SITE Centers Corp.

Good day, and welcome to the Site Center's first quarter 2024 operating results conference call. All participants will be in the send-only mode. Should you need assistance, 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 the star, then one, on your touch-tone phone. To withdraw your question, please press the star, then two. Please note, this event is being recorded. And now I'd like to turn to the conference of your host today, Stephanie Rui, Vice President of Capital Markets. Please go ahead, ma'am.

Thank you. Good morning and welcome to SightCenter's first quarter 2024 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.sightcenters.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 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. Descriptions and reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in today's quarterly financial supplement and investor presentation. At this time, it is my pleasure to introduce our Chief Executive Officer, David Lukes.

Good morning, and thank you for joining our quarterly earnings call. The first quarter was highlighted by additional progress on the announced planned spinoff of the convenience portfolio from within site centers into a new and unique focused growth company called CurbLine Properties. This announcement, along with over $1 billion of completed dispositions and over $100 million of new acquisitions since the third quarter of 2023, has put us on a dual path of growing our CurbLine portfolio through acquisitions and maximizing the value of the site center's portfolio through certain dispositions along with continued leasing and asset management. I'll start with an update on CurbLine, shift next to transactions, then conclude with an update on the quarter and operations before turning it over to Connor to talk about the first quarter results, the outlook for the rest of the year, and the balance sheet. Starting with CurbLine, we began investing in convenience assets over five years ago. And after several years of investments, reviewing data analytics, and financial and tenant analysis, we are more convinced than ever the convenience sector is a differentiated, unique growth opportunity. As announced, to seize this opportunity, we are creating CurbLine Properties as a first mover REIT that is unlike other retail REITs and has what we believe to be the highest organic cash flow growth potential driven by annual bumps the ability to recapture and mark-to-market units, a high-quality and diversified tenant roster with minimal concentration risk, and limited CapEx needs as compared to other property types. Same-store NOI for the current CurbLine portfolio is expected to grow 4.5% in 2024 and average greater than 3% for the next three years when factor in all of these attributes. As of quarter end, the CurbLine portfolio included 67 wholly owned convenience properties expected to generate about $79 million of NOI in 2024 after adjusting for first quarter results and acquisitions. These assets share common characteristics, including excellent visibility, access, and what we believe are compelling economics highlighted by limited CapEx needs. Arguably, what we own today represents the largest, highest quality convenience portfolio in the U.S., yet it's only a fraction of the addressable market for this type of asset. Convenience properties, which primarily cater to customer daily needs, are an integral part of the suburban lifestyle, which has only become more entrenched with increased suburban migration and the adoption of hybrid work. And combined with a balance sheet that is expected to have no outstanding debt, Curb Line Properties is expected to generate compelling and elevated relative growth and returns for stakeholders. As of today, we expect the spinoff to be completed on or around October 1st of this year, with Curb capitalized with $600 million of liquidity in the form of cash and a preferred investment in site centers. Additionally, consistent with our commentary last quarter, should we continue to make progress on the disposition front, it is likely that Curb would not retain a preferred investment in sight and would be capitalized simply with no debt and $600 million of cash. On that point, moving to transactions, we have closed $170 million of wholly owned property sales year-to-date, with total closed transactions since July 1st of just under $1.1 billion and at a blended cap rate of under 7%. The volume of disposition activity has increased since our call last quarter, resulting in over $1 billion of real estate currently either under contract, in contract negotiation, or with executed non-binding LOIs at a blended cap rate of roughly 7%. The bulk of this inventory is primarily sub-market dominant power centers. Closings are expected to pick up over the middle of the year, consistent with the timeline that we discussed last quarter for the assets launched around year end. The participants in this bidding process have been a wide variety of private and institutional investors. This deep pool of interest is clearly showing an active and liquid market for our well-located and high-quality portfolio of open-air shopping centers. Leasing momentum remains strong, market rents are growing, and replacement costs continue to escalate. Factors, we believe, that are supporting strong buyer interest. These buyers are sophisticated, committed to the open-air retail format, and often have been unlevered acquirers. There has certainly been capital markets volatility in recent weeks, and no asset sales are certain until closing, but the elevated level of demand for the assets on the market speaks to the quality of the site center's portfolio and the opportunity that we identified with the spinoff announcement. In terms of acquisitions, we acquired two convenience properties in the first quarter for $19 million in Houston and Phoenix and have over $100 million of additional convenience assets awarded or under contract subject to standard closing and diligence provisions. Average household incomes for the first quarter investments were over $113,000 with a weighted average lease rate of almost 100%. highlighting our focus on acquiring properties where renewals and lease bumps drive growth without significant capex. Going forward, we remain encouraged by the unique opportunity in the convenience subsector, including the size of the opportunity itself. The addressable market for convenience assets, according to ICSC, is 950 million square feet. CurbLine's current portfolio, comprising 2.2 million square feet, represents one quarter of 1% of total U.S. inventory, meaning we have plenty of room to grow. That said, while we expect to remain active acquirers prior to the spin, we continue to prioritize dispositions to take advantage of demand for sites' assets, which will likely result in significantly more dispositions as compared to acquisitions in 2024. Ending with the quarter and operations, First quarter results were ahead of expectations on lower G&A, higher occupancy, and higher lease termination fees. Overall quarterly leasing volume was up sequentially but remains down from 2023 levels, which is a function of a smaller portfolio and certainly less availability. Leasing demand continues to be very strong for both existing retailers and service tenants, expanding into key suburban markets along with new concepts competing for the same space. Despite the strength of execution from our leasing team, our lease rate was down 30 basis points sequentially, in part as we held space offline to maximize proceeds as part of the sale process. Looking forward, we have over 350,000 square feet at share in lease negotiations, which we expect to be completed over the next two quarters at similar spreads and economics to the trailing 12-month figures reported today. We continue to expect the commencement of executed leases to be the material driver of our same property NOI growth over the course of 2024. Before turning the call over to Connor, I want to again thank everyone at Site Centers for their work these past few quarters, which has been nothing short of incredible. The spinoff of CurbLine Properties is possible due to the work of the entire organization, and we believe the transaction unlocks a compelling opportunity to create significant value for the company's stakeholders. And with that, I'll turn it over to Conor.