INDIANAPOLIS--(BUSINESS WIRE)--
Kite Realty Group Trust (NYSE: KRG):
Highlights
-- Funds From Operations (FFO) was $0.24 per diluted share for the fourth
quarter of 2008 and $1.17 per diluted share for the full year
-- Excluding the effects of assets written off in connection with the
announced liquidation of Circuit City, diluted FFO per share would have
been $0.27 for the fourth quarter and $1.20 for the full year
-- Cash on hand and availability under current borrowing facilities totaled
approximately $90 million at December 31, 2008
-- Extended or refinanced approximately $131 million of 2008 and 2009
maturities in the fourth quarter
-- Completed a common equity offering, using net proceeds of approximately
$48 million to pay down the Company's revolving line of credit
-- Disposed of Silver Glen Crossing and Spring Mill Medical properties and
used the majority of the Company's share of the $23.6 million net
proceeds to pay down the revolving line of credit
-- In December 2008, executed a 22,400 square foot lease with Sprouts
Farmers Market at Plaza at Cedar Hill in Dallas, Texas
Kite Realty Group Trust (NYSE: KRG) (the "Company") today announced
results for its fourth quarter and year ended December 31, 2008.
Financial statements and exhibits attached to this release include
results for the three and twelve months ended December 31, 2008 and
December 31, 2007.
Financial and Operating Results
For the three months ended December 31, 2008, funds from operations
(FFO), a widely accepted supplemental measure of REIT performance
established by the National Association of Real Estate Investment
Trusts, was $10.0 million, or $0.24 per diluted share, which reflects
the increased common shares issued in the October equity offering, for
the Kite Portfolio compared to $12.7 million, or $0.34 per diluted
share, for the Kite Portfolio for the same period in the prior year. The
fourth quarter of 2008 reflects the one-time write-off of assets
associated with three locations occupied by Circuit City which announced
in January 2009 that it is liquidating its operations. Excluding this
write off, FFO for the Kite Portfolio was $11.2 million or $0.27 per
diluted share. The Company's allocable share of FFO was $8.1 million for
the three months ended December 31, 2008 compared with the Company's
allocable share of $9.9 million for the same period in 2007.
For the twelve months ended December 31, 2008, FFO for the Kite
Portfolio was $45.1 million or $1.17 per diluted share, which reflects
the increased common shares issued in the October equity offering,
compared to $47.2 million, or $1.26 per diluted share for the prior
year. Excluding the Circuit City write off, FFO for the Kite Portfolio
for the full year of 2008 was $46.3 million or $1.20 per diluted share.
The Company's allocable share of FFO was $35.4 million for the year
ended December 31, 2008 compared to $36.7 million for 2007.
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 fourth quarter of 2008 increased
5.7% to $41.8 million from $39.6 million for the same period in 2007.
The Company's net loss was $2.0 million for the fourth quarter of 2008
and includes a net loss from the sale of operating properties and the
write off of assets in connection with the Circuit City liquidation
totaling approximately $4.4 million. The reported net loss of $2.0
million compares to net income of $5.2 million in the fourth quarter of
2007, which included a $1.6 million gain on the sale of a retail
operating property.
The Company's total revenue for the twelve months ended December 31,
2008 increased 2.8% to $142.7 million from $138.8 million during 2007.
The Company's net income was $6.1 million for the twelve months ended
December 31, 2008 and includes the net loss from the sale of operating
properties and the write off of assets in connection with the Circuit
City liquidation totaling approximately $4.4 million. The reported net
income of $6.1 million compares to net income of $13.5 million for the
twelve months ended December 31, 2007 which included the $1.6 million
gain on the sale of the retail operating property.
John A. Kite, Kite Realty Group's Chairman and Chief Executive Officer
said, "Given the tremendous dislocation in the credit and capital
markets, our primary objective has been the strengthening of our balance
sheet, managing our debt maturities and conserving cash. We closed 2008
by executing on our plan to strengthen our capital structure, ending the
year with approximately $90 million of cash and borrowing capacity. We
will remain focused on 2009 and 2010 refinancings and will continue to
aggressively manage our operating portfolio."
Operating Portfolio
As of December 31, 2008, the Company owned interests in 52 retail
operating properties totaling approximately 8.4 million square feet. The
owned gross leasable area ("GLA") in the Company's retail operating
portfolio was 91.2% leased as of December 31, 2008, compared to 91.9%
leased as of the end of the prior quarter. This decrease is partially
attributable to the sale of Silver Glen Crossing in the fourth quarter.
In addition, the Company owns three commercial operating properties
totaling 499,221 square feet. As of December 31, 2008, the owned net
rentable area of the commercial operating portfolio was 96.5% leased,
compared to 97.8% at the end of the prior quarter. This decrease is
primarily attributable to the sale of Spring Mill Medical I which was
100% leased at the time of sale. For the combined retail and commercial
operating portfolio, the leased percentage was 91.7% as of December 31,
2008, compared to 92.5% at the end of the prior quarter.
On a same property basis, the leased percentage of 49 total operating
properties was 92.3% at December 31, 2008 and 94.2% at December 31,
2007. Same property net operating income for these properties decreased
1.2% in the fourth quarter of 2008 and remained flat for the full year
2008 compared to the same periods of the prior year.
Development Activities
As of December 31, 2008, the Company owned interests in three retail
properties in the current development pipeline that are expected to
total approximately 674,000 square feet. Approximately 368,000 square
feet are 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 $48 million had been
incurred as of December 31, 2008. Approximately 73% of the owned GLA at
properties in the development pipeline is currently leased or under
negotiation with prospective tenants. The Company also has five
properties under redevelopment representing a total of 520,000 square
feet.
Leasing Activities
During the fourth quarter of 2008, the Company executed 18 new leases
and 15 renewals for 173,000 square feet of GLA in our development and
operating portfolios. A total of 13 leases for 105,000 square feet of
previously unoccupied space were executed with initial rental rates
approximately 51% above the operating portfolio average. The Company
executed 20 new leases and renewals in previously occupied space. These
leases represent a 4% cash increase over the previous rent.
For the twelve months ended December 31, 2008, the Company executed 58
new leases and 26 renewals for 525,000 square feet of GLA in our
development and operating portfolios. A total of 45 leases for 413,000
square feet of previously unoccupied space were executed with initial
rental rates approximately 52% above the operating portfolio average.
The Company executed 39 new leases and renewals in previously occupied
space. These leases represent a 6% cash increase over the previous rent.
Capital Markets Activities
During the fourth quarter, the Company issued 4,750,000 shares of common
equity at $10.55 per share. Net proceeds of approximately $48 million
after offering expenses were used to pay down borrowings under the
Company's revolving line of credit.
Financing Activities
The Company executed the following financing transactions in the fourth
quarter.
-- Bayport Commons was refinanced with a three-year $20.9 million loan;
-- Glendale Town Center was financed with a three-year $21.8 million loan;
-- The first phase of the Eddy Street Commons development project at the
University of Notre Dame was financed with a three-year $29.5 million
construction loan; and
-- Gateway Shopping Center was refinanced with a three-year $17.9 million
loan.
Proceeds from the Glendale Town Center loan were primarily used to
substantially pay off the $10 million loan on Naperville Marketplace,
the $4.5 million loan on Red Bank Commons, and the $7.9 million loan on
Traders Point II.
The Company also completed the following loan extensions during the
fourth quarter.
-- Estero Town Center - $16.0 million;
-- Tarpon Springs Plaza - $19.9 million;
-- Rivers Edge - $16.6 million;
-- Bridgewater Marketplace - $8.3 million; and
-- Delray Marketplace - $9.4 million.
Property Dispositions
During the fourth quarter of 2008, the Company sold both phases of its
Spring Mill Medical commercial asset and its Silver Glen Crossing
shopping center located in Chicago, Illinois. The transactions generated
combined gross proceeds of approximately $48.5 million, before adjusting
for partners' shares. The Company's share of net cash from the sales was
approximately $23.6 million, the majority of which was used to pay down
the Company's unsecured line of credit.
Distributions
On November 4, 2008, the Board of Trustees declared a quarterly cash
distribution of $0.205 per common share for the quarter ended December
31, 2008 to shareholders of record as of January 7, 2009. This
distribution was paid on January 16, 2009.
On February 17, 2009, the Board of Trustees declared a quarterly cash
distribution of $0.1525 per common share for the quarter ending March
31, 2009 to shareholders of record as of April 7, 2009. This
distribution will be paid on or about April 17, 2009. Management and the
Board will continue to evaluate the Company's distribution policy on a
quarterly basis as they monitor the capital markets and the impact of
the economy on the Company's operations.
Earnings Guidance
The Company expects FFO to be within a range of $0.83 to $0.97 per
diluted share for the year ending December 31, 2009 and diluted net
income to be within a range of $0.10 to $0.21 per share for the same
period. 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.
While other factors may impact FFO and earnings, the Company's 2009
guidance is based primarily on the following assumptions:
-- The sale of two properties in 2008 and the related decrease in 2009
earnings;
-- The impact of the recently announced Circuit City liquidation at three
locations;
-- Decrease in same property net operating income (including joint ventures
on a pro-rata basis) of approximately 2.0% to 4.0%;
-- An interest rate environment consistent with the current forward yield
curve for one month LIBOR and the 10-year US Treasury note;
-- Transactional FFO ranging from $0.05 to $0.15 per diluted share;
-- General and administrative expense ranging from approximately $5.7 to
$6.1 million;
-- Net margin before tax from construction and service activities of $1.5
million to $3.0 million;
-- The dilutive effect from the Company's October 2008 common share
offering; and
-- No material acquisition or disposition activity.
The Company's 2009 guidance is based on a number of other assumptions,
many of which are outside the Company's control and all of which are
subject to change. The Company's guidance may change as actual and
anticipated results vary from these assumptions.
Following is a reconciliation of the range of estimated diluted net
income per share to estimated diluted FFO per share:
Guidance Range for 2009 Low High
Diluted net income per share $0.10 $0.21
Limited Partners' 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 $0.97
Earnings Conference Call
Management will host a conference call on Thursday, February 19, 2009 at
1:00 p.m. EST to discuss financial results for the quarter and year
ended December 31, 2008. 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) 713-4209 for domestic callers and (617)
213-4863 for international callers (passcode 12534738). In addition, a
telephonic replay of the call will be available until May 8, 2009. The
replay dial-in telephone numbers are (888) 286-8010 for domestic callers
and (617) 801-6888 for international callers (passcode 99140701).
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
Statements regarding the Company's 2008 FFO and earnings guidance,
including the underlying assumptions are, and 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, including access to capital at desirable
terms; 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 discusses 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 and net income estimates), whether as a result of new
information, future events or otherwise.
Kite Realty Group Trust
Consolidated Balance Sheets
(Unaudited)
December 31, December 31,
2008 2007
Assets:
Investment properties, at cost:
Land $ 227,781,452 $ 210,486,125
Land held for development 25,431,845 23,622,458
Buildings and improvements 690,161,336 624,500,501
Furniture, equipment and other 5,024,696 4,571,354
Construction in progress 191,106,309 187,006,760
1,139,505,638 1,050,187,198
Less: accumulated depreciation (104,051,695 ) (84,603,939 )
1,035,453,943 965,583,259
Cash and cash equivalents 9,917,875 19,002,268
Tenant receivables, including accrued
straight-line rent of $7,221,882 and 17,776,282 17,200,458
$6,653,244, respectively, net of allowance
for uncollectible accounts
Other receivables 10,357,679 7,124,485
Investments in unconsolidated entities, at 1,902,473 1,079,937
equity
Escrow deposits 11,316,728 14,036,877
Deferred costs, net 21,167,288 20,563,664
Prepaid and other assets 4,159,638 3,643,696
Total Assets $ 1,112,051,906 $ 1,048,234,644
Liabilities and Shareholders' Equity:
Mortgage and other indebtedness $ 677,661,466 $ 646,833,633
Accounts payable and accrued expenses 53,144,015 36,173,195
Deferred revenue and other liabilities 24,594,794 26,127,043
Cash distributions and losses in excess of
net investment in unconsolidated entities, -- 234,618
at equity
Minority interest 4,416,533 4,731,211
Total Liabilities 759,816,808 714,099,700
Commitments and contingencies
Limited Partners' interests in Operating 67,276,904 74,512,093
Partnership
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 34,181,179 shares and
28,981,594 shares issued and outstanding 341,812 289,816
at December 31, 2008 and December 31,
2007, respectively
Additional paid in capital and other 343,631,595 293,897,673
Accumulated other comprehensive loss (7,739,154 ) (3,122,482 )
Accumulated deficit (51,276,059 ) (31,442,156 )
Total Shareholders' Equity 284,958,194 259,622,851
Total Liabilities and Shareholders' Equity $ 1,112,051,906 $ 1,048,234,644
Kite Realty Group Trust
Consolidated Statements of Operations
For the Three Months and Twelve Month Ended December 31, 2008 and 2007
(Unaudited)
Three Months Ended December Year Ended December 31,
31,
2008 2007 2008 2007
Revenue:
Minimum rent $ 17,065,771 $ 18,364,742 $ 71,862,956 $ 72,083,108
Tenant 3,559,921 4,535,221 17,735,551 18,401,181
reimbursements
Other property 2,069,383 3,048,596 13,998,650 11,010,553
related revenue
Construction
and service fee 19,148,029 13,629,831 39,103,151 37,259,934
revenue
Total revenue 41,843,104 39,578,390 142,700,308 138,754,776
Expenses:
Property 4,729,181 3,684,425 17,108,464 15,121,325
operating
Real estate 2,172,974 3,068,768 11,977,099 11,917,299
taxes
Cost of
construction 16,860,243 10,950,145 33,788,008 32,077,014
and services
General,
administrative, 1,461,951 1,540,623 5,884,152 6,298,901
and other
Depreciation
and 10,898,729 7,991,774 35,446,575 31,850,770
amortization
Total expenses 36,123,078 27,235,735 104,204,298 97,265,309
Operating 5,720,026 12,342,655 38,496,010 41,489,467
income
Interest (7,254,291 ) (7,048,534 ) (29,372,181 ) (25,965,141 )
expense
Income tax
expense of (391,053 ) (466,233 ) (1,927,830 ) (761,628 )
taxable REIT
subsidiary
Other income 15,497 59,197 158,024 778,552
Minority
interest in
income of (23,877 ) (323,411 ) (61,707 ) (587,413 )
consolidated
subsidiaries
Income from
unconsolidated 629,490 72,811 842,425 290,710
entities
Gain on sale of
unconsolidated 1,233,338 -- 1,233,338 --
property
Limited
Partners'
interests in 81,310 (1,023,328 ) (2,014,136 ) (3,399,534 )
the Operating
Partnership
Income from
continuing 10,440 3,613,157 7,353,943 11,845,013
operations
Discontinued
operations:
Operating
income from
discontinued
operations, net 106,764 31,835 850,745 95,551
of Limited
Partners'
interests
(Loss) gain on
sale of
operating
property, net (2,111,562 ) 1,582,119 (2,111,562 ) 1,582,119
of Limited
Partners'
interests
(Loss) income
from (2,004,798 ) 1,613,954 (1,260,817 ) 1,677,670
discontinued
operations
Net (loss) $ (1,994,358 ) $ 5,227,111 $ 6,093,126 $ 13,522,683
income
Income (loss)
per common
share - basic
Continuing $ 0.00 $ 0.12 $ 0.24 $ 0.41
operations
Discontinued (0.06 ) 0.06 (0.04 ) 0.06
operations
$ (0.06 ) $ 0.18 $ 0.20 $ 0.47
Income (loss)
per common
share - diluted
Continuing $ 0.00 $ 0.12 $ 0.24 $ 0.40
operations
Discontinued (0.06 ) 0.06 (0.04 ) 0.06
operations
$ (0.06 ) $ 0.18 $ 0.20 $ 0.46
Weighted
average common
shares 33,920,594 28,964,641 30,328,408 28,908,274
outstanding -
basic
Weighted
average common
shares 33,937,604 29,175,748 30,340,449 29,180,987
outstanding -
diluted
Dividends
declared per $ 0.205 $ 0.205 $ 0.820 $ 0.800
common share
Kite Realty Group Trust
Funds From Operations
For the Three and Twelve Months Ended December 31, 2008 and 2007
(Unaudited)
Three Months Ended December Year Ended December 31,
31,
2008 2007 2008 2007
Net (loss) $ (1,994,358 ) $ 5,227,111 $ 6,093,126 $ 13,522,683
income
Add loss on
sale of 2,689,888 -- 2,689,888 --
operating
property
Deduct gain on
sale of (1,233,338 ) -- (1,233,338 ) --
unconsolidated
property
Deduct gain on
sale of -- (2,036,189 ) -- (2,036,189 )
operating
property
Add Limited
Partners' (638,922 ) 1,477,398 1,668,817 3,853,604
interests in
(loss) income
Add
depreciation
and
amortization
of 11,030,742 7,954,636 35,438,229 31,475,146
consolidated
entities, net
of minority
interest
Add
depreciation
and
amortization 102,051 100,972 406,623 403,799
of
unconsolidated
entities
Funds From
Operations of 9,956,063 12,723,928 45,063,345 47,219,043
the Kite
Portfolio1
Deduct Limited
Partners'
interests in (1,894,985 ) (2,798,821 ) (9,688,619 ) (10,529,847 )
Funds From
Operations
Funds From
Operations $ 8,061,078 $ 9,925,107 $ 35,374,726 $ 36,689,196
allocable to
the Company1
Basic FFO per
share of the $ 0.24 $ 0.34 $ 1.17 $ 1.27
Kite Portfolio
Diluted FFO
per share of $ 0.24 $ 0.34 $ 1.17 $ 1.26
the Kite
Portfolio
Basic weighted
average Common 33,920,594 28,964,641 30,328,408 28,908,274
Shares
outstanding
Diluted
weighted
average Common 33,937,604 29,175,748 30,340,449 29,180,987
Shares
outstanding
Basic weighted
average Common
Shares and 42,127,855 37,316,897 38,618,663 37,296,010
Units
outstanding
Diluted
weighted
average Common 42,144,865 37,528,004 38,630,704 37,568,722
Shares and
Units
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
Limited Partners' weighted average diluted interest in the Operating
Partnership.
Source: Kite Realty Group Trust
Contact: Kite Realty Group Trust
Dan Sink, Chief Financial Officer, 317-577-5609
dsink@kiterealty.com
or
Adam Chavers, Director of Investor Relations, 317-713-5684
achavers@kiterealty.com