SITE Centers Corp. (SITC)

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

EXECUTIVE SUMMARY

The Company is a self-administered and self-managed Real Estate Investment Trust (“REIT”) in the business of owning, leasing, acquiring, redeveloping and managing shopping centers. As of December 31, 2024, the Company’s portfolio consisted of 33 shopping centers (including 11 shopping centers owned through unconsolidated joint ventures). At December 31, 2024, the Company owned 8.8 million square feet of gross leasable area (“GLA”) through all its properties (wholly-owned and joint venture). At December 31, 2024, the aggregate occupancy of the Company’s operating shopping center portfolio was 90.6% on a pro rata basis, and the average annualized base rent per occupied square foot was $19.64 on a pro rata basis. In addition, at December 31, 2024, the Company owns two adjacent office buildings located in Beachwood, Ohio, totaling approximately 339,000 square feet of GLA, a portion of which buildings currently serve as the Company’s headquarters.

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Curbline Spin-Off

In October 2023, the Company announced a plan to spin off a portfolio of convenience retail assets into a separate, publicly traded company to be named Curbline Properties Corp. (“Curbline” or “Curbline Properties”) in recognition of the distinct characteristics and opportunities within the Company’s unanchored and grocery, lifestyle and power center portfolios. Convenience properties are generally positioned on the curbline of well-trafficked intersections and major vehicular corridors, offering enhanced access and visibility along with dedicated parking and often include drive-thru units. Convenience properties generally consist of a homogeneous row of primarily small-shop units leased to a diversified mixture of national and local service and restaurant tenants that cater to daily convenience trips from the growing suburban population.

As of September 30, 2024, the Curbline portfolio consisted of 79 wholly-owned convenience retail assets consisting of approximately 2.7 million square feet of GLA. The separation of Curbline was completed on October 1, 2024.

On October 1, 2024, the Company, Curbline and Curbline Properties LP (the “Operating Partnership”) entered into a Separation and Distribution Agreement (the “Separation and Distribution Agreement”), which provided for the principal transactions necessary to consummate the spin-off, including the allocation among the Company, Curbline and the Operating Partnership of the Company’s assets, liabilities and obligations attributable to periods both prior to and following the spin-off. In particular, the Separation and Distribution Agreement provided, among other things, that certain assets relating to Curbline’s business were to be transferred to the Operating Partnership or the applicable Curbline subsidiary, including equity interests of certain Company subsidiaries that held assets and liabilities related to Curbline, interests in real property, certain tangible personal property, cash and cash equivalents held in Curbline accounts (including the transfer to Curbline of unrestricted cash of $800.0 million upon consummation of the spin-off) and other assets primarily used or held primarily for use in Curbline’s business. The Separation and Distribution Agreement also provided that certain liabilities relating to Curbline’s business were to be transferred to the Operating Partnership or the applicable Curbline subsidiary, including liabilities relating to or arising out of the operation of Curbline’s business after the effective time of the spin-off and liabilities expressly allocated to Curbline or one of its subsidiaries by the Separation and Distribution Agreement or certain other agreements entered into in connection with the spin-off.

Additionally, the Separation and Distribution Agreement contains provisions that obligate the Company to complete certain redevelopment projects at properties that are owned by Curbline. As of December 31, 2024, these redevelopment projects were estimated to cost $32.9 million to complete.

On October 1, 2024, the Company, Curbline and the Operating Partnership also entered into a Shared Services Agreement (the “Shared Services Agreement”), which provides that, subject to the supervision of the Company’s Board of Directors and executives, the Operating Partnership or its affiliates will provide the Company (i) leadership and management services that are of a nature customarily performed by leadership and management overseeing the business and operation of a REIT similarly situated to the Company, including supervising various business functions of the Company necessary for the day-to-day management operations of the Company and its affiliates and (ii) transaction services that are of a nature customarily performed by a dedicated transactions team within an organization similarly situated to the Company, including the provision of personnel at both the leadership and operational levels necessary to ensure effective and efficient preparation, negotiation, execution and implementation of real estate transactions, as well as overseeing post-transaction activities and alignment with the Company’s strategic objectives. The Operating Partnership or its affiliates provides the Company with a Chief Executive Officer and Chief Investment Officer but the Company employs its own Chief Financial Officer, Chief Accounting Officer and General Counsel. The Company also provid Curbline Properties and its affiliates an option to enter into a lease agreement for office space at SITE Centers’ corporate headquarters location in Beachwood, Ohio for an initial five-year term with the right to extend the lease for up to four successive terms of five years each.

The Shared Services Agreement also requires the Company to provide the Operating Partnership and its affiliates the services of its employees and the use or benefit of the Company’s assets, offices and other resources as may be necessary or useful to establish and operate various business functions of the Operating Partnership and its affiliates in a manner as would be established and operated for a REIT similarly situated to Curbline. The Operating Partnership has the authority to supervise the employees of the Company and its affiliates and direct and control the day-to-day activities of such employees while such employees are providing services to the Operating Partnership or its affiliates under the Shared Services Agreement.

The Operating Partnership pays the Company a fee in the aggregate amount of 2.0% of Curbline’s Gross Revenue (as defined in the Shared Services Agreement) during the term of the Shared Services Agreement to be paid in monthly installments each month in arrears no later than the tenth calendar day of each month based upon Curbline’s Gross Revenue for the prior month. There is no separate fee paid by the Company in connection with the provision of services by the Operating Partnership or its affiliates under the Shared Services Agreement. Unless terminated earlier, the term of the Shared Services Agreement will expire on October 1, 2027. In the event of certain early terminations of the Shared Services Agreement, the Company will be obligated to pay a termination fee to the Operating Partnership equal to $2.5 million multiplied by the number of whole or partial fiscal quarters remaining in the Shared

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Services Agreement’s three-year term (or $12.0 million in the event the Company terminates the agreement for convenience on its second anniversary).

The Company, Curbline and the Operating Partnership also entered into a tax matters agreement (the “Tax Matters Agreement”), which governs the rights, responsibilities and obligations 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. In addition, the Company, Curbline and the Operating Partnership entered into an employee matters agreement (“the Employee Matters Agreement”), which governs the respective rights, responsibilities, and obligations of the parties following the spin-off with respect to transitioning employees, equity plans and retirement plans, health and welfare benefits, and other employment, compensation, and benefit-related matters.

SITE Centers Strategy

From July 1, 2023 to December 31, 2024, the Company generated approximately $3.1 billion of gross proceeds from sales of properties for the purpose of acquiring additional convenience properties, capitalizing Curbline and, together with proceeds from the closing and funding of the Mortgage Facility (defined below), redeeming and/or repaying all of the Company’s outstanding unsecured indebtedness and preferred shares. Going forward, the Company intends to realize value through operations and to consider various factors, including market conditions and differences between the public and private valuations of its portfolio, in evaluating whether and when to pursue additional asset sales. The timing of any additional sales may also be impacted by interim leasing, tactical redevelopment activities and other asset management initiatives intended to maximize value. As of February 28, 2025, the Company was in the beginning stages of marketing a select number of assets for sale, though no assurances can be given that such efforts will result in additional asset sales, particularly in light of the dynamic interest rate environment and capital markets conditions. The Company expects to use proceeds from any additional asset sales to repay outstanding indebtedness and make distributions to shareholders.

The Company expects that rental income and net income will decrease in future periods as compared to corresponding prior year periods as a result of the spin-off of Curbline and the significant volume of dispositions completed in 2024. The Company expects that its future dividend policy will be influenced by operations and asset sales, though the Company’s distribution of any sale proceeds to shareholders will be subject to collateral release and repayment requirements set forth in the terms of the Company’s indebtedness and management of liquidity and overall leverage levels in connection with ongoing operations.

Growth opportunities within the Company’s portfolio include rental rate increases, continued lease-up of the portfolio, and rent commencement with respect to recently executed leases.

Transaction and Capital Markets Highlights

Transaction and investment highlights during 2024, in addition to the Curbline spin-off, include the following:

•
Acquired a fee interest in a land parcel in Florida as well as a joint venture partner’s 80% interest in two properties in North Carolina (Meadowmont Crossing and Meadowmont Market) for $18.7 million;

•
Sold 40 wholly-owned shopping centers (excluding certain retained convenience parcels), a parcel at a shopping center and two joint venture assets for an aggregate sales price of $2,325.9 million ($2,261.3 million at the Company’s share);

•
Effected a reverse stock split of its common shares at a ratio of one-for-four and cancelled treasury shares not reserved for compensation plans;

•
Closed and funded a $530.0 million Mortgage Facility which had an outstanding principal balance of $206.9 million as of December 31, 2024;

•
Repaid in full the $200.0 million Term Loan (defined below) and terminated the Revolving Credit Facility (defined below) and recorded associated debt extinguishment costs of $0.9 million and $3.9 million, respectively;

•
Repurchased $88.3 million aggregate principal amount of outstanding senior notes due in 2025, 2026 and 2027 (the “Senior Notes”) for total cash consideration including expenses of $87.1 million and recorded a gain on debt retirement of $1.0 million;

•
Redeemed all remaining outstanding Senior Notes for total cash consideration including expenses of $1,223.0 million and recorded debt extinguishment costs of $6.7 million;

•
Repaid a joint venture mortgage loan for DDRM Properties Joint Venture due in 2024 for $40.9 million ($8.2 million at the Company’s share) and

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•
Redeemed all outstanding 6.375% Class A Cumulative Redeemable Preferred Shares and the associated depositary shares (the “Class A Preferred Shares”) for total cash consideration including expenses of $175.0 million plus accrued dividends. In connection with the redemption, the Company recorded a charge of approximately $6.2 million to net income attributable to common shareholders in the fourth quarter of 2024.

Operational Accomplishments

The Company believes the strong leased and commencement rates of its portfolio is attributable to national tenants’ strong financial positions and increasing emphasis and reliance on physical store locations and the concentration of the Company’s portfolio in primarily suburban, high household income communities which have witnessed significant population growth, changes in remote work and work-from-home trends, and limited new construction of competing retail properties.

Operating highlights for 2024 included (excluding discontinued operations and properties sold in 2024):

•
Signed new leases and renewals for approximately 0.7 million square feet of GLA on a pro rata basis;

•
Achieved blended lease spreads of 7.8% at the Company’s pro rata share;

•
Total annualized base rent per occupied square foot on a pro rata basis increased to $19.64 at December 31, 2024, as compared to $19.42 at December 31, 2023, primarily due to an increase in occupancy of small shop space and rent increases and

•
Aggregate occupancy was 90.6% at December 31, 2024 on a pro rata basis compared to 89.5% at December 31, 2023. The year over year increase primarily was related to new tenant openings in excess of closings.

Retail Environment

The Company continued to see strong renewals for its space in 2024 from a combination of both national and local retailers. Although certain retailers announced bankruptcies and/or store closures in 2024 other retailers, specifically those in the value and convenience category, continue to expand their store fleets and launch new concepts. As a result, the Company believes that its prospects to backfill spaces vacated by bankrupt or non-renewing tenants are generally good, though such re-tenanting efforts will likely require additional capital expenditures and opportunities to lease any vacant theater spaces that may arise may be more limited. Many of the Company’s largest tenants, including TJX Companies, Dick’s Sporting Goods, Ross and Burlington, remain well positioned with access to capital and have outperformed other retail categories on a relative basis.

Company Fundamentals

The following table lists the Company’s tenants that equal or exceed 1.5% of the Company’s aggregate annualized shopping center base rental revenue and the respective Company-owned shopping center GLA as of December 31, 2024, for the following (1) the wholly-owned properties and the Company’s proportionate share of unconsolidated joint venture properties combined, (2) the wholly-owned properties and (3) the unconsolidated joint ventures presented at 100%:

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

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

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

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

The Company leased approximately 1.3 million square feet (0.7 million square feet at the Company’s share) of GLA in 2024 in its wholly-owned and joint venture portfolios, composed of 19 new leases and 90 renewals, for a total of 109 leases executed in 2024. At December 31, 2024, the Company had 68 leases expiring in 2025 with an average base rent per square foot of $23.46 on a pro rata basis. For the comparable leases executed in 2024, at the Company’s interest, the Company generated positive cash leasing spreads of 14.2% for new leases and 7.4% for renewals, or 7.8% on a blended basis. Cash leasing spreads are a key metric in real estate, representing the percentage increase of the tenant’s annual base rent in the first year of the newly executed or renewal lease, over the annual base rent applicable to the final year of the previous lease term, though leasing spreads exclude consideration of the amount of capital expended in connection with new leasing activity and exclude properties in redevelopment. The Company’s cash leasing spread calculation includes only those deals that were executed within one year of the date the prior tenant vacated, in addition to other factors that limit comparability, and as a result, is a good benchmark to compare the average annualized base rent of expiring leases with the comparable executed market rental rates.

For new leases executed during 2024, the Company expended a weighted-average cost of tenant improvements and lease commissions estimated at $6.85 per rentable square foot, on a pro rata basis, over the lease term, as compared to $4.74 per rentable square foot in 2023. The Company generally does not expend a significant amount of capital on lease renewals.

Summary—2024 Financial Results

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

For the year ended December 31, 2024, the increase in net income attributable to common shareholders, as compared to the prior year, was primarily the result of higher gains on dispositions of real estate and an increase in interest income, partially offset by the impact of net property dispositions, the write-off of fees related to the Mortgage Commitment (defined below), debt

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extinguishment costs, and impairment charges. The decrease in Funds from Operations (“FFO”) attributable to common shareholders was primarily the result of the impact of net property dispositions and debt extinguishment costs, partially offset by increased interest income. The decrease in Operating FFO attributable to common shareholders generally was due to the impact of net property dispositions, partially offset by increased interest income.

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

Purchase Price Allocations of Property Acquisitions

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

Real Estate and Long-Lived Assets

Impairment Assessment

An asset with impairment indicators is considered impaired when the undiscounted future cash flows are not sufficient to recover the asset’s carrying value. 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 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.

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. Undiscounted cash flows relating to assets considered for potential sale include estimated net operating income through potential sale dates and estimates of the assets current fair value based on the best available information, which may include a direct capitalization of such net operating income, letters of intent, broker opinions of value or purchase and sale agreements under negotiation.

Impairment indicators related to significant 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. For certain assets, this may require us to reevaluate the hold period required to recover the asset’s carrying value based on updated undiscounted cash flow estimates and involves reconsideration of our hold period based of our ability and intent to hold the asset. The determination of anticipated undiscounted cash flows in these situations is inherently more subjective, requiring significant estimates made by management, and considers the most likely expected course of action at the balance sheet date

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based on current plans, intended holding periods, estimated down-time, market rent assumptions, terminal capitalization rates and other available market information.

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

Measurement of Fair Value

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

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

RESULTS OF OPERATIONS

The spin-off of Curbline Properties in October 2024 represented a strategic shift in the Company’s business and, as such, the Curbline properties are reflected in the financial results as discontinued operations for all periods presented. For the comparison of the Company’s 2024 performance to 2023 and comparison of the Company’s 2023 performance to 2022 presented below, consolidated shopping center properties owned as of January 1, 2023 and January 1, 2022, respectively, are referred to herein as the “Comparable Portfolio Properties.”

Revenues from Operations (in thousands)

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

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

The increase within the Comparable Portfolio Properties for 2023 as compared to 2022 includes the write-off of approximately $8.4 million of below-market lease intangibles due to the early termination of tenant leases.

The increase in Comparable Property Portfolio is due to higher occupancy and annualized base rent per occupied square foot. At December 31, 2024 and 2023, the Comparable Properties consisted of 22 wholly-owned properties as of each balance sheet date that had an aggregate occupancy rate of 90.6% and 89.5% and an average annualized base rent per occupied square foot of $19.81 and $19.63, respectively.

(2)
Recoveries from tenants were approximately 73.5% and 78.7% of operating expenses and real estate taxes for the years ended December 31, 2024 and 2023, respectively. The decrease in the recovery percentage primarily was due to a combination of transactional activity and the mix of properties sold.

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

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

Expenses from Operations (in thousands)

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

The decrease in depreciation for the Comparable Portfolio Properties in 2024 vs. 2023 was primarily due to the impact of acceleration of depreciation related to terminations and write-off of intangibles in 2023.

(B)
There were $66.6 million of impairment charges recorded for the year ended December 31, 2024, triggered by changes in hold period assumptions. For the year ended December 31, 2022, the $2.5 million impairment charge resulted from a tenant exercising a fixed-price purchase option on their building pursuant to the lease agreement. Impairment charges are presented in Note 11, “Impairment Charges,” to the Company’s consolidated financial statements included herein.

(C)
General and administrative expenses for 2023 included costs related to a May 2023 restructuring plan, which included a voluntary retirement offer and other costs to align the Company’s cost structure and technology platform with current and future expected operations and resulted in charges to general and administrative costs of $5.0 million for the year ended December 31, 2023. The Company continues to expense certain internal leasing salaries, legal salaries and related expenses associated with leasing and re-leasing of existing space.

Other Income and Expenses (in thousands)

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

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In 2024, the Company simplified its debt structure. As of December 31, 2024, the Company’s consolidated indebtedness consisted of two outstanding mortgages (the Mortgage Facility and a mortgage loan encumbering Nassau Park Pavilion) with an aggregate outstanding balance of $306.8 million, a weighted-average interest rate (based on contractual rates excluding amortization of debt issuance costs) of 6.9% and a weighted-average maturity (prior to exercise of applicable extension options) of 2.4 years. The weighted-average interest rate (based on contractual rates and excluding amortization of debt issuance costs) was 4.3% and 4.1% at December 31, 2023 and 2022, respectively. At December 31, 2023, the weighted-average maturity (without extensions) was 2.5 years. Interest costs capitalized in conjunction with redevelopment projects were $0.6 million, $1.2 million and $1.1 million for the years ended December 31, 2024, 2023 and 2022, respectively.

(B)
Related to excess cash as a result of sale proceeds maintained in money market accounts.

(C)
In 2024, related primarily to the write off of loan costs and commitment fees and payment of debt extinguishment costs due to the termination of the Mortgage Commitment ($21.2 million), the Revolving Credit Facility ($3.9 million), redemption of the Senior Notes ($6.7 million), pay-off of the Term Loan ($0.9 million) and the release of properties from the Mortgage Facility ($10.1 million).

(D)
Related to the repurchase of a portion of the Senior Notes for total cash consideration, including expenses, of $87.1 million and the write-off of a fair value discount.

(E)
Derivative mark-to-market impact related to the partial hedge on the potential interest rate impact to yield maintenance premiums on the Senior Notes. The hedge was terminated in conjunction with the redemption of the Senior Notes and the Company received a cash payment of $1.3 million in 2024.

(F)
In 2024, primarily consists of transactions costs for abandoned deals and an adjustment to reflect the fair value of services received and provided to Curbline Properties under the Shared Services Agreement.

Other Items (in thousands)

(A)
The reduction in income is the result of gains recognized in 2023 from joint venture asset sales. At December 31, 2024, 2023 and 2022 the Company had an economic investment in unconsolidated joint ventures which owned 11, 13 and 18 shopping center properties, respectively. Joint venture property sales could significantly impact the amount of income or loss recognized in future periods. See Note 3, “Investments in and Advances to Joint Ventures,” in the Company’s consolidated financial statements included herein.

(B)
In 2024, the Company acquired its partner’s 80% interest in one asset previously owned by DDRM Properties Joint Venture (Meadowmont Village, Chapel Hill, North Carolina) for $35.4 million and stepped up its 20% interest due to change in control. In 2023, the Company recorded a gain related to additional proceeds received related to an unconsolidated joint venture that sold its sole asset, a parcel of undeveloped land in Richmond Hill, Ontario, which was considered contingent at the time of the sale. In 2022, the Company recorded a $3.3 million gain from the acquisition of its joint venture partner’s 80% equity in an asset (Casselberry Commons) owned by the DDRM Joint Venture, a $16.8 million gain from the sale of its 20% interest in the SAU Joint Venture to its partner and a $25.4 million gain from the sale of its 50% interest in Lennox Town Center to its partner.

(C)
The Company sold 40 and 17 wholly-owned shopping centers (excluding certain convenience parcels that were retained and later included in the spin-off of Curbline Properties) in 2024 and 2023, respectively. In addition, one land parcel was also sold in 2024. Five wholly-owned shopping centers and land parcels were sold in 2022. See “— Sources and Uses of Capital” included elsewhere herein.

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(D)
The decrease in 2024 as compared to 2023 is due to the fact that 2024 results are through the spin-off date as compared to a full year in 2023 as well as $30.7 million in transactions costs related to the spin-off of Curbline Properties. The increase in 2023 as compared to 2022 was due to properties acquired during 2023 and 2022 which were included in the spin-off.

Net Income (in thousands)

The increase in net income in 2024 attributable to SITE Centers, as compared to the prior-year period, was primarily attributable to the higher gain on disposition of real estate recognized in 2024 and interest income partially offset by impairment charges, debt extinguishment costs and the net impact of property sales. The increase in net income attributable to SITE Centers in 2023, as compared to the prior-year period was primarily attributable to the higher gain on disposition of real estate recognized in 2023, base rent growth, the write-off of below market lease intangibles and the net impact of property acquisitions, partially offset by lower joint venture management fees, higher interest expense, higher depreciation expense and separation and charges included within general and administrative expenses related to the restructuring plan initiated in May 2023.

NON-GAAP FINANCIAL MEASURES

Funds from Operations and Operating Funds from Operations

Definition and Basis of Presentation

The Company believes that FFO and Operating FFO, both non-GAAP financial measures, provide additional and useful means to assess the financial performance of REITs. FFO and Operating FFO are frequently used by the real estate industry, as well as securities analysts, investors and other interested parties, to evaluate the performance of REITs. The Company also believes that FFO and Operating FFO more appropriately measure the core operations of the Company and provide benchmarks to its peer group.

FFO excludes GAAP historical cost depreciation and amortization of real estate and real estate investments, which assume that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions, and many companies use different depreciable lives and methods. Because FFO excludes depreciation and amortization unique to real estate and gains and losses from property dispositions, it can provide a performance measure that, when compared year over year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, interest costs and acquisition, disposition and development activities. This provides a perspective of the Company’s financial performance not immediately apparent from net income determined in accordance with GAAP.

FFO is generally defined and calculated by the Company as net income (loss) (computed in accordance with GAAP), adjusted to exclude (i) preferred share dividends, (ii) gains and losses from disposition of real estate property and related investments, which are presented net of taxes, (iii) impairment charges on real estate property and related investments, (iv) gains and losses from changes in control and (v) certain non-cash items. These non-cash items principally include real property depreciation and amortization of intangibles, equity income (loss) from joint ventures and equity income (loss) from non-controlling interests and adding the Company’s proportionate share of FFO from its unconsolidated joint ventures and non-controlling interests, determined on a consistent basis. The Company’s calculation of FFO is consistent with the definition of FFO provided by NAREIT.

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

The adjustment for these charges, income and gains may not be comparable to how other REITs or real estate companies calculate their results of operations, and the Company’s calculation of Operating FFO differs from NAREIT’s definition of FFO.

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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):

The decrease in FFO for the year ended December 31, 2024, as compared to the prior-year period, was primarily attributable to the impact from net property dispositions, debt extinguishment costs and transaction costs associated with the spin-off of Curbline, which are included in income from discontinued operations, partially offset by increased interest income. The decrease in Operating FFO attributable to common shareholders generally was due to the impact of net property dispositions, partially offset by increased interest income.

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

(A)
At December 31, 2024 and 2023, the Company had an economic investment in unconsolidated joint ventures which owned 11 and 13 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):

(B)
Discontinued operations’ FFO adjustments are summarized as follows (in thousands):

LIQUIDITY, CAPITAL RESOURCES AND FINANCING ACTIVITIES

The Company requires capital to fund its operating expenses and capital expenditures. The Company’s primary capital sources include cash flow from operations, debt financings and proceeds from asset sales. The Company remains committed to monitoring the duration of its indebtedness, to maintaining prudent leverage levels in an effort to manage its overall risk profile while maintaining strategic flexibility and to closely monitoring liquidity and its cash position following the termination of its Revolving Credit Facility in August 2024.

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As of December 31, 2024, the Company had $306.8 million aggregate principal amount of consolidated indebtedness outstanding (as compared to $1.6 billion at December 31, 2023) consisting of the Mortgage Facility having an outstanding principal balance of $206.9 million and a mortgage loan secured by Nassau Park Pavilion having an outstanding principal balance of $99.9 million. In addition, as of December 31, 2024, the Company’s unconsolidated joint ventures had $441.8 million of indebtedness ($106.6 million at SITE’s share).

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

The Company expects that operating expenses, redevelopment activities and capital expenditures will generally be financed through cash provided from operating activities and asset sales. At December 31, 2024, the Company had an unrestricted cash balance of $54.6 million. As of December 31, 2024, the Company anticipates that it has approximately $32.9 million to be incurred to complete redevelopment projects at properties owned by Curbline pursuant to the terms of the Separation and Distribution Agreement. The Company believes it has sufficient liquidity to operate its business at this time.

2024 Financing Activities

The Company repositioned its capital structure during the course of 2024 in order to provide leverage levels and liquidity following the separation of Curbline Properties.

Mortgage Facility

On August 7, 2024, the Company closed and funded a $530.0 million mortgage loan (the “Mortgage Facility”) provided by affiliates of Atlas SP Partners, L.P. and Athene Annuity and Life Company (collectively, the “Lenders”). The Company used proceeds from the closing together with cash on hand from asset sales to repay its outstanding senior unsecured indebtedness as described below and to capitalize Curbline.

In connection with the Mortgage Facility’s closing, certain wholly-owned subsidiaries of the Company (collectively, the “Borrowers”) delivered certain promissory notes (collectively, the “Notes”) evidencing their obligation to pay principal, interest and other amounts under the Mortgage Facility. The Notes are secured by, among other things, mortgages encumbering the Borrowers’ respective properties (a total of 23 properties at closing) (collectively, the “Properties”) and related personal property, leases and rents.

The Mortgage Facility will mature on September 6, 2026, subject to two one-year extensions at the Borrowers’ option (subject to satisfaction of certain conditions). The interest rate applicable to the Notes is equal to 30-day term Secured Overnight Financing Rate (“SOFR”) (subject to a rate index floor of 3.50%) plus a spread of 2.75% per annum. The Borrowers are required to maintain an interest rate cap with respect to the principal amount of the Notes having a 30-day term SOFR strike rate equal to 6.25%. During the continuance of an event of default, the contract rate of interest on the Notes will increase to the lesser of (i) the maximum rate allowed by law or (ii) 4% above the interest rate then otherwise applicable.

The Mortgage Facility is structured as an interest only loan throughout the initial two-year term and any exercised extension periods. The principal amount outstanding under the Mortgage Facility may be prepaid (in whole or in part) by the Borrowers at any time without penalty, provided that prepayments made prior to the first anniversary of the closing date in excess of 35% of the initial principal amount of the Mortgage Facility will be subject to the Borrowers’ payment of a spread maintenance premium equal to 2.75% per annum based on the number of days remaining prior to the first anniversary of the closing date. So long as no event of default then exists and subject to other customary release conditions, the Borrowers may cause the Lenders to release Properties from the Mortgage Facility in connection with their sale by paying 115% of the initial loan amount allocated to such Property (plus the spread maintenance premium, if applicable) provided that after giving effect to such release the debt yield of the remaining Properties is equal to or greater than (i) the debt yield on the Mortgage Facility’s closing date and (ii) the debt yield in effect immediately prior to such release.

All Property rents are deposited into lockbox accounts in the name of the Borrowers for the benefit of and controlled by the Lenders. So long as no Trigger Period (as defined below) is continuing, Borrowers will have control over all funds in such lockbox accounts. During a Trigger Period, substantially all amounts in the lockbox accounts will be remitted to a cash management account controlled by the Lenders on a daily basis and will be used by the Lenders to fund monthly debt service, real estate taxes, insurance, required reserves, other amounts owing to the Lenders and other property-level operating costs, with all remaining amounts to be held by the Lenders as additional collateral for the Mortgage Facility. A “Trigger Period” commences (i) upon the occurrence of any event of default under the Mortgage Facility (and ends upon the cure or waiver of the event of default); (ii) when the debt yield falls below

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10.5% (and ends when the debt yield exceeds 10.5% for one calendar quarter); or (iii) upon any bankruptcy action with respect to any Borrower or manager of a Property that has not been discharged within 60 days of filing.

Throughout the term of the Mortgage Facility, the Company is required to maintain (i) a net worth of not less than 15% of the then outstanding principal amount of the loan (but in no event less than $100.0 million) and (ii) minimum liquid assets of not less than 5% of the then outstanding principal amount of the loan (but in no event less than $15.0 million).

The Company is required to comply with certain other covenants under the Mortgage Facility. The Company was in compliance with these covenants at December 31, 2024.

As of December 31, 2024, the Mortgage Facility had an outstanding principal balance of $206.9 million and was secured by 13 Properties.

Termination of Mortgage Commitment

In connection with the Mortgage Facility’s closing, the Company terminated the commitment (the “Mortgage Commitment”) that it had obtained from the a different group of lenders in October 2023 to provide a $1.1 billion financing secured by 40 of the Company’s properties.

Termination of Revolving Credit Facility and Term Loan

On August 15, 2024, the Company terminated all of the lenders’ commitments under its unsecured revolving credit facility with a syndicate of financial institutions and JPMorgan Chase Bank, N.A., as administrative agent (the “Revolving Credit Facility”) and paid all related fees and expenses then outstanding. At the time of termination of the lenders’ commitments, there were no loans outstanding under the Revolving Credit Facility.

On August 15, 2024, the Company also repaid in full all outstanding amounts under its unsecured term loan with a syndicate of financial institutions and Wells Fargo Bank, National Association, as administrative agent (the “Term Loan”). At the time of the repayment, the principal amount of the Term Loan was approximately $200.0 million.

Repayment of Other Senior Unsecured Indebtedness

On August 21, 2024, the Company redeemed the entire outstanding principal amount of its 4.700% Notes due 2027 ($448.3 million). On August 23, 2024, the Company redeemed the entire outstanding principal amount of its 3.625% Notes due 2025 ($400.4 million) and 4.250% Notes due 2026 ($370.1 million).

Redemption of Series A Preferred Shares

On November 26, 2024, the Company redeemed all of its outstanding Class A Preferred Shares for a total cash consideration of $175.0 million plus accrued dividends.

Consolidated Indebtedness – As of December 31, 2024

In addition to amounts outstanding under the Mortgage Facility, the Company had outstanding consolidated indebtedness at December 31, 2024 of $99.9 million, which consisted of a mortgage loan encumbering one property (Nassau Park Pavilion, Princeton, New Jersey), maturing in November 2028. No assurance can be provided that the Company’s debt obligations will be refinanced or repaid as currently anticipated. See Item 1A. Risk Factors.

Unconsolidated Joint Ventures’ Mortgage Indebtedness – As of December 31, 2024

The outstanding indebtedness of the Company’s unconsolidated joint ventures at December 31, 2024, which matures in the subsequent 14-month period (i.e., through February 28, 2026), is $61.2 million or $30.4 million at the Company’s share which is expected to be extended in accordance with the loan documents.

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

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Cash Flow Activity

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

Changes in cash flow for the year ended December 31, 2024, compared to the prior year are as follows:

Operating Activities: Cash provided by operating activities decreased by $126.5 million primarily due to lower rental income as a result of disposition activity and transaction costs related to the spin-off of Curbline Properties partially offset by an increase in interest income.

Investing Activities: Cash from investing activities increased by $1.3 billion primarily due to the following:

•
Increase in real estate assets acquired, developed and improved of $12.1 million;

•
Increase in proceeds from disposition of real estate and joint ventures of $1.3 billion and

•
Decrease in distributions from unconsolidated joint venture of $8.0 million.

Financing Activities: Cash used for financing activities increased by $2.2 billion primarily due to the following:

•
Increase in the repayment of the Senior Notes of $1.2 billion;

•
Increase in repayment of Term Loan and Mortgage Facility debt of $520.4 million partially offset by increase in proceeds from mortgage debt of $430.0 million;

•
Redemption of Class A Preferred Shares of $175.0 million;

•
Contribution of unrestricted cash to Curbline of $800.0 million;

•
Increase in dividends paid in 2024 of $7.5 million due to a special dividend paid in January 2024 and

•
Repurchases of common shares in 2023 of $26.6 million.

Dividend Distribution

The Company satisfied its REIT requirement of distributing at least 90% of ordinary taxable income with declared common and preferred share cash dividends of $64.4 million in 2024 (in addition to the value of the distribution of Curbline Properties common stock), as compared to $154.1 million of cash dividends declared in 2023. In order to maximize the capitalization of Curbline and preserve funds for operations, the Company did not declare a dividend on its common shares with respect to the third and fourth quarter of 2024. Because actual distributions were greater than 100% of taxable income, the Company does not expect to incur federal income taxes in 2024.

The Company declared aggregate cash dividends of $1.04 per common share in 2024 (adjusted to reflect the one-for-four reverse stock split of the Company’s common shares in August 2024). 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. The Company does not currently expect to make regular quarterly dividend payments in the future. Instead, the Company intends to pursue a dividend policy of retaining sufficient free cash flow to support the Company’s capital needs while still adhering to REIT payout requirements and minimizing federal income taxes. The Company expects that the frequency and timing of future dividends will be influenced by operations and asset sales, though the Company’s distribution of any sale proceeds to shareholders will be subject to collateral release and repayment requirements set forth in the terms of the Company’s indebtedness and prudent management of liquidity and overall leverage levels in connection with ongoing operations. The Company is required by the Code to distribute at least 90% of its REIT taxable income; however, there can be no assurances as to the timing and amounts of future dividends.

SITE Centers’ Equity

In 2022, the Company’s Board of Directors authorized a common share repurchase program. Under the terms of the program, the Company is authorized to repurchase up to a maximum value of $100 million of its common shares. As of December 31, 2024, the Company had repurchased an aggregate of 0.5 million of its common shares under this program at an aggregate cost of $26.6 million, or $53.76 per share (as adjusted to give effect to the one-for-four reverse split of the Company’s common shares in August 2024).

In May 2024, the Company terminated its $250.0 million “at the market” continuous equity program.

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Prior to the commencement of trading on August 19, 2024, in anticipation of the spin-off of Curbline Properties, the Company effected a reverse stock split of its common shares, at a ratio of one-for-four and cancelled all outstanding treasury shares not specifically reserved to satisfy the Company’s compensation plans.

In the fourth quarter of 2024, the Company redeemed all of its Class A Preferred Shares at a redemption price of $500.00 per Class A Preferred Share (or $25.00 per depositary share) plus accrued and unpaid dividends of $3.6302 per Class A Preferred Share (or $0.1815 per depositary share). The Company recorded a charge of $6.2 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.

SOURCES AND USES OF CAPITAL

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

Curbline Separation

On October 1, 2024, the Company completed the spin-off of Curbline. For additional information on the Curbline spin-off, see the “Executive Summary—Curbline Spin-Off” section of this MD&A.

Prior to the spin-off of Curbline, the Company used proceeds from the closing and funding of the Mortgage Facility and asset sales to redeem and/or repay all of the Company’s outstanding unsecured indebtedness. Going forward, the Company intends to realize value through operations and to consider various factors, including market conditions and differences between the public and private valuations of its portfolio, in evaluating whether and when to pursue additional asset sales. The timing of any additional sales may also be impacted by interim leasing, tactical redevelopment activities and other asset management initiatives intended to maximize value. As of February 28, 2025, the Company was in the beginning stages of marketing a select number of assets for sale, though no assurances can be given that such efforts will result in additional asset sales, particularly in light of the dynamic interest rate environment and capital markets conditions. The Company expects to use proceeds from any additional asset sales to repay outstanding indebtedness (including the Mortgage Facility) and make distributions to shareholders. Following the termination of the Company’s Revolving Credit Facility in August 2024, the Company also plans to conservatively manage its cash position in order to provide adequate resources to fund ongoing operations.

2024 Transactions Activity

Acquisitions

During 2024, the Company acquired 14 convenience centers for an aggregate gross purchase price of $219.2 million, all of which were included in the spin-off of Curbline.

In addition, the Company acquired the following shopping centers (in thousands) for the benefit of its consolidated shopping center portfolio:

(A)
Acquired the fee interest in a land parcel at this center.

(B)
Acquired from the DDRM Properties Joint Venture.

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Dispositions

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

(A)
GLA excludes some square footage relating to convenience parcels retained by the Company at the time of the sale and subsequently included in the spin-off of Curbline Properties.

Joint Venture Dispositions

In May 2024, the Company acquired one asset owned by the DDRM Properties Joint Venture (Meadowmont Village, Chapel Hill, North Carolina) for $44.2 million ($8.8 million at the Company’s share) which included a convenience parcel subsequently included in the Curbline Properties spin-off. In June 2024, the DDRM Properties Joint Venture sold one asset (Hilltop Plaza, Richmond, California) for $36.5 million, of which the Company’s share was $7.3 million. There are no remaining assets in this joint venture.

Equity Transactions

In the fourth quarter of 2024, the Company redeemed all of its Class A Preferred Shares at a redemption price of $500.00 per Class A Preferred Share (or $25.00 per depositary share) plus accrued and unpaid dividends of $3.6302 per Class A Preferred Share (or $0.1815 per depositary share). The Company recorded a charge of $6.2 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.

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Redevelopment Projects

The Company evaluates additional tactical redevelopment potential within the portfolio, particularly as it relates to the efficient use of the underlying real estate, which includes expanding, improving and re-tenanting various properties. The Company generally expects to commence construction on redevelopment projects only after substantial tenant leasing has occurred. At December 31, 2024, the Company had approximately $2.7 million in construction in progress in various active re-tenanting projects. At December 31, 2024, the estimated cost to complete redevelopment projects at properties owned by Curbline pursuant to the terms of the Separation and Distribution Agreement was approximately $32.9 million.

2023 Transactions Activity

Acquisitions

During 2023, the Company acquired 12 convenience centers for an aggregate gross purchase price of $165.1 million, all of which were included in the spin-off of Curbline.

Dispositions

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

(A)
GLA excludes some square footage relating to convenience parcels retained by the Company at the time of the sale and subsequently included in the spin-off of Curbline Properties.

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

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

Equity Transactions

In the first quarter of 2023, the Company repurchased 0.4 million of its common shares in open market transactions at an aggregate cost of $20.0 million, or $53.73 per share (adjusted to give effect to the one-for-four reverse split of the Company’s common shares in August 2024) with the remaining proceeds from the sale of wholly-owned properties in the fourth quarter of 2022 and proceeds from the sale of joint venture properties.

In the second quarter of 2023, the Company repurchased 35,158 operating partnership units (“OP Units”) in a privately negotiated transaction at an aggregate cost of $1.7 million, or $49.36 per share (adjusted to give effect to the one-for-four reverse split of the Company’s common shares in August 2024). Following the repurchase, the Company has no outstanding OP Units.

Redevelopment Projects

The Company invested approximately $82 million in various consolidated active redevelopment and other projects during 2023.

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2022 Transactions Activity

Acquisitions

During 2022, the Company acquired 15 convenience centers for an aggregate gross purchase price of $306.8 million, all of which were included in the spin-off of Curbline. In addition, the Company acquired its joint venture partner’s 80% equity interest from the DDRM Joint Venture for one asset which included a convenience center component. The purchase price was $44.5 million at 100% (or $35.6 million at 80%).

Dispositions of Assets and Joint Venture Investments

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

In 2022, the Company acquired its joint venture partner’s 80% equity interest in one asset owned by the DDRM Joint Venture for $35.6 million (including the portion included in the Curbline Properties spin-off) and stepped up the previous 20% interest due to change in control. The transaction resulted in Gain on change in control of interests of $3.3 million.

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

Equity Transactions

In the first and second quarters of 2022, the Company settled 0.6 million common shares which were offered and sold on a forward basis under its $250 million continuous equity program, resulting in gross proceeds of $38.3 million, or $63.16 per share. In the third and fourth quarters of 2022, the Company repurchased 0.9 million of its common shares in open market transactions at an aggregate cost of $48.9 million, or $52.37 per share. The per share amounts have been adjusted to give effect to the one-for-four reverse split of the Company’s common shares in August 2024.

Redevelopment Projects

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

CAPITALIZATION

At December 31, 2024, the Company’s capitalization consisted of $306.8 million of debt and $801.7 million of market equity (calculated as common shares outstanding multiplied by $15.29, the closing price of the Company’s common shares on the New York Stock Exchange at December 31, 2024).

In July 2024, the Company announced a one-for-four reverse stock split of its common shares. Split-adjusted trading began on the New York Stock Exchange at the opening of trading on August 19, 2024.

Management seeks to maintain access to the capital resources necessary to manage the Company’s balance sheet and to repay upcoming maturities. Accordingly, the Company may seek to obtain funds through additional debt or asset sales. In connection with the spin-off of Curbline, the Company used proceeds from the Mortgage Facility together with proceeds from asset sales to repay all of the Company’s outstanding unsecured indebtedness and therefore no longer maintains a revolving line of credit or an investment grade rating. The Company may not be able to obtain financing on favorable terms, or at all.

The Mortgage Facility contains certain operating and financial covenants, including net worth and liquidity requirements, and includes provisions that could restrict the Company’s access and use of rent collections from mortgaged properties in the event the debt yield falls below a certain threshold or an event of default occurs. Although the Company intends to operate in compliance with these covenants, if the Company were to violate these covenants, the Company may be subject to higher finance costs and fees or accelerated maturities. In addition, the Mortgage Facility permits the acceleration of maturity and foreclosure in the event of breaches of affirmative or negative covenants. 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.

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CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

The Company has addressed all of its consolidated debt maturing in 2025. The Company expects to fund repayment of future maturities from cash on hand, proceeds from asset sales and other investments, cash flow from operations and/or additional debt financings. No assurance can be provided that these obligations will be repaid as currently anticipated or refinanced.

Other Guaranties

In conjunction with the redevelopment of shopping centers, the Company had entered into commitments with general contractors aggregating approximately $0.4 million for its properties (excluding Curbline redevelopment noted below) as of December 31, 2024. 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 cash on hand, operating cash flows or asset sales. These contracts typically can be changed or terminated without penalty.

Additionally, the Separation and Distribution Agreement contains obligations to complete certain redevelopment projects at properties that are owned by Curbline. As of December 31, 2024, such redevelopment projects were estimated to cost $32.9 million to complete.

In connection with the sale of two properties in 2024, the Company guaranteed additional construction costs to complete re-tenanting work at the properties and deferred maintenance, all of which were recorded as a liability. As of December 31, 2024, the Company had a liability of approximately $7.2 million. The amount is recorded in accounts payable and other liabilities on the Company’s consolidated balance sheets.

The Company routinely enters into contracts for the maintenance of its properties. These contracts typically can be canceled upon 30 to 60 days’ notice without penalty. At December 31, 2024, the Company had purchase order obligations, typically payable within one year, aggregating approximately $0.3 million related to the maintenance of its properties and general and administrative expenses.

At December 31, 2024, the Company had letters of credit outstanding of $9.2 million. The Company has not recorded any obligations associated with these letters of credit, the majority of which serve as collateral to secure the Company’s obligation to third-party insurers with respect to limited reinsurance provided by the Company’s captive insurance company.

The Company is a party to employment contracts with its Chief Financial Officer and its General Counsel. These contracts generally provide for base salary, bonuses based on factors including the performance of the Company and the executive, participation in the Company’s retirement plans, health and welfare benefits and reimbursement of various qualified business expenses. These employment agreements have indefinite terms subject to termination by either the Company or the executive without cause upon at least 90 days’ notice and the payment of severance and other amounts to the executive under certain circumstances. The Company is not a party to employment contracts with its Chief Executive Officer or Chief Investment Officer whose services are provided to the Company by Curbline Properties pursuant to the terms of the Shared Services Agreement. The term of the Shared Services Agreement expires on October 1, 2027, subject to earlier termination by the Company or Curbline Properties as provided therein (and the Company’s payment of a termination fee to Curbline Properties under certain circumstances).

ECONOMIC CONDITIONS

The Company continues to experience steady retailer demand which it believes is attributable to the concentration of the Company’s portfolio in primarily suburban, high household income communities experiencing population growth, positive changes in remote and work-from-home trends, limited new construction of competing retail properties and tenants’ increasing use of physical store locations to improve the speed and efficiency of merchandise distribution.

The Company benefits from a diversified tenant base, where only six tenants’ 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. Other significant national tenants generally have relatively strong financial positions, have outperformed other retail categories over time and the Company believes remain well-capitalized. Historically, these national tenants have provided a stable revenue base, and the Company believes that they will continue to provide a stable revenue base going forward, given the long-term nature of these leases. The majority of the tenants in the Company’s shopping centers provide day-to-day consumer necessities with a focus on value and convenience, versus discretionary items, which the Company believes will enable many of its tenants to outperform under a variety of economic conditions. The Company has relatively little reliance on overage or percentage rents generated by tenant sales performance.

The Company believes that its shopping center portfolio is well positioned, as evidenced by its recent leasing activity, historical property income growth and consistent growth in average annualized base rent per occupied square foot. The Company executed new

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leases and renewals aggregating approximately 0.7 million square feet of space on a pro rata basis for the year ended December 31, 2024. At December 31, 2024 and 2023, the shopping center portfolio occupancy, on a pro rata basis, was 90.6% and 89.5%, respectively, and the total portfolio average annualized base rent, on a pro rata basis, was $19.64 and $19.42, respectively. Historical occupancy has generally ranged from 89% to 94% over the last 10 years. The weighted-average cost of tenant improvements and lease commissions estimated to be incurred over the expected lease term for new leases executed during the years ended December 31, 2024 and 2023, on a pro rata basis, was $6.85 and $4.74 per rentable square foot, respectively. The Company generally does not expend a significant amount of capital on lease renewals. The comparability of period-over-period operating metrics has been increasingly impacted by the level and composition of the Company’s disposition activities.

Inflation, higher interest rates and concerns over consumer spending, along with the volatility of global capital markets, continue to pose risks to the U.S. economy, retail sales, and the Company’s tenants. In addition to these macroeconomic challenges, the retail sector has been affected by changing consumer behaviors, including the competitive nature of the retail business and the competition for the share of the consumer wallet. The Company routinely monitors the credit profiles of its tenants and analyzes the possible impact of any potential tenant credit issues on the financial statements of the Company and its unconsolidated joint ventures. In some cases, changing conditions have resulted in weaker retailers and retail categories losing market share and declaring bankruptcy and/or closing stores. However, other retailers, specifically those in the value and convenience category, continue to launch new concepts and expand their store fleets within the suburban, high household income communities in which many of the Company’s properties are located. As a result, the Company believes that its prospects to backfill vacant spaces or non-renewing tenants are generally good, though such re-tenanting efforts would likely require additional capital expenditures and the opportunities to lease any vacant theater spaces may be more limited. However, there can be no assurance that vacancy resulting from increasingly uncertain economic conditions will not adversely affect the Company’s operating results or the valuation of its properties (see Item 1A. Risk Factors).

FORWARD-LOOKING STATEMENTS

MD&A should be read in conjunction with the Company’s consolidated financial statements and the notes thereto appearing elsewhere in this report. Historical results and percentage relationships set forth in the Company’s consolidated financial statements, including trends that might appear, should not be taken as indicative of future operations. The Company considers portions of this information to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), both as amended, with respect to the Company’s expectations for future periods. Forward-looking statements include, without limitation, dispositions and other business development activities, future capital expenditures, financing sources and availability and the effects of environmental and other regulations. Although the Company believes that the expectations reflected in these forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. For this purpose, any statements contained herein that are not statements of historical fact should be deemed to be forward-looking statements. Without limiting the foregoing, the words “will,” “believes,” “anticipates,” “plans,” “expects,” “seeks,” “estimates” and similar expressions are intended to identify forward-looking statements. Readers should exercise caution in interpreting and relying on forward-looking statements because such statements involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company’s control and that could cause actual results to differ materially from those expressed or implied in the forward-looking statements and that could materially affect the Company’s actual results, performance or achievements. For additional factors that could cause the results of the Company to differ materially from those indicated in the forward-looking statements (see Item 1A. Risk Factors).

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

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

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

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

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

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

•
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 be subject to potential exposure to unexpected claims, liabilities or costs under the Company's agreements with Curbline and the Operating Partnership or otherwise in connection with the spin-off;

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

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

•
The Company’s financial condition may be affected by required debt service payments, the risk of default, restrictions on its ability to incur additional debt or to enter into certain transactions under its debt obligations. In addition, the Company may encounter difficulties in obtaining permanent financing or refinancing existing debt;

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

•
Financing necessary for the Company to 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, the valuation of its properties and the market price of the Company’s common shares;

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

•
The Company is subject to complex regulations related to its status as a REIT, the compliance with which has become more complex as a result of changes to the Company’s asset portfolio, and would be adversely affected if it failed to qualify as a REIT for any reason;

•
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 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;

48

•
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;

•
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 be subject to potential liabilities, increased costs, reputation harm and other adverse effects on the Company’s business due to stakeholders’, including regulators’, views regarding the Company’s environmental, social and governance initiatives and disclosures, and the impact of factors outside of the Company’s control on such initiatives and disclosures;

•
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;

•
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;

•
A change in the Company’s relationship with Curbline Properties and the Company’s ability to retain qualified personnel and adequately manage the Company in the event the Shared Services Agreement is terminated;

•
Potential conflicts of interest with Curbline Properties and

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

EXECUTIVE SUMMARY

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

Current Strategy

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

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

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

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

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

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

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

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

Transaction and Capital Markets Highlights

Transaction and investment highlights during 2023 include the following:

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

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

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

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

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

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

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

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

Operational Accomplishments

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

Operating highlights for 2023 included:

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

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

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

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

Retail Environment

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

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Company Fundamentals

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

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

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

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

(D)
Includes Gap, Old Navy and Banana Republic

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

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

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

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Summary—2023 Financial Results

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

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

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

CRITICAL ACCOUNTING ESTIMATES

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

Purchase Price Allocations of Property Acquisitions

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

Real Estate and Long-Lived Assets

Impairment Assessment

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

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

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

Measurement of Fair Value

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

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

RESULTS OF OPERATIONS

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

Revenues from Operations (in thousands)

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

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

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

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

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

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

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

Expenses from Operations (in thousands)

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

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

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

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

Other Income and Expenses (in thousands)

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

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

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

Other Items (in thousands)

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

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

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

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Net Income (in thousands)

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

NON-GAAP FINANCIAL MEASURES

Funds from Operations and Operating Funds from Operations

Definition and Basis of Presentation

The Company believes that Funds from Operations (“FFO”) and Operating FFO, both non-GAAP financial measures, provide additional and useful means to assess the financial performance of REITs. FFO and Operating FFO are frequently used by the real estate industry, as well as securities analysts, investors and other interested parties, to evaluate the performance of REITs. The Company also believes that FFO and Operating FFO more appropriately measure the core operations of the Company and provide benchmarks to its peer group.

FFO excludes GAAP historical cost depreciation and amortization of real estate and real estate investments, which assume that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions, and many companies use different depreciable lives and methods. Because FFO excludes depreciation and amortization unique to real estate and gains and losses from property dispositions, it can provide a performance measure that, when compared year over year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, interest costs and acquisition, disposition and development activities. This provides a perspective of the Company’s financial performance not immediately apparent from net income determined in accordance with GAAP.

FFO is generally defined and calculated by the Company as net income (loss) (computed in accordance with GAAP), adjusted to exclude (i) preferred share dividends, (ii) gains and losses from disposition of real estate property and related investments, which are presented net of taxes, (iii) impairment charges on real estate property and related investments, (iv) gains and losses from changes in control and (v) certain non-cash items. These non-cash items principally include real property depreciation and amortization of intangibles, equity income (loss) from joint ventures and equity income (loss) from non-controlling interests and adding the Company’s proportionate share of FFO from its unconsolidated joint ventures and non-controlling interests, determined on a consistent basis. The Company’s calculation of FFO is consistent with the definition of FFO provided by NAREIT.

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

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

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

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

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

Reconciliation Presentation

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

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

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