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Kite Realty Group Trust Completes Over $200M in Dispositions and Executes 12 Box Leases in 2018

Company Release - 1/8/2019 4:45 PM ET

INDIANAPOLIS, Jan. 08, 2019 (GLOBE NEWSWIRE) -- Kite Realty Group Trust (NYSE:KRG) announced today that, for calendar year 2018, it completed approximately $214 million in dispositions and executed 12 box leases for approximately 297,000 square feet.  During this time period, KRG also completed approximately $22 million in acquisitions and $900 million in total capital markets activity.

“Our transactional and leasing accomplishments in 2018 are a testament to Kite’s ongoing commitment to improve the quality of our retail portfolio, strengthen our balance sheet and deepen our relationships with blue-chip institutional partners,” said John A. Kite, Chairman and Chief Executive Officer.  “We fully intend to continue this trend into 2019, and our team is poised to swiftly execute on all fronts.”

2018 Disposition Activity:

  • Sold seven non-core assets for a combined $125 million:
    • Trussville Promenade; Birmingham, AL Metropolitan Statistical Area (“MSA”) (Q1)
    • Memorial Commons; Goldsboro, NC MSA (Q1)
    • Bank of America; Raleigh, NC MSA (Q2)
    • Hamilton Crossing; Knoxville, TN MSA (Q4)
    • Fox Lake Crossing; Chicago, IL MSA (Q4)
    • Lowe’s Plaza; Las Vegas, NV MSA (Q4)
    • Lake Lofts at Deerwood; Jacksonville, FL MSA (Q4)

    The blended capitalization rate was approximately 8.0%.

    The operating retail assets had a weighted average retail ABR of $12.23, 27% lower than the current operating portfolio ABR of $16.84.
  • Entered into a strategic joint venture with TH Real Estate (formerly known as TIAA) by selling an 80% interest in three core retail assets resulting in gross proceeds of approximately $89 million at a blended capitalization rate of 5.95%.
    • Livingston Shopping Center; New York/Northern New Jersey MSA (Q3)
    • Plaza Volente; Austin, TX MSA (Q3)
    • Tamiami Crossing; Naples, FL MSA (Q3)

2018 Acquisition Activity:

  • Executed a $22 million buyout of the minority members in a joint venture involving six retail properties in Las Vegas, NV (Cannery Corner, Centennial Center, Centennial Gateway, Eastern Beltway, Eastgate Plaza, and Lowe’s Plaza).

2018 Capital Markets Activity:

  • Recast the unsecured revolving credit facility in Q2, which increased the borrowing capacity to $600 million, reduced the effective credit spread by 30-45 bps based on the leverage grid, and extended the term to April 2023.
  • Executed an industry pioneering $250 million ten-year unsecured term loan in Q4 that accomplished the following:
    • Extended the weighted average maturity of KRG’s debt portfolio by a full year (6.0 years vs. 5.0 years);
    • Fully retired a $200 million seven-year term loan due in 2022 (LIBOR plus 160 basis points);
    • Prepaid $50 million of a $200 million five-year term loan due in 2021;
    • Laddered the debt maturity schedule so that no more than 20% of KRG’s debt comes due in any single calendar year (vs. 26% prior to the transaction); and
    • Executed an interest rate hedge that resulted in a blended fixed rate of 4.75% for 7 years.
  • Executed a new $52 million ($10.4 million at share) fixed-rate (4.09%) mortgage loan in connection with the TH Real Estate joint venture.

2018 Transactional Sources and Uses Summary1:

SourcesUses
Asset Sales2142Property Debt Paydown84.8
10yr Term Loan250Revolver Paydown14.5
  2022 Term Loan Paydown200
  2021 Term Loan Paydown1053
  Las Vegas JV Buyout22
  Net Development/CapEx37.7
Total Sources464Total Uses464

1 All amounts represented are in millions of dollars.
2 Inclusive of the $10 million of mortgage proceeds in connection with the TH transaction.
3 $50 million sourced from the new 10-year term loan and $55 million sourced from asset sales.

2018 Big Box Leasing Summary:

  • KRG executed 12 anchor leases representing approximately 297,000 square feet at blended comparable releasing spreads of 8.4% and GAAP releasing spreads of 15.4%. New tenants include REI at Belle Isle in Oklahoma City, OK; Sprouts at Miramar Square in Miramar, FL; Old Navy at Mullins Crossing in Augusta, GA; and HomeGoods at Centennial Center in Las Vegas, NV.
  • Of the approximately 250,000 square feet vacated by Toys R Us, KRG has executed four leases representing approximately 100,000 square feet and entered into two letters of intent representing approximately 60,000 square feet.

“Success in this business is all about the quality of your people and the quality of your real estate,” said Thomas K. McGowan, President and Chief Operating Officer. “Our 2018 big box leasing numbers were made possible by a top-notch leasing team and continued anchor demand in Kite’s well-located shopping centers. With another 10 box deals representing approximately 285,000 square feet under LOI or in active negotiations, we are feeling optimistic about 2019.”

About Kite Realty Group Trust

Kite Realty Group Trust is a full-service, vertically integrated real estate investment trust (REIT) that provides communities with convenient and beneficial shopping experiences. We connect consumers to tenants in desirable markets through our portfolio of neighborhood, community, and lifestyle centers. Using operational, development, and redevelopment expertise, we continuously optimize our portfolio to maximize value and return to our shareholders. As of September 30, 2018, KRG owned interests in 115 operating and redevelopment properties totaling approximately 22.4 million square feet and one development project (0.5 million square feet) currently under construction. For more information, please visit kiterealty.com.

Safe Harbor

Certain statements in this document that are not historical fact may constitute 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 economic uncertainty caused by fluctuations in the prices of oil and other energy sources and inflationary trends or outlook; financing risks, including the availability of, and costs associated with, sources of liquidity; KRG’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 KRG operates; acquisition, disposition, development and joint venture risks; property ownership and management risks; KRG’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 KRG owns; the impact of online retail competition and the perception that such competition has on the value of shopping center assets; risks related to the geographical concentration of KRG’s properties in Florida, Indiana and Texas; insurance costs and coverage; risks associated with cybersecurity attacks and the loss of confidential information and other business interruptions; and other factors affecting the real estate industry generally. KRG refers you to the documents filed by KRG from time to time with the SEC, specifically the section titled “Risk Factors” in KRG’s and the Operating Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, which discuss these and other factors that could adversely affect KRG’s results. KRG undertakes no obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

Contact Information: Kite Realty Group Trust     
                                   
Heath Fear
EVP, Chief Financial Officer
317.577.5609
hfear@kiterealty.com

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Source: Kite Realty Group Trust
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