Kite Realty Group Trust (NYSE: KRG) (the “Company”) announced
today operating results for the first quarter ended March 31, 2016.
Financial statements and exhibits attached to this release include
the details of these results.
“We started off 2016 with great momentum and enthusiasm from all
areas of our business as the team made meaningful strides towards
executing on our three-year roadmap,” said John A. Kite, Chairman
and CEO. “We grew same-property NOI by 3.4%. We delivered 125,000
square feet of new owned anchor space and made substantial progress
on our 3-R initiative, commencing construction on five of these
projects during the first quarter. We remain focused on increasing
cash flow and adding value for our shareholders.”
First Quarter Highlights
- Generated Funds From Operations
(“FFO”), as adjusted, of $0.52 per diluted common share, or $44.1
million.
- Generated Adjusted Funds From
Operations (“AFFO”) of $0.46 per diluted common share.
- Increased same-property net operating
income (“NOI”) by 3.4% quarter-over-quarter, excluding
redevelopment.
- Achieved aggregate cash rent spreads of
7.8% including a cash renewal rent spread of 7.1% on a comparable
basis.
- Increased small shop occupancy by 180
basis points compared to the same period in the prior year, to
87.7%.
- Delivered approximately 125,000 square
feet of new anchor space as part of our development and
redevelopment initiatives, such as Stein Mart and Marshalls at
Tamiami Crossing and DSW at Holly Springs.
- Commenced construction on five
redevelopment projects, which have total expected costs of $34
million to $39 million and estimated incremental returns averaging
approximately 9% to 11%.
- Increased the common share dividend by
approximately 5.5% to $0.2875 per common share for the first
quarter, which, when annualized, represents an approximate 19.8%
increase since 2013.
First Quarter Financial
Results
FFO, as adjusted, for the three months ended March 31, 2016, was
$44.1 million, or $0.52 per diluted common share, for real estate
properties in which the Company’s operating subsidiaries own an
interest (to which we refer as “Kite Portfolio”), compared to $42.3
million, or $0.50 per diluted common share, for the same period in
the prior year.
Reported FFO, as defined by NAREIT, was $43.6 million, or $0.51
per diluted common share, for the Kite Portfolio, compared to $42.1
million, or $0.49 per diluted common share, for the same period in
the prior year.
Net income attributable to common shareholders for the three
months ended March 31, 2016, was $1.4 million compared to a net
income of $5.1 million for the same period in 2015. The decrease is
primarily attributable to a $3.4 million gain on the sales of
operating properties during the first quarter of 2015.
Portfolio Operations
As of March 31, 2016, the Company owned interests in 121 retail
operating properties totaling approximately 24 million square feet.
The owned GLA in the Company’s retail operating portfolio was 95.4%
leased as of March 31, 2016.
Same-property NOI, which includes 102 retail operating
properties, increased 3.4% in the first quarter of 2016 compared to
the same period in the prior year. The leased percentage of these
properties was 95.5% at March 31, 2016, compared to 94.9% at March
31, 2015.
The Company executed leases on 88 individual spaces totaling
405,338 square feet during the first quarter of 2016, including 64
comparable new and renewal leases for 333,898 owned square feet.
Cash spreads on new spaces executed during the quarter were 11.4%
while cash spreads on renewals were 7.1%, for a blended spread of
7.8%.
The leasing spread results were impacted by two specific anchor
spaces; excluding these, the quarter had a blended cash leasing
spread of 10.5%, which included 31.5% cash spread on new leases and
8% cash spread on renewals.
Redevelopment and
Development
The Company’s Redevelopment, Reposition and Repurpose (“3-R”)
initiative continued to evolve during the first quarter. Identified
3-R opportunities totaled approximately $95 million to $110 million
across the portfolio with an average targeted incremental return of
approximately 9% to 11%.
Five of the 3-R assets commenced construction during the first
quarter, with aggregate estimated costs of $34 million to $39
million and an average targeted incremental return of approximately
9% to 11%. The 3-R projects under construction include City Center
(White Plains, NY), Bolton Plaza (Jacksonville, FL), Phase I of
Portofino (Houston, TX), Castleton Crossing (Indianapolis, IN) and
Northdale Promenade (Tampa, FL).
Development projects currently in various stages of completion
include Phase II of Parkside Town Commons, Phase II of Holly
Springs, and Tamiami Crossing. These three projects were in
aggregate 91% pre-leased or committed as of March 31, 2016, and
included several anchor deliveries during the first quarter, such
as Stein Mart, Marshalls, Ross and Ulta at Tamiami Crossing and DSW
at Holly Springs.
2016 Earnings Guidance
The Company maintains its previously announced guidance and
underlying assumptions for 2016 FFO, as adjusted, of $2.02 to $2.08
per diluted share. This guidance excludes certain one-time items
such as transaction costs, debt extinguishment gains/losses and
certain other income or charges. Please refer to the full list of
guidance assumptions on page 35 of the supplemental.
Guidance Range For Full Year 2016
Low
High
Consolidated net income per diluted common share $ 0.06 $ 0.12 Add:
Depreciation, amortization and other 1.94 1.94 FFO, per
diluted common share, as defined by NAREIT 2.00 2.06 Add:
Transaction costs and certain other charges 0.02 0.02
FFO, as adjusted, per diluted common share $ 2.02 $
2.08
Earnings Conference Call
The Company will conduct a conference call to discuss its
financial results on Friday, April 29, 2016, at 9:00 a.m. EDT. A
live webcast of the conference call will be available online on the
Company’s corporate website at www.kiterealty.com. The dial-in
numbers are (866) 840-7637 for domestic callers and (704) 908-0456
for international callers (passcode 67967945). In addition, a
webcast replay link will be available on the corporate website.
About Kite Realty Group
Trust
Kite Realty Group Trust is a full-service, vertically integrated
real estate investment trust engaged in the ownership, operation,
management, leasing, acquisition, construction, redevelopment and
development of neighborhood and community shopping centers in
selected markets in the United States. As of March 31, 2016, the
Company owned interests in a portfolio of 121 operating,
development and redevelopment properties totaling approximately 24
million total square feet across 20 states. For more information,
please visit the Company’s website at www.kiterealty.com.
Safe Harbor
This press release 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, 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, its indebtedness, the level and volatility
of interest rates, the financial stability of tenants, including
their ability to pay rent and the risk of tenant bankruptcies, the
competitive environment in which the Company operates, acquisition,
disposition, development, joint venture, property ownership and
management risks, the Company’s ability to maintain its status as a
real estate investment trust for federal income tax purposes,
potential environmental and other liabilities, impairment in the
value of real estate property the Company owns, risks related to
the geographical concentration of our properties in Florida,
Indiana and Texas, the dilutive effects of future offerings of
issuing additional securities, and other factors affecting the real
estate industry generally. The Company refers you to the documents
filed by the Company from time to time with the Securities and
Exchange Commission, specifically the section titled “Risk Factors”
in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2015, which discuss these and other factors that could
adversely affect the Company’s results. 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.
Kite Realty Group
TrustConsolidated Balance Sheets(Unaudited)
($ in thousands) March 31,2016
December 31,2015 Assets: Investment
properties, at cost $ 3,947,922 $ 3,933,140 Less: accumulated
depreciation (461,051 ) (432,295 ) 3,486,871 3,500,845 Cash
and cash equivalents 23,307 33,880 Tenant and other receivables,
including accrued straight-line rent of $25,230 and $23,809
respectively, net of allowance for uncollectible accounts 52,406
51,101 Restricted cash and escrow deposits 13,345 13,476 Deferred
costs and intangibles, net 143,028 148,274 Prepaid and other assets
10,793 8,852
Total Assets $ 3,729,750 $
3,756,428
Liabilities and Shareholders’ Equity:
Mortgage and other indebtedness, net $ 1,730,787 $ 1,724,449
Accounts payable and accrued expenses 81,772 81,356 Deferred
revenue and other liabilities 127,484 131,559
Total Liabilities 1,940,043 1,937,364 Commitments and
contingencies Limited Partners’ interests in the Operating
Partnership and other redeemable noncontrolling interests 99,021
92,315
Shareholders’ Equity: Kite Realty Group Trust
Shareholders’ Equity: Common Shares, $.01 par value,
225,000,000 shares authorized, 83,364,216 and 83,334,865 shares
issued and outstanding at March 31, 2016 and December 31, 2015,
respectively 834 833 Additional paid in capital 2,044,266 2,050,545
Accumulated other comprehensive loss (9,290 ) (2,145 ) Accumulated
deficit (345,822 ) (323,257 )
Total Kite Realty Group Trust
Shareholders’ Equity 1,689,988 1,725,976 Noncontrolling
Interests 698 773
Total Equity 1,690,686
1,726,749
Total Liabilities and Shareholders'
Equity $ 3,729,750 $ 3,756,428
Kite Realty Group
TrustConsolidated Statements of OperationsFor the
Three Months Ended March 31, 2016 and 2015
(Unaudited)
($ in thousands, except per share data)
Three Months EndedMarch 31, 2016 2015
Revenue: Minimum rent $ 67,463 $ 65,479 Tenant
reimbursements 18,155 18,615 Other property related revenue 2,932
2,734
Total revenue 88,550 86,828
Expenses: Property operating 12,192 12,724 Real estate taxes
11,135 10,021 General, administrative, and other 5,291 5,006 Merger
and acquisition costs — 159 Depreciation and amortization 42,240
40,435
Total expenses 70,858 68,345
Operating income 17,692 18,483 Interest expense
(15,325 ) (13,933 ) Income tax expense of taxable REIT subsidiary
(410 ) (55 ) Other income, net 18 4
Income from
continuing operations 1,975 4,499 Gain on sales of operating
properties — 3,363
Net income 1,975 7,862 Net
income attributable to noncontrolling interest (573 ) (683 )
Dividends on preferred shares — (2,114 )
Net income
attributable to Kite Realty Group Trust common shareholders $
1,402 $ 5,065
Income per common share -
basic and diluted $ 0.02 $ 0.06 Weighted
average common shares outstanding - basic 83,348,507
83,532,092 Weighted average common shares outstanding -
diluted 83,490,979 83,625,352
Common dividends
declared per common share $ 0.2875 $ 0.2725
Kite Realty Group TrustFunds
From OperationsFor the Three Months Ended March 31, 2016 and
2015 (Unaudited)
($ in thousands, except share and per share
data) Three Months EndedMarch 31, 2016
2015 Funds From Operations Consolidated net income $
1,975 $ 7,862 Less: cash dividends on preferred shares — (2,114 )
Less: net income attributable to noncontrolling interests in
properties (461 ) (587 ) Less: gains on sales of operating
properties — (3,363 ) Add: depreciation and amortization of
consolidated entities, net of noncontrolling interests 42,052
40,293 Funds From Operations of the Kite Portfolio1
43,566 42,091 Less: Limited Partners' interests in Funds From
Operations (981 ) (807 ) Funds From Operations attributable to Kite
Realty Group Trust common shareholders $ 42,585 $ 41,284
FFO per share of the Operating Partnership - basic $ 0.51
$ 0.49 FFO per share of the Operating Partnership -
diluted $ 0.51 $ 0.49 Funds From Operations of
the Kite Portfolio1 $ 43,566 $ 42,091 Add: merger and acquisition
costs — 159 Add: severance charge 500 — Funds From
Operations of the Kite Portfolio, as adjusted $ 44,066 $
42,250 FFO per share of the Operating Partnership, as
adjusted - basic $ 0.52 $ 0.50 FFO per share of the
Operating Partnership, as adjusted - diluted $ 0.52 $ 0.50
Weighted average Common Shares outstanding - basic
83,348,507 83,532,092 Weighted average Common Shares
outstanding - diluted 83,490,979 83,625,352 Weighted
average Common Shares and Units outstanding - basic 85,271,012
85,172,613 Weighted average Common Shares and Units
outstanding - diluted 85,413,485 85,265,873
____________________ 1 “Funds From Operations of the Kite
Portfolio" measures 100% of the operating performance of the
Operating Partnership’s real estate properties and construction and
service subsidiaries in which the Company owns an interest. “Funds
From Operations attributable to Kite Realty Group Trust common
shareholders” reflects a reduction for the redeemable
noncontrolling weighted average diluted interest in the Operating
Partnership.
Kite Realty Group TrustSame
Property Net Operating IncomeFor the Three Months Ended
March 31, 2016 and 2015(Unaudited)
($ in thousands) Three Months Ended
March 31, 2016 2015 % Change Number of
properties at period end1 102 102
Leased percentage
95.5 % 94.9 %
Economic Occupancy percentage at period
end2 93.7 % 93.2 % Minimum rent $ 54,351 $ 53,344
Tenant recoveries 15,335 15,619 Other income 325 274
70,011 69,237 Property operating expenses (8,518 ) (9,814 )
Real estate taxes (9,269 ) (8,921 ) (17,787 ) (18,735 )
Net
operating income - same properties3 $
52,224 $ 50,502 3.4%
Reconciliation of Same Property NOI to Most Directly
Comparable GAAP Measure: Net operating income - same properties $
52,224 $ 50,502 Net operating income - non-same activity4 12,999
13,581 Other expense, net (392 ) (51 ) General, administrative and
other (5,291 ) (5,006 ) Merger and acquisition costs — (159 )
Depreciation expense (42,240 ) (40,435 ) Interest expense (15,325 )
(13,933 ) Gains on sales of operating properties — 3,363 Net income
attributable to noncontrolling interests (573 ) (683 ) Dividends on
preferred shares — (2,114 ) Net income attributable to
common shareholders $ 1,402 $ 5,065
____________________ 1 Same property analysis excludes
operating properties in redevelopment as well as office properties
(30 South Meridian and Eddy Street Commons). 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 during the period. 3
Same property net operating income excludes net gains from outlot
sales, straight-line rent revenue, bad debt expense and recoveries,
lease termination fees, amortization of lease intangibles and
significant prior year expense recoveries and adjustments, if any.
4 Includes non-cash accounting items across the portfolio as
well as net operating income from properties not included in the
same property pool. The change between years largely reflects the
sales of operating properties in 2015, net of acquired properties
and development projects, not yet in the same property pool.
The Company believes that Net Operating Income ("NOI") is
helpful to investors as a measure of its operating performance
because it excludes various items included in net income that do
not relate to or are not indicative of its operating performance,
such as depreciation and amortization, interest expense, and
impairment, if any. The Company believes that Same Property NOI is
helpful to investors as a measure of its operating performance
because it includes only the NOI of properties that have been owned
for the full period presented, which eliminates disparities in net
income due to the redevelopment, acquisition or disposition of
properties during the particular period presented, and thus
provides a more consistent metric for the comparison of the
Company's properties. NOI and Same Property NOI should not,
however, be considered as alternatives to net income (calculated in
accordance with GAAP) as indicators of the Company's financial
performance.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160428006293/en/
Kite Realty Group TrustMaggie Daniels, CFA, 317-713-7644Investor
Relations and Strategymdaniels@kiterealty.com
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