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Section 1: 8-K (FORM 8-K 11/13/2017)

Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): November 13, 2017
 
KITE REALTY GROUP TRUST
(Exact name of registrant as specified in its charter)
 
Maryland
1-32268
11-3715772
(State or other jurisdiction
(Commission
(IRS Employer
of incorporation)
File Number)
Identification Number)
 
 
 
30 S. Meridian Street
Suite 1100
Indianapolis, IN 46204
(Address of principal executive offices) (Zip Code)
 
 
(317) 577-5600
(Registrant’s telephone number, including area code)
 
 
Not applicable
(Former name or former address, if changed since last report)
  
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o






Item 7.01 Regulation FD Disclosure 

Kite Realty Group Trust (the “Company”) intends to distribute copies of certain printed materials (the “Materials”) to analysts, institutional investors and other persons in connection with meetings to be held by the Company on November 14, 2017. A copy of these Materials is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein solely for purposes of this Item 7.01 disclosure. 

This presentation, together with other statements and information publicly disseminated by us, contains certain 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. Such statements are based on assumptions and expectations that may not be realized and are inherently subject to risks, uncertainties and other factors, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, performance, transactions or achievements, financial or otherwise, may differ materially from the results, performance, transactions or achievements, financial or otherwise, expressed or implied by the forward-looking statements. Risks, uncertainties and other factors that might cause such differences, some of which could be material, include but are not limited to: national and local economic, business, real estate and other market conditions, particularly in light of low growth in the U.S. economy as well as economic uncertainty caused by fluctuations in the prices of oil and other energy sources; financing risks, including the availability of, and costs associated with, sources of liquidity; our ability to refinance, or extend the maturity dates of, our indebtedness; the level and volatility of interest rates; the financial stability of tenants, including their ability to pay rent and the risk of tenant bankruptcies; the competitive environment in which we operate; acquisition, disposition, development and joint venture risks; property ownership and management risks; our ability to maintain our status as a real estate investment trust for federal income tax purposes; potential environmental and other liabilities; impairment in the value of real estate property we own; the impact of online retail and the perception that such retail has on the value of shopping center assets; risks related to the geographical concentration of our properties in Florida, Indiana and Texas; insurance costs and coverage; risks associated with cybersecurity attacks and the loss of confidential information and other business disruptions; other factors affecting the real estate industry generally; and other risks identified in our Annual Report on Form 10-K and, from time to time, in other reports we file with the Securities and Exchange Commission (the “SEC”) or in other documents that we publicly disseminate. The Company undertakes no obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.
 
The information in this Item 7.01 disclosure, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section. In addition, the information in this Item 7.01 disclosure, including Exhibit 99.1, shall not be incorporated by reference into the filings of the Company under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 
Item 9.01. Financial Statements and Exhibits.
 
(a) Not applicable.

(b) Not applicable.

(c) Not applicable.

(d) Exhibits.
 
Exhibit No.
 
Description
99.1
 
Presentation Materials of Kite Realty Group Trust, dated November 13, 2017














SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
KITE REALTY GROUP TRUST
 
 
Date: November 13, 2017
By:
/s/ Daniel R. Sink
 
 
Daniel R. Sink
 
 
Executive Vice President and
 
 
Chief Financial Officer































EXHIBIT INDEX

Exhibit
 
Document
99.1
 



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Section 2: EX-99.1 (KRG PRESENTATION MATERIALS)

kiteinvestorupdate111017


 
2 November 2017 INVESTOR UPDATE SHARE PRICE (AS OF 11/7/17) $19.03 EQUITY MARKET CAPITALIZATION (AS OF 11/7/17) $1.6 BN ENTERPRISE VALUE (AS OF 11/7/17) $3.3 BN DIVIDEND YIELD1 6.4% MOODY’S/S&P RATINGS Baa3/BBB- PORTFOLIO SUMMARY Number of Properties 119 Number of States 20 Total GLA (SF) 23.7mm Total Retail Operating Portfolio Leased 94.5% Retail Operating Shop Portfolio Leased 89.7% Annualized Base Rent (ABR) Per SF, Including 3-R Properties2 $16.32 Average Center Size (SF) ~200,000 PORTFOLIO DEMOGRAPHICS3 Average Household Income 3 Mile: $86,000 5 Mile: $85,200 Population 3 Mile: 67,400 5 Mile: 166,000 COMPANY SNAPSHOT Necessity-Driven Open-Air Shopping Centers 20162015201420132012 $1.71 $1.92 $2.02 $1.99 $2.06 ~5% CAGR FFO PER SHARE, AS ADJUSTED Note: Unless otherwise indicated, the source of all Company data is publicly available information that has been filed with the Securities and Exchange Commission as of Q3’17. (1) Source: SNL; Dividend yield calculated as most recent quarterly dividend, annualized and expressed as a percentage of the share price. Future dividends will be declared solely at the discretion of the Board of Trustees. (2) 3-R Properties are assets that are in the process of being developed, repositioned, or repurposed, as described in our Quarterly Financial Supplement. (3) Demographic data source: STI: Popstats based on estimated 2016 data from the U.S. Census Bureau.


 
3 November 2017 INVESTOR UPDATE ~$36mm in estimated annual free cash flow1 $83mm limited debt maturities through 2020 6% floating rate debt exposure 3.4x debt service coverage 76% of ABR from top 50 MSAs and destination locations 93% of tenants are internet resistant/omni-channel 66% grocery-anchored assets Focusing on experiential tenants, consisting of food, fitness, entertainment, and service Top-tier operating metrics 3.6% historical same-property NOI growth over the last four years Enhancing assets via the 3-Rs: Redevelop, Reposition, Repurpose $8.2mm of additional cash NOI from in-process 3-R and transitional projects INVESTMENT GRADE BALANCE SHEET HIGH-QUALITY PORTFOLIO OPERATIONS AND GROWTH OPPORTUNITIES BUILDING VALUE AND CRITICAL MASS IN AND AROUND REGIONAL FOOTPRINT (1) After common dividends, capital expenditures, tenant improvements, and leasing commissions. CORE STRATEGY Gearing Up Shareholder Value the Kite Way


 
4 November 2017 INVESTOR UPDATE DIVIDEND VS. 2017E FFO1 PRICE VS. 2017E FFO1 KIMAKRFRTDDRROICRPTRPAIWRIKRGREGUEBRXCDR 64%PEER GROUPMEDIAN 59.1% FRTAKRUEREGROICWRIKIMRPAICDRRPTKRGBRXDDR 12.4xPEER GROUPMEDIAN 9.1x CONSERVATIVE FFO PAYOUT RATIO SUPPORTS POTENTIAL FUTURE DIVIDEND INCREASES DISCOUNTED MULTIPLE PROVIDES ATTRACTIVE INVESTMENT OPPORTUNITY 59.1% DIVIDEND VS. 2017E FFO1 9.1x PRICE VS. 2017E FFO1 TOTAL RETURN KRG Provides Attractive Investment Opportunity (1) 2017E FFO per share refers to consensus estimates for companies as of 11/6/17 per FactSet, which may not reflect the Company’s or the peer companies’ estimates. FFO Payout Ratio calculated as dividends by 2017E FFO, on a per share basis. Multiple based on Company share price of $18.60 at market close on 11/6/17.


 
5 November 2017 INVESTOR UPDATE 3.6% SPNOI GROWTH AS REPORTED OVER LAST 4 YEARS QUARTERLY AVERAGE SPNOI GROWTH FROM Q3'13-Q3'171 ROIC REG RPAI WRI BRX FRT DDR RPT KIM CDR 4.6% AKR 3.7% KRG 3.3% 3.6% 4.1% 3.3% 3.3% 3.1% 3.0% 2.5% 2.3% 2.2% 1.1% 2.9%PEER AVERAGE KRG SPNOI ADJ. FOR BAD DEBT EXPENSEKRG SPNOI AS REPORTEDKRG SPNOI EXCLUDING 3-R IMPACT 2.6% (1) Figures exclude redevelopments, when peer information is available, averaged on a quarterly basis from supplemental data for Q3’13-Q3’17. Our computation of NOI and Same Property NOI may not be comparable to the methodology used by other REITs. Excludes companies that have not been public for the full time period. OPERATIONAL EXCELLENCE Kite’s Consistent, Strong Operational Performance Is at the Top End of Its Peer Group


 
November 2017 INVESTOR UPDATE HIGH-QUALITY PORTFOLIO Necessity-Driven and Experiential-Based Open-Air Shopping Centers


 
7 November 2017 INVESTOR UPDATE NORTHEAST 11.2% OF ABR SOUTHEAST 18.4% OF ABR FLORIDA 24.3% OF ABR MID-CENTRAL 16.7% OF ABR WEST 12.4% OF ABR MIDWEST 17.0% OF ABR 76% OF ABR DERIVED FROM TOP 50 MSAs AND DESTINATION LOCATIONS1 (1) Destination locations (i.e., areas with high-disposable income) include Beechwood Promenade in Athens, GA, Eddy Street Commons in South Bend, IN, Gainesville Plaza in Gainesville, FL, as well as Kings Lake Square, Pine Ridge Crossing, Riverchase Plaza, Shops at Eagle Creek, Tamiami Crossing, Tarpon Bay Plaza, and Courthouse Shadows, all located in Naples, FL. GEOGRAPHIC DIVERSITY Well-Positioned Real Estate Footprint 119 PROPERTIES ACROSS THE COUNTRY IN 6 REGIONS


 
8 November 2017 INVESTOR UPDATE CITY CENTER MSA: New York City, NY OWNED GLA 360,880 SF ABR PER SF $26.70 LANDSTOWN COMMONS MSA: Virginia Beach, VA OWNED GLA 398,349 SF ABR PER SF $19.21 CENTENNIAL CENTER MSA: Las Vegas, NV OWNED GLA 334,396 SF ABR PER SF $25.05 PORTOFINO SHOPPING CENTER MSA: Houston, TX OWNED GLA 386,647 SF ABR PER SF $19.68 HIGH-QUALITY PROPERTIES Top 12 Centers Comprise 29% of Total Core Portfolio ABR TOP 12 CENTERS HAVE AN AVERAGE ABR OF $20.39/SF


 
9 November 2017 INVESTOR UPDATE PARKSIDE TOWN COMMONS MSA: Raleigh, NC OWNED GLA 347,072 SF ABR PER SF $20.20 DELRAY MARKETPLACE MSA: Miami, FL OWNED GLA 260,146 SF ABR PER SF $26.17 HIGH-QUALITY PROPERTIES Top 12 Centers Comprise 29% of Total Core Portfolio ABR HOLLY SPRINGS TOWNE CENTER MSA: Raleigh, NC OWNED GLA 329,536 SF ABR PER SF $17.53 UNIVERSITY TOWN CENTER MSA: Oklahoma City, OK OWNED GLA 348,862 SF ABR PER SF $15.13 TOP 12 CENTERS HAVE AN AVERAGE ABR OF $20.39/SF


 
10 November 2017 INVESTOR UPDATE DRAPER PEAKS MSA: Salt Lake City, UT OWNED GLA 227,494 SF ABR PER SF $19.88 HIGH-QUALITY PROPERTIES Top 12 Centers Comprise 29% of Total Core Portfolio ABR TRADERS POINT MSA: Indianapolis, IN OWNED GLA 325,623 SF ABR PER SF $16.91 THE LANDING AT TRADITION MSA: Port St. Lucie, FL OWNED GLA 360,974 SF ABR PER SF $15.73 CENTENNIAL GATEWAY MSA: Las Vegas, NV OWNED GLA 193,085 SF ABR PER SF $24.18 TOP 12 CENTERS HAVE AN AVERAGE ABR OF $20.39/SF


 
11 November 2017 INVESTOR UPDATE Top 10 Tenants by ABR Credit Rating # Stores % ABR 1 The TJX Companies, Inc. A+ 22 2.5% 2 Publix Supermarkets, Inc. A 14 2.5% 3 Petsmart, Inc. B+ 19 2.2% 4 Bed Bath & Beyond, Inc. BBB+ 19 2.2% 5 Ross Stores, Inc. A- 18 2.1% 6 Lowe's Companies, Inc. A- 5 1.8% 7 Office Depot B 15 1.6% 8 Dick's Sporting Goods, Inc. NR 8 1.5% 9 Ascena Retail Group BB- 34 1.5% 10 Nordstrom, Inc. BBB+ 6 1.4% TOTAL 160 19.3% TOP INVESTMENT GRADE-RATED TENANTS 2017 LEASE ACTIVITY EXAMPLES DIVERSE TENANT BASE Strong Mix of High-Quality Tenants Across Our Diversified Portfolio


 
12 November 2017 INVESTOR UPDATE Asset Classification Key Power Center (No Grocer): 3 + anchors over 20K SF Grocer: No more than 2 anchors over 20K SF in addition to grocer Power Center (w/Grocer): 3 + anchors over 20K SF in addition to grocer (1) Grocer includes traditional grocers, specialty grocers, and big box retailers that have a grocer component. GROCER 28% NON-GROCER STRIP 4% LIFESTYLE CENTER 3% COMMERCIAL 3% UNANCHORED STRIP 1% POWER/ COMMUNITY CENTER (W/ GROCER) 38% POWER CENTER (NO GROCER) 23% 66% OF ABR GENERATED FROM ASSETS ANCHORED WITH A GROCER1 LIVINGSTON SHOPPING CENTER COBBLESTONE PLAZA KINGS LAKE SQUARE EDDY STREET COMMONS AT NOTRE DAME DIVERSE TENANT BASE Necessity-Focused Retail Portfolio


 
13 November 2017 INVESTOR UPDATE INTERNET-RESISTANT 53.6% Services, Entertainment 22.3% Restaurants 16.1% Grocer, Specialty Stores 15.2% MULTI-CHANNEL 39.3% Soft Goods 14.0% Home Improvement Goods 11.8% Discount Retailers 10.3% Sporting Goods 3.2% INTERNET RISK 7.1% Electronic / Books 5.0% Office Supplies 2.1% WELL-POSITIONED TO MANAGE EVOLVING CONSUMER PREFERENCES WITH EXPERIENTIAL TENANTS TENANT TYPE COMPOSITION BY ABR MULTI- CHANNEL 39.3% INTERNET- RESISTANT 53.6% INTERNET RISK 7.1% Kite’s tenant base is 82% non-apparel 1 and 93% internet-resistant / multi-channel. (1) Apparel tenants comprise 64.9% of soft goods and 83.3% of discount retailers. DIVERSE TENANT BASE Internet-Resistant Retail Base


 
14 November 2017 INVESTOR UPDATE RECENT TENANT OPENINGS ~363,000 SF OF ANCHOR SPACE OPENED OVER THE LAST FOUR QUARTERS FOOD / FITNESS / ENTERTAINMENT / SERVICE DISCOUNT RETAILERS / SOFT GOODS / SPORTING GOODS / SPECIALTY 91% OF TOTAL SQUARE FEET OPENED DIVERSE TENANT BASE Enhancing Kite’s Portfolio with Strong Retail Tenants


 
15 November 2017 INVESTOR UPDATE MINIMAL IMPACT REALIZED IN 2017: ~1% OF ABR1 TENANT # OF KRG LOCATIONS AT 1/1/2017 # OF KRG LOCATIONS AT 9/30/2017 REMAINING ABR EXPOSURE AT 9/30/17 Gander Mountain 1 0 None HH Gregg 1 0 None JCPenney 3 3 0.1% Kmart / Sears 1 / 2 1 / 2 0.3% / 0.2% Macy’s 1 1 0.1% Marsh Supermarkets 1 0 None Payless 9 8 0.2% Rue 21 9 2 0.1% Toys 'R' Us / Babies 'R' Us 6 6 1.1% No exposure to the following retailers that have filed bankruptcy or have announced store closings: Abercrombie & Fitch, American Apparel, Banana Republic, BCBG, bebe, Dillard’s, Eastern Outfitters, Guess, True Religion, Wet Seal DIVERSE TENANT BASE Minimal Exposure to Announced Store Closures (1) Includes ABR from operating and redevelopment properties from KRG Q3’17 financial supplemental.


 
November 2017 INVESTOR UPDATE GROWTH OPPORTUNITIES Increasing Value Through Efficient Operations and the 3-R Platform


 
17 November 2017 INVESTOR UPDATE • Attractive NOI Margin: 74.6%, trailing twelve months • Efficient G&A / Revenues: 6.1%, trailing twelve months • Opportunity Areas: Operating expense savings, overage rent, and ancillary income • New and renewal cash rent spreads: - 2016: 18.6% and 7.1% respectively - 2017: 24.3% and 7.4%, respectively • Embedded average contractual rent bumps of ~1.5% • Fixed CAM recovery initiative, ~20% of operating portfolio currently with goal to increase to ~50% • $8.2mm of additional cash NOI from $72.5mm-$79.0mm in-process 3-R and transitional projects • Five future 3-R opportunities with a total cost of $45-$61mm • Potential future acquisitions assuming a more favorable cost of capital • Anchor lease-up from 96.7% to 98.5%, or ~184,000 SF • Small shops leased at 89.7% with additional upside to 90%+ OPERATING PROPERTIES CONTRACTUAL RENT STEPS / FIXED CAM RECOVERY 3-R INITIATIVE / DEVELOPMENT / ACQUISITIONS OCCUPANCY GROWTH INCREASING VALUE Embedded NOI Growth Opportunities in Portfolio


 
18 November 2017 INVESTOR UPDATE KRG CONSISTENTLY RANKS IN TOP TIER ACROSS PEERS FOR EFFICIENCY ROIC 75.1% KRG 74.6% BRX 74.0% KIM 72.9% RPAI 69.2% FRT 68.6% 68.2% WRI NOI MARGIN % REG 72.2% DDR 71.4% RPT 70.9% FRT 4.1% WRI 4.4% ROIC 5.3% KRG 6.1% KIM 8.3% RPT 8.8% 9.1 % DDR G&A / REVENUES % BRX 7.2% RPAI 7.3% REG 7.4% (1) Data reflects trailing four quarters average as of Q3’17. Reflects pro rata income statement figures. INCREASING VALUE Top-Tier Operating Efficiency Metrics


 
19 November 2017 INVESTOR UPDATE (1) KRG Supplementals Q4’10 through Q3’17. Q3'172016201520142013201220112010 92.2% 93.3% 94.2% 95.3% 94.8% 95.4% 95.4% 94.5% 2. 5 % GR O WT H SINCE 2010 Q3'172016201520142013201220112010 $12.80 $13.26 $12.95 $13.18 $15.15 $15.22 $15.78 $16.32 27 .5 % GR O WT H SINCE 2010 Q3'172016201520142013201220112010 78.1% 79.5% 82.5% 85.5% 85.7 % 87.6% 88.9% 89.7 % 14. 9 % GR O WT H SINCE 2010 Q3'172016201520142013201220112010 85.7% 87.3% 82.5% 85.9% 89.6% 87.3% 89.2% 89.9% 4. 9 % GR O WT H SINCE 2010 RETAIL PORTFOLIO LEASE % ABR PER SQUARE FOOT SMALL SHOP LEASE % RETAIL RECOVERY RATIO INCREASING VALUE Proven Ability to Create Positive Operating Results1


 
20 November 2017 INVESTOR UPDATE REDEVELOP REPURPOSE REPOSITION Substantial renovations, including teardowns, remerchandising, and exterior/interior improvements Significant property alterations, including product-type changes Less substantial asset enhancements, generally $5mm or less investment COMPLETED IN-PROCESS IDENTIFIEDOPPORTUNITIES $22.9mm of 3-R projects with 13% Return on Investment (ROI) $72.5mm - $79.0mm of projects with 8-9% ROI $45.0mm - $61.0mm of projects with 9-11% ROI SOURCE OF CAPITAL Free cash flow + non-core, low-growth property sales KITE’S 3-R PLATFORM HAS GENERATED ATTRACTIVE RISK-ADJUSTED RETURNS AND IMPROVED CASH FLOW AND ASSET QUALITY RESULTING IN INCREASED SHAREHOLDER VALUE RAMPART COMMONS MSA: Las Vegas, NV FISHERS STATION MSA: Indianapolis, IN 3-R OVERVIEW Redevelopment Execution and Opportunity


 
November 2017 INVESTOR UPDATE INVESTMENT GRADE BALANCE SHEET Well-Positioned for the Future


 
22 November 2017 INVESTOR UPDATE (1) KRG Supplementals Q4’11 through Q3’17. Q3'17201620152014201320122011 9.7x 8.6x 7.4x 6.5x 7.0x 7.0x 6.9x 2.8x LOWERED Q3'17201620152014201320122011 1.6x 1.6x 2.0x 3.2x 3.4x 3.3x 3.4x 1.8x INCREASED Q3'17201620152014201320122011 42% 28% 30% 23% 12% 7% 6% 3,600 bps DECREASED NET DEBT / EBITDA DEBT SERVICE COVERAGE FLOATING RATE DEBT EXPOSURE STRONG BALANCE SHEET Significantly Improved Metrics1


 
23 November 2017 INVESTOR UPDATE 5.7 YEARS WEIGHTED AVERAGE DEBT MATURITY WEIGHTED AVERAGE DEBT MATURITIES AND WEIGHTED AVERAGE INTEREST RATE1 DDR ROICBRX RPAI KIMRPTWRI REGKRG WEIGHTED AVERAGE DEBT MATURITY (YEARS) WEIGHTED AVERAGE INTEREST RATE (%) 4.0% 5.7 YEARS (1) Peer data sourced from publicly available Q3’17 information. Only inclusive of peers who provided both weighted average debt maturity and weighted average interest rates. 4.0% WEIGHTED AVERAGE INTEREST RATE STRONG BALANCE SHEET Efficient Debt Structure Relative to Peers


 
24 November 2017 INVESTOR UPDATE (1) Excludes annual principal payments and net premiums on fixed rate. ONLY $83mm THROUGH 2020 SCHEDULE OF DEBT MATURITIES ($ IN MILLIONS)1 2017 2018 2019 2020 2021 2022 2023 20252024 2027+2026 MORTGAGE DEBT LINE OF CREDIT TERM LOAN PRIVATE PLACEMENT SENIOR UNSECURED NOTES 38 45 80 75 11 300 169 215 215 95 41 200 200 Only $83mm of debt maturing through 2020 STRONG BALANCE SHEET Well-staggered Debt Maturity Profile


 
25 November 2017 INVESTOR UPDATE FORWARD-LOOKING STATEMENTS This supplemental information package, together with other statements and information publicly disseminated by us, contains certain for- ward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are based on assumptions and expectations that may not be realized and are inherently subject to risks, uncertainties and other factors, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, performance, transactions or achievements, financial or otherwise, may differ materially from the results, performance, transactions or achieve- ments, financial or otherwise, expressed or implied by the forward-looking statements. Risks, uncertainties and other factors that might cause such differences, some of which could be material, include but are not limited to: • national and local economic, business, real estate and other market conditions, particularly in light of low growth in the U.S. economy as well as economic uncertainty caused by fluctuations in the prices of oil and other energy sources; • financing risks, including the availability of, and costs associated with, sources of liquidity; • our ability to refinance, or extend the maturity dates of, our indebtedness; • the level and volatility of interest rates; • the financial stability of tenants, including their ability to pay rent and the risk of tenant bankruptcies; • the competitive environment in which the Company operates; • acquisition, disposition, development and joint venture risks; • property ownership and management risks; • our ability to maintain our status as a real estate investment trust for federal income tax purposes; • potential environmental and other liabilities; • impairment in the value of real estate property the Company owns; • the impact of online retail and the perception that such retail has on the value of shopping center assets; • risks related to the geographical concentration of our properties in Florida, Indiana and Texas; • insurance costs and coverage; • risks associated with cybersecurity attacks and the loss of confidential information and other business disruptions; • other factors affecting the real estate industry generally; and • other risks identified in reports the Company files with the Securities and Exchange Commission (“the SEC”) or in other documents that it publicly disseminates, including, in particular, the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, and in our quarterly reports on Form 10-Q. The Company undertakes no obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events or otherwise. DISCLAIMER


 
26 November 2017 INVESTOR UPDATE FREE CASH FLOW Free Cash Flow is reflected on an annual basis and is defined as Funds From Operations (FFO) as adjusted, less capital expenditures, capitalized internal costs, tenant improvements, plus non-cash items, and after dividends paid. FUNDS FROM OPERATIONS Funds from Operations (FFO) is a widely used performance measure for real estate companies and is provided here as a supplemental measure of operating performance. The Company calculates FFO, a non-GAAP financial measure, in accordance with the best practices described in the April 2002 National Policy Bulletin of the National Association of Real Estate Investment Trusts ("NAREIT"). The NAREIT white paper defines FFO as net income (determined in accordance with GAAP), excluding gains (or losses) from sales and impairments of depreciated property, plus de- preciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Considering the nature of our business as a real estate owner and operator, the Company believes that FFO is helpful to investors in measuring our operational performance because it excludes various items included in net income that do not relate to or are not indicative of our operat- ing performance, such as gains or losses from sales of depreciated property and depreciation and amortization, which can make periodic and peer analyses of operating performance more difficult. For informational purposes, the Company has also provided FFO adjusted for accelerat- ed amortization of debt issuance costs, transaction costs and a severance charge in 2016. The Company believes this supplemental information provides a meaningful measure of our operating performance. The Company believes our presentation of FFO, as adjusted, provides investors with another financial measure that may facilitate comparison of operating performance between periods and among our peer companies. FFO should not be considered as an alternative to net income (determined in accordance with GAAP) as an indicator of our financial performance, is not an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, and is not indica- tive of funds available to satisfy our cash needs, including our ability to make distributions. Our computation of FFO may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than we do. A reconciliation of net income (computed in accordance with GAAP) to FFO is included elsewhere in this Finan- cial Supplement. ADJUSTED FUNDS FROM OPERATIONS Adjusted Funds From Operations (“AFFO”) is a non-GAAP financial measure of operating performance used by many companies in the REIT industry. AFFO modifies FFO, as adjusted for certain cash and non-cash transactions not included in FFO, as adjusted. AFFO should not be con- sidered an alternative to net income as an indication of the company's performance or as an alternative to cash flow as a measure of liquidity or ability to make distributions. Management considers AFFO a useful supplemental measure of the company’s performance. The Company’s computation of AFFO may differ from the methodology for calculating AFFO used by other REITs, and therefore, may not be comparable to such other REITs. A reconciliation of net income (computed in accordance with GAAP) to AFFO is included elsewhere in this Financial Supplement. NET OPERATING INCOME AND SAME PROPERTY NET OPERATING INCOME The Company uses property net operating income (“NOI”), a non-GAAP financial measure, to evaluate the performance of our properties. The Company defines NOI as income from our real estate, including lease termination fees received from tenants, less our property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions and certain corporate level expenses. The Company believes that NOI is helpful to investors as a measure of our operating performance because it excludes various items included in net income that do not relate to or are not indicative of our operating performance, such as depreciation and amortization, interest expense, and impairment, if any. NON-GAAP FINANCIAL MEASURES


 
27 November 2017 INVESTOR UPDATE NET OPERATING INCOME AND SAME PROPERTY NET OPERATING INCOME (CONT.) The Company also uses same property NOI ("Same Property NOI"), a non-GAAP financial measure, to evaluate the performance of our proper- ties. Same Property NOI excludes properties that have not been owned for the full period presented. It also excludes net gains from outlot sales, straight-line rent revenue, bad debt expense and recoveries, lease termination fees, amortization of lease intangibles and significant prior period expense recoveries and adjustments, if any. The Company believes that Same Property NOI is helpful to investors as a measure of our operating performance because it includes only the NOI of properties that have been owned for the full period presented, which eliminates disparities in net income due to the acquisition or disposition of properties during the particular period presented and thus provides a more consistent metric for the comparison of our properties. The year to date results represent the sum of the individual quarters, as reported. NOI and Same Property NOI should not, however, be considered as alternatives to net income (calculated in accordance with GAAP) as indica- tors of our financial performance. Our computation of NOI and Same Property NOI may differ from the methodology used by other REITs, and therefore may not be comparable to such other REITs. When evaluating the properties that are included in the same property pool, the Company has established specific criteria for determining the in- clusion of properties acquired or those recently under development. An acquired property is included in the same property pool when there is a full quarter of operations in both years subsequent to the acquisition date. Development and redevelopment properties are included in the same property pool four full quarters after the properties have been transferred to the operating portfolio. A redevelopment property is first excluded from the same property pool when the execution of a redevelopment plan is likely and the Company begins recapturing space from tenants. For the quarter ended September 30, 2017, the Company excluded eight redevelopment properties and the recently completed Northdale Promenade redevelopment from the same property pool that met these criteria and were owned in both comparable periods. EARNINGS BEFORE INTEREST EXPENSE, INCOME TAX EXPENSE, DEPRECIATION AND AMORTIZATION (EBITDA) The Company defines EBITDA, a non-GAAP financial measure, as net income before depreciation and amortization, interest expense and income tax expense of taxable REIT subsidiary. For informational purposes, the Company has also provided Adjusted EBITDA, which the Company de- fines as EBITDA less (i) EBITDA from unconsolidated entities, (ii) gains on sales of operating properties or impairment charges, (iii) other income and expense, (iv) noncontrolling interest EBITDA and (v) other non-recurring activity or items impacting comparability from period to period. Annualized Adjusted EBITDA is Adjusted EBITDA for the most recent quarter multiplied by four. Net Debt to Adjusted EBITDA is the Company's share of net debt divided by Annualized Adjusted EBITDA. EBITDA, Adjusted EBITDA, Annualized Adjusted EBITDA and Net Debt to Adjusted EBITDA, as calculated by us, are not comparable to EBITDA and EBITDA-related measures reported by other REITs that do not define EBITDA and EBITDA-related measures exactly as we do. EBITDA, Adjusted EBITDA and Annualized Adjusted EBITDA do not represent cash generated from operating activities in accordance with GAAP, and should not be considered alternatives to net income as an indicator of performance or as alternatives to cash flows from operating activities as an indicator of liquidity. Considering the nature of our business as a real estate owner and operator, the Company believes that EBITDA, Adjusted EBITDA and the ratio of Net Debt to Adjusted EBITDA are helpful to investors in measuring our operational performance because they exclude various items included in net income that do not relate to or are not indicative of our operating performance, such as gains or losses from sales of depreciated prop- erty and depreciation and amortization, which can make periodic and peer analyses of operating performance more difficult. For informational purposes, the Company has also provided Annualized Adjusted EBITDA, adjusted as described above. The Company believes this supplemental information provides a meaningful measure of our operating performance. The Company believes presenting EBITDA and the related measures in this manner allows investors and other interested parties to form a more meaningful assessment of our operating results. NON-GAAP FINANCIAL MEASURES


 
28 November 2017 INVESTOR UPDATE APPENDIX – CONSOLIDATED STATEMENTS OF OPERATIONS


 
29 November 2017 INVESTOR UPDATE (1) “ FFO of the Operating Partnership” measures 100% of the operating performance of the Operating Partnership’s real estate properties. “FFO attributable to Kite Realty Group Trust common shareholders” reflects a reduction for the redeemable noncontrolling weighted average diluted interest in the Operating Partnership. APPENDIX – RECONCILIATION OF FFO TO NET INCOME


 
30 November 2017 INVESTOR UPDATE (1) Same Property NOI excludes eight properties in redevelopment, the recently completed Northdale Promenade redevelopment as well as office properties (Thirty South Meridian and Eddy Street Commons). (2) Excludes leases that are signed but for which tenants have not yet commenced the payment of cash rent. Calculated as a weighted average based on the timing of cash rent commencement and expiration during the period. (3) Same Property NOI excludes net gains from outlot sales, straight-line rent revenue, bad debt expense and recoveries, lease termination fees, amortization of lease intangibles and significant prior period expense recoveries and adjustments, if any. (4) See pages 27 and 28 of Q3 2017 supplemental for further detail of the properties included in the 3-R initiative. (5) Includes non-cash activity across the portfolio as well as net operating income from properties not included in the same property pool. APPENDIX – RECONCILIATION OF SAME PROPERTY NOI TO NET INCOME


 
31 November 2017 INVESTOR UPDATE (1) Represents Adjusted EBITDA for the three months ended September 30, 2017 (as shown in the table above) multiplied by four. (2) Partner share of consolidated joint venture debt is calculated based upon the partner’s pro-rata ownership of the joint venture, multiplied by the related secured debt balance. In all cases, this debt is the responsibility of the consolidated joint venture. APPENDIX – RECONCILIATION OF EBITDA/ADJUSTED EBITDA TO NET INCOME


 
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