Kite Realty Group Trust · NYSE:KRG
Kite Realty Group Trust — Investor Presentation (September 2017)
32 slides from Kite Realty Group Trust's investor presentation, Sep 11, 2017
Slide 1: September 2017 Investor Update
Slide 2: Company Snapshot
2 SHARE PRICE (AS OF 9/6/17) $20.45 EQUITY MARKET CAPITALIZATION (AS OF 9/6/17) $1.8 BN ENTERPRISE VALUE (AS OF 9/6/17) $3.4 BN DIVIDEND YIELD1 5.9% MOODY’S/S&P RATINGS Baa3/BBB- PORTFOLIO SUMMARY Number of Properties 118 Number of States 20 Total GLA (SF) 23.2mm Total Retail Operating Portfolio Lea
Slide 3: Core Strategy: Gearing Up Shareholder Value the Kite Way
3 ~$40mm in annual free cash flow1 $83mm limited debt maturities through 2020 5% floating rate debt exposure 3.6x debt service coverage 76% of ABR from top 50 MSAs and destination locations 93% of tenants are internet resistant/omni-channel 66% of grocery-anchored assets Focusing on experiential ten
Slide 4: KRG Provides Attractive Investment Opportunity
4 DIVIDEND VS. 2017E FFO1 PRICE VS. 2017E FFO1 KIMAKRRPAIFRTDDRROICUERPTWRIKRGREGBRXCDR 66%PEER GROUPMEDIAN 59.1% FRTAKRREGUEROICRPAIWRIKIMKRGRPTCDRBRXDDR 13.5xPEER GROUPMEDIAN 9.8x CONSERVATIVE FFO PAYOUT RATIO SUPPORTS FUTURE DIVIDEND INCREASES DISCOUNTED MULTIPLE PROVIDES ATTRACTIVE INVESTMENT OP
Slide 5: Kite's Consistent, Strong Operational Performance Is at the Top End of Its Peer Group
5 3.6% SPNOI GROWTH AS REPORTED OVER LAST 4 YEARS QUARTERLY AVERAGE SPNOI GROWTH FROM Q2'13-Q2'171 ROIC AKR KRG REG RPAI WRI BRX FRT DDR RPT KIM CDR 5.1% 4.1% 3.4% 3.6% 4.1% 3.4% 3.3% 3.1% 3.1% 2.7% 2.7% 2.5% 2.2% 1.2% 3.1%PEER AVERAGE KRG SPNOI ADJ. FOR BAD DEBT EXPENSEKRG SPNOI AS REPORTEDKRG SPNO
Slide 6: High-Quality Portfolio
September 2017 INVESTOR UPDATE HIGH-QUALITY PORTFOLIO Necessity-Driven and Experiential-Based Open-Air Shopping Centers
Slide 7: Well-Positioned Real Estate Footprint
7 NORTHEAST 11.4% OF ABR SOUTHEAST 18.4% OF ABR FLORIDA 24.3% OF ABR MID-CENTRAL 16.8% OF ABR WEST 12.1% OF ABR MIDWEST 17.0% OF ABR 76% OF ABR DERIVED FROM TOP 50 MSAs AND DESTINATION LOCATIONS1 (1) Destination locations (i.e., areas with high-disposable income) include Beechwood Promenade in Athen
Slide 8: High-Quality Properties: Top 12 Centers
8 CITY CENTER MSA: New York City, NY LANDSTOWN COMMONS MSA: Virginia Beach, VA CENTENNIAL CENTER MSA: Las Vegas, NV PORTOFINO SHOPPING CENTER MSA: Houston, TX OWNED GLA 365,905 SF ABR PER SF $27.19 OWNED GLA 398,349 SF ABR PER SF $19.17 OWNED GLA 334,205 SF ABR PER SF $24.85 OWNED GLA 386,414 SF ABR
Slide 9: High-Quality Properties: Top 12 Centers
9 PARKSIDE TOWN COMMONS MSA: Raleigh, NC DELRAY MARKETPLACE MSA: Miami, FL THE LANDING AT TRADITION MSA: Port St. Lucie, FL CENTENNIAL GATEWAY MSA: Las Vegas, NV OWNED GLA 347,071 SF ABR PER SF $19.87 OWNED GLA 260,138 SF ABR PER SF $26.00 OWNED GLA 360,974 SF ABR PER SF $15.72 OWNED GLA 193,033 SF
Slide 10: High-Quality Properties: Top 12 Centers
10 DRAPER PEAKS MSA: Salt Lake City, UT PLAZA AT CEDAR HILL MSA: Dallas, TX EASTERN BELTWAY MSA: Las Vegas, NV SUNLAND TOWNE CENTER MSA: El Paso, TX OWNED GLA 227,494 SF ABR PER SF $19.63 OWNED GLA 302,458 SF ABR PER SF $13.25 OWNED GLA 162,444 SF ABR PER SF $24.06 OWNED GLA 306,437 SF ABR PER SF $1
Slide 11: Strong Mix of High-Quality Tenants
11 Top 10 Tenants by ABR Credit Rating # Stores % ABR 1 The TJX Companies, Inc. A+ 22 2.5% 2 Publix Supermarkets, Inc. A 13 2.3% 3 Petsmart, Inc. B+ 19 2.2% 4 Bed Bath & Beyond, Inc. BBB+ 19 2.2% 5 Ross Stores, Inc. A- 18 2.1% 6 Lowe's Companies, Inc. A- 5 1.9% 7 Office Depot B 15 1.6% 8 Dick's Spor
Slide 12: Necessity-Focused Retail Portfolio
12 Asset Classification Key Power Center (No Grocer): 3 + anchors over 20K SF Grocer: No more than 2 anchors over 20K SF in addition to grocer Power Center (w/Grocer): 3 + anchors over 20K SF in addition to grocer (1) Grocer includes traditional grocers, specialty grocers, and big box retailers that
Slide 13: Internet-Resistant Retail Base
13 INTERNET-RESISTANT 52.3% Services, Entertainment 21.3% Grocer, Specialty Stores 15.0% Restaurants 16.0% MULTI-CHANNEL 40.4% Soft Goods 14.5% Home Improvement Goods 11.8% Discount Retailers 10.6% Sporting Goods 3.5% INTERNET RISK 7.3% Electronic / Books 4.9% Office Supplies 2.4% WELL-POSITIONED TO
Slide 14: Enhancing Kite's Portfolio with Strong Retail Tenants
14 RECENT TENANT OPENINGS FOOD / FITNESS / ENTERTAINMENT / SERVICE DISCOUNT RETAILERS / SOFT GOODS / SPORTING GOODS / SPECIALTY 91% OF TOTAL SQUARE FEET OPENED DIVERSE TENANT BASE Enhancing Kite’s Portfolio with Strong Retail Tenants September 2017 INVESTOR UPDATE
Slide 15: Minimal Exposure to Announced Store Closures
15 MINIMAL IMPACT REALIZED IN 2017: <1% OF ABR1 TENANT # OF KRG LOCATIONS AT 3/31/2017 # OF KRG LOCATIONS AT 8/31/2017 REMAINING ABR EXPOSURE AT 8/31/17 Gander Mountain 1 0 None HH Gregg 1 0 None JCPenney 3 3 0.14% Kmart / Sears 1 / 2 1 / 2 0.32% / 0.20% Macy’s 1 1 0.11% Marsh Supermarkets 1 0 None
Slide 16: Growth Opportunities
September 2017 Investor Update GROWTH OPPORTUNITIES Increasing Value Through Efficient Operations and the 3-R Platform
Slide 17: Growth Opportunities: Operations and 3-R Platform
17 • Attractive NOI Margin: 74.4%, trailing twelve months • Efficient G&A / Revenues: 5.9%, trailing twelve months • Opportunity Areas: Operating expense savings, overage rent, and ancillary income • New and renewal cash rent spreads of 18.6% and 7.1%, respectively, in 2016 • Embedded average contra
Slide 18: Top-Tier Operating Efficiency Metrics
18 KRG CONSISTENTLY RANKS IN TOP TIER ACROSS PEERS FOR EFFICIENCY ROIC 75.1% KRG 74.4% BRX 73.4% KIM 72.5% RPAI 70.1% WRI 68.7% 68.5% FRT NOI MARGIN % REG 72.3% DDR 71.6% RPT 71.5% FRT 4.1% WRI 4.6% ROIC 5.3% KRG 5.9% KIM 8.3% RPT 8.8% 9.1 % DDR G&A / REVENUES % BRX 7.2% RPAI 7.7% REG 8.3% (1) Data
Slide 19: Proven Ability to Create Positive Operating Results
19 (1) KRG Supplementals Q4’10 through Q2’17. Q2'172016201520142013201220112010 92.2% 93.3% 94.2% 95.3% 94.8% 95.4% 95.4% 94.5% 2. 5 % GR O WT H SINCE 2010 Q2'172016201520142013201220112010 $12.80 $13.26 $12.95 $13.18 $15.15 $15.22 $15.78 $16.20 26. 6 % GR O WT H SINCE 2010 Q2'1720162015201420132012
Slide 20: Redevelopment Execution and Opportunity
20 REDEVELOP REPURPOSE REPOSITION Substantial renovations, including teardowns, remerchandising, and exterior/interior improvements Significant property alterations, including product-type changes Less substantial asset enhancements, generally $5mm or less investment COMPLETED IN-PROCESS FUTURE $22.
Slide 21: Investment Grade Balance Sheet
September 2017 Investor Update INVESTMENT GRADE BALANCE SHEET Well-Positioned for the Future
Slide 22: Significantly Improved Metrics
22(1) KRG Supplementals Q4’11 through Q2’17. Q2'17201620152014201320122011 9.7x 8.6x 7.4x 6.5x 7.0x 7.0x 6.8x 2.9x LOWERED Q2'17201620152014201320122011 1.6x 1.6x 2.0x 3.2x 3.4x 3.3x 3.6x 2.0x INCREASED Q2'17201620152014201320122011 42% 28% 30% 23% 12% 7% 5% 3,700 bps DECREASED NET DEBT / EBITDA DEB
Slide 23: Efficient Debt Structure Relative to Peers
23 6.0 YEARS WEIGHTED AVERAGE DEBT MATURITY WEIGHTED AVERAGE DEBT MATURITIES AND WEIGHTED AVERAGE INTEREST RATE1 DDR ROIC BRX RPAI REG RPT KRG WRI KIM 4.0% 6.0 YEARS WEIGHTED AVERAGE DEBT MATURITY (YEARS) WEIGHTED AVERAGE INTEREST RATE (%) (1) Peer data sourced from publicly available Q2’17 informat
Slide 24: Well-staggered Debt Maturity Profile
24(1) Chart excludes annual principal payments and net premiums on fixed rate ONLY $83mm THROUGH 2020 SCHEDULE OF DEBT MATURITIES ($ IN MILLIONS)1 2017 2018 2019 2020 2021 2022 2023 20252024 2027+2026 MORTGAGE DEBT LINE OF CREDIT TERM LOAN PRIVATE PLACEMENT SENIOR UNSECURED NOTES 38 45 80 75 11 300
Slide 25: Forward-Looking Statements
25 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
Slide 26: Free Cash Flow and Funds From Operations
26 FREE CASH FLOW Free Cash Flow is reflected on an annual basis and is defined as Funds From Operations (FFO) as adjusted, less capital expenditures, capitalized internal costs, tenant improvements, plus non-cash items, and after dividends paid. FUNDS FROM OPERATIONS Funds from Operations (FFO) is
Slide 27: Net Operating Income and Same Property NOI
27 NET OPERATING INCOME AND SAME PROPERTY NET OPERATING INCOME (CONT.) The Company also uses same property NOI (“Same Property NOI”), a non-GAAP financial measure, to evaluate the performance of our proper- ties. Same Property NOI excludes properties that have not been owned for the full period pres
Slide 28: Appendix – Consolidated Statements of Operations
28 September 2017 INVESTOR UPDATE APPENDIX – CONSOLIDATED STATEMENTS OF OPERATIONS 7 Kite Realty Group Trust Consolidated Statements of Operations For the Three and Six Months Ended June 30, 20 1 7 and 20 1 6 (U naudited) ($ in thousands, except per share data) Three Months Ended June 30, Six Months
Slide 29: Appendix – Reconciliation of FFO to Net Income
29 (1) “FFO of the Operating Partnership” measures 100% of the operating performance of the Operating Partnership’s real estate properties. “FFO attributable to Kite Realty Group Trust common shareholders” reflects a reduction for the redeemable noncontrolling weighted average diluted interest in th
Slide 30: (1) Same Property NOI excludes eight properties in redevelopment, the recently completed Northdale Promenade
30 (1) Same Property NOI excludes eight properties in redevelopment, the recently completed Northdale Promenade as well as office properties (Thirty South Meridian and Eddy Street Commons). (2) Excludes leases that are signed but for which tenants have not yet commenced the payment of cash rent. Cal
Slide 31: (1) Relates to (a) a reduction reflecting the second quarter GAAP operating income of
31 (1) Relates to (a) a reduction reflecting the second quarter GAAP operating income of $0.8 million for properties sold during the second quarter of 2017, which adjustment to EBITDA (an income measure) corresponds with the use of proceeds from such sales to pay down the Credit Facility, as reflect
Slide 32: Kite Realty contact details
888 577 5600 kiterealty.com 30 S MERIDIAN STREET SUITE 1100 INDIANAPOLIS, IN 46204
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