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Section 1: 10-Q (10-Q)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
 
For the quarterly period ended
June 30, 2019
 
 
 
OR
 
 
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
For the transition period from                  to                 
 
 
Commission File Number:
001-32268
Kite Realty Group Trust
Commission File Number:
333-202666-01
Kite Realty Group, L.P.
 
 
Kite Realty Group Trust
Kite Realty Group, L.P.
(Exact Name of Registrant as Specified in its Charter)
Maryland
 
(Kite Realty Group Trust)
 
11-3715772
Delaware
 
(Kite Realty Group, L.P.)
 
20-1453863
(State or other jurisdiction of incorporation or organization)
 
 
 
(IRS Employer Identification No.)
 
 
 
 
 
30 S. Meridian Street
Suite 1100
Indianapolis
Indiana
46204
(Address of principal executive offices)
 
 
(Zip code)
 
 
 
 
 
Telephone:
317
577-5600
 
 
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol
 
Name of each exchange on which registered
Common stock, $0.01 par value per share
 
KRG
 
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Kite Realty Group Trust
Yes
No 
o
Kite Realty Group, L.P.
Yes
No 
o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Kite Realty Group Trust
Yes
No 
o

Kite Realty Group, L.P.
Yes
No 
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Kite Realty Group Trust:
Large accelerated filer
x
Accelerated filer
o
Non-accelerated filer
o
Smaller reporting company
 
 
 
 
 
 
 
Emerging growth company
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
Kite Realty Group, L.P.:
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
x
Smaller reporting company
 
 
 
 
 
 
 
Emerging growth company
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
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

1



Kite Realty Group Trust
Yes
No   
x
Kite Realty Group, L.P.
Yes 
No   
x
The number of Common Shares of Kite Realty Group Trust outstanding as of August 2, 2019 was 83,981,696 ($.01 par value).

2



EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended June 30, 2019 of Kite Realty Group Trust, Kite Realty Group, L.P. and its subsidiaries. Unless stated otherwise or the context otherwise requires, references to "Kite Realty Group Trust" or the "Parent Company" mean Kite Realty Group Trust, and references to the "Operating Partnership" mean Kite Realty Group, L.P. and its consolidated subsidiaries. The terms "Company," "we," "us," and "our" refer to the Parent Company and the Operating Partnership, collectively, and those entities owned or controlled by the Parent Company and/or the Operating Partnership.

The Operating Partnership is engaged in the ownership and operation, acquisition, development and redevelopment of high-quality neighborhood and community shopping centers in select markets in the United States. The Parent Company is the sole general partner of the Operating Partnership and as of June 30, 2019 owned approximately 97.5% of the common partnership interests in the Operating Partnership (“General Partner Units”). The remaining 2.5% of the common partnership interests (“Limited Partner Units” and, together with the General Partner Units, the “Common Units”) were owned by the limited partners.

We believe combining the quarterly reports on Form 10-Q of the Parent Company and the Operating Partnership into this single report benefits investors by:
enhancing investors' understanding of the Parent Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
eliminating duplicative disclosure and providing a more streamlined and readable presentation of information because a substantial portion of the Company's disclosure applies to both the Parent Company and the Operating Partnership; and
creating time and cost efficiencies through the preparation of one combined report instead of two separate reports.

We believe it is important to understand the few differences between the Parent Company and the Operating Partnership in the context of how we operate as an interrelated consolidated company. The Parent Company has no material assets or liabilities other than its investment in the Operating Partnership. The Parent Company issues public equity from time to time but does not have any indebtedness as all debt is incurred by the Operating Partnership. In addition, the Parent Company currently does not nor does it intend to guarantee any debt of the Operating Partnership. The Operating Partnership has numerous wholly-owned subsidiaries, and it also owns interests in certain joint ventures. These subsidiaries and joint ventures own and operate retail shopping centers and other real estate assets. The Operating Partnership is structured as a partnership with no publicly-traded equity. Except for net proceeds from equity issuances by the Parent Company, which are contributed to the Operating Partnership in exchange for General Partner Units, the Operating Partnership generates the capital required by the business through its operations, its placement of indebtedness and the issuance of Limited Partner Units to third parties.

Shareholders' equity and partners' capital are the main areas of difference between the consolidated financial statements of the Parent Company and those of the Operating Partnership. In order to highlight this and other differences between the Parent Company and the Operating Partnership, there are separate sections in this report, as applicable, that separately discuss the Parent Company and the Operating Partnership, including separate financial statements and separate Exhibit 31 and 32 certifications. In the sections that combine disclosure of the Parent Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the collective Company.


3



KITE REALTY GROUP TRUST AND KITE REALTY GROUP, L.P. AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q 

 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2019
 
 TABLE OF CONTENTS
 
 
Page
Part I.
 
 
 
 
Item 1.
 
 
 
 
Kite Realty Group Trust:
 
 
 
 
 
Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018
 
 
 
 
Consolidated Statements of Operations and Comprehensive Income for the Three and Six Months Ended June 30, 2019 and 2018
 
 
 
 
Consolidated Statement of Shareholders' Equity for the Three and Six Months Ended June 30, 2019 and 2018
 
 
 
 
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018
 
 
 
Kite Realty Group, L.P. and subsidiaries:
 
 
 
 
 
Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018
 
 
 
 
Consolidated Statements of Operations and Comprehensive Income for the Three and Six Months Ended June 30, 2019 and 2018
 
 
 
 
Consolidated Statement of Partners' Equity for the Three and Six Months Ended June 30, 2019 and 2018
 
 
 
 
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018
 
 
 
Kite Realty Group Trust and Kite Realty Group, L.P. and subsidiaries:
 
 
 
 
 
Notes to Consolidated Financial Statements
 
 
 
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
 
 
 
 
Cautionary Note About Forward-Looking Statements
 
 
 
Item 3.
Quantitative and Qualitative Disclosure about Market Risk
 
 
 
Item 4.
Controls and Procedures
 
 
 
Part II.
OTHER INFORMATION
 
 
 
 
Item 1.
Legal Proceedings
 
 
 
Item 1A.
Risk Factors
 
 
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
 
 
 
Item 3.
Defaults upon Senior Securities
 
 
 
Item 4.
Mine Safety Disclosures
 
 
 
Item 5.
Other Information
 
 
 
Item 6.
Exhibits
 
 
 
SIGNATURES

3



Part I. FINANCIAL INFORMATION
  
Item 1.
 
Kite Realty Group Trust
Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share data)
 
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 Equity:
 

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

 
$
1,543,301

Accounts payable and accrued expenses
66,600

 
85,934

Deferred revenue and intangibles, net and other liabilities
94,439

 
83,632

Total Liabilities
1,537,651

 
1,712,867

Commitments and contingencies


 


Limited partners' interests in Operating Partnership and other redeemable noncontrolling interests
45,306

 
45,743

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 Interest
698

 
698

Total Equity
1,353,361

 
1,413,403

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

 
$
3,172,013

  
The accompanying notes are an integral part of these consolidated financial statements.

4



Kite Realty Group Trust
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
(in thousands, except share and 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 (loss)
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
)
Consolidated 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
)
 
 

 
 

 
 
 
 
Net (loss) income per common share - basic & 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

 
 
 
 
 
 
 
 
Net (loss) income
$
(1,697
)
 
$
(1,062
)
 
$
4,291

 
$
(19,059
)
Change in fair value of derivatives
(7,653
)
 
514

 
(12,710
)
 
2,727

Total comprehensive loss
(9,350
)
 
(548
)
 
(8,419
)
 
(16,332
)
Comprehensive loss (income) attributable to noncontrolling interests
89

 
(316
)
 
(57
)
 
(293
)
Comprehensive (loss) income attributable to Kite Realty Group Trust
$
(9,261
)
 
$
(864
)
 
$
(8,476
)
 
$
(16,625
)

The accompanying notes are an integral part of these consolidated financial statements.

5



Kite Realty Group Trust
Consolidated Statement of Shareholders’ Equity
(Unaudited)
(in thousands, except share data)

 
 
Common Shares
 
Additional
Paid-in Capital
 
Accumulated
Other
Comprehensive
Loss
 
Accumulated
Deficit
 
Total
 
Shares
 
Amount
 
 
 
 
Balances, December 31, 2018
83,800,886

 
$
838

 
$
2,078,099

 
$
(3,497
)
 
$
(662,735
)
 
$
1,412,705

Stock compensation activity
102,022

 
1

 
1,160

 

 

 
1,161

Other comprehensive loss attributable to Kite Realty Group Trust

 

 

 
(4,930
)
 

 
(4,930
)
Distributions declared to common shareholders

 

 

 

 
(26,672
)
 
(26,672
)
Net income attributable to Kite Realty Group Trust

 

 

 

 
5,715

 
5,715

Exchange of redeemable noncontrolling interests for common shares
7,500

 

 
127

 

 

 
127

Adjustment to redeemable noncontrolling interests

 

 
(1,282
)
 

 

 
(1,282
)
Balances, March 31, 2019
83,910,408

 
839

 
2,078,104

 
(8,427
)
 
(683,692
)
 
1,386,824

Stock compensation activity
49,938

 
1

 
1,816

 

 

 
1,817

Other comprehensive loss attributable
to Kite Realty Group Trust

 

 

 
(7,465
)
 

 
(7,465
)
Distributions declared to common
shareholders

 

 

 

 
(26,665
)
 
(26,665
)
Net loss attributable to Kite
Realty Group Trust

 

 

 

 
(1,796
)
 
(1,796
)
Adjustment to redeemable noncontrolling
interests

 

 
(52
)
 

 

 
(52
)
Balances, June 30, 2019
83,960,346

 
840

 
2,079,868

 
(15,892
)
 
(712,153
)
 
1,352,663


 
Common Shares
 
Additional
Paid-in Capital
 
Accumulated
Other
Comprehensive
Income
 
Accumulated
Deficit
 
Total
 
Shares
 
Amount
 
 
 
 
Balances, December 31, 2017
83,606,068

 
$
836

 
$
2,071,418

 
$
2,990

 
$
(509,833
)
 
$
1,565,411

Stock compensation activity
69,914

 
1

 
1,446

 

 

 
1,447

Other comprehensive income attributable
to Kite Realty Group Trust

 

 

 
2,157

 

 
2,157

Distributions declared to common
shareholders

 

 

 

 
(26,563
)
 
(26,563
)
Net loss attributable to Kite
Realty Group Trust

 

 

 

 
(17,917
)
 
(17,917
)
Adjustment to redeemable noncontrolling
interests

 

 
452

 

 

 
452

Balances, March 31, 2018
83,675,982

 
837

 
2,073,316

 
5,147

 
(554,313
)
 
1,524,987

Stock compensation activity
(3,282
)
 

 
1,904

 

 

 
1,904

Other comprehensive income attributable to Kite Realty Group Trust

 

 

 
502

 

 
502

Distributions declared to common shareholders

 

 

 

 
(26,566
)
 
(26,566
)
Net loss attributable to Kite Realty Group Trust

 

 

 

 
(1,366
)
 
(1,366
)
Adjustment to redeemable noncontrolling interests

 

 
(29
)
 

 

 
(29
)
Balances, June 30, 2018
83,672,700

 
837

 
2,075,191

 
5,649

 
(582,245
)
 
1,499,432

 
The accompanying notes are an integral part of these consolidated financial statements.


6




Kite Realty Group Trust
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
 
Six Months Ended
June 30,
 
2019
 
2018
Cash flows from operating activities:
 
 
 
Consolidated net income (loss)
$
4,291

 
$
(19,059
)
Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities:
 
 
 

      Straight-line rent
(1,610
)
 
(1,562
)
      Depreciation and amortization
70,861

 
80,565

      Gains on sales of operating properties
(30,679
)
 
(8,329
)
      Impairment charge
29,184

 
38,847

      Compensation expense for equity awards
2,705

 
3,021

      Amortization of debt fair value adjustment
(1,047
)
 
(1,536
)
      Loss on debt extinguishment
2,577

 

      Amortization of in-place lease liabilities, net
(2,154
)
 
(4,641
)
Changes in assets and liabilities:
 
 
 

      Tenant receivables and other
7,108

 
4,362

      Deferred costs and other assets
(6,250
)
 
(6,615
)
      Accounts payable, accrued expenses, deferred revenue and other liabilities
(5,328
)
 
(3,016
)
Net cash provided by operating activities
69,658

 
82,037

Cash flows from investing activities:
 

 
 

      Acquisitions of interests in properties
(29,286
)
 

      Capital expenditures, net
(25,239
)
 
(34,600
)
      Net proceeds from sales of operating properties
254,206

 
161,499

      Investment in unconsolidated subsidiaries

 
(9,973
)
      Change in construction payables
(2,773
)
 
1,209

Net cash provided by investing activities
196,908

 
118,135

Cash flows from financing activities:
 

 
 

      Proceeds from issuance of common shares, net
115

 
34

      Repurchases of common shares upon the vesting of restricted shares
(460
)
 
(319
)
      Loan proceeds
75,000

 
112,869

      Loan transaction costs

 
(2,597
)
      Debt extinguishment costs
(4,280
)
 

      Loan payments
(240,753
)
 
(243,913
)
      Distributions paid – common shareholders
(79,927
)
 
(53,112
)
      Distributions paid – redeemable noncontrolling interests
(2,233
)
 
(1,978
)
Net cash used in financing activities
(252,538
)
 
(189,016
)
Net change in cash, cash equivalents, and restricted cash
14,028

 
11,156

Cash, cash equivalents, and restricted cash beginning of period
45,506

 
32,176

Cash, cash equivalents, and restricted cash end of period
$
59,534

 
$
43,332


 The accompanying notes are an integral part of these consolidated financial statements.

7



Kite Realty Group, L.P. and subsidiaries
Consolidated Balance Sheets
(unaudited)
(in thousands, except unit data)
 
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 Equity:
 

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

 
$
1,543,301

Accounts payable and accrued expenses
66,600

 
85,934

Deferred revenue and intangibles, net and other liabilities
94,439

 
83,632

Total Liabilities
1,537,651

 
1,712,867

Commitments and contingencies


 


Redeemable Limited Partners’ and other redeemable noncontrolling interests
45,306

 
45,743

Partners Equity:
 
 
 
 Parent Company:
 
 
 
Common equity 83,960,346 and 83,800,886 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
1,368,555

 
1,416,202

      Accumulated other comprehensive loss
(15,892
)
 
(3,497
)
  Total Partners 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


The accompanying notes are an integral part of these consolidated financial statements.


8



Kite Realty Group, L.P. and subsidiaries
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
(in thousands, except unit and per unit 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

  Gains on sales of operating properties
24,092

 
7,829

 
30,679

 
8,329

Operating income (loss)
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
)
Consolidated net (loss) income
(1,697
)
 
(1,062
)
 
4,291

 
(19,059
)
  Net income attributable to noncontrolling interests
(132
)
 
(343
)
 
(264
)
 
(695
)
Net (loss) income attributable to common unitholders
$
(1,829
)
 
$
(1,405
)
 
$
4,027

 
$
(19,754
)
 
 
 
 
 
 
 
 
Allocation of net (loss) income:
 
 
 
 
 
 
 
Limited Partners
$
(33
)
 
$
(39
)
 
$
108

 
$
(470
)
Parent Company
(1,796
)
 
(1,366
)
 
3,919

 
(19,284
)
 
$
(1,829
)
 
$
(1,405
)
 
$
4,027

 
$
(19,754
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income per unit - basic & diluted
$
(0.02
)
 
$
(0.02
)
 
$
0.05

 
$
(0.23
)
 
 
 
 
 
 
 
 
Weighted average common units outstanding - basic
86,051,797

 
85,739,745

 
85,982,324

 
85,691,306

Weighted average common units outstanding - diluted
86,051,797

 
85,739,745

 
86,108,502

 
85,691,306

 
 
 
 
 
 
 
 
Distributions declared per common unit
$
0.3175

 
$
0.3175

 
$
0.6350

 
$
0.6350

 
 
 
 
 
 
 
 
Consolidated net (loss) income
$
(1,697
)
 
$
(1,062
)
 
$
4,291

 
$
(19,059
)
Change in fair value of derivatives
(7,653
)
 
514

 
(12,710
)
 
2,727

Total comprehensive loss
(9,350
)
 
(548
)
 
(8,419
)
 
(16,332
)
Comprehensive income attributable to noncontrolling interests
(132
)
 
(343
)
 
(264
)
 
(695
)
Comprehensive (loss) income attributable to common unitholders
$
(9,482
)
 
$
(891
)
 
$
(8,683
)
 
$
(17,027
)

The accompanying notes are an integral part of these consolidated financial statements.

9



Kite Realty Group, L.P. and subsidiaries
Consolidated Statements of Partners’ Equity
(Unaudited)
(in thousands)

 
General Partner
 
Total
 
Common Equity
 
Accumulated
Other
Comprehensive
Loss
 
Balances, December 31, 2018
$
1,416,202

 
$
(3,497
)
 
$
1,412,705

Stock compensation activity
1,161

 

 
1,161

Other comprehensive loss attributable to Parent Company

 
(4,930
)
 
(4,930
)
Distributions declared to Parent Company
(26,672
)
 

 
(26,672
)
Net loss
5,715

 

 
5,715

Conversions of Limited Partner Units to shares of the Parent Company
127

 

 
127

Adjustment to redeemable noncontrolling interests
(1,282
)
 

 
(1,282
)
Balances March 31, 2019
1,395,251

 
(8,427
)
 
1,386,824

Stock compensation activity
1,817

 
 
 
1,817

Other comprehensive loss attributable to Parent Company

 
(7,465
)
 
(7,465
)
Distributions declared to Parent Company
(26,665
)
 

 
(26,665
)
Net loss
(1,796
)
 

 
(1,796
)
Adjustment to redeemable noncontrolling interests
(52
)
 

 
(52
)
Balances, June 30, 2019
1,368,555

 
(15,892
)
 
1,352,663




 
General Partner
 
Total
 
Common Equity
 
Accumulated
Other
Comprehensive
Income
 
Balances, December 31, 2017
$
1,562,421

 
$
2,990

 
$
1,565,411

Stock compensation activity
1,447

 

 
1,447

Other comprehensive income attributable to Parent Company

 
2,157

 
2,157

Distributions declared to Parent Company
(26,563
)
 

 
(26,563
)
Net loss
(17,917
)
 

 
(17,917
)
Adjustment to redeemable noncontrolling interests
452

 

 
452

Balances, March 31, 2018
1,519,840

 
5,147

 
1,524,987

Stock compensation activity
1,904

 

 
1,904

Other comprehensive income attributable to Parent Company

 
502

 
502

Distributions declared to Parent Company
(26,566
)
 

 
(26,566
)
Net loss
(1,366
)
 

 
(1,366
)
Adjustment to redeemable noncontrolling interests
(29
)
 

 
(29
)
Balances, June 30, 2018
1,493,783

 
5,649

 
1,499,432


The accompanying notes are an integral part of these consolidated financial statements.




10



Kite Realty Group, L.P. and subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
 
Six Months Ended
June 30,
 
2019
 
2018
Cash flows from operating activities:
 
 
 
Consolidated net income (loss)
$
4,291

 
$
(19,059
)
Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities:
 
 
 
      Straight-line rent
(1,610
)
 
(1,562
)
      Depreciation and amortization
70,861

 
80,565

      Gains on sales of operating properties
(30,679
)
 
(8,329
)
      Impairment charge
29,184

 
38,847

      Compensation expense for equity awards
2,705

 
3,021

      Amortization of debt fair value adjustment
(1,047
)
 
(1,536
)
      Loss on debt extinguishment
2,577

 

      Amortization of in-place lease liabilities, net
(2,154
)
 
(4,641
)
Changes in assets and liabilities:
 
 
 
      Tenant receivables and other
7,108

 
4,362

      Deferred costs and other assets
(6,250
)
 
(6,615
)
      Accounts payable, accrued expenses, deferred revenue and other liabilities
(5,328
)
 
(3,016
)
Net cash provided by operating activities
69,658

 
82,037

Cash flows from investing activities:
 

 
 

      Acquisitions of interests in properties
(29,286
)
 

      Capital expenditures, net
(25,239
)
 
(34,600
)
      Net proceeds from sales of operating properties
254,206

 
161,499

      Investment in unconsolidated subsidiaries

 
(9,973
)
      Change in construction payables
(2,773
)
 
1,209

Net cash provided by investing activities
196,908

 
118,135

Cash flows from financing activities:
 

 
 

      Contributions from the General Partner
115

 
34

      Repurchases of common shares upon the vesting of restricted shares
(460
)
 
(319
)
      Loan proceeds
75,000

 
112,869

      Loan transaction costs

 
(2,597
)
      Debt extinguishment costs
(4,280
)
 

      Loan payments
(240,753
)
 
(243,913
)
      Distributions paid – common unitholders
(79,927
)
 
(53,112
)
      Distributions paid – redeemable noncontrolling interests
(2,233
)
 
(1,978
)
Net cash used in financing activities
(252,538
)
 
(