INDIANAPOLIS--(BUSINESS WIRE)--
Kite Realty Group Trust (NYSE: KRG) (the “Company”) announced today
operating results for the first quarter ended March 31, 2015. Financial
statements and exhibits attached to this release include the details of
these results.
“We kicked off 2015 with another strong quarter of operating
performance, balance sheet management and follow-through execution,”
said John A. Kite, Chairman and CEO.“We continued to grow
FFO and our free cash flow while also reporting solid same-property NOI
growth.The quarter’s results are a testament to our
portfolio’s strength, our operating expertise and our team’s ability to
execute and seamlessly integrate new, high-growth assets.Our
investment grade balance sheet and upgraded operating systems remained
core to our overall strategy.We are energized and excited
about the future.”
First Quarter Highlights
-
Generated FFO, as adjusted, of $42.3 million, or $0.50 per diluted
common share, for the first quarter.
-
Adjusted Funds From Operations (“AFFO”) growth of 13% year-over-year
from $0.39 to $0.44 per diluted common share.
-
Same-property net operating income (“NOI”) growth of 4.4%
year-over-year.
-
Aggregate cash rent spread of 9.0%.
-
Closed final tranche of previously announced 15-asset disposition for
gross proceeds of $167 million.
-
Completed development project at Phase I of Parkside Town Commons in
Raleigh, North Carolina, and moved property to the operating portfolio.
-
On April 1, acquired Colleyville Downs, a 201,000 square foot Whole
Foods-anchored shopping center located in the Dallas MSA.
First Quarter Financial Results
FFO, as adjusted, for the three months ended March 31, 2015, was $42.3
million, or $0.50 per diluted common share, for real estate properties
in which the Company’s operating subsidiaries own an interest (to which
we refer to as “Kite Portfolio”), compared to $17.5 million, or $0.51
per diluted common share, for the same period in the prior year.
The reduction in FFO per diluted common share was primarily driven by
the 15-asset disposition completed in two tranches, closing in December
2014 and March 2015.
Reported FFO, as defined by NAREIT, was $42.1 million, or $0.49 per
diluted common share, for the Kite Portfolio, compared to $13.0 million,
or $0.38 per diluted common share, for the same period in the prior year.
Net income attributable to common shareholders for the three months
ended March 31, 2015, was $5.1 million compared to a net income of $2.2
million for the same period in 2014.
Portfolio Activity During The First Quarter
Development and Redevelopment
The first phase of Parkside Town Commons, which is anchored by Target
and Harris Teeter, was moved into operations in the first quarter. The
remaining development projects include Phase II of Parkside Town
Commons, Phase II of Holly Springs, and Tamiami Crossing. These three
projects were in the aggregate 79% pre-leased or committed as of March
31, 2015, with a total estimated cost of approximately $164.5 million,
of which approximately $110.7 million had been incurred as of March 31,
2015.
As of the first quarter, the primary anchors were both open at the
redevelopment project at Gainesville Plaza in Gainesville, Florida. This
project consists of 164,665 square feet, of which 81.6% is open,
pre-leased or committed as of March 31, 2015, and is anchored by
Burlington Coat Factory and Ross Dress for Less, which opened in March.
Dispositions
On September 16, 2014, the Company announced it had entered into a
definitive agreement to sell 15 operating properties. The sale closed in
two tranches, the first in December 2014 and the second in March 2015.
As a result of these sales, the Company exited four states in which it
did not have future growth plans. The second tranche included 7 non-core
assets and resulted in gross proceeds of approximately $167 million, or
net proceeds of $103 million.
Acquisitions
On April 2, 2015, the Company announced it had closed on the acquisition
of Colleyville Downs, a 201,000 square foot shopping center located in
the MSA of Dallas, Texas. The center is 92% leased and anchored by
Petco, Ace Hardware, and a newly constructed Whole Foods Market that
opened in 2014.
Portfolio Operations
As of March 31, 2015, the Company owned interests in 117 operating
properties totaling approximately 23.3 million square feet. The owned
GLA in the Company’s retail operating portfolio was 94.9% leased as of
March 31, 2015, and the Company’s overall portfolio was 94.8% leased,
excluding ground leases and non-owned anchors.
Same-property net operating income, which includes 64 operating
properties, increased 4.4% in the first quarter of 2015 compared to the
same period in the prior year. The leased percentage of these properties
was 95.1% at March 31, 2015, compared to 95.3% at March 31, 2014, and
the economic occupancy increased to 92.9% in the first quarter from
91.5% at March 31, 2014.
The Company executed 77 leases totaling 377,470 square feet during the
first quarter of 2015. There were 52 comparable new and renewal leases
executed during the quarter for 275,949 owned square feet. Cash spreads
on new leases executed in the quarter were up 18.4%, while cash spreads
on renewals were up 7.1%, for a blended spread of 9.0%.
2015 Earnings Guidance
The Company is updating its guidance for FFO, as adjusted, for the year
ending December 31, 2015, to be between $1.93 to $2.00 per diluted
common share from $1.90 to $2.00 per diluted common share and for net
income to be within a range of $0.17 to $0.24 per diluted common share.
While other factors may impact FFO and net income, the Company’s 2015
guidance is being updated based on the following assumptions:
-
An increase of 3.0% to 3.5% in same-property NOI compared to the prior
year from the initial guidance range of 2.5% to 3.5%;
-
An increase in acquisition assumptions to $125 million from $80
million.
The Company’s 2015 guidance is based on a number of other factors, many
of which are outside the Company’s control and all of which are subject
to change. The Company may change its guidance during the year if actual
and anticipated results vary from these assumptions.
Following is a reconciliation of the range of 2015 estimated net income
per diluted common share to estimated FFO per diluted common share:
| Updated Guidance Range for Full Year 2015 |
|
| Low |
| High |
| | | |
|
|
Consolidated net income per diluted common share
| | $0.17 | | $0.24 |
|
Less: Dividends on preferred shares
| |
(0.10)
| |
(0.10)
|
|
Add: Depreciation, amortization and other
| |
1.89
| |
1.89
|
|
Less: Gain on sale of operating property
| |
(0.03)
|
|
(0.03)
|
| FFO, as adjusted, per diluted common share (1) | | $1.93 |
| $2.00 |
(1)Excludes acquisition costs. |
Non-GAAP Financial Measures
Given the nature of the Company’s business as a real estate owner and
operator, the Company believes that FFO, FFO, as adjusted, and AFFO are
helpful to investors when measuring operating performance because they
exclude 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. We believe this supplemental
information provides a more meaningful measure of our operating
performance. The Company believes presenting FFO, FFO, as adjusted, and
AFFO in this manner allows investors and other interested parties to
form a more meaningful assessment of the Company’s operating results.
Reconciliations of net income to FFO, FFO, as adjusted, and AFFO are
included in the attached table.
Earnings Conference Call
The Company will conduct a conference call to discuss its financial
results on Friday, May 1, 2015, at 11:00 a.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 (866) 543-6403 for domestic callers and (617)
213-8896 for international callers (passcode 68574736). In addition, a
webcast replay link will be available on the corporate website.
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. As of March 31, 2015, the Company owned interests in a
portfolio of 120 operating, development and redevelopment properties
totaling approximately 24 million total square feet across 22 states.
For more information, please visit the Company’s website at www.kiterealty.com.
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, financial or
otherwise, 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 low 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, joint venture, property ownership and
management risks, the Company’s ability to maintain its status as a real
estate investment trust 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 Florida, Indiana and Texas, the
dilutive effects of future offerings of issuing additional securities,
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, 2014, 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, whether as a result of new information,
future events or otherwise.
|
| |
| |
| Kite Realty Group Trust |
| Consolidated Balance Sheets |
| (Unaudited) |
| | | |
|
| | March 31, | | December 31, |
| | 2015 | | 2014 |
| Assets: | | | | |
|
Investment properties, at cost
| |
$
|
3,753,405,895
| | |
$
|
3,732,747,979
| |
|
Less: accumulated depreciation
| |
(347,763,694
|
)
| |
(315,092,881
|
)
|
| |
3,405,642,201
| | |
3,417,655,098
| |
| | | |
|
|
Cash and cash equivalents1 | |
126,743,610
| | |
43,825,526
| |
|
Tenant and other receivables, including accrued straight-line rent
of $19,871,143 and $18,629,987, respectively, net of allowance for
uncollectible accounts
| |
42,420,970
| | |
48,096,669
| |
|
Restricted cash and escrow deposits
| |
17,598,342
| | |
16,170,973
| |
|
Deferred costs and intangibles, net
| |
154,075,705
| | |
159,977,680
| |
|
Prepaid and other assets
| |
11,843,056
| | |
8,847,088
| |
|
Assets held for sale
| |
—
|
| |
179,642,501
|
|
| Total Assets | |
$
|
3,758,323,884
|
| |
$
|
3,874,215,535
|
|
| Liabilities and Shareholders’ Equity: | | | | |
|
Mortgage and other indebtedness2 | |
$
|
1,569,420,326
| | |
$
|
1,554,263,020
| |
|
Accounts payable and accrued expenses
| |
82,956,921
| | |
75,149,213
| |
|
Deferred revenue and other liabilities
| |
134,211,750
| | |
136,409,308
| |
|
Liabilities held for sale
| |
—
|
| |
81,164,271
|
|
| Total Liabilities | |
1,786,588,997
| | |
1,846,985,812
| |
|
Commitments and contingencies
| | | | |
|
Limited Partners’ interests in the Operating Partnership and other
redeemable noncontrolling interests
| |
91,146,685
| | |
125,082,085
| |
| Shareholders’ Equity: | | | | |
| Kite Realty Group Trust Shareholders’ Equity: | | | | |
|
Preferred Shares, $.01 par value, 40,000,000 shares authorized,
4,100,000 shares issued and outstanding at March 31, 2015 and
December 31, 2014, respectively
| |
102,500,000
| | |
102,500,000
| |
|
Common Shares, $.01 par value, 450,000,000 shares authorized,
83,579,854 and 83,490,663 shares issued and outstanding at March 31,
2015 and December 31, 2014, respectively
| |
835,799
| | |
834,907
| |
|
Additional paid in capital
| |
2,043,740,457
| | |
2,044,424,643
| |
|
Accumulated other comprehensive loss
| |
(4,339,357
|
)
| |
(1,174,755
|
)
|
|
Accumulated deficit
| |
(265,511,996
|
)
| |
(247,801,217
|
)
|
| Total Kite Realty Group Trust Shareholders’ Equity | |
1,877,224,903
| | |
1,898,783,578
| |
|
Noncontrolling Interests
| |
3,363,299
|
| |
3,364,060
|
|
| Total Equity | |
1,880,588,202
|
| |
1,902,147,638
|
|
| Total Liabilities and Shareholders' Equity | |
$
|
3,758,323,884
|
| |
$
|
3,874,215,535
|
|
|
|
|
|
____________________
|
| | |
1
|
|
Includes $94.7 million at March 31, 2015 of funds set aside by the
Company to affect a tax deferred purchase of real estate.
|
| | |
2
| |
Includes debt premium of $26.8 million at March 31, 2015.
|
| | | | |
|
|
| |
| Kite Realty Group Trust |
| Consolidated Statements of Operations |
| For the Three Months Ended March 31, 2015 and 2014 |
(Unaudited) |
| |
|
| | Three Months Ended |
| | March 31, |
| | 2015 |
| 2014 |
| Revenue: | | | | |
|
Minimum rent
| |
$
|
65,479,387
| | |
$
|
31,260,036
| |
|
Tenant reimbursements
| |
18,615,086
| | |
9,162,860
| |
|
Other property related revenue
| |
2,734,139
|
| |
2,237,015
|
|
| Total revenue | |
86,828,612
| | |
42,659,911
| |
| Expenses: | | | | |
|
Property operating
| |
12,724,292
| | |
7,315,255
| |
|
Real estate taxes
| |
10,021,249
| | |
5,113,023
| |
|
General, administrative, and other
| |
5,005,846
| | |
3,106,102
| |
|
Merger and acquisition costs
| |
159,497
| | |
4,480,389
| |
|
Depreciation and amortization
| |
40,435,238
|
| |
17,439,606
|
|
| Total expenses | |
68,346,122
|
| |
37,454,375
|
|
| Operating income | |
18,482,490
| | |
5,205,536
| |
|
Interest expense
| |
(13,932,987
|
)
| |
(7,382,845
|
)
|
|
Income tax (expense) benefit of taxable REIT subsidiary
| |
(55,101
|
)
| |
53,146
| |
|
Other income (expense), net
| |
4,514
|
| |
(92,944
|
)
|
| Income/(loss) from continuing operations | |
4,498,916
| | |
(2,217,107
|
)
|
| Discontinued operations: | | | | |
|
Gain on sale of operating property
| |
—
|
| |
3,198,772
|
|
| Income from discontinued operations | |
—
|
| |
3,198,772
|
|
| Income before gain on sale of operating properties | |
4,498,916
| | |
981,665
| |
|
Gain on sales of operating properties
| |
3,362,944
|
| |
3,489,338
|
|
| Net income | |
7,861,860
| | |
4,471,003
| |
| Less: Net income attributable to noncontrolling interest | |
(683,066
|
)
| |
(138,912
|
)
|
| Less: Dividends on preferred shares | |
(2,114,063
|
)
| |
(2,114,063
|
)
|
| Net income attributable to Kite Realty Group Trust common
shareholders | |
$
|
5,064,731
|
| |
$
|
2,218,028
|
|
| | | |
|
| Income (loss) per common share - basic and diluted: | | | | |
|
Continuing operations
| |
$
|
0.06
| | |
$
|
(0.03
|
)
|
|
Discontinued operations
| |
—
|
| |
0.10
|
|
| |
$
|
0.06
|
| |
$
|
0.07
|
|
| | | |
|
| Weighted average common shares outstanding - basic | |
83,532,092
|
| |
32,755,898
|
|
| Weighted average common shares outstanding - diluted | |
83,625,352
|
| |
32,755,898
|
|
| Common Dividends declared per common share | |
$
|
0.2725
|
| |
$
|
0.2600
|
|
| | | |
|
| Amounts attributable to Kite Realty Group Trust common
shareholders: | | | | |
| Income (loss) from continuing operations | |
$
|
5,064,731
| | |
$
|
(826,614
|
)
|
| Income from discontinued operations | |
—
|
| |
3,044,642
|
|
| Net Income | |
$
|
5,064,731
|
| |
$
|
2,218,028
|
|
| | | | | | | |
|
|
| |
| Kite Realty Group Trust |
| Funds From Operations |
| For the Three Months Ended March 31, 2015 and 2014 |
| (Unaudited) |
| |
|
| | Three Months Ended |
| | March 31, |
| | 2015 |
| 2014 |
| Funds From Operations | | | | |
|
Consolidated net income
| |
$
|
7,861,860
| | |
$
|
4,471,003
| |
|
Less: dividends on preferred shares
| |
(2,114,063
|
)
| |
(2,114,063
|
)
|
|
Less: net income attributable to noncontrolling interests in
properties
| |
(586,952
|
)
| |
(26,633
|
)
|
|
Less: gains on sales of operating properties
| |
(3,362,944
|
)
| |
(6,688,110
|
)
|
|
Add: depreciation and amortization of consolidated entities, net of
noncontrolling interests
| |
40,292,904
|
| |
17,342,631
|
|
|
Funds From Operations of the Operating Partnership | |
42,090,805
| | |
12,984,828
| |
|
Less Limited Partners' interests in Funds From Operations
| |
(806,598
|
)
| |
(624,852
|
)
|
|
Funds From Operations allocable to the Company1 | |
$
|
41,284,207
|
| |
$
|
12,359,976
|
|
|
FFO per share of the Operating Partnership - basic
| |
$
|
0.49
|
| |
$
|
0.38
|
|
|
FFO per share of the Operating Partnership - diluted
| |
$
|
0.49
|
| |
$
|
0.38
|
|
| | | |
|
|
Funds From Operations of the Operating Partnership | |
$
|
42,090,805
| | |
$
|
12,984,828
| |
|
Add: Merger and acquisition costs
| |
159,497
|
| |
4,480,389
|
|
|
Funds From Operations of the Kite Portfolio, as adjusted
| |
$
|
42,250,302
|
| |
$
|
17,465,217
|
|
|
FFO per share of the Operating Partnership, as adjusted - basic
| |
$
|
0.50
|
| |
$
|
0.51
|
|
|
FFO per share of the Operating Partnership, as adjusted - diluted
| |
$
|
0.50
|
| |
$
|
0.51
|
|
| | | |
|
|
Weighted average Common Shares outstanding - basic
| |
83,532,092
|
| |
32,755,898
|
|
|
Weighted average Common Shares outstanding - diluted
| |
83,625,352
|
| |
32,806,581
|
|
|
Weighted average Common Shares and Units outstanding - basic
| |
85,172,613
|
| |
34,416,602
|
|
|
Weighted average Common Shares and Units outstanding - diluted
| |
85,265,873
|
| |
34,467,286
|
|
| | | | | |
|
|
____________________
|
|
1
|
|
“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.
|
|
2
| |
Excludes merger and acquisition costs.
|
|
| |
| Kite Realty Group Trust |
| Same Property Net Operating Income |
| For the Three Months Ended March 31, 2015 and 2014 |
| (Unaudited) |
| |
|
| | Three Months Ended March 31, |
| | 2015 |
| 2014 |
| % Change |
|
Number of properties at period end1 | |
64
| |
64
| | |
| | | | | |
|
| Leased percentage at period end | |
95.1
|
%
| |
95.3
|
%
| | |
| Economic Occupancy percentage at period end2 | |
92.9
|
%
| |
91.5
|
%
| | |
| | | | | |
|
|
Minimum rent
| |
$
|
29,021,553
| | |
$
|
27,966,426
| | | |
|
Tenant recoveries
| |
8,848,126
| | |
8,681,946
| | | |
|
Other income
| |
853,908
|
| |
999,686
|
| | |
| |
38,723,587
| | |
37,648,058
| | | |
| | | | | |
|
|
Property operating expenses
| |
(7,635,289
|
)
| |
(7,870,742
|
)
| | |
|
Real estate taxes
| |
(5,122,479
|
)
| |
(4,916,450
|
)
| | |
| |
(12,757,768
|
)
| |
(12,787,192
|
)
| | |
| Net operating income - same properties (64 properties)3 | | $ | 25,965,819 | | | $ | 24,860,866 | | | 4.4 | % |
| | | | | |
|
| Reconciliation to Most Directly Comparable GAAP Measure: | | | | | | |
|
Net operating income - same properties
| |
$
|
25,965,819
| | |
$
|
24,860,866
| | | |
|
Net operating income - non-same activity
| |
38,117,252
| | |
5,370,767
| | | |
|
Other expense, net
| |
(50,587
|
)
| |
(39,798
|
)
| | |
|
General, administrative and other
| |
(5,005,846
|
)
| |
(3,106,102
|
)
| | |
|
Merger and acquisition costs
| |
(159,497
|
)
| |
(4,480,389
|
)
| | |
|
Depreciation expense
| |
(40,435,238
|
)
| |
(17,439,606
|
)
| | |
|
Interest expense
| |
(13,932,987
|
)
| |
(7,382,845
|
)
| | |
|
Discontinued operations
| |
—
| | |
3,198,772
| | | |
|
Gains on sales of operating properties
| |
3,362,944
| | |
3,489,338
| | | |
|
Net income attributable to noncontrolling interests
| |
(683,066
|
)
| |
(138,912
|
)
| | |
|
Dividends on preferred shares
| |
(2,114,063
|
)
| |
(2,114,063
|
)
| | |
|
Net income attributable to common shareholders
| |
$
|
5,064,731
|
| |
$
|
2,218,028
|
| | |
|
____________________
|
|
1
|
|
Same property NOI analysis excludes operating properties in
redevelopment.
|
|
2
| |
Excludes leases that are signed but for which tenants have not
commenced payment of cash rent.
|
|
3
| |
Same property NOI excludes net gains from outlot sales,
straight-line rent revenue, bad debt expense and related recoveries,
lease termination fees, amortization of lease intangibles and
significant prior year expense recoveries and adjustments, if any.
|
| |
|
The Company believes that Net Operating Income 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.
NOI and 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
Media & Investor Relations
Maggie
Kofkoff, CFA, 317-713-7644
mkofkoff@kiterealty.com
Source: Kite Realty Group Trust