Kite Realty Group Trust · NYSE:KRG
Kite Realty Group Trust — Q2 2023 Earnings Presentation
35 slides from Kite Realty Group Trust's earnings presentation, Aug 1, 2023
Slide 1: Investor Update Q2 2023
KGTE: INVESTOR UPDATE Q2 2023 ‘dition Village Center - Port St. Lucie, FL MSA © 2023 Kite Realty Group | kiterealty.com
Slide 2: Company overview and key portfolio metrics
Founded / IPO NYSE Market Cap1 Enterprise Value1 Operating Retail Total Owned Retail Retail Portfolio Annualized Base Rent Net Debt to Properties GLA (SF) Percent Leased (ABR) per SF Adjusted EBITDA ABR from Assets with a ABR from Community and ABR in Sun Belt Markets Fitch Credit Rating Grocery Com
Slide 3: Investment highlights
▪ ✓ Operating margins and metrics well above open-air retail sector averages ✓ Management team has deep experience operating open-air real estate ▪ ✓ Low leverage with manageable near-term maturities ✓ Over $1.2B of available liquidity and minimal near- term capital commitments ▪ ✓ Primarily concent
Slide 4: Q2 2023 highlights
2016 2017 2018 2019 2020 2021 2022 Q2 2023 2016 2017 2018 2019 2020 2021 2022 Q2 2023 Outperformed consensus1 by $0.03 largely driven by lower than expected bad debt, higher termination fees, and overage rent Increased occupancy, overage rent, and lower bad debt drove outsized SSNOI growth Healthy l
Slide 5: 2023 guidance
Net income ▪ Same property NOI growth range of 3.0% - 4.0%, which represents a 75-basis point increase at the Gain on sales of operating properties, net midpoint Depreciation and amortization NAREIT FFO ▪ Bad debt reserves of 1.25% of total revenues for the remainder of 2023 ▪ Assumes no additional
Slide 6: Peer comparison: KRG vs peer average
Peer Average KRG - 2Q'23 Peer Average KRG - 2Q'23 Peer Average KRG - 2Q'23 Peer Average KRG - 2Q'23 Note: Peer group includes AKR, BRX, FRT, KIM, PECO, REG, ROIC and SITC. Source of all peer data is from 1Q 2023 supplemental disclosures, except KIM, ROIC and SITC data is from 2Q 2023 supplemental di
Slide 7: Multi-tenant retail supply and demand
• Note: Data pertains to multi-tenant retail, excluding single-tenant and net lease retail. Source: CBRE Research
Slide 8: Lease structure: CPI, fixed rent bumps, fixed CAM
• • • CPI Fixed Rent Bumps Greater Than or Equal to 3% Fixed CAM
Slide 9: Balance sheet strength and leverage vs peers
Net Debt + Preferred / Adjusted EBITDA Debt Service Coverage Ratio Liquidity Weighted Average Interest Rate Unencumbered NOI as a % of Total NOI Fixed Rate Debt Fitch Moody’s S&P 6.9x 6.5x 6.3x 6.0x 6.1x 5.9x 5.3x 4.9x REG KRG PECO KIM SITC BRX FRT ROIC AKR Notes: Source of all peer data is from 1Q
Slide 10: Debt maturity schedule
1. Subsequent to June 30, 2023, the Company amended the mortgage secured by Delray Marketplace agreement to extend the maturity date to August 4, 2026, with a one-year extension option. In addition, the interest rate margin increased to 215 basis points. In conjunction with the extension, the Compan
Slide 11: Further strengthened portfolio with significant potential
Mi ef Further Strengthened Portfolio Has Significant Potential fe) u g h n u t)
Slide 12: Sun Belt market exposure
1. Sun Belt states include AL, AR, AZ, CA, CO, FL, GA, KY, LA, MS, NC, NM, NV, OK, SC, TN, TX, UT and VA.
Slide 13: Portfolio demographics
• • • • • Average Population: 103K Average Household Income: $117K Note: 3-mile demographic statistics are weighted by 2Q 2023 ABR and sourced from PopStats. Remaining 1% of KRG’s portfolio is unanchored or single-tenant assets.
Slide 14: Portfolio composition by center type
• • Community / Neighborhood / Power Centers Lifestyle / Mixed-Use Centers Community / Neighborhood / Power Centers Lifestyle / Mixed-Use Centers 1. Represents the estimated total potential ABR divided by the cost of executing such leases. These numbers are based on Management's estimates and assump
Slide 15: Anchor vacancy lease-up opportunity
• • Count Square feet Capital / SF Total capital ($, M) Previous tenants’ ABR Estimated New ABR2 Cash lease spread Return on capital New NOI incl. NNN ($, M) FFO / Share 1. Estimate of potential outcomes of remaining anchor vacancies. 2. New ABR is actual for executed and average in-place ABR for an
Slide 16: Leasing activity and spreads
• • # of Leases Signed Leased SF Signed Blended Cash Spread Non-Option Renewal Spread
Slide 17: Top tenants and categories
Grocery / Drug / Big Box Wine and Spirits The TJX Companies, Inc. Office Supply / Electronics Best Buy Co., Inc. Medical Ross Stores, Inc. Pet Stores PetSmart, Inc. Hardware / Auto Gap Inc. Banks Michaels Stores, Inc. Dick’s Sporting Goods, Inc. Quick Service Restaurants Publix Super Markets, Inc. F
Slide 18: Anchor and shop tenant exposure
rh —— Anchor and Shop Tenant Exposure KITE + 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 PORTF
Slide 19: Big names, small spaces
— Big Names. Small Spaces. Pi KITE > Top 50 Small Sea RAS 99% ~780 29% 15% (< 10K Square Feet) National Brands Stores Of Small Shop ABR Of Portfolio ABR J (— >) Pairing Typical Small Shop Tenants With Newer Retail Concepts KEY TOP 50 SHOP TENANTS (by ABR) KEY NEW SHOP TENANTS RECENTLY SIGNED @ATHLET
Slide 20: Development projects
Total Project Cost at KRG’s Share1 • KRG Ownership % KRG Equity Requirement • Est. Project Cash Yield Est. Incremental NOI @ Share Expected Stabilization Date 1. The Company does not have any equity requirements related to this development. Total project costs are at KRG’s share and are net of KRG’s
Slide 21: Future development opportunities
• • • 1. Based on external estimates and completed entitlements.
Slide 22: ESG metrics and governance
Invested in small business in the form of tenant ✓ 92% Independent Trustees allowance and landlord work ✓ Entirely independent committees Scope 1 2,275.2 2,657.5 16.8% Meals packed through Kite Cares initiative ✓ Lead independent Trustee Hours dedicated to KRG volunteer time off (VTO) ✓ Majority vot
Slide 23: Project Green
• • • • • Project Green began with a simple concept – celebrating each new lease in the KRG portfolio with the planting of a tree. Then one tree for each lease quickly became 100. As a perpetual commitment to environmental stewardship, KRG looks forward to continuing Project Green and its impact for
Slide 24: ESG priorities and initiatives
- Execute green leases - Tenant relationships and satisfaction - Foster tenant relationships to improve energy efficient initiatives - Vendor relationships and satisfaction - Obtain consent from tenants for green projects - Identify and execute energy efficient initiatives - Cybersecurity - Foster v
Slide 25: Updated 5-year ESG goals
— Updated 5-Year ESG Goals (Established in 2021) K 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 (2Q’23) ENVIRONMENTAL >
Slide 26: Thriving Open-Air Real Estate
a Thriving Open-Air Real Estate DENTON CROSSING Dallas / Ft. Wor
Slide 27: Physical stores drive retailer sales
Over the last two years, store Approximately 97% of sales are fulfilled delivery sales have nearly fulfilled with physical stores tripled, reaching $1B each month 18 consecutive quarters of comp Planning to open 500 to 600 net sales growth new stores over the next 5 years 70% of e-commerce sales ful
Slide 28: Open-air benefits and retailer case study
Pi KITE * 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 much lower total costs to retailers — O
Slide 29: Omnichannel fulfillment through stores
Shop and purchase in the physical store Order online Order online and pick up in and select a store delivery time slot Drive up and Product have order shipped from brought to the store your car
Slide 30: Forward-Looking Statements
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 Exchange A
Slide 31: Net operating income and same property NOI
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 real estate, including lease
Slide 32: EBITDA definitions
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 defines as EBITDA less (i) Adj
Slide 33: Reconciliation of Same Property NOI to Net Income
rh Appendix: Reconciliation of Same Property NOI to Net Income KITE Kite Realty Group Trust Same Property Net Operating Income ("NOI") (dollars in thousands) (unaudited) ‘Three Months Ended June 30, ‘six Months Ended June 30, 2023 2022 Change 2023 72022__ Change Number of properties in same property
Slide 34: Funds from Operations
KRG NYSE Appendix: Funds from Operations Kite Realty Group Trust Funds From Operations ("FFO")¥4 (dollars in thousands, except per share amounts) (unaudited) Three Months Ended Six Months Ended June 30, June 30. 2023 2022 2023 2022 Net income (loss) $ 32481 $ 13445 $ 38042 $ (3,381) Less: net income
Slide 35: Reconciliation of EBITDA to Net Income
PA — Appendix: Reconciliation of EBITDA to Net Income KITE Kite Realty Group Trust Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") (dollars in thousands) (unaudited) Three Months Ended une 30, 2023 Net income $ 32,481 Depreciation and amortization 109,462 Interest expense 2
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