Toggle SGML Header (+)


Section 1: 8-K (FORM 8-K Q2 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): August 5, 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))

Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol
 
Common Shares, $0.01 par value per share
KRG
New York Stock Exchange

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 August 5, 2019, Kite Realty Group Trust (the “Company”) announced its consolidated financial results for the quarter ended June 30, 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 Second 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 August 5, 2019
99.2
 
Kite Realty Group Trust Second 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: August 5, 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

  

399054612_pressrellogo23.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 Reports Substantial Progress on Deleveraging and Disposition Program Along with Strong Second Quarter 2019 Operating Results

Indianapolis, Indiana, August 5, 2019 - Kite Realty Group Trust (NYSE:KRG) (“KRG”) reported today its operating results for the second quarter ended June 30, 2019.
“We are extremely pleased with the progress of Project Focus, our deleveraging and portfolio transformation program,” said John A. Kite, Chairman and CEO. “As of today, we have closed on $415 million in asset sales, using the proceeds to pay down debt and lower our leverage to a net-debt-to-EBITDA ratio of 6.0x. This is a major milestone for our Company, and we reached this point well ahead of schedule.”

“Our transactions team has done a great job getting us to this point, while our operations team is simultaneously firing on all cylinders. Our leasing volume is up 40% year-over-year, and our big box program continues to deliver results. We look forward to continuing our outperformance in the second half of the year.”

Financial Highlights
Realized net loss attributable to common shareholders of $1.8 million, or $0.02 per common share, for the second quarter and realized net income attributable to common shareholders of $3.9 million, or $0.05 per common share, for the six months ending June 30, 2019.
Generated Funds from Operations of the Operating Partnership as adjusted (FFO) of $36.7 million, or $0.43 per diluted common share, for the second quarter and generated FFO of $75.0 million, or $0.87 per diluted common share, for the six months ending June 30, 2019.
Increased Same-Property Net Operating Income (NOI) by 1.7%. Combined with our first quarter results, Same-Property NOI grew by 1.8% through June 30, 2019.

Portfolio Operations
Retail leased percentage was 95.1%, an increase of 10 basis points sequentially.
Small shop leased percentage was 92.0%, an increase of 40 basis points sequentially.
Annualized base rent (ABR) for the operating retail portfolio was $17.35, an increase of $0.19 sequentially.
Executed 81 new and renewal leases during the second quarter, representing a total of 500,992 square feet, which includes 2 big box leases representing approximately 43,000 square feet.
GAAP leasing spreads of 25.4% (18.2% cash basis) on 21 comparable new leases, 10.5% (5.9% cash basis) on 48 comparable renewals and 14.0% (8.7% cash basis) on a blended basis.
Executed 176 new and renewal leases, representing over 1.1 million square feet, through June 30, 2019.



1


Transactions
Sold 8 non-core assets for a total of $244 million in second quarter.
Subsequent to quarter end, sold an additional 5 non-core assets for $157 million.
Total non-core asset sales year to date of $415 million.

Balance Sheet
KRG currently has zero debt maturing through 2020. As of June 30, the debt portfolio had a weighted average maturity of 5.7 years and a weighted average interest rate of 4.16%.

As of June 30, 2019, KRG’s net-debt-to-EBITDA ratio was 6.4x. Factoring in the asset sales and corresponding debt paydown subsequent to quarter end, KRG’s proforma net-debt-to-EBITDA is 6.0x, and there is zero outstanding on our corporate line of credit.

Guidance
KRG is updating previously provided guidance of 2019 FFO from $1.66 - $1.76 per share to $1.61 - $1.69 per share. The decrease of $0.06 cents of FFO per share at the midpoint is solely related to the company’s outperformance with respect to the accelerated timing of the deleveraging and disposition program.
The key assumption changes are:

 
Previous
Current
Change at Midpoint
SP NOI Growth
1.25% - 2.25%
1.50% - 2.50%
0.25%
Pre-disposition 2019 FFO Guidance
1.76 - 1.82
1.76 - 1.82
0.00
2019 Dispositions
$350M - $500M
$415M - $500M
$32M
Disposition Wtd Avg Sales Date
Late August
Early July
 
Net Impact of 2019 Dispositions in 2019
(0.10) - (0.06)
(0.15) - (0.13)1,2
(0.06)
2019 FFO Guidance
1.66 - 1.76
1.61 - 1.69
(0.06)
 
 
 
 
2019 Dispositions Net Impact Annualized
(0.29) - (0.20)
(0.29) - (0.25)1,2
 
 
 
 
 
(1) Disposition NOI less anticipated interest savings based on weighted-average sale date of July 2019.
(2) Low end of range assumes $500 million in proceeds while high end of range assumes $415 million in proceeds.

















2


Earnings Conference Call
Kite Realty Group Trust will conduct a conference call to discuss its financial results on Tuesday, August 6, 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 6769276). 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 retailers 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.





























3


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.






4


Kite Realty Group Trust
Consolidated Balance Sheets
(Unaudited)

($ in thousands)
 
 
 
 
 
 
June 30,
2019
 
December 31,
2018
Assets:
 
 
 
 
Investment properties, at cost
 
$
3,386,780

 
$
3,641,120

Less: accumulated depreciation
 
(697,005
)
 
(699,927
)
 
 
2,689,775

 
2,941,193

 
 
 
 
 
Cash and cash equivalents
 
35,842

 
35,376

Tenant and other receivables, including accrued straight-line rent of $30,823 and $31,347, respectively
 
51,965

 
58,059

Restricted cash and escrow deposits
 
23,692

 
10,130

Deferred costs and intangibles, net
 
85,056

 
95,264

Prepaid and other assets
 
37,296

 
12,764

Investments in unconsolidated subsidiaries
 
12,692

 
13,496

Assets held for sale
 

 
5,731

Total Assets
 
$
2,936,318

 
$
3,172,013

Liabilities and Shareholders’ Equity:
 
 
 
 

Mortgage and other indebtedness, net
 
$
1,376,612

 
$
1,543,301

Accounts payable and accrued expenses
 
66,600

 
85,934

Deferred revenue and other liabilities
 
94,439

 
83,632

Total Liabilities
 
1,537,651

 
1,712,867

Commitments and contingencies
 
 
 
 

Limited Partners’ interests in the Operating Partnership and other redeemable noncontrolling interests
 
45,306

 
45,743

Shareholders’ Equity:
 
 
 
 

Kite Realty Group Trust Shareholders’ Equity:
 
 
 
 

Common Shares, $.01 par value, 225,000,000 shares authorized, 83,960,346 and 83,800,886 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
 
840

 
838

Additional paid in capital
 
2,079,868

 
2,078,099

Accumulated other comprehensive loss
 
(15,892
)
 
(3,497
)
Accumulated deficit
 
(712,153
)
 
(662,735
)
Total Kite Realty Group Trust Shareholders’ Equity
 
1,352,663

 
1,412,705

Noncontrolling Interests
 
698

 
698

Total Equity
 
1,353,361

 
1,413,403

Total Liabilities and Shareholders' Equity
 
$
2,936,318

 
$
3,172,013



5


Kite Realty Group Trust
Consolidated Statements of Operations
For the Three and Six Months Ended June 30, 2019 and 2018
(Unaudited)

($ in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2019
 
2018
 
2019
 
2018
Revenue:
 
 
 
 
 
 
 
 
Rental income
 
$
79,795

 
$
85,846

 
$
162,152

 
$
174,667

Other property related revenue
 
1,594

 
4,927

 
2,649

 
4,507

  Fee income
 
91

 
963

 
194

 
2,325

Total revenue
 
81,480

 
91,736

 
164,995

 
181,499

Expenses:
 
 
 
 
 
 

 
 

  Property operating
 
11,468

 
12,621

 
22,898

 
25,091

  Real estate taxes
 
9,929

 
10,392

 
20,135

 
21,146

  General, administrative, and other
 
7,037

 
5,553

 
13,814

 
11,499

  Depreciation and amortization
 
34,713

 
40,451

 
69,348

 
79,006

  Impairment charges
 
25,107

 
14,777

 
29,184

 
38,847

Total expenses
 
88,254

 
83,794

 
155,379

 
175,589

Gain on sale of operating properties, net
 
24,092

 
7,829

 
30,679

 
8,329

Operating income
 
17,318

 
15,771

 
40,295

 
14,239

  Interest expense
 
(16,124
)
 
(16,746
)
 
(32,582
)
 
(33,084
)
  Income tax benefit of taxable REIT subsidiary
 
66

 
28

 
148

 
51

  Loss on debt extinguishment
 
(2,577
)
 

 
(2,577
)
 

  Equity in loss of unconsolidated subsidiary
 
(238
)
 

 
(665
)
 

  Other expense, net
 
(142
)
 
(115
)
 
(328
)
 
(265
)
Net (loss) income
 
(1,697
)
 
(1,062
)
 
4,291

 
(19,059
)
  Net income attributable to noncontrolling interests
 
(99
)
 
(304
)
 
(372
)
 
(225
)
Net (loss) income attributable to Kite Realty Group Trust common shareholders
 
$
(1,796
)
 
$
(1,366
)
 
$
3,919

 
$
(19,284
)
 
 
 
 
 
 
 
 
 
(Loss) income per common share - basic and diluted
 
$
(0.02
)
 
$
(0.02
)
 
0.05

 
(0.23
)
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic
 
83,938,961

 
83,672,896

 
83,891,584

 
83,651,402

Weighted average common shares outstanding - diluted
 
83,938,961

 
83,672,896

 
84,017,762

 
83,651,402

Cash dividends declared per common share
 
$
0.3175

 
$
0.3175

 
$
0.6350

 
$
0.6350

 
 
 
 
 
 
 
 
 

6


Kite Realty Group Trust
Funds From Operations
For the Three and Six Months Ended June 30, 2019 and 2018
(Unaudited)
($ in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2019
 
2018
 
2019
 
2018
Funds From Operations
 
 
 
 
 
 
 
 
Consolidated net (loss) income
 
$
(1,697
)
 
$
(1,062
)
 
$
4,291

 
$
(19,059
)
Less: net income attributable to noncontrolling interests in properties
 
(132
)
 
(343
)
 
(264
)
 
(694
)
Less: gain on sales of operating properties
 
(24,092
)
 
(7,829
)
 
(30,679
)
 
(8,329
)
Add: impairment charges
 
25,107

 
14,777

 
29,184

 
38,847

Add: depreciation and amortization of consolidated and unconsolidated entities, net of noncontrolling interests
 
34,954

 
40,178

 
69,853

 
78,457

   FFO of the Operating Partnership1
 
34,140

 
45,721

 
72,385

 
89,222

Less: Limited Partners' interests in FFO
 
(819
)
 
(1,119
)
 
(1,737
)
 
(2,141
)
   FFO attributable to Kite Realty Group Trust common shareholders1
 
$
33,321

 
$
44,602

 
$
70,648

 
$
87,081

FFO, as defined by NAREIT, per share of the Operating Partnership - basic and diluted
 
$
0.40

 
$
0.53

 
$
0.84

 
$
1.04

 
 
 
 
 
 
 
 
 
FFO of the Operating Partnership1
 
$
34,140

 
$
45,721

 
$
72,385

 
$
89,222

Add: loss on debt extinguishment
 
2,577

 

 
2,577

 

FFO, as adjusted, of the Operating Partnership
 
$
36,717

 
$
45,721

 
$
74,962

 
$
89,222

FFO, as adjusted, per share of the Operating Partnership - basic and diluted
 
$
0.43

 
$
0.53

 
$
0.87

 
$
1.04

 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic
 
83,938,961

 
83,672,896

 
83,891,584

 
83,651,402

Weighted average common shares outstanding - diluted
 
84,064,507

 
83,722,444

 
84,017,762

 
83,694,898

Weighted average common shares and units outstanding - basic
 
86,051,797

 
85,739,745

 
85,982,324

 
85,691,306

Weighted average common shares and units outstanding - diluted
 
86,177,343

 
85,789,293

 
86,108,502

 
85,734,802

 
 
 
 
 
 
 
 
 
FFO, as defined by NAREIT, per diluted share/unit
 
 
 
 
 
 
 
 
Consolidated net (loss) income
 
$
(0.02
)
 
$
(0.01
)
 
$
0.05

 
$
(0.22
)
Less: net income attributable to noncontrolling interests in properties
 

 

 

 
(0.01
)
Less: gain on sales of operating properties
 
(0.28
)
 
(0.09
)
 
(0.36
)
 
(0.10
)
Add: impairment charges
 
0.29

 
0.17

 
0.34

 
0.45

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

 
0.46

 
0.81

 
0.92

FFO, as defined by NAREIT, of the Operating Partnership per diluted share/unit1
 
$
0.40

 
$
0.53

 
$
0.84

 
$
1.04

 
 
 
 
 
 
 
 
 
Add: loss on debt extinguishment
 
0.03

 

 
0.03

 

FFO, as adjusted, of the Operating Partnership per diluted share/unit
 
$
0.43

 
$
0.53

 
$
0.87

 
$
1.04

____________________
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. For informational purposes, we have also provided FFO adjusted for loss on debt extinguishment.

7


Kite Realty Group Trust
Same Property Net Operating Income
For the Three and Six Months Ended June 30, 2019 and 2018
(Unaudited)

($ in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
% Change
 
2019
 
2018
 
% Change
Number of properties for the quarter
93

 
93

 
 
 


 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leased percentage at period end
95.1
%
 
93.8
%
 
 
 
95.1
%
 
93.8
%
 
 
Economic Occupancy percentage2
92.4
%
 
93.0
%
 
 
 
92.3
%
 
93.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Minimum rent
$
53,549

 
$
53,263

 
 
 
$
110,694

 
$
109,808

 
 
Tenant recoveries 
15,231

 
14,966

 
 
 
31,808

 
31,174

 
 
Bad debt
(424
)
 
(513
)
 
 
 
(988
)
 
(866
)
 
 
Other income
364

 
260

 
 
 
747

 
552

 
 
 
68,720

 
67,976

 
 
 
142,261

 
140,668

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property operating expenses 
(8,440
)
 
(8,772
)
 
 
 
(17,328
)
 
(17,870
)
 
 
Real estate taxes 
(8,942
)
 
(8,743
)
 
 
 
(18,483
)
 
(18,203
)
 
 
 
(17,382
)
 
(17,515
)
 
 
 
(35,811
)
 
(36,073
)
 
 
Same Property NOI3
$
51,338

 
$
50,461

 
1.7%
 
$
106,450

 
$
104,595

 
1.8%
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of Same Property NOI to Most Directly Comparable GAAP Measure: 
 
 
 
 
 
 
 
 
 
 
 
Net operating income - same properties
$
51,338

 
$
50,461

 
 
 
$
106,450

 
$
104,595

 
 
Net operating income - non-same activity4
8,654

 
17,299

 
 
 
15,318

 
28,342

 
 
Other (expense) income, net
(223
)
 
876

 
 
 
(651
)
 
2,111

 
 
General, administrative and other
(7,037
)
 
(5,553
)
 
 
 
(13,814
)
 
(11,499
)
 
 
Loss on debt extinguishment
(2,577
)
 

 
 
 
(2,577
)
 

 
 
Impairment charges
(25,107
)
 
(14,777
)
 
 
 
(29,184
)
 
(38,847
)
 
 
Depreciation and amortization expense
(34,713
)
 
(40,451
)
 
 
 
(69,348
)
 
(79,006
)
 
 
Interest expense
(16,124
)
 
(16,746
)
 
 
 
(32,582
)
 
(33,084
)
 
 
Gains on sales of operating properties
24,092

 
7,829

 
 
 
30,679

 
8,329

 
 
Net income attributable to noncontrolling interests
(99
)
 
(304
)
 
 
 
(372
)
 
(225
)
 
 
Net (loss) income attributable to common shareholders
$
(1,796
)
 
$
(1,366
)
 
 
 
$
3,919

 
$
(19,284
)
 
 
____________________
1
Same Property NOI excludes (i) The Corner, Courthouse Shadows, Glendale Town Center, and Hamilton Crossing redevelopments, (ii) the recently completed 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 June 30, 2019, the Company excluded four redevelopment properties and three recently completed redevelopments from the same property pool that met these criteria and were owned in both comparable periods.

8
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2 Q2 2019 SUPPLEMENTAL)

Exhibit
 
 
Exhibit 99.2

399054612_a2019q2suppcover.jpg


QUARTERLY FINANCIAL SUPPLEMENTAL – JUNE 30, 2019
399054612_image57.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 and Six Months Ended June 30, 2019
13
 
Same Property Net Operating Income
14
 
Net Operating Income and EBITDA by Quarter 
15
 
Funds from Operations for the Three and Six Months Ended June 30, 2019
16
 
Adjusted Funds From Operations and Other Financial Information for the Three and Six Months Ended June 30, 2019
17
 
Summary Income Statement
18
 
Joint Venture Summary as of June 30, 2019
19
 
Summary of Outstanding Debt as of June 30, 2019
20
 
Maturity Schedule of Outstanding Debt as of June 30, 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 –6/30/2019

 
 
 


399054612_pressrellogo23.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 Reports Substantial Progress on Deleveraging and Disposition Program Along with Strong Second Quarter 2019 Operating Results

Indianapolis, Indiana, August 5, 2019 - Kite Realty Group Trust (NYSE:KRG) (“KRG”) reported today its operating results for the second quarter ended June 30, 2019.
“We are extremely pleased with the progress of Project Focus, our deleveraging and portfolio transformation program,” said John A. Kite, Chairman and CEO. “As of today, we have closed on $415 million in asset sales, using the proceeds to pay down debt and lower our leverage to a net-debt-to-EBITDA ratio of 6.0x. This is a major milestone for our Company, and we reached this point well ahead of schedule.”

“Our transactions team has done a great job getting us to this point, while our operations team is simultaneously firing on all cylinders. Our leasing volume is up 40% year-over-year, and our big box program continues to deliver results. We look forward to continuing our outperformance in the second half of the year.”

Financial Highlights
Realized net loss attributable to common shareholders of $1.8 million, or $0.02 per common share, for the second quarter and realized net income attributable to common shareholders of $3.9 million, or $0.05 per common share, for the six months ending June 30, 2019.
Generated Funds from Operations of the Operating Partnership as adjusted (FFO) of $36.7 million, or $0.43 per diluted common share, for the second quarter and generated FFO of $75.0 million, or $0.87 per diluted common share, for the six months ending June 30, 2019.
Increased Same-Property Net Operating Income (NOI) by 1.7%. Combined with our first quarter results, Same-Property NOI grew by 1.8% through June 30, 2019.

Portfolio Operations
Retail leased percentage was 95.1%, an increase of 10 basis points sequentially.
Small shop leased percentage was 92.0%, an increase of 40 basis points sequentially.
Annualized base rent (ABR) for the operating retail portfolio was $17.35, an increase of $0.19 sequentially.
Executed 81 new and renewal leases during the second quarter, representing a total of 500,992 square feet, which includes 2 big box leases representing approximately 43,000 square feet.
GAAP leasing spreads of 25.4% (18.2% cash basis) on 21 comparable new leases, 10.5% (5.9% cash basis) on 48 comparable renewals and 14.0% (8.7% cash basis) on a blended basis.
Executed 176 new and renewal leases, representing over 1.1 million square feet, through June 30, 2019.






p. 3
Kite Realty Group Trust Supplemental Financial and Operating Statistics –6/30/2019


Transactions
Sold 8 non-core assets for a total of $244 million in second quarter.
Subsequent to quarter end, sold an additional 5 non-core assets for $157 million.
Total non-core asset sales year to date of $415 million.

Balance Sheet
KRG currently has zero debt maturing through 2020. As of June 30, the debt portfolio had a weighted average maturity of 5.7 years and a weighted average interest rate of 4.16%.

As of June 30, 2019, KRG’s net-debt-to-EBITDA ratio was 6.4x. Factoring in the asset sales and corresponding debt paydown subsequent to quarter end, KRG’s proforma net-debt-to-EBITDA is 6.0x, and there is zero outstanding on our corporate line of credit.

Guidance
KRG is updating previously provided guidance of 2019 FFO from $1.66 - $1.76 per share to $1.61 - $1.69 per share. The decrease of $0.06 cents of FFO per share at the midpoint is solely related to the company’s outperformance with respect to the accelerated timing of the deleveraging and disposition program.
The key assumption changes are:


 
Previous
Current
Change at Midpoint
SP NOI Growth
1.25% - 2.25%
1.50% - 2.50%
0.25%
Pre-disposition 2019 FFO Guidance
1.76 - 1.82
1.76 - 1.82
0.00
2019 Dispositions
$350M - $500M
$415M - $500M
$32M
Disposition Wtd Avg Sales Date
Late August
Early July
 
Net Impact of 2019 Dispositions in 2019
(0.10) - (0.06)
(0.15) - (0.13)1,2
(0.06)
2019 FFO Guidance
1.66 - 1.76
1.61 - 1.69
(0.06)
 
 
 
 
2019 Dispositions Net Impact Annualized
(0.29) - (0.20)
(0.29) - (0.25)1,2
 
 
 
 
 
(1) Disposition NOI less anticipated interest savings based on weighted-average sale date of July 2019.
(2) Low end of range assumes $500 million in proceeds while high end of range assumes $415 million in proceeds.





















p. 4
Kite Realty Group Trust Supplemental Financial and Operating Statistics –6/30/2019



Earnings Conference Call
Kite Realty Group Trust will conduct a conference call to discuss its financial results on Tuesday, August 6, 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 6769276). 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 retailers 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 –6/30/2019



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 –6/30/2019

CORPORATE PROFILE
 
399054612_image57.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 June 30, 2019, we owned interests in 103 operating and redevelopment properties totaling approximately 19.9 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 June 30, 2019  
 
 
# of Properties
Total
GLA /NRA
Owned
 GLA /NRA1
Operating Retail Properties
 
95

18,528,888

13,319,537

Operating Office Properties and Other
 
4

498,242

498,242

Redevelopment Properties
 
4

900,221

635,518

Total Operating and Redevelopment Properties
 
103

19,927,351

14,453,297

Development Projects
 
1

530,000

8,500

Total All Properties
 
104

20,457,351

14,461,797

 
 
Retail
Non-Retail
Total
Operating Properties –  Leased Percentage
 
95.1%
97.7%
95.2%
States
 
 
 
18


Stock Listing: New York Stock Exchange symbol: KRG
  
____________________
1
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 –6/30/2019

CONTACT INFORMATION    
 
399054612_image57.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 –6/30/2019

IMPORTANT NOTES INCLUDING NON-GAAP DISCLOSURES    
399054612_image57.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 Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 to be filed on or about August 6, 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. For informational purposes, we have also provided FFO adjusted for loss on debt extinguishment. 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 –6/30/2019

IMPORTANT NOTES INCLUDING NON-GAAP DISCLOSURES (CONTINUED)
399054612_image57.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 June 30, 2019, the Company excluded four redevelopment properties and three 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 –6/30/2019

CONSOLIDATED BALANCE SHEETS (UNAUDITED)
399054612_image57.jpg


($ in thousands)
 
 
 
 
 
 
June 30,
2019
 
December 31,
2018
Assets:
 
 
 
 
Investment properties, at cost
 
$
3,386,780

 
$
3,641,120

Less: accumulated depreciation
 
(697,005
)
 
(699,927
)
 
 
2,689,775

 
2,941,193

Cash and cash equivalents
 
35,842

 
35,376

Tenant and other receivables, including accrued straight-line rent of $30,823 and $31,347, respectively
 
51,965

 
58,059

Restricted cash and escrow deposits
 
23,692

 
10,130

Deferred costs and intangibles, net
 
85,056

 
95,264

Prepaid and other assets
 
37,296

 
12,764

Investments in unconsolidated subsidiaries
 
12,692

 
13,496

Assets held for sale
 

 
5,731

Total Assets
 
$
2,936,318

 
$
3,172,013

Liabilities and Shareholders’ Equity:
 
 
 
 

Mortgage and other indebtedness, net
 
$
1,376,612

 
$
1,543,301

Accounts payable and accrued expenses
 
66,600

 
85,934

Deferred revenue and other liabilities
 
94,439

 
83,632

Total Liabilities
 
1,537,651

 
1,712,867

Commitments and contingencies
 
 
 
 

Limited Partners’ interests in the Operating Partnership and other redeemable noncontrolling interests
 
45,306

 
45,743

Shareholders’ Equity:
 
 
 
 

Kite Realty Group Trust Shareholders’ Equity:
 
 
 
 

Common Shares, $.01 par value, 225,000,000 shares authorized, 83,960,346 and 83,800,886 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
 
840

 
838

Additional paid in capital
 
2,079,868

 
2,078,099

Accumulated other comprehensive loss
 
(15,892
)
 
(3,497
)
Accumulated deficit
 
(712,153
)
 
(662,735
)
Total Kite Realty Group Trust Shareholders’ Equity
 
1,352,663

 
1,412,705

Noncontrolling Interests
 
698

 
698

Total Equity
 
1,353,361

 
1,413,403

Total Liabilities and Equity
 
$
2,936,318

 
$
3,172,013












p. 11
Kite Realty Group Trust Supplemental Financial and Operating Statistics –6/30/2019

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
399054612_image57.jpg
     


($ in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2019
 
2018
 
2019
 
2018
Revenue:
 
 
 
 
 
 
 
 
Rental income
 
$
79,795

 
$
85,846

 
$
162,152

 
$
174,667

Other property related revenue
 
1,594

 
4,927

 
2,649

 
4,507

Fee income
 
91

 
963

 
194

 
2,325

Total revenue
 
81,480

 
91,736

 
164,995

 
181,499

Expenses:
 
 

 
 

 
 
 
 
  Property operating
 
11,468

 
12,621

 
22,898

 
25,091

  Real estate taxes
 
9,929

 
10,392

 
20,135

 
21,146

  General, administrative, and other
 
7,037

 
5,553

 
13,814

 
11,499

  Depreciation and amortization
 
34,713

 
40,451

 
69,348

 
79,006

  Impairment charges
 
25,107

 
14,777

 
29,184

 
38,847

Total expenses
 
88,254

 
83,794

 
155,379

 
175,589

Gain on sale of operating properties, net
 
24,092

 
7,829

 
30,679

 
8,329

Operating income
 
17,318

 
15,771

 
40,295

 
14,239

  Interest expense
 
(16,124
)
 
(16,746
)
 
(32,582
)
 
(33,084
)
  Income tax benefit of taxable REIT subsidiary
 
66

 
28

 
148

 
51

  Loss on debt extinguishment

(2,577
)



(2,577
)


  Equity in loss of unconsolidated subsidiary
 
(238
)
 

 
(665
)
 

  Other expense, net
 
(142
)
 
(115
)
 
(328
)
 
(265
)
Net (loss) income
 
(1,697
)
 
(1,062
)
 
4,291

 
(19,059
)
  Net income attributable to noncontrolling interests
 
(99
)
 
(304
)
 
(372
)
 
(225
)
Net (loss) income attributable to Kite Realty Group Trust common shareholders
 
$
(1,796
)
 
$
(1,366
)
 
$
3,919

 
$
(19,284
)
 
 
 
 
 
 
 
 
 
(Loss) income per common share - basic and diluted
 
$
(0.02
)
 
$
(0.02
)
 
$
0.05

 
$
(0.23
)
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic
 
83,938,961

 
83,672,896

 
83,891,584

 
83,651,402

Weighted average common shares outstanding - diluted
 
83,938,961

 
83,672,896

 
84,017,762

 
83,651,402

Cash dividends declared per common share
 
$
0.3175

 
$
0.3175

 
$
0.6350

 
$
0.6350

  


p. 12
Kite Realty Group Trust Supplemental Financial and Operating Statistics –6/30/2019

SAME PROPERTY NET OPERATING INCOME (NOI)
399054612_image57.jpg




($ in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
% Change
 
2019
 
2018
 
% Change
Number of properties for the quarter
93

 
93

 
 
 


 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leased percentage at period end
95.1
%
 
93.8
%
 
 
 
95.1
%
 
93.8
%
 
 
Economic Occupancy percentage2
92.4
%
 
93.0
%
 
 
 
92.3
%
 
93.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Minimum rent
$
53,549

 
$
53,263

 
 
 
$
110,694

 
$
109,808

 
 
Tenant recoveries 
15,231

 
14,966

 
 
 
31,808

 
31,174

 
 
Bad debt
(424
)
 
(513
)
 
 
 
(988
)
 
(866
)
 
 
Other income
364

 
260

 
 
 
747

 
552

 
 
 
68,720

 
67,976

 
 
 
142,261

 
140,668

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property operating expenses 
(8,440
)
 
(8,772
)
 
 
 
(17,328
)
 
(17,870
)
 
 
Real estate taxes 
(8,942
)
 
(8,743
)
 
 
 
(18,483
)
 
(18,203
)
 
 
 
(17,382
)
 
(17,515
)
 
 
 
(35,811
)
 
(36,073
)
 
 
Same Property NOI3
$
51,338

 
$
50,461

 
1.7%
 
$
106,450

 
$
104,595

 
1.8%
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of Same Property NOI to Most Directly Comparable GAAP Measure: 
 
 
 
 
 
 
 
 
 
 
 
Net operating income - same properties
$
51,338

 
$
50,461

 
 
 
$
106,450

 
$
104,595

 
 
Net operating income - non-same activity4
8,654

 
17,299

 
 
 
15,318

 
28,342

 
 
Other (expense) income, net
(223
)
 
876

 
 
 
(651
)
 
2,111

 
 
General, administrative and other
(7,037
)
 
(5,553
)
 
 
 
(13,814
)
 
(11,499
)
 
 
Impairment charges
(25,107
)
 
(14,777
)
 
 
 
(29,184
)
 
(38,847
)
 
 
Depreciation and amortization expense
(34,713
)
 
(40,451
)
 
 
 
(69,348
)
 
(79,006
)
 
 
Interest expense
(16,124
)
 
(16,746
)
 
 
 
(32,582
)
 
(33,084
)
 
 
Loss on debt extinguishment
(2,577
)
 

 
 
 
(2,577
)
 

 
 
Gains on sales of operating properties
24,092

 
7,829

 
 
 
30,679

 
8,329

 
 
Net income attributable to noncontrolling interests
(99
)
 
(304
)
 
 
 
(372
)
 
(225
)
 
 
Net (loss) income attributable to common shareholders
$
(1,796
)
 
$
(1,366
)
 
 
 
$
3,919

 
$
(19,284
)
 
 
 
____________________
1
Same Property NOI excludes (i) The Corner, Courthouse Shadows, Glendale Town Center, and Hamilton Crossing redevelopments, (ii) the recently completed 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 –6/30/2019

NET OPERATING INCOME AND EBITDA BY QUARTER
399054612_image57.jpg



($ in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
Revenue: 
 
 
 
 
 
 
 
 
 
 
Minimum rent1
 
$
62,047

 
$
63,999

 
$
64,764

 
$
66,577

 
$
69,280

Tenant reimbursements 
 
17,573

 
18,142

 
17,558

 
18,185

 
17,664

Other property related revenue
 
492

 
359

 
3,091

 
333

 
3,270

Overage rent
 
174

 
217

 
830

 
87

 
100

Parking revenue, net2
 
518

 
243

 
170

 
82

 
83

 
 
80,804

 
82,960

 
86,413

 
85,264

 
90,397

Expenses: 
 
 
 
 
 
 
 
 
 
 
Property operating  - Recoverable3
 
9,594

 
9,764

 
10,018

 
9,894

 
9,959

Property operating - Non-Recoverable3
 
1,491

 
1,387

 
2,888

 
1,978

 
2,413

Real estate taxes 
 
9,727

 
10,032

 
9,861

 
11,047

 
10,265

 
 
20,812

 
21,183

 
22,767

 
22,919

 
22,637

Net Operating Income - Properties 
 
59,992

 
61,777

 
63,646

 
62,345

 
67,760

 
 
 
 
 
 
 
 
 
 
 
Other (Expenses) Income: 
 
 
 
 
 
 
 
 
 
 
General, administrative, and other 
 
(7,037
)
 
(6,777
)
 
(4,957
)
 
(4,865
)
 
(5,553
)
Fee income
 
91

 
102

 
93

 
105

 
963

 
 
(6,946
)
 
(6,675
)
 
(4,864
)
 
(4,760
)
 
(4,590
)
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization
 
53,046

 
55,102

 
58,782

 
57,585

 
63,170

 
 
 
 
 
 
 
 
 
 
 
Impairment charge
 
(25,107
)
 
(4,077
)
 
(31,513
)
 

 
(14,777
)
Depreciation and amortization 
 
(34,713
)
 
(34,635
)
 
(36,299
)
 
(36,858
)
 
(40,451
)
Interest expense
 
(16,124
)
 
(16,459
)
 
(17,643
)
 
(16,058
)
 
(16,746
)
Equity in loss of unconsolidated subsidiaries
 
(238
)
 
(427
)
 
(303
)
 

 

Income tax benefit of taxable REIT subsidiary 
 
66

 
82

 
150

 
27

 
28

Loss on debt extinguishment
 
(2,577
)
 

 

 

 

Other expense, net
 
(142
)
 
(185
)
 
(158
)
 
(379
)
 
(115
)
Gains (loss) on sales of operating properties
 
24,092

 
6,587

 
(4,725
)
 

 
7,829

Net (loss) income
 
(1,697
)
 
5,988

 
(31,709
)
 
4,317

 
(1,062
)
Less: Net (income) loss attributable to noncontrolling interests
 
(99
)
 
(273
)
 
488

 
(379
)
 
(304
)
Net (loss) income attributable to Kite Realty Group Trust
 
$
(1,796
)
 
$
5,715

 
$
(31,221
)
 
$
3,938

 
$
(1,366
)
 
 
 
 
 
 
 
 
 
 
 
NOI/Revenue
 
74.2
%
 
74.5
%
 
73.7
%
 
73.1
%
 
75.0
%
Recovery Ratios4
 
 
 
 
 
 
 
 
 
 
       - Retail Properties
 
94.3
%
 
93.9
%
 
90.7
%
 
89.3
%
 
89.7
%
       - Consolidated
 
91.0
%
 
91.6
%
 
88.3
%
 
86.8
%
 
87.3
%
 
____________________
1
Minimum rent includes $4.4 million in ground lease-related revenue for the three months ended June 30, 2019. In addition, minimum rent includes $0.2 million, $0.1 million, $0.5 million, $1.2 million, and $1.0 million of lease termination income for the three months ended June 30