Kite Realty Group Trust Reports Second Quarter 2023 Operating Results

INDIANAPOLIS, July 31, 2023 (GLOBE NEWSWIRE) -- Kite Realty Group Trust (: 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 second quarter ended June 30, 2023. For the quarters ended June 30, 2023 and 2022, net income attributable to common shareholders was $32.1 million, or $0.15 per diluted share, compared to net income of $13.1 million, or $0.06 per diluted share, respectively. For the six months ended June 30, 2023 and 2022, net income attributable to common shareholders was $37.4 million, or $0.17 per diluted share, compared to net loss of $3.7 million, or $0.02 per diluted share, respectively.

Company raises 2023 guidance
Leased over 1.3 million square feet at 14.8% comparable blended cash leasing spreads
Same Property NOI increased by 5.7% on a year-over-year basis
Lowered leverage to 5.0x, an all-time low for KRG

“The KRG team delivered another quarter of outstanding operating results, leasing over 1.3 million square feet at nearly 15% comparable blended cash leasing spreads,” said John A. Kite, Chairman and CEO. “The combination of our superior operating platform and high-quality portfolio has enabled KRG’s outperformance to continue. Based on the strength of our fortified balance sheet and continued tenant demand, we are proactively enhancing the quality of our tenants and redefining our long-term embedded growth profile.”

Second Quarter 2023 Financial and Operational Results

• Generated NAREIT FFO of the Operating Partnership of $113.7 million, or $0.51 per diluted share.
• Same Property NOI increased by 5.7%.
• Executed 190 new and renewal leases representing over 1.3 million square feet.
  • Blended cash leasing spreads of 14.8% on 146 comparable leases, including 45.5% on 29 comparable new leases, 11.9% on 64 comparable non-option renewals and 8.6% on 53 comparable option renewals.
  • Cash leasing spreads of 24.0% on a blended basis for comparable new and non-option renewal leases, excluding option renewals.
• Operating retail portfolio annualized base rent (ABR) per square foot of $20.19 at June 30, 2023, a 2.7% increase year-over-year.
• Retail portfolio leased percentage of 94.1% at June 30, 2023, a 30-basis point increase on a year-over-year basis.
  • The leased percentage includes the impact of eight Bed Bath & Beyond leases that were terminated as of June 30, 2023, in connection with its initial bankruptcy proceedings, which impacted the leased rate by 60 basis points.
• Portfolio leased-to-occupied spread of 200 basis points, which equates to $27 million of signed-not-open NOI.
  

Second Quarter 2023 Capital Allocation Activity

• Sold Kingwood Commons (Houston, TX), a 158,172 square foot neighborhood center, for $27.4 million.
• Sold Pan Am Plaza (Indianapolis, IN), an undeveloped land parcel and parking garage, for $52.0 million.
• The Company currently has two active development projects with limited future capital commitments of $34.9 million.
  

Second Quarter 2023 Balance Sheet Overview

• As of June 30, 2023, the Company’s net debt to Adjusted EBITDA was 5.0x.
• As previously disclosed, the Company closed on a $95.1 million 10-year mortgage at a fixed interest rate of 5.36% secured by its One Loudoun Residential joint venture project in Ashburn, Virginia. The mortgage generated gross proceeds of $92.7 million at the Company’s share.
• As of June 30, 2023, the Company’s $1.1 billion revolving line of credit was undrawn.
  

Dividend
On July 28, 2023, the Company’s Board of Trustees declared a third quarter 2023 dividend of $0.24 per common share, which represents a 9.1% year-over-year increase. The third quarter dividend will be paid on or about October 13, 2023, to shareholders of record as of October 6, 2023.

2023 Earnings Guidance
The Company expects to generate net income attributable to common shareholders of $0.21 to $0.25 per diluted share in 2023. The Company is raising its 2023 NAREIT FFO guidance range to $1.96 to $2.00 per diluted share from $1.92 to $1.98 per diluted share, based, in part, on the following key assumptions at the midpoint:

• 2023 same property NOI range of 3.0% to 4.0%, which represents a 75-basis point increase at the midpoint.
• Bad debt reserves of 1.25% of total revenues for the remainder of 2023.
• Assumes no additional revenue from Bed Bath & Beyond Inc.
  

The following table reconciles the Company’s 2023 net income guidance range to the Company’s 2023 NAREIT FFO guidance range:

Earnings Conference Call

Kite Realty Group Trust will conduct a conference call to discuss its financial results on Tuesday, August 1, 2023, at 12:00 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: Second Quarter 2023 Webcast. The dial-in registration link is: Second 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 (: 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 June 30, 2023, the Company owned interests in 181 U.S. open-air shopping centers and mixed-use assets, comprising approximately 28.6 million square feet of gross leasable space. For more information, please visit kiterealty.com.

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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: 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 Texas, Florida, Maryland, New York, and North Carolina; 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; risks associated with cybersecurity attacks and the loss of confidential information and other business disruptions; other factors affecting the real estate industry generally; our ability to enhance the quality of our tenants and redefine our long-term embedded growth profile; 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.