KRG 10-Q
Kite Realty Group Trust (KRG)
10-Q
2025-04-30
For: 2025-03-31
View Original
Added on
April 09, 2026
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 March 31, 2025
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: | Kite Realty Group Trust | |||||||
| Commission File Number: | Kite Realty Group, L.P. | |||||||
| (Exact name of registrant as specified in its charter) | ||||||||
| Kite Realty Group Trust | ||||||||||||||
| Kite Realty Group, L.P. | ||||||||||||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
(Address of principal executive offices) (Zip Code)
(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(s) | Name of each exchange on which registered | ||||||||||||
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 | ☒ | No | o | Kite Realty Group, L.P. | ☒ | No | o | |||||||||||||||||||||||||
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
| Kite Realty Group Trust | ☒ | No | o | Kite Realty Group, L.P. | ☒ | No | o | |||||||||||||||||||||||||
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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:
| x | Accelerated filer | o | Non-accelerated filer | o | Smaller reporting company | |||||||||||||||||||||||||||
| Emerging growth company | ||||||||||||||||||||||||||||||||
Kite Realty Group, L.P.:
| Large accelerated filer | o | Accelerated filer | o | 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.
| Kite Realty Group Trust | o | Kite Realty Group, L.P. | o | |||||||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
| Kite Realty Group Trust | Yes | ☐ | No | Kite Realty Group, L.P. | Yes | ☐ | No | |||||||||||||||||||||||||
The number of Common Shares outstanding as of April 25, 2025 was 219,812,300 ($0.01 par value).
EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the period ended March 31, 2025 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, operation, acquisition, development and redevelopment of high-quality, open-air shopping centers and mixed-use assets that are primarily grocery-anchored and located in high-growth Sun Belt markets and select strategic gateway markets in the United States, and the Parent Company conducts substantially all of its activities through the Operating Partnership and its wholly owned subsidiaries. The Parent Company is the sole general partner of the Operating Partnership and, as of March 31, 2025, owned approximately 97.8% of the common partnership interests in the Operating Partnership (“General Partner Units”). The remaining 2.2% of the common partnership interests (“Limited Partner Units” and, together with the General Partner Units, the “Common Units”) are 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 as 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 incurrence 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.
KITE REALTY GROUP TRUST AND KITE REALTY GROUP, L.P. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2025
TABLE OF CONTENTS
| KITE REALTY GROUP TRUST | |||||||||||
| KITE REALTY GROUP, L.P. AND SUBSIDIARIES | |||||||||||
| KITE REALTY GROUP TRUST AND KITE REALTY GROUP, L.P. AND SUBSIDIARIES | |||||||||||
3
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
KITE REALTY GROUP TRUST
Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share data)
| March 31, 2025 | December 31, 2024 | ||||||||||
| Assets: | |||||||||||
| Investment properties, at cost | $ | $ | |||||||||
| Less: accumulated depreciation | ( | ( | |||||||||
| Net investment properties | |||||||||||
| Cash and cash equivalents | |||||||||||
Tenant and other receivables, including accrued straight-line rent of $ and $ | |||||||||||
| Restricted cash and escrow deposits | |||||||||||
| Deferred costs, net | |||||||||||
| Short-term deposits | |||||||||||
| Prepaid and other assets | |||||||||||
| Investments in unconsolidated subsidiaries | |||||||||||
| Assets associated with investment properties held for sale | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Equity: | |||||||||||
| Liabilities: | |||||||||||
| Mortgage and other indebtedness, net | $ | $ | |||||||||
| Accounts payable and accrued expenses | |||||||||||
| Deferred revenue and other liabilities | |||||||||||
| Liabilities associated with investment properties held for sale | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Limited Partners’ interests in the Operating Partnership | |||||||||||
| Equity: | |||||||||||
Common shares, $ March 31, 2025 and December 31, 2024, respectively | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated other comprehensive income | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Total shareholders’ equity | |||||||||||
| Noncontrolling interests | |||||||||||
| Total equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
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 March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Revenue: | |||||||||||
| Rental income | $ | $ | |||||||||
| Other property-related revenue | |||||||||||
| Fee income | |||||||||||
| Total revenue | |||||||||||
| Expenses: | |||||||||||
| Property operating | |||||||||||
| Real estate taxes | |||||||||||
| General, administrative and other | |||||||||||
| Depreciation and amortization | |||||||||||
| Total expenses | |||||||||||
| Gain (loss) on sales of operating properties, net | ( | ||||||||||
| Operating income | |||||||||||
| Other (expense) income: | |||||||||||
| Interest expense | ( | ( | |||||||||
| Income tax expense of taxable REIT subsidiaries | ( | ( | |||||||||
| Equity in loss of unconsolidated subsidiaries | ( | ( | |||||||||
| Gain on sale of unconsolidated property, net | |||||||||||
| Other income, net | |||||||||||
| Net income | |||||||||||
| Net income attributable to noncontrolling interests | ( | ( | |||||||||
| Net income attributable to common shareholders | $ | $ | |||||||||
| Net income per common share – basic and diluted | $ | $ | |||||||||
| Weighted average common shares outstanding – basic | |||||||||||
| Weighted average common shares outstanding – diluted | |||||||||||
| Net income | $ | $ | |||||||||
| Change in fair value of derivatives | ( | ||||||||||
| Total comprehensive income | |||||||||||
| Comprehensive income attributable to noncontrolling interests | ( | ( | |||||||||
| Comprehensive income attributable to the Company | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
5
KITE REALTY GROUP TRUST
Consolidated Statements of Shareholders’ Equity
(Unaudited)
(in thousands, except share data)
| Common Shares | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total | |||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Stock compensation activity | — | — | |||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Distributions to common shareholders | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Net income attributable to common shareholders | — | — | — | — | |||||||||||||||||||||||||||||||
| Adjustment to redeemable noncontrolling interests | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Stock compensation activity | — | — | |||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
| Distributions to common shareholders | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Net income attributable to common shareholders | — | — | — | — | |||||||||||||||||||||||||||||||
| Adjustment to redeemable noncontrolling interests | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
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)
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| (Gain) loss on sales of operating properties, net | ( | ||||||||||
| Gain on sale of unconsolidated property, net | ( | ||||||||||
| Straight-line rent | ( | ( | |||||||||
| Compensation expense for equity awards | |||||||||||
| Amortization of debt fair value adjustments | ( | ( | |||||||||
| Amortization of in-place lease liabilities | ( | ( | |||||||||
| Changes in assets and liabilities: | |||||||||||
| Tenant receivables | ( | ||||||||||
| Deferred costs and other assets | ( | ( | |||||||||
| Accounts payable, accrued expenses, deferred revenue and other liabilities | ( | ( | |||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Acquisitions of interests in properties | ( | ||||||||||
| Capital expenditures | ( | ( | |||||||||
| Net proceeds from sales of land | |||||||||||
| Investment in short-term deposits | ( | ||||||||||
| Proceeds from short-term deposits | |||||||||||
| Change in construction payables | ( | ||||||||||
| Distributions from unconsolidated joint ventures | |||||||||||
| Capital contributions to unconsolidated joint ventures | ( | ||||||||||
| Net cash provided by (used in) investing activities | ( | ||||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from issuance of common shares, net | |||||||||||
| Repurchases of common shares upon the vesting of restricted shares | ( | ( | |||||||||
| Debt and equity issuance costs | ( | ( | |||||||||
| Loan proceeds | |||||||||||
| Loan payments | ( | ( | |||||||||
| Distributions paid – common shareholders | ( | ( | |||||||||
| Distributions paid – redeemable noncontrolling interests | ( | ( | |||||||||
| Distributions to noncontrolling interests | ( | ( | |||||||||
| Net cash (used in) provided by financing activities | ( | ||||||||||
| Net change in cash, cash equivalents and restricted cash | ( | ||||||||||
| Cash, cash equivalents and restricted cash, beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | $ | |||||||||
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)
| March 31, 2025 | December 31, 2024 | ||||||||||
| Assets: | |||||||||||
| Investment properties, at cost | $ | $ | |||||||||
| Less: accumulated depreciation | ( | ( | |||||||||
| Net investment properties | |||||||||||
| Cash and cash equivalents | |||||||||||
Tenant and other receivables, including accrued straight-line rent of $ and $ | |||||||||||
| Restricted cash and escrow deposits | |||||||||||
| Deferred costs, net | |||||||||||
| Short-term deposits | |||||||||||
| Prepaid and other assets | |||||||||||
| Investments in unconsolidated subsidiaries | |||||||||||
| Assets associated with investment properties held for sale | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Equity: | |||||||||||
| Liabilities: | |||||||||||
| Mortgage and other indebtedness, net | $ | $ | |||||||||
| Accounts payable and accrued expenses | |||||||||||
| Deferred revenue and other liabilities | |||||||||||
| Liabilities associated with investment properties held for sale | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Limited Partners’ interests in the Operating Partnership | |||||||||||
| Partners’ Equity: | |||||||||||
Common equity, at March 31, 2025 and December 31, 2024, respectively | |||||||||||
| Accumulated other comprehensive income | |||||||||||
| Total Partners’ equity | |||||||||||
| Noncontrolling interests | |||||||||||
| Total equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
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 March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Revenue: | |||||||||||
| Rental income | $ | $ | |||||||||
| Other property-related revenue | |||||||||||
| Fee income | |||||||||||
| Total revenue | |||||||||||
| Expenses: | |||||||||||
| Property operating | |||||||||||
| Real estate taxes | |||||||||||
| General, administrative and other | |||||||||||
| Depreciation and amortization | |||||||||||
| Total expenses | |||||||||||
| Gain (loss) on sales of operating properties, net | ( | ||||||||||
| Operating income | |||||||||||
| Other (expense) income: | |||||||||||
| Interest expense | ( | ( | |||||||||
| Income tax expense of taxable REIT subsidiaries | ( | ( | |||||||||
| Equity in loss of unconsolidated subsidiaries | ( | ( | |||||||||
| Gain on sale of unconsolidated property, net | |||||||||||
| Other income, net | |||||||||||
| Net income | |||||||||||
| Net income attributable to noncontrolling interests | ( | ( | |||||||||
| Net income attributable to common unitholders | $ | $ | |||||||||
| Allocation of net income: | |||||||||||
| Limited Partners | $ | $ | |||||||||
| Parent Company | |||||||||||
| $ | $ | ||||||||||
| Net income per common unit – basic and diluted | $ | $ | |||||||||
| Weighted average common units outstanding – basic | |||||||||||
| Weighted average common units outstanding – diluted | |||||||||||
| Net income | $ | $ | |||||||||
| Change in fair value of derivatives | ( | ||||||||||
| Total comprehensive income | |||||||||||
| Comprehensive income attributable to noncontrolling interests | ( | ( | |||||||||
| Comprehensive income attributable to common unitholders | $ | $ | |||||||||
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 Income (Loss) | ||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ||||||||||||||
| Stock compensation activity | — | ||||||||||||||||
| Other comprehensive loss attributable to Parent Company | — | ( | ( | ||||||||||||||
| Distributions to Parent Company | ( | — | ( | ||||||||||||||
| Net income attributable to Parent Company | — | ||||||||||||||||
| Adjustment to redeemable noncontrolling interests | ( | — | ( | ||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | ||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | ||||||||||||||
| Stock compensation activity | — | ||||||||||||||||
| Other comprehensive income attributable to Parent Company | — | ||||||||||||||||
| Distributions to Parent Company | ( | — | ( | ||||||||||||||
| Net income attributable to Parent Company | — | ||||||||||||||||
| Adjustment to redeemable noncontrolling interests | ( | — | ( | ||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | ||||||||||||||
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)
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| (Gain) loss on sales of operating properties, net | ( | ||||||||||
| Gain on sale of unconsolidated property, net | ( | ||||||||||
| Straight-line rent | ( | ( | |||||||||
| Compensation expense for equity awards | |||||||||||
| Amortization of debt fair value adjustments | ( | ( | |||||||||
| Amortization of in-place lease liabilities | ( | ( | |||||||||
| Changes in assets and liabilities: | |||||||||||
| Tenant receivables | ( | ||||||||||
| Deferred costs and other assets | ( | ( | |||||||||
| Accounts payable, accrued expenses, deferred revenue and other liabilities | ( | ( | |||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Acquisition of interests in properties | ( | ||||||||||
| Capital expenditures | ( | ( | |||||||||
| Net proceeds from sales of land | |||||||||||
| Investment in short-term deposits | ( | ||||||||||
| Proceeds from short-term deposits | |||||||||||
| Change in construction payables | ( | ||||||||||
| Distributions from unconsolidated joint ventures | |||||||||||
| Capital contributions to unconsolidated joint ventures | ( | ||||||||||
| Net cash provided by (used in) investing activities | ( | ||||||||||
| Cash flows from financing activities: | |||||||||||
| Contributions from the General Partner | |||||||||||
| Repurchases of common shares upon the vesting of restricted shares | ( | ( | |||||||||
| Debt and equity issuance costs | ( | ( | |||||||||
| Loan proceeds | |||||||||||
| Loan payments | ( | ( | |||||||||
| Distributions paid – common unitholders | ( | ( | |||||||||
| Distributions paid – redeemable noncontrolling interests | ( | ( | |||||||||
| Distributions to noncontrolling interests | ( | ( | |||||||||
| Net cash (used in) provided by financing activities | ( | ||||||||||
| Net change in cash, cash equivalents and restricted cash | ( | ||||||||||
| Cash, cash equivalents and restricted cash, beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
11
KITE REALTY GROUP TRUST AND KITE REALTY GROUP, L.P. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
March 31, 2025
(dollars in thousands, except share, per share, unit and per unit amounts and where indicated in millions or billions)
NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION
Kite Realty Group Trust (the “Parent Company”), through its majority-owned subsidiary, Kite Realty Group, L.P. (the “Operating Partnership”), owns interests in various operating subsidiaries and joint ventures engaged in the ownership, operation, acquisition, development and redevelopment of high-quality, open-air, grocery-anchored shopping centers and vibrant mixed-use assets that are primarily located in high-growth Sun Belt markets and select strategic gateway markets in the United States. 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 was formed on August 16, 2004, when the Parent Company contributed properties and the net proceeds from an initial public offering (“IPO”) of shares of its common stock to the Operating Partnership. The Parent Company was organized in Maryland in 2004 to succeed in the acquisition, development, construction and real estate businesses of its predecessor. We believe the Company qualifies as a real estate investment trust (“REIT”) under sections 856-860 of the Internal Revenue Code of 1986, as amended.
The Parent Company is the sole general partner of the Operating Partnership and, as of March 31, 2025, owned approximately 97.8 % of the common partnership interests in the Operating Partnership (the “General Partner Units”). The remaining 2.2 % of the common partnership interests (the “Limited Partner Units” and, together with the General Partner Units, the “Common Units”) were owned by the limited partners. As the sole general partner of the Operating Partnership, the Parent Company has full, exclusive and complete responsibility and discretion in the day-to-day management and control of the Operating Partnership. The Parent Company and the Operating Partnership are operated as one enterprise. The management of the Parent Company consists of the same members as the management of the Operating Partnership. As the sole general partner with control of the Operating Partnership, the Parent Company consolidates the Operating Partnership for financial reporting purposes, and the Parent Company does not have any significant assets other than its investment in the Operating Partnership.
The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) may have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the presentation not misleading. The unaudited consolidated financial statements as of March 31, 2025 and for the three months ended March 31, 2025 and 2024 include all adjustments, consisting of normal recurring adjustments, necessary in the opinion of management to present fairly the financial information set forth therein. The unaudited consolidated financial statements in this Form 10-Q should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the combined Annual Report on Form 10-K of the Parent Company and the Operating Partnership for the year ended December 31, 2024.
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reported period. Actual results could differ from those estimates. The results of operations for the interim periods are not necessarily indicative of the results that may be expected on an annual basis.
12
As of March 31, 2025, the Company’s portfolio consisted of the following:
| Properties | Square Footage | ||||||||||
Operating retail properties(1) | |||||||||||
Office properties(2) | |||||||||||
| Development and redevelopment projects: | |||||||||||
| One Loudoun Expansion | |||||||||||
| Hamilton Crossing Centre | |||||||||||
| Edwards Multiplex – Ontario | |||||||||||
(1)Included within operating retail properties are 10 properties that contain an office component. Excludes two operating retail properties classified as held for sale as of March 31, 2025. Of the 180 operating retail properties, 176 are consolidated within these financial statements and the remaining four are accounted for under the equity method.
(2)Office properties include Carillon medical office building, which was reclassified from active redevelopment into our office portfolio in December 2024.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Components of Investment Properties
The following table summarizes the composition of the Company’s investment properties as of March 31, 2025 and December 31, 2024 (in thousands):
| March 31, 2025 | December 31, 2024 | ||||||||||
| Land, buildings and improvements | $ | $ | |||||||||
| Construction in progress | |||||||||||
| Investment properties, at cost | $ | $ | |||||||||
Components of Rental Income, including Allowance for Uncollectible Accounts
Rental income related to the Company’s operating leases is comprised of the following for the three months ended March 31, 2025 and 2024 (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Fixed contractual lease payments – operating leases | $ | $ | |||||||||
| Variable lease payments – operating leases | |||||||||||
| Bad debt reserve | ( | ( | |||||||||
| Straight-line rent adjustments | |||||||||||
| Straight-line rent reserve for uncollectibility | ( | ( | |||||||||
| Amortization of in-place lease liabilities, net | |||||||||||
| Rental income | $ | $ | |||||||||
The Company makes estimates as to the collectability of its accounts receivable. In making these estimates, the Company reviews a variety of qualitative and quantitative data and considers such factors as the credit quality of the tenant, historical write-off experience, tenant creditworthiness, and current economic trends, to make a subjective determination. An allowance for uncollectible accounts, including future credit losses of the accrued straight-line rent receivables, is maintained for estimated losses resulting from the inability of certain tenants to meet contractual obligations under their lease agreements.
Short-Term Deposits
In August 2024, the Company invested $350.0 million in short-term deposits at Goldman Sachs Bank USA and KeyBank National Association. These short-term deposits earned interest at a weighted average interest rate of 5.05 % with a maturity date of February 2025. During the three months ended March 31, 2025, the Company earned $2.5 million of interest income on the August 2024 deposits, which is recorded within “Other income, net” in the accompanying consolidated statements of operations and comprehensive income.
13
Consolidation and Investments in Joint Ventures
The accompanying financial statements are presented on a consolidated basis and include all accounts of the Parent Company, the Operating Partnership, the taxable REIT subsidiaries (“TRSs”) of the Operating Partnership, subsidiaries of the Operating Partnership that are controlled, and any variable interest entities (“VIEs”) in which the Operating Partnership is the primary beneficiary. As of March 31, 2025, we owned investments in two consolidated joint ventures that were VIEs in which the partners did not have substantive participating rights, and we were the primary beneficiary. As of March 31, 2025, these consolidated VIEs had mortgage debt totaling $109.1 million, which was secured by assets of the VIEs totaling $218.9 million. The Operating Partnership guarantees the mortgage debt of these VIEs.
The Operating Partnership is considered a VIE as the limited partners do not hold kick-out rights or substantive participating rights. The Parent Company consolidates the Operating Partnership as it is the primary beneficiary.
As of March 31, 2025, the Company also owned investments in four unconsolidated joint ventures accounted for under the equity method, which are not considered VIEs. On January 31, 2024, the joint venture that owned Glendale Center Apartments, of which we have an 11.5 % ownership interest, sold the 267 -unit property to a third party, resulting in a gain on sale of $20.2 million. The Company recognized its share of the gain on sale of unconsolidated property of $2.3 million during the three months ended March 31, 2024. In addition, the Company received a $1.6 million distribution upon the disposition of the property during the three months ended March 31, 2024. The Company maintains an investment in the joint venture, which is in the process of winding up its activities and distributing remaining net assets. Glendale Center Apartments is adjacent to our Glendale Town Center operating retail property in the Indianapolis MSA.
Income Taxes and REIT Compliance
Parent Company
The Parent Company has been organized and operated, and intends to continue to operate, in a manner that will enable it to maintain its qualification as a REIT for U.S. federal income tax purposes. As a result, it generally will not be subject to U.S. federal income tax on the earnings that it distributes to the extent it distributes its “REIT taxable income” (determined before the deduction for dividends paid and excluding net capital gains) to shareholders of the Parent Company and meets certain other requirements on a recurring basis. To the extent that it satisfies this distribution requirement but distributes less than 100% of its taxable income, it will be subject to U.S. federal income tax on its undistributed REIT taxable income at regular corporate income tax rates. REITs are subject to a number of organizational and operational requirements. If the Parent Company fails to qualify as a REIT in any taxable year, it will be subject to U.S. federal income tax on its taxable income at regular corporate income tax rates for a period of four years following the year in which qualification is lost. Additionally, we may also be subject to certain taxes enacted by the Inflation Reduction Act of 2022 that are applicable to non-REIT corporations, including the nondeductible 1% excise tax on certain stock repurchases. We may also be subject to certain U.S. federal, state, and local taxes on our income and property and to U.S. federal income and excise taxes on our undistributed taxable income even if the Parent Company does qualify as a REIT. The Operating Partnership intends to continue to make distributions to the Parent Company in amounts sufficient to assist the Parent Company in adhering to REIT requirements and maintaining its REIT status.
We have elected to treat Kite Realty Holdings, LLC and IWR Protective Corporation as TRSs of the Operating Partnership, and we may elect to treat other subsidiaries as TRSs in the future. This election enables us to receive income and provide services that would otherwise be impermissible for a REIT. Deferred tax assets and liabilities are established for temporary differences between the financial reporting bases and the tax bases of assets and liabilities at the tax rates expected to be in effect when the temporary differences reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized.
Operating Partnership
The allocated share of income and loss, other than the operations of our TRSs, is included in the income tax returns of the Operating Partnership’s partners. Accordingly, the only U.S. federal income taxes included in the accompanying consolidated financial statements are in connection with the TRSs.
14
Noncontrolling Interests
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Noncontrolling interests balance as of January 1, | $ | $ | |||||||||
| Net income allocable to noncontrolling interests, excluding redeemable noncontrolling interests | |||||||||||
| Distributions to noncontrolling interests | ( | ( | |||||||||
Noncontrolling interests balance as of March 31, | $ | $ | |||||||||
Noncontrolling Interests – Joint Venture
Prior to the merger with Retail Properties of America, Inc. (“RPAI”) in October 2021, RPAI entered into a joint venture related to the development, ownership and operation of the multifamily rental portion of the expansion project at One Loudoun Downtown – Pads G & H. The Company owns 90 % of the joint venture.
Under terms defined in the joint venture agreement, after construction completion and stabilization of the development project (as defined in the joint venture agreement), the Company has the ability to call, and the joint venture partner has the ability to put to the Company, subject to certain conditions, the joint venture partner’s interest in the joint venture at fair value. As of March 31, 2025, the conditions for exercising the put and call options have been met but neither the Company nor the joint venture partner has exercised their respective options.
The joint venture is considered a VIE primarily because the Company’s joint venture partner does not have substantive kick-out rights or substantive participating rights. The Company is considered the primary beneficiary as it has a controlling financial interest in the joint venture. As such, the Company has consolidated this joint venture and presented the joint venture partner’s interests as noncontrolling interests.
Redeemable Noncontrolling Interests – Limited Partners
Limited Partner Units are redeemable noncontrolling interests in the Operating Partnership. We classify redeemable noncontrolling interests in the Operating Partnership in the accompanying consolidated balance sheets outside of permanent equity because we may be required to pay cash to holders of Limited Partner Units upon redemption of their interests in the Operating Partnership or deliver registered shares upon their conversion. The carrying amount of the redeemable noncontrolling interests in the Operating Partnership is reflected at the greater of historical book value or redemption value with a corresponding adjustment to additional paid-in capital. As of March 31, 2025 and December 31, 2024, the redemption value of the redeemable noncontrolling interests in the Operating Partnership exceeded the historical book value, and the balances were accordingly adjusted to redemption value.
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Parent Company’s weighted average interest in the Operating Partnership | % | % | |||||||||
| Limited partners’ weighted average interests in the Operating Partnership | % | % | |||||||||
As of March 31, 2025, the Parent Company’s interest and the limited partners’ redeemable noncontrolling ownership interests in the Operating Partnership were 97.8 % and 2.2 %, respectively. As of December 31, 2024, the Parent Company’s interest and the limited partners’ redeemable noncontrolling ownership interests in the Operating Partnership were 98.1 % and 1.9 %, respectively.
15
Concurrent with the Parent Company’s IPO and related formation transactions, certain individuals received Limited Partner Units of the Operating Partnership in exchange for their interests in certain properties. The limited partners have the right to redeem Limited Partner Units for cash or, at the Parent Company’s election, common shares of the Parent Company in an amount equal to the market value of an equivalent number of common shares of the Parent Company at the time of redemption. Such common shares must be registered, which is not fully in the Parent Company’s control. Therefore, the limited partners’ interest is not reflected within permanent equity. The Parent Company also has the right to redeem the Limited Partner Units directly from the limited partner in exchange for either cash in the amount specified above or a number of its common shares equal to the number of Limited Partner Units being redeemed.
There were 4,849,588 and 4,192,597 Limited Partner Units outstanding as of March 31, 2025 and December 31, 2024, respectively. The increase in Limited Partner Units outstanding from December 31, 2024 is due to non-cash compensation awards granted to our executive officers in the form of Limited Partner Units.
The redeemable noncontrolling interests in the Operating Partnership for the three months ended March 31, 2025 and 2024 were as follows (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Redeemable noncontrolling interests balance as of January 1, | $ | $ | |||||||||
| Net income allocable to redeemable noncontrolling interests | |||||||||||
| Distributions declared to redeemable noncontrolling interests | ( | ( | |||||||||
| Other, net including adjustments to redemption value | |||||||||||
Total limited partners’ interests in the Operating Partnership balance as of March 31, | $ | $ | |||||||||
Fair Value Measurements
We follow the framework established under Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures, for measuring fair value of non-financial assets and liabilities that are not required or permitted to be measured at fair value on a recurring basis but only in certain circumstances, such as a business combination or upon determination of an impairment.
Assets and liabilities recorded at fair value in the accompanying consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows:
•Level 1 fair value inputs are quoted prices in active markets for identical instruments to which we have access.
•Level 2 fair value inputs are inputs other than quoted prices included in Level 1 that are observable for similar instruments, either directly or indirectly, and appropriately consider counterparty creditworthiness in the valuation.
•Level 3 fair value inputs reflect our best estimate of inputs and assumptions market participants would use in pricing an instrument at the measurement date. The inputs are unobservable in the market and significant to the valuation estimate.
In instances where the determination of the fair value measurement is based upon inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
New Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This new guidance requires public entities to disclose, in a tabular format, the amounts of certain natural expenses included within relevant expense captions presented on the face of the income statement, as well as provide additional disclosures about selling expenses. The new disclosure requirements are effective for annual reporting periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted, and may be applied either prospectively or retrospectively. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.
16
NOTE 3. ACQUISITIONS
The Company closed on the following asset acquisition during the three months ended March 31, 2025 (dollars in thousands):
| Date | Property Name | MSA | Property Type | Square Footage | Acquisition Price | |||||||||||||||||||||||||||
| January 15, 2025 | Village Commons | Miami | Multi-tenant retail | $ | ||||||||||||||||||||||||||||
The above acquisition was funded using a combination of available cash on hand and borrowings on the Company’s unsecured revolving line of credit. Substantially all of the purchase price was allocated to investment properties.
The Company did not acquire any properties during the three months ended March 31, 2024.
During the three months ended March 31, 2025, the Company entered into a joint venture (the “Joint Venture”) with GIC, and subsequent to March 31, 2025, the Joint Venture acquired Legacy West, a 344,076 square foot operating retail property in the Dallas/Ft. Worth MSA (the “Property”), for a gross purchase price of $785.0 million, including the assumption of $304.0 million of debt with an interest rate of 3.80 %. The Company’s share of the purchase price is $408.2 million, and the acquisition was initially funded with borrowings of $255.0 million on the Company’s unsecured revolving line of credit. The Property also contains 443,553 square feet of office space and 782 multifamily units. The Company will own 52 % of the equity in the Joint Venture. The Company will be the operating member of the Joint Venture, and an affiliate of the Company will also act as property manager responsible for the day-to-day management of the Property; therefore, the Company will receive property management and leasing fees. Both members of the Joint Venture have substantive participation rights over major decisions that impact the economics and operations of the Joint Venture. The Company will account for the Joint Venture under the equity method as it has the ability to exercise influence but not control over the operating and financial policies of the Joint Venture.
NOTE 4. DISPOSITIONS
The Company did not sell any properties during the three months ended March 31, 2025 and 2024.
As of March 31, 2025, the Company had entered into a contract to sell Stoney Creek Commons, an 84,094 square foot multi-tenant retail property located in the Indianapolis MSA. This property qualified for held-for-sale accounting treatment upon meeting all applicable GAAP criteria during the quarter ended March 31, 2025, at which time depreciation and amortization ceased. In addition, the assets and liabilities associated with this property are separately classified as held for sale in the accompanying consolidated balance sheet as of March 31, 2025. Stoney Creek Commons was sold on April 4, 2025 for a gross sales price of $9.5 million, the proceeds of which are restricted for 180 days related to a potential Internal Revenue Code Section 1031 tax-deferred exchange (“1031 Exchange”).
We have also classified City Center, a 362,278 square foot multi-tenant retail property in the New York MSA, as held for sale since June 30, 2024 as the Company has committed to a plan to sell this asset and expects that the sale will be completed by June 30, 2025. This property qualified for held-for-sale accounting treatment upon meeting all applicable GAAP criteria as of June 30, 2024, at which time depreciation and amortization were ceased, and continues to meet the GAAP criteria for held-for-sale accounting treatment as of March 31, 2025. In addition, the assets and liabilities associated with this property remain separately classified as held for sale in the accompanying consolidated balance sheets as of March 31, 2025 and December 31, 2024.
17
The following table presents the assets and liabilities associated with Stoney Creek Commons and City Center, the investment properties classified as held for sale as of March 31, 2025. In addition, City Center was classified as held for sale as of December 31, 2024 (in thousands):
| March 31, 2025 | December 31, 2024 | ||||||||||
| Assets | |||||||||||
| Net investment properties | $ | $ | |||||||||
| Tenant and other receivables | |||||||||||
| Restricted cash and escrow deposits | |||||||||||
| Deferred costs, net | |||||||||||
| Prepaid and other assets | |||||||||||
| Assets associated with investment properties held for sale | $ | $ | |||||||||
| Liabilities | |||||||||||
| Accounts payable and accrued expenses | $ | $ | |||||||||
| Deferred revenue and other liabilities | |||||||||||
| Liabilities associated with investment properties held for sale | $ | $ | |||||||||
There were no discontinued operations for the three months ended March 31, 2025 and 2024 as none of the dispositions or planned dispositions represented a strategic shift that has had, or will have, a material effect on our operations or financial results.
NOTE 5. DEFERRED COSTS AND INTANGIBLES, NET
Deferred costs consist primarily of acquired lease intangible assets, broker fees, and capitalized internal commissions incurred in connection with lease originations. Deferred leasing costs, lease intangibles and similar costs are amortized on a straight-line basis over the terms of the related leases. As of March 31, 2025 and December 31, 2024, deferred costs consisted of the following (in thousands):
| March 31, 2025 | December 31, 2024 | ||||||||||
| Acquired lease intangible assets | $ | $ | |||||||||
| Deferred leasing costs and other | |||||||||||
| Less: accumulated amortization | ( | ( | |||||||||
| $ | $ | ||||||||||
| Less: deferred costs associated with investment properties held for sale | ( | ( | |||||||||
| Deferred costs, net | $ | $ | |||||||||
The amortization of deferred leasing costs, lease intangibles and other is included within “Depreciation and amortization” in the accompanying consolidated statements of operations and comprehensive income. The amortization of above-market lease intangibles is included as a reduction to “Rental income” in the accompanying consolidated statements of operations and comprehensive income. The amounts of such amortization included in the accompanying consolidated statements of operations and comprehensive income are as follows (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Amortization of deferred leasing costs, lease intangibles and other | $ | $ | |||||||||
| Amortization of above-market lease intangibles | $ | $ | |||||||||
18
NOTE 6. DEFERRED REVENUE, INTANGIBLES, NET AND OTHER LIABILITIES
Deferred revenue and other liabilities consist of (i) the unamortized fair value of below-market lease liabilities recorded in connection with purchase accounting, (ii) retainage payables for development and redevelopment projects, (iii) tenant rent payments received in advance of the month in which they are due, and (iv) lease liabilities recorded upon adoption of ASU 2016-02, Leases (Topic 842). The amortization of below-market lease liabilities is recognized as revenue over the remaining life of the leases (including option periods for leases with below-market renewal options) through 2085. Tenant rent payments received in advance are recognized as revenue in the period to which they apply, which is typically the month following their receipt.
As of March 31, 2025 and December 31, 2024, deferred revenue, intangibles, net and other liabilities consisted of the following (in thousands):
| March 31, 2025 | December 31, 2024 | ||||||||||
| Unamortized in-place lease liabilities | $ | $ | |||||||||
| Retainage payables and other | |||||||||||
| Tenant rents received in advance | |||||||||||
| $ | $ | ||||||||||
| Less: deferred revenue associated with investment properties held for sale | ( | ( | |||||||||
| Deferred revenue and other liabilities | $ | $ | |||||||||
The amortization of below-market lease intangibles is included as a component of “Rental income” in the accompanying consolidated statements of operations and comprehensive income and totaled $9.1 million and $5.0 million for the three months ended March 31, 2025 and 2024, respectively.
NOTE 7. MORTGAGE AND OTHER INDEBTEDNESS
The following table summarizes the Company’s indebtedness as of March 31, 2025 and December 31, 2024 (in thousands):
| March 31, 2025 | December 31, 2024 | ||||||||||
| Mortgages payable | $ | $ | |||||||||
| Senior unsecured notes | |||||||||||
| Unsecured term loans | |||||||||||
| Unsecured revolving line of credit | |||||||||||
| Unamortized discounts and premiums, net | |||||||||||
| Unamortized debt issuance costs, net | ( | ( | |||||||||
| Total mortgage and other indebtedness, net | $ | $ | |||||||||
Consolidated indebtedness, including weighted average interest rates and weighted average maturities as of March 31, 2025, considering the impact of interest rate swaps, is summarized below (dollars in thousands):
| Amount Outstanding | Ratio | Weighted Average Interest Rate | Weighted Average Years to Maturity | ||||||||||||||||||||
Fixed rate debt(1) | $ | % | % | ||||||||||||||||||||
Variable rate debt(2) | % | % | |||||||||||||||||||||
| Debt discounts, premiums and issuance costs, net | ( | N/A | N/A | N/A | |||||||||||||||||||
| Mortgage and other indebtedness, net | $ | % | % | ||||||||||||||||||||
(1)Fixed rate debt includes the portion of variable rate debt that has been hedged by interest rate swaps. As of March 31, 2025, $700.0 million in variable rate debt is hedged to a fixed rate for a weighted average of 0.6 years.
(2)Variable rate debt includes the portion of fixed rate debt that has been hedged by interest rate swaps. As of March 31, 2025, $155.0 million in fixed rate debt is hedged to a floating rate for a weighted average of 0.4 years.
19
Mortgages Payable
The following table summarizes the Company’s mortgages payable (dollars in thousands):
| March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||
| Balance | Weighted Average Interest Rate | Weighted Average Years to Maturity | Balance | Weighted Average Interest Rate | Weighted Average Years to Maturity | ||||||||||||||||||||||||||||||
Fixed rate mortgages payable(1) | $ | % | $ | % | |||||||||||||||||||||||||||||||
Variable rate mortgage payable(2) | % | % | |||||||||||||||||||||||||||||||||
| Total mortgages payable | $ | $ | |||||||||||||||||||||||||||||||||
(1)The fixed rate mortgages had interest rates ranging from 3.75 5.73
(2)The interest rate on the variable rate mortgage is based on the Secured Overnight Financing Rate (“”) plus 215 basis points. The one-month SOFR rate was 4.32 % and 4.33 % as of March 31, 2025 and December 31, 2024, respectively.
Mortgages payable, which are secured by certain real estate and, in some cases, by guarantees from the Operating Partnership, are generally due in monthly installments of principal and interest and mature over various terms through 2033. During the three months ended March 31, 2025, we made scheduled principal payments of $1.3 million related to amortizing loans.
Unsecured Notes
The following table summarizes the Company’s senior unsecured notes and exchangeable senior notes (dollars in thousands):
| March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||
| Maturity Date | Balance | Interest Rate | Balance | Interest Rate | |||||||||||||||||||||||||
Senior notes – | March 15, 2025 | $ | % | $ | % | ||||||||||||||||||||||||
Senior notes – + | September 10, 2025 | % | % | ||||||||||||||||||||||||||
Senior notes – | September 30, 2026 | % | % | ||||||||||||||||||||||||||
Senior notes – | October 1, 2026 | % | % | ||||||||||||||||||||||||||
Senior exchangeable notes – | April 1, 2027 | % | % | ||||||||||||||||||||||||||
Senior notes – + | September 10, 2027 | % | % | ||||||||||||||||||||||||||
Senior notes – | December 28, 2028 | % | % | ||||||||||||||||||||||||||
Senior notes – | June 28, 2029 | % | % | ||||||||||||||||||||||||||
Senior notes – | September 15, 2030 | % | % | ||||||||||||||||||||||||||
Senior notes – | December 15, 2031 | % | % | ||||||||||||||||||||||||||
Senior notes – | March 1, 2034 | % | % | ||||||||||||||||||||||||||
| Total senior unsecured notes | $ | $ | |||||||||||||||||||||||||||
(1)$80,000 of 4.47 % senior unsecured notes due 2025 has been swapped to a variable rate of three-month plus 3.65 % through September 10, 2025.
(2)$75,000 of 4.57 % senior unsecured notes due 2027 has been swapped to a variable rate of three-month plus 3.75 % through September 10, 2025.
(3)The coupon rate is 5.50 %; however, as a result of hedging activities, the Company’s interest rate is 4.60 %.
During the three months ended March 31, 2025, the Company repaid the $350.0 million principal balance of the 4.00 % senior unsecured notes due 2025 using proceeds from the August 2024 public offering of $350.0 million in aggregate principal amount of 4.95 % senior unsecured notes due 2031.
20
Unsecured Term Loans and Revolving Line of Credit
The following table summarizes the Company’s term loans and revolving line of credit (dollars in thousands):
| March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||
| Maturity Date | Balance | Interest Rate | Balance | Interest Rate | |||||||||||||||||||||||||
Unsecured term loan due 2026 – fixed rate(1) | July 17, 2026 | $ | % | $ | % | ||||||||||||||||||||||||
Unsecured term loan due 2027 – fixed rate(2) | October 24, 2027 | % | % | ||||||||||||||||||||||||||
Unsecured term loan due 2029 – fixed rate(3) | July 29, 2029 | % | % | ||||||||||||||||||||||||||
| Total unsecured term loans | $ | $ | |||||||||||||||||||||||||||
Unsecured credit facility revolving line of credit – variable rate(4) | October 3, 2028 | $ | % | $ | % | ||||||||||||||||||||||||
(1)$150,000 of -based variable rate debt has been swapped to a fixed rate of 1.68 % plus a credit spread based on a ratings grid ranging from 0.75 % to 1.60 % through July 17, 2026. The applicable credit spread was 1.05
(2)$250,000 of -based variable rate debt has been swapped to a fixed rate of 2.99 % plus a credit spread based on a ratings grid ranging from 0.75 % to 1.60 % through October 24, 2025. The applicable credit spread was 0.95 one -year period at the Operating Partnership’s election, subject to certain conditions.
(3)$300,000 of -based variable rate debt has been swapped to a fixed rate of 2.47 % plus a credit spread based on a ratings grid ranging from 1.15 % to 2.20 % through August 1, 2025. The applicable credit spread was 1.25
(4)The revolving line of credit can be extended for either one one-year period or up to two six-month periods at the Company’s election, subject to (i) customary representations and warranties, including, but not limited to, the absence of an event of default as defined in the unsecured credit agreement and (ii) payment of an extension fee equal to 0.075 % of the revolving line of credit capacity.
Unsecured Revolving Credit Facility
In October 2024, the Operating Partnership, as borrower, and the Company entered into the Third Amendment (the “Third Amendment”) to the Sixth Amended and Restated Credit Agreement, dated as of July 8, 2021 (as amended, the “Credit Agreement”) with a syndicate of financial institutions to provide for an unsecured revolving credit facility aggregating $1.1 billion (the “Revolving Facility”) and a seven-year $300.0 million unsecured term loan that matures in July 2029 (the “$300 M Term Loan”). Under the Credit Agreement, the Operating Partnership has the option, subject to certain customary conditions, to increase the Revolving Facility and/or incur additional term loans up to a maximum aggregate amount not to exceed $2.0 billion. The Third Amendment extended the maturity date of the Revolving Facility to October 3, 2028, which maturity date may be extended for either one one-year period or up to two -month periods at the Operating Partnership’s option, subject to certain conditions.
Borrowings under the Revolving Facility bear interest at a rate per annum equal to SOFR plus a margin based on the Operating Partnership’s leverage ratio or credit rating, respectively, plus a facility fee based on the Operating Partnership’s leverage ratio or credit rating, respectively. The rate is also subject to an additional 0.10 % spread adjustment. The Revolving Facility is currently priced on the leverage-based pricing grid. In accordance with the Credit Agreement, the credit spread set forth in the leverage grid resets quarterly based on the Company’s leverage, as calculated at the previous quarter end. The Company may irrevocably elect to convert to the ratings-based pricing grid at any time. As of March 31, 2025, making such an election would have resulted in a lower interest rate; however, the Company had not made the election to convert to the ratings-based pricing grid. As specified in the Third Amendment, in the event that the Company so elects to convert to the ratings-based pricing grid, the Company has the ability to obtain more favorable pricing in certain circumstances when its total leverage ratio is (x) less than or equal to 35.0 % or (y) greater than 35.0 % but less than or equal to 37.5 % with respect to not more than one fiscal quarter following a period in which the condition described in clause (x) was satisfied (the “Leverage Toggle”). The Third Amendment also includes an adjustment to the sustainability-linked pricing provisions that allows the otherwise applicable interest rate margin to be reduced by up to two basis points (previously one basis point) if certain greenhouse gas emission reduction targets are achieved. The greenhouse gas emission reduction targets have not been achieved as of March 31, 2025.
21
The following table summarizes the key terms of the Revolving Facility as of March 31, 2025 (dollars in thousands):
| Leverage-Based Pricing | Investment-Grade Pricing | |||||||||||||||||||||||||||||||||||||||||||||||||
| Credit Agreement | Maturity Date | Extension Options | Extension Fee | Credit Spread | Facility Fee | Credit Spread | Facility Fee | Adjustment | ||||||||||||||||||||||||||||||||||||||||||
$ | 10/3/2028 | |||||||||||||||||||||||||||||||||||||||||||||||||
The Operating Partnership’s ability to borrow under the Credit Agreement is subject to ongoing compliance by the Operating Partnership and its subsidiaries with various restrictive covenants, including with respect to liens, transactions with affiliates, dividends, mergers and asset sales. In addition, the Credit Agreement requires that the Operating Partnership satisfy certain financial covenants, including (i) a maximum leverage ratio; (ii) a minimum fixed charge coverage ratio; (iii) a maximum secured indebtedness ratio; (iv) a maximum unsecured leverage ratio; and (v) a minimum unencumbered interest coverage ratio. As of March 31, 2025, we were in compliance with all such covenants.
As of March 31, 2025, we had outstanding letters of credit totaling $4.5 million with no amounts advanced against these instruments.
Unsecured Term Loans
As of March 31, 2025, the Operating Partnership has the following unsecured term loans: (i) a $150.0 million unsecured term loan due July 2026 (the “$150 M Term Loan”), (ii) a $250.0 million unsecured term loan due October 2027 (the “$250 M Term Loan”), and (iii) the $300 M Term Loan that matures in July 2029, each of which bears interest at a rate of plus a credit spread based on a ratings-based pricing grid. The loan agreement related to the $150 M Term Loan includes a sustainability metric based on targeted greenhouse gas emission reductions, which results in a reduction of the otherwise applicable interest rate margin by one 250 M Term Loan and the $300 M Term Loan include the same Leverage Toggle for determining pricing and sustainability-linked pricing provisions as described above for the Third Amendment to the Credit Agreement. The greenhouse gas emission reduction targets have not been achieved as of March 31, 2025.
The following table summarizes the key terms of the unsecured term loans as of March 31, 2025 (dollars in thousands):
Unsecured Term Loans | Maturity Date | Leverage-Based Pricing Credit Spread | Investment-Grade Pricing Credit Spread | Adjustment | ||||||||||||||||||||||
$ | 7/17/2026 | |||||||||||||||||||||||||
$ | 10/24/2027(1) | N/A | ||||||||||||||||||||||||
$ | 7/29/2029 | N/A | ||||||||||||||||||||||||
(1)The maturity date may be extended by one one-year period at the Operating Partnership’s option, subject to certain conditions.
The Operating Partnership has the option to increase the $150 M Term Loan to $250.0 million upon the Operating Partnership’s request, subject to certain conditions, including obtaining commitments from any one or more lenders, whether or not currently party to the term loan agreement, to provide such increased amounts. The Operating Partnership is permitted to prepay the $150 M Term Loan in whole or in part at any time, without being subject to a prepayment fee.
The Operating Partnership has the option to increase the $250 M Term Loan to $300.0 million, subject to certain conditions, including obtaining commitments from any one or more lenders, whether or not currently party to the term loan agreement, to provide such increased amounts. The Operating Partnership is permitted to prepay the $250 M Term Loan in whole or in part, without premium or penalty.
The Operating Partnership is permitted to prepay the $300 M Term Loan in whole or in part at any time, without premium or penalty.
The unsecured term loan agreements contain representations, financial and other affirmative and negative covenants and events of default that are substantially similar to those contained in the Credit Agreement. The unsecured term loan agreements all rank pari passu with the Operating Partnership’s Revolving Facility and other unsecured indebtedness of the Operating Partnership.
22
Debt Issuance Costs
Debt issuance costs are amortized over the terms of the respective loans. The following amounts of amortization of debt issuance costs are included as a component of “Interest expense” in the accompanying consolidated statements of operations and comprehensive income (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Amortization of debt issuance costs | $ | $ | |||||||||
Debt Discounts and Premiums
Debt discounts and premiums, including the related value of interest rate swaps that were assumed in the October 2021 merger with RPAI, are amortized over the terms of the respective loans. The following amounts of amortization are included as a component of “Interest expense” in the accompanying consolidated statements of operations and comprehensive income (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Amortization of debt discounts, premiums and hedge instruments | $ | $ | |||||||||
In addition, the estimated amounts of the reduction to interest expense as of March 31, 2025 for each of the next five years and thereafter related to the amortization of debt discounts, premiums and assumed hedge instruments, assuming these instruments are held to maturity, are as follows (in thousands):
| April 2025 through December 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Thereafter | |||||
| Total unamortized debt discounts, premiums and hedge instruments | $ | ||||
The following table reconciles total unamortized debt discounts, premiums and hedge instruments as of March 31, 2025 to the balance of unamortized discounts and premiums, net (in thousands):
| Unamortized discounts and premiums on mortgages payable, senior unsecured notes and unsecured term loans | $ | ||||
| Unamortized hedge instruments | |||||
| Total unamortized debt discounts, premiums and hedge instruments | |||||
| Unamortized hedge instruments (included in accumulated other comprehensive income) | ( | ||||
| Fair value of variable interest rate swaps | ( | ||||
| Unamortized discounts and premiums, net | $ | ||||
Fair Value of Fixed and Variable Rate Debt
As of March 31, 2025, the estimated fair value of fixed rate debt was $2.1 billion compared to the book value of $2.2 billion. The fair value was estimated using Level 2 and Level 3 inputs with cash flows discounted at current borrowing rates for similar instruments, which ranged from 5.48 % to 6.65 %. As of March 31, 2025, the estimated fair value of variable rate debt was $749.5 million compared to the book value of $748.0 million. The fair value was estimated using Level 2 and Level 3 inputs with cash flows discounted at a current borrowing rate for similar instruments of 5.47 %.
23
NOTE 8. DERIVATIVE INSTRUMENTS, HEDGING ACTIVITIES AND OTHER COMPREHENSIVE INCOME
In order to manage potential future variable interest rate risk, we enter into interest rate derivative agreements from time to time. We do not use interest rate derivative agreements for trading or speculative purposes. The agreements with each of our derivative counterparties provide that in the event of default on any of our indebtedness, we could also be declared in default on our derivative obligations.
The following table summarizes the terms and fair values of the Company’s derivative financial instruments that were designated and qualified as part of a hedging relationship as of March 31, 2025 and December 31, 2024 (dollars in thousands):
Fair Value Assets (Liabilities)(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Type of Hedge | Number of Instruments | Aggregate Notional | Reference Rate | Interest Rate | Effective Date | Maturity Date | March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||
| Cash Flow | $ | % | 12/1/2022 | 10/24/2025 | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Cash Flow | % | 8/1/2022 | 8/1/2025 | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash Flow | % | 11/22/2023 | 8/1/2025 | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash Flow | % | 8/15/2022 | 7/17/2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value(2) | $ | + | 4/23/2021 | 9/10/2025 | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||||
(1)Derivatives in an asset position are included within “Prepaid and other assets” and derivatives in a liability position are included within “Accounts payable and accrued expenses” in the accompanying consolidated balance sheets.
(2)The derivative agreements swap a blended fixed rate of 4.52 % for a blended floating rate of three-month plus 3.70 %.
These interest rate derivative agreements are the only assets or liabilities that we record at fair value on a recurring basis. The valuation of these assets and liabilities is determined using widely accepted techniques, including discounted cash flow analysis. These techniques consider the contractual terms of the derivatives (including the period to maturity) and use observable market-based inputs such as interest rate curves and implied volatilities. We also incorporate credit valuation adjustments into the fair value measurements to reflect non-performance risk on both our part and that of the respective counterparties.
We have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, although the credit valuation adjustments associated with our derivatives use Level 3 inputs such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. As of March 31, 2025 and December 31, 2024, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and determined that the credit valuation adjustments were not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations are classified within Level 2 of the fair value hierarchy.
Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to earnings over time as the hedged items are recognized in earnings. Approximately $2.6 million and $4.9 million was reclassified as a reduction to interest expense during the three months ended March 31, 2025 and 2024, respectively. As interest payments on our derivatives are made over the next 12 months, we estimate the decrease to interest expense to be approximately $10.8 million, assuming the current SOFR curve.
Unrealized gains and losses on our interest rate derivative agreements are the only components of the change in accumulated other comprehensive income.
NOTE 9. SEGMENT REPORTING
An operating segment is a component of a public entity that engages in business activities from which it may earn revenues and incur expenses and has discrete financial information available that is regularly reviewed by the chief operating decision maker (the “CODM”).
The Company’s primary business is the ownership and operation of high-quality, open-air shopping centers and mixed-use assets that are primarily grocery-anchored and located in high-growth Sun Belt markets and select strategic gateway markets in the United States. We derive our revenue primarily from the collection of contractual rents and reimbursement payments from
24
tenants under existing lease agreements at each of our properties. The Company’s CODM, which is its Chief Executive Officer, regularly reviews operating and financial information for each property on an individual basis; therefore, each property represents an individual operating segment. The CODM does not distinguish or group our operations on a geographical or any other basis for purposes of measuring performance and allocating capital. Across our properties, the financial performance, revenue generating activities, and customer base is determined to be economically similar; therefore, all operating segments have been aggregated into one
The CODM measures and evaluates the financial performance of our portfolio of properties and decides how resources are allocated based on net operating income. The CODM uses net operating income to evaluate income generated from each property in deciding whether to reinvest profits for recurring capital expenditures or into other parts of the business, such as for acquisitions, developments, scheduled interest and principal payments on our indebtedness, or to pay dividends. Net operating income is also used to monitor budget versus actual results in assessing the performance of our properties. The CODM does not regularly review total assets for our single reportable segment as total assets are not used to assess performance or allocate resources.
The following table presents information on the Company’s reported segment revenue, net operating income, and significant segment expenses that are provided to the CODM and included within the Company’s single reportable operating segment measure of profit or loss:
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Revenue: | |||||||||||
| Minimum rent | $ | $ | |||||||||
| Tenant reimbursements | |||||||||||
| Bad debt reserve | ( | ( | |||||||||
| Other property-related revenue | |||||||||||
| Overage rent | |||||||||||
| Total revenue | |||||||||||
| Expenses: | |||||||||||
| Property operating – recoverable | |||||||||||
| Property operating – non-recoverable | |||||||||||
| Real estate taxes | |||||||||||
| Total expenses | |||||||||||
| Net operating income | |||||||||||
| Other (expense) income: | |||||||||||
| Other general and administrative expenses | ( | ( | |||||||||
| Fee income | |||||||||||
| Depreciation and amortization | ( | ( | |||||||||
| Interest expense | ( | ( | |||||||||
| Equity in loss of unconsolidated subsidiaries | ( | ( | |||||||||
| Gain on sale of unconsolidated property, net | |||||||||||
| Income tax expense of taxable REIT subsidiaries | ( | ( | |||||||||
| Other income, net | |||||||||||
| Gain (loss) on sales of operating properties, net | ( | ||||||||||
| Net income | |||||||||||
| Net income attributable to noncontrolling interests | ( | ( | |||||||||
| Net income attributable to common shareholders | $ | $ | |||||||||
25
NOTE 10. SHAREHOLDERS’ EQUITY
Distributions
Our Board of Trustees declared a cash distribution of $0.27
For the three months ended March 31, 2024, we declared a cash distribution of $0.25 per common share and Common Unit.
Share Repurchase Program
The Company has an existing share repurchase program under which it may repurchase, from time to time, up to a maximum of $300.0 million of its common shares (the “Share Repurchase Program”). The Company intends to fund any future repurchases under the Share Repurchase Program with cash on hand or availability under the Revolving Facility, subject to any applicable restrictions. The timing of share repurchases and the number of common shares to be repurchased under the Share Repurchase Program will depend upon prevailing market conditions, regulatory requirements, and other factors. In January 2025, the Company extended the Share Repurchase Program for an additional year to February 28, 2026, if not terminated or extended prior to that date. As of March 31, 2025, the Company has no t repurchased any shares under the Share Repurchase Program.
NOTE 11. EARNINGS PER SHARE OR UNIT
Basic earnings per share or unit is calculated based on the weighted average number of common shares or units outstanding during the period. Diluted earnings per share or unit is calculated based on the weighted average number of common shares or units outstanding during the period combined with the incremental weighted average common shares or units that would have been outstanding assuming the conversion of all potentially dilutive common shares or units into common shares or units as of the earliest date possible.
Potentially dilutive securities include (i) outstanding options to acquire common shares; (ii) Limited Partner Units, which may be exchanged for either cash or common shares at the Parent Company’s option and under certain circumstances; (iii) Appreciation Only Long-Term Incentive Plan Units; (iv) deferred common share units, which may be credited to the personal accounts of members of the Board of Trustees in lieu of compensation paid in cash or the issuance of common shares to such trustees, and (v) common shares issuable upon the exchange of the Company’s Exchangeable Notes. The Company calculates the potential dilutive effect of the Exchangeable Notes under the if-converted method, which considers only the amounts settled in excess of the principal in diluted earnings per share as the principal must be paid in cash. Limited Partner Units have been omitted from the Parent Company’s denominator for the purpose of computing diluted earnings per share since the effect of including those amounts in the denominator would have no dilutive impact. Weighted average Limited Partner Units outstanding were 4.5 million and 3.6 million for the three months ended March 31, 2025 and 2024, respectively.
NOTE 12. COMMITMENTS AND CONTINGENCIES
Other Commitments and Contingencies
We are obligated under various completion guarantees with certain lenders and lease agreements with tenants to complete all or portions of a development project and tenant-specific space that are currently under construction. We believe we currently have sufficient financing in place to fund these projects and expect to do so primarily through free cash flow or borrowings on the Revolving Facility.
In 2021, we provided repayment and completion guarantees on loans totaling $66.2 million associated with the development of The Corner mixed-use project in the Indianapolis MSA. As of March 31, 2025, the outstanding balance of the loans was $68.4 million, of which our share was $34.2 million.
As of March 31, 2025, we had outstanding letters of credit totaling $4.5 million with no amounts advanced against these instruments.
26
Legal Proceedings
We are not subject to any material litigation, nor, to management’s knowledge, is any material litigation currently threatened against us. We are parties to routine litigation, claims, and administrative proceedings arising in the ordinary course of business. Management believes that such matters will not have a material adverse impact on our consolidated financial condition, results of operations or cash flows taken as a whole.
NOTE 13. SUBSEQUENT EVENTS
Subsequent to March 31, 2025:
•we closed on the disposition of Stoney Creek Commons, an 84,094 square foot multi-tenant retail property in the Indianapolis MSA, which was classified as held for sale as of March 31, 2025, for a gross sales price of $9.5 million. The proceeds are restricted for 180 days related to a potential 1031 Exchange; and
•the Joint Venture with GIC closed on the acquisition of Legacy West, a 344,076 square foot operating retail property in the Dallas/Ft. Worth MSA, for a gross purchase price of $785.0 million, including the assumption of $304.0 million of debt. The Company’s share of the purchase price is $408.2 million, and the acquisition was initially funded with borrowings of $255.0 million on the Company’s unsecured revolving line of credit. See Note 3 for further details.
27
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the accompanying historical financial statements and related notes thereto. In this discussion, unless the context suggests otherwise, references to “our Company,” “we,” “us,” and “our” mean Kite Realty Group Trust and its direct and indirect subsidiaries, including Kite Realty Group, L.P.
CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, 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:
•economic, business, banking, real estate and other market conditions, particularly in connection with low or negative growth in the U.S. economy as well as economic uncertainty (including from an economic slowdown or recession, disruptions related to tariffs and other trade or sanction issues, rising interest rates, inflation, unemployment, or limited growth in consumer income or spending);
•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 our tenants;
•the competitive environment in which we operate, including potential oversupplies of, or a reduction in demand for, rental space;
•acquisition, disposition, development and joint venture risks;
•property ownership and management risks, including the relative illiquidity of real estate investments, and expenses, vacancies or the inability to rent space on favorable terms or at all;
•our ability to maintain our status as a real estate investment trust (“REIT”) for U.S. federal income tax purposes;
•potential environmental and other liabilities;
•impairment in the value of real estate property we own;
•the attractiveness of our properties to tenants, the actual and perceived impact of e-commerce on the value of shopping center assets, and changing demographics and customer traffic patterns;
•business continuity disruptions and a deterioration in our tenants’ ability to operate in affected areas or delays in the supply of products or services to us or our tenants from vendors that are needed to operate efficiently, causing costs to rise sharply and inventory to fall;
•risks related to our current geographical concentration of properties in the states of Texas, Florida, and North Carolina and the metropolitan statistical areas (“MSAs”) of New York, Atlanta, Seattle, Chicago, and Washington, D.C.;
•civil unrest, acts of violence, terrorism or war, acts of God, climate change, epidemics, pandemics, natural disasters and severe weather conditions, including such events that may result in underinsured or uninsured losses or other increased costs and expenses;
28
•changes in laws and government regulations, including governmental orders affecting the use of our properties or the ability of our tenants to operate, and the costs of complying with such changed laws and government regulations;
•possible changes in consumer behavior due to public health crises and the fear of future pandemics;
•our ability to satisfy environmental, social or governance standards set by various constituencies;
•insurance costs and coverage, especially in Florida and Texas coastal areas;
•risks associated with cyber attacks and the loss of confidential information and other business disruptions;
•risks associated with the use of artificial intelligence and related tools;
•other factors affecting the real estate industry generally; and
•other risks identified in this Quarterly Report on Form 10-Q and, from time to time, in other reports we file with the Securities and Exchange Commission (the “SEC”) or in other documents that we publicly disseminate, including, in particular, the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
We undertake no obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.
Overview
Our Business and Properties
Kite Realty Group Trust is a publicly held REIT that, through its majority-owned subsidiary, Kite Realty Group, L.P., owns interests in various operating subsidiaries and joint ventures engaged in the ownership, operation, acquisition, development, and redevelopment of high-quality, open-air, grocery-anchored shopping centers and vibrant mixed-use assets that are primarily located in high-growth Sun Belt markets and select strategic gateway markets in the United States. We derive our revenue primarily from the collection of contractual rents and reimbursement payments from tenants under existing lease agreements at each of our properties. Therefore, our operating results depend materially on, among other things, the ability of our tenants to make required lease payments, the health and resilience of the U.S. retail sector, interest rate volatility, stability in the banking sector, job growth, the real estate market, and overall economic conditions.
As of March 31, 2025, we own interests in 180 operating retail properties totaling approximately 27.8 million square feet, excluding two operating retail properties classified as held for sale as of March 31, 2025, and two office properties with 0.4 million square feet. Of the 180 operating retail properties, 10 contain an office component. We also own interests in one development project under construction as of March 31, 2025 and an additional two properties with future redevelopment opportunities.
Inflation and Tariffs
We continue to monitor the impact of inflation and tariffs on our operating and financial performance. Although inflation has moderated significantly from peak levels experienced during 2022, inflation may increase in the near future given the recent enactment of tariffs on all imported goods and targeting specific countries by the U.S. government. These tariffs may lead to higher prices for many of the products that our tenants sell, potentially reducing consumer demand and spending and impacting our tenants’ sales volume. This, in turn, could put downward pricing pressure on rents that we are able to charge to new or renewing tenants, such that rent spreads and, in some cases, our percentage rents could be impacted. Additionally, uncertainty regarding the scope and duration of the current and potential tariffs can lead to significant business uncertainty, affecting our tenants’ strategic planning and store expansion plans. Many of our leases contain provisions designed to mitigate the adverse impact of inflation, including stated rent increases and requirements for tenants to pay a share of operating expenses, including common area maintenance, real estate taxes, insurance, or other operating expenses related to the maintenance of our properties, with escalation clauses in most leases. Over the past two years, we have made significant progress in executing leases that include higher fixed-rent increases while also including consumer price index-based, anti-gouging protection for tenants. However, the stated rent increases or limits on such tenant’s obligation to pay its share of operating expenses could be lower than the increase in inflation at any given time. Inflation may also increase labor or other general and administrative expenses, which cannot be easily reduced.
29
Historically, economic indicators such as GDP growth, consumer confidence, and employment have been correlated with demand for certain of our tenants’ products and services. An economic recession could, among other impacts, increase the number of our tenants that are unable to meet their lease obligations to us and limit the demand from new tenants for space in our properties.
Operating Activity
During the first quarter of 2025, we executed new and renewal leases on 182 individual spaces totaling 843,829 square feet (13.7% cash leasing spread on 126 comparable leases). New leases were signed on 58 individual spaces for 169,703 square feet of gross leasable area (“GLA”) (15.6% cash leasing spread on 26 comparable leases), while non-option renewal leases were signed on 91 individual spaces for 331,781 square feet of GLA (20.1% cash leasing spread on 67 comparable leases) and option renewals were signed on 33 individual spaces for 342,345 square feet of GLA (7.0% cash leasing spread). The blended cash spread for comparable new and non-option renewal leases was 18.7%. Comparable new and renewal leases are defined as those for which the space was occupied by a tenant within the last 12 months.
Results of Operations
The comparability of results of operations for the three months ended March 31, 2025 and 2024 is affected by our development, redevelopment, and operating property acquisition and disposition activities during these periods. Therefore, we believe it is most useful to review the comparisons of our results of operations for these periods in conjunction with the discussion of our activities during those periods, which is set forth below.
Acquisitions
The following operating properties were acquired during the period from January 1, 2024 through March 31, 2025:
| Property Name | MSA | Acquisition Date | GLA | |||||||||||||||||
| Parkside West Cobb | Atlanta | August 30, 2024 | 141,627 | |||||||||||||||||
| Village Commons | Miami | January 15, 2025 | 170,976 | |||||||||||||||||
Subsequent to March 31, 2025, we acquired a 52% interest in Legacy West, a 344,076 square foot, mixed-use operating retail property in the Dallas/Ft. Worth MSA, in a joint venture with GIC for a gross purchase price of $785.0 million, including the assumption of $304.0 million of debt with an interest rate of 3.80%. Our share of the purchase price is $408.2 million. Legacy West also contains 443,553 square feet of office space and 782 multifamily units.
Dispositions
The following operating property was sold during the period from January 1, 2024 through March 31, 2025:
| Property Name | MSA | Disposition Date | GLA | |||||||||||||||||
| Ashland & Roosevelt | Chicago | May 31, 2024 | 104,176 | |||||||||||||||||
In addition to the above disposition, Stoney Creek Commons, an 84,094 square foot multi-tenant retail property in the Indianapolis MSA, is classified as held for sale as of March 31, 2025 and was sold on April 4, 2025.
In January 2024, the joint venture that owned Glendale Center Apartments, of which we have an 11.5% ownership interest, sold the 267-unit property to a third party. Glendale Center Apartments is adjacent to our Glendale Town Center operating retail property in the Indianapolis MSA.
30
Development and Redevelopment Projects
The following properties were under active development or redevelopment at various times during the period from January 1, 2024 through March 31, 2025 and removed from our operating portfolio:
| Project Name | MSA | Transition to Development or Redevelopment(1) | Transition to Operating Portfolio | GLA | ||||||||||||||||||||||
| Active Projects | ||||||||||||||||||||||||||
One Loudoun Expansion(2) | Washington, D.C. | September 2024 | Pending | 119,000 | ||||||||||||||||||||||
| Future Opportunities | ||||||||||||||||||||||||||
Hamilton Crossing Centre(3)(4) | Indianapolis | June 2014 | Pending | 92,283 | ||||||||||||||||||||||
Edwards Multiplex – Ontario(3) | Los Angeles | March 2023 | Pending | 124,614 | ||||||||||||||||||||||
| Completed Projects | ||||||||||||||||||||||||||
Carillon medical office building(5) | Washington, D.C. | October 2021 | December 2024 | 125,277 | ||||||||||||||||||||||
The Corner – IN(6) | Indianapolis | December 2015 | March 2025 | 23,776 | ||||||||||||||||||||||
(1)Transition date represents the date the property was transferred from our operating portfolio into redevelopment status. For legacy Retail Properties of America, Inc. (“RPAI”) projects, the transition date represents the later of the date of the closing of the merger (October 2021) and the date the project was transferred into redevelopment status.
(2)The property is comprised of the development project (which has been excluded from the Company’s same property pool due to the ongoing development) and the remaining retail operating portion of the property (which is included in the Company’s same property pool as of March 31, 2025).
(3)This property has been identified as a redevelopment property and is not included in the operating portfolio or the same property pool. The redevelopment project at Hamilton Crossing Centre will include the creation of a mixed-used development.
(4)Approximately half of the Hamilton Crossing site was sold in January 2022 to Republic Airways Inc. In addition to the sale, the Company entered into a development and construction management agreement for the development of a corporate campus for Republic Airways. Phase I of the corporate campus was completed in 2023.
(5)This property is included in the office portfolio and is not included in the operating portfolio or the same property pool.
(6)This property is included in the operating portfolio and is not included in the same property pool.
In addition, in December 2024, the Company disposed of the first phase of a land parcel and the rights to develop 24 residential units at One Loudoun Expansion in the Washington, D.C. MSA. The Company is under contract to sell the remaining land and the rights to develop an additional 54 residential units, which are expected to close in phases through 2026.
31
Comparison of Operating Results for the Three Months Ended March 31, 2025 to the Three Months Ended March 31, 2024
The following table reflects changes in the components of our consolidated statements of operations for the three months ended March 31, 2025 and 2024 (in thousands):
| Three Months Ended March 31, | |||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||
| Revenue: | |||||||||||||||||
| Rental income | $ | 219,172 | $ | 205,813 | $ | 13,359 | |||||||||||
| Other property-related revenue | 2,165 | 1,311 | 854 | ||||||||||||||
| Fee income | 425 | 315 | 110 | ||||||||||||||
| Total revenue | 221,762 | 207,439 | 14,323 | ||||||||||||||
| Expenses: | |||||||||||||||||
| Property operating | 29,826 | 28,081 | 1,745 | ||||||||||||||
| Real estate taxes | 27,761 | 26,534 | 1,227 | ||||||||||||||
| General, administrative and other | 12,258 | 12,784 | (526) | ||||||||||||||
| Depreciation and amortization | 98,231 | 100,379 | (2,148) | ||||||||||||||
| Total expenses | 168,076 | 167,778 | 298 | ||||||||||||||
| Gain (loss) on sales of operating properties, net | 91 | (236) | 327 | ||||||||||||||
| Operating income | 53,777 | 39,425 | 14,352 | ||||||||||||||
| Other (expense) income: | |||||||||||||||||
| Interest expense | (32,954) | (30,364) | (2,590) | ||||||||||||||
| Income tax expense of taxable REIT subsidiaries | (10) | (158) | 148 | ||||||||||||||
| Equity in loss of unconsolidated subsidiaries | (607) | (420) | (187) | ||||||||||||||
| Gain on sale of unconsolidated property, net | — | 2,325 | (2,325) | ||||||||||||||
| Other income, net | 4,058 | 3,628 | 430 | ||||||||||||||
| Net income | 24,264 | 14,436 | 9,828 | ||||||||||||||
| Net income attributable to noncontrolling interests | (534) | (280) | (254) | ||||||||||||||
| Net income attributable to common shareholders | $ | 23,730 | $ | 14,156 | $ | 9,574 | |||||||||||
| Property operating expense to total revenue ratio | 13.4 | % | 13.5 | % | |||||||||||||
Rental income (including tenant reimbursements) increased $13.4 million, or 6.5%, due to the following (in thousands):
Net Change Three Months Ended March 31, 2024 to 2025 | |||||
| Properties or components of properties sold or held for sale during 2024 and/or 2025 | $ | (127) | |||
| Properties under redevelopment or acquired during 2024 and/or 2025 | 2,114 | ||||
| Properties fully operational during 2024 and 2025 and other | 11,372 | ||||
| Total | $ | 13,359 | |||
The net increase of $11.4 million in rental income for properties that were fully operational during 2024 and 2025 is primarily due to increases in the following: (i) base minimum rent of $6.6 million due to contractual rent changes and improving occupancy, (ii) lease termination income of $4.8 million, and (iii) tenant reimbursements of $2.2 million due to higher recoverable common area maintenance expenses. These variances were partially offset by an increase in bad debt expense of $1.4 million and a decrease in overage rent of $0.6 million and ancillary income of $0.2 million. The occupancy of the fully operational properties increased from 91.2% for the three months ended March 31, 2024 to 91.9% for the three months ended March 31, 2025.
Other property-related revenue primarily consists of parking revenues, gains on the sale of land, and other miscellaneous activity. This revenue increased by $0.9 million primarily as a result of the receipt of $0.7 million of insurance proceeds during the three months ended March 31, 2025 related to a hail storm at one of our properties.
32
We recorded fee income of $0.4 million and $0.3 million during the three months ended March 31, 2025 and 2024, respectively, from property management and development services provided to third parties and unconsolidated joint ventures. The increase in fee income is primarily related to development fees earned related to phase two of the development of a corporate campus for Republic Airways at Hamilton Crossing Centre.
Property operating expenses increased $1.7 million, or 6.2%, due to the following (in thousands):
Net Change Three Months Ended March 31, 2024 to 2025 | |||||
| Properties or components of properties sold or held for sale during 2024 and/or 2025 | $ | 64 | |||
| Properties under redevelopment or acquired during 2024 and/or 2025 | 310 | ||||
| Properties fully operational during 2024 and 2025 and other | 1,371 | ||||
| Total | $ | 1,745 | |||
The net increase of $1.4 million in property operating expenses for properties that were fully operational during 2024 and 2025 is primarily due to increases in the following: (i) snow removal expenses of $0.8 million, (ii) insurance expenses of $0.6 million, and (iii) utilities of $0.2 million. As a percentage of revenue, property operating expenses decreased from 13.5% to 13.4% due to an increase in revenue in 2025.
Real estate taxes increased $1.2 million, or 4.6%, due to the following (in thousands):
Net Change Three Months Ended March 31, 2024 to 2025 | |||||
| Properties or components of properties sold or held for sale during 2024 and/or 2025 | $ | (267) | |||
| Properties under redevelopment or acquired during 2024 and/or 2025 | 311 | ||||
| Properties fully operational during 2024 and 2025 and other | 1,183 | ||||
| Total | $ | 1,227 | |||
The net increase of $1.2 million in real estate taxes for properties that were fully operational during 2024 and 2025 is primarily due to higher real estate tax assessments at certain properties in the portfolio in 2025 and a decrease in real estate tax refunds received during the three months ended March 31, 2025. The majority of real estate tax expense is recoverable from tenants and such recovery is reflected within “Rental income” in the accompanying consolidated statements of operations and comprehensive income.
General, administrative and other expenses decreased $0.5 million, or 4.1%, primarily due to lower costs incurred related to travel and a decrease in corporate communication expenses in 2025.
Depreciation and amortization expense decreased $2.1 million, or 2.1%, due to the following (in thousands):
Net Change Three Months Ended March 31, 2024 to 2025 | |||||
| Properties or components of properties sold or held for sale during 2024 and/or 2025 | $ | (2,466) | |||
| Properties under redevelopment or acquired during 2024 and/or 2025 | 664 | ||||
| Properties fully operational during 2024 and 2025 and other | (346) | ||||
| Total | $ | (2,148) | |||
The net decrease of $0.3 million in depreciation and amortization at properties that were fully operational during 2024 and 2025 is primarily due to the timing of placing assets in service and writing-off tenant-related assets as a result of tenant move-outs along with certain assets acquired in the October 2021 merger with RPAI that became fully depreciated in 2024.
Interest expense increased $2.6 million, or 8.5%, primarily due to interest incurred on the $350.0 million in aggregate principal amount of 4.95% senior unsecured notes due 2031 (the “Notes Due 2031”) issued in August 2024 and less favorable interest rate swaps in 2025 compared to the prior year, partially offset by a decrease in interest incurred on the unsecured term loans.
33
During the three months ended March 31, 2024, we recognized a $2.3 million gain on sale of unconsolidated property related to our share of the gain on the sale of Glendale Center Apartments. No such gain was recorded during the three months ended March 31, 2025.
Other income, net increased $0.4 million primarily due to an increase in interest income earned during the three months ended March 31, 2025.
Net Operating Income and Same Property Net Operating Income
We use property net operating income (“NOI”), a non-GAAP financial measure, to evaluate the performance of our properties. We define 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, including merger and acquisition costs. We believe 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.
We also use same property NOI (“Same Property NOI”), a non-GAAP financial measure, to evaluate the performance of our properties. Same Property NOI is net income excluding properties that have not been owned for the full periods presented. Same Property NOI also excludes (i) net gains from outlot sales, (ii) straight-line rent revenue, (iii) lease termination income in excess of lost rent, (iv) amortization of lease intangibles, and (v) significant prior period expense recoveries and adjustments, if any. When we receive payments in excess of any accounts receivable for terminating a lease, Same Property NOI will include such excess payments as monthly rent until the earlier of the expiration of 12 months or the start date of a replacement tenant. We believe that Same Property NOI is helpful to investors as a measure of our operating performance because it includes only the NOI of properties that have been owned for the full periods presented. We believe such presentation eliminates disparities in net income due to the acquisition or disposition of properties during the particular periods presented and thus provides a more consistent metric for the comparison of our properties. Same Property NOI includes the results of properties that have been owned for the entire current and prior year reporting periods.
NOI and Same Property NOI should not, however, be considered as an alternative to net income (calculated in accordance with GAAP) as an indicator 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, we have 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 we (a) begin recapturing space from tenants or (b) the contemplated plan significantly impacts the operations of the property.
For the three months ended March 31, 2025, the Same Property Pool excludes the following:
•properties acquired or placed in service during 2024 and 2025;
•The Corner – IN, which was reclassified from active development into our operating portfolio in March 2025;
•our active development at One Loudoun Expansion;
•Hamilton Crossing Centre and Edwards Multiplex – Ontario, which were reclassified from our operating portfolio into redevelopment in June 2014 and March 2023, respectively;
•properties sold or classified as held for sale during 2024 and 2025; and
•office properties, including Carillon medical office building, which was reclassified from active redevelopment into our office portfolio in December 2024.
34
The following table presents Same Property NOI and a reconciliation to net income (loss) attributable to common shareholders for the three months ended March 31, 2025 and 2024 (dollars in thousands):
| Three Months Ended March 31, | |||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||
Number of properties in Same Property Pool for the period(1) | 177 | 177 | |||||||||||||||
| Leased percentage at period end | 93.8 | % | 94.4 | % | |||||||||||||
| Economic occupancy percentage at period end | 91.2 | % | 91.1 | % | |||||||||||||
Economic occupancy percentage(2) | 91.9 | % | 91.2 | % | |||||||||||||
| Same Property NOI | $ | 147,930 | $ | 143,524 | 3.1 | % | |||||||||||
Reconciliation of Same Property NOI to most directly comparable GAAP measure: | |||||||||||||||||
| Net operating income – same properties | $ | 147,930 | $ | 143,524 | |||||||||||||
Net operating income – non-same activity(3) | 15,820 | 8,985 | |||||||||||||||
| Total property NOI | 163,750 | 152,509 | 7.4 | % | |||||||||||||
| Other income, net | 3,866 | 3,365 | |||||||||||||||
| General, administrative and other | (12,258) | (12,784) | |||||||||||||||
| Depreciation and amortization | (98,231) | (100,379) | |||||||||||||||
| Interest expense | (32,954) | (30,364) | |||||||||||||||
| Gain (loss) on sales of operating properties, net | 91 | (236) | |||||||||||||||
| Gain on sale of unconsolidated property, net | — | 2,325 | |||||||||||||||
Net income attributable to noncontrolling interests | (534) | (280) | |||||||||||||||
Net income attributable to common shareholders | $ | 23,730 | $ | 14,156 | |||||||||||||
(1)Same Property NOI excludes the following: (i) properties acquired or placed in service during 2024 and 2025; (ii) The Corner – IN, which was reclassified from active development into our operating portfolio in March 2025; (iii) our active development project at One Loudoun Expansion; (iv) Hamilton Crossing Centre and Edwards Multiplex – Ontario, which were reclassified from our operating portfolio into redevelopment in June 2014 and March 2023, respectively; (v) properties sold or classified as held for sale during 2024 and 2025; and (vi) office properties, including Carillon medical office building, which was reclassified from active redevelopment into our office portfolio in December 2024.
(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)Includes non-cash activity across the portfolio as well as NOI from properties not included in the same property pool, including properties sold during both periods.
Our Same Property NOI increased 3.1% for the three months ended March 31, 2025 compared to the same period of the prior year primarily due to contractual rent growth, partially offset by higher bad debt expense.
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 our operating performance. We calculate 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 (i) depreciation and amortization related to real estate, (ii) gains and losses from the sale of certain real estate assets, (iii) gains and losses from change in control, and (iv) impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.
Considering the nature of our business as a real estate owner and operator, we believe 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 flows from operating activities (calculated in accordance with GAAP) as a
35
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.
From time to time, we may report or provide guidance with respect to “FFO, as adjusted,” which removes the impact of certain non-recurring and non-operating transactions or other items the Company does not consider to be representative of its core operating results, including, without limitation, (i) gains or losses associated with the early extinguishment of debt, (ii) gains or losses associated with litigation involving the Company that is not in the normal course of business, (iii) merger and acquisition costs, (iv) the impact on earnings from employee severance, (v) the excess of redemption value over carrying value of preferred stock redemption, and (vi) the impact of prior period bad debt or the collection of accounts receivable previously written off (“prior period collection impact”), which are not otherwise adjusted in our calculation of FFO.
Core Funds From Operations (“Core FFO”) is a non-GAAP financial measure of operating performance that modifies FFO for certain non-cash transactions that result in recording income or expense and impact our period-over-period performance, including (i) amortization of deferred financing costs, (ii) non-cash compensation expense and other, (iii) straight-line rent related to minimum rent and common area maintenance, (iv) market rent amortization income, and (v) amortization of debt discounts, premiums and hedge instruments. We believe that Core FFO is useful to investors in evaluating our core cash flow-generating operations by adjusting for items that we do not consider to be part of our core business operations, allowing for comparison of our core operating performance between periods. Core FFO should not be considered as an alternative to net income as an indicator of our performance or as an alternative to cash flow as a measure of liquidity or our ability to make distributions. Our computation of Core FFO may differ from the methodology for calculating Core FFO used by other REITs and therefore may not be comparable to such other REITs.
Our calculations of FFO and reconciliation to net income and Core FFO for the three months ended March 31, 2025 and 2024 (unaudited) are as follows (dollars in thousands):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net income | $ | 24,264 | $ | 14,436 | |||||||
| Less: net income attributable to noncontrolling interests in properties | (70) | (67) | |||||||||
| Less/add: (gain) loss on sales of operating properties, net | (91) | 236 | |||||||||
| Less: gain on sale of unconsolidated property, net | — | (2,325) | |||||||||
Add: depreciation and amortization of consolidated and unconsolidated entities, net of noncontrolling interests | 98,677 | 100,560 | |||||||||
FFO of the Operating Partnership(1) | 122,780 | 112,840 | |||||||||
| Less: Limited Partners’ interests in FFO | (2,463) | (1,822) | |||||||||
FFO attributable to common shareholders(1) | $ | 120,317 | $ | 111,018 | |||||||
| FFO per share of the Operating Partnership – diluted | $ | 0.55 | $ | 0.50 | |||||||
| Reconciliation of FFO to Core FFO | |||||||||||
FFO of the Operating Partnership(1) | $ | 122,780 | $ | 112,840 | |||||||
| Add: | |||||||||||
| Amortization of deferred financing costs | 1,644 | 929 | |||||||||
| Non-cash compensation expense and other | 2,516 | 2,722 | |||||||||
| Less: | |||||||||||
| Straight-line rent – minimum rent and common area maintenance | 2,578 | 3,125 | |||||||||
| Market rent amortization income | 3,542 | 2,267 | |||||||||
| Amortization of debt discounts, premiums and hedge instruments | 2,756 | 3,756 | |||||||||
| Core FFO of the Operating Partnership | $ | 118,064 | $ | 107,343 | |||||||
| Core FFO per share of the Operating Partnership – diluted | $ | 0.53 | $ | 0.48 | |||||||
(1)“FFO of the Operating Partnership” measures 100% of the operating performance of the Operating Partnership’s real estate properties. “FFO attributable to common shareholders” reflects a reduction for the redeemable noncontrolling weighted average diluted interest in the Operating Partnership.
36
Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”)
We define EBITDA, a non-GAAP financial measure, as net income before interest expense, income tax expense of the taxable REIT subsidiaries, and depreciation and amortization. For informational purposes, we also provide Adjusted EBITDA, which we define as EBITDA less (i) EBITDA from unconsolidated entities, as adjusted, (ii) gains on sales of operating properties or impairment charges, (iii) merger and acquisition costs, (iv) other income and expense, (v) noncontrolling interest Adjusted EBITDA, and (vi) 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 our 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, we believe 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, we also provide Annualized Adjusted EBITDA, adjusted as described above. We believe this supplemental information provides a meaningful measure of our operating performance. We believe 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.
The following table presents a reconciliation of our EBITDA, Adjusted EBITDA, and Annualized Adjusted EBITDA to net income (the most directly comparable GAAP measure) and a calculation of Net Debt to Adjusted EBITDA (in thousands):
| Three Months Ended March 31, 2025 | |||||
| Net income | $ | 24,264 | |||
| Depreciation and amortization | 98,231 | ||||
| Interest expense | 32,954 | ||||
| Income tax expense of taxable REIT subsidiaries | 10 | ||||
| EBITDA | 155,459 | ||||
| Unconsolidated EBITDA, as adjusted | 717 | ||||
| Gain on sales of operating properties, net | (91) | ||||
| Other income and expense, net | (3,451) | ||||
| Noncontrolling interests | (198) | ||||
| Adjusted EBITDA | $ | 152,436 | |||
Annualized Adjusted EBITDA(1) | $ | 609,744 | |||
| Company share of Net Debt: | |||||
| Mortgage and other indebtedness, net | $ | 2,910,057 | |||
| Add: Company share of unconsolidated joint venture debt | 44,575 | ||||
| Add: debt discounts, premiums and issuance costs, net | 828 | ||||
Less: Partner share of consolidated joint venture debt(2) | (9,789) | ||||
| Company’s consolidated debt and share of unconsolidated debt | 2,945,671 | ||||
| Less: cash, cash equivalents and restricted cash | (57,205) | ||||
| Company share of Net Debt | $ | 2,888,466 | |||
| Net Debt to Adjusted EBITDA | 4.7x | ||||
(1)Represents Adjusted EBITDA for the three months ended March 31, 2025 (as shown in the table above) multiplied by four.
(2)Partner share of consolidated joint venture debt is calculated based upon the partner’s pro rata ownership of the joint venture, multiplied by the related secured debt balance.
37
Liquidity and Capital Resources
Overview
Our primary finance and capital strategy is to maintain a strong balance sheet with sufficient flexibility to fund our operating and investment activities in a cost-effective manner. We consider a number of factors when evaluating our level of indebtedness and making decisions regarding additional borrowings or equity offerings, including the interest or dividend rate, the maturity date and the Company’s debt maturity ladder, the impact of financial metrics such as overall Company leverage levels and coverage ratios, and the Company’s ability to generate cash flow to cover debt service. We continuously monitor the capital markets and may consider raising additional capital through the issuance of our common or preferred shares, unsecured debt securities, or other securities.
As of March 31, 2025, we had approximately $49.1 million in cash and cash equivalents on hand, $5.8 million in restricted cash and escrow deposits, and $1.1 billion of remaining availability under the $1.1 billion unsecured revolving credit facility (the “Revolving Facility”) compared to $80.0 million of debt maturities over the next 12 months. During the three months ended March 31, 2025, we repaid the $350.0 million principal balance of the 4.00% senior unsecured notes that matured on March 15, 2025 using proceeds from Notes Due 2031. We believe we will have adequate liquidity over the next 12 months and beyond to operate our business and meet our cash requirements.
We derive the majority of our revenue from tenants who lease space from us under existing lease agreements at each of our properties. Therefore, our ability to generate cash from operations is dependent upon the rents that we are able to charge and collect from our tenants. While we believe that the nature of the properties in which we typically invest—primarily neighborhood and community shopping centers—provides a relatively stable revenue flow, an economic downturn, instability in the banking sector, tenant bankruptcies, inflation, tariffs, labor shortages, supply chain constraints, severe weather events, and/or increasing energy prices and interest rates, among other events, could adversely affect the ability of some of our tenants to meet their lease obligations.
Our Principal Capital Resources
For a discussion of cash generated from operations, see “Cash Flows” beginning on page 41. In addition to cash generated from operations, our other principal capital resources are discussed below.
Over the last several years, we have made substantial progress in enhancing our liquidity position and reducing our leverage and borrowing costs. We continue to focus on a balanced approach to growth and staggering debt maturities in order to retain our financial flexibility.
As of March 31, 2025, we had $1.1 billion available under the Revolving Facility for future borrowings. We also had $49.1 million in cash and cash equivalents as of March 31, 2025.
We were in compliance with all applicable financial covenants under the Revolving Facility, unsecured term loans and senior unsecured notes as of March 31, 2025.
On June 7, 2024, the Company filed a shelf registration statement with the SEC on Form S-3, which is effective for a term of three years, relating to the offer and sale, from time to time, of an indeterminate amount of equity and debt securities. Equity securities may be offered and sold by the Parent Company, and the net proceeds of any such offerings would be contributed to the Operating Partnership in exchange for additional General Partner Units. Debt securities may be offered and sold by the Operating Partnership with the Operating Partnership receiving the proceeds. From time to time, we may issue securities under this shelf registration statement for general corporate purposes, which may include acquisitions of additional properties, repayment of outstanding indebtedness, capital expenditures, the expansion, redevelopment, and/or improvement of properties in our portfolio, working capital, and other general purposes.
In the future, we will continue to monitor the capital markets and may consider raising additional capital through the issuance of our common shares, preferred shares, or other securities. We may also raise capital by disposing of properties, land parcels, or other assets that are no longer core components of our growth strategy. The sale price may differ from our carrying value at the time of sale.
38
Our Principal Liquidity Needs
Short-Term Liquidity Needs
Near-Term Debt Maturities. As of March 31, 2025, we have no secured debt, excluding scheduled monthly principal payments, and $80.0 million of unsecured debt scheduled to mature over the next 12 months. We believe we have sufficient liquidity to repay this obligation through a combination of cash flows generated from operations, capital markets transactions, and borrowings on the Revolving Facility.
Other Short-Term Liquidity Needs. The requirements for qualifying as a REIT and for a tax deduction for some or all of the dividends paid to shareholders necessitate that we distribute at least 90% of our taxable income on an annual basis. Such requirements cause us to have substantial liquidity needs over both the short and long term. Our short-term liquidity needs consist primarily of funds necessary to pay operating expenses associated with our operating properties, scheduled interest and principal payments on our debt of approximately $105.0 million and $3.9 million, respectively, for the remainder of 2025, expected dividend payments to our common shareholders and common unit holders, and recurring capital expenditures.
In February 2025, our Board of Trustees declared a cash distribution of $0.27 per common share and Common Unit for the first quarter of 2025. This distribution was paid on April 16, 2025 to common shareholders and common unit holders of record as of April 9, 2025. Future distributions, if any, are at the discretion of the Board of Trustees, who will continue to evaluate our sources and uses of capital, liquidity position, operating fundamentals, maintenance of our REIT qualification, and other factors they may deem relevant. We believe we have sufficient liquidity to pay any dividend from available cash on hand and borrowings on the Revolving Facility.
Other short-term liquidity needs include expenditures for tenant improvements, external leasing commissions, and recurring capital expenditures. During the three months ended March 31, 2025, we incurred $6.3 million for recurring capital expenditures on operating properties and $31.3 million for tenant improvements and external leasing commissions, which includes costs to re-lease anchor space at our operating properties related to tenants open and operating as of March 31, 2025 (excluding development and redevelopment properties). We currently anticipate incurring approximately $130 million of additional major tenant improvement costs related to executed leases for tenants not yet open at a number of our operating properties over the next 12 to 24 months. We believe we have the ability to fund these costs through cash flows generated from operations or borrowings on the Revolving Facility.
During the three months ended March 31, 2025, we completed major development construction activities at The Corner – IN and reclassified the property from active development into our operating portfolio in March 2025. As of March 31, 2025, the retail and office portions of the expansion project at One Loudoun Downtown (the “One Loudoun Expansion”), our mixed-use lifestyle center in the Washington, D.C. MSA, was under construction. Our share of the total estimated costs for this project is approximately $81.0 million to $91 million, of which our share of the expected funding requirement is approximately $65.0 million to $75.0 million. As of March 31, 2025, we have incurred $4.0 million of these costs. We anticipate incurring the majority of the remaining costs for this project over the next 12 to 24 months and believe we have the ability to fund this project through cash flows generated from operations or borrowings on the Revolving Facility.
Share Repurchase Program
The Company has an existing share repurchase program under which it may repurchase, from time to time, up to a maximum of $300.0 million of its common shares (the “Share Repurchase Program”). The Company intends to fund any future repurchases under the Share Repurchase Program with available cash on hand or availability under the Revolving Facility, subject to any applicable restrictions. The timing of share repurchases and the number of common shares to be repurchased under the Share Repurchase Program will depend upon prevailing market conditions, regulatory requirements, and other factors. In January 2025, the Company extended the Share Repurchase Program for an additional year to February 28, 2026, if not terminated or extended prior to that date. As of March 31, 2025, the Company has not repurchased any shares under the Share Repurchase Program.
Long-Term Liquidity Needs
Our long-term liquidity needs consist primarily of funds necessary to pay for any new development projects, redevelopment of existing properties, non-recurring capital expenditures, acquisitions of properties, payment of indebtedness at maturity, and obligations under ground leases.
39
Selective Acquisitions, Developments and Joint Ventures. We may selectively pursue the acquisition, development, and redevelopment of other properties, which would require additional capital. It is unlikely that we would have sufficient funds on hand to meet these long-term capital requirements; therefore, we would have to satisfy these needs through additional borrowings, sales of common or preferred shares, issuance of Operating Partnership units, cash generated through property dispositions, and/or participation in joint venture arrangements. We cannot be certain that we would have access to these sources of capital on satisfactory terms, if at all, to fund our long-term liquidity requirements. We evaluate all future opportunities against pre-established criteria, including, but not limited to, location, demographics, expected return, tenant credit quality, tenant relationships, and the amount of existing retail space. Our ability to access the capital markets will depend on a number of factors, including general capital market conditions.
Potential Debt Repurchases. We may, from time to time, depending on market conditions and prices, contractual restrictions, our financial liquidity, and other factors, seek to repurchase our senior unsecured notes maturing at various dates through March 2034 in open market transactions, by tender offer, or otherwise, as market conditions warrant.
Commitments under Ground Leases. We are obligated under 12 ground leases for approximately 98 acres of land as of March 31, 2025. Most of these ground leases require fixed annual rent payments, and the expiration dates of the remaining initial terms of these ground leases range from August 2025 to 2092. Assuming we exercise all available options to extend the terms of our ground leases, our ground leases will expire between 2045 and 2115.
Capital Expenditures on Consolidated Properties
The following table summarizes cash capital expenditures for our development and redevelopment projects and other capital expenditures for the three months ended March 31, 2025 (in thousands):
| Three Months Ended March 31, 2025 | |||||
| Active development and redevelopment projects | $ | 1,493 | |||
| Recurring operating capital expenditures (primarily tenant improvements) and other | 32,870 | ||||
| Total | $ | 34,363 | |||
We capitalize certain indirect costs such as interest, payroll, and other general and administrative costs related to these development activities. If we had experienced a 10% reduction in development and redevelopment activities without a corresponding decrease in indirect project costs, we would have recorded additional expense of $0.1 million for the three months ended March 31, 2025.
Debt Maturities
The following table summarizes the scheduled maturities and principal amortization of the Company’s indebtedness as of March 31, 2025, presented on a calendar year basis (in thousands):
| Secured Debt | |||||||||||||||||||||||
| Scheduled Principal Payments | Term Maturities | Unsecured Debt | Total | ||||||||||||||||||||
| 2025 | $ | 3,948 | $ | — | $ | 80,000 | $ | 83,948 | |||||||||||||||
| 2026 | 4,581 | 10,600 | 550,000 | 565,181 | |||||||||||||||||||
| 2027 | 3,120 | — | 500,000 | 503,120 | |||||||||||||||||||
| 2028 | 3,757 | — | 134,000 | 137,757 | |||||||||||||||||||
| 2029 | 4,324 | — | 400,000 | 404,324 | |||||||||||||||||||
| Thereafter | 23,767 | 92,788 | 1,100,000 | 1,216,555 | |||||||||||||||||||
| $ | 43,497 | $ | 103,388 | $ | 2,764,000 | $ | 2,910,885 | ||||||||||||||||
| Debt discounts, premiums and issuance costs, net | (828) | ||||||||||||||||||||||
| Total | $ | 2,910,057 | |||||||||||||||||||||
Failure to comply with the obligations under our debt agreements, including payment obligations, could cause an event of default under such debt, which, among other things, could result in the loss of title to the assets securing the debt, acceleration of the payment of all principal and interest and/or termination of the agreements, or exposure to the risk of foreclosure. In addition, certain of our variable rate loans contain cross-default provisions whereby a violation by the Company of any financial covenant set forth in the Revolving Facility will constitute an “Event of Default” under the loans, which could allow
40
the lenders to accelerate the amounts due under our debt agreements if we fail to satisfy these financial covenants. See Item 1A. “Risk Factors – Risks Related to Our Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024 for more information related to the risks associated with our indebtedness.
Impact of Changes in Credit Ratings on Our Liquidity
We have received investment-grade corporate credit ratings from three nationally recognized credit rating agencies. These ratings did not change as of March 31, 2025.
In the future, these ratings could change based upon, among other things, the impact that prevailing economic conditions may have on our results of operations and financial condition. Credit rating reductions by one or more rating agencies could also adversely affect our access to funding sources, the cost and other terms of obtaining funding, as well as our overall financial condition, operating results and cash flow.
Cash Flows
As of March 31, 2025, we had cash, cash equivalents and restricted cash of $54.9 million. We may be subject to concentrations of credit risk with regard to our cash and cash equivalents. We place our cash and short-term investments with highly rated financial institutions. While we attempt to limit our exposure at any point in time, occasionally such cash and investments may temporarily exceed the Federal Deposit Insurance Corporation (“FDIC”) and the Securities Investor Protection Corporation (“SIPC”) insurance limits. We also maintain certain compensating balances in several financial institutions in support of borrowings from those institutions. Such compensating balances were not material to the accompanying consolidated balance sheets.
Comparison of the Three Months Ended March 31, 2025 to the Three Months Ended March 31, 2024
The following table summarizes our cash flow activities (in thousands):
| Three Months Ended March 31, | |||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||
| Net cash provided by operating activities | $ | 74,060 | $ | 53,581 | $ | 20,479 | |||||||||||
| Net cash provided by (used in) investing activities | 227,837 | (289,338) | 517,175 | ||||||||||||||
| Net cash (used in) provided by financing activities | (380,317) | 283,291 | (663,608) | ||||||||||||||
| (Decrease) increase in cash, cash equivalents and restricted cash | (78,420) | 47,534 | (125,954) | ||||||||||||||
| Cash, cash equivalents and restricted cash, at beginning of period | 133,552 | 41,430 | |||||||||||||||
| Cash, cash equivalents and restricted cash, at end of period | $ | 55,132 | $ | 88,964 | |||||||||||||
Cash provided by operating activities was $74.1 million for the three months ended March 31, 2025 and $53.6 million for the same period of 2024. The cash flows were positively impacted by an increase in net operating income and changes to other working capital accounts.
Cash provided by investing activities was $227.8 million for the three months ended March 31, 2025 compared to cash used in investing activities of $289.3 million for the same period of 2024. Highlights of significant cash sources and uses in investing activities are as follows:
•We received $350.0 million in principal upon maturity of the short-term certificates of deposit in February 2025 during the three months ended March 31, 2025;
•We invested $265.0 million of proceeds from the January 2024 public offering of $350.0 million in aggregate principal amount of 5.50% senior unsecured notes due 2034 (the “Notes Due 2034”) in short-term certificates of deposit during the three months ended March 31, 2024;
•We acquired Village Commons and made an acquisition deposit related to the purchase of Legacy West for $78.3 million during the three months ended March 31, 2025. We did not acquire any properties during the three months ended March 31, 2024;
•Capital expenditures increased by $6.2 million primarily related to the timing of capital projects along with a change in construction payables of $7.8 million for the three months ended March 31, 2025;
41
•We contributed $2.0 million to an unconsolidated joint venture during the three months ended March 31, 2025 related to our share of a developer fee and debt service on the construction loan at The Corner – IN, of which we own a 50% interest;
•We received net proceeds of $1.8 million from the sale of land at Broadstone Station during the three months ended March 31, 2024. We did not sell any land during the three months ended March 31, 2025; and
•We received a $1.6 million distribution upon the joint venture’s disposition of Glendale Center Apartments, of which we own an 11.5% interest, to a third party during the three months ended March 31, 2024.
Cash used in financing activities was $380.3 million for the three months ended March 31, 2025 compared to cash provided by financing activities of $283.3 million for the same period of 2024. Highlights of significant cash sources and uses in financing activities are as follows:
•We borrowed $103.0 million on the Revolving Facility during the three months ended March 31, 2025 compared to the receipt of $345.3 million of proceeds from the Notes Due 2034 and borrowings of $40.0 million on the Revolving Facility during the three months ended March 31, 2024;
•We repaid the following during the three months ended March 31, 2025: (i) $350.0 million principal balance of the 4.00% senior unsecured notes that matured on March 15, 2025, (ii) $69.0 million of borrowings on the Revolving Facility, and (iii) $1.3 million of mortgages payable compared to the following repayments during the three months ended March 31, 2024: (i) $40.0 million of borrowings on the Revolving Facility and (ii) $1.3 million of mortgages payable; and
•We made distributions to common shareholders and holders of common partnership interests in the Operating Partnership of $61.8 million during the three months ended March 31, 2025 compared to distributions of $55.7 million during the three months ended March 31, 2024.
Critical Accounting Estimates
We based the discussion and analysis of our financial condition and results of operations upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. There were no changes made by management to the critical accounting policies in the three months ended March 31, 2025. We discuss the most critical estimates in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 12, 2025.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk Related to Fixed and Variable Rate Debt
As of March 31, 2025, we had $2.9 billion of outstanding consolidated indebtedness (inclusive of net unamortized debt discounts, premiums and issuance costs of $0.8 million). In addition, we were party to various consolidated interest rate hedge agreements totaling $855.0 million with maturities over various terms through 2026. Reflecting the effects of these hedge agreements, our fixed and variable rate debt would have been $2.7 billion (93%) and $203.0 million (7%), respectively, of our total consolidated indebtedness as of March 31, 2025.
As of March 31, 2025, we had $550.0 million of fixed rate debt scheduled to mature within the next 18 months. A 100-basis point change in interest rates on this debt as of March 31, 2025 would change our annual cash flow by $5.5 million. A 100-basis point change in interest rates on our unhedged variable rate debt as of March 31, 2025 would change our annual cash flow by $2.0 million. Based upon the terms of our variable rate debt, we are most vulnerable to a change in short-term Secured Overnight Financing Rate (“SOFR”) interest rates.
42
ITEM 4. CONTROLS AND PROCEDURES
Kite Realty Group Trust
Evaluation of Disclosure Controls and Procedures
An evaluation was performed under the supervision and with the participation of the Parent Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, the Parent Company’s Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
There has been no change in the Parent Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) identified in connection with the evaluation required by Rule 13a-15(b) under the Securities Exchange Act of 1934 of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of March 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Kite Realty Group, L.P.
Evaluation of Disclosure Controls and Procedures
An evaluation was performed under the supervision and with the participation of the Operating Partnership’s management, including the Chief Executive Officer and Chief Financial Officer of Kite Realty Group Trust (the sole general partner of Kite Realty Group, L.P.), of the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, the Operating Partnership’s Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
There has been no change in the Operating Partnership’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) identified in connection with the evaluation required by Rule 13a-15(b) under the Securities Exchange Act of 1934 of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of March 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
43
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not subject to any material litigation nor, to management’s knowledge, is any material litigation currently threatened against us. We are parties to routine litigation, claims, and administrative proceedings arising in the ordinary course of business. Management believes that such matters will not have a material adverse impact on our consolidated financial condition, results of operations or cash flows taken as a whole.
ITEM 1A. RISK FACTORS
There have been no material changes from the risk factors previously disclosed in response to Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2024 filed on February 12, 2025.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
During the three months ended March 31, 2025, certain of our employees surrendered common shares owned by them to satisfy their statutory minimum U.S. federal and state tax obligations associated with the vesting of restricted common shares of beneficial interest issued under the Company’s 2013 Equity Incentive Plan, as amended and restated as of May 11, 2022. These shares were repurchased by the Company.
The following table summarizes all of these repurchases during the three months ended March 31, 2025:
| Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Maximum number of shares that may yet be purchased under the plans or programs(1) | ||||||||||||||||||||||
| January 1, 2025 to January 31, 2025 | — | $ | — | N/A | $ | 300,000,000 | ||||||||||||||||||||
| February 1, 2025 to February 28, 2025 | — | $ | — | N/A | $ | 300,000,000 | ||||||||||||||||||||
| March 1, 2025 to March 31, 2025 | 51,057 | $ | 23.30 | N/A | $ | 300,000,000 | ||||||||||||||||||||
| Total | 51,057 | $ | 23.30 | |||||||||||||||||||||||
(1)Represents amounts outstanding under the Company’s authorized Share Repurchase Program, which was announced in February 2021. In April 2022, the Company’s Board of Trustees increased the size of the program from $150.0 million to $300.0 million and in January 2025, extended the program for an additional year. The program may be suspended or terminated at any time by the Company and will terminate on February 28, 2026, if not terminated or extended prior to that date.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Trading Arrangements
During the three months ended March 31, 2025, none of our officers or trustees adopted terminated
44
ITEM 6. EXHIBITS
| Exhibit No. | Description | Location | ||||||||||||
| 3.1 | Incorporated by reference to Exhibit 3.1 to the Annual Report on Form 10-K of Kite Realty Group Trust filed with the SEC on February 28, 2022 | |||||||||||||
| 3.2 | Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on November 9, 2023 | |||||||||||||
| 31.1 | Filed herewith | |||||||||||||
| 31.2 | Filed herewith | |||||||||||||
| 31.3 | Filed herewith | |||||||||||||
| 31.4 | Filed herewith | |||||||||||||
| 32.1 | Filed herewith | |||||||||||||
| 32.2 | Filed herewith | |||||||||||||
| 101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | Filed herewith | ||||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | Filed herewith | ||||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Filed herewith | ||||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith | ||||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | Filed herewith | ||||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Filed herewith | ||||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | Filed herewith | ||||||||||||
45
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.
| KITE REALTY GROUP TRUST | ||||||||||||||
| Date: | April 30, 2025 | By: | /s/ JOHN A. KITE | |||||||||||
| John A. Kite | ||||||||||||||
| Chairman and Chief Executive Officer | ||||||||||||||
| (Principal Executive Officer) | ||||||||||||||
| Date: | April 30, 2025 | By: | /s/ HEATH R. FEAR | |||||||||||
| Heath R. Fear | ||||||||||||||
| Executive Vice President and Chief Financial Officer | ||||||||||||||
| (Principal Financial Officer) | ||||||||||||||
| KITE REALTY GROUP, L.P. | ||||||||||||||
| By: Kite Realty Group Trust, its sole general partner | ||||||||||||||
| Date: | April 30, 2025 | By: | /s/ JOHN A. KITE | |||||||||||
| John A. Kite | ||||||||||||||
| Chairman and Chief Executive Officer | ||||||||||||||
| (Principal Executive Officer) | ||||||||||||||
| Date: | April 30, 2025 | By: | /s/ HEATH R. FEAR | |||||||||||
| Heath R. Fear | ||||||||||||||
| Executive Vice President and Chief Financial Officer | ||||||||||||||
| (Principal Financial Officer) | ||||||||||||||
46