Kite Realty Group Trust · NYSE:KRG
Kite Realty Group Trust — Investor Presentation (September 2019)
30 slides from Kite Realty Group Trust's investor presentation, Sep 9, 2019
Slide 1: Second Quarter 2019 Investor Update
tee Se We ee UR oleae ne 4 OND QUARTER2019 INVESTOR UPDATE KRG 8885775600 kiterealty.com mmm NYSE
Slide 2: Company overview and key portfolio statistics
Number of Retail 94 • High-quality portfolio with diverse tenant Properties1 base 1 Total GLA (SF) 18.1mm • Over 71% of retail ABR is from centers Operating Portfolio with a grocery component 95.2% Percent Leased1 • Covered dividend with attractive 9% Annualized Base yield3 $17.42 Rent (ABR) Per SF1
Slide 3: Portfolio demographics and population growth
Note: Demographic data source: STI: Popstats based on estimated 2018 data on a 5-mile radius from KRG market assets, per the US Census Bureau, weighted by ABR Population Growth 2018 – 2023. Pro forma for $415M of asset sales YTD. © 2019 Kite Realty Group Second Quarter 2019 Investor Presentation | 3
Slide 4: Portfolio demographics by property type
Average Q2 2019 Average Q2 2019 Average Q2 2019 Household Income Household Income Household Income Average Q2 2019 Average Q2 2019 Average Q2 2019 Population Population Population 1. STI: Popstats based on estimated 2018 data on a 5-mile radius from the U.S. Census Bureau, weighted by ABR. Property
Slide 5: Top 10 tenants
1 Publix Supermarkets, Inc. NR 14 2.7% 2 The TJX Companies, Inc. A+ 17 2.1% 3 Bed Bath & Beyond, Inc. BB+ 17 2.0% 4 PetSmart, Inc. B- 15 1.9% 5 Ross Stores, Inc. A+ 14 1.9% 6 Dick’s Sporting Goods, Inc. NR 7 1.6% 7 Nordstrom Rack BBB+ 6 1.6% 8 Michaels Stores, Inc. BB- 12 1.4% 9 LA Fitness NR 4 1.4%
Slide 6: KRG
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Slide 7: Discount to consensus NAV versus peers
• At $14.73 per share, KRG would trade at a 35% discount to consensus NAV of $22.55 per share1 • While the entire retail sector has been under pressure for several years, the retail peer group2 trades at an average NAV discount of 18% to consensus as compared to KRG’s 35% to consensus discount1 AKR
Slide 8: Strategic priorities
Portfolio and Company Leverage • Sell assets to generate between $415mm and $500mm of proceeds • Use the proceeds to pay down debt and fortify the balance sheet • Articulate an asset mix and market/geographic strategy Tenants • Campaign for new/underrepresented tenants • Deepen partnerships with lea
Slide 9: Debt maturity schedule
$ in millions $300 95.0 $200 47.6 Current as of 300.0 9/4/2019 250.0 $100 189.7 181.9 80.0 70.9 75.0 11.8 9.8 10.4 $0 16.9 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Line of credit can pay 100% of maturities through 2025 $300 95.0 $200 9.2 $500mm Net 300.0 Dispositions 250.0 $100 18
Slide 10: Peer multiples and leverage comparison
AKR $ 29.74 CDR 8.3x CDR 10.3x FRT 11.0 FRT $ 27.99 ROIC 7.5x ROIC 7.5x KIM 9.9 REG $ 22.30 KRG (12/31/18) 6.7x KIM 7.4x REG 9.8 ROIC $ 21.41 RPT 6.6x RPT 7.2x KRG (Proforma)2 7.0 WRI $ 19.37 BRX 6.4x SITC 7.1x UE 6.2 RPAI $ 19.27 KIM 6.0x KRG (12/31/2018) 6.7x KRG (Today)3 5.8 UE $ 18.40 KRG (Today
Slide 11: Leverage and FFO multiple versus peers
11.0x Avg Peer FFO Multiple = 12.8x 70.0% 10.0x KRG FFO 60.0% 9.0x Multiple = 9.5x 50.0% Market Net Total Debt Cap / 8.0x 40.0% 7.0x Avg Peer FFO Multiple = 15.7x 30.0% 6.0x Net Debt + Pref / / +EBITDA DebtNetPref 20.0% 5.0x 4.0x 10.0% 3.0x 0.0% 2 3 WRI UE REG FRT RPAI AKR PF KRG KRG BRX UBA AAT SIT
Slide 12: Disposition program
$500M • Market Rankings $415M2 • Asset Demographics/Location • Tenant Considerations • Proforma and historical NOI CAGR • In-place and proforma ABR CAGR Population (3 Mile) 60,700 73,200 Population Growth (3 Mile) 1.0% 1.6% Average Household Income (3 Mile) $72,600 $93,900 ABR / PSF (2019 Budget) $1
Slide 13: Market thesis and criteria
Market Thesis • KRG’s long-term goal is to have at least 80% of its NOI generated from 15-20 focus markets that meet certain data-driven criteria • Assets outside of the 15-20 focus markets will generally be located in extremely productive submarkets (e.g. Naples) or will be assets that demonstrate
Slide 14: Migration trends and SALT impact
Prior to SALT legislation migration impact* Note: Sourced from Bloomberg analysis of US Census data. Proforma for $415M of asset sales YTD. © 2019 Kite Realty Group Second Quarter 2019 Investor Presentation | 14
Slide 15: Q2 2019 Results
KRG Q2 2019 R
Slide 16: Q2 2019 highlights
Net loss attributable to common shareholders of $1.8M, or $0.02 per common share for Q2 2019 Q2 2019 FFO, as adjusted, per share was $0.43, in-line with KRG’s guidance and analyst consensus. SPNOI for Q2 2019 was 1.7% higher year-over-year, and driven by an increase in minimum rent and net recoverie
Slide 17: Occupancy, ABR and leased rate trends
Same-Property Occupancy Rate ABR PSF Record Level1 96% $18.00 $17.35 95% $17.00 94% $16.00 93% 92.4% $15.00 92% $14.00 91% $13.00 90% $12.00 2013 2014 2015 2016 2017 2018 Q2'19 2013 2014 2015 2016 2017 2018 Q2'19 Larger than average spread (270 bps) due Same-Property Leased Rate to continued anchor
Slide 18: Annualized NOI coming online
Annualized NOI Coming Online $10.0 $9.1 $8.6 $8.0 $6.9 $6.0 $5.1 $4.0 NOI ($, millions) ($, NOI $2.0 $1.6 $0.0 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 © 2019 Kite Realty Group Second Quarter 2019 Investor Presentation | 18
Slide 19: Tenant mix by ABR
Sporting Goods Office Supplies 3.4% 1.5% Electronics & Books Services, 4.6% Entertainment Home Improvement Goods 25.1% 9.7% Soft Goods 9.7% Restaurants 17.2% Discount Retailers 13.3% Grocer, Specialty Stores 15.5% 1. Over 71% of retail ABR is from centers with a grocery component © 2019 Kite Realty
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Slide 21: Operating priorities
• High performance business as usual in terms of increasing value across the portfolio • Extreme focus on re-tenanting anchors with Big Box Surge initiative • Continue to cultivate redevelopment opportunities so they are “shovel ready” when Big Box Surge is complete and capital becomes available • S
Slide 22: Internal growth drivers
• $1.6mm of additional cash NOI from in-process development and redevelopment projects • Continue to identify redevelopment opportunities to enhance portfolio quality • Undertaking a portfolio optimization strategy in 2019 • ABR of new leases executed in Q2 is 25.1% higher than the ABR for the opera
Slide 23: Big box leasing
BIG BOX LEASING KRG’s portfolio is: • 49% box and 51% small shop/ground leases by ABR1 • 69% box and 31% small shop by GLA1 96.5% anchor leased1 • Primary vacancies coming from struggling and/or bankrupt retailers such as Toys “R” Us KRG signed 2 new box leases in Q2 2019 on top of the 18 box leases
Slide 24: Box splitting example
+ No loss of square footage + More demand for smaller spaces + Less capital required + Higher ABR psf + Higher return on capital + De-risk center as less NOI associated with one - Harder to lease as fewer tenants can take space tenant - Cost to split box - Loss of square feet • Converted 38k sf Babi
Slide 25: Redevelopment example
Key actions taken: • Replaced a 17k SF GAP with a diverse lineup of lifestyle retailers • Filled 4.5k SF of vacant space with an expansion of restaurant and signing of service retailer • Relocated soft goods retailer to more appropriate location and backfilled with two new tenants Redevelopment not
Slide 26: Net income to FFO reconciliation and guidance
Net Income to FFO Reconciliation Low High Net Income Guidance $0.04 $0.12 Add: Impairment Charges 0.33 0.33 Add: Depreciation and Amortization 1.57 1.57 Less: Gain on sales of operating properties, net (0.33) (0.33) FFO - Guidance $1.61 $1.69 Change at Previous Current Midpoint SP NOI Growth 1.25% -
Slide 27: 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 28: Funds From Operations
FUNDS FROM OPERATIONS Funds from Operations (FFO) is a widely used performance measure for real estate companies and is provided here as a supplemental measure of operating performance. The Company calculates FFO, a non-GAAP financial measure, in accordance with the best practices described in the A
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