Kite Realty Group Trust (NYSE: KRG), a premier owner and operator
of high-quality, open-air grocery-anchored neighborhood and
community centers, along with vibrant mixed-use assets, reported
today its operating results for the fourth quarter and year ended
December 31, 2023. For the quarters ended December 31, 2023 and
2022, net income attributable to common shareholders was $8.0
million, or $0.04 per diluted share, compared to a net loss of $1.1
million, or $0.01 per diluted share, respectively. For the years
ended December 31, 2023 and 2022, net income attributable to common
shareholders was $47.5 million, or $0.22 per diluted share,
compared to a net loss of $12.6 million, or $0.06 per diluted
share, respectively.
Increased NAREIT FFO per share by 4.6% on
a year-over-year basisLeased approximately 4.9
million square feet in 2023 at 14.3% comparable blended cash
leasing spreads2023 Same Property NOI increased by
4.8% on a year-over-year basisIncreased ABR per
square foot to $20.70Subsequent to year end,
issued $350 million of 5.50% senior unsecured notes due March
2034Company provides initial 2024
outlook
“The KRG team capped off a remarkably
productive year with over 380,000 square feet of new leasing volume
in the fourth quarter – the highest quarterly new leasing activity
in our Company’s history,” said John A. Kite, Chairman and CEO.
“Our dedicated team enables us to consistently deliver outstanding
results and long-term value to all stakeholders. Over the course of
2024, we will continue to operate from a position of strength with
a best-in-class operating platform and balance sheet.”
Full Year 2023 Highlights
- Generated NAREIT FFO of the
Operating Partnership of $453.3 million, or $2.03 per diluted
share.
- Executed 740 new and renewal leases
representing approximately 4.9 million square feet at comparable
cash spreads of 14.3%.
- Cash leasing spreads of 22.7% on a
blended basis for comparable new and non-option renewal
leases.
- Executed 26 new anchor leases at a
blended comparable cash leasing spread of 54.3%.
- New anchor leasing activity
included 21 different retailers and increased our percentage of
annualized base rent (ABR) from properties with a grocery component
to 79%.
- Same Property Net Operating Income
(NOI) increased by 4.8%.
- Completed one acquisition for $81.0
million and closed on $142.1 million of dispositions.
Fourth Quarter 2023 Financial and
Operational Results
- Generated NAREIT FFO of the
Operating Partnership of $111.1 million, or $0.50 per diluted
share.
- Same Property NOI increased by
2.8%.
- Executed 192 new and renewal leases
representing approximately 1.3 million square feet.
- Blended cash leasing spreads of
14.5% on 147 comparable leases, including 43.0% on 28 comparable
new leases, 9.2% on 60 comparable non-option renewals and 7.6% on
59 comparable option renewals.
- Cash leasing spreads of 21.2% on a
blended basis for comparable new and non-option renewal
leases.
- Executed 10 new anchor leases at a
blended comparable cash leasing spread of 37.3%.
- Anchor leasing activity included
Whole Foods, Trader Joe’s, Total Wine & More, Homesense, Sierra
and PGA Superstore.
- Operating retail portfolio ABR per
square foot of $20.70 at December 31, 2023, a 3.4% increase
year-over-year.
- Retail portfolio leased percentage
of 93.9% at December 31, 2023, a 50-basis point increase
sequentially.
- Portfolio leased-to-occupied spread
at period end of 280 basis points, which represents $31 million of
signed-not-open NOI.
Fourth Quarter 2023 Capital Allocation
Activity
- As previously disclosed, sold
Eastside (Dallas, TX) for $14.4 million.
- The Company currently has two
active development projects with limited future capital commitments
of $30.1 million.
Fourth Quarter 2023 Balance Sheet
Overview
- As of December 31, 2023, the
Company’s net debt to Adjusted EBITDA was 5.1x.
- Subsequent to quarter end, issued
$350 million of senior unsecured notes due March 1, 2034 at a fixed
interest rate of 5.50%. The Company expects proceeds will be used
to satisfy all 2024 debt maturities.
DividendOn February 7, 2024,
the Company’s Board of Trustees declared a first quarter 2024
dividend of $0.25 per common share, which represents a 4.2%
year-over-year increase. The first quarter dividend will be paid on
or about April 12, 2024, to shareholders of record as of April 5,
2024.
2024 Earnings GuidanceThe
Company expects to generate net income attributable to common
shareholders of $0.29 to $0.35 per diluted share in 2024 and NAREIT
FFO of $2.00 to $2.06 per diluted share, based, in part, on the
following assumptions:
- 2024 Same Property NOI range of
1.0% to 2.0%.
- Full-year bad debt assumption of
0.75% to 1.25% of total revenues.
The following table reconciles the Company’s
2024 net income guidance range to the Company’s 2024 NAREIT FFO
guidance range:
|
|
Low |
|
|
High |
Net income |
|
$ |
0.29 |
|
$ |
0.35 |
Depreciation and amortization |
|
|
1.71 |
|
|
1.71 |
NAREIT FFO |
|
$ |
2.00 |
|
$ |
2.06 |
Earnings Conference Call
Kite Realty Group Trust will conduct a
conference call to discuss its financial results on Wednesday,
February 14, 2024, at 1:00 p.m. Eastern Time. A live webcast of the
conference call will be available on KRG’s website at
www.kiterealty.com or at the following link: KRG Fourth Quarter
2023 Webcast. The dial-in registration link is: KRG Fourth Quarter
2023 Teleconference Registration. In addition, a webcast replay
link will be available on KRG’s website.
About Kite Realty Group
Trust
Kite Realty Group Trust (NYSE: KRG) is a real
estate investment trust (REIT) headquartered in Indianapolis, IN
that is one of the largest publicly traded owners and operators of
open-air shopping centers and mixed-use assets. The Company’s
primarily grocery-anchored portfolio is located in high-growth Sun
Belt and select strategic gateway markets. The combination of
necessity-based grocery-anchored neighborhood and community
centers, along with vibrant mixed-use assets makes the KRG
portfolio an ideal mix for both retailers and consumers. Publicly
listed since 2004, KRG has nearly 60 years of experience in
developing, constructing and operating real estate. Using
operational, investment, development, and redevelopment expertise,
KRG continuously optimizes its portfolio to maximize value and
return to shareholders. As of December 31, 2023, the Company owned
interests in 180 U.S. open-air shopping centers and mixed-use
assets, comprising approximately 28.1 million square feet of gross
leasable space. For more information, please visit
kiterealty.com.
Connect with
KRG: LinkedIn | Twitter | Instagram | Facebook
Safe Harbor
This release, together with other statements and
information publicly disseminated by us, contains certain
forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 (the “Securities Act”) 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: our ability to deliver continued
outperformance and maintain a best-in-class balance sheet; national
and local economic, business, banking, real estate and other market
conditions, particularly in connection with low or negative growth
in the U.S. economy as well as economic uncertainty (including a
potential economic slowdown or recession, rising interest rates,
inflation, unemployment, or limited growth in consumer income or
spending); 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, the Company’s
indebtedness; the level and volatility of interest rates; the
financial stability of tenants; the competitive environment in
which the Company operates, including potential oversupplies of and
reduction in demand for rental space; acquisition, disposition,
development and joint venture risks; property ownership and
management risks, including the relative illiquidity of real estate
investments, and expenses, vacancies or the inability to rent space
on favorable terms or at all; the Company’s ability to maintain the
Company’s status as a real estate investment trust for U.S. federal
income tax purposes; potential environmental and other liabilities;
impairment in the value of real estate property the Company owns;
the attractiveness of our properties to tenants, the actual and
perceived impact of e-commerce on the value of shopping center
assets and changing demographics and customer traffic patterns;
business continuity disruptions and a deterioration in our tenant’s
ability to operate in affected areas or delays in the supply of
products or services to us or our tenants from vendors that are
needed to operate efficiently, causing costs to rise sharply and
inventory to fall; risks related to our current geographical
concentration of the Company’s properties in the states of Texas,
Florida, and North Carolina and the metropolitan statistical areas
of New York, Atlanta, Seattle, Chicago, and Washington, D.C.; civil
unrest, acts of violence, terrorism or war, acts of God, climate
change, epidemics, pandemics (including COVID-19), natural
disasters and severe weather conditions, including such events that
may result in underinsured or uninsured losses or other increased
costs and expenses; changes in laws and government regulations
including governmental orders affecting the use of the Company’s
properties or the ability of its tenants to operate, and the costs
of complying with such changed laws and government regulations;
possible short-term or long-term changes in consumer behavior due
to COVID-19 and the fear of future pandemics; our ability to
satisfy environmental, social or governance standards set by
various constituencies; insurance costs and coverage, especially in
Florida and Texas coastal areas; risks associated with
cybersecurity attacks and the loss of confidential information and
other business disruptions; other factors affecting the real estate
industry generally; and other risks identified in reports the
Company files with the Securities and Exchange Commission (“the
SEC”) or in other documents that it publicly disseminates,
including, in particular, the section titled “Risk Factors” in the
Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2022, and in the Company’s quarterly reports on Form
10-Q. 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.
This Earnings Release also includes certain
forward-looking non-GAAP information. These non-GAAP financial
measures should be considered along with, but not as alternatives
to, net income (loss) as a measure of our operating performance.
Please see the following pages for the corresponding definitions
and reconciliations of such non-GAAP financial measures.
Kite Realty Group
TrustConsolidated Balance Sheets(dollars
in thousands)(unaudited)
|
December 31,2023 |
|
December 31,2022 |
Assets: |
|
|
|
Investment properties, at cost |
$ |
7,740,061 |
|
|
$ |
7,732,573 |
|
Less: accumulated depreciation |
|
(1,381,770 |
) |
|
|
(1,161,148 |
) |
Net investment properties |
|
6,358,291 |
|
|
|
6,571,425 |
|
|
|
|
|
Cash and cash equivalents |
|
36,413 |
|
|
|
115,799 |
|
Tenant and other receivables, including accrued straight-line rent
of $55,482 and $44,460, respectively |
|
113,290 |
|
|
|
101,301 |
|
Restricted cash and escrow deposits |
|
5,017 |
|
|
|
6,171 |
|
Deferred costs, net |
|
304,171 |
|
|
|
409,828 |
|
Prepaid and other assets |
|
117,834 |
|
|
|
127,044 |
|
Investments in unconsolidated subsidiaries |
|
9,062 |
|
|
|
10,414 |
|
Total
assets |
$ |
6,944,078 |
|
|
$ |
7,341,982 |
|
|
|
|
|
Liabilities and
Equity: |
|
|
|
Liabilities: |
|
|
|
Mortgage and other indebtedness, net |
$ |
2,829,202 |
|
|
$ |
3,010,299 |
|
Accounts payable and accrued expenses |
|
198,079 |
|
|
|
207,792 |
|
Deferred revenue and other liabilities |
|
272,942 |
|
|
|
298,039 |
|
Total
liabilities |
|
3,300,223 |
|
|
|
3,516,130 |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
Limited Partners’ interests in
the Operating Partnership |
|
73,287 |
|
|
|
53,967 |
|
|
|
|
|
Equity: |
|
|
|
Common shares, $0.01 par value, 490,000,000 shares authorized,
219,448,429 and 219,185,658 shares issued and outstanding at
December 31, 2023 and 2022, respectively |
|
2,194 |
|
|
|
2,192 |
|
Additional paid-in capital |
|
4,886,592 |
|
|
|
4,897,736 |
|
Accumulated other comprehensive income |
|
52,435 |
|
|
|
74,344 |
|
Accumulated deficit |
|
(1,373,083 |
) |
|
|
(1,207,757 |
) |
Total shareholders’ equity |
|
3,568,138 |
|
|
|
3,766,515 |
|
Noncontrolling interests |
|
2,430 |
|
|
|
5,370 |
|
Total
equity |
|
3,570,568 |
|
|
|
3,771,885 |
|
Total liabilities and
equity |
$ |
6,944,078 |
|
|
$ |
7,341,982 |
|
Kite Realty Group
TrustConsolidated Statements of
Operations(dollars in thousands, except per share
amounts)(unaudited)
|
Three Months EndedDecember
31, |
|
Year EndedDecember 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue: |
|
|
|
|
|
|
|
Rental income |
$ |
197,257 |
|
|
$ |
199,577 |
|
|
$ |
810,146 |
|
|
$ |
782,349 |
|
Other property-related revenue |
|
2,521 |
|
|
|
3,176 |
|
|
|
8,492 |
|
|
|
11,108 |
|
Fee income |
|
498 |
|
|
|
1,936 |
|
|
|
4,366 |
|
|
|
8,539 |
|
Total
revenue |
|
200,276 |
|
|
|
204,689 |
|
|
|
823,004 |
|
|
|
801,996 |
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
Property operating |
|
25,768 |
|
|
|
29,659 |
|
|
|
107,958 |
|
|
|
107,217 |
|
Real estate taxes |
|
22,093 |
|
|
|
24,144 |
|
|
|
102,426 |
|
|
|
104,589 |
|
General, administrative and other |
|
14,342 |
|
|
|
12,883 |
|
|
|
56,142 |
|
|
|
54,860 |
|
Merger and acquisition costs |
|
— |
|
|
|
(81 |
) |
|
|
— |
|
|
|
925 |
|
Depreciation and amortization |
|
102,898 |
|
|
|
112,709 |
|
|
|
426,361 |
|
|
|
469,805 |
|
Impairment charges |
|
— |
|
|
|
— |
|
|
|
477 |
|
|
|
— |
|
Total
expenses |
|
165,101 |
|
|
|
179,314 |
|
|
|
693,364 |
|
|
|
737,396 |
|
|
|
|
|
|
|
|
|
Gain (loss) on sales of
operating properties, net |
|
133 |
|
|
|
(57 |
) |
|
|
22,601 |
|
|
|
27,069 |
|
|
|
|
|
|
|
|
|
Operating income |
|
35,308 |
|
|
|
25,318 |
|
|
|
152,241 |
|
|
|
91,669 |
|
Other (expense)
income: |
|
|
|
|
|
|
|
Interest expense |
|
(27,235 |
) |
|
|
(26,827 |
) |
|
|
(105,349 |
) |
|
|
(104,276 |
) |
Income tax expense of taxable REIT subsidiary |
|
(449 |
) |
|
|
(302 |
) |
|
|
(533 |
) |
|
|
(43 |
) |
Equity in earnings of unconsolidated subsidiaries |
|
206 |
|
|
|
312 |
|
|
|
33 |
|
|
|
256 |
|
Other income, net |
|
334 |
|
|
|
447 |
|
|
|
1,991 |
|
|
|
240 |
|
Net income (loss) |
|
8,164 |
|
|
|
(1,052 |
) |
|
|
48,383 |
|
|
|
(12,154 |
) |
Net income attributable to
noncontrolling interests |
|
(185 |
) |
|
|
(74 |
) |
|
|
(885 |
) |
|
|
(482 |
) |
Net income (loss) attributable
to common shareholders |
$ |
7,979 |
|
|
$ |
(1,126 |
) |
|
$ |
47,498 |
|
|
$ |
(12,636 |
) |
|
|
|
|
|
|
|
|
Net income (loss) per common
share – basic and diluted |
$ |
0.04 |
|
|
$ |
(0.01 |
) |
|
$ |
0.22 |
|
|
$ |
(0.06 |
) |
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding – basic |
|
219,407,927 |
|
|
|
219,137,140 |
|
|
|
219,344,832 |
|
|
|
219,074,448 |
|
Weighted average common shares
outstanding – diluted |
|
219,795,602 |
|
|
|
219,137,140 |
|
|
|
219,728,283 |
|
|
|
219,074,448 |
|
Kite Realty Group
TrustFunds From Operations
(“FFO”)(1)(2)(dollars in thousands,
except per share amounts)(unaudited)
|
Three Months EndedDecember
31, |
|
Year EndedDecember 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
8,164 |
|
|
$ |
(1,052 |
) |
|
$ |
48,383 |
|
|
$ |
(12,154 |
) |
Less: net income attributable to noncontrolling interests in
properties |
|
(56 |
) |
|
|
(88 |
) |
|
|
(257 |
) |
|
|
(623 |
) |
Less: (gain) loss on sales of operating properties, net |
|
(133 |
) |
|
|
57 |
|
|
|
(22,601 |
) |
|
|
(27,069 |
) |
Add: impairment charges |
|
— |
|
|
|
— |
|
|
|
477 |
|
|
|
— |
|
Add: depreciation and amortization of consolidated and
unconsolidated entities, net of noncontrolling interests |
|
103,119 |
|
|
|
112,925 |
|
|
|
427,335 |
|
|
|
471,086 |
|
FFO of the Operating
Partnership(1) |
|
111,094 |
|
|
|
111,842 |
|
|
|
453,337 |
|
|
|
431,240 |
|
Less: Limited Partners’ interests in FFO |
|
(1,708 |
) |
|
|
(1,463 |
) |
|
|
(6,447 |
) |
|
|
(5,395 |
) |
FFO attributable to common
shareholders(1) |
$ |
109,386 |
|
|
$ |
110,379 |
|
|
$ |
446,890 |
|
|
$ |
425,845 |
|
FFO, as defined by
NAREIT, per share of the Operating Partnership –
basic |
$ |
0.50 |
|
|
$ |
0.50 |
|
|
$ |
2.04 |
|
|
$ |
1.94 |
|
FFO, as defined by
NAREIT, per share of the Operating Partnership –
diluted |
$ |
0.50 |
|
|
$ |
0.50 |
|
|
$ |
2.03 |
|
|
$ |
1.94 |
|
|
|
|
|
|
|
|
|
FFO of the Operating
Partnership(1) |
$ |
111,094 |
|
|
$ |
111,842 |
|
|
$ |
453,337 |
|
|
$ |
431,240 |
|
Add: merger and acquisition costs |
|
— |
|
|
|
(81 |
) |
|
|
— |
|
|
|
925 |
|
Add (less): prior period collection impact |
|
— |
|
|
|
189 |
|
|
|
— |
|
|
|
(2,556 |
) |
FFO, as adjusted, of
the Operating Partnership |
$ |
111,094 |
|
|
$ |
111,950 |
|
|
$ |
453,337 |
|
|
$ |
429,609 |
|
FFO, as adjusted, per
share of the Operating Partnership – basic |
$ |
0.50 |
|
|
$ |
0.50 |
|
|
$ |
2.04 |
|
|
$ |
1.94 |
|
FFO, as adjusted, per
share of the Operating Partnership – diluted |
$ |
0.50 |
|
|
$ |
0.50 |
|
|
$ |
2.03 |
|
|
$ |
1.93 |
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding – basic |
|
219,407,927 |
|
|
|
219,137,140 |
|
|
|
219,344,832 |
|
|
|
219,074,448 |
|
Weighted average common shares
outstanding – diluted |
|
219,795,602 |
|
|
|
219,763,609 |
|
|
|
219,728,283 |
|
|
|
219,710,514 |
|
|
|
|
|
|
|
|
|
Weighted average common shares
and units outstanding – basic |
|
222,827,090 |
|
|
|
222,055,880 |
|
|
|
222,514,956 |
|
|
|
221,858,084 |
|
Weighted average common shares
and units outstanding – diluted |
|
223,214,765 |
|
|
|
222,682,349 |
|
|
|
222,898,407 |
|
|
|
222,494,151 |
|
|
|
|
|
|
|
|
|
FFO, as defined by
NAREIT, per diluted share/unit |
|
|
|
|
|
|
|
Net income (loss) |
$ |
0.04 |
|
|
$ |
0.00 |
|
|
$ |
0.22 |
|
|
$ |
(0.05 |
) |
Less: net income attributable to noncontrolling interests in
properties |
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
Less: (gain) loss on sales of operating properties, net |
|
0.00 |
|
|
|
0.00 |
|
|
|
(0.10 |
) |
|
|
(0.12 |
) |
Add: impairment charges |
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
Add: depreciation and amortization of consolidated and
unconsolidated entities, net of noncontrolling interests |
|
0.46 |
|
|
|
0.51 |
|
|
|
1.92 |
|
|
|
2.12 |
|
FFO, as defined by NAREIT, of
the Operating Partnership per diluted share/unit(1)(2) |
$ |
0.50 |
|
|
$ |
0.50 |
|
|
$ |
2.04 |
|
|
$ |
1.94 |
|
Add: merger and acquisition costs |
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
Less: prior period collection impact |
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
(0.01 |
) |
FFO, as adjusted, of
the Operating Partnership per diluted
share/unit(2) |
$ |
0.50 |
|
|
$ |
0.50 |
|
|
$ |
2.03 |
|
|
$ |
1.93 |
|
(2) |
“FFO of the
Operating Partnership” measures 100% of the operating performance
of the Operating Partnership’s real estate properties. “FFO
attributable to common shareholders” reflects a reduction for the
redeemable noncontrolling weighted average diluted interest in the
Operating Partnership. |
(1) |
Per share/unit amounts of components will not necessarily sum
to the total due to rounding to the nearest cent. |
Funds From Operations (“FFO”) is a widely used
performance measure for real estate companies and is provided here
as a supplemental measure of operating performance. The Company
calculates FFO, a non-GAAP financial measure, in accordance with
the best practices described in the April 2002 National Policy
Bulletin of the National Association of Real Estate Investment
Trusts (“NAREIT”), as restated in 2018. The NAREIT white paper
defines FFO as net income (calculated in accordance with GAAP),
excluding (i) depreciation and amortization related to real estate,
(ii) gains and losses from the sale of certain real estate assets,
(iii) gains and losses from change in control, and (iv) impairment
write-downs of certain real estate assets and investments in
entities when the impairment is directly attributable to decreases
in the value of depreciable real estate held by the entity.
Considering the nature of our business as a real
estate owner and operator, the Company believes that FFO is helpful
to investors in measuring our operational performance because it
excludes various items included in net income that do not relate to
or are not indicative of our operating performance, such as gains
or losses from sales of depreciated property and depreciation and
amortization, which can make periodic and peer analyses of
operating performance more difficult. FFO (a) should not be
considered as an alternative to net income (calculated in
accordance with GAAP) for the purpose of measuring our financial
performance, (b) is not an alternative to cash flow from operating
activities (calculated in accordance with GAAP) as a measure of our
liquidity, and (c) is not indicative of funds available to satisfy
our cash needs, including our ability to make distributions. The
Company’s computation of FFO may not be comparable to FFO reported
by other REITs that do not define the term in accordance with the
current NAREIT definition or that interpret the current NAREIT
definition differently than we do.
From time to time, the Company may report or
provide guidance with respect to “FFO, as adjusted,” which removes
the impact of certain non-recurring and non-operating transactions
or other items the Company does not consider to be representative
of its core operating results including, without limitation, (i)
gains or losses associated with the early extinguishment of debt,
(ii) gains or losses associated with litigation involving the
Company that is not in the normal course of business, (iii) merger
and acquisition costs, (iv) the impact on earnings from employee
severance, (v) the excess of redemption value over carrying value
of preferred stock redemption, and (vi) in 2022, the impact of
prior period bad debt or the collection of accounts receivable
previously written off (“prior period collection impact”) due to
the recovery from the COVID-19 pandemic, which are not otherwise
adjusted in the Company’s calculation of FFO.
Kite Realty Group
TrustSame Property Net Operating Income
(“NOI”)(dollars in thousands)(unaudited)
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
Change |
|
|
2023 |
|
|
|
2022 |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of properties in same
property pool for the period(1) |
|
175 |
|
|
|
175 |
|
|
|
|
|
175 |
|
|
|
175 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leased percentage at period
end |
|
94.0 |
% |
|
|
95.4 |
% |
|
|
|
|
94.0 |
% |
|
|
95.4 |
% |
|
|
Economic occupancy percentage
at period end |
|
91.2 |
% |
|
|
92.5 |
% |
|
|
|
|
91.2 |
% |
|
|
92.5 |
% |
|
|
Economic occupancy
percentage(2) |
|
91.3 |
% |
|
|
92.7 |
% |
|
|
|
|
92.0 |
% |
|
|
91.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum rent |
$ |
145,532 |
|
|
$ |
143,253 |
|
|
|
|
$ |
579,322 |
|
|
$ |
563,144 |
|
|
|
Tenant recoveries |
|
37,385 |
|
|
|
39,160 |
|
|
|
|
|
160,323 |
|
|
|
157,979 |
|
|
|
Bad debt reserve |
|
(1,492 |
) |
|
|
(2,077 |
) |
|
|
|
|
(3,203 |
) |
|
|
(7,718 |
) |
|
|
Other income, net |
|
3,430 |
|
|
|
4,049 |
|
|
|
|
|
9,801 |
|
|
|
7,884 |
|
|
|
Total
revenue |
|
184,855 |
|
|
|
184,385 |
|
|
|
|
|
746,243 |
|
|
|
721,289 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating |
|
(22,721 |
) |
|
|
(24,756 |
) |
|
|
|
|
(91,690 |
) |
|
|
(90,061 |
) |
|
|
Real estate taxes |
|
(21,909 |
) |
|
|
(23,261 |
) |
|
|
|
|
(99,157 |
) |
|
|
(101,207 |
) |
|
|
Total
expenses |
|
(44,630 |
) |
|
|
(48,017 |
) |
|
|
|
|
(190,847 |
) |
|
|
(191,268 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Property
NOI |
$ |
140,225 |
|
|
$ |
136,368 |
|
|
2.8% |
|
$ |
555,396 |
|
|
$ |
530,021 |
|
|
4.8% |
Reconciliation of Same
Property NOI to mostdirectly comparable GAAP measure: |
|
|
|
|
|
|
|
|
|
|
|
Net operating income – same properties |
$ |
140,225 |
|
|
$ |
136,368 |
|
|
|
|
$ |
555,396 |
|
|
$ |
530,021 |
|
|
|
Net operating income – non-same activity(3) |
|
11,692 |
|
|
|
12,582 |
|
|
|
|
|
52,858 |
|
|
|
51,630 |
|
|
|
Total property NOI |
|
151,917 |
|
|
|
148,950 |
|
|
2.0% |
|
|
608,254 |
|
|
|
581,651 |
|
|
4.6% |
Other income, net |
|
589 |
|
|
|
2,393 |
|
|
|
|
|
5,857 |
|
|
|
8,992 |
|
|
|
General, administrative and other |
|
(14,342 |
) |
|
|
(12,883 |
) |
|
|
|
|
(56,142 |
) |
|
|
(54,860 |
) |
|
|
Merger and acquisition costs |
|
— |
|
|
|
81 |
|
|
|
|
|
— |
|
|
|
(925 |
) |
|
|
Impairment charges |
|
— |
|
|
|
— |
|
|
|
|
|
(477 |
) |
|
|
— |
|
|
|
Depreciation and amortization |
|
(102,898 |
) |
|
|
(112,709 |
) |
|
|
|
|
(426,361 |
) |
|
|
(469,805 |
) |
|
|
Interest expense |
|
(27,235 |
) |
|
|
(26,827 |
) |
|
|
|
|
(105,349 |
) |
|
|
(104,276 |
) |
|
|
Gain (loss) on sales of operating properties, net |
|
133 |
|
|
|
(57 |
) |
|
|
|
|
22,601 |
|
|
|
27,069 |
|
|
|
Net income attributable to noncontrolling interests |
|
(185 |
) |
|
|
(74 |
) |
|
|
|
|
(885 |
) |
|
|
(482 |
) |
|
|
Net income (loss) attributable
to common shareholders |
$ |
7,979 |
|
|
$ |
(1,126 |
) |
|
|
|
$ |
47,498 |
|
|
$ |
(12,636 |
) |
|
|
(2) |
Same Property
NOI excludes the following: (i) properties acquired or placed in
service during 2022 and 2023; (ii) the multifamily rental units and
commercial portion at One Loudoun Downtown – Pads G & H; (iii)
Shoppes at Quarterfield, Circle East and The Landing at Tradition –
Phase II, which were reclassified from active redevelopment into
our operating portfolio in June 2022, September 2022 and June 2023,
respectively; (iv) two active development and redevelopment
projects; (v) Hamilton Crossing Centre and Edwards Multiplex –
Ontario, which were reclassified from our operating portfolio into
redevelopment in June 2014 and March 2023, respectively; (vi)
properties sold or classified as held for sale during 2022 and
2023; and (vii) office properties. |
(3) |
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 and
expiration during the period. |
(4) |
Includes non-cash activity across the portfolio as well as NOI
from properties not included in the same property pool, including
properties sold during both periods. |
The Company uses property NOI, a non-GAAP
financial measure, to evaluate the performance of our properties.
The Company defines NOI as income from our real estate, including
lease termination fees received from tenants, less our property
operating expenses. NOI excludes amortization of capitalized tenant
improvement costs and leasing commissions and certain corporate
level expenses, including merger and acquisition costs. The Company
believes that NOI is helpful to investors as a measure of our
operating performance because it excludes various items included in
net income that do not relate to or are not indicative of our
operating performance, such as depreciation and amortization,
interest expense, and impairment, if any.
The Company also uses same property NOI (“Same
Property NOI”), a non-GAAP financial measure, to evaluate the
performance of our properties. Same Property NOI is net income
excluding properties that have not been owned for the full periods
presented. Same Property NOI also excludes (i) net gains from
outlot sales, (ii) straight-line rent revenue, (iii) lease
termination income in excess of lost rent, (iv) amortization of
lease intangibles, and (v) significant prior period expense
recoveries and adjustments, if any. When the Company receives
payments in excess of any accounts receivable for terminating a
lease, Same Property NOI will include such excess payments as
monthly rent until the earlier of the expiration of 12 months or
the start date of a replacement tenant. The Company believes that
Same Property NOI is helpful to investors as a measure of our
operating performance because it includes only the NOI of
properties that have been owned for the full periods presented. The
Company believes such presentation eliminates disparities in net
income due to the acquisition or disposition of properties during
the particular periods presented and thus provides a more
consistent metric for the comparison of our properties. Same
Property NOI includes the results of properties that have been
owned for the entire current and prior year reporting periods.
NOI and Same Property NOI should not, however,
be considered as alternatives to net income (calculated in
accordance with GAAP) as indicators of our financial performance.
The Company’s computation of NOI and Same Property NOI may differ
from the methodology used by other REITs and, therefore, may not be
comparable to such other REITs.
When evaluating the properties that are included
in the same property pool, we have established specific criteria
for determining the inclusion of properties acquired or those
recently under development. An acquired property is included in the
same property pool when there is a full quarter of operations in
both years subsequent to the acquisition date. Development and
redevelopment properties are included in the same property pool
four full quarters after the properties have been transferred to
the operating portfolio. A redevelopment property is first excluded
from the same property pool when the execution of a redevelopment
plan is likely and we (a) begin recapturing space from tenants or
(b) the contemplated plan significantly impacts the operations of
the property. For the three months and year ended December 31,
2023, the same property pool excludes the following: (i) properties
acquired or placed in service during 2022 and 2023; (ii) the
multifamily rental units and commercial portion at One Loudoun
Downtown – Pads G & H; (iii) Shoppes at Quarterfield, Circle
East and The Landing at Tradition – Phase II, which were
reclassified from active redevelopment into our operating portfolio
in June 2022, September 2022 and June 2023, respectively; (iv) two
active development and redevelopment projects; (v) Hamilton
Crossing Centre and Edwards Multiplex – Ontario, which were
reclassified from our operating portfolio into redevelopment in
June 2014 and March 2023, respectively; (vi) properties sold or
classified as held for sale during 2022 and 2023; and (vii) office
properties.
Kite Realty Group
TrustEarnings Before Interest, Taxes, Depreciation
and Amortization (“EBITDA”)(dollars in thousands)
(unaudited)
|
Three Months EndedDecember 31,
2023 |
|
|
Net income |
$ |
8,164 |
|
Depreciation and amortization |
|
102,898 |
|
Interest expense |
|
27,235 |
|
Income tax expense of taxable REIT subsidiary |
|
449 |
|
EBITDA |
|
138,746 |
|
Unconsolidated Adjusted EBITDA |
|
828 |
|
Gain on sales of operating properties, net |
|
(133 |
) |
Other income and expense, net |
|
(540 |
) |
Noncontrolling interests |
|
(189 |
) |
Adjusted
EBITDA |
$ |
138,712 |
|
|
|
Annualized Adjusted
EBITDA(1) |
$ |
554,849 |
|
|
|
Company share of Net
Debt: |
|
Mortgage and other indebtedness, net |
$ |
2,829,202 |
|
Plus: Company share of unconsolidated joint venture debt |
|
55,911 |
|
Less: Partner share of consolidated joint venture debt(2) |
|
(9,849 |
) |
Less: cash, cash equivalents, and restricted cash |
|
(43,986 |
) |
Less: debt discounts, premiums and issuance costs, net |
|
(26,261 |
) |
Company share of Net Debt |
$ |
2,805,017 |
|
|
|
Net Debt to Adjusted
EBITDA |
5.1x |
(1) |
Represents Adjusted EBITDA for the three months ended
December 31, 2023 (as shown in the table above) multiplied by
four. |
(2) |
Partner share of consolidated joint venture debt is calculated
based upon the partner’s pro-rata ownership of the joint venture,
multiplied by the related secured debt balance. |
The Company defines EBITDA, a non-GAAP financial
measure, as net income before interest expense, income tax expense
of the taxable REIT subsidiary, and depreciation and amortization.
For informational purposes, the Company also provides Adjusted
EBITDA, which it defines as EBITDA less (i) Adjusted EBITDA from
unconsolidated entities, (ii) gains on sales of operating
properties or impairment charges, (iii) merger and acquisition
costs, (iv) other income and expense, (v) noncontrolling interest
Adjusted EBITDA, and (vi) other non-recurring activity or items
impacting comparability from period to period. Annualized Adjusted
EBITDA is Adjusted EBITDA for the most recent quarter multiplied by
four. Net Debt to Adjusted EBITDA is the Company’s share of net
debt divided by Annualized Adjusted EBITDA. EBITDA, Adjusted
EBITDA, Annualized Adjusted EBITDA and Net Debt to Adjusted EBITDA,
as calculated by the Company, are not comparable to EBITDA and
EBITDA-related measures reported by other REITs that do not define
EBITDA and EBITDA-related measures exactly as we do. EBITDA,
Adjusted EBITDA and Annualized Adjusted EBITDA do not represent
cash generated from operating activities in accordance with GAAP
and should not be considered alternatives to net income as an
indicator of performance or as alternatives to cash flows from
operating activities as an indicator of liquidity.
Considering the nature of our business as a real
estate owner and operator, the Company believes that EBITDA,
Adjusted EBITDA and the ratio of Net Debt to Adjusted EBITDA are
helpful to investors in measuring our operational performance
because they exclude various items included in net income that do
not relate to or are not indicative of our operating performance,
such as gains or losses from sales of depreciated property and
depreciation and amortization, which can make periodic and peer
analyses of operating performance more difficult. For informational
purposes, the Company also provides Annualized Adjusted EBITDA,
adjusted as described above. The Company believes this supplemental
information provides a meaningful measure of its operating
performance. The Company believes presenting EBITDA and the related
measures in this manner allows investors and other interested
parties to form a more meaningful assessment of the Company’s
operating results.
Contact Information: Kite Realty Group TrustTyler
HenshawSVP, Capital Markets & Investor
Relations317.713.7780thenshaw@kiterealty.com
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