INDIANAPOLIS--(BUSINESS WIRE)--
Kite Realty Group Trust (NYSE: KRG) (the "Company") today announced
results for its first quarter ended March 31, 2009. Financial statements
and exhibits attached to this release include results for the three
months ended March 31, 2009 and March 31, 2008.
Financial and Operating Results
For the three months ended March 31, 2009, funds from operations (FFO),
a widely accepted supplemental measure of REIT performance established
by the National Association of Real Estate Investment Trusts, was $8.3
million for the Kite Portfolio, or $0.20 per diluted share, compared to
$11.6 million, or $0.31 per diluted share, for the same period in the
prior year. The decrease is largely due to the Company's decision to
reduce the volume of land and outlot sale transactions and the effects
of the October 2008 equity offering. The Company's allocable share of
FFO was $6.7 million for the three months ended March 31, 2009 compared
with the Company's allocable share of $9.0 million for the same period
in 2008.
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 first quarter of 2009 was $30.4
million, down from $32.3 million for the same period in 2008. This
decrease was primarily a result of the Company's anticipated reduction
in land and outlot sale transactions in light of current market
conditions. The Company's net income was $701 thousand for the first
quarter of 2009 compared to net income of $2.7 million in the first
quarter of 2008. This decline also reflects the reduction in land and
outlot sales.
John A. Kite, Kite Realty Group's Chairman and Chief Executive Officer
said, "While the economic environment remains challenging, we continue
to remain focused on successfully refinancing our maturing debt,
enhancing our liquidity, managing our leverage levels and maintaining
portfolio leasing percentages."
Operating Portfolio
As of March 31, 2009, the Company owned interests in 51 retail operating
properties totaling approximately 8.0 million square feet. The owned
gross leasable area ("GLA") in the Company's retail operating portfolio
was 90.2% leased as of March 31, 2009, compared to 91.2% leased as of
the end of the prior quarter. This decrease is primarily attributable to
the termination of our leases with Circuit City following their recent
bankruptcy liquidation.
In addition, the Company owns three commercial operating properties
totaling 499,221 square feet. As of March 31, 2009, the owned net
rentable area of the commercial operating portfolio was 97.2% leased,
compared to 96.5% at the end of the prior quarter. For the combined
retail and commercial operating portfolio, the leased percentage was
90.8% as of March 31, 2009, compared to 91.7% at the end of the prior
quarter.
On a same property basis, the leased percentage of 47 total operating
properties was 91.7% at March 31, 2009 and 90.9% at March 31, 2008. Same
property net operating income for these properties decreased 2.5% in the
first quarter of 2009 compared to the same period in the prior year. The
leased percentage increased while minimum rental income declined as the
Company continues to remain focused on maintaining occupancy levels in
the current economy.
Development Activities
As of March 31, 2009, the Company owned interests in three retail
properties in the current development pipeline that are expected to
total approximately 674,000 square feet when completed. Approximately
368,000 square feet is anticipated to be owned directly by the Company
or through various joint ventures. The remaining square footage will be
owned by anchor tenants. The total estimated cost of these projects is
approximately $91 million, of which approximately $60 million had been
incurred as of March 31, 2009. The Company also has six properties under
redevelopment representing a total of 538,000 square feet.
The Company has plans to reduce capital expenditures in the visible
shadow pipeline by approximately $110 million by focusing on ground
leasing or selling to end users as well as modifying the scope of the
development projects.
Leasing Activities
On April 1, 2009, Bud Moll joined the Company as Executive Vice
President of Leasing. Bud is responsible for management of the leasing
department as well as establishing the leasing strategy for the
operating portfolio and development and redevelopment pipelines. Bud was
most recently a partner with Poag & McEwen, a prominent real estate
company in Memphis, Tennessee, where he had served as Senior Vice
President of Leasing since 2004. Prior to that, he spent 10 years as a
top leasing representative with the Pyramid Companies.
During the first quarter of 2009, the Company executed seven new leases
for approximately 20,000 square feet of GLA in our operating retail
portfolio. These leases represent a 4.6% positive rent spread. In
addition, a total of 10 leases for 19,500 square feet were renewed at
rental rates approximately 2.2% above previous rents.
The Company is currently negotiating 26 leases with tenants for a total
of approximately 102,000 square feet. In addition, the Company has
executed letters of intent for two of the three spaces formerly occupied
by Circuit City prior to its bankruptcy and liquidation.
Distributions
On February 17, 2009, the Board of Trustees declared a quarterly cash
distribution of $0.1525 per common share for the quarter ended March 31,
2009 to shareholders of record as of April 7, 2009. This distribution
was paid on April 17, 2009. The Board of Trustees is continuing to
evaluate current economic and market conditions and intends to declare a
quarterly cash distribution for the quarter ending June 30, 2009 later
in the second quarter.
Financing Activities
The Company completed two loan extensions during the first quarter. The
loan on its unconsolidated Parkside Town Commons development property
was extended two years to 2011 at a rate of LIBOR plus 300 basis points.
The loan was partially repaid at closing and the Company's share of the
repayment and remaining loan balance were approximately $8.8 million and
$13.5 million, respectively.
The Company extended the loan on its Beacon Hill Shopping Center
operating property for five years to 2014 at a rate of LIBOR plus 125
basis points. At closing, the Company paid down the balance of the loan
by approximately $3.5 million to $8.4 million.
Subsequent to March 31, 2009, the Company received commitments to extend
or refinance an additional $35.5 million of its 2009 maturities,
resulting in remaining 2009 maturities of $39.3 million.
During the quarter, the Company executed two interest rate hedges for a
total notional amount of $39.7 million and a blended fixed rate of 4.4
percent.
On May 5, the Company placed a three-year $15.4 million loan with an
additional one year extension on its Eastgate Pavilion property and
intends to use the proceeds to pay down its line of credit. The loan
bears interest at a rate of LIBOR plus 295 basis points and was
immediately hedged at a fixed rate of 4.84%.
Earnings Guidance
The Company is revising its earnings and FFO guidance for the year
ending December 31, 2009 in the range of $0.83 to $0.93 per diluted
common share. The upper end of the guidance range was lowered primarily
to reflect reduced expectations from transactional income and
construction and services net margin. Following is a reconciliation of
the calculation of net income per common share to FFO per share:
Guidance Range for 2009 Low High
Diluted net income per share $0.10 $0.17
Redeemable noncontrolling interests in Operating Partnership 0.02 0.05
Depreciation and amortization of consolidated entities 0.70 0.70
Depreciation and amortization of unconsolidated entities 0.01 0.01
Diluted FFO per share $0.83 $0.93
Earnings Conference Call
Management will host a conference call on Friday, May 8, 2009 at 11:00
a.m. EDT to discuss financial results for the quarter ended March 31,
2009. 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 (888) 713-4211 for domestic callers and (617)
213-4864 for international callers (passcode 66008319). In addition, a
telephonic replay of the call will be available until August 8, 2009.
The replay dial-in telephone numbers are (888) 286-8010 for domestic
callers and (617) 801-6888 for international callers (passcode 32194647).
About Kite Realty Group Trust
Kite Realty Group Trust is a full-service, vertically integrated real
estate investment trust engaged primarily on the development,
construction, acquisition, ownership and operation of high quality
neighborhood and community shopping centers in selected markets in the
United States. The Company owns interests in a portfolio of operating
retail properties, retail properties under development and
redevelopment, 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 the document 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 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 the current recession and
governmental action and policies; financing risks, including accessing
capital on acceptable terms; the level and volatility of interest rates;
the financial stability of tenants, including their ability to pay rent;
the competitive environment in which the Company operates; acquisition,
disposition, development and joint venture risks; property ownership and
management risks; the Company's ability to maintain its status as a real
estate investment trust ("REIT") for federal income tax purposes;
potential environmental and other liabilities; other factors affecting
the real estate industry generally. 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. 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
"Business Risk Factors" in the Company's Annual Report on Form 10-K for
the year ended December 31, 2008, which discusses these and other
factors that could adversely affect the Company's results. Except as
otherwise required by the federal securities laws, the Company assumes
no liability to update the information in this press release.
Kite Realty Group Trust
Consolidated Balance Sheets
March 31, December 31,
2009 2008
(Unaudited)
Assets:
Investment properties, at cost:
Land $ 228,369,439 $ 227,781,452
Land held for development 23,074,389 25,431,845
Buildings and improvements 698,951,428 690,161,336
Furniture, equipment and other 5,041,033 5,024,696
Construction in progress 195,067,908 191,106,309
1,150,504,197 1,139,505,638
Less: accumulated depreciation (110,516,127 ) (104,051,695 )
1,039,988,070 1,035,453,943
Cash and cash equivalents 9,980,536 9,917,875
Tenant receivables, including accrued
straight-line rent of $7,558,214 and 16,220,967 17,776,282
$7,221,882, respectively, net of allowance
for uncollectible accounts
Other receivables 8,733,645 10,357,679
Investments in unconsolidated entities, at 11,090,328 1,902,473
equity
Escrow deposits 12,309,338 11,316,728
Deferred costs, net 20,906,587 21,167,288
Prepaid and other assets 4,585,162 4,159,638
Total Assets $ 1,123,814,633 $ 1,112,051,906
Liabilities and Equity:
Mortgage and other indebtedness $ 704,676,288 $ 677,661,466
Accounts payable and accrued expenses 43,038,827 53,144,015
Deferred revenue and other liabilities 24,498,750 24,594,794
Total Liabilities 772,213,865 755,400,275
Commitments and contingencies
Redeemable noncontrolling interests in the 66,312,906 67,276,904
Operating Partnership
Equity:
Kite Realty Group Trust 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 34,187,241 shares and
34,181,179 shares issued and outstanding 341,872 341,812
at March 31, 2009 and December 31, 2008,
respectively
Additional paid in capital and other 343,825,990 343,631,595
Accumulated other comprehensive loss (7,504,706 ) (7,739,154 )
Accumulated deficit (55,788,074 ) (51,276,059 )
Total Kite Realty Group Trust 280,875,082 284,958,194
Shareholders' Equity
Noncontrolling Interests 4,412,780 4,416,533
Total Equity 285,287,862 289,374,727
Total Liabilities and Equity $ 1,123,814,633 $ 1,112,051,906
Kite Realty Group Trust
Consolidated Statements of Operations
For the Three Months Ended March 31, 2009 and 2008
(Unaudited)
Three Months Ended March 31,
2009 2008
Revenue:
Minimum rent $ 17,985,844 $ 17,884,128
Tenant reimbursements 4,695,681 5,018,938
Other property related revenue 1,588,108 5,157,085
Construction and service fee revenue 6,148,995 4,288,522
Total revenue 30,418,628 32,348,673
Expenses:
Property operating 5,590,600 4,361,771
Real estate taxes 2,793,765 3,054,349
Cost of construction and services 5,559,316 3,764,234
General, administrative, and other 1,343,470 1,709,950
Depreciation and amortization 7,511,438 8,028,663
Total expenses 22,798,589 20,918,967
Operating income 7,620,039 11,429,706
Interest expense (6,776,508 ) (7,253,566 )
Income tax expense of taxable REIT subsidiary (37,952 ) (1,153,228 )
Other income 48,899 65,232
Income from unconsolidated entities 31,500 61,174
Income from continuing operations 885,978 3,149,318
Income from discontinued operations -- 330,823
Consolidated net income 885,978 3,480,141
Net income attributable to noncontrolling (184,736 ) (772,842 )
interests
Net income attributable to Kite Realty Group $ 701,242 $ 2,707,299
Trust
Income per common share - basic & diluted
Income from continuing operations attributable to $ 0.02 $ 0.08
Kite Realty Group Trust common shareholders
Income from discontinued operations attributable -- 0.01
to Kite Realty Group Trust common shareholders
Net income attributable to Kite Realty Group $ 0.02 $ 0.09
Trust common shareholders
Weighted average common shares outstanding - 34,184,305 29,028,953
basic
Weighted average common shares outstanding - 34,220,160 29,059,809
diluted
Dividends declared per common share $ 0.1525 $ 0.2050
Net income attributable to Kite Realty Group
Trust common shareholders:
Income from continuing operations $ 701,242 $ 2,450,250
Discontinued operations -- 257,049
Net income attributable to Kite Realty Group $ 701,242 $ 2,707,299
Trust
Kite Realty Group Trust
Funds From Operations
For the Three Months Ended March 31, 2009 and 2008
(Unaudited)
Three Months Ended March 31,
2009 2008
Consolidated net income $ 885,978 $ 3,480,141
Deduct net (income) loss attributable to (20,247 ) 4,156
noncontrolling interests in properties
Add depreciation and amortization of
consolidated entities, net of noncontrolling 7,380,243 7,983,114
interests in properties
Add depreciation and amortization of 52,136 101,057
unconsolidated entities
Funds From Operations of the Kite Portfolio1 8,298,110 11,568,468
Deduct redeemable noncontrolling interests in (1,576,641 ) (2,579,768 )
Funds From Operations
Funds From Operations allocable to the Company1 $ 6,721,469 $ 8,988,700
Basic FFO per share of the Kite Portfolio $ 0.20 $ 0.31
Diluted FFO per share of the Kite Portfolio $ 0.20 $ 0.31
Basic weighted average Common Shares outstanding 34,184,305 29,028,953
Diluted weighted average Common Shares 34,220,160 29,059,809
outstanding
Basic weighted average Common Shares and Units 42,236,784 37,367,201
outstanding
Diluted weighted average Common Shares and Units 42,272,639 37,398,057
outstanding
____________________
"Funds From Operations of the Kite Portfolio" measures 100% of the operating
performance of the Operating Partnership's real estate properties and
1 construction and service subsidiaries in which the Company owns an interest.
"Funds From Operations allocable to the Company" reflects a reduction for the
redeemable noncontrolling weighted average diluted interest in the Operating
Partnership.
Source: Kite Realty Group Trust
Contact: Kite Realty Group Trust
Dan Sink, 317-577-5609
Chief Financial Officer
dsink@kiterealty.com
or
Kite Realty Group Trust
Adam Chavers, 317-713-5684
Director of Investor Relations
achavers@kiterealty.com