INVESTOR UPDATE September 2015 Chapel Hill (Dallas, TX) Livingston Center (Livingston, NJ)
THE LOOK AHEAD
© 2015 Kite Realty Group kiterealty.com Investor Update | 3 Operational Excellence Active Development/Redevelopment The 3 R's ORGANIC DRIVERS FOR NOI GROWTH ~2.00‐ 3.00% ~2.25% ~2.25% Embedded NOI Growth Of ~7.5+% ~7.5% + ~3.00% ~2.25% ~3.00%
© 2015 Kite Realty Group kiterealty.com Investor Update | 4 Annual Portfolio GAAP NOI LQA ~$250,000 Pro Forma Adjustments (1) + $7,000 Total Portfolio GAAP NOI ~$257,000 Less: 3‐R’s Current NOI (2) (~$48,000) Core Portfolio GAAP NOI ~$209,000 Plus: Incremental Re/Development NOI ~$11,700 VARIOUS OUTLETS TO GROW NOI FURTHER ~8‐10% Incremental Returns Core Portfolio 78% 3 R's 18%Active Dev/Redev 4% Sources Of NOI As Of Q2 2015 Market cycles and opportunities guide the appropriate capital allocation of development and redevelopment Breakdown Of NOI ~2‐3% Stable Annual Growth ~10% Average Returns 1. Includes acquisitions of Belle Isle, Livingston Station and Chapel Hill as well as anchor openings. 2. Represents Q2 2015 annualized NOI for the operating properties targeted for redevelopment, listed on page 29 of the supplemental.
© 2015 Kite Realty Group kiterealty.com Investor Update | 5 OPERATIONAL EXCELLENCE The “Kite Way” Industry leading operating platform Top efficiency margins in the sector Cash renewal spreads of 6‐8% on shop leases Achieved on >90% of expiring shop leases; most with 3% annual bumps 90+% retention rate and robust risk management process Detailed underwriting & aggressive tenant management improve quality and consistency of cash flow Remerchandising strategy via 3 R’s grows NAV Portfolio operations to generate $50mm in free cash flow in 2015 Eddy Street Commons
© 2015 Kite Realty Group kiterealty.com Investor Update | 6 ACTIVE DEVELOPMENT / REDEVELOPMENT 1. Calculated as the sum of land held for development and construction in process, divided by gross asset value. Development / Redevelopment Expertise Long history of experience in development Completed 1.7mm SF since 2008 Measured approach to development < 5% development exposure (1) Nearing completion on existing developments 75% funded; 83% leased / committed Parkside Town Commons – Phase II (Raleigh, NC) Tamiami Crossing (Naples, FL) Portfolio NAV Free Cash Flow Embedded Rent GrowthHolly Springs – Phase II (Raleigh, NC)
© 2015 Kite Realty Group kiterealty.com Investor Update | 7 THE 3 R’s: REPURPOSE, REPOSITION, REDEVELOP 52% 20% 28% The 3 R’s Pipeline Breakdown Redevelopment Repurpose Reposition Redevelopment: 8.0‐9.0% Repurpose: 9.5‐10.5% Reposition: 10.5‐11.5% Expected Returns Summary $105‐125mm in redevelopment projects, expected to commence over the next ~18 months
© 2015 Kite Realty Group kiterealty.com Investor Update | 8 SHORT‐TERM IMPACT; LONG‐TERM NAV BENEFIT Q1 '15 A Q2 '15A Q3 '15E Q4 '15E 2015E 4.4% 3.7% 3‐3.5% Peer Avg. ~3.3%⁽¹⁾ KRG Historical Avg. ~4.5% 1. Peers include AKR, BRX, CDR, DDR, EQY, FRT, KIM, REG, RPAI, RPT. All same store numbers exclude redevelopment. Historical KRG average over previous 9 quarters. Expected 3 R’s Impact in 2H 2015 Projected 3R’s Impact To 2015 Same‐Store NOI
© 2015 Kite Realty Group kiterealty.com Investor Update | 9 EFFICIENT CAPITAL ALLOCATION TO BENEFIT NAV Using free cash flow to fund redevelopment pipeline yields high return on capital and boosts portfolio NAV ~$50mm in free cash flow for 2015FY $105‐125mm of 3 R’s; with ~10% average return Portfolio NAV Rivers Edge (IN)Lithia Crossing (FL)
PORTFOLIO OVERVIEW
© 2015 Kite Realty Group kiterealty.com Investor Update | 11 COMPANY SNAPSHOT KITE REALTY GROUP TRUST FL, 26% IN, 13% TX, 12% NV, 10% TRI‐ST, 8% NC, 6% OK, 5% GA, 3% VA, 3% UT, 3% TN, 2% SC, 2% AL, 2% Other, 5% Note: All data as of 06/30/15 unless otherwise noted. 1. ABR excludes ground lease revenue attributable to parcels and outlots owned by the Company and ground leased to tenants. 2. Source: Bloomberg; as of 07/31/15. Dividend yield calculated as “Indicated Yield” per Bloomberg definition. ABR BY GEOGRAPHY (1) Note: Cities referenced denote regional office locations. BEECHWOOD PROMENADE (GA) DELRAY MARKETPLACE (FL)
© 2015 Kite Realty Group kiterealty.com Investor Update | 12 OVER 70% OF ABR FROM TOP 50 MSAs 46% of FL’s ABR from Top 50 MSA 54% of the SE’s ABR from Top 50 MSA 81% of the NE’s ABR from Top 50 MSA 77% of the Midwest’s ABR from Top 50 MSA 91% of TX/OK’s ABR from Top 50 MSA 94% of the West’s ABR from Top 50 MSA Regional Approach Proves Impactful As Majority Of Portfolio Income From Top Markets Source: Top 50 MSAs based on population counts from the U.S. Census.
© 2015 Kite Realty Group kiterealty.com Investor Update | 13 Long‐standing and cohesive management team Shareholder value creation via NAV‐focused initiatives Robust platform results in top tier operational efficiencies Diverse, high‐quality portfolio Strong development/redevelopment portfolio Flexible investment grade balance sheet WHAT DIFFERENTIATES KITE?
© 2015 Kite Realty Group kiterealty.com Investor Update | 14 TOP TIER OPERATING EFFICIENCY 4.6% 5.1% 5.5% 6.5% 7.2% 7.9% 8.0% 8.5% 8.9% 9.2% 9.3% WRI FRT KRG BRX DDR ROIC KIM EQY RPT REG RPAI G&A / Revenues (%) 75.3% 75.0% 74.3% 74.1% 73.1% 72.0% 71.3% 71.1% 70.4% 70.1% 70.0% BRX ROIC KRG EQY REG KIM RPT RPAI FRT WRI DDR NOI Margin (%) Kite efficiency metrics are among the best in the industry Source: As of 06/30/15 per company financials. Reflects pro rata income statement figures.
© 2015 Kite Realty Group kiterealty.com Investor Update | 15 Grocery Anchored, 13% Hybrid (Power W/ Grocery), 52% Power / Regional Center, 33% Other, 2%⁽²⁾ PORTFOLIO OVERVIEW DRAMATICALLY TRANSFORMED HIGH‐QUALITY PORTFOLIO Top tier retail portfolio with an ABR of $15.25, is comprised mostly with grocery and hybrid / power centers 1. As of 06/30/15. 2. Other includes office, unanchored strip centers and single tenant assets. 3. Based on 5‐mile radius. Source: demographic data from AGS. Number of Properties 119 Number of States 22 Total GLA (SF) 24mm Owned GLA (SF) 17mm Total Leased (Owned SF) 94.8% Shop Leased (Owned SF) 86.2% Annualized Base Rent (Per SF) $15.25 Ground Lease (ABR) $18.1mm Average Center Size (SF) 204,000 Portfolio Demographics (3) Average Household Income $90,000 Population > 161,000 Retail Diversification By ABR (1)Summary Statistics (1) By Property Type 65% Of Assets Anchored With A Grocery
© 2015 Kite Realty Group kiterealty.com Investor Update | 16 INCREASING LEASES WITH KEY NATIONAL TENANTS STRONG MIX OF TENANTS ACROSS OUR DIVERSIFIED PORTFOLIO Continued support of strong tenants further enhances the quality and strength of our assets; limited exposure to any single tenant provides additional insulation from the retail industry cycles CREDIT STRENGTH OF PORTFOLIO Tenant # Stores % ABR 18 3.3% 19 2.2% 18 2.1% 17 2.0% 5 2.0% 18 2.0% 9 1.8% 14 1.6% 13 1.4% 6 1.4% Total 137 19.8% TOP 10 TENANTS BY ABR `
© 2015 Kite Realty Group kiterealty.com Investor Update | 17 CONSISTENT OPERATORS OF QUALITY ASSETS Superior Same‐Property NOI Growth 4.4% 4.9% 4.9% 4.7% 4.4% 4.7% 4.8% 4.4% 3.7% 0.0 1.0 2.0 3.0 4.0 5.0 Same‐Property NOI Growth (%) Growing ABR Through High Quality Assets $12.80 $13.26 $12.95 $13.18 $15.15 $15.25 $11.00 $12.50 $14.00 $15.50 2010 2011 2012 2013 2014 Current Base Rent Per Owned GLA KRG Historical avg. ~4.5% Peer avg.⁽¹⁾ ~3.3% 1. Peers include AKR, BRX, CDR, DDR, EQY, FRT, KIM, REG, RPAI, RPT.
PORTFOLIO TRANSFORMATION
© 2015 Kite Realty Group kiterealty.com Investor Update | 19 RECENT TRANSACTIONS SUPPORT CORE MARKETS West ~15% of Total ABR Summit at Scottsdale (Scottsdale, AZ) Sold at 5.25% cap rate Q3 2015 Mid‐Central ~15% of Total ABR Village on the Parkway (Dallas, TX) Sold at 4.5% cap rate Q3 2015 Midwest ~15% of Total ABR Skokie Commons (Skokie, IL) Sold at 5.45% cap rate Q2 2015 Florida ~25% of Total ABR Mercato (Naples, FL) Sold at 4.75% cap rate Q2 2015 Southeast ~20% of Total ABR Settler’s Market (Williamsburg, VA) Sold at 5.9% cap rate Q2 2015 Northeast ~10% of Total ABR Downtown Crown (Gaithersburg, MD) Sold at 4.3% cap rate Q1 2015 Source: As of 06/30/15.
© 2015 Kite Realty Group kiterealty.com Investor Update | 20 GROWING THE PORTFOLIO Developments⁽¹⁾ AcquisitionsRedevelopments 1. Developments’ percentage leased refers to leased or committed square feet. Portofino Shopping Center Houston 375,000 SF 92% Leased Tamiami Crossing Naples 145,000 SF 100% Leased Holly Springs Town Center Raleigh‐Cary 330,000 SF 88% Leased Livingston Shopping Center New York‐Newark 140,000 SF 95% Leased Parkside Town Commons Raleigh‐Cary 353,000 SF 80% Leased Colleyville Downs Dallas 201,000 SF 93% Leased Belle Isle Station Oklahoma City 400,000 SF 99% Leased Chapel Hill Dallas 200,000 SF 96% Leased
© 2015 Kite Realty Group kiterealty.com Investor Update | 21 STRATEGICALLY RECYCLED SALE PROCEEDS $13.02 $19.71 Dispositions Acquisitions 50% Improvement In ABR per SF 50% Increase $74K $107K Dispositions Acquisitions 45% Increase In Household Income Note: Dispositions include the 15‐ asset disposition which closed in Q4 2014 and Q1 2015. Acquisition assets include Livingston Shopping Center, Rampart Commons, Belle Isle, Colleyville Downs and Chapel Hill. Demographic data from AGS; population based on a 5‐mile radius and household income based on a 3‐mile radius. CONTINUED PORTFOLIO ENHANCEMENT USING DISPOSITION PROCEEDS Replace low growth, non‐core assets with high quality real estate, anchored by strong retailers and located in the Top 50 MSAs 45% Increase 61K 251K Dispositions Acquisitions More Than 300% Growth In Population >300% Increase Dramatic Tenant Improvement Dispositions Acquisitions
© 2015 Kite Realty Group kiterealty.com Investor Update | 22 DRAMATICALLY UPGRADED PORTFOLIO Dispositions Acquisitions Walgreens Plaza, Jacksonville, NC AHHI: $57,000 Eastside Junction, Athens, AL Population: 12,000 Colleyville Downs, Colleyville, TX AHHI: $130,000 Rampart Commons, Las Vegas, NV Population: 161,000 Note: Demographic data from AGS and based on a 3‐mile radius.
© 2015 Kite Realty Group kiterealty.com Investor Update | 23 ACQUISITION: COLLEYVILLE DOWNS Summary MSA GLA % Leased Population AHHI Dallas 201,000 SF 93% 255,000 $128,000 Ability to create additional value through lease‐ up and below‐market rent from first generation leases completed before Whole Foods opened Potential to remerchandise and reconfigure specific tenant spaces to right size and enhance junior box layouts Sourced using regional footprint to execute off‐ market transaction Property Highlights Note: Population based on a 5‐mile radius and average household income based on a 3‐mile radius.
© 2015 Kite Realty Group kiterealty.com Investor Update | 24 ACQUISITION: BELLE ISLE STATION Summary MSA GLA % Leased Population Vehicle Traffic Daily Oklahoma City 400,000 SF 99% 197,000 100,000 Adjacent to the highest sales producing mall in Oklahoma City Average home prices in the surrounding area in excess of $1.3 million Complimentary lifestyle tenant mix that plays well with Penn Square Mall Property constructed in 2000 – minimal capital expenses expected Property Highlights Note: Population based on a 5‐mile radius.
© 2015 Kite Realty Group kiterealty.com Investor Update | 25 ACQUISITION: LIVINGSTON SHOPPING CENTER Summary MSA GLA % Leased Population AHHI New York‐Newark 140,000 SF 95% 150,000 $168,000 Located in Western Essex County, one of the most affluent areas in the country Leveraged relationships to best position during the selectively marketed process Located near The Short Hills Mall, one of the top 10 sales grossing malls in the U.S. Upside potential via lease‐up of newly constructed space Property Highlights Note: Population based on a 5‐mile radius and average household income based on a 3‐mile radius.
© 2015 Kite Realty Group kiterealty.com Investor Update | 26 ACQUISITION: CHAPEL HILL Summary Showcases one of HEB’s premier Central Market stores; one of 9 total and only one in the MSA Recent backfill of Borders bookstore with The Container Store Exceptional visibility and continuous retail frontage yield high sales; often, top performing centers for retailers Sourced using regional footprint to execute off‐market transaction Property Highlights MSA GLA % Leased Population Dallas‐Fort Worth 200,000 SF 96% 275,000
BALANCE SHEET
© 2015 Kite Realty Group kiterealty.com Investor Update | 28 STRONG BALANCE SHEET & CAPITAL POSITION 9.1x 9.7x 8.6x 7.4x 6.5x 6.5x 2010 2011 2012 2013 2014 Current Net Debt / EBITDA Multiple 1031 Proceeds $80 Expansion of Term Loan $170 1031 Proceeds $12 Acquisitions $145 Debt Pay Down $105 Chapel Hill $10 Sources of Cash Uses of Cash Current Balance Sheet Supports Future Initiatives (1) 1. Blue bars are the current sources and uses. The green bars are the future sources and uses. Note Chapel Hill funding use excludes asset‐level debt amount. Developments / Redevelopments Debt Paydown $185 Q 2 2 0 1 5 2 H 2 0 1 5 E Private Placement Funding $250 Cash / Other $35 Preferred $102 RECENT FUNDING INITIATIVES BOLSTER STRONG BALANCE SHEET FURTHER Unsecured private placement offering reduces floating rate exposure to ~10%
© 2015 Kite Realty Group kiterealty.com Investor Update | 29 WELL‐STAGGERED DEBT MATURITY PROFILE $263 $50 $64 $0 $446 $178 $249 $277 $167 0 100 200 300 400 500 600 700 2016 2017 2018 2019 2020 2021 2022 2023 2024+ Mortgage Debt Term Loan Construction Debt Senior Unsecured Notes ($mm) 1. Chart excludes scheduled principal payments and net premiums. Term Loan is shown at final maturity after extension option exercised. Revolver scheduled to mature in 2019, after extension option exercised. As of 06/30/15, pro forma for senior unsecured debt deal, expected to fund September 2015. KRG’s Debt Maturity Schedule (1) Funding of the $250mm unsecured private placement offering in early September contributes to full paydown of KRG’s line of credit
© 2015 Kite Realty Group kiterealty.com Investor Update | 30 UNQUESTIONABLE VALUE PROPOSITION IN KRG KEY NAV COMPONENTS PER Q2 2015 SUPPLEMENTAL Apply Portfolio Cap Rate “PCR” Apply PCR Less ~75‐100 bps Buying opportunity vs. both public and private valuations Cash Net Operating Income (NOI) Supplemental Pg. Other Assets Supplemental Pg. GAAP Property NOI (incl. Ground Lease Revenue) 62,179,042 Pg. 13 Cash and cash equivalents 70,120,217 Pg. 7 Below‐market lease intangbiles, net (758,587) Pg. 10 Tenant and other receivables (net of SLR) 22,986,251 Pg. 7 Straight‐line rent (1,530,913) Pg. 10 Restricted cash and escrow deposits 23,749,963 Pg. 7 Other property related revenue (1,857,441) Pg. 13 Prepaid and other assets (2) 6,163,844 Pg. 7 Ground Lease ("GL") Revenue (4,534,000) Pg. 13, footnote 5 Undeveloped land in operating portfolio 11,800,000 Pg. 10, footnote 3 Consolidated Cash Property NOI (excl. GL) 53,498,101 Land held for development 34,975,149 Pg. 10 Annualized Consolidated Cash Property NOI (excl. GL) 213,992,404 CIP Not In Active Development/Redevelopment (3) 39,408,000 Pg. 28 Total Other Asset Value 209,203,424 Adjustments To Normalize Annualized Cash NOI Active Development / Redevelopment NOI Currently Included (3,818,000) Pg. 27 Liabilities Unconsolidated EBITDA 131,250 Pg. 11 Mortgage and other indebtedness (1,618,614,378) Pg. 7 Minority Interest EBITDA (1) (120,100) Pg. 14 Accounts payable and accrued expenses (79,760,005) Pg. 7 Pro Forma Adjustments 1,930,405 Pg. 11 Other liabilities (4) (24,535,884) Pg.7, Pg. 10 Management Fee Income Included In Property Expenses 1,400,000 Pg. 13 Debt premium on assumed debt 25,244,599 Pg. 11 Total Adjustments (476,445) Non‐controlling redeemable JV interest (40,791,617) Pg. 14 Total Liabilities (1,738,457,285) Annualized Normalized Operating Cash NOI (excl. GL) 213,515,959 Total Preferred Stock (102,500,000) Pg. 7 Annualized Ground Lease NOI 18,136,000 Total Annualized Operating Cash NOI 231,651,959 Annualized Stabilized Development / Redevelopment Cash NOI 15,489,000 Pg. 27 Total Annualized Portfolio Cash NOI 247,140,959 Diluted shares and units outstanding 85,243,602 Pg. 11 1. Excludes Crossing at Killingly Commons and Territory Portfolio as they're included in non‐controlling redeemable JV interest in liabilities. 2. Excludes $2,500,000 of the Company's unconsolidated joint venture investment. 3. Includes CIP amounts for Deerwood apartments, Holly Springs Town Center ‐ Phase III and miscellaneous tenant improvements and small projects. 4. Deferred revenue and other liabilities (pg. 7) of $142,323,115 less mark‐to‐market lease amount (pg. 10) of $117,787,231.
© 2015 Kite Realty Group kiterealty.com Investor Update | 31 This presentation, together with other statements and information publicly disseminated by us, contains certain forward‐looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are based on assumptions and expectations that may not be realized and are inherently subject to risks, uncertainties and other factors, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, performance, transactions or achievements, financial or otherwise, may differ materially from the results, performance, transactions or achievements, financial or otherwise, expressed or implied by the forward‐looking statements. Risks, uncertainties and other factors that might cause such differences, some of which could be material, include but are not limited to: national and local economic, business, real estate and other market conditions, particularly in light of low growth in the U.S. economy as well as uncertainty added to the economic forecast due to the sharp drop in oil and energy prices in late 2014; financing risks, including the availability of and costs associated with sources of liquidity; our ability to refinance, or extend the maturity dates of, our indebtedness; the level and volatility of interest rates; the financial stability of tenants, including their ability to pay rent and the risk of tenant bankruptcies; the competitive environment in which we operate; acquisition, disposition, development and joint venture risks; property ownership and management risks; our ability to maintain our status as a real estate investment trust for federal income tax purposes; potential environmental and other liabilities; impairment in the value of real estate property we own; risks related to the geographical concentration of our properties in Florida, Indiana, and Texas; insurance costs and coverage; other factors affecting the real estate industry generally; and other uncertainties and factors identified in this presentation and, from time to time, in reports we file with the SEC or in other documents that we publicly disseminate, including, in particular, the section titled “Risk Factors” in our Annual Report on Form 10‐K for the fiscal year ended December 31, 2014. 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. FORWARD‐LOOKING STATEMENTS Rampart Commons, Las Vegas, NV