INDIANAPOLIS--(BUSINESS WIRE)--
Kite Realty Group Trust (NYSE: KRG) (the “Company”) announced today
operating results for the first quarter ended March 31, 2016. Financial
statements and exhibits attached to this release include the details of
these results.
“We started off 2016 with great momentum and enthusiasm from all
areas of our business as the team made meaningful strides towards
executing on our three-year roadmap,” said John A. Kite, Chairman and
CEO.“We grew same-property NOI by 3.4%. We delivered 125,000
square feet of new owned anchor space and made substantial progress on
our 3-R initiative, commencing construction on five of these projects
during the first quarter.We remain focused on increasing cash
flow and adding value for our shareholders.”
First Quarter Highlights
-
Generated Funds From Operations (“FFO”), as adjusted, of $0.52 per
diluted common share, or $44.1 million.
-
Generated Adjusted Funds From Operations (“AFFO”) of $0.46 per diluted
common share.
-
Increased same-property net operating income (“NOI”) by 3.4%
quarter-over-quarter, excluding redevelopment.
-
Achieved aggregate cash rent spreads of 7.8% including a cash renewal
rent spread of 7.1% on a comparable basis.
-
Increased small shop occupancy by 180 basis points compared to the
same period in the prior year, to 87.7%.
-
Delivered approximately 125,000 square feet of new anchor space as
part of our development and redevelopment initiatives, such as Stein
Mart and Marshalls at Tamiami Crossing and DSW at Holly Springs.
-
Commenced construction on five redevelopment projects, which have
total expected costs of $34 million to $39 million and estimated
incremental returns averaging approximately 9% to 11%.
-
Increased the common share dividend by approximately 5.5% to $0.2875
per common share for the first quarter, which, when annualized,
represents an approximate 19.8% increase since 2013.
First Quarter Financial Results
FFO, as adjusted, for the three months ended March 31, 2016, was $44.1
million, or $0.52 per diluted common share, for real estate properties
in which the Company’s operating subsidiaries own an interest (to which
we refer as “Kite Portfolio”), compared to $42.3 million, or $0.50 per
diluted common share, for the same period in the prior year.
Reported FFO, as defined by NAREIT, was $43.6 million, or $0.51 per
diluted common share, for the Kite Portfolio, compared to $42.1 million,
or $0.49 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, 2016, was $1.4 million compared to a net income of $5.1
million for the same period in 2015. The decrease is primarily
attributable to a $3.4 million gain on the sales of operating properties
during the first quarter of 2015.
Portfolio Operations
As of March 31, 2016, the Company owned interests in 121 retail
operating properties totaling approximately 24 million square feet. The
owned GLA in the Company’s retail operating portfolio was 95.4% leased
as of March 31, 2016.
Same-property NOI, which includes 102 retail operating properties,
increased 3.4% in the first quarter of 2016 compared to the same period
in the prior year. The leased percentage of these properties was 95.5%
at March 31, 2016, compared to 94.9% at March 31, 2015.
The Company executed leases on 88 individual spaces totaling 405,338
square feet during the first quarter of 2016, including 64 comparable
new and renewal leases for 333,898 owned square feet. Cash spreads on
new spaces executed during the quarter were 11.4% while cash spreads on
renewals were 7.1%, for a blended spread of 7.8%.
The leasing spread results were impacted by two specific anchor spaces;
excluding these, the quarter had a blended cash leasing spread of 10.5%,
which included 31.5% cash spread on new leases and 8% cash spread on
renewals.
Redevelopment and Development
The Company’s Redevelopment, Reposition and Repurpose (“3-R”) initiative
continued to evolve during the first quarter. Identified 3-R
opportunities totaled approximately $95 million to $110 million across
the portfolio with an average targeted incremental return of
approximately 9% to 11%.
Five of the 3-R assets commenced construction during the first quarter,
with aggregate estimated costs of $34 million to $39 million and an
average targeted incremental return of approximately 9% to 11%. The 3-R
projects under construction include City Center (White Plains, NY),
Bolton Plaza (Jacksonville, FL), Phase I of Portofino (Houston, TX),
Castleton Crossing (Indianapolis, IN) and Northdale Promenade (Tampa,
FL).
Development projects currently in various stages of completion include
Phase II of Parkside Town Commons, Phase II of Holly Springs, and
Tamiami Crossing. These three projects were in aggregate 91% pre-leased
or committed as of March 31, 2016, and included several anchor
deliveries during the first quarter, such as Stein Mart, Marshalls, Ross
and Ulta at Tamiami Crossing and DSW at Holly Springs.
2016 Earnings Guidance
The Company maintains its previously announced guidance and underlying
assumptions for 2016 FFO, as adjusted, of $2.02 to $2.08 per diluted
share. This guidance excludes certain one-time items such as transaction
costs, debt extinguishment gains/losses and certain other income or
charges. Please refer to the full list of guidance assumptions on page
35 of the supplemental.
| Guidance Range For Full Year 2016 |
|
|
| Low |
|
|
| High |
|
Consolidated net income per diluted common share
| | | |
$
|
0.06
| | | | |
$
|
0.12
|
|
Add: Depreciation, amortization and other
| | | |
1.94
|
| | | |
1.94
|
|
FFO, per diluted common share, as defined by NAREIT
| | | |
2.00
|
| | | |
2.06
|
|
Add: Transaction costs and certain other charges
| | | |
0.02
|
| | | |
0.02
|
| FFO, as adjusted, per diluted common share | | | |
$
|
2.02
|
| | | |
$
|
2.08
|
| | | | | | | | | | |
|
Earnings Conference Call
The Company will conduct a conference call to discuss its financial
results on Friday, April 29, 2016, at 9:00 a.m. EDT. 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) 840-7637
for domestic callers and (704) 908-0456 for international callers
(passcode 67967945). 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, 2016, the Company owned interests in a
portfolio of 121 operating, development and redevelopment properties
totaling approximately 24 million total square feet across 20 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, 2015, 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) |
|
| |
| |
| ($ in thousands) | | | | |
| | March 31,
2016 | | December 31,
2015 |
| Assets: | | | | |
|
Investment properties, at cost
| |
$
|
3,947,922
| | |
$
|
3,933,140
| |
|
Less: accumulated depreciation
| |
(461,051
|
)
| |
(432,295
|
)
|
| |
3,486,871
| | |
3,500,845
| |
| | | |
|
|
Cash and cash equivalents
| |
23,307
| | |
33,880
| |
|
Tenant and other receivables, including accrued straight-line rent
of $25,230 and $23,809 respectively, net of allowance for
uncollectible accounts
| |
52,406
| | |
51,101
| |
|
Restricted cash and escrow deposits
| |
13,345
| | |
13,476
| |
|
Deferred costs and intangibles, net
| |
143,028
| | |
148,274
| |
|
Prepaid and other assets
| |
10,793
|
| |
8,852
|
|
| Total Assets | |
$
|
3,729,750
|
| |
$
|
3,756,428
|
|
| Liabilities and Shareholders’ Equity: | | | | |
|
Mortgage and other indebtedness, net
| |
$
|
1,730,787
| | |
$
|
1,724,449
| |
|
Accounts payable and accrued expenses
| |
81,772
| | |
81,356
| |
|
Deferred revenue and other liabilities
| |
127,484
|
| |
131,559
|
|
| Total Liabilities | |
1,940,043
| | |
1,937,364
| |
|
Commitments and contingencies
| | | | |
|
Limited Partners’ interests in the Operating Partnership and other
redeemable noncontrolling interests
| |
99,021
| | |
92,315
| |
| Shareholders’ Equity: | | | | |
| Kite Realty Group Trust Shareholders’ Equity: | | | | |
|
Common Shares, $.01 par value, 225,000,000 shares authorized,
83,364,216 and 83,334,865 shares issued and outstanding at March 31,
2016 and December 31, 2015, respectively
| |
834
| | |
833
| |
|
Additional paid in capital
| |
2,044,266
| | |
2,050,545
| |
|
Accumulated other comprehensive loss
| |
(9,290
|
)
| |
(2,145
|
)
|
|
Accumulated deficit
| |
(345,822
|
)
| |
(323,257
|
)
|
| Total Kite Realty Group Trust Shareholders’ Equity | |
1,689,988
| | |
1,725,976
| |
|
Noncontrolling Interests
| |
698
|
| |
773
|
|
| Total Equity | |
1,690,686
|
| |
1,726,749
|
|
| Total Liabilities and Shareholders' Equity | |
$
|
3,729,750
|
| |
$
|
3,756,428
|
|
| | | | | | | |
|
Kite Realty Group Trust
Consolidated Statements of
Operations
For the Three Months Ended March 31, 2016
and 2015
(Unaudited) |
|
| |
| |
| ($ in thousands, except per share data) | | | | |
| | Three Months Ended
March 31, |
| | 2016 | | 2015 |
| Revenue: | | | | |
|
Minimum rent
| |
$
|
67,463
| | |
$
|
65,479
| |
|
Tenant reimbursements
| |
18,155
| | |
18,615
| |
|
Other property related revenue
| |
2,932
|
| |
2,734
|
|
| Total revenue | |
88,550
| | |
86,828
| |
| Expenses: | | | | |
|
Property operating
| |
12,192
| | |
12,724
| |
|
Real estate taxes
| |
11,135
| | |
10,021
| |
|
General, administrative, and other
| |
5,291
| | |
5,006
| |
|
Merger and acquisition costs
| |
—
| | |
159
| |
|
Depreciation and amortization
| |
42,240
|
| |
40,435
|
|
| Total expenses | |
70,858
|
| |
68,345
|
|
| Operating income | |
17,692
| | |
18,483
| |
|
Interest expense
| |
(15,325
|
)
| |
(13,933
|
)
|
|
Income tax expense of taxable REIT subsidiary
| |
(410
|
)
| |
(55
|
)
|
|
Other income, net
| |
18
|
| |
4
|
|
| Income from continuing operations | |
1,975
| | |
4,499
| |
|
Gain on sales of operating properties
| |
—
|
| |
3,363
|
|
| Net income | |
1,975
| | |
7,862
| |
|
Net income attributable to noncontrolling interest
| |
(573
|
)
| |
(683
|
)
|
|
Dividends on preferred shares
| |
—
|
| |
(2,114
|
)
|
| Net income attributable to Kite Realty Group Trust common
shareholders | |
$
|
1,402
|
| |
$
|
5,065
|
|
| | | |
|
| Income per common share - basic and diluted | |
$
|
0.02
|
| |
$
|
0.06
|
|
| | | |
|
|
Weighted average common shares outstanding - basic
| |
83,348,507
|
| |
83,532,092
|
|
|
Weighted average common shares outstanding - diluted
| |
83,490,979
|
| |
83,625,352
|
|
| Common dividends declared per common share | |
$
|
0.2875
|
| |
$
|
0.2725
|
|
| | | | | | | |
|
Kite Realty Group Trust
Funds From Operations
For
the Three Months Ended March 31, 2016 and 2015
(Unaudited) |
|
| |
| |
| ($ in thousands, except share and per share data) | | | | |
| | Three Months Ended
March 31, |
| | 2016 | | 2015 |
| Funds From Operations | | | | |
|
Consolidated net income
| |
$
|
1,975
| | |
$
|
7,862
| |
|
Less: cash dividends on preferred shares
| |
—
| | |
(2,114
|
)
|
|
Less: net income attributable to noncontrolling interests in
properties
| |
(461
|
)
| |
(587
|
)
|
|
Less: gains on sales of operating properties
| |
—
| | |
(3,363
|
)
|
|
Add: depreciation and amortization of consolidated entities, net of
noncontrolling interests
| |
42,052
|
| |
40,293
|
|
|
Funds From Operations of the Kite Portfolio1 | |
43,566
| | |
42,091
| |
|
Less: Limited Partners' interests in Funds From Operations
| |
(981
|
)
| |
(807
|
)
|
|
Funds From Operations attributable to Kite Realty Group Trust common
shareholders
| |
$
|
42,585
|
| |
$
|
41,284
|
|
|
FFO per share of the Operating Partnership - basic
| |
$
|
0.51
|
| |
$
|
0.49
|
|
|
FFO per share of the Operating Partnership - diluted
| |
$
|
0.51
|
| |
$
|
0.49
|
|
| | | |
|
|
Funds From Operations of the Kite Portfolio1 | |
$
|
43,566
| | |
$
|
42,091
| |
|
Add: merger and acquisition costs
| |
—
| | |
159
| |
|
Add: severance charge
| |
500
|
| |
—
|
|
|
Funds From Operations of the Kite Portfolio, as adjusted
| |
$
|
44,066
|
| |
$
|
42,250
|
|
|
FFO per share of the Operating Partnership, as adjusted - basic
| |
$
|
0.52
|
| |
$
|
0.50
|
|
|
FFO per share of the Operating Partnership, as adjusted - diluted
| |
$
|
0.52
|
| |
$
|
0.50
|
|
| | | |
|
|
Weighted average Common Shares outstanding - basic
| |
83,348,507
|
| |
83,532,092
|
|
|
Weighted average Common Shares outstanding - diluted
| |
83,490,979
|
| |
83,625,352
|
|
|
Weighted average Common Shares and Units outstanding - basic
| |
85,271,012
|
| |
85,172,613
|
|
|
Weighted average Common Shares and Units outstanding - diluted
| |
85,413,485
|
| |
85,265,873
|
|
|
____________________
|
|
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 attributable to
Kite Realty Group Trust common shareholders” 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, 2016 and
2015
(Unaudited) |
|
| |
| |
| |
| ($ in thousands) | | | | | | |
| | Three Months Ended March 31, |
| | 2016 | | 2015 | | % Change |
|
Number of properties at period end1 | |
102
| |
102
| | |
| | | | | |
|
| Leased percentage | |
95.5
|
%
| |
94.9
|
%
| | |
| Economic Occupancy percentage at period end2 | |
93.7
|
%
| |
93.2
|
%
| | |
| | | | | |
|
|
Minimum rent
| |
$
|
54,351
| | |
$
|
53,344
| | | |
|
Tenant recoveries
| |
15,335
| | |
15,619
| | | |
|
Other income
| |
325
|
| |
274
|
| | |
| |
70,011
| | |
69,237
| | | |
| | | | | |
|
|
Property operating expenses
| |
(8,518
|
)
| |
(9,814
|
)
| | |
|
Real estate taxes
| |
(9,269
|
)
| |
(8,921
|
)
| | |
| |
(17,787
|
)
| |
(18,735
|
)
| | |
| Net operating income - same properties3 | | $ | 52,224 |
| | $ | 50,502 |
| | 3.4% |
| | | | | |
|
| Reconciliation of Same Property NOI to Most Directly Comparable
GAAP Measure: | | | | | | |
|
Net operating income - same properties
| |
$
|
52,224
| | |
$
|
50,502
| | | |
|
Net operating income - non-same activity4 | |
12,999
| | |
13,581
| | | |
|
Other expense, net
| |
(392
|
)
| |
(51
|
)
| | |
|
General, administrative and other
| |
(5,291
|
)
| |
(5,006
|
)
| | |
|
Merger and acquisition costs
| |
—
| | |
(159
|
)
| | |
|
Depreciation expense
| |
(42,240
|
)
| |
(40,435
|
)
| | |
|
Interest expense
| |
(15,325
|
)
| |
(13,933
|
)
| | |
|
Gains on sales of operating properties
| |
—
| | |
3,363
| | | |
|
Net income attributable to noncontrolling interests
| |
(573
|
)
| |
(683
|
)
| | |
|
Dividends on preferred shares
| |
—
|
| |
(2,114
|
)
| | |
|
Net income attributable to common shareholders
| |
$
|
1,402
|
| |
$
|
5,065
|
| | |
| | | | | | | | | |
|
|
____________________
|
|
1
|
|
Same property analysis excludes operating properties in
redevelopment as well as office properties (30 South Meridian and
Eddy Street Commons).
|
| |
|
|
2
| |
Excludes leases that are signed but for which tenants have not yet
commenced the payment of cash rent. Calculated as a weighted average
based on the timing of cash rent commencement during the period.
|
| |
|
|
3
| |
Same property net operating income excludes net gains from outlot
sales, straight-line rent revenue, bad debt expense and recoveries,
lease termination fees, amortization of lease intangibles and
significant prior year expense recoveries and adjustments, if any.
|
| |
|
|
4
| |
Includes non-cash accounting items across the portfolio as well as
net operating income from properties not included in the same
property pool. The change between years largely reflects the sales
of operating properties in 2015, net of acquired properties and
development projects, not yet in the same property pool.
|
| |
|
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. 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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160428006293/en/
Kite Realty Group Trust
Maggie Daniels, CFA, 317-713-7644
Investor
Relations and Strategy
mdaniels@kiterealty.com
Source: Kite Realty Group Trust