Kite Realty Group Trust · NYSE:KRG

Kite Realty Group Trust — Q1 2022 Earnings Presentation

40 slides from Kite Realty Group Trust's earnings presentation, Apr 28, 2022

  1. Slide 1: Investor Update Q1 2022

    © 2022 Kite Realty Group | kiterealty.com INVESTOR UPDATE KITE REALTY GROUP CHAPEL HILL SHOPPING CENTER MSA: Dallas / Ft Worth, TX RAMPART COMMONS MSA: Las Vegas, NV HOLLY SPRINGS TOWNE CENTER MSA: Raleigh, NC Q1 2022 DOWNTOWN CROWN MSA: Washington, D.C. / Baltimore

  2. Slide 2: A Solid Foundation: Why KRG?

    © 2022 Kite Realty Group | kiterealty.com Number of Operating Retail Properties 181 Total Owned Retail GLA (SF) 29M Operating Retail Portfolio Percent Leased 93.6% Annualized Base Rent (ABR) Per SF $19.57 % of ABR from assets with a grocery component1 75% Equity Market Cap2 $4.9B Enterprise Value2 $

  3. Slide 3: First Quarter Highlights

    © 2022 Kite Realty Group | kiterealty.com NAREIT FFO / FFO, as adjusted $0.46 / $0.46 NAREIT FFO impacted by $1.1M from prior period collection impact, offset by $0.9M of merger and acquisition costs Same Property NOI1 5.9% Increased leasing activity drove outsized SSNOI growth Total Leasing Volume

  4. Slide 4: 2022 Guidance

    © 2022 Kite Realty Group | kiterealty.com 2022 GUIDANCE •Key assumptions at the midpoint: – Increase same-property NOI growth range to 2.25% - 3.25%, which represents a 75-basis point increase – Decreased bad debt by 25-basis points to 1.25% of total revenues – Any transaction activity expected to b

  5. Slide 5: Top 5 Publicly Traded Shopping Center REITs by Enterprise Value

    © 2022 Kite Realty Group | kiterealty.com $23.7 $16.3 $14.1 $12.8 $8.2 $6.2 $5.5 $4.0 $3.9 $3.9 $3.7 $2.2 KIM REG FRT BRX KRG PECO SITC ROIC UE AKR AAT RPT Note: Market data as of April 25, 2022. Source of peer data is FactSet. TOP 5 PUBLICLY TRADED SHOPPING CENTER REITS BY ENTERPRISE VALUE TOP 5 SH

  6. Slide 6: FFO Multiple Disconnect Based on Key Metrics

    © 2022 Kite Realty Group | kiterealty.com $29.69 $23.18 $19.57 $19.12 $15.42 FRT REG KRG KIM BRX ABR PSF Note: Comparison to only top 5 shopping center REITs by total enterprise value. Source of all peer data is from supplemental disclosures from 4Q 2021. 1. Market data as of April 25, 2022. Source

  7. Slide 7: Organic Growth Not Priced In

    © 2022 Kite Realty Group | kiterealty.com ORGANIC GROWTH NOT PRICED IN 7 KITE REALTY GROUP POTENTIAL STOCK PRICE POTENTIAL STOCK RETURN4 • We believe the market is currently mispricing KRG and ignoring significant signed-not-open pipeline, active development pipeline and potential NOI growth from va

  8. Slide 8: Components of Signed-Not-Open Pipeline

    © 2022 Kite Realty Group | kiterealty.com $8 $15 $25 $33 $37$37 $29 $22 $12 $4 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 CUMULATIVE ANNUALIZED SIGNED-NOT-OPEN NOI TIMING ($, Ms) Previously Commenced Expected to Commence 8 KITE REALTY GROUP COMPONENTS OF SIGNED-NOT-OPEN PIPELINE •Outsized lease

  9. Slide 9: Three Horizons of Growth

    © 2022 Kite Realty Group | kiterealty.com THREE HORIZONS OF GROWTH 9 1. Assumes leasing up anchors to 98% and shops to 92.5% at current avg. ABR as of 1Q22 plus previous tenant recoveries. 2. Excludes in-place NOI and NOI related to tenants that have signed leases but have not commenced rent as of 3

  10. Slide 10: Traffic Rebounded Strongly

    © 2022 Kite Realty Group | kiterealty.com 10 KITE REALTY GROUP TRAFFIC REBOUNDED STRONGLY •Foot traffic in KRG portfolio rebounded strongly in 2021 and is now outpacing 2019 levels – Despite slight declines in early first half of 2021, continued leasing volume supported increasing levels of foot tra

  11. Slide 11: Further Strengthened Portfolio Has Significant Potential

    © 2022 Kite Realty Group | kiterealty.com FURTHER STRENGTHENED PORTFOLIO HAS SIGNIFICANT POTENTIAL KRG DIFFERENCE Q1 2022 INVESTOR UPDATE

  12. Slide 12: Predominantly Sun Belt with Strategic Gateway Components

    © 2022 Kite Realty Group | kiterealty.com PREDOMINANTLY SUN BELT WITH STRATEGIC GATEWAY COMPONENTS Las Vegas – 5% Dallas / Fort Worth – 16% Houston – 4% Naples – 2% Miami / Fort Lauderdale – 3% Charlotte – 2% Raleigh / Durham – 3% 1. Sun Belt states include AL, AZ, CA, CO, FL, GA, KY, LA, MS, NC, NM

  13. Slide 13: Diverse Portfolio of Durable Cash Flow and Growth Potential

    © 2022 Kite Realty Group | kiterealty.com Note: 3-Mile demographic stats are weighted by 1Q 2022 ABR and sourced from PopStats. Remaining 3% of portfolio are unanchored or single-tenant assets. DIVERSE PORTFOLIO OF DURABLE CASH FLOW AND GROWTH POTENTIAL 13 • Expanding offerings to retailers via a mo

  14. Slide 14: Downtown Crown

    © 2022 Kite Realty Group | kiterealty.com 14 DOWNTOWN CROWN MSA: WASHINGTON, D.C. / BALTIMORE KRG DIFFERENCE HIGH-QUALITY PROPERTIES Total Owned GLA 201,459 ABR PSF $39.23 % of Portfolio ABR 1.6% Leased % 96.5% Cash Lease Spread on Past 3 New Deals 11.5% 3 Mile Population 137K 3 Mile Avg. HHI $143K

  15. Slide 15: Miramar Square

    © 2022 Kite Realty Group | kiterealty.com 15 MIRAMAR SQUARE MSA: FORT LAUDERDALE KRG DIFFERENCE HIGH-QUALITY PROPERTIES Total Owned GLA 231,709 ABR PSF $18.04 % of Portfolio ABR 0.9% Leased % 97.2% Cash Lease Spread on Past 3 New Deals 8.0% 3 Mile Population 184K 3 Mile Avg. HHI $74K

  16. Slide 16: Portofino Shopping Center

    © 2022 Kite Realty Group | kiterealty.com 16 PORTOFINO SHOPPING CENTER MSA: HOUSTON KRG DIFFERENCE HIGH-QUALITY PROPERTIES Total Owned GLA 339,286 ABR PSF $21.54 % of Portfolio ABR 1.3% Leased % 97.7% Cash Lease Spread on Past 3 New Deals 107.4% 3 Mile Population 53K 3 Mile Avg. HHI $139K

  17. Slide 17: Holly Springs Towne Center

    © 2022 Kite Realty Group | kiterealty.com 17 HOLLY SPRINGS TOWNE CENTER MSA: RALEIGH-DURHAM KRG DIFFERENCE HIGH-QUALITY PROPERTIES Total Owned GLA 354,874 ABR PSF $19.00 % of Portfolio ABR 1.2% Leased % 96.5% Cash Lease Spread on Past 3 New Deals 15.8% 3 Mile Population 41K 3 Mile Avg. HHI $125K

  18. Slide 18: Anchor Vacancy Re-leasing Opportunity

    © 2022 Kite Realty Group | kiterealty.com 1. Estimate of potential outcomes of remaining anchor vacancy. 2. New ABR is actual for Signed Not Open and average in place ABR for anchor tenants in the KRG portfolio as of 1Q’22. 3. Includes only comparable leases (21 of 36). 4. Represents the percentage

  19. Slide 19: Strong Momentum Continues: Solid Leasing Activity

    © 2022 Kite Realty Group | kiterealty.com • KRG continues to see strong retailer demand for its well- positioned, open-air centers • Leasing volumes are up significantly coming out of last year along with strong spreads SOLID LEASING ACTIVITY TENANTS SIGNED IN LAST 6 MONTHS 3Q’21 4Q’21 1Q’22 # of Le

  20. Slide 20: Top 15 Tenants by ABR

    © 2022 Kite Realty Group | kiterealty.com 1. Number of stores represents stores at consolidated and unconsolidated properties. 2. Percent of weighted ABR includes ground lease rent and represents the Company’s share of the ABR at consolidated and unconsolidated properties. TOP 15 TENANTS BY ABR COUN

  21. Slide 21: Active Development Projects

    © 2022 Kite Realty Group | kiterealty.com 1. Commercial GLA only. 2. Total project costs and KRG equity requirement represent costs to KRG post-merger and exclude any costs spent to date prior to the merger. 3. Excludes in-place NOI and NOI related to tenants that have signed leases but have not com

  22. Slide 22: One Loudoun Downtown Key Metrics

    © 2022 Kite Realty Group | kiterealty.com • Developing two additional pads (G & H) to include 378 multi-family units, 33k square feet of office and 34k square feet of retail • Pads G & H will each contain parking garages combining for over 1,000 spaces • Office is 100% leased, multi-family is curren

  23. Slide 23: The Corner Key Metrics

    © 2022 Kite Realty Group | kiterealty.com OVERVIEW TOTAL Cost1 $63.9M KRG Ownership % 50% KRG Equity Requirement $0M Est. Project Cash Yield 6.0% - 7.0% Est. Incremental NOI @ Share $1.7M - $1.9M Expected Stabilization Date Q4 2024 23 KRG DIFFERENCE THE CORNER KEY METRICS • 285 multi-family units an

  24. Slide 24: Development Has Many Forms

    © 2022 Kite Realty Group | kiterealty.com 24 • KRG is a bespoke developer • A successful development does not always entail going vertical and/or owning 100% of every project • In fact, monetizing portions of the property, contributing the land and partnering with third parties have proven an effect

  25. Slide 25: Entitled Land – Development and/or Capital Source

    © 2022 Kite Realty Group | kiterealty.com 25 PROPERTY NAME MSA POTENTIAL COMMERCIAL GLA POTENTIAL MULTI-FAMILY UNITS ESTIMATED LAND VALUE ($,M)1 Carillon Washington, D.C. 1,200,000 3,000 One Loudoun Washington, D.C. 2,930,000 Main Street Promenade Chicago 10,000 47 Downtown Crown Washington, D.C. 42

  26. Slide 26: Sources and Uses: Liquidity Through 2022

    © 2022 Kite Realty Group | kiterealty.com CASH ON HAND, $207 LOC AVAILABILITY, $714 EST. CASH FFO LESS DIVIDENDS, $191 DEBT MATURITIES, $84 SNO RELATED CAPITAL, $92 CAPEX, $39 POTENTIAL RE-LEASING CAPITAL, $58 ACTIVE DEVELOPMENTS, $91 NET LIQUIDITY, $748 0 100 200 300 400 500 600 700 800 900 1,000 1

  27. Slide 27: Well-Staggered Maturity Ladder

    © 2022 Kite Realty Group | kiterealty.com 1. Fixed rate debt includes the portion of variable rate debt that has been hedged by interest rate swaps. As of 3/31/2022, $720 million in variable rate debt is hedged to a fixed rate for a weighted average of 3.0 years. 2. Variable rate debt includes the p

  28. Slide 28: Key 2021 ESG Accomplishments

    © 2022 Kite Realty Group | kiterealty.com • Key 2021 Accomplishments: – Established KRG’s 5-year ESG targets – Completed GRESB report for the second year, receiving an improved score from 2019 – Continued to implement Green Lease language with our tenants to help KRG’s ability to monitor and track e

  29. Slide 29: 5-Year ESG Goals

    © 2022 Kite Realty Group | kiterealty.com 5-YEAR ESG GOALS 29 • Setting goals will improve ESG scores at various institutions and signals a long-term ESG commitment from management - Establishing and publishing 5-year targets will align internal and external expectations with KRG’s ESG program 5-YEA

  30. Slide 30: Thriving Open-Air Real Estate

    © 2022 Kite Realty Group | kiterealty.com THRIVING OPEN-AIR REAL ESTATE OPEN-AIR RETAIL Q1 2022 INVESTOR UPDATE

  31. Slide 31: Open-Air Centers: Convenient and Less Costly

    © 2022 Kite Realty Group | kiterealty.com • Open-air assets are thriving due to their convenient and affordable nature for retailers and consumers • Conveniently located and easily accessible parking fields that satisfy BOPIS / curbside pick up methods • Significantly lower operating costs equal muc

  32. Slide 32: Convenient Shopping Destinations and Last-Mile Fulfillment

    © 2022 Kite Realty Group | kiterealty.com CONVENIENT SHOPPING DESTINATIONS AND LAST-MILE FULFILLMENT 32 SHOP IN STORE Shop and purchase in the physical store SCHEDULED DELIVERY Order online and select a delivery time slot SHIP FROM STORE Product shipped from store CURBSIDE PICKUP Drive up and have o

  33. Slide 33: Open-Air Centers: Commerce Hubs

    © 2022 Kite Realty Group | kiterealty.com 44% of ABR is deemed essential 41% of ABR service-oriented tenants offer necessary daily trips post-COVID 15% of ABR from primarily full-service restaurants creates additional traffic Essential shadow anchors Target and Bank of America drive daily trips Suff

  34. Slide 34: Forward-Looking Statements

    © 2022 Kite Realty Group | kiterealty.com 34 • 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 A

  35. Slide 35: Net Operating Income and Same Property Net Operating Income

    © 2022 Kite Realty Group | kiterealty.com 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

  36. Slide 36: EBITDA

    © 2022 Kite Realty Group | kiterealty.com 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 EBITD

  37. Slide 37: Appendix: Reconciliation of Same-Property NOI to Net Income

    © 2022 Kite Realty Group | kiterealty.com APPENDIX: RECONCILIATION OF SAME-PROPERTY NOI TO NET INCOME 37

  38. Slide 38: Appendix: Funds From Operations

    © 2022 Kite Realty Group | kiterealty.com 38 APPENDIX: FUNDS FROM OPERATIONS

  39. Slide 39: Appendix: Reconciliation of EBITDA to Net Income

    © 2022 Kite Realty Group | kiterealty.com 39 APPENDIX: RECONCILIATION OF EBITDA TO NET INCOME

  40. Slide 40: Appendix: Reconciliation of Net Income to FFO, As Adjusted, Guidance

    © 2022 Kite Realty Group | kiterealty.com 40 APPENDIX: RECONCILIATION OF NET INCOME TO FFO, AS ADJUSTED, GUIDANCE Low High Net loss ($0.30) ($0.24) Depreciation and amortization 2.02 2.02 NAREIT FFO $1.72 $1.78 Non-recurring merger and acquisition costs 0.02 0.02 FFO, as adjusted $1.74 $1.80

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