Kite Realty Group Trust · NYSE:KRG
Kite Realty Group Trust — Q1 2021 Earnings Presentation
41 slides from Kite Realty Group Trust's earnings presentation, Apr 30, 2021
Slide 1: Investor Update Q1 2021
KITE "| i KITE REALTY GROUP INVESTOR UPDATE Ql) 2021 KRG ist © 2021 Kite Realty Group | kiterealty.com NYSE
Slide 2: Number of Operating Retail Properties
Number of Operating Retail Properties • Only open-air retail REIT focused on Southern and Western US (aka “Warmer & Cheaper”) Total Retail GLA (SF) - 78% of ABR from Warmer & Cheaper markets - Closest peer3 has less than 50% from similar markets Operating Retail Portfolio Percent Leased • Southern a
Slide 3: Portfolio markets and demographics
Las Vegas Indianapolis ABR PSF New York Average Population1 Raleigh Average # of Households1 Dallas / Ft. Worth Average HH Income1 Houston % of College Graduates1 Naples % of ABR with Grocer Fort Lauderdale % of ABR in Top 50 MSAs Oklahoma City Salt Lake City Charlotte Miami Port St. Lucie Orlando T
Slide 4: Total Potential NOI Growth
• • • Anchor Lease-up2 Shop Lease-up3 Signed Not Open Tenants 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. 1. Percentage increase from
Slide 5: NAREIT FFO and collections
NAREIT FFO impacted $0.2M from 2020 Collection Impact Negatively impacted by COVID-19 Strong leasing volume continues Negatively impacted by COVID-19 Sector-leading collection % throughout the pandemic 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21
Slide 6: KRG Difference
KITE KRG DIFFERENCE STRONG REAL ESTATE /S THE SHIP THAT SURVIVES THE STORM QI 2021 INVESTOR UPDATE KRG LISTED © 2021 Kite Realty Group | kiterealty.com NYSE
Slide 7: Gateway markets research and Project Focus
• • – Research over the past decade shows rent growth in gateway markets is only marginally higher than other markets1 – Portfolios with high ABR have not necessarily had higher collection rates on rents during the COVID-19 crisis • • – Project Focus, completed in 2019, improved the portfolio, remov
Slide 8: High-Quality Properties
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Slide 9: Portfolio transformation statistics
# of Operating Retail Properties # of States # of Markets South and West ABR Top Region (% of ABR) Top State (% of ABR) Top MSA (% of ABR) ABR Top Tenant (% of ABR) Net-debt-to-EBITDA Note: Based on retail operating portfolio in supplemental disclosures for YE 2004, 2015, and Q1 2021. 1. Reflects as
Slide 10: Community center demographics
• • • – Average Population: 76,300 • – Average Household Income: $101,200 – Est. Annual 5-year Population Growth: 1.4% 1. Per Green Street Advisors. 2. Based on ABR. Remaining 6% of portfolio are Lifestyle Centers or other assets.
Slide 11: Leasing activity
• • # of leases signed Leased SF signed Year-over-year % change1 Blended GAAP Spread 1. Year-over-year leasing statistics have been adjusted for sold assets in 2019.
Slide 12: Top tenants and tenant mix
Grocery / Drug Office / Communication 1 Publix Supermarkets, Inc. Pet Stores Medical 2 The TJX Companies, Inc. Hardware / Auto 3 PetSmart, Inc. Banks 4 Ross Stores, Inc. Quick Service Restaurants 5 Dick’s Sporting Goods, Inc. Full Service Restaurants 6 Nordstrom Rack Soft Goods Discount Retailers 7
Slide 13: Liquidity and balance sheet
• – $229M of cash on hand – $385M of revolver availability – NDE = 6.6x with no outstanding preferred shares1 • – ’22 debt maturities = $180M – Signed Anchor Acceleration = $6M – Potential Re-leasing Capital = $77M • – Glendale apartments = $0.7M – Eddy Street Phase III = $5.2M – Glendale retail = $
Slide 14: FFO, as adjusted guidance
FFO, as adjusted • – Should there be previous bad debt collected (recognized as revenue) or accounts receivable written off (recognized as expense) related to 2020 billings, KRG will disclose the impact, but exclude it from FFO, as adjusted – Will continue to report NAREIT FFO, which will be Net Inc
Slide 15: ESG initiatives
• – Created an ESG Task Force – Publicly disclosed KRG’s ESG policy – Published an ESG brochure highlighting key stats and initiatives for each category – Filed inaugural GRESB report – Planted 5,100 trees in partnership with One Tree Planted and donating 51 additional trees in KRG’s local communiti
Slide 16: Moving Forward
KITE MOVING FORWARD EXPERIENCED TEAM + STRONG OPEN-AIR REAL ESTATE + LEADING BALANCE SHEET = POTENTIAL FOR OPPORTUNITIES QI 2021 INVESTOR UPDATE KRG USTED © 2021 Kite Realty Group | kiterealty.com NYSE
Slide 17: Priorities and opportunities
• – Convertible debt issuance proceeds will be used to fund 2022 maturities • – Leasing of pandemic dislocation is already under way • – BOPIS and curbside pick-up are here to stay and will continue to drive brick-and-mortar sales – Will benefit from expected tenant demand for open-air space • – Pur
Slide 18: Collected revenues and 2021 guidance
• • – Collected revenues decreased ~7% (compared to peak decrease of 15% in Q2), but stabilized in Q4 • 1. Midpoint of 2021 guidance excluding the impact of the recent Eastgate acquisition and any other transactions. Guidance is based on current environment stabilizing and no additional closures.
Slide 19: Leasing results and bankruptcy dislocation
# of Leases Signed • # of Different Tenants Signed Square Feet of New Leases Total Expected Cost • Return on Capital Comparable Cash Lease Spread1 • Comparable GAAP Lease Spread1 – Over 85% of the bankruptcy dislocation, shown on the next slide, has been addressed or is in discussions • 93.0% 91.0%
Slide 20: Bankrupt tenant exposure
1 Guitar Center 2 Francesca’s 3 Rubio’s Restaurant 4 New York Sports Club 5 Stein Mart 6 It’s Sugar 7 Ruby Tuesday 8 Ascena 9 Tailored Brands 10 24 Hour Fitness 11 GNC 12 Tuesday Morning 13 J Crew 14 Hair Cuttery 15 Earth Fare 16 Pier 1 Imports 17 AC Moore 18 Bar Louie 19 Destination Maternity 1. KR
Slide 21: Anchor and shop lease-up opportunity
• • – In a typical year, leasing capex can range from $10 - $15 million – 2021 and 2022 leasing capex can potentially be $25 - $30 million higher annually • – Leasing all displayed anchor vacancies would result in 100% occupancy for anchors – Leasing all displayed shop space would result in 92.5% oc
Slide 22: Anchor Acceleration vacancy
• • Count Square feet Capital / SF Total capital ($, 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 23: Glendale Town Center
G GLENDALE TOWN CENTER VISIONARY REDEVELOPMENT KRG USTED © 2021 Kite Realty Group | kiterealty.com NYSE bs, em
Slide 24: Glendale project details
• • Cost KRG Ownership % KRG Capital Required Est. Project Cash Yield Est. Incremental NOI @ share Expected Stabilization Date
Slide 25: Glendale project details
Cost • KRG Ownership % KRG Capital Required • Est. Project Cash Yield Est. Incremental NOI @ share Expected Stabilization Date
Slide 26: Eddy Street Commons Phase III
EDDY STREET COMMONS AT NOTRE DAME KRG UsTeD NYSE © 2021 Kite Realty Group | kiterealty.com PHASE Ill DEVELOPMENT
Slide 27: Eddy Street Phase III details
Cost • KRG Ownership % KRG Capital Required Est. Project Cash Yield • Est. Incremental NOI @ share Expected Stabilization Date
Slide 28: Market Thesis: Warmer & Cheaper
KITE MARKET THESIS WARMER & CHEAPER INVESTOR UPDATE KRG USTED © 2021 Kite Realty Group | kiterealty.com NYSE
Slide 29: Migration to warmer and cheaper states
• • – Florida had the largest AGI increase (20.3%) and Nevada had the third largest increase (15.7%) – New Jersey, Connecticut, New York and Illinois were 4 of the bottom 5 in terms of AGI reduction • – States listed in the bottom 10 were New Jersey, Illinois, New York, Connecticut and California •
Slide 30: Income and discretionary income comparison
• • Income Discretionary Income1 Income Discretionary Income1 Source: Smart Asset 2021 Cost of Living Calculator 1. Discretionary income is net of tax burden, housing and food costs.
Slide 31: Population and migration by state
Florida Texas North Carolina Indiana Nevada South West Midwest Northeast Source: Synergos Technologies. Pre pandemic analysis.
Slide 32: Strong Open-Air Real Estate
KITE OPEN-AIR STRONG OPEN-AIR REAL ESTATE QI 2021 INVESTOR UPDATE KRG ust © 2021 Kite Realty Group | kiterealty.com NYSE
Slide 33: Retailer curbside and pickup growth
• Curbside pickup at ~3,750 locations Drive-up pick up has increased 500% and same-day delivery from ~3,000 year-over-year stores Greater than 60% of online orders Comp sales were up 28.6% in 4Q fulfilled through a store in 2020 Greater than 80% of online orders are Curbside and BOPIS sales growth r
Slide 34: Open-air retailer operating cost savings
• • • • • • • – 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 - $10 psf • – Lower operating costs equate to retailer savings
Slide 35: Essential and service-oriented tenants
44% of ABR is deemed essential 41% of ABR service-oriented tenants offer necessary daily trips post-COVID 15% of ABR from primarily full-service restaurants creates additional traffic Essential shadow anchors Target and Bank of America drive daily trips Sufficient access points to the shopping cente
Slide 36: Forward-Looking Statements
• Forward-Looking Statements • This supplemental information package, together with other statements and information publicly disseminated by us, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
Slide 37: Net Operating Income and Same Property NOI
NET OPERATING INCOME AND SAME PROPERTY NET OPERATING INCOME The Company uses property net operating income (“NOI”), a non-GAAP financial measure, to evaluate the performance of our properties. The Company defines NOI as income from our real estate, including lease termination fees received from tena
Slide 38: EBITDA definitions
EBITDA The Company defines EBITDA, a non-GAAP financial measure, as net income before depreciation and amortization, interest expense and income tax expense of taxable REIT subsidiary. For informational purposes, the Company has also provided Adjusted EBITDA, which the Company defines as EBITDA less
Slide 39: Reconciliation of Same-Property NOI to Net Income
APPENDIX: RECONCILIATION OF SAME-PROPERTY NOI TO NET INCOME PA KITE KRG LisTeD NYSE ($ im thousands) Number of proverties for the period! Leased percentage at period end Economic Occupancy percentage” Same Property NOI Kite Realty Group Trust Same Property Net Operating Income For the Three Months E
Slide 40: Funds From Operations
APPENDIX: FUNDS FROM OPERATIONS KITE KRG LisTeD NYSE Kite Realty Group Trust Funds From Operations For the Three Months Ended March 31, 2021 and 2020 (Unaudited) (S in thousands. excent ver share data) Funds From Operations ‘Consolidated net income Less: net income attributable to noncontrolling int
Slide 41: Reconciliation of EBITDA to Net Income
rh APPENDIX: RECONCILIATION OF EBITDA TO NET INCOME KITE KRG LisTeD NYSE Kite Realty Group Trust Earnings Before Interest, Tax, Depreciation, and Amortization For the Three Months Ended March 31, 2021 (Unaudited) (S in thousands) ‘Three Months Ended March 31, 2021 ‘Consolidated net income $ 25,355 A
Kite Realty Group Trust — Q1 2021 Earnings Presentation on 6ix