Toggle SGML Header (+)


Section 1: 8-K (FORM 8-K Q1 2019)

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): May 6, 2019
 
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 2.02. Results of Operations and Financial Condition.
 
On May 6, 2019, Kite Realty Group Trust (the “Company”) announced its consolidated financial results for the quarter ended March 31, 2019. A copy of the Company’s press release is furnished as Exhibit 99.1 to this current report on Form 8-K. A copy of the Company’s First Quarter 2019 Supplemental Disclosure is furnished as Exhibit 99.2 to this current report on Form 8-K. The information contained in Item 2.02 of this current report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed “filed” with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the Company under the Securities Act of 1933, as amended.
 
Item 9.01. Financial Statements and Exhibits.
 
(a) Not applicable.

(b) Not applicable.

(c) Not applicable.

(d) Exhibits.
 
Exhibit No.
 
Description
99.1
 
Kite Realty Group Trust Press Release dated May 6, 2019
99.2
 
Kite Realty Group Trust First Quarter 2019 Supplemental Disclosure























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: May 6, 2019
By:
/s/ Heath R. Fear
 
 
Heath R. Fear
 
 
Executive Vice President and
 
 
Chief Financial Officer































EXHIBIT INDEX
Exhibit
 
Document
99.1
 
99.2
 



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1 EARNINGS RELEASE)

Exhibit


 
Exhibit 99.1

  

397820812_pressrellogo20.jpg


PRESS RELEASE
        
Contact Information: Kite Realty Group Trust
Jason Colton
SVP, Capital Markets & Investor Relations
317.713.2762
jcolton@kiterealty.com


Kite Realty Group Trust Makes Significant Progress on Disposition Program and
Reports First Quarter 2019 Operating Results

Indianapolis, Indiana, May 6, 2019 - Kite Realty Group Trust (NYSE:KRG) (“KRG”) reported today its operating results for the first quarter ended March 31, 2019.
“We are off to a strong start in 2019 and our team is swiftly executing on our full year operational and transactional objectives,” said Chairman and Chief Executive Officer, John A. Kite. “We had an extremely productive quarter on the leasing front, executing 95 deals for approximately 642,000 square feet, which is more than a 30% increase in GLA volume compared to Q4 2018. As for our disposition efforts, we have closed $135 million to date and have made significant strides toward our goal of generating between $350 - 500 million of sales before year end. Demand for our non-core assets has been encouraging and we are pleased with the depth and diversity of our buyer pools.”
Financial Highlights

Realized net income attributable to common shareholders of $5.7 million, or $0.07 per common share
Generated Funds from Operations of the Operating Partnership (FFO) of $38.2 million, or $0.44 per diluted common share
Increased Same-Property Net Operating Income (NOI) by 1.8%

Portfolio Operations
Retail leased percentage is 95.0%, an increase of 40 basis points sequentially
Anchor leased percentage is 96.7%, an increase of 50 basis points sequentially
Small shop leased percentage is 91.6%, an increase of 40 basis points sequentially
Annualized base rent (ABR) for the operating retail portfolio is $17.16, an increase of nearly 2% sequentially
Executed 95 new and renewal leases, representing a total of 642,105 square feet, which includes 6 big box leases representing approximately 200,000 square feet
GAAP leasing spreads of 63.3% (58.2% cash basis) on 17 comparable new leases, 1.0% (-3.2% cash basis) on 57 comparable renewals and 10.2% (5.6% cash basis) on a blended basis.
Excluding the impact of certain strategic leases, blended GAAP spreads would have been 17.6% (12.4% cash basis).






1


Transactions
Sold 1 non-core asset for $13.5 million
Subsequent to quarter end, sold an additional 4 non-core assets for $121.3 million for total sales to date of $134.8 million
Placed under contract an additional $162.4 million in dispositions
Acquired the Pan Am Parking Garage in Indianapolis, IN for $29.5 million

Balance Sheet
KRG currently has only a single $20.7 million mortgage maturing through 2020, and as of March 31st, the debt portfolio had a weighted average maturity of 5.5 years and a weighted average interest rate of 4.09%.

As of March 31, 2019, KRG’s net-debt-to-EBITDA ratio was 6.9x. Factoring in the asset sales and corresponding debt paydown subsequent to quarter end, KRG’s proforma net-debt-to-EBITDA is 6.6x.

Guidance
KRG is reiterating previously provided guidance of 2019 FFO between $1.66 - $1.76 per share.



 
Low
High
2018 FFO
$
2.00

$
2.00

Previously Disclosed 2018 FFO Walk Down
 
 
2018 Dispositions
(0.05
)
(0.05
)
Lease Accounting Rules
(0.06
)
(0.06
)
Interest Expense
(0.03
)
(0.03
)
One-Time Income Items 1
(0.09
)
(0.09
)
Lease Termination & Other Revenue
(0.03
)

Subtotal
(0.25
)
(0.22
)
 
 
 
2019 Items:
 
 
Same Store NOI 2 (1.25% - 2.25%)
0.03

0.05

G&A
(0.02
)
(0.01
)
Subtotal - 2019 Items
0.01

0.04

 
 
 
2019 FFO - Pre-Dispositions
1.76

1.82

 
 
 
2019 Disposition Net Impact 3,4
(0.10
)
(0.06
)
 
 
 
FFO - Guidance
$
1.66

$
1.76

 
 
 
2019 Disposition Net Impact Annualized 4,5
(0.29
)
(0.20
)
 
 
 
(1) Relates to Eddy Street Commons development fee and cash and non-cash impact of Toys 'R Us bankruptcy. Also inludes ($0.03) from business interruption income.
(2) Includes $0.03 from executed anchor leases commencing in 2019.
 
(3) Disposition NOI less anticipated interest savings based on weighted-average sale date of August 31, 2019.
(4) Low end of range assumes $500 million in proceeds while high end of range assumes $350 million in proceeds.
(5) Annualized 2019 disposition NOI less annualized anticipated interest savings.
 



2



Earnings Conference Call
Kite Realty Group Trust will conduct a conference call to discuss its financial results on Tuesday, May 7, 2019, at 10:00 a.m. Eastern Time. A live webcast of the conference call will be available on KRG’s corporate website at www.kiterealty.com. The dial-in numbers are (844) 309-0605 for domestic callers and (574) 990-9933 for international callers (passcode 9359366). In addition, a webcast replay link will be available on the corporate website.
About Kite Realty Group Trust
Kite Realty Group Trust is a full-service, vertically integrated real estate investment trust (REIT) that provides communities with convenient and beneficial shopping experiences. We connect consumers to tenants in desirable markets through our portfolio of neighborhood, community, and lifestyle centers. Using operational, development, and redevelopment expertise, we continuously optimize our portfolio to maximize value and return to our shareholders. For more information, please visit our website at kiterealty.com.
Safe Harbor
Certain statements in this document that are not historical fact may constitute 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 and inflationary trends or outlook; the risk that KRG may not be able to successfully complete the planned dispositions on favorable terms - or at all; financing risks, including the availability of, and costs associated with, sources of liquidity; KRG’s ability to refinance, or extend the maturity dates of, its 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 KRG operates; acquisition, disposition, development and joint venture risks; property ownership and management risks; KRG’s ability to maintain its 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 KRG owns; the impact of online retail competition and the perception that such competition has on the value of shopping center assets; risks related to the geographical concentration of KRG’s properties in Florida, Indiana and Texas; insurance costs and coverage; risks associated with cybersecurity attacks and the loss of confidential information and other business interruptions; and other factors affecting the real estate industry generally. KRG refers you to the documents filed by KRG from time to time with the SEC, specifically the section titled “Risk Factors” in KRG’s and the Operating Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, which discuss these and other factors that could adversely affect KRG’s results. KRG undertakes no obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.




3


Kite Realty Group Trust
Consolidated Balance Sheets
(Unaudited)

($ in thousands)
 
 
 
 
 
 
March 31,
2019
 
December 31,
2018
Assets:
 
 
 
 
Investment properties, at cost
 
$
3,581,911

 
$
3,641,120

Less: accumulated depreciation
 
(697,660
)
 
(699,927
)
 
 
2,884,251

 
2,941,193

 
 
 
 
 
Cash and cash equivalents
 
28,357

 
35,376

Tenant and other receivables, including accrued straight-line rent of $30,945 and $31,347, respectively
 
55,432

 
58,059

Restricted cash and escrow deposits
 
23,604

 
10,130

Deferred costs and intangibles, net
 
92,827

 
95,264

Prepaid and other assets
 
41,080

 
12,764

Investments in unconsolidated subsidiaries
 
13,283

 
13,496

Assets held for sale
 
64,343

 
5,731

Total Assets
 
$
3,203,177

 
$
3,172,013

Liabilities and Shareholders’ Equity:
 
 
 
 

Mortgage and other indebtedness, net
 
$
1,602,603

 
$
1,543,301

Accounts payable and accrued expenses
 
61,868

 
85,934

Deferred revenue and other liabilities
 
102,478

 
83,632

Total Liabilities
 
1,769,357

 
1,712,867

Commitments and contingencies
 
 
 
 

Limited Partners’ interests in the Operating Partnership and other redeemable noncontrolling interests
 
46,298

 
45,743

Shareholders’ Equity:
 
 
 
 

Kite Realty Group Trust Shareholders’ Equity:
 
 
 
 

Common Shares, $.01 par value, 225,000,000 shares authorized, 83,910,408 and 83,800,886 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively
 
839

 
838

Additional paid in capital
 
2,078,104

 
2,078,099

Accumulated other comprehensive loss
 
(8,427
)
 
(3,497
)
Accumulated deficit
 
(683,692
)
 
(662,735
)
Total Kite Realty Group Trust Shareholders’ Equity
 
1,386,824

 
1,412,705

Noncontrolling Interests
 
698

 
698

Total Equity
 
1,387,522

 
1,413,403

Total Liabilities and Shareholders' Equity
 
$
3,203,177

 
$
3,172,013



4


Kite Realty Group Trust
Consolidated Statements of Operations
For the Three Months Ended March 31, 2019 and 2018
(Unaudited)

($ in thousands, except per share data)
 
 
 
 
 
 
 
Three Months Ended
March 31,
 
 
 
2019
 
2018
 
Revenue:
 
 
 
 
 
Rental income
 
$
82,358

 
$
87,623

 
Other property related revenue
 
1,055

 
778

 
  Fee income
 
102

 
1,362

 
Total revenue
 
83,515

 
89,763

 
Expenses:
 
 
 
 
 
  Property operating
 
11,431

 
12,470

 
  Real estate taxes
 
10,206

 
10,754

 
  General, administrative, and other
 
6,777

 
5,945

 
  Depreciation and amortization
 
34,635

 
38,556

 
  Impairment charges
 
4,077

 
24,070

 
Total expenses
 
67,126

 
91,795

 
Gain on sale of operating properties, net
 
6,587

 
500

 
Operating income (loss)
 
22,976

 
(1,532
)
 
  Interest expense
 
(16,459
)
 
(16,337
)
 
  Income tax benefit of taxable REIT subsidiary
 
82

 
23

 
  Equity in loss of unconsolidated subsidiary
 
(427
)
 

 
  Other expense, net
 
(184
)
 
(151
)
 
Net income (loss)
 
5,988

 
(17,997
)
 
  Net (income) loss attributable to noncontrolling interests
 
(273
)
 
80

 
Net income (loss) attributable to Kite Realty Group Trust common shareholders
 
$
5,715

 
$
(17,917
)
 
 
 
 
 
 
 
Income (loss) per common share - basic and diluted
 
$
0.07

 
$
(0.21
)
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic
 
83,843,681

 
83,629,669

 
Weighted average common shares outstanding - diluted
 
84,034,097

 
83,629,669

 
Cash dividends declared per common share
 
$
0.3175

 
$
0.3175

 
 
 
 
 
 
 

5


Kite Realty Group Trust
Funds From Operations
For the Three Months Ended March 31, 2019 and 2018
(Unaudited)
($ in thousands, except per share data)
 
 
 
 
 
 
 
Three Months Ended
March 31,
 
 
 
2019
 
2018
 
Funds From Operations
 
 
 
 
 
Consolidated net income (loss)
 
$
5,988

 
$
(17,997
)
 
Less: net income attributable to noncontrolling interests in properties
 
(132
)
 
(351
)
 
Less: gain on sales of operating properties
 
(6,587
)
 
(500
)
 
Add: impairment charges
 
4,077

 
24,070

 
Add: depreciation and amortization of consolidated and unconsolidated entities, net of noncontrolling interests
 
34,896

 
38,278

 
   FFO of the Operating Partnership1
 
38,242

 
43,500

 
Less: Limited Partners' interests in FFO
 
(918
)
 
(1,022
)
 
   FFO attributable to Kite Realty Group Trust common shareholders1
 
$
37,324

 
$
42,478

 
FFO, as defined by NAREIT, per share of the Operating Partnership - basic
 
$
0.45

 
$
0.51

 
FFO, as defined by NAREIT, per share of the Operating Partnership - diluted
 
$
0.44

 
$
0.51

 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic
 
83,843,681

 
83,629,669

 
Weighted average common shares outstanding - diluted
 
84,034,097

 
83,668,918

 
Weighted average common shares and units outstanding - basic
 
85,912,080

 
85,642,329

 
Weighted average common shares and units outstanding - diluted
 
86,102,496

 
85,681,578

 
 
 
 
 
 
 
FFO, as defined by NAREIT, per diluted share/unit
 
 
 
 
 
Consolidated net income (loss)
 
$
0.07

 
$
(0.21
)
 
Less: net income attributable to noncontrolling interests in properties
 

 

 
Less: gain on sales of operating properties
 
(0.08
)
 
(0.01
)
 
Add: impairment charges
 
0.04

 
0.28

 
Add: depreciation and amortization of consolidated and unconsolidated entities, net of noncontrolling interests
 
0.41

 
0.45

 
FFO, as defined by NAREIT, of the Operating Partnership per diluted share/unit1
 
$
0.44

 
$
0.51

 
 
 
 
 
 
 
____________________
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.
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"), as restated in 2018. The NAREIT white paper defines FFO as net income (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real estate assets and investments, 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 operating 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. FFO (a) should not be considered as an alternative to net income (calculated in accordance with GAAP) for the purpose of measuring our financial performance, (b) is not an alternative to cash flow from operating activities (calculated in accordance with GAAP) as a measure of our liquidity, and (c) is not indicative 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.

6


Kite Realty Group Trust
Same Property Net Operating Income
For the Three Months Ended March 31, 2019 and 2018
(Unaudited)

($ in thousands)
 
 
 
 
 
 
 
Three Months Ended March 31,
 
 
2019
 
2018
 
% Change
 
Number of properties for the quarter
100

 
100

 
 
 
 
 
 
 
 
 
 
Leased percentage at period end
95.0
%
 
94.7
%
 
 
 
Economic Occupancy percentage2
92.2
%
 
93.2
%
 
 
 
 
 
 
 
 
 
 
Minimum rent
$
57,145

 
$
56,545

 
 
 
Tenant recoveries 
16,577

 
16,208

 
 
 
Bad debt
(564
)
 
(353
)
 
 
 
Other income
383

 
292

 
 
 
 
73,541

 
72,692

 
 
 
 
 
 
 
 
 
 
Property operating expenses 
(8,888
)
 
(9,098
)
 
 
 
Real estate taxes 
(9,541
)
 
(9,460
)
 
 
 
 
(18,429
)
 
(18,558
)
 
 
 
Same Property NOI3
$
55,112

 
$
54,134

 
1.8%
 
 
 
 
 
 
 
 
Reconciliation of Same Property NOI to Most Directly Comparable GAAP Measure: 
 
 
 
 
 
 
Net operating income - same properties
$
55,112

 
$
54,134

 
 
 
Net operating income - non-same activity4
6,766

 
12,405

 
 
 
Other expense, net
(529
)
 
(128
)
 
 
 
General, administrative and other
(6,777
)
 
(5,945
)
 
 
 
Impairment charges
(4,077
)
 
(24,070
)
 
 
 
Depreciation and amortization expense
(34,635
)
 
(38,556
)
 
 
 
Interest expense
(16,459
)
 
(16,337
)
 
 
 
Gains on sales of operating properties
6,587

 
500

 
 
 
Net (income) loss attributable to noncontrolling interests
(273
)
 
80

 
 
 
Net income (loss) attributable to common shareholders
$
5,715

 
$
(17,917
)
 
 
 
____________________
1
Same Property NOI excludes (i) The Corner, Courthouse Shadows, Glendale Town Center, and Hamilton Crossing redevelopments, (ii) the recently completed Beechwood Promenade, City Center, Fishers Station, and Rampart Commons redevelopments and (iii) office properties.
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, lease termination fees, amortization of lease intangibles, fee income and significant prior period expense recoveries and adjustments, if any.
4
Includes non-cash activity across the portfolio as well as net operating income from properties not included in the same property pool including properties sold during both periods.
The Company uses same property NOI ("Same Property NOI"), a non-GAAP financial measure, to evaluate the performance of our properties. 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, 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 and fully operational for the full quarters presented. The Company believes such presentation eliminates disparities in net income due to the acquisition or disposition of properties during the particular quarters presented and thus provides a more consistent 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 indicators 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 inclusion 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 March 31, 2019, the Company excluded four redevelopment properties and four recently completed redevelopments from the same property pool that met these criteria and were owned in both comparable periods.

7
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2 Q1 2019 SUPPLEMENTAL)

Exhibit
 
 
Exhibit 99.2

397820812_a2019q1suppcover.jpg


QUARTERLY FINANCIAL SUPPLEMENTAL – MARCH 31, 2019
397820812_image53.jpg


 
PAGE NO.
 
TABLE OF CONTENTS
 
 
 
3
 
Earnings Press Release 
7
 
Corporate Profile 
8
 
Contact Information 
9
 
Important Notes Including Non-GAAP Disclosures
11
 
Consolidated Balance Sheets 
12
 
Consolidated Statements of Operations for the Three Months Ended March 31, 2019
13
 
Same Property Net Operating Income
14
 
Net Operating Income and EBITDA by Quarter 
15
 
Funds from Operations for the Three Months Ended March 31, 2019
16
 
Adjusted Funds From Operations and Other Financial Information for the Three Months Ended March 31, 2019
17
 
Summary Income Statement
18
 
Joint Venture Summary as of March 31, 2019
19
 
Summary of Outstanding Debt as of March 31, 2019
20
 
Maturity Schedule of Outstanding Debt as of March 31, 2019
22
 
Key Debt Metrics
23
 
Top 25 Tenants by Annualized Base Rent 
24
 
Retail Leasing Spreads
25
 
Lease Expirations
26
 
Development and Redevelopment Projects
27
 
2019 Transactions
28
 
Geographic Diversification – Annualized Base Rent by Region and State
29
 
Operating Retail Portfolio Summary Report
34
 
Operating Office Properties and Other
35
 
Components of Net Asset Value
36
 
Earnings Guidance – 2019


p. 2
Kite Realty Group Trust Supplemental Financial and Operating Statistics –3/31/2019

 
 
 


397820812_pressrellogo20.jpg

PRESS RELEASE         

Contact Information: Kite Realty Group Trust
Jason Colton
SVP, Capital Markets & Investor Relations
317.713.2762
jcolton@kiterealty.com


Kite Realty Group Trust Makes Significant Progress on Disposition Program and
Reports First Quarter 2019 Operating Results

Indianapolis, Indiana, May 6, 2019 - Kite Realty Group Trust (NYSE:KRG) (“KRG”) reported today its operating results for the first quarter ended March 31, 2019.
“We are off to a strong start in 2019 and our team is swiftly executing on our full year operational and transactional objectives,” said Chairman and Chief Executive Officer, John A. Kite. “We had an extremely productive quarter on the leasing front, executing 95 deals for approximately 642,000 square feet, which is more than a 30% increase in GLA volume compared to Q4 2018. As for our disposition efforts, we have closed $135 million to date and have made significant strides toward our goal of generating between $350 - 500 million of sales before year end. Demand for our non-core assets has been encouraging and we are pleased with the depth and diversity of our buyer pools.”
Financial Highlights
Realized net income attributable to common shareholders of $5.7 million, or $0.07 per common share
Generated Funds from Operations of the Operating Partnership (FFO) of $38.2 million, or $0.44 per diluted common share
Increased Same-Property Net Operating Income (NOI) by 1.8%

Portfolio Operations
Retail leased percentage is 95.0%, an increase of 40 basis points sequentially
Anchor leased percentage is 96.7%, an increase of 50 basis points sequentially
Small shop leased percentage is 91.6%, an increase of 40 basis points sequentially
Annualized base rent (ABR) for the operating retail portfolio is $17.16, an increase of nearly 2% sequentially
Executed 95 new and renewal leases, representing a total of 642,105 square feet, which includes 6 big box leases representing approximately 200,000 square feet
GAAP leasing spreads of 63.3% (58.2% cash basis) on 17 comparable new leases, 1.0% (-3.2% cash basis) on 57 comparable renewals and 10.2% (5.6% cash basis) on a blended basis.
Excluding the impact of certain strategic leases, blended GAAP spreads would have been 17.6% (12.4% cash basis).










p. 3
Kite Realty Group Trust Supplemental Financial and Operating Statistics –3/31/2019


Transactions
Sold 1 non-core asset for $13.5 million
Subsequent to quarter end, sold an additional 4 non-core assets for $121.3 million for total sales to date of $134.8 million
Placed under contract an additional $162.4 million in dispositions
Acquired the Pan Am Parking Garage in Indianapolis, IN for $29.5 million

Balance Sheet
KRG currently has only a single $20.7 million mortgage maturing through 2020, and as of March 31st, the debt portfolio had a weighted average maturity of 5.5 years and a weighted average interest rate of 4.09%.

As of March 31, 2019, KRG’s net-debt-to-EBITDA ratio was 6.9x. Factoring in the asset sales and corresponding debt paydown subsequent to quarter end, KRG’s proforma net-debt-to-EBITDA is 6.6x.

Guidance
KRG is reiterating previously provided guidance of 2019 FFO between $1.66 - $1.76 per share.

 
Low
High
2018 FFO
$
2.00

$
2.00

Previously Disclosed 2018 FFO Walk Down
 
 
2018 Dispositions
(0.05
)
(0.05
)
Lease Accounting Rules
(0.06
)
(0.06
)
Interest Expense
(0.03
)
(0.03
)
One-Time Income Items 1
(0.09
)
(0.09
)
Lease Termination & Other Revenue
(0.03
)

Subtotal
(0.25
)
(0.22
)
 
 
 
2019 Items:
 
 
Same Store NOI 2 (1.25% - 2.25%)
0.03

0.05

G&A
(0.02
)
(0.01
)
Subtotal - 2019 Items
0.01

0.04

 
 
 
2019 FFO - Pre-Dispositions
1.76

1.82

 
 
 
2019 Disposition Net Impact 3,4
(0.10
)
(0.06
)
 
 
 
FFO - Guidance
$
1.66

$
1.76

 
 
 
2019 Disposition Net Impact Annualized 4,5
(0.29
)
(0.20
)
 
 
 
(1) Relates to Eddy Street Commons development fee and cash and non-cash impact of Toys 'R Us bankruptcy. Also includes ($0.03) from business interruption income
(2) Includes $0.03 from executed anchor leases commencing in 2019.
 
(3) Disposition NOI less anticipated interest savings based on weighted-average sale date of August 31, 2019.
(4) Low end of range assumes $500 million in proceeds while high end of range assumes $350 million in proceeds.
(5) Annualized 2019 disposition NOI less annualized anticipated interest savings.
 



p. 4
Kite Realty Group Trust Supplemental Financial and Operating Statistics –3/31/2019


Earnings Conference Call
Kite Realty Group Trust will conduct a conference call to discuss its financial results on Tuesday, May 7, 2019, at 10:00 a.m. Eastern Time. A live webcast of the conference call will be available on KRG’s corporate website at www.kiterealty.com. The dial-in numbers are (844) 309-0605 for domestic callers and (574) 990-9933 for international callers (passcode 9359366). In addition, a webcast replay link will be available on the corporate website.
About Kite Realty Group Trust
Kite Realty Group Trust is a full-service, vertically integrated real estate investment trust (REIT) that provides communities with convenient and beneficial shopping experiences. We connect consumers to tenants in desirable markets through our portfolio of neighborhood, community, and lifestyle centers. Using operational, development, and redevelopment expertise, we continuously optimize our portfolio to maximize value and return to our shareholders. For more information, please visit our website at kiterealty.com.























p. 5
Kite Realty Group Trust Supplemental Financial and Operating Statistics –3/31/2019


Safe Harbor
Certain statements in this document that are not historical fact may constitute 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 and inflationary trends or outlook; the risk that KRG may not be able to successfully complete the planned dispositions on favorable terms - or at all; financing risks, including the availability of, and costs associated with, sources of liquidity; KRG’s ability to refinance, or extend the maturity dates of, its 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 KRG operates; acquisition, disposition, development and joint venture risks; property ownership and management risks; KRG’s ability to maintain its 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 KRG owns; the impact of online retail competition and the perception that such competition has on the value of shopping center assets; risks related to the geographical concentration of KRG’s properties in Florida, Indiana and Texas; insurance costs and coverage; risks associated with cybersecurity attacks and the loss of confidential information and other business interruptions; and other factors affecting the real estate industry generally. KRG refers you to the documents filed by KRG from time to time with the SEC, specifically the section titled “Risk Factors” in KRG’s and the Operating Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, which discuss these and other factors that could adversely affect KRG’s results. KRG undertakes no obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.





p. 6
Kite Realty Group Trust Supplemental Financial and Operating Statistics –3/31/2019

CORPORATE PROFILE
 
397820812_image53.jpg


 
General Description
 
Kite Realty Group Trust is a full-service, vertically integrated real estate investment trust (REIT) engaged primarily in the ownership and operation, acquisition, development and redevelopment of high-quality neighborhood and community shopping centers in select markets in the United States. As of March 31, 2019, we owned interests in 111 operating and redevelopment properties totaling approximately 21.8 million square feet and one development project currently under construction.
 
Our strategy is to maximize the cash flow of our operating properties, successfully complete the construction and lease-up of our redevelopment and development portfolio, and identify additional opportunities to acquire or dispose of properties. New investments are focused in the shopping center sector primarily in markets where we believe we can leverage our existing infrastructure and relationships to generate attractive risk-adjusted returns or otherwise in desirable trade areas. Dispositions are generally designed to increase the quality of our portfolio and to strengthen the Company’s balance sheet.  

Company Highlights as of March 31, 2019  
 
 
# of Properties
Total
GLA /NRA
Owned
 GLA /NRA2
Operating Retail Properties 1
 
103

20,399,078

14,537,134

Operating Office Properties and Other
 
4

498,242

498,242

Redevelopment Properties
 
4

900,221

635,518

Total Operating and Redevelopment Properties
 
111

21,797,541

15,670,894

Development Projects
 
1

530,000

8,500

Total All Properties
 
112

22,327,541

15,679,394

 
 
Retail
Non-Retail
Total
Operating Properties –  Leased Percentage2
 
95.0%
97.7%
95.1%
States
 
 
 
19


Stock Listing: New York Stock Exchange symbol: KRG
  
____________________
1
Includes the Beechwood Promenade and Lakewood Promenade operating properties, which are held for sale as of March 31, 2019.
2
Excludes square footage of structures located on land owned by the company and ground leased to tenants and adjacent non-owned anchors.

p. 7
Kite Realty Group Trust Supplemental Financial and Operating Statistics –3/31/2019

CONTACT INFORMATION    
 
397820812_image53.jpg
                                



 
Corporate Office
30 South Meridian Street, Suite 1100
Indianapolis, IN 46204
(888) 577-5600
(317) 577-5600
www.kiterealty.com
 
Investor Relations Contact:
 
Analyst Coverage:
 
Analyst Coverage:
 
 
 
 
 
Jason Colton
 
Robert W. Baird & Co.
 
DA Davidson
Senior Vice President, Capital Markets and IR
 
Mr. RJ Milligan
 
Mr. James O. Lykins
Kite Realty Group Trust 
(813) 273-8252
(503) 603-3041
30 South Meridian Street, Suite 1100 
 
rjmilligan@rwbaird.com
 
jlykins@dadco.com
Indianapolis, IN 46204 
 
 
 
 
(317) 713-2762
 
Bank of America/Merrill Lynch
 
KeyBanc Capital Markets
jcolton@kiterealty.com
 
Mr. Jeffrey Spector/Mr. Craig Schmidt
 
Mr. Jordan Sadler/Mr. Todd Thomas
 
 
(646) 855-1363/(646) 855-3640
 
(917) 368-2280/(917) 368-2286
Transfer Agent:
 
jeff.spector@baml.com
 
tthomas@keybanccm.com
 
 
craig.schmidt@baml.com
 
jsadler@keybanccm.com
Broadridge Financial Solutions
 
 
 
 
Ms. Kristen Tartaglione
 
Barclays
 
Raymond James 
2 Journal Square, 7th Floor
 
Mr. Ross Smotrich/Ms. Linda Tsai
 
Mr. Paul Puryear/Mr. Collin Mings
Jersey City, NJ  07306
 
(212) 526-2306/(212) 526-9937
 
(727) 567-2253/(727) 567-2585
(201) 714-8094
 
ross.smotrich@barclays.com
 
paul.puryear@raymondjames.com 
 
 
linda.tsai@barclays.com
 
collin.mings@raymondjames.com
Stock Specialist:
 
 
 
 
 
 
BTIG
 
Sandler O’Neill
GTS
 
Mr. Michael Gorman
 
Mr. Alexander Goldfarb
545 Madison Avenue
 
(212) 738-6138
 
(212) 466-7937
15th Floor 
 
mgorman@btig.com
 
agoldfarb@sandleroneill.com
New York, NY 10022 
 
 
 
 
(212) 715-2830
 
Capital One Securities, Inc.
 
Wells Fargo Securities, LLC
 
 
Mr. Christopher Lucas
 
Mr. Jeffrey J. Donnelly, CFA /Ms. Tamara Fique
 
 
(571) 633-8151
 
(617) 603-4262/(443) 263-6568
 
 
christopher.lucas@capitalone.com
 
jeff.donnelly@wellsfargo.com 
 
 
 
 
tamara.fique@wellsfargo.com
 
 
Citigroup Global Markets 
 
 
 
 
Mr. Michael Bilerman/Ms. Christy McElroy
 
 
 
 
(212) 816-1383/(212) 816-6981
 
 
 
 
michael.bilerman@citigroup.com 
 
 
 
 
christy.mcelroy@citigroup.com
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

p. 8
Kite Realty Group Trust Supplemental Financial and Operating Statistics –3/31/2019

IMPORTANT NOTES INCLUDING NON-GAAP DISCLOSURES    
397820812_image53.jpg
                                


Interim Information 
This Quarterly Financial Supplemental contains historical information of Kite Realty Group Trust (“the Company” or “KRG”) and is intended to supplement the Company’s Annual Report on Form 10-Q for the quarter ended March 31, 2019 to be filed on or about May 7, 2019, which should be read in conjunction with this supplement. The supplemental information is unaudited, although it reflects all adjustments which, in the opinion of management, are necessary for a fair presentation of operating results for the interim periods.
 
Forward-Looking Statements 
This supplemental information package, 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 connection with low or negative growth in the U.S. economy as well as economic uncertainty;
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 insolvency and bankruptcy;
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 actual and perceived impact of online retail 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, 2018, 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.

Non-GAAP Disclosures
 
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"), as restated in 2018. The NAREIT white paper defines FFO as net income (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real estate assets and investments, 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 operating 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. FFO (a) should not be considered as an alternative to net income (calculated in accordance with GAAP) for the purpose of measuring our financial performance, (b) is not an alternative to cash flow from operating activities (calculated in accordance with GAAP) as a measure of our liquidity, and (c) is not indicative 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 (calculated in accordance with GAAP) to FFO is included elsewhere in this Financial Supplement.
 








p. 9
Kite Realty Group Trust Supplemental Financial and Operating Statistics –3/31/2019

IMPORTANT NOTES INCLUDING NON-GAAP DISCLOSURES (CONTINUED)
397820812_image53.jpg



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. AFFO should not be considered 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 (calculcated 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.

The Company also uses same property NOI ("Same Property NOI"), a non-GAAP financial measure, to evaluate the performance of our properties. 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, 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 and fully operational for the full quarters presented. The Company believes such presentation eliminates disparities in net income due to the acquisition or disposition of properties during the particular quarters presented and thus provides a more consistent 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 indicators 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 inclusion 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 March 31, 2019, the Company excluded four redevelopment properties and four recently completed redevelopments 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 defines 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 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 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.


p. 10
Kite Realty Group Trust Supplemental Financial and Operating Statistics –3/31/2019

CONSOLIDATED BALANCE SHEETS (UNAUDITED)
397820812_image53.jpg


($ in thousands)
 
 
 
 
 
 
March 31,
2019
 
December 31,
2018
Assets:
 
 
 
 
Investment properties, at cost
 
$
3,581,911

 
$
3,641,120

Less: accumulated depreciation
 
(697,660
)
 
(699,927
)
 
 
2,884,251

 
2,941,193

Cash and cash equivalents
 
28,357

 
35,376

Tenant and other receivables, including accrued straight-line rent of $30,945 and $31,347, respectively
 
55,432

 
58,059

Restricted cash and escrow deposits
 
23,604

 
10,130

Deferred costs and intangibles, net
 
92,827

 
95,264

Prepaid and other assets
 
41,080

 
12,764

Investments in unconsolidated subsidiaries
 
13,283

 
13,496

Assets held for sale
 
64,343

 
5,731

Total Assets
 
$
3,203,177

 
$
3,172,013

Liabilities and Shareholders’ Equity:
 
 
 
 

Mortgage and other indebtedness, net
 
$
1,602,603

 
$
1,543,301

Accounts payable and accrued expenses
 
61,868

 
85,934

Deferred revenue and other liabilities
 
102,478

 
83,632

Liabilities of assets held for sale
 
2,408

 

Total Liabilities
 
1,769,357

 
1,712,867

Commitments and contingencies
 
 
 
 

Limited Partners’ interests in the Operating Partnership and other redeemable noncontrolling interests
 
46,298

 
45,743

Shareholders’ Equity:
 
 
 
 

Kite Realty Group Trust Shareholders’ Equity:
 
 
 
 

Common Shares, $.01 par value, 225,000,000 shares authorized, 83,910,408 and 83,800,886 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively
 
839

 
838

Additional paid in capital
 
2,078,104

 
2,078,099

Accumulated other comprehensive loss
 
(8,427
)
 
(3,497
)
Accumulated deficit
 
(683,692
)
 
(662,735
)
Total Kite Realty Group Trust Shareholders’ Equity
 
1,386,824

 
1,412,705

Noncontrolling Interests
 
698

 
698

Total Equity
 
1,387,522

 
1,413,403

Total Liabilities and Equity
 
$
3,203,177

 
$
3,172,013











p. 11
Kite Realty Group Trust Supplemental Financial and Operating Statistics –3/31/2019

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
397820812_image53.jpg
     



($ in thousands, except per share data)
 
 
 
 
 
 
 
Three Months Ended
March 31,
 
 
 
2019
 
2018
 
Revenue:
 
 
 
 
 
Rental income
 
$
82,358

 
$
87,623

 
Other property related revenue
 
1,055

 
778

 
Fee income
 
102

 
1,362

 
Total revenue
 
83,515

 
89,763

 
Expenses:
 
 

 
 

 
  Property operating
 
11,431

 
12,470

 
  Real estate taxes
 
10,206

 
10,754

 
  General, administrative, and other
 
6,777

 
5,945

 
  Depreciation and amortization
 
34,635

 
38,556

 
  Impairment charges
 
4,077

 
24,070

 
Total expenses
 
67,126

 
91,795

 
Gain on sale of operating properties, net
 
6,587

 
500

 
Operating income (loss)
 
22,976

 
(1,532
)
 
  Interest expense
 
(16,459
)
 
(16,337
)
 
  Income tax benefit of taxable REIT subsidiary
 
82

 
23

 
  Equity in loss of unconsolidated subsidiary
 
(427
)
 

 
  Other expense, net
 
(184
)
 
(151
)
 
Net income (loss)
 
5,988

 
(17,997
)
 
  Net (income) loss attributable to noncontrolling interests
 
(273
)
 
80

 
Net income (loss) attributable to Kite Realty Group Trust common shareholders
 
$
5,715

 
$
(17,917
)
 
 
 
 
 
 
 
Income (loss) per common share - basic and diluted
 
$
0.07

 
$
(0.21
)
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic
 
83,843,681

 
83,629,669

 
Weighted average common shares outstanding - diluted
 
84,034,097

 
83,629,669

 
Cash dividends declared per common share
 
$
0.3175

 
$
0.3175

 
  


p. 12
Kite Realty Group Trust Supplemental Financial and Operating Statistics –3/31/2019

SAME PROPERTY NET OPERATING INCOME (NOI)
397820812_image53.jpg




($ in thousands)
 
 
 
 
 
 
 
Three Months Ended March 31,
 
 
2019
 
2018
 
% Change
 
Number of properties for the quarter
100

 
100

 
 
 
 
 
 
 
 
 
 
Leased percentage at period end
95.0
%
 
94.7
%
 
 
 
Economic Occupancy percentage2
92.2
%
 
93.2
%
 
 
 
 
 
 
 
 
 
 
Minimum rent
$
57,145

 
$
56,545

 
 
 
Tenant recoveries 
16,577

 
16,208

 
 
 
Bad debt
(564
)
 
(353
)
 
 
 
Other income
383

 
292

 
 
 
 
73,541

 
72,692

 
 
 
 
 
 
 
 
 
 
Property operating expenses 
(8,888
)
 
(9,098
)
 
 
 
Real estate taxes 
(9,541
)
 
(9,460
)
 
 
 
 
(18,429
)
 
(18,558
)
 
 
 
Same Property NOI3
$
55,112

 
$
54,134

 
1.8%
 
 
 
 
 
 
 
 
Reconciliation of Same Property NOI to Most Directly Comparable GAAP Measure: 
 
 
 
 
 
 
Net operating income - same properties
$
55,112

 
$
54,134

 
 
 
Net operating income - non-same activity4
6,766

 
12,405

 
 
 
Other expense, net
(529
)
 
(128
)
 
 
 
General, administrative and other
(6,777
)
 
(5,945
)
 
 
 
Impairment charges
(4,077
)
 
(24,070
)
 
 
 
Depreciation and amortization expense
(34,635
)
 
(38,556
)
 
 
 
Interest expense
(16,459
)
 
(16,337
)
 
 
 
Gains on sales of operating properties
6,587

 
500

 
 
 
Net (income) loss attributable to noncontrolling interests
(273
)
 
80

 
 
 
Net income (loss) attributable to common shareholders
$
5,715

 
$
(17,917
)
 
 
 
 
____________________
1
Same Property NOI excludes (i) The Corner, Courthouse Shadows, Glendale Town Center, and Hamilton Crossing redevelopments, (ii) the recently completed Beechwood Promenade, City Center, Fishers Station, and Rampart Commons redevelopments and (iii) office properties.
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, lease termination fees, amortization of lease intangibles, fee income and significant prior period expense recoveries and adjustments, if any.
4
Includes non-cash activity across the portfolio as well as net operating income from properties not included in the same property pool including properties sold during both periods.
 


p. 13
Kite Realty Group Trust Supplemental Financial and Operating Statistics –3/31/2019

NET OPERATING INCOME AND EBITDA BY QUARTER
397820812_image53.jpg



($ in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31, 2018
Revenue: 
 
 
 
 
 
 
 
 
 
 
Minimum rent1
 
$
63,999

 
$
64,764

 
$
66,577

 
$
69,280

 
$
69,073

Tenant reimbursements 
 
18,142

 
17,558

 
18,185

 
17,664

 
18,373

Other property related revenue
 
359

 
3,091

 
333

 
3,270

 
326

Overage rent
 
217

 
830

 
87

 
100

 
148

Parking revenue, net2
 
243

 
170

 
82

 
83

 
67

 
 
82,960

 
86,413

 
85,264

 
90,397

 
87,987

Expenses: 
 
 
 
 
 
 
 
 
 
 
Property operating  - Recoverable3
 
9,764

 
10,018

 
9,894

 
9,959

 
10,235

Property operating - Non-Recoverable3
 
1,387

 
2,888

 
1,978

 
2,413

 
1,984

Real estate taxes 
 
10,032

 
9,861

 
11,047

 
10,265

 
10,591

 
 
21,183

 
22,767

 
22,919

 
22,637

 
22,810

Net Operating Income - Properties 
 
61,777

 
63,646

 
62,345

 
67,760

 
65,177

 
 
 
 
 
 
 
 
 
 
 
Other (Expenses) Income: 
 
 
 
 
 
 
 
 
 
 
General, administrative, and other 
 
(6,777
)
 
(4,957
)
 
(4,865
)
 
(5,553
)
 
(5,945
)
Fee income
 
102

 
93

 
105

 
963

 
1,362

 
 
(6,675
)
 
(4,864
)
 
(4,760
)
 
(4,590
)
 
(4,583
)
Earnings Before Interest, Taxes, Depreciation and Amortization
 
55,102

 
58,782

 
57,585

 
63,170

 
60,594

 
 
 
 
 
 
 
 
 
 
 
Impairment charge
 
(4,077
)
 
(31,513
)
 

 
(14,777
)
 
(24,070
)
Depreciation and amortization 
 
(34,635
)
 
(36,299
)
 
(36,858
)
 
(40,451
)
 
(38,556
)
Interest expense
 
(16,459
)
 
(17,643
)
 
(16,058
)
 
(16,746
)
 
(16,337
)
Equity in loss of unconsolidated subsidiaries
 
(427
)
 
(303
)
 

 

 

Income tax benefit of taxable REIT subsidiary 
 
82

 
150

 
27

 
28

 
23

Other expense, net
 
(184
)
 
(158
)
 
(379
)
 
(115
)
 
(151
)
Gains (loss) on sales of operating properties
 
6,587

 
(4,725
)
 

 
7,829

 
500

Net income (loss)
 
5,988

 
(31,709
)
 
4,317

 
(1,062
)
 
(17,997
)
Less: Net (income) loss attributable to noncontrolling interests
 
(273
)
 
488

 
(379
)
 
(304
)
 
80

Net income (loss) attributable to Kite Realty Group Trust
 
$
5,715

 
$
(31,221
)
 
$
3,938

 
$
(1,366
)
 
$
(17,917
)
 
 
 
 
 
 
 
 
 
 
 
NOI/Revenue
 
74.5
%
 
73.7
%
 
73.1
%
 
75.0
%
 
74.1
%
Recovery Ratios4
 
 
 
 
 
 
 
 
 
 
       - Retail Properties
 
93.9
%
 
90.7
%
 
89.3
%
 
89.7
%
 
90.5
%
       - Consolidated
 
91.6
%
 
88.3
%
 
86.8
%
 
87.3
%
 
88.2
%
 
____________________
1
Minimum rent includes $5.1 million in ground lease-related revenue for the three months ended March 31, 2019. In addition, minimum rent includes $0.1 million of lease termination income for the three months ended March 31, 2019.
2
Parking revenue, net represents the net operating results of the Eddy Street Parking Garage, the Union Station Parking Garage, and the Pan Am Plaza Parking Garage.
3
Recoverable expenses include total management fee expense (or recurring G&A expense of $1.4 million) allocable to the property operations in the three months ended March 31, 2019, a portion of which is recoverable. Non-recoverable expenses primarily include ground rent, professional fees, and marketing costs.
4
“Recovery Ratio” is computed by dividing tenant reimbursements by the sum of recoverable property operating expense and real estate tax expense.

p. 14
Kite Realty Group Trust Supplemental Financial and Operating Statistics –3/31/2019

FUNDS FROM OPERATIONS1
397820812_image53.jpg



($ in thousands, except per share data)
 
 
 
 
 
 
 
Three Months Ended
March 31,
 
 
 
2019
 
2018
 
Funds From Operations ("FFO")
 
 
 
 
 
Consolidated net income (loss)
 
$
5,988

 
$
(17,997
)
 
Less: net income attributable to noncontrolling interests in properties
 
(132
)
 
(351
)
 
Less: gain on sales of operating properties
 
(6,587
)
 
(500
)
 
Add: impairment charges
 
4,077

 
24,070

 
Add: depreciation and amortization of consolidated and unconsolidated entities, net of noncontrolling interests
 
34,896

 
38,278

 
   FFO of the Operating Partnership1
 
38,242

 
43,500

 
Less: Limited Partners' interests in FFO
 
(918
)
 
(1,022
)
 
   FFO attributable to Kite Realty Group Trust common shareholders1
 
$
37,324

 
$
42,478

 
FFO, as defined by NAREIT, per share of the Operating Partnership - basic
 
$
0.45

 
$
0.51

 
FFO, as defined by NAREIT, per share of the Operating Partnership - diluted
 
$
0.44

 
$
0.51

 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic
 
83,843,681

 
83,629,669

 
Weighted average common shares outstanding - diluted
 
84,034,097

 
83,668,918

 
Weighted average common shares and units outstanding - basic
 
85,912,080

 
85,642,329

 
Weighted average common shares and units outstanding - diluted
 
86,102,496

 
85,681,578

 
 
 
 
 
 
 
FFO, as defined by NAREIT, per diluted share/unit
 
 
 
 
 
Consolidated net income (loss)
 
$
0.07

 
$
(0.21
)
 
Less: net income attributable to noncontrolling interests in properties
 

 

 
Less: gain on sales of operating properties
 
(0.08
)
 
(0.01
)
 
Add: impairment charges
 
0.04

 
0.28

 
Add: depreciation and amortization of consolidated and unconsolidated entities, net of noncontrolling interests
 
0.41

 
0.45

 
FFO, as defined by NAREIT, of the Operating Partnership per diluted share/unit1
 
$
0.44

 
$
0.51

 
 
 
 
 
 
 
____________________
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.

p. 15
Kite Realty Group Trust Supplemental Financial and Operating Statistics –3/31/2019

ADJUSTED FUNDS FROM OPERATIONS AND OTHER FINANCIAL INFORMATION
397820812_image53.jpg

 
($ in thousands)
 
 
 
 
 
 
 
Three Months Ended
March 31,
 
 
 
2019
 
2018
 
Reconciliation of FFO, as adjusted, to Adjusted Funds from Operations (AFFO)
 
 

 
 

 
FFO, as defined by NAREIT, as adjusted, of the Operating Partnership
 
$
38,242

 
$
43,500

 
Add:
 
 

 
 

 
Depreciation of non-real estate assets
 
177

 
277

 
Amortization of deferred financing costs
 
669

 
660

 
Non-cash compensation expense
 
1,284

 
1,186

 
Less:
 
 

 
 

 
Straight-line rent - minimum rent
 
566

 
951

 
Straight-line rent - common area maintenance
 
109

 

 
Market rent amortization income
 
1,046

 
2,576

 
Amortization of debt premium
 
547

 
990

 
Capital expenditures1:
 
 
 
 
 
     Maintenance capital expenditures2
 
351

 
721

 
     Revenue enhancing tenant improvements – retail
 
2,372

 
2,793

 
     Revenue enhancing tenant improvements – office
 

 

 
     External lease commissions
 
449

 
450

 
Total AFFO of the Operating Partnership
 
$
34,932

 
$
37,142

 
 
 
 
 
 
 
Other Financial Information:
 
 
 
 
 
Scheduled debt principal payments 
 
$
1,159

 
$
1,530

 
Capitalized interest cost
 
$
462

 
$
434

 
Mark to market lease amount in Deferred revenue and other liabilities on consolidated balance sheet
 
$
66,245

 
$
76,600

 

 
____________________
1
Excludes landlord work, tenant improvements and leasing commissions relating to development and redevelopment projects.
2
A portion of these capital improvements are reimbursed by tenants and are revenue producing.
 


p. 16
Kite Realty Group Trust Supplemental Financial and Operating Statistics –3/31/2019

SUMMARY INCOME STATEMENT AND LEASE ACCOUNTING IMPACT
397820812_image53.jpg

($ in thousands)
 
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
 
 
2019
 
2018
 
% Change
 
 
 
 

 
 

 
 
 
Same Property Revenue
 
$
73,541

 
$
72,692

 
1.2
 %
 
Same Property Expenses
 
(18,429
)
 
(18,558
)
 
0.7
 %
 
Same Property Net Operating Income
 
55,112

 
54,134

 
1.8
 %
 
 
 
 
 
 
 
 
 
Redevelopment Revenue
 
7,072

 
6,485

 
9.1
 %
 
Redevelopment Expenses
 
(2,522
)
 
(2,352
)
 
(7.2
)%
 
Redevelopment Net Operating Income
 
4,550

 
4,133

 
10.1
 %
 
 
 
 

 
 

 
 
 
Non-Same Property Net Operating Income
 
112

 
(185
)
 
160.5
 %
 
Sold Assets Net Operating Income
 
193

 
3,460

 
(94.4
)%
 
Non-Cash & Other Non-Recurring Net Operating Income
 
1,810

 
3,635

 
(50.2
)%
 
Net Operating Income
 
61,777

 
65,177

 
(5.2
)%
 
 
 
 
 
 
 
 
 
General and Administrative Expense
 
(6,777
)
 
(5,945
)
 
(14.0
)%
 
Fee income
 
102

 
1,362

 
(92.5
)%
 
EBITDA
 
55,102

 
60,594

 
(9.1
)%
 
 
 
 
 
 
 
 
 
Interest Expense
 
(16,459
)
 
(16,337
)
 
(0.7
)%
 
Other expense
 
(401
)
 
(757
)
 
47.0
 %
 
Funds From Operations
 
38,242

 
43,500

 
(12.1
)%
 
 
 
 
 
 
 
 
 
      Non-Cash Items
 
(138
)
 
(2,394
)
 
94.2
 %
 
      Capital Expenditures
 
(3,172
)
 
(3,964
)
 
20.0
 %
 
Adjusted Funds From Operations
 
$
34,932

 
$
37,142

 
(6.0
)%
 
 
 
 
 
 
 
 
 
FFO, per share of the Operating Partnership - diluted
 
$
0.44

 
$
0.51

 
(13.7
)%
 

Impact of New Lease Guidance Implementation
 
 
Balance Sheet Impact
 
Amount
 
Account
Right of Use Asset
 
$
27,074

 
Prepaid and Other Assets
Lease Liabilities
 
$
27,315

 
Deferred Revenue and Other Liabilities
 
 
 
 
 
Income Statement Impact
 
Amount
 
Account
Internal and third party leasing and legal costs not directly incremental to a lease execution
 
$
1,216

 
General & Administrative Expense
 
 
 
 
 
Straight-line rent - common area maintenance
 
$
109

 
Rental Income