Highlights
-- Funds From Operations (FFO) was $0.12 per diluted share for the fourth
quarter of 2009 and $0.48 per diluted share for the year ended December
31, 2009; excluding a third quarter non-cash impairment charge on a real
estate operating asset, FFO was $0.57 per diluted share for 2009
-- Cash and availability under the credit facility was approximately $87
million at quarter end
-- Subsequent to the end of the quarter, the Company extended or refinanced
all remaining 2010 debt maturities
-- 27 new leases and renewals for 300,000 square feet were executed during
the quarter including anchor leases with Whole Foods at Cobblestone
Plaza, Toys 'R Us at Coral Springs Plaza, and Academy Sports & Outdoors
at Bolton Plaza
INDIANAPOLIS--(BUSINESS WIRE)--
Kite Realty Group Trust (NYSE: KRG) (the "Company") today announced
results for its fourth quarter and year ended December 31, 2009.
Financial statements and exhibits attached to this release include
results for the three and twelve months ended December 31, 2009 and
December 31, 2008.
Financial and Operating Results
For the three months ended December 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 $8.7 million or $0.12 per diluted share for the Kite
Portfolio compared to $10.0 million or $0.24 per diluted share for the
same period in the prior year. FFO in 2009 and 2008 is based on diluted
shares and operating partnership units outstanding of 63.1 million and
33.9 million, respectively. Diluted common shares outstanding in 2009
reflect the issuance of 28.75 million shares in the Company's May equity
offering. The Company's allocable share of FFO was $8.0 million for the
three months ended December 31, 2009 compared to $8.1 million for the
same period in 2008.
For the twelve months ended December 31, 2009, FFO for the Kite
Portfolio was $28.7 million or $0.48 per diluted share, which reflects
the increase in common shares from the Company's May 2009 equity
offering, compared to $45.1 million, or $1.17 per diluted share for the
prior year. Full year results for 2009 also reflect a previously
disclosed third quarter non-cash impairment charge of $5.4 million or
$0.09 per diluted share based on the full year weighted average share
count. As adjusted for this impairment charge, FFO was $0.57 per diluted
share. FFO per diluted share was based on 60.3 million diluted shares
outstanding in 2009 and 38.6 million in 2008. The Company's allocable
share of FFO was $24.9 million for the year ended December 31, 2009
compared to $35.4 million for 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. The Company
believes presenting FFO in this manner allows investors and other
interested parties to form a more meaningful assessment of the Company's
operating results. For informational purposes, the Company also has
provided FFO adjusted for the impairment charge recorded in September
2009. The Company believes this supplemental information provides a
meaningful measure of its operating performance. A reconciliation of net
income to FFO is included in the attached table.
The Company's total revenue for the fourth quarter of 2009 was $29.3
million, down from $41.7 million for the same period in 2008. This
decrease reflects a decline in construction activity of $14.3 million.
Fourth quarter revenues from real estate operations were $24.4 million,
an increase of $1.8 million or 8.2% over the prior year. Net income
attributable to Kite Realty Group Trust was $0.6 million for the fourth
quarter of 2009 compared to a net loss in the prior year of $2.0 million
which included the Company's share of a $4.4 million write off of assets
in connection with the liquidation of Circuit City.
The Company's total revenue for the twelve months ended December 31,
2009 decreased from $142.1 million to $115.3 million, a decline of $26.8
million, of which $19.7 million related to lower construction activity
and $7.0 million related to reduced gains on land and outlot sales. The
net loss attributable to Kite Realty Group Trust for the year ended
December 31, 2009 was $1.8 million, which reflects the Company's $4.7
million share of a non-cash impairment charge, compared to net income
attributable to Kite Realty Group Trust of $6.1 million in 2008 which
includes the Company's share of the $4.4 million write off of assets in
connection with the Circuit City liquidation and the Company's share of
a $2.7 million net loss from the sale of an operating property.
John A. Kite, Kite Realty Group's Chairman and Chief Executive Officer
said, "In 2009 we made important progress in addressing our debt
maturities and available liquidity. We ended the year with a combined
$87 million in cash and availability on our line of credit and,
subsequent to year-end, extended or refinanced all of our remaining 2010
debt maturities. We reorganized, refocused and strengthened our leasing
department which resulted in one of the highest levels of annual leasing
production in our history. Despite the market setbacks in 2009 and the
industry challenges in 2010, we believe we are well positioned to take
advantage of the changes in the real estate market cycle."
Operating Portfolio
As of December 31, 2009, the Company owned interests in 51 retail
operating properties totaling approximately 8.4 million square feet. The
owned gross leasable area ("GLA") in the Company's retail operating
portfolio was 90.1% leased as of December 31, 2009, compared to 90.8%
leased as of the end of the prior quarter. This decrease is primarily
attributable to a lease expiration of a junior anchor tenant at a center
in Texas.
In addition, the Company owns four commercial operating properties
totaling 499,221 square feet. As of December 31, 2009, the owned net
rentable area of the commercial operating portfolio was 96.2% leased,
compared to 95.2% at the end of the prior quarter. For the combined
retail and commercial operating portfolio, the leased percentage was
90.7% as of December 31, 2009, compared to 91.2% at the end of the prior
quarter.
On a same property basis, the leased percentage of 54 total operating
properties was 90.5% at December 31, 2009 and 91.9% at December 31,
2008. Same property net operating income for these properties decreased
3.0% in the fourth quarter and decreased 2.7% for the full year 2009
compared to the same periods in 2008.
Leasing Activities
During the fourth quarter of 2009, the Company executed a combined 27
new and renewal leases totaling approximately 300,000 square feet. New
leases were signed with 14 tenants for approximately 178,000 square feet
of GLA. These leases represent a 5.7% positive cash rent spread. A total
of 13 leases for 122,000 square feet were renewed during the quarter.
Rental rates for these renewals increased approximately 2.3% above
previous rents.
Included in the leases signed during the quarter are leases with three
anchor tenants. Whole Foods leased approximately 35,000 square feet at
Cobblestone Plaza, a development property in Pembroke Pines, Florida.
This lease brings the center to 74% leased as of December 31, 2009. The
Company also leased approximately 47,000 square feet to a Toys "R" Us
and Babies "R" Us combination store at Coral Springs Plaza, a
redevelopment property in Coral Springs, Florida. This center was
previously anchored by Circuit City and is now 100% leased. Lastly,
Academy Sports & Outdoors leased 66,500 square feet of a former Wal-Mart
at Bolton Plaza in Jacksonville, Florida. This property is currently
under redevelopment and is now 50% leased.
For the year, the Company executed a combined 114 new and renewal leases
totaling approximately 673,000 square feet. New leases were signed with
61 tenants for approximately 369,000 square feet of GLA. These leases
represent a 4.4% positive cash rent spread. A total of 53 leases for
304,000 square feet were renewed during the year. Rental rates for these
renewals decreased approximately 0.8% compared to previous rents.
Development Activities
As of December 31, 2009, the Company owned interests in two projects in
the current development pipeline that are expected to total
approximately 300,000 owned square feet. The total estimated cost of
these projects is approximately $87 million, of which approximately $73
million had been incurred as of December 31, 2009. The Company also
has five properties in its redevelopment pipeline representing a total
of approximately 494,000 square feet with an estimated $15.7 million
expected to be spent on redevelopment costs.
Financing Activities
Since the end of the third quarter, the Company refinanced or extended
the maturity dates of all of its remaining 2009 and 2010 debt
maturities. The Company completed the following financing activities in
the fourth quarter:
-- The Ridge Plaza operating property, in Oak Ridge, New Jersey, was
financed with a $15 million permanent loan. This loan has a maturity
date of January 2017 and bears interest at a rate of LIBOR plus 325
basis points which the Company simultaneously hedged to fix the interest
rate at 6.56% for the full term of the loan.
-- The $12 million loan on Boulevard Crossing in Kokomo, Indiana was
retired and the asset was contributed to the line of credit collateral
pool.
-- The Tarpon Springs Plaza loan was reduced to a balance of $14 million
and the maturity date was extended to January 2013 at an interest rate
of LIBOR plus 325 basis points.
-- The Estero Town Commons loan was reduced to a balance of $10.5 million
and the maturity date was extended to January 2013 at an interest rate
of LIBOR plus 325 basis points.
Subsequent to the end of the year, the Company completed the following
financing activities:
-- The South Elgin Commons loan was reduced to a balance of $9.4 million.
The maturity date was extended to September 2013 at an interest rate of
LIBOR plus 325 basis points, subject to a LIBOR floor of 2.0%.
-- The construction loan on Cobblestone Plaza was reduced to a balance of
$28 million and the maturity date was extended to February 2013 at an
interest rate of LIBOR plus 350 basis points.
-- The Shops at Rivers Edge loan was reduced to a balance of $14.3 million
and the maturity date was extended to February 2013 at an interest rate
of LIBOR plus 400 basis points.
These loan extensions addressed all of the Company's 2010 debt
maturities with an average 14% paydown of the outstanding balances at
the date of the extensions.
Distributions
On December 23, 2009, the Board of Trustees declared a quarterly cash
distribution of $0.06 per common share for the quarter ended December
31, 2009 to shareholders of record as of January 7, 2010. This
distribution was paid on January 18, 2010. Management and the Board will
continue to evaluate the Company's distribution policy on a quarterly
basis.
Earnings Guidance
The Company expects FFO to be within a range of $0.42 to $0.47 per
diluted share for the year ending December 31, 2010 and diluted net
income to be within a range of $0.00 to $0.05 per share. 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 net earnings, the Company's 2010
guidance is based primarily on the following assumptions:
-- Includes the full year effect of the May 2009 common equity offering;
-- Portfolio leased percentage ranging from 90% to 92% at December 31,
2010;
-- A decrease in same property net operating income ranging from 0.0% to
2.0%;
-- 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 $0.01 to $0.03 on a pretax basis;
-- General and administrative expense ranging from approximately $5.5
million to $5.8 million;
-- No material acquisition or disposition activity;
-- Construction and service fee net margin ranging from $0.01 to $0.03 on a
pretax basis.
The Company's 2010 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 may change its guidance as actual and
anticipated results vary from these assumptions.
Following is a reconciliation of the range of 2010 estimated diluted net
income per share to estimated diluted FFO per share:
Guidance Range for 2010 Low High
Diluted net income per share $ 0.00 $ 0.05
Depreciation and amortization of consolidated and 0.42 0.42
unconsolidated entities
Diluted FFO per share $ 0.42 $ 0.47
Earnings Conference Call
The Company will conduct a conference call to discuss its financial
results on Thursday, February 18th at 1:00 p.m. eastern time.
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 71504130). In addition, a
telephonic replay of the call will be available until May 18, 2010. The
replay dial-in telephone numbers are (888) 286-8010 for domestic callers
and (617) 801-6888 for international callers (passcode 26509761).
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 Statement
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; the risk that the Company's
assumptions related to its 2010 net income and FFO guidance change;
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; risks related to property
impairments; 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)
December 31, December 31,
2009 2008
Assets:
Investment properties, at cost:
Land $ 226,506,781 $ 227,781,452
Land held for development 27,546,315 25,431,845
Buildings and improvements 736,027,845 690,161,336
Furniture, equipment and other 5,060,233 5,024,696
Construction in progress 176,689,227 191,106,309
1,171,830,401 1,139,505,638
Less: accumulated depreciation (127,031,144 ) (104,051,695 )
1,044,799,257 1,035,453,943
Cash and cash equivalents 19,958,376 9,917,875
Tenant receivables, including accrued
straight-line rent of $8,570,069 and 18,537,031 17,776,282
$7,221,882, respectively, net of allowance
for uncollectible accounts
Other receivables 9,326,475 10,357,679
Investments in unconsolidated entities, at 10,799,782 1,902,473
equity
Escrow deposits 11,377,408 11,316,728
Deferred costs, net 21,509,070 21,167,288
Prepaid and other assets 4,378,045 4,159,638
Total Assets $ 1,140,685,444 $ 1,112,051,906
Liabilities and Equity:
Mortgage and other indebtedness $ 658,294,513 $ 677,661,466
Accounts payable and accrued expenses 32,799,351 53,144,015
Deferred revenue and other liabilities 19,835,438 24,594,794
Total Liabilities 710,929,302 755,400,275
Commitments and contingencies
Redeemable noncontrolling interests in the 47,307,115 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 63,062,083 shares and
34,181,179 shares issued and outstanding 630,621 341,812
at December 31, 2009 and December 31,
2008, respectively
Additional paid in capital 449,863,390 343,631,595
Accumulated other comprehensive loss (5,802,406 ) (7,739,154 )
Accumulated deficit (69,613,763 ) (51,276,059 )
Total Kite Realty Group Trust 375,077,842 284,958,194
Shareholders' Equity
Noncontrolling Interests 7,371,185 4,416,533
Total Equity 382,449,027 289,374,727
Total Liabilities and Equity $ 1,140,685,444 $ 1,112,051,906
Kite Realty Group Trust
Consolidated Statements of Operations
For the Three and Twelve Months Ended December 31, 2009 and 2008
(Unaudited)
Three Months Ended December Twelve Months Ended December
31, 31,
2009 2008 2009 2008
Revenue:
Minimum rent $ 18,000,595 $ 17,000,686 $ 71,612,415 $ 71,313,482
Tenant 4,750,543 3,511,969 18,163,191 17,729,788
reimbursements
Other property 1,678,577 2,069,383 6,065,708 13,916,680
related revenue
Construction
and service fee 4,855,122 19,148,029 19,450,789 39,103,151
revenue
Total revenue 29,284,837 41,730,067 115,292,103 142,063,101
Expenses:
Property 4,821,688 4,569,335 18,188,710 16,388,515
operating
Real estate 3,110,577 2,063,166 12,068,903 11,864,552
taxes
Cost of
construction 4,233,332 16,860,244 17,192,267 33,788,008
and services
General,
administrative, 1,435,172 1,461,208 5,711,623 5,879,702
and other
Depreciation
and 8,283,015 10,606,523 32,148,318 34,892,975
amortization
Total expenses 21,883,784 35,560,476 85,309,821 102,813,752
Operating 7,401,053 6,169,591 29,982,282 39,249,349
income
Interest (6,567,135 ) (7,254,291 ) (27,151,054 ) (29,372,181 )
expense
Income tax
(expense)
benefit of (7,236 ) (391,053 ) 22,293 (1,927,830 )
taxable REIT
subsidiary
Income from
unconsolidated -- 629,489 226,041 842,425
entities
Gain on sale of
unconsolidated -- 1,233,338 -- 1,233,338
property
Non-cash gain
from -- -- 1,634,876 --
consolidation
of subsidiary
Other income, 98,191 15,497 224,927 157,955
net
Income from
continuing 924,873 402,571 4,939,365 10,183,056
operations
Discontinued
operations:
Operating
(loss) income
from (18,614 ) (322,086 ) (732,621 ) 330,482
discontinued
operations
Non-cash loss
on impairment -- -- (5,384,747 ) --
of real estate
asset
Loss on sale of
operating -- (2,689,888 ) -- (2,689,888 )
property
Loss from
discontinued (18,614 ) (3,011,974 ) (6,117,368 ) (2,359,406 )
operations
Consolidated
net income 906,259 (2,609,403 ) (1,178,003 ) 7,823,650
(loss)
Less: Net
income (loss)
attributable to (262,982 ) 615,045 (603,763 ) (1,730,524 )
noncontrolling
interests
Net income
(loss)
attributable to $ 643,277 $ (1,994,358 ) $ (1,781,766 ) $ 6,093,126
Kite Realty
Group Trust
Income (loss)
per common
share - basic
and diluted
Income from
continuing
operations
attributable to $ 0.01 $ 0.01 $ 0.07 $ 0.26
Kite Realty
Group Trust
common
shareholders
Loss from
discontinued
operations
attributable to (0.00 ) (0.07 ) (0.10 ) (0.06 )
Kite Realty
Group Trust
common
shareholders
Net income
(loss)
attributable to
Kite Realty $ 0.01 $ (0.06 ) $ (0.03 ) $ 0.20
Group Trust
common
shareholders
Weighted
average common
shares 62,997,180 33,920,594 52,146,454 30,328,408
outstanding -
basic
Weighted
average common
shares 63,132,990 33,920,594 52,146,454 30,340,449
outstanding -
diluted
Dividends
declared per $ 0.0600 $ 0.2050 $ 0.3325 $ 0.8200
common share
Net income
(loss)
attributable to
Kite Realty
Group Trust
common
shareholders:
Income from
continuing $ 665,109 $ 365,475 $ 3,515,875 $ 7,945,260
operations
Discontinued (21,832 ) (2,359,833 ) (5,297,641 ) (1,852,134 )
operations
Net income
(loss)
attributable to
Kite Realty $ 643,277 $ (1,994,358 ) $ (1,781,766 ) $ 6,093,126
Group Trust
common
shareholders
Kite Realty Group Trust
Funds From Operations
For the Three and Twelve Months Ended December 31, 2009 and 2008
(Unaudited)
Three Months Ended December Twelve Months Ended December 31,
31,
2009 2008 2009 2008
Consolidated
net income $ 906,259 $ (2,609,403 ) $ (1,178,003 ) $ 7,823,650
(loss)1
Add loss on
sale of -- 2,689,888 -- 2,689,888
operating
property
Less non-cash
gain from
consolidation
of subsidiary, -- -- (980,926 ) --
net of
noncontrolling
interests
Less gain on
sale of -- (1,233,338 ) -- (1,233,338 )
unconsolidated
property
Less net
income
attributable
to (137,333 ) (23,877 ) (879,463 ) (61,707 )
noncontrolling
interests in
properties
Add
depreciation
and
amortization
of 7,908,465 11,030,742 31,601,550 35,438,229
consolidated
entities, net
of
noncontrolling
interests
Add
depreciation
and
amortization -- 102,051 157,623 406,623
of
unconsolidated
entities
Funds From
Operations of 8,677,391 9,956,063 28,720,781 45,063,345
the Kite
Portfolio2
Less
redeemable
noncontrolling (675,265 ) (1,894,985 ) (3,848,585 ) (9,688,619 )
interests in
Funds From
Operations
Funds From
Operations $ 8,002,126 $ 8,061,078 $ 24,872,196 $ 35,374,726
allocable to
the Company2
Basic and
Diluted FFO
per share of $ 0.12 $ 0.24 $ 0.48 $ 1.17
the Kite
Portfolio
Funds From
Operations of $ 8,677,391 $ 9,956,063 $ 28,720,781 45,063,345
the Kite
Portfolio
Add back:
Non-cash loss
on impairment -- -- 5,384,747 --
of real estate
asset
Funds From
Operations of
the Kite
Portfolio
excluding $ 8,677,391 $ 9,956,063 $ 34,105,528 45,063,345
non-cash loss
on impairment
of real estate
asset
Basic and
Diluted FFO
per share of
the Kite
Portfolio $ 0.12 $ 0.24 $ 0.57 $ 1.17
(excluding
non-cash loss
on impairment
of real estate
asset)
Basic weighted
average Common 62,997,180 33,920,594 52,146,454 30,328,408
Shares
outstanding
Diluted
weighted
average Common 63,132,990 33,937,604 52,239,335 30,340,449
Shares
outstanding
Basic weighted
average Common
Shares and 71,038,551 42,127,855 60,194,986 38,618,663
Units
outstanding
Diluted
weighted
average Common 71,174,361 42,144,865 60,287,866 38,630,704
Shares and
Units
outstanding
____________________
1 Includes non-cash impairment loss on a real estate asset of $5,384,747 for
the twelve months ended December 31, 2009.
"Funds From Operations of the Kite Portfolio" measures 100% of the operating
performance of the Operating Partnership's real estate properties and
2 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
Investors/Media:
Adam Chavers, Director of Investor Relations, 317-713-5684
achavers@kiterealty.com