted, duly endorsed for transfer, together with a written conversion notice completed, to the Preferred Shares Depositary, in
the case of the depositary shares, or to the Company’s transfer agent, in the case of Designated Preferred Shares. The conversion
notice must state:
•
•
•
the relevant Change of Control Conversion Date;
the number of depositary shares or Designated Preferred Shares to be converted; and
that the depositary shares or the Designated Preferred Shares are to be converted pursuant to the applicable provisions
of the Designated Preferred Shares.
The “Change of Control Conversion Date” is the date the Designated Preferred Shares are to be converted, which will be a
business day that is no fewer than 20 days nor more than 35 days after the date on which the Company provides the notice
described above to the holders of the depositary shares representing interests in the Designated Preferred Shares.
The “Common Share Price” will be: (i) if the consideration to be received in the Change of Control by the holders of the
Company’s common shares is solely cash, the amount of cash consideration per common share or (ii) if the consideration to be
received in the Change of Control by holders of the Company’s common shares is other than solely cash (x) the average of the
closing sale prices per common share (or, if no closing sale price is reported, the average of the closing bid and ask prices per
common share or, if more than one in either case, the average of the average closing bid and the average closing ask prices per
common share) for the ten consecutive trading days immediately preceding, but not including, the date on which such Change of
Control occurred as reported on the principal U.S. securities exchange on which the Company’s common shares are then traded,
or (y) the average of the last quoted bid prices for the Company’s common shares in the over-the-counter market as reported by
OTC Markets Group Inc. or similar organization for the ten consecutive trading days immediately preceding, but not including,
the date on which such
13
Change of Control occurred, if the Company’s common shares are not then listed for trading on a U.S. securities exchange.
Holders of the depositary shares representing interests in the Designated Preferred Shares may withdraw any notice of exercise of
a Change of Control Conversion Right (in whole or in part) by a written notice of withdrawal delivered to the Preferred Shares
Depositary, in the case of the depositary shares, or to the Company’s transfer agent, in the case of the Designated Preferred
Shares, prior to the close of business on the business day prior to the Change of Control Conversion Date. The notice of
withdrawal must state:
•
•
•
the number of withdrawn depositary shares or Designated Preferred Shares;
if certificated depositary shares or Designated Preferred Shares have been issued, the receipt or certificate numbers of
the withdrawn Designated Preferred Shares; and
the number of depositary shares or Designated Preferred Shares, if any, which remain subject to the conversion notice.
Notwithstanding the foregoing, if the Designated Preferred Shares are held in global form, the conversion notice and/or the notice
of withdrawal, as applicable, must comply with applicable procedures of The Depository Trust Company.
Designated Preferred Shares as to which the Change of Control Conversion Right has been properly exercised and for which the
conversion notice has not been properly withdrawn will be converted into the applicable Conversion Consideration in accordance
with the Change of Control Conversion Right on the Change of Control Conversion Date, unless prior to the Change of Control
Conversion Date the Company has provided or provides notice of the Company’s election to redeem such Designated Preferred
Shares, whether pursuant to the Company’s optional redemption right or the Company’s special optional redemption right. If the
Company elects to redeem Designated Preferred Shares that would otherwise be converted into the applicable Conversion
Consideration on a Change of Control Conversion Date, such Designated Preferred Shares will not be so converted and the
holders of such shares will be entitled to receive on the applicable redemption date $500.00 per share (or $25.00 per depositary
share), plus accrued and unpaid dividends to, but not including, the date of redemption. See “—Optional Redemption” and “—
Special Optional Redemption.”
The Company will deliver amounts owing upon conversion no later than the third business day following the Change of Control
Conversion Date.
In connection with the exercise of any Change of Control Conversion Right, the Company will comply with all federal and state
securities laws and stock exchange rules in connection with any conversion of Designated Preferred Shares or depositary shares
into the Company’s common shares. Notwithstanding any other provision of the Designated Preferred Shares, no holder of
14
Designated Preferred Shares or depositary shares will be entitled to convert such shares to the extent that receipt of common
shares upon conversion of the Designated Preferred Shares or depositary shares would cause such holder (or any other person) to
exceed the share ownership limits contained in the Company’s articles of incorporation setting forth the terms of the Designated
Preferred Shares, unless the Company provides an exemption from this limitation for such holder or other person. See “—
Ownership Limit,” below.
Notwithstanding the foregoing restrictions on the ability to convert the Designated Preferred Shares or depositary shares, any
conversion of Designated Preferred Shares or depositary shares in violation of the ownership limit described below under “—
Ownership Limit” or that causes another person to be in violation of such ownership limit, including as a result of the effect of
the operation of this provision, will be construed as causing any Designated Preferred Shares or depositary shares that exceed
such ownership limit to be deemed “Excess Preferred Shares” as defined in the Company’s articles of incorporation and subject
to the provisions applicable to Excess Preferred Shares set forth in the Company’s articles of incorporation. Such Excess
Preferred Shares will be transferred by operation of law to the Company as trustee of a trust for the exclusive benefit of the
person or persons to whom or by whom such Excess Preferred Shares can ultimately be transferred or held, respectively, without
violating the ownership limit described below under “—Ownership Limit,” and any Excess Preferred Shares while held in such
trust will not have any voting rights, will not be considered for purposes of any shareholder vote or for determining a quorum for
such a vote, and will not be entitled to any dividends or other distributions.
Except as otherwise provided above, neither the Designated Preferred Shares nor the depositary shares are convertible into or
exchangeable for any other securities or property.
Limited Voting Rights
In any matter in which the Designated Preferred Shares may vote (as expressly provided herein, or as may be required by law),
each Designated Preferred Share will be entitled to one vote. As a result, each depositary share will be entitled to 1/20th of a
vote.
Nonvoting Preferred Shares
Holders of nonvoting preferred shares have only the voting rights described below that apply to all preferred shares, whether
nonvoting or voting, and as from time to time required by law.
If and when the Company is in default in the payment of (or, with respect to noncumulative shares, has not paid or declared and
set aside a sum sufficient for the payment of) dividends on any series of any class of outstanding nonvoting preferred shares, for
dividend payment periods, whether consecutive or not, which in the aggregate contain at least 540 days, all holders of shares of
such class, voting separately as a class, together and combined with all other preferred shares upon which like voting rights have
been conferred and are exercisable, will be entitled to elect a total of two members to the Board. This voting right shall be vested
and any additional directors shall serve until all accrued and unpaid dividends (except, with respect to noncumulative shares, only
dividends for the then-current dividend period) on such outstanding preferred shares have been paid or declared and a sufficient
sum set aside for payment thereof.
15
The affirmative vote of the holders of at least two-thirds of a class of outstanding nonvoting preferred shares, voting separately as
a class, shall be necessary to effect either of the following:
•
•
The authorization, creation or increase in the authorized number of any shares, or any security convertible into shares,
ranking prior to such class of nonvoting preferred shares; or
Any amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the
Company’s articles of incorporation or the Company’s code of regulations which adversely and materially affects the
preferences or voting or other rights of the holders of such class of nonvoting preferred shares which are set forth in
the Company’s articles of incorporation. However, the amendment of the Company’s articles of incorporation to
authorize, create or change the authorized or outstanding number of a class of such preferred shares or of any shares
ranking on a parity with or junior to such class of preferred shares does not adversely and materially affect preferences
or voting or other rights of the holders of such class of preferred shares. In addition, amending the code of regulations
to change the number or classification of the Company’s directors does not adversely or materially affect preferences
or voting rights or other rights. Voting shall be done in person at a meeting called for one of the above purposes or in
writing by proxy.
The preceding voting provisions will not apply if, at or prior to the time of the action with respect to which such vote would be
required, all outstanding shares of such series of preferred shares have been redeemed or called for redemption and sufficient
funds shall have been deposited in trust to effect such redemption.
Cumulative Voting Preferred Shares.
If and when the Company is in default in the payment of dividends on the cumulative voting preferred shares, for at least six
dividend payment periods, whether or not consecutive, all holders of shares of such class, voting separately as a class, together
and combined with all other preferred shares upon which like voting rights have been conferred and are exercisable, will be
entitled to elect a total of two members to the Board. This voting right shall be vested and any additional directors shall serve
until all accrued and unpaid dividends (except, with respect to noncumulative shares, only dividends for the then-current dividend
period) on such outstanding preferred shares have been paid or declared and a sufficient sum set aside for payment thereof.
The affirmative vote of the holders of at least two-thirds of the outstanding cumulative voting preferred shares, voting separately
as a class, shall be necessary to effect either of the following:
•
Any amendment, alteration or repeal of any of the provisions of, or the addition of any provisions to, the Company’s
articles of incorporation or code of regulations, whether by merger, consolidation or otherwise (an “event”), that
materially adversely affects the voting powers, rights or preferences of the holders of the cumulative voting preferred
shares; provided, however, that the amendment of the provisions of the articles of incorporation (a) so as to authorize
or create, or to increase the authorized amount of, or issue, any shares ranking junior to the cumulative voting
preferred shares or any shares
16
of any class or series of shares ranking on a parity with the cumulative voting preferred shares or (b) with respect to
the occurrence of any event, so long as the cumulative voting preferred shares remain outstanding with the terms
thereof materially unchanged, taking into account that upon the occurrence of the event, the Company may not be the
surviving entity, shall not in either case be deemed to materially adversely affect the voting power, rights or
preferences of the holders of cumulative voting preferred shares; or
•
the authorization, creation of, increase in the authorized amount of, or issuance of any shares of any class or series of
shares ranking prior to the cumulative voting preferred shares or any security convertible into shares of any class or
series of shares ranking prior to the cumulative voting preferred shares (whether or not such class or series of shares
ranking prior to the cumulative voting preferred shares is currently authorized).
The preceding voting provisions will not apply, if at or prior to the time of the action with respect to which such vote would be
required, all outstanding shares of such series of cumulative voting preferred shares have been redeemed or called for redemption
and sufficient funds shall have been deposited in trust to effect such redemption.
In addition to the foregoing, the holders of cumulative voting preferred shares shall be entitled to vote on all matters on which
holders of common shares may vote and shall be entitled to one vote for each cumulative voting preferred share entitled to vote at
such meeting.
General
Without limiting the provisions described above, under Ohio law, holders of each class of preferred shares will be entitled to vote
as a class on any amendment to the Company’s articles of incorporation, whether or not they are entitled to vote thereon by the
Company’s articles of incorporation, if the amendment would:
•
•
•
•
•
increase or decrease the par value of the shares of such class;
change the issued shares of such class into a lesser number of shares of such class or into the same or different number
of shares of another class;
change or add to the express terms of the shares of the class in any manner substantially prejudicial to the holders of
such class;
change the express terms of any class of issued shares ranking prior to the particular class in any manner substantially
prejudicial to the holders of shares of the particular class;
authorize shares of another class that are convertible into, or authorize the conversion of shares of another class into,
shares of the particular class, or authorize the directors to fix or alter conversion rights of shares of another class that
are convertible into shares of the particular class;
17
•
•
reduce or eliminate the Company’s stated capital;
substantially change the Company’s purposes; or • change the Company into a nonprofit corporation.
If, and only to the extent that:
•
•
a class of preferred shares is issued in more than one series; and
Ohio law permits the holders of a series of a class of capital stock to vote separately as a class;
the affirmative vote of the holders of at least two-thirds of each series of such class of outstanding preferred shares, voting
separately as a class, shall be required for any amendment, alteration or repeal, whether by merger, consolidation or otherwise, of
any of the provisions of the Company’s articles of incorporation or the Company’s code of regulations which adversely and
materially affects the preferences or voting or other rights of the holders of such series as set forth in the Company’s articles of
incorporation. However, the amendment of the Company’s articles of incorporation so as to authorize, create or change the
authorized or outstanding number of a class of preferred shares or of any shares ranking equal to or junior to such class of
preferred shares does not adversely and materially affect the preference or voting or other rights of the holders of such series. In
addition, the amendment of the Company’s code of regulations to change the number or classification of the Company’s directors
does not adversely and materially affect the preference or voting or other rights of the holders of such series.
Ownership Limit
Ownership of more than 9.8% of any series of the depositary shares or the Designated Preferred Shares is restricted in order to
help preserve the Company’s status as a REIT for federal income tax purposes.
Restrictions on Ownership
In order to qualify as a REIT under the Code, not more than 50% in value of the Company’s outstanding capital stock may be
owned, directly or indirectly, by five or fewer individuals during the last half of a taxable year. “Individual” is defined in the
Code to include certain entities. In addition, the Company’s capital stock must be beneficially owned by 100 or more persons
during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year. The Company
also must satisfy certain other requirements. For more information on restrictions on ownership, see “Common Shares—
Restrictions on Ownership.”
To help ensure that five or fewer individuals do not own more than 50% in value of the Company’s outstanding preferred shares,
the Company’s articles of incorporation provide that, subject to certain exceptions, no one may own, or be deemed to own by
virtue of the attribution provisions of the Code, more than 9.8% (the “preferred shares ownership limit”) of any series of any
class of the Company’s outstanding preferred shares. In addition, because rent from a related party tenant (any tenant 10% of
which is owned, directly or constructively, by a REIT, including an owner of 10% or more of a REIT) is not qualifying rent for
purposes of the gross
18
income tests under the Code, the Company’s articles of incorporation provide that no individual or entity may own, or be deemed
to own by virtue of the attribution provisions of the Code (which differ from the attribution provisions applied to the preferred
shares ownership limit), in excess of 9.8% (the “preferred shares related party limit”) of the Company’s outstanding preferred
shares. The Board may exempt a person from the preferred shares ownership limit if the person would not be deemed an
“individual” and may exempt a person from the preferred shares related party limit. As a condition of any exemption, the Board
will require appropriate representations and undertakings from the applicant with respect to preserving the Company’s REIT
status.
The preceding restrictions on transferability and ownership of preferred shares may not apply if the Board determines that it is no
longer in the Company’s best interests to attempt to qualify, or to continue to qualify, as a REIT.
Even if the REIT provisions of the Code are changed so as to no longer contain any ownership concentration limitation or if the
ownership concentration limitation is increased, the preferred shares ownership limit and the preferred shares related party limit
will not be automatically removed. Any change in the preferred shares ownership limit or the preferred shares related party limit
would require an amendment to the Company’s articles of incorporation, even if the Board determines that maintenance of REIT
status is no longer in the Company’s best interests. Amendments to the Company’s articles of incorporation require the
affirmative vote of holders owning not less than a majority of the Company’s outstanding common shares. If it is determined that
an amendment would materially and adversely affect the holders of any class of preferred shares, such amendment would also
require the affirmative vote of holders of not less than two-thirds of such class of preferred shares.
If preferred shares in excess of the preferred shares ownership limit or the preferred shares related party limit are issued or
transferred to any person absent a waiver of such limit, such issuance or transfer will be null and void to the intended transferee,
and the intended transferee will acquire no rights to the shares. In addition, if an issuance or transfer would cause the Company’s
shares to be beneficially or constructively owned by fewer than 100 persons or would result in the Company’s being “closely
held” within the meaning of Section 856(h) of the Code, such issuance or transfer will be null and void to the intended transferee,
and the intended transferee will acquire no rights to the shares. Preferred shares transferred or proposed to be transferred in
excess of the preferred shares ownership limit or the preferred shares related party limit or which would otherwise jeopardize the
Company’s REIT status will be subject to repurchase by the Company. The purchase price of such preferred shares will be equal
to the lesser of:
•
•
the price in such proposed transaction; and
the fair market value of such shares reflected in the last reported sales price for the shares on the trading day
immediately preceding the date on which the Company or its designee determine to exercise the Company’s
repurchase right if the shares are listed on a national securities exchange, or such price for the shares on the principal
exchange if the shares are then listed on more than one national securities exchange.
19
If the shares are not listed on a national securities exchange, the purchase price will be equal to the lesser of:
•
•
the price in such proposed transaction; and
the latest bid quotation for the shares if the shares are then traded over the counter, or, if such quotation is not
available, the fair market value as determined by the Board in good faith, on the last trading day immediately
preceding the day on which notice of such proposed purchase is sent by the Company.
From and after the date fixed for the Company’s purchase of such preferred shares, the holder will cease to be entitled to
distributions, voting rights and other benefits with respect to such shares except the right to payment of the purchase price for the
shares. Any dividend or distribution paid to a proposed transferee on such preferred shares must be repaid to the Company upon
demand. If the foregoing transfer restrictions are determined to be void or invalid by virtue of any legal decision, statute, rule or
regulation, then the intended transferee of any such preferred shares may be deemed, at the Company’s option, to have acted as
the Company’s agent in acquiring such preferred shares and to hold such preferred shares on the Company’s behalf.
All certificates for preferred shares will bear a legend referring to the restrictions described above.
The Company’s articles of incorporation provide that all persons who own, directly or by virtue of the attribution provisions of
the Code, more than 5% of the preferred shares must give written notice to the Company stating the name and address of such
person, the number of shares owned, and a description of how such shares are held each year by January 31. In addition, each of
those shareholders must provide supplemental information that the Company may request, in good faith, in order to determine the
Company’s status as a REIT.
DESCRIPTION OF COMMON SHARES
General
Holders of common shares are entitled to receive dividends when, as and if declared by the Board, out of funds legally available
therefor. Any payment and declaration of dividends on common shares and purchases thereof will be subject to certain
restrictions if the Company fails to pay dividends on any outstanding preferred shares. If the Company is liquidated, dissolved or
involved in any winding-up, the holders of common shares are entitled to receive ratably any assets remaining after the Company
has fully paid all of its liabilities, including the preferential amounts it owes with respect to any preferred shares. Holders of
common shares possess ordinary voting rights, with each share entitling the holder to one vote. Except as outlined below or
otherwise expressly required by the Company’s articles of incorporation or by statute, the vote of the holders of shares entitling
them to exercise a majority of the voting power of the Company is required to approve any matters submitted to a vote of the
shareholders. At each annual meeting of shareholders, each director will be elected by a majority vote of all votes cast at such
meeting for a term expiring at the next annual meeting of shareholders and until the election of
20
their successors. Holders of common shares do not have cumulative voting rights in the election of directors. Holders of
common shares do not have preemptive rights, which means that they have no right to acquire any additional common shares that
the Company may subsequently issue.
Restrictions on Ownership
In order for the Company to qualify as a REIT under the Code, not more than 50% in value of its outstanding capital stock may
be owned, directly or indirectly, by five or fewer individuals during the last half of a taxable year. “Individual” is defined in the
Code to include certain entities. In addition, the Company’s capital stock must be beneficially owned by 100 or more persons
during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year. Additionally,
certain other requirements must be satisfied.
To help ensure that five or fewer individuals do not own more than 50% in value of the Company’s outstanding common shares,
the Company’s articles of incorporation provide that, subject to certain exceptions (including those set forth below), no holder
may own, or be deemed to own by virtue of the attribution provisions of the Code, more than 5% (the “ownership limit”) of the
Company’s outstanding common shares. The “existing holder,” which includes, collectively, (a) Iris Wolstein and/or all
descendants of Iris Wolstein (which includes Scott A. Wolstein (the Company’s former Chief Executive Officer and former
director)), (b) trusts or family foundations established for the benefit of the individuals named in (a) above and (c) other entities
controlled by the individuals named in (a) above (or trusts or family foundations established for the benefit of those individuals)
may own, or be deemed to own by virtue of the attribution provisions of the Code, no more than 5.1% of the Company’s
outstanding common shares. The “exempt holder,” which includes, collectively, (x) Professor Werner Otto, his wife Maren Otto
and/or all descendants of Professor Werner Otto, including, without limitation, Alexander Otto (a current director), (y) trusts or
family foundations established for the benefit of the individuals named in (x) above and (z) other entities controlled by the
individuals named in (x) above (or trusts or family foundations established for the benefit of those individuals) may own, or be
deemed to own by virtue of the attribution provisions of the Code, no more than 17.5% of the Company’s outstanding common
shares.
In addition, because rent from a related party tenant (any tenant 10% of which is owned, directly or constructively, by a REIT,
including an owner of 10% or more of a REIT) is not qualifying rent for purposes of the gross income tests under the Code, the
Company’s articles of incorporation provide that no individual or entity may own, or be deemed to own by virtue of the
attribution provisions of the Code (which differ from the attribution provisions applied to the ownership limit), in excess of 9.8%
of the Company’s outstanding common shares (the “related party limit”). The Board may exempt a person from the ownership
limit if the person would not be deemed an “individual” and may exempt a person from the related party limit if an opinion of
counsel or a ruling from the Internal Revenue Service, or IRS, is provided to the Board to the effect that the ownership will not
then or in the future jeopardize the Company’s status as a REIT. The Board may also exempt the exempt holder and any person
who would constructively own common shares constructively owned by the exempt holder from the ownership limit in its sole
discretion. As a condition of any exemption, the Board will require appropriate
21
representations and undertakings from the applicant with respect to preserving the Company’s REIT status.
Additionally, the Company’s articles of incorporation prohibit any transfer of common shares that would cause the Company to
cease to be a “domestically controlled qualified investment entity” as defined in Section 897(h) (4)(B) of the Code.
The preceding restrictions on transferability and ownership of common shares may not apply if the Board determines that it is no
longer in the Company’s best interests to continue to qualify as a REIT. The ownership limit and the related party limit will not
be automatically removed even if the REIT provisions of the Code are changed to no longer contain any ownership concentration
limitation or if the ownership concentration limitation is increased. In addition to preserving the Company’s status as a REIT, the
effects of the ownership limit and the related party limit are to prevent any person or small group of persons from acquiring
unilateral control of the Company. Any change in the ownership limit, other than modifications that may be made by the Board
as permitted by the Company’s articles of incorporation, requires an amendment to the articles of incorporation, even if the Board
determines that maintenance of REIT status is no longer in the Company’s best interests. Amendments to the articles of
incorporation require the affirmative vote of holders owning a majority of the Company’s outstanding common shares. If it is
determined that an amendment would materially and adversely affect the holders of any class of preferred shares, that amendment
also would require the affirmative vote of holders of two-thirds of the affected class of preferred shares.
The Company’s articles of incorporation provide that upon a transfer or non-transfer event that results in a person beneficially or
constructively owning common shares in excess of the applicable ownership limits or that results in the Company being “closely
held” within the meaning of Section 856(h) of the Code, the person (a “prohibited owner”) will not acquire or retain any rights or
beneficial economic interest in the shares that would exceed such applicable ownership limits or result in the Company being
closely held (the “excess shares”). Instead, the excess shares will be automatically transferred to a person or entity unaffiliated
with and designated by the Company to serve as trustee of a trust for the exclusive benefit of a charitable beneficiary to be
designated by the Company within five days after the discovery of the transaction that created the excess shares. The trustee will
have the exclusive right to designate a person who may acquire the excess shares without violating the applicable restrictions (a
“permitted transferee”) to acquire all of the shares held by the trust. The permitted transferee must pay the trustee an amount
equal to the fair market value (determined at the time of transfer to the permitted transferee) for the excess shares. The trustee
will pay to the prohibited owner the lesser of (a) the value of the shares at the time they became excess shares and (b) the price
received by the trustee from the sale of the excess shares to a permitted transferee. The beneficiary will receive the excess of (x)
the sale proceeds from the transfer to a permitted transferee over (y) the amount paid to the prohibited owner, if any, in addition
to any dividends paid with respect to the excess shares.
All certificates representing common shares bear a legend referring to the preceding restrictions.
The Company’s articles of incorporation provide that all persons who own, directly or by virtue of the attribution provisions of
the Code, more than 5% of the Company’s outstanding common
22
shares must give written notice to the Company stating the name and address of such person, the number of shares owned, and a
description of how such shares are held each year by January 31. In addition, each of those shareholders must provide
supplemental information that the Company may request, in good faith, in order to determine the Company’s status as a REIT.
CERTAIN ANTI-TAKEOVER PROVISIONS OF OHIO LAW
Chapter 1704 of the Ohio Revised Code prohibits certain transactions, including mergers, sales of assets, issuances or purchases
of securities, liquidation or dissolution, or reclassifications of the then-outstanding shares of an Ohio corporation with 50 or more
shareholders involving, or for the benefit of, certain holders of shares representing 10% or more of the voting power of the
corporation (any such shareholder, a “10% Shareholder”), unless:
(1)
(2)
(3)
the transaction is approved by the directors before the 10% Shareholder becomes a 10% Shareholder;
the acquisition of 10% of the voting power is approved by the directors before the 10% Shareholder becomes a
10% Shareholder; or
the transaction involves a 10% Shareholder who has been a 10% Shareholder for at least three years and is
approved by the directors before the 10% Shareholder becomes a 10% Shareholder, is approved by holders of two-
thirds of the Company’s voting power and the holders of a majority of the voting power not owned by the 10%
Shareholder, or certain price and form of consideration requirements are met.
The Company has not opted out of the application of Chapter 1704 of the Ohio Revised Code.
23
SITE CENTERS CORP.
LIST OF SUBSIDIARIES/AFFILIATES
Exhibit 21.1
3030 North Broadway LLC, an Illinois limited liability company
AIP Office Flex II LLC, an Ohio limited liability company
American Industrial Properties REIT, a Texas real estate investment trust
American Property Protection Company, a Vermont corporation
Bandera Pointe Investment LLC, a Delaware limited liability company
BG Toledo, LLC, an Ohio limited liability company
Black Cherry Limited Liability Company, a Colorado limited liability company
BRE DDR BR Midtowne SC LLC, a Delaware limited liability company
BRE DDR BR White Oak VA LLC, a Delaware limited liability company
BRE DDR Carillon Place LLC, a Delaware limited liability company
BRE DDR Connecticut Commons LLC, a Delaware limited liability company
BRE DDR Cool Springs Pointe LLC, a Delaware limited liability company
BRE DDR Crocodile Falcon Ridge Town Center I LLC, a Delaware limited liability company
BRE DDR Crocodile Falcon Ridge Town Center II LLC, a Delaware limited liability company
BRE DDR Crocodile Falcon Ridge Triangles LLC, a Delaware limited liability company
BRE DDR Crocodile Holdings LLC, a Delaware limited liability company
BRE DDR Crocodile Property Holdco LLC, a Delaware limited liability company
BRE DDR Crocodile Silver Spring Square Trust, a Delaware statutory trust
BRE DDR Crocodile Sycamore Plaza LLC, a Delaware limited liability company
BRE DDR Fairfax Town Center LLC, a Delaware limited liability company
BRE DDR Flatacres Marketplace LLC, a Delaware limited liability company
BRE DDR Homart Holdings LLC, a Delaware limited liability company
BRE DDR IVA Ashbridge PA LLC, a Delaware limited liability company
BRE DDR IVA Concourse FL LLC, a Delaware limited liability company
BRE DDR IVA Hub NY LLC, a Delaware limited liability company
BRE DDR IVA Southmont PA LLC, a Delaware limited liability company
BRE DDR IVB Echelon NJ LLC, a Delaware limited liability company
BRE DDR IVB Larkin’s PA LLC, a Delaware limited liability company
BRE DDR Lake Brandon Village LLC, a Delaware limited liability company
BRE DDR Longhorn II Holdings LLC, a Delaware limited liability company
BRE DDR Longhorn II Mezz Borrower LLC, a Delaware limited liability company
BRE DDR Merriam Town Center LLC, a Delaware limited liability company
BRE DDR Parker Pavilions LLC, a Delaware limited liability company
BRE DDR Retail Holdings LLC, a Delaware limited liability company
BRE DDR Retail Mezz 1 LLC, a Delaware limited liability company
BRE DDR Retail Mezz 2 LLC, a Delaware limited liability company
BRE DDR Retail Parent LLC, a Delaware limited liability company
BRE DDR Shoppers World LLC, a Delaware limited liability company
BRE DDR TRS LLC, a Delaware limited liability company
BRE DDR Venice Holdings LLC, a Delaware limited liability company
BRE DDR Woodfield Village LLC, a Delaware limited liability company
Buffalo-Norfolk Associates, L.L.P., a Virginia limited liability company (inactive but not dissolved)
Canal TC LLC, a Delaware limited liability company
Chelmsford Associates LLC, a Delaware limited liability company
Coventry Real Estate Partners, Ltd., an Ohio limited liability company
DD Community Centers Eight, Inc., a Delaware corporation
DDR 2008 Portfolio LLC, a Delaware limited liability company
DDR 3030 Holdco LLC, a Delaware limited liability company
DDR Arrowhead Crossing OP LLC, a Delaware limited liability company
DDR Asset Management LLC, a Delaware limited liability company
DDR Bandera LLC, a Delaware limited liability company
DDR Bandera GP LLC, a Delaware limited liability company
DDR Bandera GP II LLC, a Delaware limited liability company
DDR Bandera LP II LLC, a Delaware limited liability company
DDR Beachwood Headquarters LLC, a Delaware limited liability company
DDR Belgate Holdings LLC, a Delaware limited liability company
DDR Belgate LP, a Delaware limited partnership
DDR Buena Park Place Holdings LLC, a Delaware limited liability company
DDR Buena Park Place LP, a Delaware limited partnership
DDR Builders LLC, a Delaware limited liability company
DDR Builders Utah Inc., a Utah corporation
DDR BV Holdings LLC, a Delaware limited liability company
DDR BV Holdings II LLC, a Delaware limited liability company
DDR BV Holdings III LLC, a Delaware limited liability company
DDR BV Holdings IV LLC, a Delaware limited liability company
DDR BV Preferred Holdings LLC, a Delaware limited liability company
DDR BV Preferred Holdings IV LLC, a Delaware limited liability company
DDR CA Holdings LLC, a Delaware limited liability company
DDR Canada Ventures Holding Inc., a Delaware corporation
DDR Canada Ventures Inc., an Ontario corporation
DDR Carolina Pavilion LP, a Delaware limited partnership
DDR Continental Inc., an Ohio corporation
DDR Continental LP, an Ohio limited partnership
DDR Cotswold LP, a Delaware limited partnership
DDR CP Holdings LLC, a Delaware limited liability company
-2-
DDR Creekside LP, a Delaware limited partnership
DDR Creekside Tenant LP, a Delaware limited partnership
DDR CRV Portfolio LLC, S.E., a Delaware limited liability company
DDR DB Kyle LP, a Texas limited partnership
DDR DB SA Phase II LP, a Texas limited partnership
DDR DB SA Ventures LP, a Texas limited partnership
DDR DB Stone Oak LP, a Texas limited partnership
DDR DB Terrell LP, a Texas limited partnership
DDR Deer Park Town Center LLC, an Ohio limited liability company
DDR DownREIT LLC, an Ohio limited liability company
DDR Easton Holdings LLC, a Delaware limited liability company
DDR Easton Market OP LLC, a Delaware limited liability company
DDR Family Centers I, Inc., an Ohio corporation
DDR Family Centers LP, a Delaware limited partnership
DDR GC Ventures LLC, a Delaware limited liability company
DDR GLH GP Holdings II LLC, a Delaware limited liability company
DDR Guilford LLC, a Delaware limited liability company
DDR Hendon Nassau Park II LP, a Georgia limited partnership
DDR Highland Village LP, a Delaware limited partnership
DDR IRR Acquisition LLC, a Delaware limited liability company
DDR KM Shopping Center LLC, a Delaware limited liability company
DDR Kyle Holdings LLC, a Delaware limited liability company
DDR Lake Brandon Plaza LLC, a Delaware limited liability company
DDR LH2 Mezz LLC, a Delaware limited liability company
DDR Major Mac Richmond GP Inc., an Ontario corporation
DDR Major Mac Richmond Limited Partnership, an Ontario limited partnership
DDR Major Mac Richmond OPCO ULC, an Alberta unlimited liability company
DDR Management LLC, a Delaware limited liability company
DDR Manatee Liquidating Holdco 1 LLC, a Delaware limited liability company
DDR Manatee Master GP LLC, a Delaware limited liability company
DDR Manatee Master LP, a Delaware limited partnership
DDR Maxwell LLC, a Delaware limited liability company
DDR Maxwell JV LLC, a Delaware limited liability company
DDR MCH East LLC, a Delaware limited liability company
DDR MCH East II LLC, a Delaware limited liability company
DDR MCH West LLC, a Delaware limited liability company
DDR Melbourne LLC, a Delaware limited liability company
DDR Merriam Village LLC, a Delaware limited liability company
DDR Miami Avenue, LLC, a Delaware limited liability company
DDR Mid-Atlantic Management Corp., a Delaware corporation
-3-
DDR MM Mezz LLC, a Delaware limited liability company
DDR MV City Center LLC, a Delaware limited liability company
DDR Nampa Cinema LLC, a Delaware limited liability company
DDR Nassau Park II Inc., an Ohio corporation
DDR Nassau Pavilion Associates LP, a Georgia limited partnership
DDR Nassau Pavilion Inc., an Ohio corporation
DDR NC Holdings LLC, a Delaware limited liability company
DDR NJ Liquor License LLC, a Delaware limited liability company
DDR Northern GL West BF LLC, a Delaware limited liability company
DDR Northern GL West TE Co., a Delaware corporation
DDR Northern GL West Trust, a Delaware statutory trust
DDR Northern Richmond Hill BF LLC, a Delaware limited liability company
DDR Northern Richmond Hill TE Co., a Delaware corporation
DDR Northern Richmond Hill Trust, a Delaware statutory trust
DDR Office Flex Corporation, a Delaware corporation
DDR Office Flex LP, an Ohio limited partnership
DDR OG Holdings LLC, a Delaware limited liability company
DDR Ohio Opportunity II LLC, an Ohio limited liability company
DDR Orlando LLC, a Delaware limited liability company
DDR PA Trustee LLC, a Delaware limited liability company
DDR Paradise LLC, an Ohio limited liability company
DDR Perimeter Holdings LLC, a Delaware limited liability company
DDR Perimeter Pointe LLC, a Delaware limited liability company
DDR Pool 3 Holdings LLC, a Delaware limited liability company
DDR PR GC Ventures LLC, a Delaware limited liability company
DDR PR Ventures LLC, S.E., a Delaware limited liability company
DDR PR Ventures II LLC, a Delaware limited liability company
DDR Prado LLC, a Delaware limited liability company
DDR Property Management LLC, a Delaware limited liability company
DDR PTC LLC, a Delaware limited liability company
DDR PTC Outparcel LLC, a Delaware limited liability company
DDR Realty Company, a Maryland Real Estate Investment Trust
DDR Retail Real Estate Limited Partnership, an Illinois limited partnership
DDR Sharon Greens LLC, a Delaware limited liability company
DDR Site Work LLC, a Delaware limited liability company
DDR/SKW Grayslake LLC, a Delaware limited liability company
DDR Snellville Holdings LLC, a Delaware limited liability company
DDR Southeast East Hanover, L.L.C., a Delaware limited liability company
DDR Southeast Edgewater, L.L.C., a Delaware limited liability company
DDR Southeast Fountains, L.L.C., a Delaware limited liability company
-4-
DDR Southeast Loisdale, L.L.C., a Delaware limited liability company
DDR Southeast Property Management Corp., a Delaware corporation
DDR Southeast Retail Acquisitions, L.L.C., a Delaware limited liability company
DDR Southeast Retail Real Estate Manager, L.L.C., a Delaware limited liability company
DDR Southeast Sandy Plains, L.L.C., a Delaware limited liability company
DDR Southeast Short Pump, L.L.C., a Delaware limited liability company
DDR Southeast Snellville, L.L.C., a Delaware limited liability company
DDR Southeast Southlake LP, a Delaware limited partnership
DDR Southeast SP Outlot 1, L.L.C., a Delaware limited liability company
DDR Southeast Spring Mall, L.L.C., a Delaware limited liability company
DDR Southeast Windsor, L.L.C., a Delaware limited liability company
DDR Southern Management Corp., a Delaware corporation
DDR Stone Oak Holdings LLC, a Delaware limited liability company
DDR TC LLC, a Delaware limited liability company
DDR Terrell Holdings LLC, a Delaware limited liability company
DDR TRS Lender LLC, a Delaware limited liability company
DDR TX Holdings LLC, a Delaware limited liability company
DDR Urban, Inc, a Delaware corporation
DDR Urban LP, a Delaware limited partnership
DDR Van Ness, Inc., an Ohio corporation
DDR/Van Ness Operating Company, L.P., a Delaware limited partnership
DDR Wando Crossing LLC, a Delaware limited liability company
DDR Waterstone LLC, a Delaware limited liability company
DDR WF Holdings LLC, a Delaware limited liability company
DDR WF Oakland LP, a Delaware limited partnership
DDR Winter Garden LLC, a Delaware limited liability company
DDRA Arrowhead Crossing LLC, a Delaware limited liability company
DDRA Community Centers Eight, L.P., a Delaware limited partnership
DDRA Tanasbourne Town Center LLC, a Delaware limited liability company
DDRC Gateway LLC, a Delaware limited liability company
DDRM Apple Blossom Corners LLC, a Delaware limited liability company
DDRM Casselberry Commons LLC, a Delaware limited liability company
DDRM Chickasaw Trails Shopping Center LLC, a Delaware limited liability company
DDRM Cofer Crossing LLC, a Delaware limited liability company
DDRM Countryside LLC, a Delaware limited liability company
DDRM Creekwood Crossing LLC, a Delaware limited liability company
DDRM Crossroads Plaza LLC, a Delaware limited liability company
DDRM Derby Square LLC, a Delaware limited liability company
DDRM Fayetteville Pavilion LLC, a Delaware limited liability company
DDRM Flamingo Falls LLC, a Delaware limited liability company
-5-
DDRM Hairston Crossing LLC, a Delaware limited liability company
DDRM Harundale Plaza LLC, a Delaware limited liability company
DDRM Heather Island Plaza LLC, a Delaware limited liability company
DDRM Highland Grove LLC, a Delaware limited liability company
DDRM Hilliard Rome LLC, a Delaware limited liability company
DDRM Hilliard Rome SPE LLC, a Delaware limited liability company
DDRM Hilltop Plaza GP LLC, a Delaware limited liability company
DDRM Hilltop Plaza LP, a Delaware limited partnership
DDRM Holdings Pool 1 LLC, a Delaware limited liability company
DDRM Holdings Pool 2 LLC, a Delaware limited liability company
DDRM Holdings Pool 3 LLC, a Delaware limited liability company
DDRM Meadowmont Village Center LLC, a Delaware limited liability company
DDRM Midway Plaza LLC, a Delaware limited liability company
DDRM North Pointe Plaza LLC, a Delaware limited liability company
DDRM Northlake Commons LLC, a Delaware limited liability company
DDRM Oviedo Park Crossing LLC, a Delaware limited liability company
DDRM Properties LLC, a Delaware limited liability company
DDRM River Run LLC, a Delaware limited liability company
DDRM Riverdale Shops LLC, a Delaware limited liability company
DDRM Riverstone Plaza LLC, a Delaware limited liability company
DDRM Sexton Commons LLC, a Delaware limited liability company
DDRM Sheridan Square LLC, a Delaware limited liability company
DDRM Shoppes at New Tampa LLC, a Delaware limited liability company
DDRM Shoppes at Paradise Pointe LLC, a Delaware limited liability company
DDRM Shoppes of Ellenwood LLC, a Delaware limited liability company
DDRM Shoppes of Golden Acres LLC, a Delaware limited liability company
DDRM Shops at Oliver's Crossing LLC, a Delaware limited liability company
DDRM Skyview Plaza LLC, a Delaware limited liability company
DDRM Springfield Commons LLC, a Delaware limited liability company
DDRM Village Square at Golf LLC, a Delaware limited liability company
DDRM West Falls Plaza LLC, a Delaware limited liability company
DDR-SAU Atlanta Brookhaven, L.L.C., a Delaware limited liability company
DDR-SAU Atlanta Cascade, L.L.C., a Delaware limited liability company
DDR-SAU Atlanta Cascade Corners, L.L.C., a Delaware limited liability company
DDR-SAU Canton Hickory, L.L.C., a Delaware limited liability company
DDR-SAU Decatur Flat Shoals, L.L.C., a Delaware limited liability company
DDR-SAU Greenville Pointe, L.L.C., a Delaware limited liability company
DDR-SAU Lewandowski, L.L.C., a Delaware limited liability company
DDR-SAU Memphis American Way, L.L.C., a Delaware limited liability company
DDR-SAU Morristown Crossroads, L.L.C., a Delaware limited liability company
-6-
DDR-SAU Myrtle Beach Carolina Forest, L.L.C., a Delaware limited liability company
DDR-SAU Myrtle Beach Carolina Forest Outparcels, L.L.C., a Delaware limited liability company
DDR-SAU Retail Fund, L.L.C., a Delaware limited liability company
DDR-SAU Stone Mountain Deshon, L.L.C., a Delaware limited liability company
DDR-SAU Virginia Beach Republic, L.L.C., a Delaware limited liability company
Developers Diversified Centennial Promenade LP, an Ohio limited partnership
Developers Diversified of Mississippi, Inc., an Ohio corporation
Diversified Construction LLC, a Delaware limited liability company
Dividend Trust Portfolio JV LC, a Delaware limited partnership
Dividend Trust REIT Sub, a Maryland statutory trust
DT Ahwatukee Foothills LLC, a Delaware limited liability company
DT Ashley Crossing LLC, a Delaware limited liability company
DT Brookside LLC, a Delaware limited liability company
DT Commonwealth Center II LLC, a Delaware limited liability company
DT Connecticut Commons LLC, a Delaware limited liability company
DT Independence Commons LLC, a Delaware limited liability company
DT Mezz Borrower 1 LLC, a Delaware limited liability company
DT Mezz Borrower 2 LLC, a Delaware limited liability company
DT NC Holdings LLC, a Delaware limited liability company
DT Poyner Place LP, a Delaware limited partnership
DT Prado LLC, a Delaware limited liability company
DT Route 22 Retail LLC, a Delaware limited liability company
DT University Centre LP, a Delaware limited partnership
DT University Centre Outparcel LP, a Delaware limited partnership
Easton Market Limited Liability Company, a Delaware limited liability company
EMOP LLC, a Delaware limited liability company
Energy Management Development Services LLC, a Delaware limited liability company
FT. Collins Partners I, LLC, a Colorado limited liability company
GS Brentwood LLC, a Delaware limited liability company
GS Centennial LLC, a Delaware limited liability company
GS DDR LLC, an Ohio limited liability company
GS II DDR LLC, an Ohio limited liability company
Hendon/Atlantic Rim Johns Creek, LLC, a Georgia limited liability company
Hermes Associates, a Utah general partnership
Hermes Associates, Ltd., a Utah limited partnership
Historic Van Ness LLC, a California limited liability company
JDN Development Company, Inc., a Delaware Corporation
JDN Development Company Holdings LLC, a Delaware limited liability company
JDN Development Investment, L.P., a Georgia limited partnership
JDN Development LP LLC, a Delaware limited liability company
-7-
JDN Hamilton GP LLC, a Delaware limited liability company
JDN Real Estate - Cumming, L.P., a Georgia limited partnership
JDN Real Estate - Freehold, L.P., a Georgia limited partnership
JDN Real Estate - Hamilton, L.P., a Georgia limited partnership
JDN Real Estate - Lakeland, L.P., a Georgia limited partnership
JDN Realty Corporation, a Maryland corporation
JDN Realty Holdings, L.P., a Georgia limited partnership
JDN Realty Investment, L.P., a Georgia limited partnership
JDN Realty LP LLC, a Delaware limited liability company
Lennox Town Center Limited, an Ohio limited liability company
Manatee Liquidating Holdco 2 LLC, a Delaware limited liability company
Merriam Town Center Ltd., an Ohio limited liability company
Mountain Vista Real Estate Opportunity Fund I, LLC, a Delaware limited liability company
MV Bloomfield LLC, a Delaware limited liability company
National Property Protection Company, a Vermont corporation
Parcel J-1B Limited Partnership, a Virginia limited partnership (inactive but not dissolved)
PR II Deer Park Town Center LLC, a Delaware limited liability company
Retail Value Investment Program Limited Partnership IIIB, a Delaware limited partnership
Retail Value Investment Program IIIC Limited Partnership, a Delaware limited partnership
SCC Addison Place LLC, a Delaware limited liability company
SCC Addison Canal Parcel LLC, a Delaware limited liability company
SCC Artesia LLC, a Delaware limited liability company
SCC Boca Raton Outparcel LLC, a Delaware limited liability company
SCC Crabapple LLC, a Delaware limited liability company
SCC Dividend Trust GP LLC, a Delaware limited liability company
SCC Dividend Trust LP LLC, a Delaware limited liability company
SCC DT TRS LLC, a Delaware limited liability company
SCC Emmet Street LLC, a Delaware limited liability company
SCC Emmet Street II LLC, a Delaware limited liability company
SCC Hammond Springs LLC, a Delaware limited liability company
SCC La Fiesta Square LP, a Delaware limited partnership
SCC Lafayette Mercantile LP, a Delaware limited partnership
SCC Market Square LLC, a Delaware limited liability company
SCC Paradise Village LLC, a Delaware limited liability company
SCC Pointe at Bridgeport LLC, a Delaware limited liability company
SCC Port Commons LLC, a Delaware limited liability company
SCC Portland Bridgeport LLC, a Delaware limited liability company
SCC Portland Cosmopolitan LLC, a Delaware limited liability company
SCC Portland Encore LLC, a Delaware limited liability company
SCC Portland Lexis LLC, a Delaware limited liability company
-8-
SCC Portland Metropolitan LLC, a Delaware limited liability company
SCC Portland Park Place LLC, a Delaware limited liability company
SCC Portland Pinnacle LLC, a Delaware limited liability company
SCC Portland Riverstone LLC, a Delaware limited liability company
SCC Portland Streetcar Lofts LLC, a Delaware limited liability company
SCC Portland Tanner LLC, a Delaware limited liability company
SCC-SAU Myrtle Beach Carolina Forest Outparcel, L.L.C., a Delaware limited liability company
SCC Shops at Boca Center LLC, a Delaware limited liability company
SCC Southtown Center LLC, a Delaware limited liability company
SCC Vintage Plaza LP, a Delaware limited partnership
Shea and Tatum Associates Limited Partnership, an Arizona limited partnership
ShoreSales LLC, a Delaware limited liability company
S&T Property LLC, a Delaware limited liability company
Sun Center Limited, an Ohio limited liability company
USAA Income Properties IV Trust, a trust organized and existing in Massachusetts
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CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Exhibit 23.1
We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (Nos. 333-257074, 333-257075) and in the Registration
Statements on Form S-8 (Nos. 333-147270, 333-181442, 333-231319) of SITE Centers Corp. of our report dated February 24, 2022 relating to the financial
statements, financial statement schedules, and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.
/s/ PricewaterhouseCoopers LLP
Cleveland, Ohio
February 24, 2022
Exhibit 31.1
I, David R. Lukes, certify that:
CERTIFICATIONS
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of SITE Centers Corp.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
a)
b)
c)
d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
b)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
February 24, 2022
Date
/s/ David R. Lukes
David R. Lukes
President and Chief Executive Officer
Exhibit 31.2
I, Conor Fennerty, certify that:
CERTIFICATIONS
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of SITE Centers Corp.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
a)
b)
c)
d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
b)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
February 24, 2022
Date
/s/ Conor Fennerty
Conor Fennerty
Executive Vice President and Chief Financial Officer
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.1
I, David R. Lukes, President and Chief Executive Officer of SITE Centers Corp. (the “Company”), certify, pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
The Annual Report on Form 10-K of the Company for the period ended December 31, 2021, as filed
(1)
with the Securities and Exchange Commission (the “Report”), which this certification accompanies, fully
complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
condition and results of operations of the Company as of the dates and for the periods expressed in the Report.
The information contained in the Report fairly presents, in all material respects, the financial
/s/ David R. Lukes
David R. Lukes
President and Chief Executive Officer
February 24, 2022
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.2
I, Conor Fennerty, Executive Vice President and Chief Financial Officer of SITE Centers Corp. (the “Company”), certify,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
(1)
The Annual Report on Form 10-K of the Company for the period ended December 31, 2021, as
filed with the Securities and Exchange Commission (the “Report”), which this certification accompanies,
fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial
(2)
condition and results of operations of the Company as of the dates and for the periods expressed in the
Report.
/s/ Conor Fennerty
Conor Fennerty
Executive Vice President and Chief Financial Officer
February 24, 2022