INDIANAPOLIS, Nov. 6 /PRNewswire-FirstCall/ -- Kite Realty Group Trust
(NYSE: KRG) ("the Company") today announced results for the quarter ended
September 30, 2006. Financial statements and exhibits attached to this
release include results for the three and nine months ended September 30, 2006
and September 30, 2005.
Third Quarter Highlights
-- Funds From Operations (FFO) for the quarter of $11.4 million, an
increase of 35% over the same period in 2005
-- FFO of $0.30 per diluted share
-- Total revenues for the quarter of $33.1 million, an increase of 38%
over the same period in 2005
-- Announced strategic partnership with Prudential Real Estate Investors
Financial and Operating Results For the three months ended September 30, 2006, Funds from Operations
(FFO), a widely accepted supplemental measure of REIT performance established
by the National Association of Real Estate Investment Trusts, for the Kite
Portfolio was $11.4 million, or $0.30 per diluted share, compared to $8.4
million, or $0.30 per diluted share, for the same period in 2005. The average
number of diluted shares and units outstanding was 37,383,601 for the quarter
ended September 30, 2006 and 27,871,048 for the quarter ended September 30,
2005. The increased number of shares reflects the Company's follow-on stock
offering in October 2005, the proceeds of which were used to finance
development activities and pay down debt. The Company's allocable share of
diluted FFO was $8.8 million for the quarter ended September 30, 2006,
compared to the Company's allocable share of $5.8 million for the quarter
ended September 30, 2005.
For the nine months ended September 30, 2006, FFO for the Kite Portfolio
was $31.5 million, or $0.84 per diluted share, compared to $24.1 million, or
$0.87 per diluted share, for the same period in 2005. The average number of
diluted shares and units outstanding was 37,341,949 for the nine months ended
September 30, 2006 and 27,717,151 for the nine months ended September 30,
2005. The Company's allocable share of diluted FFO was $24.3 million for the
nine months ended September 30, 2006 compared with the Company's allocable
share of $16.7 million for the same period in 2005.
Given the nature of the Company's business as a real estate owner and
operator, the Company believes that FFO is helpful to investors when measuring
operating performance because it excludes various items included in net income
that do not relate to or are not indicative of operating performance, such as
gains (or losses) from sales of operating properties and depreciation and
amortization, which can make periodic and peer analyses of operating
performance more difficult. A reconciliation of net income to FFO is included
in the attached table.
The Company's total revenue for the third quarter of 2006 increased 38% to
$33.1 million from $24.0 million for the same period in 2005. The Company's
net income was $3.2 million for the third quarter of 2006, compared to $2.0
million for the third quarter of 2005.
The Company's total revenue for the first nine months of 2006 increased
41% to $92.4 million from $65.5 million for the same period in 2005. The
Company's net income was $6.5 million for the first nine months of 2006,
compared to $5.5 million for the same period in 2005.
"We are pleased to report continued solid results across all areas of our
business," said John A. Kite, President and Chief Executive Officer. "Our
development pipeline is robust and expanding as we continue to add new
development projects. Our new partnership with Prudential Real Estate
Investors will provide us with an opportunity to grow our development
activities while deferring the need for significant equity contributions until
projects become operational."
Operating Portfolio
As of September 30, 2006, the Company owned interests in 46 retail
operating properties totaling approximately 7.8 million square feet, including
an additional phase of its Stoney Creek Commons property in Indianapolis,
Indiana, which was added to the operating portfolio in September 2006. The
owned gross leasable area ("GLA") in the Company's retail operating portfolio
was 93.6% leased at quarter end, compared to 93.0% leased as of the end of the
prior quarter. In addition, the Company owned four commercial operating
properties totaling 562,652 square feet and a related parking garage. As of
September 30, 2006, the owned net rentable area of the commercial operating
portfolio was 96.9% leased, equal to the percentage leased as of the end of
the prior quarter.
Development Activities
As of September 30, 2006, the Company owned interests in 11 retail
properties under development that are expected to total approximately 1.6
million square feet. Approximately 588,000 square feet are anticipated to be
owned by the Company. The remaining square footage will be owned by anchors
upon completion of the developments. The total estimated cost of these
projects is $165 million, of which approximately $108 million had been
incurred as of September 30, 2006. Approximately 70% of the owned GLA at
properties in the development pipeline is currently leased or in various
stages of lease negotiations.
On September 25, 2006, the Company announced it had entered into an
agreement ("the Venture") with Prudential Real Estate Investors ("PREI") to
pursue joint venture opportunities for the development and selected
acquisition of community shopping centers in the United States. PREI entered
into the agreement on behalf of its institutional investors. The Venture
intends to develop and/or acquire up to $1.25 billion of well-positioned
community shopping centers in strategic markets in the United States. Under
the terms of the Venture agreement, the Company has agreed to present to PREI
opportunities to develop or acquire community shopping centers, each with
estimated project costs in excess of $50 million. It is expected that equity
capital contributions of up to $500 million would be made to the Venture for
qualifying projects. Contributions would be made on a project-by-project
basis with PREI contributing 80% and the Company contributing 20% of the
equity capital. Equity capital has not been committed by either party at this
time. The parties anticipate capital contributions to be required at or near
the time of development stabilization or at the time a property acquisition is
identified in the future. The Company will generate fee income from managing
any shopping centers developed or acquired under this arrangement and will
receive additional fees for development, leasing and construction management
services. The Company will also have the opportunity to earn performance-
based incentives.
The Company's Parkside Town Commons development near Raleigh, North
Carolina is the first project that the Company intends to pursue in the joint
venture with PREI. Parkside Town Commons is a mixed-use development which is
expected to include approximately 750,000 square feet of retail space and an
estimated project cost of approximately $118 million.
During the third quarter of 2006, construction commenced on Bayport
Commons in Oldsmar, Florida, a suburb of Tampa. The Company subsequently
transferred this property to the current development pipeline. This
development has a projected total cost of approximately $25 million and will
include approximately 281,100 square feet of total GLA (92,300 square feet of
Company-owned GLA) and three outparcels. Target has purchased a pad and is
constructing a Super Target to anchor this center.
During the third quarter of 2006, the Company executed 26 new leases for
128,500 square feet of GLA, including leases with PetSmart at Traders Point
and Ross Stores at Gateway Shopping Center.
Distributions
On August 3, 2006, the Board of Trustees declared a quarterly cash
distribution of $0.195 per common share for the quarter ended September 30,
2006 to shareholders of record as of October 5, 2006. This distribution, which
was paid on October 17, 2006, represents a four percent increase compared to
the prior quarter.
On November 2, 2006, the Board of Trustees declared a quarterly cash
distribution of $0.195 per common share for the quarter ended December 31,
2006 to shareholders of record as of January 5, 2007. This distribution will
be paid on January 16, 2007.
Earnings Guidance
The Company is providing revised FFO guidance for the fiscal year ended
December 31, 2006 in the range of $1.15 to $1.17 per diluted share. Following
is a reconciliation of the calculation of net income per share to FFO per
share:
Guidance Range for 2006 Low High
Net income per share $0.27 $0.29
Limited Partners' interests in
Operating Partnership 0.08 0.08
Loss on sale of operating property 0.01 0.01
Depreciation and amortization of
consolidated entities 0.78 0.78
Depreciation and amortization of
unconsolidated entities 0.01 0.01
Funds From Operations $1.15 $1.17
Earnings Conference Call Management will host a conference call on Monday, November 6, 2006, at
1:30 p.m. EST to discuss financial results for the quarter ended September 30,
2006. A live webcast of the conference call will be available online on the
Company's corporate website at http://www.kiterealty.com . The dial-in
numbers are (877) 407-8035 for domestic callers and (201) 689-8035 for
international callers. After the live webcast, the call will remain available
on Kite Realty Group Trust's website through February 7, 2007. In addition, a
telephonic replay of the call will be available until December 6, 2006. The
replay dial-in numbers are (877) 660-6853 for domestic callers and (201) 612-
7415 for international callers. Please use account number 286 and reservation
code 217301 for the telephonic replay.
About Kite Realty Group Trust
Kite Realty Group Trust is a full-service, vertically integrated real
estate investment trust focused primarily on the development, construction,
acquisition, ownership and operation of high quality neighborhood and
community shopping centers in selected growth markets in the United States.
The Company owns interests in a portfolio of operating retail properties,
retail properties under development, operating commercial properties, a
related parking garage, and parcels of land that may be used for future
development of retail or commercial properties.
Safe Harbor
Certain statements in this document that are not historical fact may
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may
cause the actual results of the Company to differ materially from historical
results or from any results expressed or implied by such forward-looking
statements, including without limitation: national and local economic,
business, real estate and other market conditions; the ability of tenants to
pay rent; the competitive environment in which the Company operates; financing
risks; property management risks; the level and volatility of interest rates;
financial stability of tenants; the Company's ability to maintain its status
as a REIT for federal income tax purposes; acquisition, disposition,
development and joint venture risks; potential environmental and other
liabilities; 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, 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 (including the FFO estimate), whether as a result of new
information, future events or otherwise.
Kite Realty Group Trust
Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
2006 2005
Assets:
Investment properties at cost:
Land $191,122,886 $172,509,684
Land held for development 19,034,512 51,340,820
Buildings and improvements 560,470,407 485,129,649
Furniture, equipment and other 5,458,042 5,675,980
Construction in progress and other 196,016,436 65,903,868
972,102,283 780,560,001
Less accumulated depreciation (58,933,666) (41,825,911)
913,168,617 738,734,090
Cash and cash equivalents 21,271,444 15,208,835
Tenant receivables, including accrued
straight-line rent of $4.2 million
and $3.3 million, respectively, net
of allowance for bad debts 13,102,056 11,302,923
Other receivables 10,267,549 6,082,511
Investments in unconsolidated
entities at equity 1,163,902 1,303,919
Escrow deposits 9,136,113 6,718,198
Deferred costs, net 19,642,799 17,380,288
Prepaid and other assets 4,305,182 2,499,042
Total Assets $992,057,662 $799,229,806
Liabilities and Shareholders' Equity:
Mortgage and other indebtedness $571,029,648 $375,245,837
Accounts payable and accrued expenses 30,197,252 30,642,822
Deferred revenue and other
liabilities 35,325,539 25,369,152
Minority interest 4,318,257 4,847,801
Total Liabilities 640,870,696 436,105,612
Commitments and contingencies
Limited Partners' interests in
operating partnership 79,358,294 84,244,814
Shareholders' Equity:
Preferred Shares, $.01 par value,
40,000,000 shares authorized,
no shares issued and outstanding - -
Common Shares, $.01 par value,
200,000,000 shares authorized,
28,838,534 shares and 28,555,187
shares issued and outstanding,
respectively 288,385 285,552
Additional paid in capital 290,987,222 288,976,563
Unearned compensation - (808,015)
Accumulated other comprehensive
income 411,383 427,057
Accumulated deficit (19,858,318) (10,001,777)
Total shareholders' equity 271,828,672 278,879,380
Total Liabilities and Shareholders'
Equity $992,057,662 $799,229,806
Kite Realty Group Trust
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30
2006 2005 2006 2005
Revenue:
Minimum rent $17,262,427 $14,299,487 $49,506,938 $40,176,577
Tenant
reimbursements 3,787,767 2,401,870 11,901,251 7,896,914
Other property
related revenue 1,565,787 2,409,900 3,562,454 3,765,989
Construction and
service fee revenue 10,293,822 4,793,407 27,227,754 13,473,050
Other income, net 158,632 57,759 243,820 150,217
Total revenue 33,068,435 23,962,423 92,442,217 65,462,747
Expenses:
Property operating 3,439,853 2,933,660 9,749,011 8,113,017
Real estate taxes 2,323,799 1,604,623 7,953,433 4,977,853
Cost of construction
and services 7,795,070 4,320,678 22,879,759 11,620,017
General,
administrative, and
other 1,305,599 1,112,313 4,250,312 3,621,683
Depreciation and
amortization 7,209,586 5,439,607 22,574,735 15,615,518
Total expenses 22,073,907 15,410,881 67,407,250 43,948,088
Operating income 10,994,528 8,551,542 25,034,967 21,514,659
Interest expense (6,139,761) (5,176,658) (15,324,928) (13,677,961)
Loss on sale of
asset - - (764,008) -
Income tax expense
of taxable REIT
subsidiary (777,600) (232,285) (640,584) (232,285)
Minority interest in
income of
consolidated
subsidiaries (2,993) (623,574) (78,503) (716,523)
Equity in earnings
of unconsolidated
entities 72,261 76,385 221,983 278,736
Limited Partners'
interests in the
continuing
operations of the
Operating
Partnership (936,782) (798,408) (1,926,356) (2,192,785)
Income from continuing
operations 3,209,653 1,797,002 6,522,571 4,973,841
Operating income
from discontinued
operations, net of
Limited Partners'
interests - 185,239 - 573,999
Net income $3,209,653 $1,982,241 $6,522,571 $5,547,840
Income per common
share - basic:
Continuing
operations $0.11 $0.09 $0.23 $0.26
Discontinued
operations - 0.01 $- $0.03
$0.11 $0.10 $0.23 $0.29
Income per common
share - diluted:
Continuing
operations $0.11 $0.09 $0.23 $0.26
Discontinued
operations - 0.01 $- $0.03
$0.11 $0.10 $0.23 $0.29
Weighted average
common shares
outstanding - basic 28,824,698 19,151,910 28,696,534 19,149,495
Weighted average
common shares
outstanding - diluted 28,979,356 19,289,737 28,830,042 19,262,229
Dividends declared per
common share $0.1950 $0.1875 $0.5700 $0.5625
Kite Realty Group Trust
Funds From Operations
For the Three and Nine Months Ended September 30, 2006 and 2005
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
2006 2005 2006 2005
Net income $3,209,653 $1,982,241 $6,522,571 $5,547,840
Loss on sale of asset,
net of tax - - 458,405 -
Add Limited Partners'
interests in income 936,782 881,407 1,926,356 2,446,166
Add depreciation and
amortization of
consolidated entities
and discontinued
operations, net of
minority interest 7,129,692 5,531,581 22,308,695 15,895,620
Add depreciation and
amortization of
unconsolidated entities 99,680 50,534 301,350 199,165
Funds From Operations
of the Kite
Portfolio (1) 11,375,807 8,445,763 31,517,377 24,088,791
Less Limited Partners'
interests in Funds From
Operations (2,560,851) (2,609,741) (7,184,226) (7,371,170)
Funds From Operations
allocable to the
Company (1) $8,814,956 $5,836,022 $24,333,151 $16,717,621
Basic FFO per share of
the Kite Portfolio $0.31 $0.30 $0.85 $0.87
Diluted FFO per share of
the Kite Portfolio $0.30 $0.30 $0.84 $0.87
Basic weighted average
common shares
outstanding 28,824,698 19,151,910 28,696,534 19,149,495
Diluted weighted average
common shares
outstanding 28,979,356 19,289,737 28,830,042 19,262,229
Basic weighted average
common shares and units
outstanding 37,228,944 27,733,221 37,208,441 27,604,417
Diluted weighted average
common shares and units
outstanding 37,383,601 27,871,048 37,341,949 27,717,151
(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 allocable to the
Company" reflects a reduction for the Limited Partners' diluted
weighted average interest in the Operating Partnership.
SOURCE Kite Realty Group Trust
Contact: Dan Sink, Chief Financial Officer, Kite Realty Group Trust, +1-317-577-5609, or dsink@kiterealty.com ; or Investors/Media: Financial Relations Board, John Waelti, +1-312-640-6760, or jwaelti@frbir.com