Highlights
- Funds From Operations (FFO) was $7.5 million or $0.11 per diluted
share for the second quarter of 2010.
- 39 new and renewal leases for 216,200 square feet were executed
during the quarter for an aggregate cash rent spread of 10%.
- Operating retail portfolio was 91% leased at quarter end as
compared to 90% at the end of the previous quarter.
- New anchor leases signed during the quarter with Nordstrom Rack and
Toys “R” Us.
- Subsequent to quarter end, a new 23,500 square foot lease was
signed with The Container Store at Rivers Edge.
INDIANAPOLIS--(BUSINESS WIRE)--
Kite Realty Group Trust (NYSE: KRG) (the “Company”) today announced
results for its second quarter ended June 30, 2010. Financial statements
and exhibits attached to this release include results for the three and
six months ended June 30, 2010 and 2009.
Financial and Operating Results
For the three months ended June 30, 2010, funds from operations (FFO), a
widely accepted supplemental measure of REIT performance established by
the National Association of Real Estate Investment Trusts, was $7.5
million for the Kite Portfolio, or $0.11 per diluted share, compared to
$8.9 million, or $0.15 per diluted share in the same period of the prior
year. The majority of the decrease in FFO between years is attributable
to lower gains on sales of land and outlot parcels ($0.6 million) and
lower after tax construction margin ($0.3 million). The decrease in
diluted FFO per share between years was primarily a result of the
issuance of 28.8 million shares in the Company’s May 2009 common share
offering.
FFO allocable to the Company for the second quarter of 2010 was $6.7
million compared to $7.6 million for the same period of the prior year.
For the six months ended June 30, 2010, FFO was $14.6 million for the
Kite Portfolio, or $0.21 per diluted share, compared to $17.2 million,
or $0.35 per diluted share for the first half of 2009. The majority of
the decrease in FFO between years is attributable to lower gains on
sales of land and outlot parcels ($2.1 million) and lower after tax
construction margin ($0.6 million). The decrease in diluted FFO per
share between years is also a result of the Company’s May 2009 common
share offering.
FFO allocable to the Company for the first six months of 2010 was $13.0
million compared to $14.4 million for the same period of the prior year.
The Company’s total revenue for the second quarter of 2010 was $24.8
million, down from $30.1 million for the same period in 2009. This
decrease was primarily a result of lower construction activity ($3.8
million) and lower gains on sales of land and outlot parcels ($0.6
million). The Company recorded a net loss of $4.0 million for the second
quarter of 2010, compared to net income of $0.3 million for the same
period of the prior year. The change between years primarily reflects
additional non-cash depreciation charges of $3.5 million recorded in
connection with the redevelopment of three properties to recognize
shorter useful lives of certain assets at these properties. Also
contributing to the decline in net income was lower construction
activity and lower gains on land and outlot sales.
The Company’s total revenue for the first six months of 2010 was $50.4
million, down from $60.3 million for the same period in 2009. This
decrease was primarily a result of lower construction activity ($8.1
million) and lower gains on sales of land and outlot parcels ($1.3
million). The Company recorded a net loss of $5.1 million for the first
six months of 2010, compared to net income of $1.0 million in the same
period of the prior year. This change between years also reflects the
2010 additional non-cash depreciation charges of $3.5 million discussed
above, lower construction activity and lower gains on land and outlot
sales.
John A. Kite, Kite Realty Group’s Chairman and Chief Executive Officer
said, “We are again pleased with the momentum of our leasing efforts
during the quarter as we increased our retail leased percentage by 100
basis points and signed several new anchor tenant leases. We have been
able to execute on our leasing initiatives while maintaining positive
rent spreads on an aggregate basis. We continue to look for select
growth opportunities while maintaining our focus on liquidity and the
balance sheet.”
Operating Portfolio
As of June 30, 2010, 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 91.0% leased as of June 30, 2010, compared to 90.0% leased as of the
end of the prior quarter. In addition, the Company owns four commercial
operating properties totaling approximately 499,200 square feet. As of
June 30, 2010, the owned net rentable area of the commercial operating
portfolio was 95.5% leased compared to 96.2% leased as of the end of the
prior quarter.
For the combined retail and commercial operating portfolio, the leased
percentage was 91.5% as of June 30, 2010, compared to 90.6% leased as of
the end of the prior quarter.
On a same property basis, the leased percentage of the Company’s 55
operating properties was 91.5% at June 30, 2010 and 91.1% at June 30,
2009. Same property net operating income for these properties decreased
1.5% in the second quarter of 2010 compared to the same period in the
prior year and increased 1.4% compared to the first quarter of 2010. The
Company expects that same property NOI growth will continue to be
positively influenced in the second half of 2010 by base rent and
related recoveries from recently executed junior anchor leases.
Leasing Activities
During the second quarter of 2010, the Company executed 39 new and
renewal leases totaling 216,200 square feet for an aggregate cash rent
spread of approximately 10%. New leases were signed with 23 tenants for
approximately 136,300 square feet of GLA representing an 18.1% cash rent
spread. A total of 16 leases for 79,900 square feet were renewed during
the quarter. Renewal rental rates were 0.4% below previous rents
excluding the renewal of an anchor tenant at Plaza at Cedar Hill near
Dallas, Texas. Including this anchor tenant lease, renewal rental rates
for the quarter were 6.0% below previous rents.
The Company executed two new anchor leases during the quarter. Nordstrom
Rack executed a 35,000 square foot lease to replace Office Depot as part
of the redevelopment of Rivers Edge in Indianapolis, Indiana. In the
operating portfolio, a 34,500 square foot lease was executed for a Toys
“R” Us/Babies “R” Us combination store at Plaza at Cedar Hill.
Subsequent to the end of the quarter, the Company executed an anchor
lease with The Container Store for an additional 23,500 square feet at
Rivers Edge.
The Company is currently in various stages of negotiations for 50 new
and renewal leases with tenants for a total of approximately 325,000
square feet.
Development Activities
As of June 30, 2010, the Company owned interests in two in-process
development projects, Eddy Street Commons in South Bend, Indiana and
Cobblestone Plaza in Ft. Lauderdale, Florida, that are expected to total
approximately 297,700 owned square feet. The total estimated cost of
these projects is approximately $87 million, of which approximately $81million had been incurred as of June 30, 2010.
At Eddy Street Commons, the leased percentage increased to approximately
80% at the end of the second quarter. The Company anticipates this
project will be stabilized by year-end. Leasing activity at Cobblestone
Plaza has increased as the October 2010 date of construction
commencement approaches for the Whole Foods anchor store.
The Company also has five properties in redevelopment representing a
total of approximately 510,300 square feet. Coral Springs Plaza near
Boca Raton, Florida is 100% leased to Toys “R” Us which is expected to
open in the fourth quarter of 2010. Academy Sports anchors the Company’s
Bolton Plaza redevelopment in Jacksonville, Florida and is also expected
to open in the fourth quarter of this year. As noted above, significant
leasing activity recently has occurred at our Rivers Edge property and
construction is expected to commence on this redevelopment in the third
quarter.
Distributions
On June 16, 2010, the Board of Trustees declared a quarterly cash
distribution of $0.06 per common share for the quarter ended June 30,
2010 to shareholders of record as of July 7, 2010. This distribution was
paid on July 14, 2010. The Board of Trustees anticipates declaring a
quarterly cash distribution for the quarter ending September 30, 2010
later in the third quarter.
FFO Guidance
The Company is reaffirming its FFO guidance for the year ending December
31, 2010 in a range of $0.42 to $0.47 per diluted share. Following is a
reconciliation of estimated net loss per common share to estimated
diluted FFO per share:
|
Guidance Range for 2010
|
|
Low
|
|
High
|
|
Diluted net loss per share (1)
| |
$
|
(0.10
|
)
| |
$
|
(0.05
|
)
|
|
Depreciation and amortization of consolidated and unconsolidated
entities (1)
| |
|
0.52
|
| |
|
0.52
|
|
|
Diluted FFO per share
| |
$
|
0.42
|
| |
$
|
0.47
|
|
(1) Reflects approximately $5 million of additional depreciation expense
on redevelopment properties. See “Financial
and Operating Results” above for additional information.
Funds From Operations
The Company’s business is the ownership, operation and management of
real estate. It believes that Funds From Operations (FFO) is helpful to
investors when measuring operating performance because it excludes
various items that are considered in the determination of 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
(loss) to FFO is included in the attached table.
Earnings Conference Call
Management will host a conference call on Thursday, August 5, 2010 at
1:00 p.m. EDT to discuss financial and operating results for the quarter
ended June 30, 2010. 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 (866) 730-5764 for domestic callers and (857)
350-1588 for international callers (passcode 94101798). In addition, a
telephonic replay of the call will be available until November 5, 2010.
The replay dial-in telephone numbers are (888) 286-8010 for domestic
callers and (617) 801-6888 for international callers (passcode 59709393).
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 and
operating commercial properties.
Safe Harbor
This press release contains certain statements that are not historical
fact and 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, particularly in light of the
current recession; financing risks, including the availability of and
costs associated with sources of liquidity; the Company’s ability to
refinance, or extend the maturity dates of, its indebtedness; the level
and volatility of interest rates; the financial stability of tenants,
including their ability to pay rent and the risk of tenant bankruptcies;
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; impairment in the value
of real estate property the Company owns; risks related to the
geographical concentration of our properties in Indiana, Florida and
Texas; and other factors affecting the real estate industry generally.
The Company refers you 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, 2009, 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 |
| Condensed Consolidated Balance Sheets |
| (Unaudited) |
|
| | | | |
| | June 30,
2010 | | December 31,
2009 | |
| Assets: | | | | | | | |
|
Investment properties, at cost:
| | | | | | | |
|
Land
| |
$
|
226,094,850
| |
$
|
226,506,781
| |
|
Land held for development
| | |
27,546,315
| | |
27,546,315
| |
|
Buildings and improvements
| | |
749,417,510
| | |
736,027,845
| |
|
Furniture, equipment and other
| | |
5,139,396
| | |
5,060,233
| |
|
Construction in progress
| | |
180,889,327
| | |
176,689,227
| |
| | |
1,189,087,398
| | |
1,171,830,401
| |
|
Less: accumulated depreciation
| | |
(142,426,340
|
)
| |
(127,031,144
|
)
|
| | |
1,046,661,058
| | |
1,044,799,257
| |
|
Cash and cash equivalents
| | |
10,380,923
| | |
19,958,376
| |
|
Tenant receivables, including accrued straight-line rent of
$8,806,470 and $8,570,069, respectively, net of allowance for
uncollectible accounts
| | |
16,793,319
| | |
18,537,031
| |
|
Other receivables
| | |
6,769,776
| | |
9,326,475
| |
|
Investments in unconsolidated entities, at equity
| | |
10,702,401
| | |
10,799,782
| |
|
Escrow deposits
| | |
13,872,370
| | |
11,377,408
| |
|
Deferred costs, net
| | |
21,164,713
| | |
21,509,070
| |
|
Prepaid and other assets
| | |
4,969,800
| | |
4,378,045
| |
| Total Assets | |
$
|
1,131,314,360
| |
$
|
1,140,685,444
| |
| | | | | | |
|
| Liabilities and Equity: | | | | | | | |
|
Mortgage and other indebtedness
| |
$
|
662,399,569
| |
$
|
658,294,513
| |
|
Accounts payable and accrued expenses
| | |
36,397,129
| | |
32,799,351
| |
|
Deferred revenue and other liabilities
| | |
16,468,913
| | |
19,835,438
| |
| Total Liabilities | | |
715,265,611
| | |
710,929,302
| |
|
Commitments and contingencies
| | | | | | | |
|
Redeemable noncontrolling interests in the Operating Partnership
| | |
45,785,248
| | |
47,307,115
| |
| 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
63,212,015 shares and 63,062,083 shares issued and outstanding at
June 30, 2010 and
December 31, 2009, respectively
| | |
632,120
| | |
630,621
| |
|
Additional paid in capital
| | |
450,241,522
| | |
449,863,390
| |
|
Accumulated other comprehensive loss
| | |
(5,376,956
|
)
| |
(5,802,406
|
)
|
|
Accumulated deficit
| | |
(82,294,258
|
)
| |
(69,613,763
|
)
|
| Total Kite Realty Group Trust Shareholders’ Equity | | |
363,202,428
| | |
375,077,842
| |
| Noncontrolling Interests | | |
7,061,073
| | |
7,371,185
| |
| Total Equity | | |
370,263,501
| | |
382,449,027
| |
| Total Liabilities and Equity | |
$
|
1,131,314,360
| |
$
|
1,140,685,444
| |
| | | | | | |
|
| Kite Realty Group Trust |
| Condensed Consolidated Statements of Operations |
| For the Three and Six Months Ended June 30, 2010 and 2009 |
| (Unaudited) |
|
|
| Three Months Ended June 30, | | Six Months Ended June 30, | |
| 2010 | | 2009 | | 2010 | | 2009 | |
| Revenue: | | | | | | | | | | | | |
|
Minimum rent
|
$
|
17,741,385
| |
$
|
17,900,174
| |
$
|
35,476,596
| |
$
|
35,834,674
| |
|
Tenant reimbursements
| |
4,259,847
| | |
4,654,376
| | |
9,101,108
| | |
9,192,463
| |
|
Other property related revenue
| |
849,036
| | |
1,770,070
| | |
1,948,848
| | |
3,360,074
| |
|
Construction and service fee revenue
| |
1,950,848
| | |
5,762,463
| | |
3,830,198
| | |
11,911,458
| |
| Total revenue | |
24,801,116
| | |
30,087,083
| | |
50,356,750
| | |
60,298,669
| |
| Expenses: | | | | | | | | | | | | |
|
Property operating
| |
3,733,851
| | |
3,880,359
| | |
8,308,203
| | |
9,156,072
| |
|
Real estate taxes
| |
3,163,086
| | |
3,544,973
| | |
6,539,400
| | |
6,280,623
| |
|
Cost of construction and services
| |
1,637,383
| | |
5,017,734
| | |
3,395,701
| | |
10,577,050
| |
|
General, administrative, and other
| |
1,254,792
| | |
1,545,964
| | |
2,630,762
| | |
2,889,044
| |
|
Depreciation and amortization
| |
12,165,390
| | |
8,678,413
| | |
20,710,245
| | |
16,139,475
| |
| Total expenses | |
21,954,502
| | |
22,667,443
| | |
41,584,311
| | |
45,042,264
| |
| Operating income | |
2,846,614
| | |
7,419,640
| | |
8,772,439
| | |
15,256,405
| |
|
Interest expense
| |
(7,237,738
|
)
| |
(6,991,624
|
)
| |
(14,334,601
|
)
| |
(13,768,132
|
)
|
|
Income tax expense of taxable REIT subsidiary
| |
(127,264
|
)
| |
(13,233
|
)
| |
(153,100
|
)
| |
(51,185
|
)
|
|
(Loss) income from unconsolidated entities
| |
(98,595
|
)
| |
121,017
| | |
(98,595
|
)
| |
152,517
| |
|
Other income
| |
66,810
| | |
35,622
| | |
132,560
| | |
84,506
| |
| (Loss) income from continuing operations | |
(4,550,173
|
)
| |
571,422
| | |
(5,681,297
|
)
| |
1,674,111
| |
|
Loss from discontinued operations
| |
—
| | |
(266,035
|
)
| |
—
| | |
(482,746
|
)
|
| Consolidated net (loss) income | |
(4,550,173
|
)
| |
305,387
| | |
(5,681,297
|
)
| |
1,191,365
| |
|
Net loss (income) attributable to noncontrolling interests
| |
529,618
| | |
(48,302
|
)
| |
586,062
| | |
(233,038
|
)
|
| Net (loss) income attributable to Kite Realty Group Trust |
$
|
(4,020,555
|
)
|
$
|
257,085
| |
$
|
(5,095,235
|
)
|
$
|
958,327
| |
| | | | | | | | | | | |
|
| (Loss) income per common share – basic and diluted | | | | | | | | | | | | |
|
(Loss) income from continuing operations attributable to Kite Realty
Group Trust common shareholders
|
$
|
(0.06
|
)
|
$
|
0.01
| |
$
|
(0.08
|
)
|
$
|
0.03
| |
|
Loss from discontinued operations attributable to Kite Realty Group
Trust common shareholders
| |
—
| | |
—
| | |
—
| | |
(0.01
|
)
|
|
Net (loss) income attributable to Kite Realty Group Trust common
shareholders
|
$
|
(0.06
|
)
|
$
|
0.01
| |
$
|
(0.08
|
)
|
$
|
0.02
| |
| | | | | | | | | | | |
|
| Weighted average common shares outstanding - basic | |
63,209,194
| | |
47,988,205
| | |
63,165,588
| | |
41,124,387
| |
| Weighted average common shares outstanding - diluted | |
63,209,194
| | |
48,081,453
| | |
63,165,588
| | |
41,198,377
| |
| Dividends declared per common share |
$
|
0.0600
| |
$
|
0.0600
| |
$
|
0.1200
| |
$
|
0.2125
| |
| | | | | | | | | | | |
|
| Net (loss) income attributable to Kite Realty Group Trust common
shareholders: | | | | | | | | | | | | |
| (Loss) income from continuing operations |
$
|
(4,020,555
|
)
|
$
|
485,607
| |
$
|
(5,095,235
|
)
|
$
|
1,362,385
| |
| Discontinued operations | |
—
| | |
(228,522
|
)
| |
—
| | |
(404,058
|
)
|
| Net (loss) income attributable to Kite Realty Group Trust |
$
|
(4,020,555
|
)
|
$
|
257,085
| |
$
|
(5,095,235
|
)
|
$
|
958,327
| |
| | | | | | | | | | | |
|
| Kite Realty Group Trust |
| Funds From Operations |
| For the Three and Six Months Ended June 30, 2010 and 2009 |
| (Unaudited) |
|
|
| Three Months Ended June 30, | | Six Months Ended June 30, | |
| 2010 | | 2009 | | 2010 | | 2009 | |
|
Consolidated net (loss) income
|
$
|
(4,550,173
|
)
|
$
|
305,387
| |
$
|
(5,681,297
|
)
|
$
|
1,191,365
| |
|
Less net (loss) income attributable to noncontrolling interests in
properties
| |
24,563
| | |
(26,228
|
)
| |
(54,526
|
)
| |
(46,475
|
)
|
|
Add depreciation and amortization of consolidated entities, net of
noncontrolling interests
| |
12,004,739
| | |
8,586,847
| | |
20,327,252
| | |
15,967,091
| |
|
Add depreciation and amortization of unconsolidated entities
| |
41,359
| | |
52,690
| | |
41,359
| | |
104,826
| |
|
Funds From Operations of the Kite Portfolio1 | |
7,520,488
| | |
8,918,696
| | |
14,632,788
| | |
17,216,807
| |
|
Less redeemable noncontrolling interests in Funds From Operations
| |
(842,294
|
)
| |
(1,277,482
|
)
| |
(1,638,872
|
)
| |
(2,854,123
|
)
|
|
Funds From Operations allocable to the Company1 |
$
|
6,678,194
| |
$
|
7,641,214
| |
$
|
12,993,916
| |
$
|
14,362,684
| |
| | | | | | | | | | | |
|
|
Basic and Diluted FFO per share of the Kite Portfolio
|
$
|
0.11
| |
$
|
0.15
| |
$
|
0.21
| |
$
|
0.35
| |
| | | | | | | | | | | |
|
|
Basic weighted average Common Shares outstanding
| |
63,209,194
| | |
47,988,205
| | |
63,165,588
| | |
41,124,387
| |
|
Diluted weighted average Common Shares outstanding
| |
63,476,111
| | |
48,081,453
| | |
63,396,648
| | |
41,198,377
| |
|
Basic weighted average Common Shares and Units outstanding
| |
71,178,077
| | |
56,040,684
| | |
71,137,042
| | |
49,176,866
| |
|
Diluted weighted average Common Shares and Units outstanding
| |
71,444,993
| | |
56,133,932
| | |
71,368,102
| | |
49,250,856
| |
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1
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“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 redeemable noncontrolling
weighted average diluted interest in the Operating Partnership.
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Source: Kite Realty Group Trust
Contact:
Kite Realty Group Trust
Dan Sink, Chief Financial Officer,
317-577-5609
dsink@kiterealty.com
or
Adam
Chavers, Vice President of Investor Relations, 317-713-5684
achavers@kiterealty.com