Kite Realty Group Trust · NYSE:KRG

Kite Realty Group Trust — NAREIT June 2019

37 slides from Kite Realty Group Trust's conference presentation, Jun 3, 2019

  1. Slide 1: NAREIT June 2019

    Title Changed to “NAREIT June 2019” Presentation or Section Name | 1

  2. Slide 2: KRG Quick Facts

    KRG QUICK FACTS Note: Unless otherwise indicated, the source of all Company data is publicly available information that has been filed with the Securities and Exchange Commission as of March 31, 2019 1. Dividend yield calculated as most recent quarterly dividend, annualized and expressed as a percen

  3. Slide 3: Note: Demographic data source: STI: Popstats based on estimated 2018 data on a 5-mile

    Note: Demographic data source: STI: Popstats based on estimated 2018 data on a 5-mile radius from KRG market assets, per the US Census Bureau, weighted by ABR Population Growth 2018 – 2023 © 2019 Kite Realty Group NAREIT - June 2019 | 3

  4. Slide 4: (1) STI: Popstats based on estimated 2018 data on a 5-mile radius from the

    (1) STI: Popstats based on estimated 2018 data on a 5-mile radius from the U.S. Census Bureau, weighted by ABR. Property classification based on definition by Green Street Advisors. In summary: Neighborhood Center: Convenience-oriented center often anchored by a grocery Community Center: Larger cent

  5. Slide 5: 1. Credit rating from S&P as of March 31, 2019 2. Per the 1Q

    1. Credit rating from S&P as of March 31, 2019 2. Per the 1Q ‘19 supplement © 2019 Kite Realty Group NAREIT - June 2019 | 5

  6. Slide 6: Presentation or Section Name |

    Presentation or Section Name | 6

  7. Slide 7: © 2019 Kite Realty Group NAREIT - June 2019 | 7

    © 2019 Kite Realty Group NAREIT - June 2019 | 7

  8. Slide 8: 96% $18.00 95% $17.00 94% $16.00 93% $15.00 92% $14.00 91% $13.00 90% $12.00

    96% $18.00 95% $17.00 94% $16.00 93% $15.00 92% $14.00 91% $13.00 90% $12.00 2013 2014 2015 2016 2017 2018 Q1'19 2013 2014 2015 2016 2017 2018 Q1'19 97% 93% 96% 91% 95% 89% 94% 87% 93% 85% 92% 83% 2013 2014 2015 2016 2017 2018 Q1'19 2013 2014 2015 2016 2017 2018 Q1'19 © 2019 Kite Realty Group NAREIT

  9. Slide 9: Tenant mix

    Sporting Goods, 3.4% Office Supplies, 1.7% Home Improvement Restaurants, 0.7% Goods, 3.4% Electronics & Books, Electronics & Books, 5.9% 4.8% Services, Sporting Home Entertainment, Goods, 6.5% Improvement 24.4% Goods, 10.2% Discount Retailers, 8.1% Discount Retailers, 11.3% Soft Goods, 8.2% Restaura

  10. Slide 10: Presentation or Section Name |

    Presentation or Section Name | 10

  11. Slide 11: Peer valuation comparison

    Data as of May 30, 2019 Premium FFO AFFO Discount to Recovery ND + Ticker Multiple1 Multiple Market Cap NAV ABR PSF2 NOI Margin Ratio ND / E2 Pref / E2 22.0x KRG 9.6x 11.3x 1,275 -32.4% $ 17.28 72.4% 91.6% 6.5x 6.5x REG 16.3x 19.5x 10,880 -7.8% $ 22.10 69.7% 81.7% 5.3x 5.3x 20.0x AKR 18.5x 22.8x 2,2

  12. Slide 12: NAV and implied cap rate versus peers

    ▪ ▪ AKR 6% BRX 24% 29.67 6.00% 49% CDR 51% 27.74 6.25% 45% FRT 4% KIM 12% 25.96 6.50% 41% REG 8% 24.31 6.75% 37% ROIC 16% 22.52 7.02% 32% RPAI 28% 21.35 7.25% 29% RPT 20% 20.02 7.50% 24% SITC 19% 18.78 7.75% 19% UE 20% 17.61 8.00% 14% WRI 19% 16.51 8.25% 8% Average 20% 15.22 8.57% 0% KRG2 32% 1. Pee

  13. Slide 13: ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪

    ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ © 2019 Kite Realty Group NAREIT - June 2019 | 13

  14. Slide 14: Debt maturity schedule

    $ in millions $400 95.0 $300 105.6 $200 95.0 300.0 250.0 $100 212.0 181.9 165.5 80.0 20.7 11.7 75.0 10.4 10.0 $0 16.9 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 $400 $300 95.0 $200 28.1 300.0 250.0 $100 189.0 181.9 80.0 52.9 11.5 75.0 10.0 $0 16.9 10.4 2019 2020 2021 2022 2023 2024

  15. Slide 15: AKR $ 29.31 CDR 8.4x CDR 10.4x KIM 10.2 FRT $ 27.79 ROIC 7.3x

    AKR $ 29.31 CDR 8.4x CDR 10.4x KIM 10.2 FRT $ 27.79 ROIC 7.3x ROIC 7.3x FRT 10.0 REG $ 22.10 RPT 6.6x RPT 7.3x REG 8.0 ROIC $ 21.28 KRG (Current)3 6.5x KIM 7.0x KRG (Proforma) 7.0 WRI $ 19.45 BRX 6.4x SITC 6.8x UE 6.4 RPAI $ 19.17 AKR 6.1x KRG (Current) 3 6.5x SITC 6.0 UE $ 18.28 KRG (Proforma) ~5.9

  16. Slide 16: Leverage comparison

    11.0x 80.0% 10.0x 70.0% 9.0x 60.0% 8.0x 50.0% 7.0x 40.0% 6.0x 30.0% 5.0x 20.0% 4.0x 10.0% 3.0x 0.0% 2 Net Debt / EBITDA Net Debt + Pref / EBITDA Net Debt / Total Market Cap 1. Source data from S&P Global and company supplementals using equity pricing as of 5/30/19 2. PF KRG is the proforma impact to

  17. Slide 17: Theoretical leverage and firm value

    ▪ Miller & Modgiliani: Theoretical Leverage & Firm Value Optimal Leverage Cost of Financial Firm Value Firm Distress Leverage Ratio ▪ ▪ ▪ ▪ ▪ ▪ ▪ 1. Numbers are an illustrative example 2. Assumes no material mark to market on the debt © 2019 Kite Realty Group NAREIT - June 2019 | 17

  18. Slide 18: Estimated multiple expansion

    Estimated Multiple / 8.9x / n/a 8.9x / 0.0x 11.8x / 2.8x 12.9x / 4.0x 12.9x / 4.0x Multiple Increase 1. Multiple expansion estimates based on comparable strip center REITs. This chart is illustrative only and assumes current market conditions, positive investor response and other assumptions and exp

  19. Slide 19: Disposition pool

    $500M $411M $322M $184M $0M 1. Based on the disposition pool as it stands today, which may change in the future. © 2019 Kite Realty Group NAREIT - June 2019 | 19

  20. Slide 20: Presentation or Section Name |

    Presentation or Section Name | 20

  21. Slide 21: ▪ ▪ ▪ ▪ ▪ ▪

    ▪ ▪ ▪ ▪ ▪ ▪ © 2019 Kite Realty Group NAREIT - June 2019 | 21

  22. Slide 22: Operating and development portfolio optimization

    Development / Portfolio Optimization ▪ ▪ ▪ Contractual Rent ▪ Steps / Fixed CAM ▪ ▪ Occupancy ▪ Growth ▪ ▪ Operating Properties ▪ ▪ © 2019 Kite Realty Group NAREIT - June 2019 | 22

  23. Slide 23: ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ 1) Excludes a strategic lease noted

    ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ 1) Excludes a strategic lease noted in KRG’s Q1’19 supplemental. © 2019 Kite Realty Group NAREIT - June 2019 | 23

  24. Slide 24: + + ▪ ▪ + + ▪ + + ▪ ▪ - - ▪

    + + ▪ ▪ + + ▪ + + ▪ ▪ - - ▪ - ▪ (1) Excludes $10psf related to the buyout of the lease © 2019 Kite Realty Group NAREIT - June 2019 | 24

  25. Slide 25: ▪ ▪ ▪ ▪ ▪ ▪ (1) 2019 budget versus 2016 actual

    ▪ ▪ ▪ ▪ ▪ ▪ (1) 2019 budget versus 2016 actual © 2019 Kite Realty Group NAREIT - June 2019 | 25

  26. Slide 26: ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ (1) EPSA Portfolio: comprised of

    ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ (1) EPSA Portfolio: comprised of Extremely Productive Submarkets and Assets © 2019 Kite Realty Group NAREIT - June 2019 | 26

  27. Slide 27: © 2019 Kite Realty Group NAREIT - June 2019 | 27

    © 2019 Kite Realty Group NAREIT - June 2019 | 27

  28. Slide 28: © 2019 Kite Realty Group NAREIT - June 2019 | 28

    © 2019 Kite Realty Group NAREIT - June 2019 | 28

  29. Slide 29: © 2019 Kite Realty Group NAREIT - June 2019 | 29

    © 2019 Kite Realty Group NAREIT - June 2019 | 29

  30. Slide 30: © 2019 Kite Realty Group NAREIT - June 2019 | 30

    © 2019 Kite Realty Group NAREIT - June 2019 | 30

  31. Slide 31: ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪

    ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ © 2019 Kite Realty Group NAREIT - June 2019 | 31

  32. Slide 32: Net Income to FFO Reconciliation

    Net Income to FFO Reconciliation Low High Net Income Guidance $0.10 $0.20 Impairment Charge (0.05) (0.05) Gains on Sale of Properties 0.07 0.07 Depreciation (1.58) (1.58) FFO - Guidance $1.66 $1.76 Low High 2018 FFO $2.00 $2.00 2019 Pre-Disposition Adjustments 2018 Dispositions (0.05) (0.05) Lease A

  33. Slide 33: Forward-Looking Statements

    FORWARD-LOOKING STATEMENTS This supplemental information package, 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 and Section 21E of the Securities Exchange Act of

  34. Slide 34: Funds From Operations

    FUNDS FROM OPERATIONS 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 A

  35. Slide 35: © 2019 Kite Realty Group NAREIT - June 2019 | 35

    © 2019 Kite Realty Group NAREIT - June 2019 | 35

  36. Slide 36: FFO reconciliation

    ($ in thousands) Three Months Ended March 31, 2019 2018 Consolidated net income (loss) $ 5,988 $ (17,997) Less: net income attributable to noncontrolling interests in properties (132) (351) Less: gain on sales of operating properties (6,587) (500) Add: impairment charges 4,077 24,070 Add: depreciati

  37. Slide 37: EBITDA and net debt reconciliation

    ($ in thousands) Three Months Ended March 31, 2019 Consolidated net income $ 5,988 Adjustments to net income: Depreciation and amortization 34,635 Interest expense 16,459 Income tax benefit of taxable REIT subsidiary (82) Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) 57,000

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