INDIANAPOLIS--(BUSINESS WIRE)--
Kite Realty Group Trust (NYSE: KRG) (the "Company") today announced
results for its second quarter ended June 30, 2009. Financial statements
and exhibits attached to this release include results for the three and
six months ended June 30, 2009 and 2008.
Financial and Operating Results
For the three months ended June 30, 2009, funds from operations (FFO), a
widely accepted supplemental measure of REIT performance established by
the National Association of Real Estate Investment Trusts, was $8.9
million for the Kite Portfolio, or $0.15 per diluted share, compared to
$11.6 million, or $0.31 per diluted share, for the same period in the
prior year. The dollar decrease between years reflects lower gains on
sales of land and lower construction activity in 2009. Excluding the
dilutive effects of our October 2008 and May 2009 equity offerings, our
diluted FFO for the second quarter would have been $0.23 per share.
The Company's allocable share of FFO was $7.6 million for the three
months ended June 30, 2009 compared with $9.0 million for the same
period in 2008.
For the six months ended June 30, 2009, the Company's FFO for the Kite
Portfolio was $17.2 million, or $0.35 per diluted share, compared with
$23.1 million, or $0.62 per diluted share, for the same period in 2008.
Excluding the dilutive effects of our October 2008 and May 2009 equity
offerings, our diluted FFO for the first half of 2009 would have been
$0.43 per share.
The Company's business is the ownership, operation and management of
real estate. It 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 second quarter of 2009 was $30.1
million, down from $34.2 million for the same period in 2008. This
decrease was primarily a result of lower construction activity ($2.5
million) and lower gains on sales of land and outlot parcels ($1.6
million). The Company's net income was $257 thousand for the second
quarter of 2009 compared to $2.5 million in the prior year. This decline
also reflects the lower construction activity and gains on sales.
The Company's total revenue for the first half of 2009 was $60.6
million, down from $66.5 million for the same period in 2008. This
decrease was primarily a result of lower gains on sales of land and
outlot parcels ($5.2 million). The Company's net income was $1.0 million
for the first six months of 2009 compared to $5.2 million in the same
period of 2008. This decline also reflects the lower gains on sales.
John A. Kite, Kite Realty Group's Chairman and Chief Executive Officer
said, "We enhanced the long term stability of our Company by completing
a $92 million equity offering in May. Combined with the capital raised
in October 2008, non-core asset sales, and $11 million from two land
sales in June, we ended the quarter with approximately $115 million of
cash and available credit and a ratio of debt to gross real estate
assets of 53 percent. We also made strong leasing progress by executing
46 new leases and renewals for 265,000 square feet."
Operating Portfolio
As of June 30, 2009, the Company owned interests in 51 retail operating
properties totaling approximately 7.9 million square feet. The owned
gross leasable area ("GLA") in the Company's retail operating portfolio
was 90.7% leased as of June 30, 2009, compared to 90.2% leased as of the
end of the prior quarter.
In addition, the Company owns four commercial operating properties
totaling 499,221 square feet. As of June 30, 2009, the owned net
rentable area of the commercial operating portfolio was 95.2% leased,
compared to 97.2% at the end of the prior quarter. For the combined
retail and commercial operating portfolio, the leased percentage was
91.1% as of June 30, 2009, compared to 90.8% at the end of the prior
quarter.
On a same property basis, the leased percentage of 51 total operating
properties was 91.7% at June 30, 2009 and 93.0% at June 30, 2008. Same
property net operating income for these properties decreased 3.4% in the
second quarter of 2009 compared to the same period in the prior year.
The majority of this decrease is attributed to three junior anchor
vacancies, including two former Circuit City locations. Year to date,
same property net operating income has decreased 3.0% and is
within the Company's previously disclosed range of expectations.
Dispositions
The Company sold two ground leased land parcels during the second
quarter. Lowes Home Improvement exercised a purchase option in its
ground lease to acquire 14 acres adjacent to the Shops at Eagle Creek in
Naples, Florida. Net proceeds of approximately $9.4 million were
retained as cash. In addition, an outlot at Estero Town Center near
Naples, Florida was sold with net proceeds of approximately $1.3
million, which were used to partially repay the loan on that shopping
center.
Leasing Activities
During the second quarter of 2009, the Company executed 46 new and
renewal leases totaling 265,000 square feet. New leases were signed with
26 tenants for approximately 94,000 square feet of GLA. These leases
represent a 7.0% positive cash rent spread. A total of 19 leases for
109,000 square feet, including to two junior anchor tenants, were
renewed during the quarter. Rental rates for these renewals were
approximately 6.3% below previous rents; however, the Company committed
only $16,000, or $0.15 per square foot, of tenant improvement dollars in
conjunction with these renewals. These leasing spreads exclude one
62,000 square foot anchor lease under which the base rent will increase
in the future if tenant improvement dollars are expended.
The Company is currently negotiating 23 new and renewal leases with
tenants for a total of approximately 160,000 square feet.
Capital Activities
In May 2009, the Company completed an equity offering of 28,750,000
common shares at an offering price of $3.20 per share for aggregate
gross and net proceeds of $92.0 million and $87.6 million, respectively.
Approximately $57 million of the net proceeds were used to repay
borrowings under the Company's unsecured revolving credit facility and
the remainder was retained as cash.
During the quarter, the Company placed a three-year $15.4 million loan,
with an additional one year extension, on its previously unencumbered
Eastgate Pavilion property and used the proceeds to increase its cash
and available credit. The loan bears interest at a rate of LIBOR plus
295 basis points and has been hedged at a fixed rate of 4.84%.
The Company completed two loan extensions during the second quarter. The
loan on its Cobblestone Plaza development was extended to March 2010 at
a rate of LIBOR plus 250 basis points. The Company also extended its
loan on its Delray Marketplace development for two years to June 2011 at
a rate of LIBOR plus 300 basis points.
As of August 4, 2009, the Company has $27.6 million of debt maturities
remaining in 2009.
Subsequent to the end of the second quarter, the Company extended its
loan on Bridgewater Marketplace from June 2010 to June 2013.
Development Activities
As of June 30, 2009, the Company owned interests in two projects in the
current development pipeline that are expected to total approximately
323,000 square feet. The total estimated cost of these projects is
approximately $82 million, of which approximately $62 million had
been incurred as of June 30, 2009. The balance of these costs will be
funded through existing construction loans on each project. The Company
also has six properties in the redevelopment pipeline representing a
total of approximately 538,000 square feet.
The Company continues to pursue plans to reduce capital expenditures in
its 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.
Distributions
On May 11, 2009, the Board of Trustees declared a quarterly cash
distribution of $0.06 per common share for the quarter ended June 30,
2009 to shareholders of record as of July 7, 2009. This distribution was
paid on July 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 September 30, 2009
later in the third quarter.
Earnings Guidance
The Company is revising its earnings and FFO guidance for the year
ending December 31, 2009 from a range of $0.59 to $0.69 per diluted
share to a range of $0.57 to $0.61 per diluted common share. This
revision is primarily attributed to delays in tenant rent commencement
at our development properties, retention of cash balances generated by
our May equity offering and an increase in real estate taxes on certain
of our properties. The revised guidance also reflects reduced
expectations for land sales for the remainder of 2009. 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 $0.06 $0.10
Depreciation and amortization of consolidated entities 0.51 0.51
Depreciation and amortization of unconsolidated entities 0.00 0.00
Diluted FFO per share $0.57 $0.61
Earnings Conference Call
Management will host a conference call on Wednesday, August 5, 2009 at
1:00 p.m. EDT to discuss financial results for the quarter ended June
30, 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) 680-0865 for domestic callers and (617)
213-4853 for international callers (passcode 49089208). In addition, a
telephonic replay of the call will be available until November 5, 2009.
The replay dial-in telephone numbers are (888) 286-8010 for domestic
callers and (617) 801-6888 for international callers (passcode 79627430).
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, expansion and development 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, 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 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 and net income estimates),
whether as a result of new information, future events or otherwise.
Kite Realty Group Trust
Consolidated Balance Sheets
(Unaudited)
June 30, December 31,
2009 2008
Assets:
Investment properties, at cost:
Land $ 222,356,743 $ 227,781,452
Land held for development 23,074,389 25,431,845
Buildings and improvements 709,117,203 690,161,336
Furniture, equipment and other 5,046,994 5,024,696
Construction in progress 192,125,761 191,106,309
1,151,721,090 1,139,505,638
Less: accumulated depreciation (115,171,727 ) (104,051,695 )
1,036,549,363 1,035,453,943
Cash and cash equivalents 57,262,003 9,917,875
Tenant receivables, including accrued
straight-line rent of $7,977,887 and 17,623,268 17,776,282
$7,221,882, respectively, net of allowance
for uncollectible accounts
Other receivables 7,588,685 10,357,679
Investments in unconsolidated entities, at 11,211,870 1,902,473
equity
Escrow deposits 12,079,731 11,316,728
Deferred costs, net 20,501,646 21,167,288
Prepaid and other assets 4,667,371 4,159,638
Total Assets $ 1,167,483,937 $ 1,112,051,906
Liabilities and Equity:
Mortgage and other indebtedness $ 669,742,156 $ 677,661,466
Accounts payable and accrued expenses 37,931,722 53,144,015
Deferred revenue and other liabilities 22,551,294 24,594,794
Total Liabilities 730,225,172 755,400,275
Commitments and contingencies
Redeemable noncontrolling interests in the 48,911,344 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 62,963,674 shares and
34,181,179 shares issued and outstanding at 629,637 341,812
June 30, 2009 and December 31, 2008,
respectively
Additional paid in capital and other 449,241,738 343,631,595
Accumulated other comprehensive loss (6,628,878 ) (7,739,154 )
Accumulated deficit (59,310,084 ) (51,276,059 )
Total Kite Realty Group Trust Shareholders' 383,932,413 284,958,194
Equity
Noncontrolling Interests 4,415,008 4,416,533
Total Equity 388,347,421 289,374,727
Total Liabilities and Equity $ 1,167,483,937 $ 1,112,051,906
Kite Realty Group Trust
Consolidated Statements of Operations
For the Three and Six Months Ended June 30, 2009 and 2008
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2009 2008 2009 2008
Revenue:
Minimum rent $ 17,951,594 $ 18,304,809 $ 35,937,438 $ 36,188,937
Tenant 4,664,968 4,569,309 9,360,649 9,588,247
reimbursements
Other property 1,770,070 2,974,507 3,358,178 8,131,592
related revenue
Construction and
service fee 5,762,463 8,311,318 11,911,458 12,599,840
revenue
Total revenue 30,149,095 34,159,943 60,567,723 66,508,616
Expenses:
Property operating 4,098,494 3,924,055 9,689,094 8,285,826
Real estate taxes 3,603,116 3,246,816 6,396,881 6,301,165
Cost of
construction and 5,017,734 7,024,400 10,577,050 10,788,634
services
General,
administrative, 1,547,357 1,259,408 2,890,827 2,969,358
and other
Depreciation and 8,728,789 8,348,003 16,240,227 16,376,666
amortization
Total expenses 22,995,490 23,802,682 45,794,079 44,721,649
Operating income 7,153,605 10,357,261 14,773,644 21,786,967
Interest expense (6,991,624 ) (7,351,499 ) (13,768,132 ) (14,605,065 )
Income tax expense
of taxable REIT (13,233 ) (251,858 ) (51,185 ) (1,405,086 )
subsidiary
Other income 35,622 31,676 84,521 96,908
Income from
unconsolidated 121,017 86,121 152,517 147,295
entities
Income from
continuing 305,387 2,871,701 1,191,365 6,021,019
operations
Income from
discontinued -- 305,041 -- 635,864
operations
Consolidated net 305,387 3,176,742 1,191,365 6,656,883
income
Net income
attributable to (48,302 ) (717,453 ) (233,038 ) (1,490,295 )
noncontrolling
interests
Net income
attributable to $ 257,085 $ 2,459,289 $ 958,327 $ 5,166,588
Kite Realty Group
Trust
Income per common
share - basic &
diluted
Income from
continuing
operations
attributable to $ 0.01 $ 0.07 $ 0.02 $ 0.16
Kite Realty Group
Trust common
shareholders
Income from
discontinued
operations
attributable to -- 0.01 -- 0.02
Kite Realty Group
Trust common
shareholders
Net income
attributable to
Kite Realty Group $ 0.01 $ 0.08 $ 0.02 $ 0.18
Trust common
shareholders
Weighted average
common shares 47,988,205 29,147,361 41,124,387 29,088,327
outstanding -
basic
Weighted average
common shares 48,081,453 29,269,062 41,198,377 29,161,590
outstanding -
diluted
Dividends declared $ 0.0600 $ 0.2050 $ 0.2125 $ 0.4100
per common share
Net income
attributable to
Kite Realty Group
Trust common
shareholders:
Income from
continuing $ 257,085 $ 2,221,968 $ 958,327 $ 4,672,217
operations
Discontinued -- 237,321 -- 494,371
operations
Net income
attributable to $ 257,085 $ 2,459,289 $ 958,327 $ 5,166,588
Kite Realty Group
Trust
Kite Realty Group Trust
Funds From Operations
For the Three and Six Months Ended June 30, 2009 and 2008
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2009 2008 2009 2008
Consolidated net $ 305,387 $ 3,176,742 $ 1,191,365 $ 6,656,883
income
Deduct net (income)
loss attributable
to noncontrolling (26,228 ) (19,756 ) (46,475 ) (15,600 )
interests in
properties
Add depreciation
and amortization of
consolidated
entities, net of 8,586,847 8,318,380 15,967,091 16,301,494
noncontrolling
interests in
properties
Add depreciation
and amortization of 52,690 101,571 104,826 202,628
unconsolidated
entities
Funds From
Operations of the 8,918,696 11,576,937 17,216,807 23,145,405
Kite Portfolio1
Deduct redeemable
noncontrolling (1,277,482 ) (2,558,418 ) (2,854,123 ) (5,138,186 )
interests in Funds
From Operations
Funds From
Operations $ 7,641,214 $ 9,018,519 $ 14,362,684 $ 18,007,219
allocable to the
Company1
Basic FFO per share
of the Kite $ 0.15 $ 0.31 $ 0.35 $ 0.62
Portfolio
Diluted FFO per
share of the Kite $ 0.15 $ 0.31 $ 0.35 $ 0.62
Portfolio
Basic weighted
average Common 47,988,205 29,147,361 41,124,387 29,088,327
Shares outstanding
Diluted weighted
average Common 48,081,453 29,269,062 41,198,377 29,161,590
Shares outstanding
Basic weighted
average Common 56,040,684 37,475,060 49,176,866 37,421,301
Shares and Units
outstanding
Diluted weighted
average Common 56,133,932 37,596,760 49,250,856 37,494,563
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
redeemable noncontrolling 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