SITE Centers Corp’s SITC well-located portfolio of retail real estate assets, concentrated mostly in the suburban and high household income regions, positions it well for growth. Its solid tenant roster and focus on the capital-recycling program augur well. However, rising e-commerce adoption and elevated interest rates add to its woes.

What’s Aiding SITC?

SITE Centers has a well-placed portfolio concentrated mostly in the suburban and high household income communities. The company’s shopping center portfolio is well positioned, as reflected in its recent leasing activity, historical property income growth and consistent growth in average annualized base rent per occupied square foot. Further, a hybrid working scenario and consumers gravitating toward suburbs are driving consistent traffic.

The company has a solid tenant roster comprising reputed names like TJX Companies, DICK's Sporting Goods, Burlington, Kroger and PetSmart. These tenants hold a relatively strong financial position and have performed well over time. This assures stable rental revenues for the company over the long term.

This retail real estate investment trust’s (REIT) aggressive capital-recycling program highlights its prudent capital-management practices and helps preserve balance sheet strength. Through this, SITC has divested its slow-growth assets and redeployed proceeds to acquire premium U.S. shopping centers, thereby enhancing its overall portfolio quality and cash-flow growth.

In 2024, SITE Centers disposed 40 shopping centers and one land parcel, thereby receiving gross proceeds of $2.25 billion. In addition to streamlining its retail portfolio, the company completed the spin-off of its convenience retail assets into a separate, publicly traded REIT — Curbline Properties Corp. — in October 2024. In 2024, SITE Centers acquired 16 shopping centers and a land parcel for $237.9 million. Except for two shopping centers and a land parcel, all these properties were included in the Curbline spin-off.

SITE Centers made concerted efforts to bolster its financial flexibility, helping it enjoy significant liquidity. As of Dec. 31, 2024, the company had a $77.1 million cash and restricted cash balance. A well-laddered debt maturity schedule and ample liquidity provide it with the financial flexibility to tide it over any mayhem and bank on growth scopes.

What’s Hurting SITC?

Given the convenience of online shopping, it is likely to remain a popular choice among customers. Consequently, this is likely to adversely impact the market share for brick-and-mortar stores and hence affect the demand for SITE Centers’ properties. Moreover, potential bankruptcies for some of the company’s tenants could adversely impact its top line in the upcoming period.

Despite the Federal Reserve announcing rate cuts late in 2024, the interest rate is still high and is a concern for SITE Centers. Elevated rates imply high borrowing costs for the company, affecting its ability to purchase or develop real estate. It has a substantial debt burden and its total consolidated debt as of Dec. 31, 2024, was $306.8 million.

Over the past three months, shares of this Zacks Rank #3 (Hold) company have lost 22.6% compared with the industry’s 6.7% decline.

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In conclusion, given the above-mentioned factors, it seems wise to retain SITC in your portfolio right now.

Stocks to Consider

Some better-ranked stocks from the retail REIT sector are Regency Centers REG and Tanger, Inc. SKT, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for REG’s 2025 FFO per share is pinned at $4.54, indicating year-over-year growth of 5.6%.

The Zacks Consensus Estimate for SKT’s 2025 FFO per share is $2.26, indicating an increase of 6.1% from the year-ago figure.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

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Regency Centers Corporation (REG) : Free Stock Analysis Report

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SITE CENTERS CORP. (SITC) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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