SITE Centers Corp.

Good morning, and welcome to the Site Center's Reports fourth quarter 2022 operating results conference call. All participants will be in a listen-only mode. And should you need any assistance during the call, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. And to withdraw your question, please press star, then two. Please note that this event is being recorded today. I would now like to turn the conference over to Stephanie Raulz-Perez. Please go ahead.

Thank you, Operator. Good morning and welcome to Site Center's 4th Quarter 2022 Earnings Conference Call. Joining me today are Chief Executive Officer David Lukes and Chief Financial Officer Connor Kennedy. In addition to the press release distributed this morning, we have posted our quarterly financial supplement and slide presentation on our website at www.sitecenters.com, which are intended to support our prepared remarks during today's call. Please be aware that certain of our statements today may contain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are subject to risks and uncertainties, and actual results may differ materially from our forward-looking statements. Additional information may be found in our earnings press release and in our filings with the SEC, including our most recent report on Form 10-K and 10-Q. In addition, we will be discussing non-GAAP financial measures on today's call, including FFO, operating FFO, and same-store net operating income. Reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in today's quarterly financial supplement. At this time, it is my pleasure to introduce our Chief Executive Officer, David Lukes.

David Lukes Good morning, and thank you for joining our fourth quarter earnings call. The fourth quarter concluded a very productive year for site centers with results ahead of budget, another quarter of elevated leasing volume despite having less available space, the opportunistic sale of three wholly owned properties with pricing well inside of where we repurchased stock, and a balance sheet that remains in great shape with full availability on our line of credit minimal near-term maturities, and debt to EBITDA on the low fives, which remains well ahead of the peer group in the sector overall. I'll start with detailed comments on leasing and then move to transaction activity before handing it over to Connor to give more details around the quarter and 2023 guidance. In the fall of 2020, we saw the early signs of an acceleration of demand from national retailers following a six-month COVID pause. The junior anchors were the first to accelerate, followed by small shop and midsize users. The common theme behind their expansion plans and new concept growth was the desire for well-capitalized retailers to get into or closer to the wealthiest suburban communities in the country to take advantage of population growth, pandemic-induced work-from-home trends, and the benefits of a store fleet that could be used for in-person, click-and-collect, or ship-from-store. The unusual strength and speed at which leasing demand accelerated led us to quickly expand our leasing department and regionalize our leasing leadership to ensure that we were in front of our best relationships at the time when they needed space. John Thirkle was named Senior Vice President of Leasing at this time, and his team of five veteran regional vice presidents have used their relationships to our advantage to produce exceptional results for our company. Ultimately, Site Center signed over 2 million square feet of new leases in 2021 and 22 at a 20% spread, including 73 anchor boxes signed since the start of the pandemic and increased our lease rate by almost 400 basis points. I can't thank the leasing team enough for their dedication and hard work. This congratulations also extends to our legal leasing department, led by Erin Fair, who have also used their deep relationships to quickly respond to tenant demand and complete a very high volume of new leases in a short period of time. Going forward, the trends and factors that allowed us to achieve these high leasing volumes are still firmly in place. Supply in our submarkets is extremely low. and demand remains very strong from national retailers looking to expand their footprints in the wealthiest suburban markets where we operate. Our execution of new leases to satisfy these retail tenant expansions, combined with high tenant retention, resulted in a 40 basis point sequential increase in our portfolio lease rate to over 95%, which achieves the target that we laid out over a year ago. The one change we have seen more recently is the return of post-holiday bankruptcy filings following a two-year hiatus, specifically as it relates to tenants including Party City and the widely publicized potential filing of Bed Bath & Beyond. I'll spend some time on our strategy for both of these tenants. For Party City, site had 12 wholly-owned locations at year-end excluding JVs and the franchise location. with total exposure of about 90 basis points of base rent. Given the high sales productivity in our portfolio and the demand from other credit tenants for that space, we were not surprised that none of our locations were on the initial rejection list as part of the bankruptcy process. Tenants looking for space in this unit size include PopShelf, Ulta, Five Below, Sephora, J.Crew, and a variety of medical users, among others. As a reminder, the Party City unit size is similar to Pier 1, which liquidated early in COVID, and none of those units are available to lease in our portfolio today. During any bankruptcy process, there are times when a landlord works with a weak tenant to restructure leases. This is not one of those times. We expect to pursue an aggressive recapture of space so that we have more inventory to satisfy demand from other high-credit national tenants. Shifting to Bed Bath & Beyond, which has been widely publicized, may file for bankruptcy. Given the possibility that we might eventually recapture all of their locations, our asset management team began working with our leasing team in the fall of last year to identify a strategy for each unit along with potential backfill candidates, and we feel very well prepared for a focused marketing cycle. To date, we've recaptured one location at natural expiration, and that store has already been released to Planet Fitness with a 2023 expected rent commencement date. Of the remaining 18 stores, which represent 1.9% of base rent, we are confident that there are single-user backfill options for 17 of those locations. The last remaining space is slated for demolition to prepare for an asset sale for a multifamily redevelopment project in Washington, D.C., which we completed the requirement for rezoning almost two years ago. As a result of these activities, I would expect that the majority of our stores will have executed leases this year should the company file with rent commencements by year end 24. Moving to the overall portfolio leasing for the quarter, as noted, demand and activity remained very high in the fourth quarter with over 800,000 square feet signed. In terms of new leasing, we had another quarter of almost 200,000 square feet of new deals with strength again from national shops as a standout. Our shop lease rate was up 120 basis points sequentially and 530 basis points from the fourth quarter last year. Quite a bit of this leasing was again in our tactical redevelopment pipeline with a specialty grocer signed post-year end at our Tannisborne project in Portland, bringing the pipeline to over 85% leased. The projects broken out in our supplement started to deliver last year, with the majority stabilizing by year-end 2023. Importantly, each of these projects are expected to be immediately accretive to earnings. Looking forward, we have another 250,000 square feet at share in current lease negotiations, which excludes any of the activity on Bed Bath or Party City locations that I just outlined. with blended spreads above our trailing 12-month average. We expect this pipeline to be completed over the next two quarters, concentrated in the mix of national publicly traded tenants. That said, the absolute level of activity in the first quarter will moderate as we simply have less space to lease until we can take possession of some of the bankrupt tenant score footage outlined earlier. Shifting to transaction activity, we had another very active quarter, recycling capital, highlighted by the sale of three wholly owned properties with total dispositions in the quarter of $158 million at share. Two of the three properties were sold not marketed, but were the result of a 1031 investor that approached our team looking to reinvest proceeds at pricing, which we felt was attractive for our stakeholders. Net proceeds were used to pay down debt repurchase stock at roughly a 150 basis point spread to the cap rate on the deals, and reinvest in convenience assets in the Mid-Atlantic and Denver. Specifically, we acquired two properties in Denver for almost $17 million and one property outside of D.C. for $15 million. There will be a lag until we are able to reinvest all of the proceeds, but we have an additional $75 million of convenience assets under contract or awarded as of today for which we would expect to close by the end of June. The assets acquired or under contract are in our core markets, including Denver, Atlanta, Phoenix, and Washington, D.C., and have attributes similar to those assets bought in the third quarter and to date, including strong submarket demographics with top quartile incomes, a tenant lineup made up of services, financial services, quick service restaurants, and a majority with a drive-through unit. Underwritten five-year NOI CAGRs are roughly 3% with minimal CapEx, which is consistent with our existing convenience portfolio and one of the key attributes of our thesis. In summary, we are extremely pleased with our portfolio positioning and future leasing prospects, our investments to date, which have increased our long-term growth profile, and shifted our portfolio to the top sub-markets in the country. and future investment prospects, which we believe will create stakeholder value while prudently managing our balance sheet. A special thank you to the entire site center's team for another incredibly productive quarter and year. And with that, I'll turn it over to Connor.