Kite Realty Group Trust · NYSE:KRG
Kite Realty Group Trust — Q1 2020 Earnings Presentation
36 slides from Kite Realty Group Trust's earnings presentation, May 8, 2020
Slide 1: Investor Update First Quarter 2020
INVESTOR UPDATE FIRST QUARTER 2020
Slide 2: Company snapshot and key portfolio statistics
Number of Operating • High-quality portfolio with diverse tenant base 82 Retail Properties • Southern US (aka “Warmer & Cheaper”) Total Retail GLA (SF) 11.6mm focus to take advantage of current and projected demographic trends Operating Portfolio 94.5% • Strong balance sheet with a substantial Perce
Slide 3: First quarter 2020 highlights
Q1 2020 FFO per share was $0.36. FFO per share was negatively impacted by ($0.04) per share primarily due to a non-cash straight-line rental revenue charge related to the impact of COVID-19. SPNOI for Q1 2020 was 0.9% higher year-over-year. Excluding the acceleration of bad debt related to the impac
Slide 4: KRG is a South & West focused retail REIT
KRG is a South & West focused retail REIT 2004 – IPO 2015 – Merger Today # of Operating 30 110 82 Retail Properties # of States 9 20 16 # of Markets 16 52 33 Top Region (% of ABR) South 52% South 63% South 61% Top State (% of ABR) FL 27% FL 28% FL 27% Top MSA (% of ABR) Indianapolis 23% Indianapolis
Slide 5: Portfolio quality and implied cap rate
• 77% of KRG’s ABR comes from the South and West Population (3 Mile) 61,700 75,800 • Project Focus pruned lower-growth, non-core assets at a cap rate of ~8.0% Est. 5-Year Population Growth (3 Mile) 1.0% 1.7% • KRG’s strong portfolio currently trades Average HHI (3 Mile) $71,800 $97,500 at an implied
Slide 6: COVID-19 Update: Strong Team to Weather the Storm
y | KEITE COVID-19 UPDATE: Strong Team to Weather the Storm KRG 888 577 5600 kiterealty.com NYSE.
Slide 7: COVID-19 response priorities
▪ Protect employee safety, security, mental health, and productivity – Instituted work from home for all non-essential employees – Activated business continuity plan – Offering employees ample resources to enable effective employee engagement ▪ Keep centers open and operating to provide for consumer
Slide 8: Optimism and communication through the crisis
▪ The best scientific minds in the world are racing to find a cure/vaccine and one of our core values is optimism ▪ The list of people that warrant a “thank you for your service” is expanding to include health care workers, cashiers at our necessity-based retailers, delivery drivers, restaurant work
Slide 9: Community support initiatives
▪ Delivered food to local hospitals, purchased from KRG small business tenants ▪ Donated to the Indiana Restaurant & Lodging Association to assist furloughed workers ▪ Supported a KRG restaurant tenant in their effort to deliver meals to elderly and at-risk citizens ▪ Provided KRG employees a stipen
Slide 10: Short-term versus permanent rent dislocation
▪ Short-term dislocation in rents is much more benign than permanent dislocation For example: • A small shop tenant with $22psf of total rent annually • Replacing this tenant could cost ~$30psf in tenant allowance • This tenant allowance would equate to 16 months of current rent (excluding down time
Slide 11: Support for small shop tenants
Small shop tenants are the backbone of the US economy and we are working to help them in this time of need ▪ In constant communication with our small shop tenants ▪ Provided tenants with summaries, weblinks, and lender contacts to assist with their SBA applications in conjunction with the CARES Act
Slide 12: Liquidity and debt maturities
▪ 2020 & 2021 debt maturities = $0 ▪ Scaling back capital expenditures ▪ Outstanding committed development spend for remainder of 2020 = $3.5M ▪ Outstanding committed Big Box spend for remainder of 2020 = $9M ▪ Borrowed $300 million from our $600 million revolving credit facility ▪ Cash on hand as o
Slide 13: ABR by tenant category
Other Non-Essential, 2% Office / Professional Service, 2% Communication, Other Specialty Food, 2% 7% Grocery / Theatres, 2% Drug, 12% Pet Stores, 4% Fitness, 4% Medical, 3% Personal Service, 7% Hardware / Auto, 2% Banks, 2% Restaurants, Other Essential, 1% 16% Soft Goods, 35% % of ABR As of 3/31/202
Slide 14: National, regional and local tenants
% of ABR As of 3/31/2020 National: 75% Regional: 22% Local: 3% National: 52% Regional: 9% Local: 39% National Tenants: Nationwide presence Regional Tenants: Regional brands Local Tenants: Local brands © 2020 Kite Realty Group First Quarter 2020 Investor Presentation | 14
Slide 15: April rent collections
Rent Received, 67% Deferred Rent / Still in Pursuit, 25% Unapplied Security Deposits, 8% © 2020 Kite Realty Group First Quarter 2020 Investor Presentation | 15
Slide 16: Portfolio open and rent received by category
% Portofolio Open % Portofolio Closed % Rent Received % Rent Outstanding Total 51% 49% Total 67% 33% Grocery / Drug 100% Grocery / Drug 100% Hardware / Auto 100% Hardware / Auto 100% Other Essential 100% Other Essential 93% Pet Stores 99% Pet Stores 75% 25% Banks 86% 14% Banks 100% Other Specialty F
Slide 17: KRG Difference: Strong Real Estate
y | KEITE KRG DIFFERENCE: Strong Real Estate KRG 888 577 5600 kiterealty.com NYSE.
Slide 18: Grocery-anchored centers and demographics
▪ 72% of retail ABR is from centers with a grocer component ▪ Strong 3 mile demographics: ▪ 77% of ABR is from South and West United States - Population 75,800 ▪ Average asset size is 141k square feet - Average Household Income: $97,500 - Est. 5-year Population Growth: 1.7% Larger center with genera
Slide 19: 44% of ABR is deemed essential
• 44% of ABR is deemed essential • 42% of ABR service-oriented tenants offer necessary daily trips post- COVID • 14% of ABR from restaurants creates additional traffic • Essential shadow anchors Target and Bank of America drive daily trips Sufficient access points to the shopping center to ensure qu
Slide 20: First Quarter 2020 Investor Presentation | 20
© 2020 Kite Realty Group First Quarter 2020 Investor Presentation | 20
Slide 21: Occupancy, ABR PSF and leased rates
Same-Property Occupancy Rate ABR PSF Record Level 96% $19.00 $18.01 95% 93.9% $17.00 94% 93% $15.00 92% $13.00 91% 90% $11.00 2013 2014 2015 2016 2017 2018 2019 Q1 2013 2014 2015 2016 2017 2018 2019 Q1 2020 2020 Same-Property Leased Rate Small Shop Leased Rate 97% 93% 91.1% 96% 91% 95% 94.4% 89% 94%
Slide 22: First Quarter 2020 Investor Presentation | 22
© 2020 Kite Realty Group First Quarter 2020 Investor Presentation | 22
Slide 23: Top tenants
1 Publix Supermarkets, Inc. NR 11 2.5% 2 The TJX Companies, Inc. A 16 2.2% 3 Bed Bath & Beyond, Inc. B+ 16 1.9% 4 PetSmart, Inc. B- 14 1.9% 5 Ross Stores, Inc. BBB+ 13 1.8% 6 Dick’s Sporting Goods, Inc. NR 7 1.7% 7 Nordstrom Rack BBB- 6 1.6% 8 Michaels Stores, Inc. B 12 1.5% 9 National Amusements B-
Slide 24: Market Thesis
y | KEITE MARKET THESIS: “| skate to where the puck is going be, not where it has been.” - Wayne Gretzky KRG 888 577 5600 kiterealty.com NYSE.
Slide 25: Migration shift to the Southern and Western US
▪ US is currently experiencing a migration shift to the Southern / Western US for a variety of reasons (cost of living, lifestyle, taxes, etc.) ▪ No state income taxes in Florida, Texas, Nevada, and Tennessee is influencing migration from high income tax states like New York, California, Illinois, C
Slide 26: SALT limitation and discretionary income comparison
▪ Residents in historically expensive states in the northeast and on the west coast are feeling an outsized impact of the SALT deduction limitation ▪ Significant discretionary income delta in “warmer and cheaper” cities New York, NY Miami, FL Las Vegas, NV Dallas, TX Income $250,000 $250,000 $250,00
Slide 27: Companies relocating to the South
“JPMorgan Weighs “Charles Schwab to “70 financial firms flee Shifting Thousands of move 1,000 jobs out of NYC for Palm Beach Jobs Out of New York San Francisco” County Florida in 3 years” Area” Associated Press Palm Beach BDB Bloomberg “Honeywell HQ is “1,800 companies left “Amazon plans Austin movi
Slide 28: First Quarter 2020 Investor Presentation | 28
Source: US Census Bureau © 2020 Kite Realty Group First Quarter 2020 Investor Presentation | 28
Slide 29: First Quarter 2020 Investor Presentation | 29
Source: Synergos Technologies © 2020 Kite Realty Group First Quarter 2020 Investor Presentation | 29
Slide 30: First Quarter 2020 Investor Presentation | 30
Source: Bloomberg News: “Florida is the Big Winner as the Wealthy Move out of Northern States” 5/24/2019 © 2020 Kite Realty Group First Quarter 2020 Investor Presentation | 30
Slide 31: 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
Slide 32: Net Operating Income and Same Property NOI
NET OPERATING INCOME AND SAME PROPERTY NET OPERATING INCOME The Company uses property net operating income (“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 tena
Slide 33: EBITDA
EBITDA The Company defines EBITDA, a non-GAAP financial measure, as net income before depreciation and amortization, interest expense and income tax expense of taxable REIT subsidiary. For informational purposes, the Company has also provided Adjusted EBITDA, which the Company defines as EBITDA less
Slide 34: First Quarter 2020 Investor Presentation | 34
© 2020 Kite Realty Group First Quarter 2020 Investor Presentation | 34
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Slide 36: First Quarter 2020 Investor Presentation | 36
© 2020 Kite Realty Group First Quarter 2020 Investor Presentation | 36
Kite Realty Group Trust — Q1 2020 Earnings Presentation on 6ix