Kite Realty Group Trust · NYSE:KRG
Kite Realty Group Trust — Q3 2021 Earnings Presentation
35 slides from Kite Realty Group Trust's earnings presentation, Oct 29, 2021
Slide 1: Investor Update Q3 2021
KITE "| i KITE REALTY GROUP INVESTOR UPDATE Q3 2021 KRG List © 2021 Kite Realty Group | kiterealty.com NYSE
Slide 2: Company overview and portfolio metrics
Number of Operating Retail Properties • Top 5 open-air shopping center REIT primarily focused in warmer & cheaper markets with select strategic gateway Total Owned Retail GLA (SF) exposure - 58% of ABR in warmer & cheaper markets Operating Retail Portfolio Percent Leased - 24% of ABR in strategic ga
Slide 3: Total potential NOI growth
• • • Anchor Lease-up2 Shop Lease-up3 Signed Not Open Tenants Active Development Potential4 TOTAL POTENTIAL NOI GROWTH Note: These are hypothetical NOI growth and cap rates. KRG is not representing it can achieve these results or that a third party would ascribe a similar cap rate to the portfolio.
Slide 4: Entitled land opinion of value
• KRG is taking a fresh look at each piece of entitled land to determine the optimal real estate use and capital allocation decision • KRG, while experienced developers, may or may not pursue all the development opportunities • An independent third-party provided an opinion of value on key entitled
Slide 5: Merger Overview
KITE MERGER OVERVIEW OPPORTUNITY KNOCKS Q3 2021 INVESTOR UPDATE KRG USTED © 2021 Kite Realty Group | kiterealty.com NYSE
Slide 6: Pro forma total enterprise value results in $7.5B company
Pro forma total Entry into strategic enterprise value results markets and bolstered in $7.5B company presence in existing markets Lower pro forma leverage Expected to be with limited near-term immediately maturities accretive to earnings / share plus reduced cost of capital Near-term organic growth
Slide 7: Peer comparison of shopping center REITs
KIM REG FRT BRX KRG PECO SITC AKR ROIC AAT UE RPT Note: Market data as of October 27, 2021. Source of peer data is FactSet.
Slide 8: KRG compared with top shopping center REITs
$29.28 $23.05 7.1x 6.8x $19.67 6.3x $18.43 6.0x $15.12 5.3x FRT REG KRG KIM BRX REG KRG BRX FRT KIM 34% 80% 79% 26% 25% 75% 16% 70% 70% 11% FRT KRG REG KIM BRX REG KIM FRT KRG BRX 58% 89% 88% 87% 43% 43% 39% 83% 71% 6% KRG KIM BRX REG FRT REG FRT KRG KIM BRX Note: Comparison to only top 5 shopping c
Slide 9: KRG Difference Further Strengthened
KITE KRG DIFFERENCE FURTHER STRENGTHENED PORTFOLIO HAS SIGNIFICANT POTENTIAL Q3 2021 INVESTOR UPDATE KRG LISTED © 2021 Kite Realty Group | kiterealty.com NYSE
Slide 10: High-quality properties
KRG Dl HIGH-QUALITY DIFFERENCE PROPERTIES KRG UsTeD NYSE © 2021 Kite Realty Group | kiterealty.com ERs GOBBLESTONE SOUTHLAKE TOWN SQUARE MSA: DALLAS / FORT WORTH, TX ce TOWN =| © RAMPART COMMONS. AeWASHINGTON, D.C-7 BALTIMORE. Via MSA: LAS VEGAS, NV » SHOPS AT LEGAC’ MSA: DALLAS / FORT WORTH, TX aa
Slide 11: Warmer and cheaper and strategic gateway markets
⚫ ⚫ Warmer and Cheaper Markets1 Seattle – 4% ⚫ ⚫⚫ ⚫ ⚫ ⚫ ⚫⚫ ⚫ ⚫ ⚫⚫ ⚫ ⚫ ⚫ Strategic Gateway Markets (DC, Seattle and NYC) ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫⚫ ⚫⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫⚫ ⚫ ⚫ ⚫ ⚫⚫ ⚫ ⚫ ⚫⚫ ⚫ ⚫ ⚫ ⚫⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫⚫⚫ ⚫ New York – 9% ⚫ ⚫ ⚫⚫ ⚫ ⚫⚫ ⚫⚫ ⚫ ⚫ ⚫⚫ ⚫ ⚫ ⚫ ⚫⚫ ⚫⚫ ⚫ ⚫⚫ ⚫ ⚫ ⚫⚫ ⚫⚫ ⚫⚫⚫⚫ ⚫ Washington, DC /
Slide 12: Portfolio demographics and grocery component
• • • – Average Population: 116,700 • – Average Household Income: $109,300 • – Est. Annual 5-year Population Growth: 1.1% Grocery Grocery Grocery ABR % ABR % ABR % Component % Component % Component % Grocery Grocery ABR % ABR % Component % Component % Note: 3-Mile demographic stats are weighted by 3
Slide 13: Top tenants
Grocery / Drug 1 The TJX Companies, Inc. Office Supply / Electronics 2 Best Buy Co., Inc. Medical 3 PetSmart, Inc. Pet Stores 4 Ross Stores, Inc. Hardware / Auto 5 Michael Stores, Inc. Banks 6 Gap, Inc. Quick Service Restaurants 7 Albertsons Companies, Inc. Full Service Restaurants 8 Bed Bath & Beyo
Slide 14: Development and redevelopment projects
• • ($ in M; GLA in ‘000s) One Loudoun Downtown Washington, Resi = 90% 67 378 Q2 2022 $131.0 $28.2 6.0% - 7.0% – Pads G & H DC / Baltimore Commercial = 100% Washington, Resi = Air Rights Sale Circle East 82 370 Q4 2022 47.0 16.4 7.0% - 8.0% DC / Baltimore Commercial = 100% The Shoppes at Washington,
Slide 15: Active development projects
• Cost KRG Ownership % • KRG Remaining Spend Est. Project Cash Yield • Est. Incremental NOI @ Share Expected Stabilization Date
Slide 16: Redevelopment projects
• Cost • KRG Ownership % KRG Capital Required Est. Project Cash Yield • Est. Incremental NOI @ share Expected Stabilization Date
Slide 17: Liquidity and capital needs
• – $209M of cash on hand – $745M of revolver availability – NDE = 6.0x with no outstanding preferred shares1 • – ’22 debt maturities = $178M – Signed Anchor Acceleration = $17M – Potential Re-leasing Capital = $61M • – Current active developments = $121M – Pipeline development spend = $0 Fitch Mood
Slide 18: Debt maturity schedule
Weighted Average Maturity Debt Type Weighted Average Interest Rate Rate Type1 $700 $600 $500 12 150 $400 200 10 $300 2 175 95 250 $200 120 430 400 400 178 $100 193 150 75 24 100 100 8 11 $- 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Mortgage Debt Senior Notes Term Loans Exchangeable Note
Slide 19: Third Quarter Results
KITE THIRD QUARTER RESULTS KRG STAND-ALONE THIRD QUARTER RESULTS Q3 2021 INVESTOR UPDATE KRG USTED © 2021 Kite Realty Group | kiterealty.com NYSE
Slide 20: Third quarter results and leasing
NAREIT FFO impacted by $2.1M from 2020 Collection Impact, offset by $9.2M of merger and acquisition costs Increased 2020 related rent collections drove outsized SSNOI growth Strong leasing volume continues Leased percentages increased sequentially by 160 bps and 90 bps, respectively Spread increased
Slide 21: Anchor acceleration projected returns
• • Count Square feet Capital / SF Total capital ($, 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 project Anchor Acceleration vacancy. 2. New ABR is actual for Signed Not Open and av
Slide 22: Leasing activity and spreads
• • # of Leases Signed Leased SF Signed Year-over-year % Change Blended GAAP Spread
Slide 23: ESG initiatives
• – Established KRG’s 5-year ESG targets – Completed GRESB report for the second year, receiving an improved score from 2019 – Continue to implement Green Lease language with our tenants to help KRG’s ability to monitor and track each property’s performance – Continue Kite Cares initiatives to partn
Slide 24: 5-year ESG targets
• 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 Install LED parking lot lighting at 50% of KRG owned and managed pr
Slide 25: Thriving Open-Air Real Estate
KITE OPEN-AIR RETAIL THRIVING OPEN-AIR REAL ESTATE Q3 2021 INVESTOR UPDATE KRG USTED © 2021 Kite Realty Group | kiterealty.com NYSE
Slide 26: Omnichannel retail growth through stores
• Curbside pickup at ~3,900 locations Order Pickup, Drive Up, and Shipt grew and same-day delivery from ~3,250 55% in 2Q, on top of 270% last year stores U.S. sales comps up 32% 55% of online orders fulfilled through a on a two-year basis store in 2Q Stores enabled 90% of total sales Physical stores
Slide 27: Shopping center operating cost advantages
• • • • • • • – 30% lower gross rent charges – Sales expected increase to $1.27M from $977k in other – Other property types operating costs can range from $20 - $70 psf location – Shopping center operating costs can range from $5 - $10 psf • – Lower operating costs equate to retailer savings
Slide 28: Omnichannel shopping options
Shop and purchase in the physical store Order online and Order online and pick up in store select a delivery time slot Drive up and have order Product shipped brought to your from store car
Slide 29: Essential and service-oriented tenants
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 Sufficient access points to the shopping cente
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 Exchan
Slide 31: Net operating income and same property NOI definitions
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 32: EBITDA definitions
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 33: Reconciliation of Same-Property NOI to Net Income
APPENDIX: RECONCILIATION OF SAME-PROPERTY NOI TO NET INCOME KRG ListeD NYSE PA KITE Kite Realty Group Trust Same Property Net Operating Income For the Three and Nine Months Ended September 30, 2021 and 2020 (Unaudited) (Sin thousands) Three Months Ended September 30, Nine Months Ended September 30,
Slide 34: Funds From Operations
APPENDIX: FUNDS FROM OPERATIONS KITE KRG ListeD NYSE Kite Realty Group Trust Funds Fram Operations For the Three and Nine Months Ended September 30, 2021 and 2020 (Unaudited) (S in thousands, except per share data) Three Months Ended ‘Nine Months Ended 30, 30, 2021. 2020 021 2020 _ ‘Funds From Opera
Slide 35: Reconciliation of EBITDA to Net Income
APPENDIX: RECONCILIATION OF EBITDA TO NET INCOME PA KITE KRG ListeD NYSE Kite Realty Group Trust Earnings Before Interest, Tax, Depreciation, and Amortization For the Three Months Ended September 30, 2021 (Unaudited) ($ in thousands) Consolidated net loss Adjustments to net loss: Depreciation and am
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