Kite Realty Group Trust 8-K, filed May 1, 2023
Kite Realty Group Trust (KRG)
8-K
2023-05-01
For: 2023-05-01
View Original
Added on
July 04, 2026
About this 8-K
Kite Realty Group Trust filed this 8-K on May 1, 2023.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 1, 2023
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification Number) | ||||||
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Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
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Item 2.02. Results of Operations and Financial Condition.
On May 1, 2023, Kite Realty Group Trust (the “Company”) announced its consolidated financial results for the quarter ended March 31, 2023. A copy of the Company’s press release is furnished as Exhibit 99.1 to this current report on Form 8-K. A copy of the Company’s First Quarter 2023 Supplemental Disclosure is furnished as Exhibit 99.2 to this current report on Form 8-K. The information contained in Item 2.02 of this current report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed “filed” with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the Company under the Securities Act of 1933, as amended.
Item 9.01. Financial Statements and Exhibits.
(d)Exhibits
| Exhibit No. | Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| KITE REALTY GROUP TRUST | ||||||||
| Date: May 1, 2023 | By: | /s/ HEATH R. FEAR | ||||||
| Heath R. Fear | ||||||||
| Executive Vice President and | ||||||||
| Chief Financial Officer | ||||||||
| Exhibit 99.1 | ||||||||
PRESS RELEASE
Contact Information: Kite Realty Group Trust
Tyler Henshaw
SVP, Capital Markets & Investor Relations
317.713.7780
thenshaw@kiterealty.com
Kite Realty Group Trust Reports First Quarter 2023 Operating Results
Indianapolis, Indiana, May 1, 2023 – Kite Realty Group Trust (NYSE: KRG), a premier owner and operator of high-quality, open-air grocery-anchored neighborhood and community centers, along with vibrant mixed-use assets, reported today its operating results for the first quarter ended March 31, 2023. For the quarters ended March 31, 2023 and 2022, net income attributable to common shareholders was $5.4 million, or $0.02 per diluted share, compared to net loss of $16.8 million, or $0.08 per diluted share, respectively.
Company raises 2023 guidance
Increased NAREIT FFO per share by 11% on a year-over-year basis
Same Property NOI increased by 6.5% on a year-over-year basis
Leased over 831,000 square feet at 13.0% comparable blended cash leasing spreads
“The KRG team continues to capitalize on a constructive leasing environment, as evidenced by the double-digit blended and non-option renewal cash leasing spreads,” said John A. Kite, Chairman and CEO. “The structural changes in consumer behavior experienced over the past several years continue to act as a tailwind to our well-positioned open-air retail portfolio. As an organization anchored in operational excellence and a rock-solid balance sheet, we believe KRG is positioned to thrive in any macroeconomic environment in 2023.”
First Quarter 2023 Financial and Operational Results
▪Generated NAREIT FFO of the Operating Partnership of $113.8 million, or $0.51 per diluted share.
▪Same Property NOI increased by 6.5%.
▪Executed 144 new and renewal leases representing over 831,000 square feet.
▪Cash leasing spreads of 38.0% on 17 comparable new leases, 10.0% on 77 comparable renewals, and 13.0% on a blended basis.
▪Excluding option renewals, the blended cash spreads for comparable new and non-option renewal leases were 21.1%.
▪Operating retail portfolio annualized base rent (ABR) per square foot of $20.04 at March 31, 2023, a 2.4% increase year-over-year.
▪Retail portfolio percent leased of 94.8% at March 31, 2023, a sequential increase of 20 basis points and a 120-basis point increase on a year-over-year basis.
▪Portfolio leased-to-occupied spread of 270 basis points, which equates to $30 million of signed-not-open NOI.
First Quarter 2023 Capital Allocation Activity
▪The Company currently has three active development projects with limited future capital commitments of $37.9 million.
First Quarter 2023 Balance Sheet Overview
▪As of March 31, 2023, the Company’s net debt to Adjusted EBITDA was 5.3x, which represents a 0.4x year-over-year decrease.
▪The Company repaid five mortgages with an aggregate principal balance of $161.5 million with proceeds from the Company’s revolving line of credit and cash on hand.
▪Subsequent to quarter end, the Company closed on a $95.1 million 10-year mortgage at a fixed interest rate of 5.36% secured by its One Loudoun Residential joint venture project in Ashburn, Virginia. The mortgage generated gross proceeds of $92.7 million at the Company’s share, which were used to repay a portion of the outstanding balance on the Company’s $1.1 billion revolving line of credit. As of May 1, 2023, the outstanding balance on the Company’s revolving line of credit is $68.5 million.
Dividend
On April 28, 2023, the Company’s Board of Trustees declared a second quarter 2023 dividend of $0.24 per common share, which represents a 14% year-over-year increase. The second quarter dividend will be paid on July 14, 2023, to shareholders of record as of July 7, 2023.
2023 Earnings Guidance
The Company expects to generate net income attributable to common shareholders of $0.05 to $0.11 per diluted share in 2023. The Company is raising its 2023 NAREIT FFO guidance range to $1.92 to $1.98 per diluted share from $1.89 to $1.95 per diluted share, based, in part, on the following key assumptions at the midpoint:
▪2023 same property NOI range of 2.25% to 3.25%, which represents a 25-basis point increase at the midpoint.
▪Full-year bad debt assumption of 1.15% of total revenues, which represents a 10-basis point decrease at the midpoint.
▪Additional disruption related to Bed Bath & Beyond Inc. and Party City Holdings Inc. of 0.75% of total revenues ($0.03 of FFO per diluted share), of which approximately 70 basis points is related to the balance of 2023 and assumes no additional revenue from Bed Bath & Beyond Inc.
▪Transaction activity is expected to be earnings neutral.
The following table reconciles the Company’s 2023 net income guidance range to the Company’s 2023 NAREIT FFO guidance range:
| Low | High | ||||||||||
| Net income | $ | 0.05 | $ | 0.11 | |||||||
| Depreciation and amortization | 1.87 | 1.87 | |||||||||
| NAREIT FFO | $ | 1.92 | $ | 1.98 | |||||||
Earnings Conference Call
Kite Realty Group Trust will conduct a conference call to discuss its financial results on Tuesday, May 2, 2023, at 1:00 p.m. Eastern Time. A live webcast of the conference call will be available on KRG’s website at www.kiterealty.com or at the following link: First Quarter 2023 Webcast. The dial-in registration link is: First Quarter 2023 Teleconference Registration. In addition, a webcast replay link will be available on KRG’s website.
About Kite Realty Group Trust
Kite Realty Group Trust (NYSE: KRG) is a real estate investment trust (REIT) headquartered in Indianapolis, IN that is one of the largest publicly traded owners and operators of open-air shopping centers and mixed-use assets. The Company’s primarily grocery-anchored portfolio is located in high-growth Sun Belt and select strategic gateway markets. The combination of necessity-based grocery-anchored neighborhood and community centers, along with vibrant mixed-use assets makes the KRG portfolio an ideal mix for both retailers and consumers. Publicly listed since 2004, KRG has nearly 60 years of experience in developing, constructing and operating real estate. Using operational, investment, development, and redevelopment expertise, KRG continuously optimizes its portfolio to maximize value and return to shareholders. As of
March 31, 2023, the Company owned interests in 181 U.S. open-air shopping centers and mixed-use assets, comprising approximately 28.5 million square feet of gross leasable space. For more information, please visit kiterealty.com.
Connect with KRG: LinkedIn | Twitter | Instagram | Facebook
Safe Harbor
This release, 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 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934. Such statements are based on assumptions and expectations that may not be realized and are inherently subject to risks, uncertainties and other factors, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, performance, transactions or achievements, financial or otherwise, may differ materially from the results, performance, transactions or achievements, financial or otherwise, expressed or implied by the forward-looking statements.
Risks, uncertainties and other factors that might cause such differences, some of which could be material, include but are not limited to: national and local economic, business, 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 a potential economic slowdown or recession, rising interest rates, inflation, unemployment, or limited growth in consumer income or spending); the risk that our actual NOI for leases that have signed but not yet opened will not be consistent with expected NOI for leases that have signed but not yet opened; financing risks, including the availability of, and costs associated with, sources of liquidity; the Company’s ability to refinance, or extend the maturity dates of, the Company’s indebtedness; the level and volatility of interest rates; the financial stability of tenants; the competitive environment in which the Company operates, including potential oversupplies of and 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; the Company’s ability to maintain the Company’s status as a real estate investment trust for U.S. federal income tax purposes; potential environmental and other liabilities; impairment in the value of real estate property the Company owns; 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 tenant’s 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 the Company’s properties in Texas, Florida, Maryland, New York, and North Carolina; civil unrest, acts of violence, terrorism or war, acts of God, climate change, epidemics, pandemics (including COVID-19), natural disasters and severe weather conditions, including such events that may result in underinsured or uninsured losses or other increased costs and expenses; changes in laws and government regulations including governmental orders affecting the use of the Company’s properties or the ability of its tenants to operate, and the costs of complying with such changed laws and government regulations; possible short-term or long-term changes in consumer behavior due to COVID-19 and the fear of future pandemics; our ability to satisfy environmental, social or governance standards set by various constituencies; insurance costs and coverage; risks associated with cybersecurity attacks and the loss of confidential information and other business disruptions; other factors affecting the real estate industry generally; and other risks identified in reports the Company files with the Securities and Exchange Commission (“the SEC”) or in other documents that it publicly disseminates, including, in particular, the section titled “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and in the Company’s quarterly reports on Form 10-Q. The Company undertakes no obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.
This Earnings Release also includes certain forward-looking non-GAAP information. These non-GAAP financial measures should be considered along with, but not as alternatives to, net income (loss) as a measure of our operating performance. Please see the following pages for the corresponding definitions and reconciliations of such non-GAAP financial measures.
Kite Realty Group Trust
Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
| March 31, 2023 | December 31, 2022 | ||||||||||
| Assets: | |||||||||||
| Investment properties, at cost | $ | 7,719,677 | $ | 7,732,573 | |||||||
| Less: accumulated depreciation | (1,210,937) | (1,161,148) | |||||||||
| Net investment properties | 6,508,740 | 6,571,425 | |||||||||
| Cash and cash equivalents | 43,733 | 115,799 | |||||||||
Tenant and other receivables, including accrued straight-line rent of $47,863 and $44,460, respectively | 103,474 | 101,301 | |||||||||
| Restricted cash and escrow deposits | 8,962 | 6,171 | |||||||||
| Deferred costs, net | 381,539 | 409,828 | |||||||||
| Prepaid and other assets | 117,424 | 127,044 | |||||||||
| Investments in unconsolidated subsidiaries | 10,341 | 10,414 | |||||||||
| Assets associated with investment property held for sale | 22,727 | — | |||||||||
| Total assets | $ | 7,196,940 | $ | 7,341,982 | |||||||
| Liabilities and Equity: | |||||||||||
| Liabilities: | |||||||||||
| Mortgage and other indebtedness, net | $ | 2,972,567 | $ | 3,010,299 | |||||||
| Accounts payable and accrued expenses | 160,142 | 207,792 | |||||||||
| Deferred revenue and other liabilities | 294,760 | 298,039 | |||||||||
| Liabilities associated with investment property held for sale | 939 | — | |||||||||
| Total liabilities | 3,428,408 | 3,516,130 | |||||||||
| Commitments and contingencies | |||||||||||
Limited Partners’ interests in the Operating Partnership and other redeemable noncontrolling interests | 57,054 | 53,967 | |||||||||
| Equity: | |||||||||||
Common shares, $0.01 par value, 490,000,000 shares authorized, 219,325,898 and 219,185,658 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively | 2,193 | 2,192 | |||||||||
| Additional paid-in capital | 4,896,049 | 4,897,736 | |||||||||
| Accumulated other comprehensive income | 62,787 | 74,344 | |||||||||
| Accumulated deficit | (1,255,025) | (1,207,757) | |||||||||
| Total shareholders’ equity | 3,706,004 | 3,766,515 | |||||||||
| Noncontrolling interests | 5,474 | 5,370 | |||||||||
| Total equity | 3,711,478 | 3,771,885 | |||||||||
| Total liabilities and equity | $ | 7,196,940 | $ | 7,341,982 | |||||||
Kite Realty Group Trust
Consolidated Statements of Operations
(dollars in thousands, except per share amounts)
(unaudited)
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Rental income | $ | 203,063 | $ | 190,892 | |||||||||||||||||||
| Other property-related revenue | 1,916 | 1,190 | |||||||||||||||||||||
| Fee income | 1,771 | 2,309 | |||||||||||||||||||||
| Total revenue | 206,750 | 194,391 | |||||||||||||||||||||
| Expenses: | |||||||||||||||||||||||
| Property operating | 27,314 | 25,928 | |||||||||||||||||||||
| Real estate taxes | 27,183 | 26,859 | |||||||||||||||||||||
| General, administrative and other | 13,384 | 13,309 | |||||||||||||||||||||
| Merger and acquisition costs | — | 925 | |||||||||||||||||||||
| Depreciation and amortization | 108,071 | 121,504 | |||||||||||||||||||||
| Total expenses | 175,952 | 188,525 | |||||||||||||||||||||
| Gain on sales of operating properties, net | — | 3,168 | |||||||||||||||||||||
| Operating income | 30,798 | 9,034 | |||||||||||||||||||||
| Other (expense) income: | |||||||||||||||||||||||
| Interest expense | (25,425) | (25,514) | |||||||||||||||||||||
| Income tax benefit of taxable REIT subsidiary | 29 | 71 | |||||||||||||||||||||
| Equity in loss of unconsolidated subsidiaries | (244) | (314) | |||||||||||||||||||||
| Other income (expense), net | 403 | (103) | |||||||||||||||||||||
| Net income (loss) | 5,561 | (16,826) | |||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interests | (170) | 22 | |||||||||||||||||||||
| Net income (loss) attributable to common shareholders | $ | 5,391 | $ | (16,804) | |||||||||||||||||||
| Net income (loss) per common share – basic and diluted | $ | 0.02 | $ | (0.08) | |||||||||||||||||||
| Weighted average common shares outstanding – basic | 219,233,569 | 218,981,168 | |||||||||||||||||||||
| Weighted average common shares outstanding – diluted | 219,965,061 | 218,981,168 | |||||||||||||||||||||
Kite Realty Group Trust
Funds From Operations (“FFO”)(1)(2)
(dollars in thousands, except per share amounts)
(unaudited)
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||||||
| Net income (loss) | $ | 5,561 | $ | (16,826) | |||||||||||||||||||
| Less: net income attributable to noncontrolling interests in properties | (104) | (144) | |||||||||||||||||||||
| Less: gain on sales of operating properties, net | — | (3,168) | |||||||||||||||||||||
Add: depreciation and amortization of consolidated and unconsolidated entities, net of noncontrolling interests | 108,309 | 121,847 | |||||||||||||||||||||
FFO of the Operating Partnership(1) | 113,766 | 101,709 | |||||||||||||||||||||
Less: Limited Partners’ interests in FFO | (1,507) | (1,118) | |||||||||||||||||||||
FFO attributable to common shareholders(1) | $ | 112,259 | $ | 100,591 | |||||||||||||||||||
| FFO, as defined by NAREIT, per share of the Operating Partnership – basic | $ | 0.51 | $ | 0.46 | |||||||||||||||||||
| FFO, as defined by NAREIT, per share of the Operating Partnership – diluted | $ | 0.51 | $ | 0.46 | |||||||||||||||||||
FFO of the Operating Partnership(1) | $ | 113,766 | $ | 101,709 | |||||||||||||||||||
| Add: merger and acquisition costs | — | 925 | |||||||||||||||||||||
| Less: prior period collection impact | — | (1,096) | |||||||||||||||||||||
| FFO, as adjusted, of the Operating Partnership | $ | 113,766 | $ | 101,538 | |||||||||||||||||||
| FFO, as adjusted, per share of the Operating Partnership – basic | $ | 0.51 | $ | 0.46 | |||||||||||||||||||
| FFO, as adjusted, per share of the Operating Partnership – diluted | $ | 0.51 | $ | 0.46 | |||||||||||||||||||
| Weighted average common shares outstanding – basic | 219,233,569 | 218,981,168 | |||||||||||||||||||||
| Weighted average common shares outstanding – diluted | 219,965,061 | 220,202,896 | |||||||||||||||||||||
| Weighted average common shares and units outstanding – basic | 222,186,023 | 221,428,198 | |||||||||||||||||||||
| Weighted average common shares and units outstanding – diluted | 222,917,515 | 222,649,925 | |||||||||||||||||||||
| FFO, as defined by NAREIT, per diluted share/unit | |||||||||||||||||||||||
| Net income (loss) | $ | 0.02 | $ | (0.08) | |||||||||||||||||||
| Less: net income attributable to noncontrolling interests in properties | 0.00 | 0.00 | |||||||||||||||||||||
| Less: gain on sales of operating properties, net | 0.00 | (0.01) | |||||||||||||||||||||
Add: depreciation and amortization of consolidated and unconsolidated entities, net of noncontrolling interests | 0.49 | 0.55 | |||||||||||||||||||||
FFO, as defined by NAREIT, of the Operating Partnership per diluted share/unit(1)(2) | $ | 0.51 | $ | 0.46 | |||||||||||||||||||
| Add: merger and acquisition costs | 0.00 | 0.00 | |||||||||||||||||||||
| Less: prior period collection impact | 0.00 | 0.00 | |||||||||||||||||||||
FFO, as adjusted, of the Operating Partnership per diluted share/unit(2) | $ | 0.51 | $ | 0.46 | |||||||||||||||||||
(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.
(2)Per share/unit amounts of components will not necessarily sum to the total due to rounding to the nearest cent.
Funds From Operations (“FFO”) is a widely used performance measure for real estate companies and is provided here as a supplemental measure of operating performance. The Company calculates FFO, a non-GAAP financial measure, in accordance with the best practices described in the April 2002 National Policy Bulletin of the National Association of Real Estate Investment Trusts (“NAREIT”), as restated in 2018. The NAREIT white paper defines FFO as net income (calculated in accordance with GAAP), excluding (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, the Company believes that FFO is helpful to investors in measuring our operational performance because it excludes various items included in net income that do not relate to or are not indicative of our operating performance, such as gains or losses from sales of depreciated property and depreciation and amortization, which can make periodic and peer analyses of operating performance more difficult. FFO (a) should not be considered as an alternative to net income (calculated in accordance with GAAP) for the purpose of measuring our financial performance, (b) is not an alternative to cash flow from operating activities (calculated in accordance with GAAP) as a measure of our liquidity, and (c) is not indicative of funds available to satisfy our cash needs, including our ability to make distributions. The Company’s 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, the Company 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) in 2022, the impact of prior period bad debt or the collection of accounts receivable previously written off (“prior period collection impact”) due to the recovery from the COVID-19 pandemic, which are not otherwise adjusted in the Company’s calculation of FFO.
Kite Realty Group Trust
Same Property Net Operating Income (“NOI”)
(dollars in thousands)
(unaudited)
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
| 2023 | 2022 | Change | |||||||||||||||||||||||||||||||||
Number of properties in same property pool for the period(1) | 177 | 177 | |||||||||||||||||||||||||||||||||
| Leased percentage at period end | 94.9 | % | 93.8 | % | |||||||||||||||||||||||||||||||
Economic occupancy percentage(2) | 92.3 | % | 90.4 | % | |||||||||||||||||||||||||||||||
| Minimum rent | $ | 146,279 | $ | 140,492 | |||||||||||||||||||||||||||||||
| Tenant recoveries | 42,124 | 40,274 | |||||||||||||||||||||||||||||||||
| Bad debt reserve | (1,699) | (1,607) | |||||||||||||||||||||||||||||||||
| Other income, net | 2,425 | 1,193 | |||||||||||||||||||||||||||||||||
| Total revenue | 189,129 | 180,352 | |||||||||||||||||||||||||||||||||
| Property operating | (23,699) | (22,684) | |||||||||||||||||||||||||||||||||
| Real estate taxes | (26,421) | (27,191) | |||||||||||||||||||||||||||||||||
| Total expenses | (50,120) | (49,875) | |||||||||||||||||||||||||||||||||
| Same Property NOI | $ | 139,009 | $ | 130,477 | 6.5 | % | |||||||||||||||||||||||||||||
Reconciliation of Same Property NOI to most directly comparable GAAP measure: | |||||||||||||||||||||||||||||||||||
| Net operating income – same properties | $ | 139,009 | $ | 130,477 | |||||||||||||||||||||||||||||||
Net operating income – non-same activity(3) | 11,473 | 8,818 | |||||||||||||||||||||||||||||||||
| Total property NOI | 150,482 | 139,295 | 8.0 | % | |||||||||||||||||||||||||||||||
| Other income, net | 1,959 | 1,963 | |||||||||||||||||||||||||||||||||
| General, administrative and other | (13,384) | (13,309) | |||||||||||||||||||||||||||||||||
| Merger and acquisition costs | — | (925) | |||||||||||||||||||||||||||||||||
| Depreciation and amortization | (108,071) | (121,504) | |||||||||||||||||||||||||||||||||
| Interest expense | (25,425) | (25,514) | |||||||||||||||||||||||||||||||||
| Gain on sales of operating properties, net | — | 3,168 | |||||||||||||||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interests | (170) | 22 | |||||||||||||||||||||||||||||||||
| Net income (loss) attributable to common shareholders | $ | 5,391 | $ | (16,804) | |||||||||||||||||||||||||||||||
(1)Same Property NOI excludes the following: (i) properties acquired or placed in service during 2022 and 2023; (ii) the multifamily rental units and commercial portion at One Loudoun Downtown – Pads G & H; (iii) Shoppes at Quarterfield and Circle East, which were reclassified from active redevelopment into our operating portfolio in June 2022 and September 2022, respectively; (iv) three active development and redevelopment projects; (v) Edwards Multiplex – Ontario, which was reclassified from our operating portfolio into redevelopment in March 2023; (vi) properties sold or classified as held for sale during 2022 and 2023; and (vii) office properties.
(2)Excludes leases that are signed but for which tenants have not yet commenced the payment of cash rent. Calculated as a weighted average based on the timing of cash rent commencement and expiration during the period.
(3)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.
The Company uses property NOI, a non-GAAP financial measure, to evaluate the performance of our properties. The Company defines NOI as income from our real estate, including lease termination fees received from tenants, less our property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions and certain corporate level expenses, including merger and acquisition costs. The Company believes that NOI is helpful to investors as a measure of our operating performance because it excludes various items included in net income that do not relate to or are not indicative of our operating performance, such as depreciation and amortization, interest expense, and impairment, if any.
The Company also uses same property NOI (“Same Property NOI”), a non-GAAP financial measure, to evaluate the performance of our properties. Same Property NOI 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 the Company receives 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. The Company believes that Same Property NOI is helpful to investors as a measure of our
operating performance because it includes only the NOI of properties that have been owned for the full periods presented. The Company believes 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 alternatives to net income (calculated in accordance with GAAP) as indicators of our financial performance. The Company’s 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, 2023, the same property pool excludes the following: (i) properties acquired or placed in service during 2022 and 2023; (ii) the multifamily rental units and commercial portion at One Loudoun Downtown – Pads G & H; (iii) Shoppes at Quarterfield and Circle East, which were reclassified from active redevelopment into our operating portfolio in June 2022 and September 2022, respectively; (iv) three active development and redevelopment projects; (v) Edwards Multiplex – Ontario, which was reclassified from our operating portfolio into redevelopment in March 2023; (vi) properties sold or classified as held for sale during 2022 and 2023; and (vii) office properties.
Kite Realty Group Trust
Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”)
(dollars in thousands)
(unaudited)
| Three Months Ended March 31, 2023 | |||||
| Net income | $ | 5,561 | |||
| Depreciation and amortization | 108,071 | ||||
| Interest expense | 25,425 | ||||
| Income tax benefit of taxable REIT subsidiary | (29) | ||||
| EBITDA | 139,028 | ||||
| Unconsolidated Adjusted EBITDA | 450 | ||||
| Other income and expense, net | (159) | ||||
| Noncontrolling interests | (104) | ||||
| Adjusted EBITDA | $ | 139,215 | |||
Annualized Adjusted EBITDA(1) | $ | 556,860 | |||
| Company share of Net Debt: | |||||
| Mortgage and other indebtedness, net | $ | 2,972,567 | |||
| Plus: Company share of unconsolidated joint venture debt | 44,243 | ||||
Less: Partner share of consolidated joint venture debt(2) | (562) | ||||
| Less: cash, cash equivalents, and restricted cash | (54,953) | ||||
| Less: debt discounts, premiums and issuance costs, net | (31,647) | ||||
| Company share of Net Debt | $ | 2,929,648 | |||
| Net Debt to Adjusted EBITDA | 5.3x | ||||
(1)Represents Adjusted EBITDA for the three months ended March 31, 2023 (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.
The Company defines EBITDA, a non-GAAP financial measure, as net income before interest expense, income tax expense of the taxable REIT subsidiary, and depreciation and amortization. For informational purposes, the Company also provides Adjusted EBITDA, which it defines as EBITDA less (i) Adjusted EBITDA from unconsolidated entities, (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 the Company’s share of net debt divided by Annualized Adjusted EBITDA. EBITDA, Adjusted EBITDA, Annualized Adjusted EBITDA and Net Debt to Adjusted EBITDA, as calculated by the Company, are not comparable to EBITDA and EBITDA-related measures reported by other REITs that do not define EBITDA and EBITDA-related measures exactly as we do. EBITDA, Adjusted EBITDA and Annualized Adjusted EBITDA do not represent cash generated from operating activities in accordance with GAAP and should not be considered alternatives to net income as an indicator of performance or as alternatives to cash flows from operating activities as an indicator of liquidity.
Considering the nature of our business as a real estate owner and operator, the Company believes that EBITDA, Adjusted EBITDA and the ratio of Net Debt to Adjusted EBITDA are helpful to investors in measuring our operational performance because they exclude various items included in net income that do not relate to or are not indicative of our operating performance, such as gains or losses from sales of depreciated property and depreciation and amortization, which can make periodic and peer analyses of operating performance more difficult. For informational purposes, the Company also provides Annualized Adjusted EBITDA, adjusted as described above. The Company believes this supplemental information provides a meaningful measure of its operating performance. The Company believes presenting EBITDA and the related measures in this manner allows investors and other interested parties to form a more meaningful assessment of the Company’s operating results.
| Exhibit 99.2 | ||||||||
Kite Realty Group Trust
Quarterly Financial Supplement as of March 31, 2023
T A B L E O F C O N T E N T S
| Earnings Press Release | |||||
| Contact Information | |||||
| Results Overview | |||||
| Consolidated Balance Sheets | |||||
| Consolidated Statements of Operations | |||||
| Same Property Net Operating Income | |||||
| Net Operating Income and Adjusted EBITDA by Quarter | |||||
| Funds From Operations | |||||
| Joint Venture Summary | |||||
| Key Debt Metrics | |||||
| Summary of Outstanding Debt | |||||
| Maturity Schedule of Outstanding Debt | |||||
| Development and Redevelopment Projects | |||||
| Geographic Diversification – Retail ABR by Region and State | |||||
| Top 25 Tenants by ABR | |||||
| Retail Leasing Spreads | |||||
| Lease Expirations | |||||
| Components of Net Asset Value | |||||
| Non-GAAP Financial Measures | |||||
Kite Realty Group Trust | 30 South Meridian Street, Suite 1100 | Indianapolis, Indiana 46204 | 888.577.5600 | www.kiterealty.com
PRESS RELEASE
Contact Information: Kite Realty Group Trust
Tyler Henshaw
SVP, Capital Markets & Investor Relations
317.713.7780
thenshaw@kiterealty.com
Kite Realty Group Trust Reports First Quarter 2023 Operating Results
Indianapolis, Indiana, May 1, 2023 – Kite Realty Group Trust (NYSE: KRG), a premier owner and operator of high-quality, open-air grocery-anchored neighborhood and community centers, along with vibrant mixed-use assets, reported today its operating results for the first quarter ended March 31, 2023. For the quarters ended March 31, 2023 and 2022, net income attributable to common shareholders was $5.4 million, or $0.02 per diluted share, compared to net loss of $16.8 million, or $0.08 per diluted share, respectively.
Company raises 2023 guidance
Increased NAREIT FFO per share by 11% on a year-over-year basis
Same Property NOI increased by 6.5% on a year-over-year basis
Leased over 831,000 square feet at 13.0% comparable blended cash leasing spreads
“The KRG team continues to capitalize on a constructive leasing environment, as evidenced by the double-digit blended and non-option renewal cash leasing spreads,” said John A. Kite, Chairman and CEO. “The structural changes in consumer behavior experienced over the past several years continue to act as a tailwind to our well-positioned open-air retail portfolio. As an organization anchored in operational excellence and a rock-solid balance sheet, we believe KRG is positioned to thrive in any macroeconomic environment in 2023.”
First Quarter 2023 Financial and Operational Results
▪Generated NAREIT FFO of the Operating Partnership of $113.8 million, or $0.51 per diluted share.
▪Same Property NOI increased by 6.5%.
▪Executed 144 new and renewal leases representing over 831,000 square feet.
▪Cash leasing spreads of 38.0% on 17 comparable new leases, 10.0% on 77 comparable renewals, and 13.0% on a blended basis.
▪Excluding option renewals, the blended cash spreads for comparable new and non-option renewal leases were 21.1%.
▪Operating retail portfolio annualized base rent (ABR) per square foot of $20.04 at March 31, 2023, a 2.4% increase year-over-year.
▪Retail portfolio percent leased of 94.8% at March 31, 2023, a sequential increase of 20 basis points and a 120-basis point increase on a year-over-year basis.
▪Portfolio leased-to-occupied spread of 270 basis points, which equates to $30 million of signed-not-open NOI.
First Quarter 2023 Capital Allocation Activity
▪The Company currently has three active development projects with limited future capital commitments of $37.9 million.
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First Quarter 2023 Balance Sheet Overview
▪As of March 31, 2023, the Company’s net debt to Adjusted EBITDA was 5.3x, which represents a 0.4x year-over-year decrease.
▪The Company repaid five mortgages with an aggregate principal balance of $161.5 million with proceeds from the Company’s revolving line of credit and cash on hand.
▪Subsequent to quarter end, the Company closed on a $95.1 million 10-year mortgage at a fixed interest rate of 5.36% secured by its One Loudoun Residential joint venture project in Ashburn, Virginia. The mortgage generated gross proceeds of $92.7 million at the Company’s share, which were used to repay a portion of the outstanding balance on the Company’s $1.1 billion revolving line of credit. As of May 1, 2023, the outstanding balance on the Company’s revolving line of credit is $68.5 million.
Dividend
On April 28, 2023, the Company’s Board of Trustees declared a second quarter 2023 dividend of $0.24 per common share, which represents a 14% year-over-year increase. The second quarter dividend will be paid on July 14, 2023, to shareholders of record as of July 7, 2023.
2023 Earnings Guidance
The Company expects to generate net income attributable to common shareholders of $0.05 to $0.11 per diluted share in 2023. The Company is raising its 2023 NAREIT FFO guidance range to $1.92 to $1.98 per diluted share from $1.89 to $1.95 per diluted share, based, in part, on the following key assumptions at the midpoint:
▪2023 same property NOI range of 2.25% to 3.25%, which represents a 25-basis point increase at the midpoint.
▪Full-year bad debt assumption of 1.15% of total revenues, which represents a 10-basis point decrease at the midpoint.
▪Additional disruption related to Bed Bath & Beyond Inc. and Party City Holdings Inc. of 0.75% of total revenues ($0.03 of FFO per diluted share), of which approximately 70 basis points is related to the balance of 2023 and assumes no additional revenue from Bed Bath & Beyond Inc.
▪Transaction activity is expected to be earnings neutral.
The following table reconciles the Company’s 2023 net income guidance range to the Company’s 2023 NAREIT FFO guidance range:
| Low | High | ||||||||||
| Net income | $ | 0.05 | $ | 0.11 | |||||||
| Depreciation and amortization | 1.87 | 1.87 | |||||||||
| NAREIT FFO | $ | 1.92 | $ | 1.98 | |||||||
Earnings Conference Call
Kite Realty Group Trust will conduct a conference call to discuss its financial results on Tuesday, May 2, 2023, at 1:00 p.m. Eastern Time. A live webcast of the conference call will be available on KRG’s website at www.kiterealty.com or at the following link: First Quarter 2023 Webcast. The dial-in registration link is: First Quarter 2023 Teleconference Registration. In addition, a webcast replay link will be available on KRG’s website.
About Kite Realty Group Trust
Kite Realty Group Trust (NYSE: KRG) is a real estate investment trust (REIT) headquartered in Indianapolis, IN that is one of the largest publicly traded owners and operators of open-air shopping centers and mixed-use assets. The Company’s primarily grocery-anchored portfolio is located in high-growth Sun Belt and select strategic gateway markets. The combination of necessity-based grocery-anchored neighborhood and community centers, along with vibrant mixed-use assets makes the KRG portfolio an ideal mix for both retailers and consumers. Publicly listed since 2004, KRG has nearly 60 years of experience in developing, constructing and operating real estate. Using operational, investment, development, and redevelopment expertise, KRG continuously optimizes its portfolio to maximize value and return to shareholders. As of
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March 31, 2023, the Company owned interests in 181 U.S. open-air shopping centers and mixed-use assets, comprising approximately 28.5 million square feet of gross leasable space. For more information, please visit kiterealty.com.
Connect with KRG: LinkedIn | Twitter | Instagram | Facebook
Safe Harbor
This release, 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 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934. Such statements are based on assumptions and expectations that may not be realized and are inherently subject to risks, uncertainties and other factors, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, performance, transactions or achievements, financial or otherwise, may differ materially from the results, performance, transactions or achievements, financial or otherwise, expressed or implied by the forward-looking statements.
Risks, uncertainties and other factors that might cause such differences, some of which could be material, include but are not limited to: national and local economic, business, 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 a potential economic slowdown or recession, rising interest rates, inflation, unemployment, or limited growth in consumer income or spending); the risk that our actual NOI for leases that have signed but not yet opened will not be consistent with expected NOI for leases that have signed but not yet opened; financing risks, including the availability of, and costs associated with, sources of liquidity; the Company’s ability to refinance, or extend the maturity dates of, the Company’s indebtedness; the level and volatility of interest rates; the financial stability of tenants; the competitive environment in which the Company operates, including potential oversupplies of and 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; the Company’s ability to maintain the Company’s status as a real estate investment trust for U.S. federal income tax purposes; potential environmental and other liabilities; impairment in the value of real estate property the Company owns; 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 tenant’s 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 the Company’s properties in Texas, Florida, Maryland, New York, and North Carolina; civil unrest, acts of violence, terrorism or war, acts of God, climate change, epidemics, pandemics (including COVID-19), natural disasters and severe weather conditions, including such events that may result in underinsured or uninsured losses or other increased costs and expenses; changes in laws and government regulations including governmental orders affecting the use of the Company’s properties or the ability of its tenants to operate, and the costs of complying with such changed laws and government regulations; possible short-term or long-term changes in consumer behavior due to COVID-19 and the fear of future pandemics; our ability to satisfy environmental, social or governance standards set by various constituencies; insurance costs and coverage; risks associated with cybersecurity attacks and the loss of confidential information and other business disruptions; other factors affecting the real estate industry generally; and other risks identified in reports the Company files with the Securities and Exchange Commission (“the SEC”) or in other documents that it publicly disseminates, including, in particular, the section titled “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and in the Company’s quarterly reports on Form 10-Q. The Company undertakes no obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.
This Earnings Release also includes certain forward-looking non-GAAP information. These non-GAAP financial measures should be considered along with, but not as alternatives to, net income (loss) as a measure of our operating performance. Please see the following pages for the corresponding definitions and reconciliations of such non-GAAP financial measures.
iii | |||||
Kite Realty Group Trust
Contact Information
Corporate Office
30 South Meridian Street, Suite 1100
Indianapolis, IN 46204
(888) 577-5600
(317) 577-5600
www.kiterealty.com
| Investor Relations Contact | Analyst Coverage | Analyst Coverage | ||||||||||||
| Tyler Henshaw | Robert W. Baird & Co. | Green Street | ||||||||||||
| Senior Vice President, Capital Markets and IR | Mr. Wes Golladay | Ms. Paulina Rojas Schmidt | ||||||||||||
| (317) 713-7780 | (216) 737-7510 | (949) 640-8780 | ||||||||||||
| thenshaw@kiterealty.com | wgolladay@rwbaird.com | projasschmidt@greenstreet.com | ||||||||||||
| Matt Hunt | Bank of America/Merrill Lynch | Jefferies LLC | ||||||||||||
| Director, Capital Markets and IR | Mr. Jeffrey Spector/Mr. Craig Schmidt | Ms. Linda Tsai | ||||||||||||
| (317) 713-7646 | (646) 855-1363/(646) 855-3640 | (212) 778-8011 | ||||||||||||
| mhunt@kiterealty.com | jeff.spector@bofa.com | ltsai@jefferies.com | ||||||||||||
| craig.schmidt@bofa.com | ||||||||||||||
| J.P. Morgan | ||||||||||||||
| Transfer Agent | Barclays | Mr. Michael W. Mueller/Mr. Hongliang Zhang | ||||||||||||
| Broadridge Financial Solutions | Mr. Anthony F. Powell | (212) 622-6689/(212) 622-6416 | ||||||||||||
| Ms. Kristen Tartaglione | (212) 526-8768 | michael.w.mueller@jpmorgan.com/ | ||||||||||||
| 2 Journal Square, 7th Floor | anthony.powell@barclays.com | hongliang.zhang@jpmorgan.com | ||||||||||||
| Jersey City, NJ 07306 | ||||||||||||||
| (201) 714-8094 | BTIG | KeyBanc Capital Markets | ||||||||||||
| Mr. Michael Gorman | Mr. Todd Thomas | |||||||||||||
| (212) 738-6138 | (917) 368-2286 | |||||||||||||
| mgorman@btig.com | tthomas@keybanccm.com | |||||||||||||
| Stock Specialist | ||||||||||||||
| GTS | Citigroup Global Markets | Piper Sandler | ||||||||||||
| 545 Madison Avenue, 15th Floor | Mr. Craig Mailman | Mr. Alexander Goldfarb | ||||||||||||
| New York, NY 10022 | (212) 816-4471 | (212) 466-7937 | ||||||||||||
| (212) 715-2830 | craig.mailman@citi.com | alexander.goldfarb@psc.com | ||||||||||||
| Compass Point Research & Trading, LLC | Raymond James | |||||||||||||
| Mr. Floris van Dijkum | Mr. RJ Milligan | |||||||||||||
| (646) 757-2621 | (727) 567-2585 | |||||||||||||
| fvandijkum@compasspointllc.com | rjmilligan@raymondjames.com | |||||||||||||
| 1st Quarter 2023 Supplemental Financial and Operating Statistics | 1 | ||||
Kite Realty Group Trust
Results Overview
(dollars in thousands, except per share and per square foot amounts)
| Three Months Ended March 31, | |||||||||||||||||||||||
| Summary Financial Results | 2023 | 2022 | |||||||||||||||||||||
| Total revenue (page 4) | $ | 206,750 | $ | 194,391 | |||||||||||||||||||
| Net income (loss) attributable to common shareholders (page 4) | $ | 5,391 | $ | (16,804) | |||||||||||||||||||
| Net income (loss) per diluted share (page 4) | $ | 0.02 | $ | (0.08) | |||||||||||||||||||
| Net operating income (NOI) (page 6) | $ | 150,482 | $ | 139,295 | |||||||||||||||||||
| Adjusted EBITDA (page 6) | $ | 138,869 | $ | 128,295 | |||||||||||||||||||
| NAREIT Funds From Operations (FFO) (page 7) | $ | 113,766 | $ | 101,709 | |||||||||||||||||||
| NAREIT FFO per diluted share (page 7) | $ | 0.51 | $ | 0.46 | |||||||||||||||||||
| FFO, as adjusted (page 7) | $ | 113,766 | $ | 101,538 | |||||||||||||||||||
| FFO, as adjusted per diluted share (page 7) | $ | 0.51 | $ | 0.46 | |||||||||||||||||||
| Dividend payout ratio (as % of NAREIT FFO, as adjusted) | 47 | % | 41 | % | |||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||
| Summary Operating and Financial Ratios | March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | ||||||||||||||||||||||||
| NOI margin (page 6) | 73.7 | % | 73.7 | % | 74.5 | % | 73.2 | % | 72.7 | % | |||||||||||||||||||
| NOI margin – retail (page 6) | 74.4 | % | 74.3 | % | 75.0 | % | 73.8 | % | 73.1 | % | |||||||||||||||||||
| Same property NOI performance (page 5) | 6.5 | % | 6.2 | % | 4.4 | % | 3.8 | % | 5.9 | % | |||||||||||||||||||
| Total property NOI performance (page 5) | 8.0 | % | 29.2 | % | 182.7 | % | 190.5 | % | 182.7 | % | |||||||||||||||||||
| Net debt to Adjusted EBITDA, current quarter (page 9) | 5.3x | 5.2x | 5.4x | 5.3x | 5.7x | ||||||||||||||||||||||||
| Recovery ratio of retail operating properties (page 6) | 87.2 | % | 87.0 | % | 89.1 | % | 88.3 | % | 85.9 | % | |||||||||||||||||||
| Recovery ratio of consolidated portfolio (page 6) | 85.8 | % | 82.5 | % | 84.3 | % | 83.3 | % | 81.3 | % | |||||||||||||||||||
| Outstanding Classes of Stock | |||||||||||||||||||||||||||||
| Common shares and units outstanding (page 17) | 222,360,110 | 222,056,355 | 222,054,091 | 222,056,695 | 221,559,185 | ||||||||||||||||||||||||
| Summary Portfolio Statistics | |||||||||||||||||||||||||||||
| Number of properties | |||||||||||||||||||||||||||||
Operating retail (page 13)(1) | 181 | 183 | 183 | 181 | 181 | ||||||||||||||||||||||||
| Office and other components | 12 | 12 | 12 | 12 | 12 | ||||||||||||||||||||||||
| Development and redevelopment projects (page 12) | 3 | 3 | 4 | 5 | 7 | ||||||||||||||||||||||||
Owned retail operating gross leasable area (GLA)(2) (page 13) | 28.5 | M | 28.8 | M | 28.9 | M | 28.8 | M | 28.8 | M | |||||||||||||||||||
| Owned office GLA | 1.6 | M | 1.6 | M | 1.6 | M | 1.6 | M | 1.6 | M | |||||||||||||||||||
Number of multifamily units(3) | 1,672 | 1,672 | 1,672 | 1,672 | 1,690 | ||||||||||||||||||||||||
| Percent leased – total | 94.5 | % | 94.4 | % | 93.9 | % | 93.7 | % | 93.5 | % | |||||||||||||||||||
| Percent leased – retail | 94.8 | % | 94.6 | % | 94.0 | % | 93.8 | % | 93.6 | % | |||||||||||||||||||
| Anchor | 97.4 | % | 97.0 | % | 96.4 | % | 96.1 | % | 96.1 | % | |||||||||||||||||||
| Small shop | 89.8 | % | 90.0 | % | 89.3 | % | 89.3 | % | 88.5 | % | |||||||||||||||||||
| Annualized base rent (ABR) per square foot | $ | 20.04 | $ | 20.02 | $ | 19.86 | $ | 19.66 | $ | 19.57 | |||||||||||||||||||
| Total new and renewal lease GLA (page 15) | 831,231 | 1,034,055 | 1,574,338 | 1,198,263 | 1,053,963 | ||||||||||||||||||||||||
| New lease cash rent spread (page 15) | 38.0 | % | 22.3 | % | 30.7 | % | 49.1 | % | 58.7 | % | |||||||||||||||||||
| Renewal lease cash rent spread (page 15) | 10.0 | % | 8.9 | % | 8.5 | % | 8.0 | % | 8.9 | % | |||||||||||||||||||
| Total new and renewal lease cash rent spread (page 15) | 13.0 | % | 11.4 | % | 10.8 | % | 13.2 | % | 16.1 | % | |||||||||||||||||||
| 2023 Guidance | Current (as of 5/1/23) | Previous (as of 2/13/23) | |||||||||
| NAREIT FFO per diluted share | $1.92 to $1.98 | $1.89 to $1.95 | |||||||||
| Credit Ratings and Outlook | |||||||||||
| Fitch Ratings | BBB / Stable | ||||||||||
| Moody's Investors Services | Baa3 / Stable | ||||||||||
| Standard & Poor's Rating Services | BBB- / Stable | ||||||||||
(1)Excludes one operating retail property classified as held for sale as of March 31, 2023.
(2)Owned GLA represents gross leasable area owned by the Company and excludes the square footage of non-retail property components and development and redevelopment projects.
(3)Represents the number of multifamily units that the Company has an economic interest in.
| 1st Quarter 2023 Supplemental Financial and Operating Statistics | 2 | ||||
Kite Realty Group Trust
Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
| March 31, 2023 | December 31, 2022 | ||||||||||
| Assets: | |||||||||||
| Investment properties, at cost | $ | 7,719,677 | $ | 7,732,573 | |||||||
| Less: accumulated depreciation | (1,210,937) | (1,161,148) | |||||||||
| Net investment properties | 6,508,740 | 6,571,425 | |||||||||
| Cash and cash equivalents | 43,733 | 115,799 | |||||||||
Tenant and other receivables, including accrued straight-line rent of $47,863 and $44,460, respectively | 103,474 | 101,301 | |||||||||
| Restricted cash and escrow deposits | 8,962 | 6,171 | |||||||||
| Deferred costs, net | 381,539 | 409,828 | |||||||||
| Prepaid and other assets | 117,424 | 127,044 | |||||||||
| Investments in unconsolidated subsidiaries | 10,341 | 10,414 | |||||||||
| Assets associated with investment property held for sale | 22,727 | — | |||||||||
| Total assets | $ | 7,196,940 | $ | 7,341,982 | |||||||
| Liabilities and Equity: | |||||||||||
| Liabilities: | |||||||||||
| Mortgage and other indebtedness, net | $ | 2,972,567 | $ | 3,010,299 | |||||||
| Accounts payable and accrued expenses | 160,142 | 207,792 | |||||||||
| Deferred revenue and other liabilities | 294,760 | 298,039 | |||||||||
| Liabilities associated with investment property held for sale | 939 | — | |||||||||
| Total liabilities | 3,428,408 | 3,516,130 | |||||||||
| Commitments and contingencies | |||||||||||
Limited Partners’ interests in the Operating Partnership and other redeemable noncontrolling interests | 57,054 | 53,967 | |||||||||
| Equity: | |||||||||||
Common shares, $0.01 par value, 490,000,000 shares authorized, 219,325,898 and 219,185,658 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively | 2,193 | 2,192 | |||||||||
| Additional paid-in capital | 4,896,049 | 4,897,736 | |||||||||
| Accumulated other comprehensive income | 62,787 | 74,344 | |||||||||
| Accumulated deficit | (1,255,025) | (1,207,757) | |||||||||
| Total shareholders’ equity | 3,706,004 | 3,766,515 | |||||||||
| Noncontrolling interests | 5,474 | 5,370 | |||||||||
| Total equity | 3,711,478 | 3,771,885 | |||||||||
| Total liabilities and equity | $ | 7,196,940 | $ | 7,341,982 | |||||||
| 1st Quarter 2023 Supplemental Financial and Operating Statistics | 3 | ||||
Kite Realty Group Trust
Consolidated Statements of Operations
(dollars in thousands, except per share amounts)
(unaudited)
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Rental income | $ | 203,063 | $ | 190,892 | |||||||||||||||||||
| Other property-related revenue | 1,916 | 1,190 | |||||||||||||||||||||
| Fee income | 1,771 | 2,309 | |||||||||||||||||||||
| Total revenue | 206,750 | 194,391 | |||||||||||||||||||||
| Expenses: | |||||||||||||||||||||||
| Property operating | 27,314 | 25,928 | |||||||||||||||||||||
| Real estate taxes | 27,183 | 26,859 | |||||||||||||||||||||
| General, administrative and other | 13,384 | 13,309 | |||||||||||||||||||||
| Merger and acquisition costs | — | 925 | |||||||||||||||||||||
| Depreciation and amortization | 108,071 | 121,504 | |||||||||||||||||||||
| Total expenses | 175,952 | 188,525 | |||||||||||||||||||||
| Gain on sales of operating properties, net | — | 3,168 | |||||||||||||||||||||
| Operating income | 30,798 | 9,034 | |||||||||||||||||||||
| Other (expense) income: | |||||||||||||||||||||||
| Interest expense | (25,425) | (25,514) | |||||||||||||||||||||
| Income tax benefit of taxable REIT subsidiary | 29 | 71 | |||||||||||||||||||||
| Equity in loss of unconsolidated subsidiaries | (244) | (314) | |||||||||||||||||||||
| Other income (expense), net | 403 | (103) | |||||||||||||||||||||
| Net income (loss) | 5,561 | (16,826) | |||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interests | (170) | 22 | |||||||||||||||||||||
| Net income (loss) attributable to common shareholders | $ | 5,391 | $ | (16,804) | |||||||||||||||||||
| Net income (loss) per common share – basic and diluted | $ | 0.02 | $ | (0.08) | |||||||||||||||||||
| Weighted average common shares outstanding – basic | 219,233,569 | 218,981,168 | |||||||||||||||||||||
| Weighted average common shares outstanding – diluted | 219,965,061 | 218,981,168 | |||||||||||||||||||||
| 1st Quarter 2023 Supplemental Financial and Operating Statistics | 4 | ||||
Kite Realty Group Trust
Same Property Net Operating Income (“NOI”)
(dollars in thousands)
(unaudited)
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
| 2023 | 2022 | Change | |||||||||||||||||||||||||||||||||
Number of properties in same property pool for the period(1) | 177 | 177 | |||||||||||||||||||||||||||||||||
| Leased percentage at period end | 94.9 | % | 93.8 | % | |||||||||||||||||||||||||||||||
Economic occupancy percentage(2) | 92.3 | % | 90.4 | % | |||||||||||||||||||||||||||||||
| Minimum rent | $ | 146,279 | $ | 140,492 | |||||||||||||||||||||||||||||||
| Tenant recoveries | 42,124 | 40,274 | |||||||||||||||||||||||||||||||||
| Bad debt reserve | (1,699) | (1,607) | |||||||||||||||||||||||||||||||||
| Other income, net | 2,425 | 1,193 | |||||||||||||||||||||||||||||||||
| Total revenue | 189,129 | 180,352 | |||||||||||||||||||||||||||||||||
| Property operating | (23,699) | (22,684) | |||||||||||||||||||||||||||||||||
| Real estate taxes | (26,421) | (27,191) | |||||||||||||||||||||||||||||||||
| Total expenses | (50,120) | (49,875) | |||||||||||||||||||||||||||||||||
| Same Property NOI | $ | 139,009 | $ | 130,477 | 6.5 | % | |||||||||||||||||||||||||||||
Reconciliation of Same Property NOI to most directly comparable GAAP measure: | |||||||||||||||||||||||||||||||||||
| Net operating income – same properties | $ | 139,009 | $ | 130,477 | |||||||||||||||||||||||||||||||
Net operating income – non-same activity(3) | 11,473 | 8,818 | |||||||||||||||||||||||||||||||||
| Total property NOI | 150,482 | 139,295 | 8.0 | % | |||||||||||||||||||||||||||||||
| Other income, net | 1,959 | 1,963 | |||||||||||||||||||||||||||||||||
| General, administrative and other | (13,384) | (13,309) | |||||||||||||||||||||||||||||||||
| Merger and acquisition costs | — | (925) | |||||||||||||||||||||||||||||||||
| Depreciation and amortization | (108,071) | (121,504) | |||||||||||||||||||||||||||||||||
| Interest expense | (25,425) | (25,514) | |||||||||||||||||||||||||||||||||
| Gain on sales of operating properties, net | — | 3,168 | |||||||||||||||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interests | (170) | 22 | |||||||||||||||||||||||||||||||||
| Net income (loss) attributable to common shareholders | $ | 5,391 | $ | (16,804) | |||||||||||||||||||||||||||||||
(1)Same Property NOI excludes the following:
▪properties acquired or placed in service during 2022 and 2023;
▪the multifamily rental units and commercial portion at One Loudoun Downtown – Pads G & H;
▪Shoppes at Quarterfield and Circle East, which were reclassified from active redevelopment into our operating portfolio in June 2022 and September 2022, respectively;
▪three active development and redevelopment projects noted on page 12;
▪Edwards Multiplex – Ontario, which was reclassified from our operating portfolio into redevelopment in March 2023;
▪properties sold or classified as held for sale during 2022 and 2023; and
▪office properties.
(2)Excludes leases that are signed but for which tenants have not yet commenced the payment of cash rent. Calculated as a weighted average based on the timing of cash rent commencement and expiration during the period.
(3)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.
| 1st Quarter 2023 Supplemental Financial and Operating Statistics | 5 | ||||
Kite Realty Group Trust
Net Operating Income and Adjusted EBITDA by Quarter
(dollars in thousands)
(unaudited)
| Three Months Ended | |||||||||||||||||||||||||||||
| March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | |||||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||||||||
Minimum rent(1) | $ | 149,310 | $ | 147,882 | $ | 145,511 | $ | 145,255 | $ | 140,171 | |||||||||||||||||||
| Minimum rent – ground leases | 10,586 | 10,472 | 10,715 | 10,207 | 10,634 | ||||||||||||||||||||||||
| Tenant reimbursements | 42,857 | 40,245 | 40,043 | 41,470 | 39,836 | ||||||||||||||||||||||||
| Bad debt reserve | (1,555) | (2,403) | (1,881) | (1,172) | (571) | ||||||||||||||||||||||||
| Other property-related revenue | 1,106 | 2,202 | 2,099 | 2,746 | 90 | ||||||||||||||||||||||||
| Overage rent | 1,865 | 3,380 | 1,287 | 446 | 822 | ||||||||||||||||||||||||
Parking revenue, net(2) | 121 | 345 | 284 | 456 | 534 | ||||||||||||||||||||||||
| Total revenue | 204,290 | 202,123 | 198,058 | 199,408 | 191,516 | ||||||||||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||||
Property operating – recoverable(3) | 22,962 | 24,852 | 22,063 | 22,059 | 22,321 | ||||||||||||||||||||||||
Property operating – non-recoverable(3) | 3,881 | 4,387 | 3,059 | 3,717 | 3,237 | ||||||||||||||||||||||||
| Real estate taxes | 26,965 | 23,934 | 25,458 | 27,704 | 26,663 | ||||||||||||||||||||||||
| Total expenses | 53,808 | 53,173 | 50,580 | 53,480 | 52,221 | ||||||||||||||||||||||||
| NOI | 150,482 | 148,950 | 147,478 | 145,928 | 139,295 | ||||||||||||||||||||||||
| Other (expense) income: | |||||||||||||||||||||||||||||
| General, administrative and other | (13,384) | (12,883) | (14,859) | (13,809) | (13,309) | ||||||||||||||||||||||||
| Fee income | 1,771 | 1,936 | 1,623 | 2,671 | 2,309 | ||||||||||||||||||||||||
| Total other (expense) income | (11,613) | (10,947) | (13,236) | (11,138) | (11,000) | ||||||||||||||||||||||||
| Adjusted EBITDA | 138,869 | 138,003 | 134,242 | 134,790 | 128,295 | ||||||||||||||||||||||||
| Depreciation and amortization | (108,071) | (112,709) | (115,831) | (119,761) | (121,504) | ||||||||||||||||||||||||
| Merger and acquisition costs | — | 81 | (108) | 27 | (925) | ||||||||||||||||||||||||
| Interest expense | (25,425) | (26,827) | (26,226) | (25,709) | (25,514) | ||||||||||||||||||||||||
| Equity in (loss) earnings of unconsolidated subsidiaries | (244) | 312 | 144 | 114 | (314) | ||||||||||||||||||||||||
| Income tax benefit (expense) of taxable REIT subsidiary | 29 | (302) | — | 188 | 71 | ||||||||||||||||||||||||
| Other income (expense), net | 403 | 447 | 58 | (162) | (103) | ||||||||||||||||||||||||
| (Loss) gain on sales of operating properties, net | — | (57) | — | 23,958 | 3,168 | ||||||||||||||||||||||||
| Net income (loss) | 5,561 | (1,052) | (7,721) | 13,445 | (16,826) | ||||||||||||||||||||||||
Less: net (income) loss attributable to noncontrolling interests | (170) | (74) | (116) | (314) | 22 | ||||||||||||||||||||||||
| Net income (loss) attributable to common shareholders | $ | 5,391 | $ | (1,126) | $ | (7,837) | $ | 13,131 | $ | (16,804) | |||||||||||||||||||
| NOI/Revenue – Retail properties | 74.4 | % | 74.3 | % | 75.0 | % | 73.8 | % | 73.1 | % | |||||||||||||||||||
| NOI/Revenue | 73.7 | % | 73.7 | % | 74.5 | % | 73.2 | % | 72.7 | % | |||||||||||||||||||
Recovery Ratios(4) | |||||||||||||||||||||||||||||
| – Retail properties | 87.2 | % | 87.0 | % | 89.1 | % | 88.3 | % | 85.9 | % | |||||||||||||||||||
| – Consolidated | 85.8 | % | 82.5 | % | 84.3 | % | 83.3 | % | 81.3 | % | |||||||||||||||||||
(1)Minimum rent includes $0.5 million, $144,000, $153,000, $1.7 million, and $0.8 million of lease termination income for the three months ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022, and March 31, 2022, respectively.
(2)Parking revenue, net represents the net operating results of the Eddy Street Parking Garage, the Union Station Parking Garage, and the Pan Am Plaza Parking Garage.
(3)Recoverable expenses include recurring G&A expense of $3.5 million allocable to the property operations in the three months ended March 31, 2023, a portion of which is recoverable. Non-recoverable expenses primarily include ground rent, professional fees, and marketing costs.
(4)“Recovery Ratios” are computed by dividing tenant reimbursements by the sum of recoverable property operating expense and real estate tax expense. Tenant reimbursements for the three months ended December 31, 2022 have been reduced by $1.4 million due to reserves for Bed Bath & Beyond Inc. real estate tax reimbursements.
| 1st Quarter 2023 Supplemental Financial and Operating Statistics | 6 | ||||
Kite Realty Group Trust
Funds From Operations (“FFO”)(1)(2)
(dollars in thousands, except per share amounts)
(unaudited)
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||||||
| Net income (loss) | $ | 5,561 | $ | (16,826) | |||||||||||||||||||
| Less: net income attributable to noncontrolling interests in properties | (104) | (144) | |||||||||||||||||||||
| Less: gain on sales of operating properties, net | — | (3,168) | |||||||||||||||||||||
Add: depreciation and amortization of consolidated and unconsolidated entities, net of noncontrolling interests | 108,309 | 121,847 | |||||||||||||||||||||
FFO of the Operating Partnership(1) | 113,766 | 101,709 | |||||||||||||||||||||
Less: Limited Partners’ interests in FFO | (1,507) | (1,118) | |||||||||||||||||||||
FFO attributable to common shareholders(1) | $ | 112,259 | $ | 100,591 | |||||||||||||||||||
| FFO, as defined by NAREIT, per share of the Operating Partnership – basic | $ | 0.51 | $ | 0.46 | |||||||||||||||||||
| FFO, as defined by NAREIT, per share of the Operating Partnership – diluted | $ | 0.51 | $ | 0.46 | |||||||||||||||||||
FFO of the Operating Partnership(1) | $ | 113,766 | $ | 101,709 | |||||||||||||||||||
| Add: merger and acquisition costs | — | 925 | |||||||||||||||||||||
| Less: prior period collection impact | — | (1,096) | |||||||||||||||||||||
| FFO, as adjusted, of the Operating Partnership | $ | 113,766 | $ | 101,538 | |||||||||||||||||||
| FFO, as adjusted, per share of the Operating Partnership – basic | $ | 0.51 | $ | 0.46 | |||||||||||||||||||
| FFO, as adjusted, per share of the Operating Partnership – diluted | $ | 0.51 | $ | 0.46 | |||||||||||||||||||
| Weighted average common shares outstanding – basic | 219,233,569 | 218,981,168 | |||||||||||||||||||||
| Weighted average common shares outstanding – diluted | 219,965,061 | 220,202,896 | |||||||||||||||||||||
| Weighted average common shares and units outstanding – basic | 222,186,023 | 221,428,198 | |||||||||||||||||||||
| Weighted average common shares and units outstanding – diluted | 222,917,515 | 222,649,925 | |||||||||||||||||||||
| FFO, as defined by NAREIT, per diluted share/unit | |||||||||||||||||||||||
| Net income (loss) | $ | 0.02 | $ | (0.08) | |||||||||||||||||||
| Less: net income attributable to noncontrolling interests in properties | 0.00 | 0.00 | |||||||||||||||||||||
| Less: gain on sales of operating properties, net | 0.00 | (0.01) | |||||||||||||||||||||
Add: depreciation and amortization of consolidated and unconsolidated entities, net of noncontrolling interests | 0.49 | 0.55 | |||||||||||||||||||||
FFO, as defined by NAREIT, of the Operating Partnership per diluted share/unit(1)(2) | $ | 0.51 | $ | 0.46 | |||||||||||||||||||
| Add: merger and acquisition costs | 0.00 | 0.00 | |||||||||||||||||||||
| Less: prior period collection impact | 0.00 | 0.00 | |||||||||||||||||||||
FFO, as adjusted, of the Operating Partnership per diluted share/unit(2) | $ | 0.51 | $ | 0.46 | |||||||||||||||||||
| Reconciliation of FFO, as adjusted, to Adjusted Funds From Operations (AFFO) | |||||||||||||||||||||||
| FFO, as adjusted, of the Operating Partnership | $ | 113,766 | $ | 101,538 | |||||||||||||||||||
| Less: non-cash income adjustments | 7,581 | 6,329 | |||||||||||||||||||||
| Less: maintenance capital expenditures | 3,039 | 3,719 | |||||||||||||||||||||
Less: tenant-related capital expenditures(3) | 15,139 | 13,010 | |||||||||||||||||||||
| Total Recurring AFFO of the Operating Partnership | $ | 88,007 | $ | 78,480 | |||||||||||||||||||
(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.
(2)Per share/unit amounts of components will not necessarily sum to the total due to rounding to the nearest cent.
(3)Excludes landlord work, tenant improvements and leasing commissions related to development and redevelopment projects.
| 1st Quarter 2023 Supplemental Financial and Operating Statistics | 7 | ||||
Kite Realty Group Trust
Joint Venture Summary as of March 31, 2023
(dollars in thousands)
| Consolidated Investments | ||||||||||||||||||||||||||||||||||||||
| Investments | Total Debt | Partner Economic Ownership Interest(1) | Partner Share of Debt | Partner Share of Annual Income | ||||||||||||||||||||||||||||||||||
| Delray Marketplace | $ | 28,113 | 2 | % | $ | 562 | $ | — | ||||||||||||||||||||||||||||||
| One Loudoun – Pads G&H Residential | — | 10 | % | — | 416 | |||||||||||||||||||||||||||||||||
| Total | $ | 28,113 | $ | 562 | $ | 416 | ||||||||||||||||||||||||||||||||
| Unconsolidated Investments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments | Retail GLA | Multifamily Units | Total Debt | KRG Economic Ownership Interest | KRG Share of Debt | KRG Investment | KRG Share of Quarterly Adjusted EBITDA | KRG Share of Quarterly Adjusted EBITDA Annualized | ||||||||||||||||||||||||||||||||||||||||||||||||
Three Property Retail Portfolio | 416,576 | — | $ | 51,890 | 20 | % | $ | 10,378 | $ | 7,658 | $ | 335 | $ | 1,340 | ||||||||||||||||||||||||||||||||||||||||||
Glendale Center Apartments | — | 267 | 31,500 | 11.5 | % | 3,623 | 46 | 54 | 216 | |||||||||||||||||||||||||||||||||||||||||||||||
Embassy Suites at Eddy Street Commons | — | — | 33,318 | 35 | % | 11,661 | — | 27 | 108 | |||||||||||||||||||||||||||||||||||||||||||||||
| The Corner (development) | 24,000 | 285 | 37,161 | 50 | % | 18,581 | 125 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Other investments | — | — | — | — | % | — | 2,512 | 34 | 136 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | 440,576 | 552 | $ | 153,869 | $ | 44,243 | $ | 10,341 | $ | 450 | $ | 1,800 | ||||||||||||||||||||||||||||||||||||||||||||
(1)Economic ownership % represents the partner’s share of cash flow.
| 1st Quarter 2023 Supplemental Financial and Operating Statistics | 8 | ||||
Kite Realty Group Trust
Key Debt Metrics as of March 31, 2023
(dollars in thousands)
| Senior Unsecured Notes Covenants | |||||||||||
| March 31, 2023 | Debt Covenant Threshold(1) | ||||||||||
| Total debt to undepreciated assets | 37% | <60% | |||||||||
| Secured debt to undepreciated assets | 1% | <40% | |||||||||
| Undepreciated unencumbered assets to unsecured debt | 278% | >150% | |||||||||
| Debt service coverage | 5.2x | >1.5x | |||||||||
| Unsecured Credit Facility Covenants | |||||||||||
| March 31, 2023 | Debt Covenant Threshold(1) | ||||||||||
| Maximum leverage | 37% | <60% | |||||||||
| Minimum fixed charge coverage | 4.3x | >1.5x | |||||||||
| Secured indebtedness | 1.4% | <45% | |||||||||
| Unsecured debt interest coverage | 4.5x | >1.75x | |||||||||
| Unsecured leverage | 36% | <60% | |||||||||
| Senior Unsecured Debt Ratings | |||||||||||
| Fitch Ratings | BBB/Stable | ||||||||||
| Moody's Investors Service | Baa3/Stable | ||||||||||
| Standard & Poor's Rating Services | BBB-/Stable | ||||||||||
| Liquidity | |||||||||||
| Cash and cash equivalents | $ | 43,733 | |||||||||
| Availability under unsecured credit facility | 974,700 | ||||||||||
| $ | 1,018,433 | ||||||||||
| Unencumbered NOI as a % of Total NOI | 96 | % | |||||||||
(1)For a complete listing of all debt covenants related to the Company’s Senior Unsecured Notes and Unsecured Credit Facility, as well as definitions of the terms, refer to the Company’s filings with the SEC.
| Net Debt to Adjusted EBITDA | |||||||||||
| Company's consolidated debt and share of unconsolidated debt | $ | 2,984,601 | |||||||||
| Less: cash, cash equivalents, and restricted cash | (54,953) | ||||||||||
| $ | 2,929,648 | ||||||||||
| Q1 2023 Adjusted EBITDA, Annualized: | |||||||||||
| – Consolidated Adjusted EBITDA | $ | 555,476 | |||||||||
– Unconsolidated Adjusted EBITDA(1) | 1,800 | ||||||||||
– Minority interest Adjusted EBITDA(1) | (416) | 556,860 | |||||||||
| Ratio of Company share of Net Debt to Adjusted EBITDA | 5.3x | ||||||||||
(1)See page 8 for details.
| 1st Quarter 2023 Supplemental Financial and Operating Statistics | 9 | ||||
Kite Realty Group Trust
Summary of Outstanding Debt as of March 31, 2023
(dollars in thousands)
| Total Outstanding Debt | Amount Outstanding | Ratio | Weighted Average Interest Rate | Weighted Average Years to Maturity | |||||||||||||||||||
Fixed rate debt(1) | $ | 2,632,807 | 89 | % | 3.97 | % | 4.3 | ||||||||||||||||
Variable rate debt(2) | 308,113 | 10 | % | 7.53 | % | 3.3 | |||||||||||||||||
| Debt discounts, premiums and issuance costs, net | 31,647 | N/A | N/A | N/A | |||||||||||||||||||
| Total consolidated debt | 2,972,567 | 99 | % | 4.34 | % | 4.2 | |||||||||||||||||
| KRG share of unconsolidated debt | 44,243 | 1 | % | 6.04 | % | 6.1 | |||||||||||||||||
| Total | $ | 3,016,810 | 100 | % | 4.37 | % | 4.2 | ||||||||||||||||
| Schedule of Maturities by Year | |||||||||||||||||||||||||||||||||||
| Secured Debt | |||||||||||||||||||||||||||||||||||
| Scheduled Principal Payments | Term Maturities | Unsecured Debt | Total Consolidated Debt | Total Unconsolidated Debt | Total Debt Outstanding | ||||||||||||||||||||||||||||||
| 2023 | $ | 2,261 | $ | 27,813 | $ | 95,000 | $ | 125,074 | $ | 203 | $ | 125,277 | |||||||||||||||||||||||
| 2024 | 2,721 | — | 269,635 | 272,356 | 3,905 | 276,261 | |||||||||||||||||||||||||||||
| 2025 | 2,848 | — | 430,000 | 432,848 | 11,176 | 444,024 | |||||||||||||||||||||||||||||
| 2026 | 2,981 | — | 550,000 | 552,981 | — | 552,981 | |||||||||||||||||||||||||||||
| 2027 | 3,120 | — | 375,000 | 378,120 | — | 378,120 | |||||||||||||||||||||||||||||
| 2028 and beyond | 27,061 | 2,480 | 1,150,000 | 1,179,541 | 28,959 | 1,208,500 | |||||||||||||||||||||||||||||
| Debt discounts, premiums and issuance costs, net | — | 1,370 | 30,277 | 31,647 | — | 31,647 | |||||||||||||||||||||||||||||
| Total | $ | 40,992 | $ | 31,663 | $ | 2,899,912 | $ | 2,972,567 | $ | 44,243 | $ | 3,016,810 | |||||||||||||||||||||||
(1)Fixed rate debt includes the portion of variable rate debt that has been hedged by interest rate swaps. As of March 31, 2023, $820.0 million in variable rate debt is hedged to a fixed rate for a weighted average of 2.4 years.
(2)Variable rate debt includes the portion of fixed rate debt that has been hedged by interest rate swaps. As of March 31, 2023, $155.0 million in fixed rate debt is hedged to a floating rate for a weighted average of 2.4 years.
| 1st Quarter 2023 Supplemental Financial and Operating Statistics | 10 | ||||
Kite Realty Group Trust
Maturity Schedule of Outstanding Debt as of March 31, 2023
(dollars in thousands)
| Description | Interest Rate(1) | Maturity Date | Balance as of March 31, 2023 | % of Total Outstanding | ||||||||||||||||||||||
Delray Marketplace(2) | BSBY + 160 | 8/4/2023 | $ | 28,113 | ||||||||||||||||||||||
| Senior Unsecured Notes | 4.23% | 9/10/2023 | 95,000 | |||||||||||||||||||||||
| 2023 Debt Maturities | 123,113 | 4 | % | |||||||||||||||||||||||
| Senior Unsecured Notes | 4.58% | 6/30/2024 | 149,635 | |||||||||||||||||||||||
Unsecured Term Loan(3) | 2.68% | 7/17/2024 | 120,000 | |||||||||||||||||||||||
| 2024 Debt Maturities | 269,635 | 9 | % | |||||||||||||||||||||||
| Senior Unsecured Notes | 4.00% | 3/15/2025 | 350,000 | |||||||||||||||||||||||
Senior Unsecured Notes(4) | LIBOR + 365 | 9/10/2025 | 80,000 | |||||||||||||||||||||||
| 2025 Debt Maturities | 430,000 | 14 | % | |||||||||||||||||||||||
Unsecured Term Loan(5) | 2.73% | 7/17/2026 | 150,000 | |||||||||||||||||||||||
| Senior Unsecured Notes | 4.08% | 9/30/2026 | 100,000 | |||||||||||||||||||||||
| Senior Unsecured Notes | 4.00% | 10/1/2026 | 300,000 | |||||||||||||||||||||||
| 2026 Debt Maturities | 550,000 | 18 | % | |||||||||||||||||||||||
Unsecured Credit Facility(6) | SOFR + 120 | 1/8/2027 | 125,000 | |||||||||||||||||||||||
| Senior Unsecured Exchangeable Notes | 0.75% | 4/1/2027 | 175,000 | |||||||||||||||||||||||
| Northgate North | 4.50% | 6/1/2027 | 22,851 | |||||||||||||||||||||||
Senior Unsecured Notes(6) | LIBOR + 375 | 9/10/2027 | 75,000 | |||||||||||||||||||||||
| 2027 Debt Maturities | 397,851 | 13 | % | |||||||||||||||||||||||
Unsecured Term Loan(7) | 5.09% | 10/24/2028 | 250,000 | |||||||||||||||||||||||
| Senior Unsecured Notes | 4.24% | 12/28/2028 | 100,000 | |||||||||||||||||||||||
| Senior Unsecured Notes | 4.82% | 6/28/2029 | 100,000 | |||||||||||||||||||||||
Unsecured Term Loan(8) | 4.05% | 7/29/2029 | 300,000 | |||||||||||||||||||||||
| Rampart Commons | 5.73% | 6/10/2030 | 7,138 | |||||||||||||||||||||||
| Senior Unsecured Notes | 4.75% | 9/15/2030 | 400,000 | |||||||||||||||||||||||
| The Shoppes at Union Hill | 3.75% | 6/1/2031 | 9,756 | |||||||||||||||||||||||
| Nora Plaza Shops | 3.80% | 2/1/2032 | 3,427 | |||||||||||||||||||||||
| 2028 and beyond Debt Maturities | 1,170,321 | 39 | % | |||||||||||||||||||||||
| Debt discounts, premiums and issuance costs, net | 31,647 | |||||||||||||||||||||||||
| Total debt per consolidated balance sheet | $ | 2,972,567 | 99 | % | ||||||||||||||||||||||
| KRG share of unconsolidated debt | ||||||||||||||||||||||||||
| Glendale Center Apartments | SOFR + 265 | 5/31/2024 | $ | 3,623 | ||||||||||||||||||||||
| Embassy Suites at Eddy Street Commons | LIBOR + 250 | 7/1/2025 | 11,661 | |||||||||||||||||||||||
| Three Property Retail Portfolio | 4.09% | 7/1/2028 | 10,378 | |||||||||||||||||||||||
The Corner (development)(9) | LIBOR + 275 | 2/15/2033 | 18,581 | |||||||||||||||||||||||
| Total KRG share of unconsolidated debt | 44,243 | 1 | % | |||||||||||||||||||||||
| Total consolidated and KRG share of unconsolidated debt | $ | 3,016,810 | ||||||||||||||||||||||||
(1)At March 31, 2023, one-month BSBY was 4.92%, one-month LIBOR was 4.86%, three-month LIBOR was 5.19%, one-month SOFR was 4.80%, and daily SOFR was 4.87%.
(2)Property is held in a joint venture. The loan is guaranteed by Kite Realty Group, LP.
(3)Term loan is hedged to a fixed rate of 1.58% plus a credit spread of 1.10% based on the Company’s current credit rating.
(4)Notes due 2025 are hedged to a floating rate until September 10, 2025. Notes due 2027 are hedged to a floating rate until September 10, 2025 and revert back to a fixed rate of 4.57% until maturity in 2027.
(5)Term loan is hedged to a fixed rate of 1.68% plus a credit spread of 1.05% based on the Company’s current credit rating.
(6)Assumes the Company exercises its option to extend the maturity date by one year to 2027.
(7)Assumes the Company exercises three one-year options to extend the maturity date to 2028. Term loan is hedged to a fixed rate of 5.09% until the initial maturity of October 24, 2025. Term loan interest rate reverts back to floating rate of SOFR + 2.10% beyond the initial maturity date.
(8)Term loan is hedged to a fixed rate of 2.70% through November 22, 2023 and subsequently to a fixed rate of 2.47% through August 1, 2025. Term loan interest rate reverts back to floating rate of SOFR from August 1, 2025 to the maturity date of July 29, 2029. In addition to the indicated rate, a credit spread of 1.35% is applicable across all time periods based on the Company’s current credit rating.
(9)The Corner (development) includes three loans with varying rates and maturity dates. As of March 31, 2023, the loans had a weighted average interest rate of 7.50% and a majority of the amount outstanding was at a floating rate. The maturity date shown is the weighted average maturity date as of March 31, 2023.
| 1st Quarter 2023 Supplemental Financial and Operating Statistics | 11 | ||||
Kite Realty Group Trust
Development and Redevelopment Projects
(dollars in thousands)
| Project | MSA | KRG Ownership % | Projected Completion Date(1) | Total Commercial GLA | Total Multifamily Units | Total Project Costs – at KRG's Share(2) | KRG Equity Requirement(2) | KRG Remaining Spend | Estimated Stabilized NOI to KRG | Estimated Remaining NOI to Come Online(3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Active Projects | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Landing at Tradition – Phase II | Port St. Lucie, FL | 100% | Q3 2023 | 39,900 | — | $ | 11,200 | $ | 11,200 | $ | 1,900 | $1.1M–$1.2M | $0.2M–$0.4M | |||||||||||||||||||||||||||||||||||||||||||||||||
| Carillon MOB | Washington, D.C./Baltimore | 100% | Q4 2024 | 126,000 | — | 59,700 | 59,700 | 36,000 | $3.5M–$4.0M | $1.7M–$2.2M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
The Corner – IN(4) | Indianapolis, IN | 50% | Q4 2024 | 24,000 | 285 | 31,900 | — | — | $1.7M–$1.9M | $1.7M–$1.9M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 189,900 | 285 | $ | 102,800 | $ | 70,900 | $ | 37,900 | $6.3M–$7.1M | $3.6M–$4.5M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Future Opportunities(5) | ||||||||||||||
| Project | MSA | Project Description | ||||||||||||
| Hamilton Crossing Centre – Phase II | Indianapolis, IN | Addition of mixed-use (multifamily, office and retail) components adjacent to the Republic Airways headquarters. | ||||||||||||
| Carillon | Washington, D.C./Baltimore | Potential of 1.2 million square feet of commercial GLA and 3,000 multifamily units for additional expansion. | ||||||||||||
| One Loudoun | Washington, D.C./Baltimore | Potential of 1.9 million square feet of commercial GLA and 1,745 multifamily units for additional expansion. | ||||||||||||
| Main Street Promenade | Chicago, IL | Potential of 16,000 square feet of commercial GLA for additional expansion. | ||||||||||||
| Downtown Crown | Washington, D.C./Baltimore | Potential of 42,000 square feet of commercial GLA for additional expansion. | ||||||||||||
| Edwards Multiplex – Ontario | Los Angeles, CA | Potential redevelopment of existing Regal Theatre. | ||||||||||||
(1)Projected completion date represents the earlier of one year after completion of project construction or substantial occupancy of the property.
(2)Total project costs and KRG equity requirement represent costs to KRG post-merger and exclude any costs spent to date prior to the merger.
(3)Estimated remaining NOI to come online excludes in-place NOI and NOI related to tenants that have signed leases but have not yet commenced paying rent.
(4)The Company does not have any equity requirements related to this development. Total project costs are at KRG’s share and are net of KRG’s share of a $13.5 million TIF.
(5)These opportunities are deemed potential at this time and are subject to various contingencies, many of which could be beyond the Company’s control.
| 1st Quarter 2023 Supplemental Financial and Operating Statistics | 12 | ||||
Kite Realty Group Trust
Geographic Diversification – Retail ABR by Region and State as of March 31, 2023
(dollars in thousands)
| Region/State | Number of Properties(1) | Owned GLA/NRA(2) | Total Weighted Retail ABR(3) | % of Weighted Retail ABR(3) | ||||||||||||||||||||||||||||||||||||||||
| South | ||||||||||||||||||||||||||||||||||||||||||||
| Texas | 44 | 7,472 | $ | 148,716 | 25.8 | % | ||||||||||||||||||||||||||||||||||||||
| Florida | 30 | 3,580 | 63,322 | 11.0 | % | |||||||||||||||||||||||||||||||||||||||
| Maryland | 9 | 1,780 | 39,434 | 6.8 | % | |||||||||||||||||||||||||||||||||||||||
| North Carolina | 8 | 1,534 | 31,863 | 5.5 | % | |||||||||||||||||||||||||||||||||||||||
| Virginia | 7 | 1,131 | 29,447 | 5.1 | % | |||||||||||||||||||||||||||||||||||||||
| Georgia | 10 | 1,707 | 26,213 | 4.6 | % | |||||||||||||||||||||||||||||||||||||||
| Tennessee | 3 | 580 | 8,475 | 1.5 | % | |||||||||||||||||||||||||||||||||||||||
| Oklahoma | 3 | 505 | 8,052 | 1.4 | % | |||||||||||||||||||||||||||||||||||||||
| South Carolina | 2 | 262 | 3,351 | 0.6 | % | |||||||||||||||||||||||||||||||||||||||
| Total South | 116 | 18,551 | 358,873 | 62.3 | % | |||||||||||||||||||||||||||||||||||||||
| West | ||||||||||||||||||||||||||||||||||||||||||||
| Washington | 10 | 1,683 | 30,748 | 5.3 | % | |||||||||||||||||||||||||||||||||||||||
| Nevada | 5 | 839 | 27,786 | 4.8 | % | |||||||||||||||||||||||||||||||||||||||
| Arizona | 5 | 726 | 15,293 | 2.7 | % | |||||||||||||||||||||||||||||||||||||||
| California | 2 | 530 | 12,566 | 2.2 | % | |||||||||||||||||||||||||||||||||||||||
| Utah | 2 | 388 | 8,050 | 1.4 | % | |||||||||||||||||||||||||||||||||||||||
| Total West | 24 | 4,166 | 94,443 | 16.4 | % | |||||||||||||||||||||||||||||||||||||||
| Midwest | ||||||||||||||||||||||||||||||||||||||||||||
| Indiana | 15 | 1,632 | 29,581 | 5.1 | % | |||||||||||||||||||||||||||||||||||||||
| Illinois | 8 | 1,163 | 24,407 | 4.2 | % | |||||||||||||||||||||||||||||||||||||||
| Michigan | 1 | 308 | 6,948 | 1.2 | % | |||||||||||||||||||||||||||||||||||||||
| Missouri | 1 | 453 | 4,035 | 0.7 | % | |||||||||||||||||||||||||||||||||||||||
| Ohio | 1 | 236 | 2,152 | 0.4 | % | |||||||||||||||||||||||||||||||||||||||
| Total Midwest | 26 | 3,792 | 67,123 | 11.6 | % | |||||||||||||||||||||||||||||||||||||||
| Northeast | ||||||||||||||||||||||||||||||||||||||||||||
| New York | 8 | 1,083 | 34,105 | 5.9 | % | |||||||||||||||||||||||||||||||||||||||
| New Jersey | 4 | 339 | 11,697 | 2.0 | % | |||||||||||||||||||||||||||||||||||||||
| Massachusetts | 1 | 272 | 4,277 | 0.8 | % | |||||||||||||||||||||||||||||||||||||||
| Connecticut | 1 | 206 | 3,640 | 0.6 | % | |||||||||||||||||||||||||||||||||||||||
| Pennsylvania | 1 | 136 | 1,983 | 0.4 | % | |||||||||||||||||||||||||||||||||||||||
| Total Northeast | 15 | 2,036 | 55,702 | 9.7 | % | |||||||||||||||||||||||||||||||||||||||
Total(4) | 181 | 28,545 | $ | 576,141 | 100.0 | % | ||||||||||||||||||||||||||||||||||||||
(1)Number of properties represents consolidated and unconsolidated retail properties.
(2)Owned GLA/NRA represents gross leasable area owned by the Company and excludes the square footage of development and redevelopment projects.
(3)Total weighted retail ABR and percent of weighted retail ABR includes ground lease rent and represents the Company’s share of the ABR at consolidated and unconsolidated properties.
(4)Excludes one operating retail property classified as held for sale as of March 31, 2023.
| 1st Quarter 2023 Supplemental Financial and Operating Statistics | 13 | ||||
Kite Realty Group Trust
Top 25 Tenants by ABR as of March 31, 2023
(dollars in thousands, except per square foot data)
The following table includes the Company’s retail operating properties.
| Credit Ratings | |||||||||||||||||||||||||||||||||||||||||||||||
| Tenant | Primary DBA/ Number of Stores | Number of Stores(1) | Total Leased GLA/NRA(2) | ABR(3) | % of Weighted ABR(4) | S&P | Moody’s | ||||||||||||||||||||||||||||||||||||||||
| 1 | The TJX Companies, Inc. | T.J. Maxx (18), Marshalls (12), HomeGoods (11), Homesense (2), T.J. Maxx & HomeGoods combined (2) | 45 | 1,322 | $ | 14,520 | 2.5 | % | A | A2 | |||||||||||||||||||||||||||||||||||||
| 2 | Best Buy Co., Inc. | Best Buy (15), Pacific Sales (1) | 16 | 633 | 11,234 | 1.9 | % | BBB+ | A3 | ||||||||||||||||||||||||||||||||||||||
| 3 | Ross Stores, Inc. | Ross Dress for Less (31), dd’s DISCOUNTS (1) | 32 | 908 | 10,800 | 1.9 | % | BBB+ | A2 | ||||||||||||||||||||||||||||||||||||||
| 4 | PetSmart, Inc. | 32 | 657 | 10,588 | 1.8 | % | B+ | B1 | |||||||||||||||||||||||||||||||||||||||
| 5 | Gap Inc. | Old Navy (25), The Gap (3), Banana Republic (3), Athleta (3) | 34 | 455 | 8,365 | 1.5 | % | BB | Ba3 | ||||||||||||||||||||||||||||||||||||||
| 6 | Michaels Stores, Inc. | Michaels | 28 | 631 | 8,257 | 1.4 | % | N/A | N/A | ||||||||||||||||||||||||||||||||||||||
| 7 | Dick’s Sporting Goods, Inc. | Dick’s Sporting Goods (12), Golf Galaxy (1) | 13 | 625 | 7,893 | 1.4 | % | BBB | Baa3 | ||||||||||||||||||||||||||||||||||||||
| 8 | Bed Bath & Beyond Inc. | Bed Bath & Beyond (13), buybuy BABY (9) | 22 | 582 | 7,829 | 1.4 | % | CCC- | Ca | ||||||||||||||||||||||||||||||||||||||
| 9 | Publix Super Markets, Inc. | 14 | 669 | 6,886 | 1.2 | % | N/A | N/A | |||||||||||||||||||||||||||||||||||||||
| 10 | The Kroger Co. | Kroger (6), Harris Teeter (2), QFC (1), Smith’s (1) | 10 | 355 | 5,844 | 1.0 | % | BBB | Baa1 | ||||||||||||||||||||||||||||||||||||||
| 11 | Lowe’s Companies, Inc. | 6 | — | 5,838 | 1.0 | % | BBB+ | Baa1 | |||||||||||||||||||||||||||||||||||||||
| 12 | Total Wine & More | 14 | 332 | 5,720 | 1.0 | % | N/A | N/A | |||||||||||||||||||||||||||||||||||||||
| 13 | BJ’s Wholesale Club, Inc. | 3 | 115 | 5,464 | 0.9 | % | BB+ | N/A | |||||||||||||||||||||||||||||||||||||||
| 14 | Ulta Beauty, Inc. | 25 | 259 | 5,426 | 0.9 | % | N/A | N/A | |||||||||||||||||||||||||||||||||||||||
| 15 | Petco Health And Wellness Company, Inc. | 20 | 279 | 5,153 | 0.9 | % | B+ | B1 | |||||||||||||||||||||||||||||||||||||||
| 16 | Albertsons Companies, Inc. | Safeway (3), Jewel-Osco (2), Tom Thumb (2) | 7 | 395 | 5,040 | 0.9 | % | BB | Ba2 | ||||||||||||||||||||||||||||||||||||||
| 17 | Five Below, Inc. | 29 | 258 | 5,003 | 0.9 | % | N/A | N/A | |||||||||||||||||||||||||||||||||||||||
| 18 | Burlington Stores, Inc. | 9 | 473 | 4,937 | 0.9 | % | BB+ | N/A | |||||||||||||||||||||||||||||||||||||||
| 19 | Fitness International, LLC | 6 | 242 | 4,884 | 0.8 | % | B- | B3 | |||||||||||||||||||||||||||||||||||||||
| 20 | Kohl’s Corporation | 7 | 361 | 4,865 | 0.8 | % | BB | Ba1 | |||||||||||||||||||||||||||||||||||||||
| 21 | DSW Designer Shoe Warehouse | 16 | 314 | 4,556 | 0.8 | % | N/A | N/A | |||||||||||||||||||||||||||||||||||||||
| 22 | Nordstrom, Inc. | 8 | 259 | 4,494 | 0.8 | % | BB+ | Ba1 | |||||||||||||||||||||||||||||||||||||||
| 23 | Ahold U.S.A. Inc. | Stop & Shop (3), Giant Foods (1) | 4 | 239 | 4,493 | 0.8 | % | BBB+ | Baa1 | ||||||||||||||||||||||||||||||||||||||
| 24 | Walgreens Boots Alliance, Inc. | 8 | 133 | 4,453 | 0.8 | % | BBB | Baa3 | |||||||||||||||||||||||||||||||||||||||
| 25 | Office Depot, Inc. | Office Depot (11), OfficeMax (3) | 14 | 308 | 4,380 | 0.8 | % | N/A | N/A | ||||||||||||||||||||||||||||||||||||||
| Total Top Tenants | 422 | 10,804 | $ | 166,922 | 29.0 | % | |||||||||||||||||||||||||||||||||||||||||
(1)Number of stores represents stores at consolidated and unconsolidated properties.
(2)Total leased GLA/NRA excludes the square footage of structures located on land owned by the Company and ground-leased to tenants.
(3)ABR represents the monthly contractual rent for March 31, 2023, for each applicable tenant multiplied by 12 and does not include tenant reimbursements. ABR represents 100% of the ABR at consolidated properties and the Company’s share of the ABR at unconsolidated properties including ground lease rent.
(4)Percent of weighted ABR includes ground lease rent and represents the Company’s share of the ABR at consolidated and unconsolidated properties.
| 1st Quarter 2023 Supplemental Financial and Operating Statistics | 14 | ||||
Kite Realty Group Trust
Retail Leasing Spreads
Comparable Space(1)(2) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Category | Total Leases(1) | Total Sq. Ft.(1) | Leases | Sq. Ft. | Prior Rent PSF(3) | New Rent PSF(4) | Cash Rent Spread | TI, LL Work, Lease Commissions PSF(5) | ||||||||||||||||||||||||||||||||||||||||||
| New Leases – Q1 2023 | 44 | 225,651 | 17 | 58,287 | $ | 21.58 | $ | 29.78 | 38.0 | % | ||||||||||||||||||||||||||||||||||||||||
| New Leases – Q4 2022 | 51 | 309,042 | 21 | 160,787 | 18.31 | 22.39 | 22.3 | % | ||||||||||||||||||||||||||||||||||||||||||
| New Leases – Q3 2022 | 61 | 207,224 | 22 | 67,920 | 32.45 | 42.41 | 30.7 | % | ||||||||||||||||||||||||||||||||||||||||||
| New Leases – Q2 2022 | 68 | 277,184 | 26 | 137,488 | 14.70 | 21.92 | 49.1 | % | ||||||||||||||||||||||||||||||||||||||||||
| Total | 224 | 1,019,101 | 86 | 424,482 | $ | 19.85 | $ | 26.46 | 33.3 | % | $ | 78.80 | ||||||||||||||||||||||||||||||||||||||
| Renewals – Q1 2023 | 100 | 605,580 | 77 | 512,725 | $ | 20.83 | $ | 22.92 | 10.0 | % | ||||||||||||||||||||||||||||||||||||||||
| Renewals – Q4 2022 | 122 | 725,013 | 105 | 624,805 | 20.45 | 22.27 | 8.9 | % | ||||||||||||||||||||||||||||||||||||||||||
| Renewals – Q3 2022 | 160 | 1,367,114 | 134 | 1,282,347 | 15.53 | 16.86 | 8.5 | % | ||||||||||||||||||||||||||||||||||||||||||
| Renewals – Q2 2022 | 138 | 921,079 | 119 | 849,958 | 16.13 | 17.41 | 8.0 | % | ||||||||||||||||||||||||||||||||||||||||||
| Total | 520 | 3,618,786 | 435 | 3,269,835 | $ | 17.46 | $ | 18.99 | 8.8 | % | $ | 0.90 | ||||||||||||||||||||||||||||||||||||||
| Total – Q1 2023 | 144 | 831,231 | 94 | 571,012 | $ | 20.90 | $ | 23.62 | 13.0 | % | ||||||||||||||||||||||||||||||||||||||||
| Total – Q4 2022 | 173 | 1,034,055 | 126 | 785,592 | 20.01 | 22.30 | 11.4 | % | ||||||||||||||||||||||||||||||||||||||||||
| Total – Q3 2022 | 221 | 1,574,338 | 156 | 1,350,267 | 16.38 | 18.14 | 10.8 | % | ||||||||||||||||||||||||||||||||||||||||||
| Total – Q2 2022 | 206 | 1,198,263 | 145 | 987,446 | 15.93 | 18.04 | 13.2 | % | ||||||||||||||||||||||||||||||||||||||||||
| Total | 744 | 4,637,887 | 521 | 3,694,317 | $ | 17.73 | $ | 19.84 | 11.9 | % | $ | 9.86 | ||||||||||||||||||||||||||||||||||||||
(1)Excludes office and ground leases. Comparable space leases on this table are included for second generation retail spaces. Comparable leases represent those leases for which there was a former tenant within the last 12 months.
(2)Comparable renewals exclude leases with terms 24 months or shorter.
(3)Prior rent represents minimum rent, if any, paid by the prior tenant in the final 12 months of the term. All amounts reported at lease execution.
(4)Contractual rent represents contractual minimum rent per square foot for the first 12 months of the lease.
(5)Includes redevelopment costs for tenant-specific landlord work and tenant allowances provided to tenants.
| 1st Quarter 2023 Supplemental Financial and Operating Statistics | 15 | ||||
Kite Realty Group Trust
Lease Expirations as of March 31, 2023
(dollars in thousands, except per square foot data)
The following table includes the Company’s operating retail properties and development/redevelopment property tenants open for business who have commenced paying rent as of March 31, 2023.
| Retail Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||||||
Expiring GLA – Retail(2) | Expiring ABR per Sq. Ft.(3) | |||||||||||||||||||||||||||||||||||||||||||||||||
Number of Expiring Leases(1) | Shop Tenants | Anchor Tenants | Expiring ABR (Pro rata) | % of Total ABR (Pro rata) | Shop Tenants | Anchor Tenants | Total | |||||||||||||||||||||||||||||||||||||||||||
| 2023 | 369 | 852,991 | 685,040 | $ | 36,817 | 6.8 | % | $ | 30.09 | $ | 16.40 | $ | 23.98 | |||||||||||||||||||||||||||||||||||||
| 2024 | 600 | 1,442,102 | 2,367,103 | 75,977 | 14.1 | % | 31.60 | 13.25 | 20.30 | |||||||||||||||||||||||||||||||||||||||||
| 2025 | 476 | 1,132,492 | 2,626,044 | 68,867 | 12.8 | % | 31.17 | 13.07 | 18.57 | |||||||||||||||||||||||||||||||||||||||||
| 2026 | 449 | 1,019,274 | 2,375,716 | 65,139 | 12.1 | % | 31.03 | 14.43 | 19.49 | |||||||||||||||||||||||||||||||||||||||||
| 2027 | 509 | 1,189,380 | 2,502,486 | 71,800 | 13.3 | % | 31.48 | 13.89 | 19.58 | |||||||||||||||||||||||||||||||||||||||||
| 2028 | 413 | 963,103 | 2,686,546 | 71,006 | 13.2 | % | 34.11 | 14.22 | 19.46 | |||||||||||||||||||||||||||||||||||||||||
| 2029 | 197 | 484,155 | 1,337,140 | 36,637 | 6.8 | % | 33.36 | 16.46 | 21.14 | |||||||||||||||||||||||||||||||||||||||||
| 2030 | 140 | 415,979 | 619,244 | 21,321 | 3.9 | % | 29.78 | 14.76 | 20.74 | |||||||||||||||||||||||||||||||||||||||||
| 2031 | 129 | 360,269 | 619,508 | 21,332 | 4.0 | % | 31.80 | 16.11 | 21.85 | |||||||||||||||||||||||||||||||||||||||||
| 2032 | 163 | 399,759 | 1,079,063 | 27,821 | 5.2 | % | 31.25 | 14.73 | 19.22 | |||||||||||||||||||||||||||||||||||||||||
| Beyond | 198 | 479,949 | 1,552,897 | 42,030 | 7.8 | % | 33.94 | 16.61 | 20.69 | |||||||||||||||||||||||||||||||||||||||||
| 3,643 | 8,739,453 | 18,450,787 | $ | 538,747 | 100.0 | % | $ | 31.72 | $ | 14.47 | $ | 20.06 | ||||||||||||||||||||||||||||||||||||||
(1)Lease expirations table reflects rents in place as of March 31, 2023 and does not include option periods; 2023 expirations include 72 month-to-month retail tenants. This column also excludes ground leases.
(2)Expiring GLA excludes the square footage of structures located on land owned by the Company and ground-leased to tenants.
(3)ABR represents the monthly contractual rent as of March 31, 2023 for each applicable tenant multiplied by 12. Excludes tenant reimbursements and ground lease revenue.
| 1st Quarter 2023 Supplemental Financial and Operating Statistics | 16 | ||||
Kite Realty Group Trust
Components of Net Asset Value as of March 31, 2023
(dollars in thousands)
| Cash Net Operating Income (NOI) | Page | Other Assets(1) | Page | |||||||||||||||||
| GAAP property NOI (incl. ground lease revenue) | $ | 150,482 | 6 | Cash, cash equivalents, and restricted cash | $ | 52,695 | 3 | |||||||||||||
| Non-cash revenue adjustments | (6,278) | Tenant and other receivables (net of SLR) | 55,611 | 3 | ||||||||||||||||
| Other property-related revenue | (1,106) | 6 | Prepaid and other assets | 117,424 | 3 | |||||||||||||||
| Ground lease (“GL”) revenue | (10,586) | 6 | ||||||||||||||||||
| Consolidated Cash Property NOI (excl. GL) | $ | 132,512 | ||||||||||||||||||
Annualized Consolidated Cash Property NOI (excl. ground leases) | $ | 530,048 | ||||||||||||||||||
| Adjustments to Normalize Annualized Cash NOI | Liabilities | |||||||||||||||||||
Remaining NOI to come online from development and redevelopment projects(2) | $ | 4,050 | 12 | Mortgage and other indebtedness, net | $ | (2,940,920) | 10 | |||||||||||||
| Unconsolidated Adjusted EBITDA | 1,800 | 8 | Pro rata adjustment for joint venture debt | (43,681) | 8 | |||||||||||||||
| General and administrative expense allocable to property management activities included in property expenses ($3.5 million in Q1) | 14,000 | 6, note 3 | Accounts payable and accrued expenses | (160,142) | 3 | |||||||||||||||
| Total Adjustments | 19,850 | Other liabilities | (294,760) | 3 | ||||||||||||||||
Projected remaining under construction development/redevelopment(3) | (37,900) | 12 | ||||||||||||||||||
Annualized Normalized Portfolio Cash NOI (excl. ground leases) | $ | 549,898 | ||||||||||||||||||
| Annualized ground lease NOI | 42,344 | |||||||||||||||||||
Total Annualized Portfolio Cash NOI(4) | $ | 592,242 | Common shares and Units outstanding | 222,360,110 | ||||||||||||||||
(1)Excludes construction in progress and entitled land held for development.
(2)Excludes the projected cash NOI and related cost from the future opportunities outlined on page 12.
(3)Remaining costs on page 12 for development projects.
(4)The above components of net asset value exclude NOI related to tenants that have signed leases but have not yet commenced paying rent as of March 31, 2023.
| 1st Quarter 2023 Supplemental Financial and Operating Statistics | 17 | ||||
Kite Realty Group Trust
Non-GAAP Financial Measures
Funds from Operations
Funds From Operations (“FFO”) is a widely used performance measure for real estate companies and is provided here as a supplemental measure of operating performance. The Company calculates FFO, a non-GAAP financial measure, in accordance with the best practices described in the April 2002 National Policy Bulletin of the National Association of Real Estate Investment Trusts (“NAREIT”), as restated in 2018. The NAREIT white paper defines FFO as net income (calculated in accordance with GAAP), excluding (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, the Company believes that FFO is helpful to investors in measuring our operational performance because it excludes various items included in net income that do not relate to or are not indicative of our operating performance, such as gains or losses from sales of depreciated property and depreciation and amortization, which can make periodic and peer analyses of operating performance more difficult. FFO (a) should not be considered as an alternative to net income (calculated in accordance with GAAP) for the purpose of measuring our financial performance, (b) is not an alternative to cash flow from operating activities (calculated in accordance with GAAP) as a measure of our liquidity, and (c) is not indicative of funds available to satisfy our cash needs, including our ability to make distributions. The Company’s computation of FFO may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than we do. A reconciliation of net income (calculated in accordance with GAAP) to FFO is included elsewhere in this Financial Supplement.
From time to time, the Company 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) in 2022, the impact of prior period bad debt or the collection of accounts receivable previously written off (“prior period collection impact”) due to the recovery from the COVID-19 pandemic, which are not otherwise adjusted in the Company’s calculation of FFO.
Adjusted Funds from Operations
Adjusted Funds From Operations (“AFFO”) is a non-GAAP financial measure of operating performance used by many companies in the real estate industry. AFFO modifies FFO for certain cash and non-cash transactions that are not included in FFO. AFFO should not be considered an alternative to net income as an indicator of the Company’s performance or as an alternative to cash flow as a measure of liquidity or the Company’s ability to make distributions. Management considers AFFO a useful supplemental measure of the Company’s performance. The Company’s computation of AFFO may differ from the methodology for calculating AFFO used by other REITs, and therefore, may not be comparable to such other REITs. A reconciliation of net income (calculated in accordance with GAAP) to AFFO is included elsewhere in this Financial Supplement.
Net Operating Income, Cash Net Operating Income and Same Property Net Operating Income
The Company uses property net operating income (“NOI”) and cash NOI, which are non-GAAP financial measures, to evaluate the performance of our properties. The Company defines NOI and cash NOI as income from our real estate, including lease termination fees received from tenants, less our property operating expenses. NOI and cash NOI exclude amortization of capitalized tenant improvement costs and leasing commissions and certain corporate level expenses, including merger and acquisition costs. Cash NOI also excludes other property-related revenue as that activity is recurring but unpredictable in its occurrence, straight-line rent adjustments, and amortization of in-place lease liabilities, net. The Company believes that NOI and cash NOI are helpful to investors as measures of our operating 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 depreciation and amortization, interest expense, and impairment, if any.
The Company also uses same property NOI (“Same Property NOI”), a non-GAAP financial measure, to evaluate the performance of our properties. Same Property NOI 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 the Company receives 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.
| 1st Quarter 2023 Supplemental Financial and Operating Statistics | 18 | ||||
Kite Realty Group Trust
Non-GAAP Financial Measures (continued)
Net Operating Income and Same Property Net Operating Income (continued)
The Company believes that Same Property NOI is helpful to investors as a measure of our operating performance because it includes only the NOI of properties that have been owned for the full periods presented. The Company believes 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 alternatives to net income (calculated in accordance with GAAP) as indicators of our financial performance. The Company’s 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, 2023, the same property pool excludes the following: (i) properties acquired or placed in service during 2022 and 2023; (ii) the multifamily rental units and commercial portion at One Loudoun Downtown – Pads G & H; (iii) Shoppes at Quarterfield and Circle East, which were reclassified from active redevelopment into our operating portfolio in June 2022 and September 2022, respectively; (iv) three active development and redevelopment projects; (v) Edwards Multiplex – Ontario, which was reclassified from our operating portfolio into redevelopment in March 2023; (vi) properties sold or classified as held for sale during 2022 and 2023; and (vii) office properties.
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Net Debt to Adjusted EBITDA
The Company defines EBITDA, a non-GAAP financial measure, as net income before interest expense, income tax expense of the taxable REIT subsidiary, and depreciation and amortization. For informational purposes, the Company also provides Adjusted EBITDA, which it defines as EBITDA less (i) Adjusted EBITDA from unconsolidated entities, (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 the Company’s share of net debt divided by Annualized Adjusted EBITDA. EBITDA, Adjusted EBITDA, Annualized Adjusted EBITDA and Net Debt to Adjusted EBITDA, as calculated by the Company, are not comparable to EBITDA and EBITDA-related measures reported by other REITs that do not define EBITDA and EBITDA-related measures exactly as we do. EBITDA, Adjusted EBITDA and Annualized Adjusted EBITDA do not represent cash generated from operating activities in accordance with GAAP and should not be considered alternatives to net income as an indicator of performance or as alternatives to cash flows from operating activities as an indicator of liquidity.
Considering the nature of our business as a real estate owner and operator, the Company believes that EBITDA, Adjusted EBITDA and the ratio of Net Debt to Adjusted EBITDA are helpful to investors in measuring our operational performance because they exclude various items included in net income that do not relate to or are not indicative of our operating performance, such as gains or losses from sales of depreciated property and depreciation and amortization, which can make periodic and peer analyses of operating performance more difficult. For informational purposes, the Company also provides Annualized Adjusted EBITDA, adjusted as described above. The Company believes this supplemental information provides a meaningful measure of its operating performance. The Company believes presenting EBITDA and the related measures in this manner allows investors and other interested parties to form a more meaningful assessment of the Company’s operating results.
| 1st Quarter 2023 Supplemental Financial and Operating Statistics | 19 | ||||