Highlights
- Funds From Operations (“FFO”) as adjusted was $0.11 per diluted
common share for the first quarter of 2012 excluding a litigation
charge. Including the charge, FFO was $0.09 per diluted common share.
- Same Property Net Operating Income for the first quarter of 2012
increased 5.4% over the prior year.
- Revenue from property operations increased 9.8% in the first
quarter over the prior year.
- Closed on the sale of land to Target at New Hill Place Phase I in
Raleigh, North Carolina.
- Closed on the sale of Gateway Shopping Center in Marysville,
Washington for a sales price of $29.4 million and a net gain of $3.1
million (Company share).
- Issued 1.3 million shares of 8.25% Series A Cumulative Redeemable
Perpetual Preferred Stock for net proceeds of $31.3 million.
- Subsequent to the end of the quarter, the Company closed on a $115
million, seven-year term loan with an interest rate ranging from LIBOR
plus 210 to 310 basis points.
- Subsequent to the end of the quarter, the Company amended and
restated its $200 million unsecured revolving credit facility
including reducing the interest rate by 35 basis points.
INDIANAPOLIS--(BUSINESS WIRE)--
Kite Realty Group Trust (NYSE: KRG) (the “Company”) today announced
results for its first quarter ended March 31, 2012. Financial statements
and exhibits attached to this release include results for the three
months ended March 31, 2012 and 2011.
Financial and Operating Results
For the three months ended March 31, 2012, funds from operations, a
widely accepted supplemental measure of REIT performance established by
the National Association of Real Estate Investment Trusts, was $7.9
million or $0.11 per diluted common share for the Kite Portfolio, as
adjusted for a litigation charge, compared to $6.9 million, or $0.10 per
diluted common share, for the same period in the prior year. Including
the effect of this charge, FFO for the Kite Portfolio was $6.6 million,
or $0.09 per diluted share. The Company’s allocable share of FFO was
$7.0 million excluding the litigation charge, or $5.9 million including
the charge, for the three months ended March 31, 2012 compared to $6.1
million for the same period in 2011.
The Company was a claimant in a matter of arbitration resulting from a
lawsuit with a former tenant of one of its operating properties. On
March 29, 2012, the Company received a notice of an arbitration order
which awarded to the tenant damages plus estimated attorneys’ fees and
costs. The Company has accrued a $1.3 million charge in the first
quarter 2012 statement of operations and balance sheet.
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 or loss that do not relate to or are not
indicative of operating performance, such as gains or losses from sales
and impairments of operating properties, and depreciation and
amortization, which can make periodic and peer analyses of operating
performance more difficult. For informational purposes, we have also
provided FFO adjusted for the litigation charge recorded in the first
quarter of 2012. We believe this supplemental information provides a
meaningful measure of our operating performance. 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. A reconciliation of net income to FFO is included in the
attached table.
Net loss attributable to common shareholders was $31 thousand for the
first quarter of 2012 compared to a net loss in the first quarter of
2011 of $2.2 million. The change between years is primarily attributable
to the Company’s $3.1 million share of a $5.2 million total gain on the
2012 sale of Gateway Shopping Center in Marysville, Washington partially
offset by the litigation charge of $1.3 million. The Company’s total
revenue for the first quarter of 2012 was $26.4 million, an increase of
10.9% over the $23.8 million reported for the same period in 2011. This
increase is due to an improvement in revenue from recurring property
operations of $2.2 million, or 9.8%, as a result of improved occupancy
levels and development projects moving into the operating portfolio in
the fourth quarter of 2011.
John A. Kite, Kite Realty Group’s Chairman and Chief Executive Officer,
said "We utilized a combination of the capital markets and capital
recycling activity to increase overall liquidity and financial
flexibility. We also continued to see strong fundamentals resulting in
revenue growth of approximately 10% from property operations.”
Operating Portfolio
As of March 31, 2012, the Company owned interests in 53 retail operating
properties totaling approximately 8.1 million square feet. The owned
gross leasable area (“GLA”) in the Company’s retail operating portfolio
was 93.4% leased as of March 31, 2012, compared to 92.3% leased as of
March 31, 2011.
In addition, the Company owns four operating commercial properties
totaling 583,600 square feet. As of March 31, 2012, the owned net
rentable area of the commercial operating portfolio was 93.4% leased.
The combined leased percentage for the retail and commercial operating
portfolios was also 93.4% as of March 31, 2012.
On a comparable same property basis, the leased percentage of 52 same
store operating properties increased 0.6% to 93.1% at March 31, 2012
from 92.5% at March 31, 2011. Same property net operating income for
these properties increased 5.4% in the first quarter of 2012 compared to
the same period in the prior year.
Leasing Activities
During the first quarter of 2012, the Company executed 27 new and
renewal leases totaling approximately 88,000 square feet with aggregate
cash rent spreads of 7.2%. New leases were signed with 14 tenants for
approximately 45,500 square feet of GLA. These leases represent a 13.5%
positive cash rent spread. A total of 13 leases for 42,500 square feet
were renewed during the quarter with a 0.4% positive cash rent spread.
Also during the quarter, 11 new tenants commenced paying rent, including
anchor tenants Whole Foods at Cobblestone Plaza, Toys “R” Us at Cedar
Hill Plaza, and an expanded BGI Fitness at Rivers Edge.
Development Activities
As of March 31, 2012, the Company owned interests in five in-process
development/redevelopment projects. The total estimated cost of these
projects is approximately $183.7 million, of which approximately $89.1
million was incurred as of March 31, 2012. The average percent leased or
committed of these projects was 77%. During the quarter, the Company
sold a parcel of land to, and entered into a site development agreement
with Target at New Hill Place, Phase I in Raleigh, North Carolina.
Dispositions
In February, the Company sold Gateway Shopping Center in Marysville,
Washington for a sales price of $29.4 million. The net proceeds were
utilized to retire a variable-rate loan of $20.4 million and the
Company’s share of the remaining proceeds was approximately $7 million.
Capital Markets/Financing Activities
During the first quarter and through the date of this release, the
Company completed the following financing activities:
-
Issued 1.3 million shares of its 8.25% Series A Cumulative Redeemable
Perpetual Preferred Stock. The total net proceeds from the offering
were $31.3 million and were initially used to pay down the Company’s
unsecured revolving credit facility.
-
Retired the $24.7 million, 7.38% fixed-rate mortgage secured by Plaza
at Cedar Hill in January.
-
Subsequent to the end of the quarter, closed on a $115 million
unsecured term loan. This loan has a seven-year term, an interest rate
of LIBOR plus 210 to 310 basis points, and a maturity date of April
30, 2019. The Company intends to expand the loan by an additional $10
million in the second quarter. Upon completion of the term loan, the
Company’s debt maturities total $0, $40 million, $48 million, and $42
million for the years 2012 – 2015.
-
Also subsequent to the end of the quarter, the maturity date of the
Company’s revolving credit facility was extended to April 30, 2016 and
the interest rate was reduced to LIBOR plus 190 to 290 basis points,
depending on the Company’s leverage. The Company has an option to
extend the maturity date to April 30, 2017.
Distributions
On March 20, 2012, the Board of Trustees declared a quarterly common
share cash distribution of $0.06 per common share for the quarter ended
March 31, 2012 payable to shareholders of record as of April 5, 2012.
This distribution was paid on April 13, 2012. The Board of Trustees
anticipates declaring a quarterly common share cash distribution for the
quarter ending June 30, 2012 later in the second quarter.
2012 Earnings Guidance
The Company is reaffirming its FFO as adjusted guidance for the year
ended December 31, 2012 to be within a range of $0.42 to $0.46 per
diluted common share. Following is a reconciliation of estimated net
loss per common share to estimated FFO per diluted share and FFO per
diluted common share, excluding the first quarter litigation charge:
| Guidance Range for 2012
|
|
| Low |
|
| High |
| | | | | | | | | |
|
|
Estimated net loss per diluted common share
| | |
$
|
(0.09
|
)
| | |
$
|
(0.05
|
)
|
|
Depreciation and amortization
| | |
|
0.49
|
|
|
|
|
0.49
|
|
|
FFO per diluted common share
| | | |
0.40
| | | | |
0.44
| |
|
Litigation charge
| | |
|
0.02
|
|
|
|
|
0.02
|
|
|
Estimated FFO per diluted common share, as adjusted
| | |
$
|
0.42
|
|
|
|
$
|
0.46
|
|
| | | | | | | | | |
|
Earnings Conference Call
The Company will conduct a conference call to discuss its financial
results on Friday, May 4th at 11:00 a.m. eastern time. A live webcast of
the conference call will be available online on the Company’s website at www.kiterealty.com.
The dial-in numbers are (866) 831-6267 for domestic callers and (617)
213-8857 for international callers (passcode 40421484). In addition, a
telephonic replay of the call will be available until August 4, 2012.
The replay dial-in telephone numbers are (888) 286-8010 for domestic
callers and (617) 801-6888 for international callers (passcode 48897971).
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, redevelopment and development of
neighborhood and community shopping centers in selected markets in the
United States. At March 31, 2012, the Company owned interests in a
portfolio of 62 operating and redevelopment properties totaling
approximately 9.2 million square feet and an additional three properties
currently under development totaling 0.6 million square feet.
Safe Harbor
This press release contains certain 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 recent slowing of growth in the U.S. economy; 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 to the
documents filed by the Company from time to time with the Securities and
Exchange Commission, specifically the section titled “Risk Factors” in
the Company’s Annual Report on Form 10-K for the year ended December 31,
2011, 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) |
|
| | | | |
| | March 31,
2012 | | December 31,
2011 | |
| Assets: | | | | | | | |
|
Investment properties, at cost:
| | | | | | | |
|
Land
| |
$
|
235,498,319
| |
$
|
238,129,092
| |
|
Land held for development
| | |
36,977,501
| | |
36,977,501
| |
|
Buildings and improvements
| | |
845,504,016
| | |
845,173,680
| |
|
Furniture, equipment and other
| | |
4,694,678
| | |
5,474,403
| |
|
Construction in progress
| | |
137,905,366
| | |
147,973,380
| |
| | |
1,260,579,880
| | |
1,273,728,056
| |
|
Less: accumulated depreciation
| | |
(184,132,595
|
)
| |
(178,006,632
|
)
|
| | |
1,076,447,285
| | |
1,095,721,424
| |
|
Cash and cash equivalents
| | |
15,567,494
| | |
10,042,450
| |
|
Tenant receivables, including accrued straight-line rent of
$11,407,396 and $11,398,347, respectively, net of allowance for
uncollectible accounts
| | |
19,405,296
| | |
20,413,671
| |
|
Other receivables
| | |
3,017,991
| | |
2,978,225
| |
|
Investments in unconsolidated entities, at equity
| | |
21,899,913
| | |
21,646,443
| |
|
Escrow deposits
| | |
8,662,836
| | |
9,424,986
| |
|
Deferred costs, net
| | |
30,567,339
| | |
31,079,129
| |
|
Prepaid and other assets
| | |
2,144,204
| | |
1,959,790
| |
| Total Assets | |
$
|
1,177,712,358
| |
$
|
1,193,266,118
| |
| | | | | | |
|
| Liabilities and Equity: | | | | | | | |
|
Mortgage and other indebtedness
| |
$
|
646,405,137
| |
$
|
689,122,933
| |
|
Accounts payable and accrued expenses
| | |
35,712,817
| | |
36,048,324
| |
|
Deferred revenue and other liabilities, including below-market
in-place lease liability of $8,183,021, and $8,637,607, respectively
| | |
12,025,878
| | |
12,636,228
| |
| Total Liabilities | | |
694,143,832
| | |
737,807,485
| |
|
Commitments and contingencies
| | | | | | | |
|
Redeemable noncontrolling interests in the Operating Partnership | | |
41,066,685
| | |
41,836,613
| |
| Equity: | | | | | | | |
| Kite Realty Group Trust Shareholders’ Equity: | | | | | | | |
|
Preferred Shares, $.01 par value, 40,000,000 shares authorized,
4,100,000 shares and 2,800,000 shares issued and outstanding at
March 31, 2012 and December 31, 2011, respectively
| | |
102,500,000
| | |
70,000,000
| |
|
Common Shares, $.01 par value, 200,000,000 shares authorized
63,946,703 shares and 63,617,019 shares issued and outstanding,
respectively
| | |
639,467
| | |
636,170
| |
|
Additional paid in capital
| | |
449,392,926
| | |
449,763,528
| |
|
Accumulated other comprehensive loss
| | |
(1,439,098
|
)
| |
(1,524,095
|
)
|
|
Accumulated deficit
| | |
(113,374,752
|
)
| |
(109,504,068
|
)
|
| Total Kite Realty Group Trust Shareholders’ Equity | | |
437,718,543
| | |
409,371,535
| |
| Noncontrolling Interests | | |
4,783,298
| | |
4,250,485
| |
| Total Equity | | |
442,501,841
| | |
413,662,020
| |
| Total Liabilities and Equity | |
$
|
1,177,712,358
| |
$
|
1,193,266,118
| |
| | | | | | |
|
Kite Realty Group Trust
Consolidated Statements of
Operations
For the Three Months Ended March 31, 2012
and 2011
(Unaudited) |
|
| | |
| | Three Months Ended March 31, | |
| | 2012 | |
| 2011 | |
| Revenue: | | | | | | | | |
|
Minimum rent
| |
$
|
19,692,138
| | |
$
|
17,802,124
| |
|
Tenant reimbursements
| | |
5,437,829
| | | |
5,090,031
| |
|
Other property related revenue
| | |
1,224,624
| | | |
888,532
| |
|
Construction and service fee revenue
| | |
43,403
| | | |
10,038
| |
| Total revenue | | |
26,397,994
| | | |
23,790,725
| |
| Expenses: | | | | | | | | |
|
Property operating
| | |
4,667,283
| | | |
4,806,268
| |
|
Real estate taxes
| | |
3,788,470
| | | |
3,265,453
| |
|
Cost of construction and services
| | |
92,348
| | | |
49,913
| |
|
General, administrative, and other
| | |
1,823,720
| | | |
1,847,878
| |
|
Litigation charge
| | |
1,289,446
| | | |
—
| |
|
Depreciation and amortization
| | |
9,728,392
| | | |
9,000,842
| |
| Total expenses | | |
21,389,659
| | | |
18,970,354
| |
| Operating income | | |
5,008,335
| | | |
4,820,371
| |
|
Interest expense
| | |
(6,604,828
|
)
| | |
(5,641,162
|
)
|
|
Income tax (expense)/benefit of taxable REIT subsidiary
| | |
(37,564
|
)
| | |
16,073
| |
|
Loss from unconsolidated entities
| | |
(11,529
|
)
| | |
(87,625
|
)
|
|
Other income
| | |
38,128
| | | |
49,038
| |
| Loss from continuing operations | | |
(1,607,458
|
)
| | |
(843,305
|
)
|
| Discontinued operations: | | | | | | | | |
|
Income from operations
| | |
99,228
| | | |
65,994
| |
|
Gain on sale of depreciable property
| | |
5,151,989
| | | |
—
| |
| Income from discontinued operations | | |
5,251,217
| | | |
65,994
| |
| Consolidated net income/(loss) | | |
3,643,759
| | | |
(777,311
|
)
|
|
Net (income)/loss attributable to noncontrolling interests
| | |
(2,097,020
|
)
| | |
70,494
| |
| Net income (loss) attributable to Kite Realty Group Trust | | |
1,546,739
| | | |
(706,817
|
)
|
|
Dividends on preferred shares
| | |
(1,577,813
|
)
| | |
(1,443,750
|
)
|
| Net loss attributable to common shareholders | |
$
|
(31,074
|
)
| |
$
|
(2,150,567
|
)
|
| | | | | | | |
|
| Net loss per common share attributable to Kite Realty Group Trust
common shareholders – basic and diluted | | | | | | | | |
|
Loss from continuing operations attributable to common shareholders
| |
$
|
(0.04
|
)
| |
$
|
(0.03
|
)
|
|
Income from discontinued operations attributable to common
shareholders
| | |
0.04
| | | |
0.00
| |
|
Net loss attributable to common shareholders
| |
$
|
(0.00
|
)
| |
$
|
(0.03
|
)
|
| | | | | | | |
|
| Weighted average common shares outstanding – basic and diluted | | |
63,713,893
| | | |
63,448,048
| |
| Dividends declared per common share | |
$
|
0.06
| | |
$
|
0.06
| |
| | | | | | | |
|
| Loss attributable to Kite Realty Group Trust common shareholders: | | | | | | | | |
| Loss from continuing operations | |
$
|
(2,852,020
|
)
| |
$
|
(2,209,321
|
)
|
| Income from discontinued operations | | |
2,820,946
| | | |
58,754
| |
| Net loss attributable to Kite Realty Group Trust common
shareholders | |
$
|
(31,074
|
)
| |
$
|
(2,150,567
|
)
|
| | | | | | | |
|
Kite Realty Group Trust
Funds From Operations
For
the Three Months Ended March 31, 2012 and 2011
(Unaudited) |
|
| | |
| | Three Months Ended March 31, | |
| | 2012 | |
| 2011 | |
|
Consolidated net income / (loss)
| |
$
|
3,643,759
| | |
$
|
(777,311
|
)
|
|
Less dividends on preferred shares
| | |
(1,577,813
|
)
| | |
(1,443,750
|
)
|
|
Less net income attributable to noncontrolling interests in
properties
| | |
(26,770
|
)
| | |
(16,586
|
)
|
|
Less gain on sale of operating property
| | |
(5,151,989
|
)
| | |
—
| |
|
Add depreciation and amortization, net of noncontrolling interests
| | |
9,717,308
| | | |
9,097,586
| |
|
Funds From Operations of the Kite Portfolio1 | | |
6,604,495
| | | |
6,859,939
| |
|
Less redeemable noncontrolling interests in Funds From Operations
| | |
(726,494
|
)
| | |
(754,593
|
)
|
|
Funds From Operations allocable to the Company1 | |
$
|
5,878,001
| | |
$
|
6,105,346
| |
| | | | | | | |
|
| Basic and Diluted FFO per share of the Kite Portfolio
| |
$
|
0.09
| | |
$
|
0.10
| |
| | | | | | | |
|
|
Funds From Operations of the Kite Portfolio
| |
$
|
6,604,495
| | |
$
|
6,859,939
| |
|
Add back: Litigation charge
| | |
1,289,446
| | | |
—
| |
|
Funds From Operations of the Kite Portfolio, as adjusted
| |
$
|
7,893,941
| | |
$
|
6,859,939
| |
| | | | | | | |
|
| Basic and Diluted FFO per share of the Kite Portfolio, as adjusted
| |
$
|
0.11
| | |
$
|
0.10
| |
| | | | | | | |
|
| Basic weighted average Common Shares outstanding
| | |
63,713,893
| | | |
63,448,048
| |
|
Diluted weighted average Common Shares outstanding
| | |
64,053,794
| | | |
63,763,668
| |
| Basic weighted average Common Shares and Units outstanding
| | |
71,553,941
| | | |
71,303,746
| |
|
Diluted weighted average Common Shares and Units outstanding
| | |
71,893,841
| | | |
71,619,366
| |
| | | | | | | |
|
|
____________________
|
|
1
|
|
“Funds From Operations of the Operating Partnership” measures 100%
of the operating performance of the Operating Partnership’s real
estate properties 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.
|
| |
|
Kite Realty Group Trust
Same Property Net Operating
Income
For the Three Months Ended March 31, 2012 and
2011
(Unaudited) |
|
| | |
| | Three Months Ended March 31, | |
| | 2012 | |
| 2011 | | % Change | |
|
Number of properties at period end1 | | |
52
| | | |
52
| | | |
| | | | | | | | | |
|
|
Leased percentage at period-end
| | |
93.1%
| | | |
92.5%
| | | |
| | | | | | | | | |
|
|
Minimum rent
| |
$
|
16,152,265
| | |
$
|
15,873,878
| | | |
|
Tenant recoveries
| | |
4,233,286
| | | |
4,398,449
| | | |
|
Other income
| | |
681,125
| | | |
492,118
| | | |
| | |
21,066,676
| | | |
20,764,445
| | | |
| | | | | | | | | |
|
|
Property operating expenses
| | |
4,175,912
| | | |
4,742,098
| | | |
|
Real estate taxes
| | |
2,886,985
| | | |
2,732,773
| | | |
| | |
7,062,897
| | | |
7,474,871
| | | |
| | | | | | | | | |
|
| Net operating income – same properties (52 properties)2 | | | 14,003,779 | | | | 13,289,574 | | 5.4 | % |
| | | | | | | | | |
|
| Reconciliation to Most Directly Comparable GAAP Measure: | | | | | | | | | | |
| | | | | | | | | |
|
|
Net operating income – same properties
| |
$
|
14,003,779
| | |
$
|
13,289,574
| | | |
|
Other income (expense), net
| | |
(12,457,040
|
)
| | |
(13,996,391
|
)
| | |
|
Dividends on preferred shares
| | |
(1,577,813
|
)
| | |
(1,443,750
|
)
| | |
|
Net loss attributable to common shareholders
| |
$
|
(31,074
|
)
| |
$
|
(2,150,567
|
)
| | |
| | | | | | | | | |
|
|
____________________
|
|
1
|
|
Same Property analysis excludes Courthouse Shadows, The Centre, Four
Corner Square and Bolton Plaza properties as the Company pursues
redevelopment of these properties.
|
| |
|
|
2
| |
Same Property net operating income is considered a non-GAAP measure
because it excludes net gains from outlot sales, write offs of
straight-line rent and lease intangibles, bad debt expense and
related recoveries, the litigation charge, lease termination fees
and significant prior year expense recoveries and adjustments, if
any.
|
| |
|
The Company believes that Net Operating Income (“NOI”) is helpful to
investors as a measure of its operating performance because it excludes
various items included in net income that do not relate to or are not
indicative of its operating performance, such as depreciation and
amortization, interest expense, and impairment, if any. The Company
believes that Same Property NOI is helpful to investors as a measure of
its operating performance because it includes only the NOI of properties
that have been owned for the full period presented, which eliminates
disparities in net income due to the redevelopment, acquisition or
disposition of properties during the particular period presented, and
thus provides a more consistent metric for the comparison of the
Company's properties. Same Property NOI should not, however, be
considered as alternatives to net income (calculated in accordance with
GAAP) as indicators of the Company's financial performance.
Kite Realty Group Trust
Dan Sink, Chief Financial Officer,
317-577-5609
dsink@kiterealty.com
or
Investors/Media:
David
Buell, Manager, Financial Reporting, 317-713-5647
dbuell@kiterealty.com
Source: Kite Realty Group Trust