Site Centers (SITC) Q2 Revenue Drops 64%

Site Centers (SITC 1.74%), a major U.S. operator of open-air shopping centers, released its earnings for the second quarter on August 5, 2025. The most notable headline is that Non-GAAP (Operating FFO) per share was $0.16 in Q2 2025 -- a figure that beat the consensus estimate of $(0.16) non-GAAP EPS. This marks a sharp outperformance versus expectations, as non-GAAP EPS of $0.16 exceeded the analyst estimate of -$0.16, but reflects a much smaller business following the spin-off of Curbline Properties and multiple property sales. Revenue was $31.1 million, above the $26.2 million estimate. Revenue dropped substantially from $85.97 million in Q2 2024. Overall, the period was characterized by large asset dispositions, bolstered cash on hand, and significant returns to shareholders, but with sharply lower recurring operating figures year over year, as reflected in a decrease in operating funds from operations (Operating FFO) from $55.9 million ($1.06 per diluted share) in Q2 2024 to $8.3 million ($0.16 per diluted share) in Q2 2025.

Source: Analyst estimates for the quarter provided by FactSet.

Company Overview and Recent Focus

Site Centers is a real estate investment trust (REIT) that owns and manages open-air shopping centers across the United States. Its properties are primarily located in affluent suburban areas, and its tenant list features large national retailers such as TJX Companies, Kroger, and Dick’s Sporting Goods. The business generates most of its revenue by leasing retail space to tenants.

In recent quarters, the company has focused on reshaping its portfolio. The major move was the spin-off of its convenience retail assets as Curbline Properties, allowing management to direct its resources toward higher-value shopping centers with strong demographic profiles. In tandem, Site Centers has sold multiple properties, improved its balance sheet, and prioritized shareholder returns through special cash distributions. The ability to maintain liquidity, manage leverage prudently, and sustain strong tenant relationships are key factors determining its success.

Quarter Highlights: Strategic Actions and Earnings Drivers

Operational results in the period were marked by a much smaller portfolio. The company sold five properties in the past two months for a combined $319.0 million. These included Winter Garden Village ($165.0 million, sold in Q3 2025), Promenade at Brentwood ($71.6 million, sold in Q2 2025), among others. At quarter’s end, Site Centers owned 31 shopping centers, down from 33 at the close of the prior year. Its gross leasable area, on a pro rata share basis, shrank to 5.36 million square feet as of Q2 2025, down from nearly 5.92 million square feet at the end of 2024.

Site Centers continues to transform its business model, realigning toward higher-value “core” suburban retail portfolios. Proceeds from asset sales have been used to reduce net debt, which dropped from $336.2 million at the end of Q4 2024 to $224.8 million at the end of Q2 2025. The cash position improved to $153.8 million as of Q2 2025, up from $54.6 million as of Q4 2024. These moves provided flexibility and enabled sizable special cash distributions for shareholders: $1.50 per share paid in July, and another $3.25 per share declared for August 29, 2025.

Leasing activity during the period revealed operational headwinds. The company executed four new leases and 13 renewals totaling 145,000 square feet in Q2 2025, but reported negative same-space leasing spreads. Leasing spread is a retail real estate metric measuring the percent change in rent achieved on new or renewed leases compared with the rent on expiring leases. New leases saw a negative 23.4% spread, while renewals posted a negative 1.7% cash leasing spread, leading to an overall combined spread of negative 3.4%. Net effective rent for new and renewed leases was $20.30 per square foot for the trailing twelve months ended Q2 2025, down from $21.06 for the prior trailing twelve months.

Occupancy also softened, with the overall portfolio lease rate falling to 88.1% in Q2 2025, down from 91.8% in Q2 2024, both on a pro rata basis and adjusted to reflect the removal of all properties included in the Curbline Properties spin-off and all properties sold during 2024. Wholly owned assets had a leased rate of 87.6% as of Q2 2025. Joint venture holdings were 91.7% leased as of Q2 2025. While property sales contributed to the contraction in reported revenue and net operating income, the tenant roster remained anchored by large, stable retailers; and the top 30 covered over half.

Outlook and What to Watch

Management provided no numerical forward guidance for fiscal 2025 or the next quarter. Future results will be shaped by the closing of contracted property sales -- currently over $190 million of properties are under agreement with buyers -- and by the ability to stabilize leasing spreads and occupancy rates. Investors should closely watch trends in renewal rates and new lease economics, as negative spreads and lower occupancy rates could pressure future revenue and cash flows, even after portfolio downsizing.

Given its REIT status, Site Centers must distribute at least 90 % of its taxable income to shareholders each year. Large special dividends totaling $4.75 per share were announced and paid following Q2 2025, reflecting one-time distributions from asset sale proceeds. These payouts compensate for shrinking core earnings.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.