Kite Realty Group Trust · NYSE:KRG
Kite Realty Group Trust — Q1 2023 Earnings Presentation
35 slides from Kite Realty Group Trust's earnings presentation, May 2, 2023
Slide 1: Investor Update Q1 2023
INVESTOR UPDATE Q1 2023 © 2023 Kite Realty Group | kiterealty.com
Slide 2: KRG Overview
KRG Overview 1960 / 2004 KRG $4.5B $7.6B Founded / IPO NYSE Market Cap1 Enterprise Value1 181 29M 94.8% $20.04 5.3x Operating Retail Total Owned Retail Retail Portfolio Annualized Base Rent Net Debt to Properties GLA (SF) Percent Leased (ABR) per SF Adjusted EBITDA 76% 67% 60% BBB ABR from Assets wi
Slide 3: KRG's Strategic Advantages
KRG’s Strategic Advantages Best-in-Class Operating Platform Operating margins and metrics well above open-air retail sector averages Management team has deep experience operating open-air real estate Flexible and Durable Balance Sheet Low leverage with manageable near-term maturities Ove
Slide 4: First Quarter Highlights
First Quarter Highlights NET DEBT TO ADJUSTED EBITDA ABR PSF 7.0x $20.02 $20.04 6.9x 6.8x $19.36 6.7x $18.42 $17.83 6.0x 5.9x $16.84 $16.07 5.3x $15.53 5.2x 2016 2017 2018 2019 2020 2021 2022 Q1 2023 2016 2017 2018 2019 2020 2021 2022 Q1 2023 Q1 2023 Outperformed consensus1 by $0.04 largely driven b
Slide 5: 2023 Guidance
2023 Guidance 2023 NAREIT FFO GUIDANCE Key assumptions at the midpoint: LOW HIGH Same property NOI growth range of 2.25% - Net income $0.05 $0.11 3.25%, which represents a 25-basis point Depreciation and amortization $1.87 $1.87 increase at the midpoint NAREIT FFO $1.92 $1.98 Full-year bad debt
Slide 6: More Room To Run At A Compelling Entry Point
More Room To Run At A Compelling Entry Point KRG has outperformed the open-air retail peer group over the trailing 3 and 5 years Despite the relative outperformance, KRG’s valuation represents a compelling entry point for shareholders with significant upside Strong Relative Performance… …at a Co
Slide 7: Significant Upside Potential Potential NAV
Significant Upside Potential Potential NAV CAP RATE 5.75% 6.25% 6.75% • We believe the market is currently mispricing KRG, using the NAV components POTENTIAL NAV $33.69 $29.84 $26.57 laid out on page 17 of KRG’s 1Q’23 supplemental • Potential NAV includes NOI and estimated POTENTIAL PRICE leasing co
Slide 8: Efficient Operators
Efficient Operators RETAIL NOI MARGIN RETAIL RECOVERY RATIO 1 74.4% 87.2% 69.8% 77.0% Peer Average KRG - 1Q'23 Peer Average KRG - 1Q'23 BLENDED CASH SPREADS (TTM) G&A AS A % OF TOTAL REVENUE 11.9% 8.3% 6.5% 9.4% Peer Average KRG - 1Q'23 Peer Average KRG - 1Q'23 Note: Peer group includes AKR, BRX, FR
Slide 9: Balance Sheet Snapshot
Balance Sheet Snapshot 5.3x 5.2x $1.0B Net Debt + Preferred / Adjusted EBITDA Debt Service Coverage Ratio Liquidity 4.37% 96% 89% Weighted Average Interest Rate Unencumbered NOI as a % of Total NOI Fixed Rate Debt BBB Baa3 BBB- Fitch Moody’s S&P NET DEBT + PREFERRED / ADJUSTED EBITDA 7.5x 6.7x 6.2x
Slide 10: Well Staggered Maturity Ladder
Well Staggered Maturity Ladder • In the first quarter, repaid 5 mortgages with an aggregate principal balance of $161.5 million with proceeds from the revolving line of credit and cash on hand • Subsequent to quarter end, closed a $95.1 million 10-year mortgage secured by the One Loudoun Residential
Slide 11: Further Strengthened Portfolio Has Significant Potential
Further Strengthened Portfolio Has Significant Potential TRADITION VILLAGE CENTER Port St. Lucie, FL MSA Q1 2023 INVESTOR UPDATE 11
Slide 12: Predominantly Sun Belt with Strategic Gateway Components
Predominantly Sun Belt with Strategic Gateway Components ABR Concentration 67% Sun Belt Markets1 Seattle – 4% Strategic Gateway Markets 23% (DC, Seattle and NYC) Highest Growth Markets2 New York – 8% 35% (since onset of pandemic) Washington, D.C. / Baltimore – 11% Las Vegas – 5% Raleigh / Durham – 3
Slide 13: Diverse Portfolio of Durable Cash Flow
Diverse Portfolio of Durable Cash Flow 48% 12% 12% 19% 7% Community Centers Neighborhood Centers Mixed-Use Centers Power Centers Lifestyle Centers Grocery Component 85% Grocery Component 87% Grocery Component 62% Grocery Component 66% Grocery Component 55% • Expanding offerings to retailers through
Slide 14: Well-Balanced Portfolio Delivered Strong Results
Well-Balanced Portfolio Delivered Strong Results • KRG is focused on achieving the highest risk-adjusted return on capital • KRG has demonstrated a well-balanced portfolio can produce similar returns on capital and allows us to capitalize on increased tenant demand for diverse open-air formats 2022
Slide 15: Anchor Inventory Update
Anchor Inventory Update • Strong risk-adjusted returns provide opportunity for outsized Solid Returns & Stronger Tenants organic NOI growth • Additional value creation at properties due to new, stronger tenants NEW OFFERINGS ANCHORS ANCHOR EXECUTED INVENTORY (YE 2020 – 1Q’23) OPPORTUNITY1 Count 58 2
Slide 16: Solid Leasing Activity Recent Tenants Signed
Solid Leasing Activity Recent Tenants Signed • KRG continues to see strong retailer demand for its well- positioned, open-air centers • Leasing volumes remain strong and have the ability to continue driving rents Strong Momentum Continues 2022 1Q’23 TRADITIONAL MALL TENANTS # of Leases Signed 782 14
Slide 17: Diverse Tenant Base
Diverse Tenant Base Strong Mix of Convenience and Experiential % of ABR STORE % OF WTD. ESSENTIAL RETAIL 31% TOP 15 TENANTS BY ABR COUNT1 ABR2 Grocery / Drug / Big Box Wine and Spirits 13% 1 The TJX Companies, Inc. 45 2.5% Office Supply / Electronics 6% 2 Best Buy Co., Inc. 16 1.9% Medical 4% 3 Ross
Slide 18: Anchor and Shop Tenant Exposure
Anchor and Shop Tenant Exposure • Diverse and balanced tenant mix provides strong durability in KRG’s cash flow • Anchor revenue stream predominantly composed of grocers and discount retailers • Shop composition includes a strong mix of restaurants, apparel and service tenants TOTAL PORTFOLIO COMPOS
Slide 19: Big Names. Small Spaces.
Big Names. Small Spaces. Top 50 Small Shop Tenants 100% 830 30% 15% (< 10K Square Feet) National Brands Stores Of Small Shop ABR Of Portfolio ABR Pairing Typical Small Shop Tenants With Newer Retail Concepts KEY TOP 50 SHOP TENANTS (by ABR) KEY NEW SHOP TENANTS RECENTLY SIGNED Q1 2023 INVESTOR UPDAT
Slide 20: Value Creation: Active Developments
Value Creation: Active Developments • Total active developments are right-sized for the size of the company and is expected to provide strong NOI growth prospects • Active development pipeline poised to deliver additional value creation in the future ($ in M; GLA in ‘000s) PROJECTED TOTAL MULTI TOTA
Slide 21: The Corner
The Corner OVERVIEW KEY METRICS Total Project Cost at KRG’s Share1 $31.9M • 285 multifamily units and 24k square feet of ground floor retail on a land KRG Ownership % 50% parcel through a 50/50 joint venture with a third party developer KRG Equity Requirement $0M • KRG’s contribution was primarily f
Slide 22: Entitled Land – Development and/or Capital Source
Entitled Land – Development and/or Capital Source • KRG is taking a fresh look at each piece of entitled land to determine the optimal real estate use and capital allocation decision • KRG, while experienced developers, may or may not pursue all of the development opportunities • At One Loudoun, KRG
Slide 23: ESG Snapshot
ESG Snapshot Environmental Social Governance Direct Emissions Changes (metric tons, in Ms) Key Stats What We Do Invested in small business in the form of tenant 92% Independent Trustees % $9M+ allowance and landlord work Emissions Scope 2020 2021 Change Entirely independent committees Scope 1 2,
Slide 24: ESG Core Responsibilities are Woven Throughout the Organization
ESG Core Responsibilities are Woven Throughout the Organization BOARD OF DIRECTOR / EXECUTIVE OVERSIGHT Leasing Property Management - Execute green leases - Tenant relationships and satisfaction - Foster tenant relationships to improve energy efficient initiatives - Vendor relationships and satisfac
Slide 25: Updated 5-Year ESG Goals (Established in 2021)
Updated 5-Year ESG Goals (Established in 2021) KRG recognizes the importance ESG initiatives play in our ability to generate long-term, sustainable returns, and setting goals signals our long-term ESG commitment 5-YEAR GOALS (To be completed by 12/31/2026) CURRENT STATUS (1Q’23) ENVIRONMENTAL Instal
Slide 26: Thriving Open-Air Real Estate
Thriving Open-Air Real Estate DENTON CROSSING Dallas / Ft. Worth, TX MSA Q1 2023 INVESTOR UPDATE 26
Slide 27: Retailers Depend on Brick & Mortar Footprint
Retailers Depend on Brick & Mortar Footprint “The biggest central competitive advantage of brick-and-mortar retail is your physical stores and your employees that work in those stores.” – Marvin Ellison Lowe’s Chairman, President and CEO STORE STORE COUNT1 COUNT1 Over the last two years, store Appro
Slide 28: Open-Air Centers: Convenient and Less Costly
Open-Air Centers: Convenient and Less Costly • Open-air assets are thriving due to their convenient and affordable nature for retailers and consumers • Conveniently located and easily accessible parking lots that satisfy BOPIS / curbside pick-up methods • Significantly lower operating costs equal mu
Slide 29: Convenient Shopping Destinations and Last-Mile Fulfillment
Convenient Shopping Destinations and Last-Mile Fulfillment SHOP IN STORE Shop and purchase in the physical store IN-STORE SCHEDULED PICKUP DELIVERY Order online Order online and pick up in and select a OPEN-AIR delivery time store CENTER slot TRANSACTIONS REDUCE FRICTION POINTS CURBSIDE SHIP FROM ON
Slide 30: Disclaimer
Disclaimer Forward-Looking Statements This Investor Update, 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
Slide 31: Non GAAP Financial Measures
Non GAAP Financial Measures NET OPERATING INCOME AND SAME PROPERTY NET OPERATING INCOME The Company uses property net operating income (“NOI”) and cash NOI, which are non-GAAP financial measures, to evaluate the performance of our properties. The Company defines NOI and cash NOI as income from our r
Slide 32: Non GAAP Financial Measures
Non GAAP Financial Measures EBITDA 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 de
Slide 33: Appendix: Reconciliation of Same Property NOI to Net Income
Appendix: Reconciliation of Same Property NOI to Net Income Q1 2023 INVESTOR UPDATE 33
Slide 34: Appendix: Funds from Operations
Appendix: Funds from Operations Q1 2023 INVESTOR UPDATE 34
Slide 35: Appendix: Reconciliation of EBITDA to Net Income
Appendix: Reconciliation of EBITDA to Net Income Q1 2023 INVESTOR UPDATE 35
Kite Realty Group Trust — Q1 2023 Earnings Presentation on 6ix