Site Centers Corp. · NYSE:SITC
Site Centers — DDR — NAREIT REITweek 2018
34 slides from Site Centers's conference presentation, Jun 4, 2018
Slide 1: Strategic Transformation NAREIT Update June 2018
D D R C O R P. STRATEGIC TRANSFORMATION NAREIT UPDATE JUNE 2018
Slide 2: Safe Harbor
safe harbor DDR Corp. considers portions of the information in this presentation to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, with respect to the Company’s expectation for fut
Slide 3: Transaction Overview—New DDR and RVI Business Plans
TRANSACTION OVERVIEW—NEW DDR AND RVI BUSINESS PLANS TWO DISTINCT COMPANIES WITH TWO DISTINCT STRATEGIES $1.35BN MORTGAGE PROCEEDS 16 MM SF MM 28 SF EXTERNAL MANAGEMENT AGREEMENT NEW DDR RETAIL VALUE INC. (RVI) Maximize earnings, NAV, and cash flow growth Realize NAV through distribution of asset thr
Slide 4: Transaction Overview—Significant Portfolio Repositioning
TRANSACTION OVERVIEW—SIGNIFICANT PORTFOLIO REPOSITIONING INCREASED EXPOSURE TO GROWTH AND REDEVELOPMENT ASSETS • New DDR’s portfolio specifically curated asset-by-asset to provide exposure to high-quality, high-growth assets most appropriate for the public markets • Smaller pool of remaining durable
Slide 5: Transaction Overview—Improved Relative and Absolute Positioning
TRANSACTION OVERVIEW—IMPROVED RELATIVE AND ABSOLUTE POSITIONING GREEN STREET ADVISORS TAP SCORE AVERAGE HOUSEHOLD INCOME ANNUAL BASE RENT PSF 65 $99K $17.29 66 $100K $17.60 65 +7% $98K +17% $17.40 +5% $96K $17.20 64 $17.00 $94K 63 $16.80 $92K 62 $90K $16.60 61 $16.40 $88K $16.20 60 $86K $16.00 59 $8
Slide 6: Transaction Overview—New DDR and RVI Operating Metrics
TRANSACTION OVERVIEW—NEW DDR AND RVI OPERATING METRICS DDR NEW DDR(1) RETAIL VALUE INC. Transaction separates highest growth Continental U.S. assets from a pool of highly saleable properties currently 44 28 MM 16 SF being discounted by the public (PRO-RATA) MM SF (PRO-RATA) MM SF markets 1Q2018 Prop
Slide 7: Transaction Overview—RVI Update and Estimated Timeline
TRANSACTION OVERVIEW—RVI UPDATE AND ESTIMATED TIMELINE RVI SPIN REMAINS ON TRACK FOR 3Q EFFECTIVE DATE • RVI asset Silver Spring Square (Mechanicsburg, PA) sold on April 17, 2018 for $81MM. Proceeds were used to repay RVI mortgage debt • Expected RVI Board of Directors: —Scott Roulston (former DDR d
Slide 8: New DDR Overview
NEW DDR OVERVIEW
Slide 9: New DDR—Significant Portfolio Repositioning
NEW DDR—SIGNIFICANT PORTFOLIO REPOSITIONING INCREASED EXPOSURE TO GROWTH AND REDEVELOPMENT ASSETS New DDR’s portfolio specifically curated asset-by-asset to provide exposure to high-quality, high-growth assets most appropriate for the public markets Smaller pool of remaining durable assets have top-
Slide 10: New DDR—Portfolio Diversity
NEW DDR—PORTFOLIO DIVERSITY NEW DDR’S FOCUSED PORTFOLIO OF 79 WHOLLY-OWNED PROPERTIES PROVIDES EXPOSURE TO HIGH-QUALITY, GROWTH ASSETS Traffic driving discounters and grocers anchor the majority of New DDR centers Assets with traditional/specialty grocers account for 43% of New DDR’s portfolio with
Slide 11: New DDR—Portfolio Map
NEW DDR—PORTFOLIO MAP TOP 12 MARKETS ACCOUNT FOR 70% OF CONSOLIDATED ADJUSTED 2018E NOI Boston, MA 6% Chicago, IL 7% Columbus, OH 6% New York, NY 8% Denver, CO 6% Washington, DC 3% Charlotte, NC 6% Los Angeles, CA 4% Phoenix, AZ 7% Atlanta, GA 8% Orlando, FL 5% Miami, FL 5% MSA % of Consolidated Adj
Slide 12: New DDR—Substantially Improved Operating Metrics
NEW DDR—SUBSTANTIALLY IMPROVED OPERATING METRICS DDR NEW DDR(1) MM 44 SF MM 28 SF (PRO-RATA) (PRO-RATA) 1Q2018 Properties (Including JVs) 132 (258) 82 (208) 1Q2018 Pro-Rata Real Estate Gross Book Value (2) $8.6BN $5.8BN 1Q2018 Adjusted NOI (3) $156MM $101MM Consolidated ABR PSF (4) $16.49 $17.29 FY
Slide 13: New DDR—Kmart Shopping Center (Brandon, FL)
NEW DDR—KMART SHOPPING CENTER (BRANDON, FL) $27.8MM redevelopment of the former Kmart box in Brandon, Florida. The project is expected to stabilize in 3Q2019 at a 9% return. New DDR has no direct exposure to Sears/Kmart. DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 13
Slide 14: New DDR—Nassau Park Pavilion (Princeton, NJ)
NEW DDR—NASSAU PARK PAVILION (PRINCETON, NJ) $5.4MM relocation of 18k SF of vacant small-shop space adjacent to a former Sam’s Club to the area immediately in front of a highly productive Wegman’s. The project is expected to stabilize at a 13% return. DDR CORP. // STRAT E G I C T R A N S F O R M AT
Slide 15: New DDR—Further Balance Sheet Improvements
NEW DDR—FURTHER BALANCE SHEET IMPROVEMENTS $1000 Transaction Expected to Result in a $900 Stronger DDR Balance Sheet $800 Net Debt / Adjusted EBITDA (excluding preferred $700 stock) of ~6.0x in 2H2018 $600 Weighted average maturity of 10.7 years $500 including preferred stock (6.3 years excluding) $
Slide 16: New DDR—Minimal Near-Term Refinancing Risk
NEW DDR—MINIMAL NEAR-TERM REFINANCING RISK WEIGHTED AVERAGE MATURITY NOW ABOVE PEER-GROUP AVERAGE WITH NO MATERIAL MATURITIES UNTIL 2022 % DEBT MATURING 2018—2020 WA INTEREST WEIGHTED AVERAGE DEBT MATURITY RATE BRX BRX 4.2% RPAI AKR 4.1% ADR REG 5.0% AAT WRI 4.4% WRI RPAI 3.7% FRT ROIC 3.1% KIM NEW
Slide 17: New DDR—Attractive Dividend Yield, Sector Leading Payout Ratio
NEW DDR—ATTRACTIVE DIVIDEND YIELD, SECTOR LEADING PAYOUT RATIO NEW DDR QUARTERLY DIVIDEND RATE EXPECTED TO BE AT LEAST $0.20/SH Enhanced cash retention for redevelopment and opportunistic investments Reset payout ratio expected to be among the most conservative in the peer group, positioned for grow
Slide 18: New DDR—Repayment of Blackstone Preferred Equity Investment
NEW DDR – REPAYMENT OF BLACKSTONE PREFERRED EQUITY INVESTMENT $450 $400 $350 $300 $250 DDR has received $112MM of $200 PREFERRED EQUITY preferred equity repayments since $150 (NET OF VALUATION ALLOWANCE) formation including $10MM in 2Q2018 $100 PREFERRED EQUITY REPAYMENT $237MM of preferred equity i
Slide 19: New DDR—2018 Guidance & FFO Bridge
NEW DDR—2018 GUIDANCE & FFO BRIDGE (SPLIT-ADJUSTED) NO CHANGE TO SPLIT-ADJUSTED OPERATING FFO PER SHARE GUIDANCE AND RELATED ASSUMPTIONS 2Q2018 OFFO guidance per share (basic and diluted) of at least $0.45 per share 3Q2018 OFFO guidance per share (basic and diluted) of at least $0.30 per share $0.70
Slide 20: New DDR—Components of NAV
NEW DDR—COMPONENTS OF NAV New DDR Assets (1) New DDR Liabilities & Preferred Stock (1) 1Q2018 Adjusted NOI (2) $101 Construction in Progress and Land $68 Land Adjacent to Existing Centers $31 Consolidated Debt (5) $2,426 Cost Basis of HQ Building $41 Pro-Rata Share of JV Debt (5) $335 Total Land and
Slide 21: Retail Value Inc. Overview
RETAIL VALUE INC. OVERVIEW
Slide 22: Retail Value Inc.—Operating Metrics
RETAIL VALUE INC.—OPERATING METRICS VALUE RETAIL INC. CONTINENTAL ASSETS U.S. PUERTO ASSETS RICO 16 4 MM 4 SF MM SF 12 MM SF 12 1Q2018 Properties (1) 50 38 12 1Q2018 Pro-Rata Real Estate Gross Book Value $2.8BN $1.8BN $1.0BN 1Q2018 Adjusted NOI (2) $56MM $36MM $20MM Consolidated ABR PSF (3) $15.32 $
Slide 23: Retail Value Inc.—Select Asset Overview
RETAIL VALUE INC.—SELECT ASSET OVERVIEW HIGHER QUALITY AND MORE LIQUID PORTFOLIO THAN ASSETS SOLD TO DATE BEAVER CREEK SEABROOK GRESHAM SILVER SPRING MARKETPLACE CROSSINGS COMMONS STATION SQUARE AT TOWNE CENTRE RALEIGH BOSTON PORTLAND HARRISBURG DALLAS MSA MSA MSA MSA MSA 321K 175K 342K 343K 180K Ow
Slide 24: Retail Value Inc.—Puerto Rico Operations Update
RETAIL VALUE INC.—PUERTO RICO OPERATIONS UPDATE PUERTO RICO FUNDAMENTALS STABILIZING PR Portfolio 87% leased as of 1Q2018 TOTAL PUERTO RICO QUARTERLY CASH RECEIPTS(1) vs. 91% prior to storm $40.0 Remaining openings generally dependent on repairs to damage $35.0 Repairs expected to be substantially c
Slide 25: Retail Value Inc.—Portfolio Map
RETAIL VALUE INC.—PORTFOLIO MAP GEOGRAPHICALLY DIVERSE AND FINANCEABLE POOL OF ASSETS RVI Assets DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 25
Slide 26: Retail Value Inc.—Financing Details
RETAIL VALUE INC.—FINANCING DETAILS PROCEEDS • $1.35BN mortgage financing • Transaction demonstrates financing availability and quality of RVI asset pool:—Cross-collateralized CHARACTERISTICS—Rate: L + 315bp (LIBOR subject to a 3.0% cap)—Term: 5-years fully extended • RVI disposition proceeds used t
Slide 27: Retail Value Inc.—Components of NAV
RETAIL VALUE INC. - COMPONENTS OF NAV RVI Assets (1) RVI Liabilities & Preferred Stock (1) 1Q2018 Adjusted NOI (2) $56 Construction in Progress and Land $9 Consolidated Debt (5) $1,350 Land Adjacent to Existing Centers $0 Pro-Rata Share of JV Debt $0 Total Land and Development $9 Total Debt $1,350 C
Slide 28: Appendix
APPENDIX
Slide 29: Retail Value Inc. Property List
RETAIL VALUE INC. PROPERTY LIST (GLA in thousands, as of 1Q2018) CONTINENTAL U.S. 100% DDR OWNERSHIP # Center MSA Location ST Owned GLA Total GLA ABR PSF Key Tenants 1 Palm Valley Pavilions West Phoenix Goodyear AZ 233 277 $18.16 Barnes & Noble, Best Buy, Ross Dress for Less, Total Wine & More 2 Tuc
Slide 30: Retail Value Inc. Property List (Continued)
RETAIL VALUE INC. PROPERTY LIST (CONTINUED) (GLA in thousands, as of 1Q2018) CONTINENTAL U.S. 100% DDR OWNERSHIP # Center MSA Location ST Owned GLA Total GLA ABR PSF Key Tenants 25 Great Northern Plazas Cleveland North Olmsted OH 631 669 $13.83 Bed Bath & Beyond, Best Buy, Big Lots, Burlington, DSW,
Slide 31: Non-GAAP Financial Measures—Definitions
NON-GAAP FINANCIAL MEASURES—DEFINITIONS FFO is a supplemental non-GAAP financial measure used as a standard in the real estate industry and is a widely accepted measure of real estate investment trust (“REIT”) performance. Management believes that both FFO and Operating FFO provide additional indica
Slide 32: Non-GAAP Reconciliation—Adjusted NOI
NON-GAAP RECONCILIATION—ADJUSTED NOI Reconciliation of Net Income Attributable to DDR to Adjusted Net Operating Income (Adjusted NOI) At (Non-GAAP) DDR Share 1Q2018 1Q2018 GAAP RECONCILIATION Net (loss) attributable to DDR ($54,153) ($54,153) Fee income (8,111) (8,111) Interest income (5,341) (5,341
Slide 33: Non-GAAP Reconciliation—Adjusted NOI (Continued)
NON-GAAP RECONCILIATION—ADJUSTED NOI (CONTINUED) At (Non-GAAP) DDR Share 1Q2018 1Q2018 GAAP RECONCILIATION Net income from unconsolidated joint ventures 23,405 8,452 Interest expense 24,243 3,749 Depreciation and amortization 39,677 5,181 Impairment charges 16,910 846 Hurricane casualty Loss 19 1 Pr
Slide 34: Non-GAAP Reconciliation—OFFO
NON-GAAP RECONCILIATION—OFFO Reconciliation of Net Income Attributable to Common Shareholders to FFO and Operating FFO estimate Per Share—Diluted 2Q2018E 3Q2018E Net (loss) income attributable to Common Shareholders ($0.19)—($0.16) $0.04—$0.06 Depreciation and amortization of real estate 0.38—0.41 0