Kite Realty Group Trust · NYSE:KRG
Kite Realty Group Trust — NAREIT 2014
33 slides from Kite Realty Group Trust's conference presentation, Nov 4, 2014
Slide 1: NAREIT 2014: Atlanta, November 2014
* NAREIT 2014: ATLANTA November 2014
Slide 2: Company Overview
* COMPANY OVERVIEW City Center White Plains, NY
Slide 3: Company Snapshot
* COMPANY SNAPSHOT * KITE REALTY GROUP TRUST KITE REALTY GROUP TRUST Number of Properties 132 Headquarters Indianapolis, IN Number of States 26 Total GLA (SF) 26.7mm Owned GLA (SF) 18.2mm Average Size Of Center (SF) ~225,000 Planned Disposition Markets Planned Disposition Assets States In Pro Forma
Slide 4: Current Portfolio Overview
CURRENT PORTFOLIO OVERVIEW * (1) As of Q3 2014. (2) Other includes office, unanchored strip centers and single tenant assets. Source: demographic data from AGS. Total Leased (Owned SF) 94.9% Shop Leased (Owned SF) 85.8% Annualized Base Rent per SF $14.98 Ground Lease (ABR) $18.6mm 3-Mile Portfolio D
Slide 5: Introducing Kite 2.0
INTRODUCING KITE 2.0 * 2010 Today Enhanced Scale 63 Properties 9 States 132 Properties 26 States Strong Leasing 78.0% Small Shops Leased 85.8% Small Shops Leased Quality Markets $12.80 ABR per GLA $14.98 ABR per GLA Geographically Diverse 41.1% % of ABR from IN ~14% % of ABR from IN Reduced Risk 15.
Slide 6: Improving Portfolio Quality While Delevering
IMPROVING PORTFOLIO QUALITY WHILE DELEVERING Growing ABR Through High-Quality Assets… …While Continuing To Strengthen The Balance Sheet 1. Base rent shown for retail operating properties at the end of each period. Source: Company filings. *
Slide 7: Portfolio Update
* PORTFOLIO UPDATE Plaza at Cedar Hill Dallas, TX Delray Marketplace Delray, FL
Slide 8: Performance Recap & Recent Events
PERFORMANCE RECAP & RECENT EVENTS * 8th consecutive quarter of >4% same property NOI growth, at 4.7% for Q3 2014 Cash rent spreads of 14.4% marking the 4th consecutive quarter in excess of 13% Increased FFO by 17% since 2012 while significantly delevering the balance sheet (1) Bolton Plaza moved to
Slide 9: Strong Operating Metrics
* STRONG OPERATING METRICS Portfolio % Leased Same Store NOI Growth Operating fundamentals underscore strength of portfolio and will continue to drive growth opportunities in the future Agg. Cash Lease Spreads >90% Leased For Last 5 Years Same Property NOI Growth >4% For 2 Years Strong Lease Spreads
Slide 10: Key Sub-Markets Drive Future Growth
KEY SUB-MARKETS DRIVE FUTURE GROWTH * . Source: demographic data from AGS; 3-mile radius shown. Note: demographic data is pro forma for announced asset dispositions. Portfolio Quality Supported By Strongest Sub-Markets Within Top 5 States Median Household Income ($000’s)
Slide 11: Defensive Merchandise Mix Among Tenants
DEFENSIVE MERCHANDISE MIX AMONG TENANTS * Non-Defensive Non-Defensive Sector % ABR Office Supplies 2.7% Hobby & Party 2.5% Books, Music, Video, Games 1.9% Other 1.5% Small Electronics 0.6% ~98% of openings YTD have come from defensive / omni-channel tenants, totaling~96% of the SQFT opened in 2014 I
Slide 12: Leasing Strategies Enhance Future Growth Opportunities
LEASING STRATEGIES ENHANCE FUTURE GROWTH OPPORTUNITIES * Fast, Casual Dining Specialty Grocer Growth Multiple Leases Executed An aggressive leasing strategy that focuses on tenant retention, long-term relationships and defensive retailers continues to enhance the quality of the portfolio
Slide 13: High-Quality & Diversified Tenants Remain Core to Kite 2.0
Tenant # Stores % ABR 20 3.5% 22 2.5% 21 2.3% 20 2.0% 10 2.0% 5 1.9% 16 1.8% 16 1.7% 15 1.5% 7 1.5% Total 152 20.7% HIGH-QUALITY & DIVERSIFIED TENANTS REMAIN CORE TO KITE 2.0 Strong relationships represented by consistency in top tenants by ABR since 2010; healthy diversification persists with no si
Slide 14: Merger & Portfolio Recycling Update
* MERGER & PORTFOLIO RECYCLYING UPDATE Landstown Commons Virginia Beach, VA Rivers Edge Indianapolis, IN
Slide 15: Kite Capitalizes on Internal & External Opportunities via Merger
Debt Management System KITE CAPITALIZES ON INTERNAL & EXTERNAL OPPORTUNITIES VIA MERGER *
Slide 16: Kite Delivers on Merger Closing, Integration and Expectations
KITE DELIVERS ON MERGER CLOSING, INTEGRATION AND EXPECTATIONS * IDIV under contract to sell net lease portfolio to Realty Income Complete 1031 exchange; redeploy $72mm of capital IDIV sold net lease portfolio Completed 1031 exchange Disposed of 2 multi-family assets Expected closing in late Q2 / Q3
Slide 17: Inland Diversified Merger Execution
INLAND DIVERSIFIED MERGER EXECUTION * Lower Net Debt to EBITDA to ~6.5x FFO neutral & strengthened balance sheet Acquired at a 6.6% cap rate on $2.03bn of assets Estimated $17-19mm synergies or $6-8mm of incremental operating expense Estimated ~$25-27mm Guidance Given In Feb. 2014 (1) Reduce Leverag
Slide 18: Swift Disposition Seizes Opportunity to Enhance Portfolio Further
SWIFT DISPOSITION SEIZES OPPORTUNITY TO ENHANCE PORTFOLIO FURTHER * Key Highlights Of Asset Sale 15 properties for ~$318mm 2 tranche closing: December 2014; March 2015 Ability to sell a 16th asset via 3rd tranche option 50% levered; only 2 are unencumbered ~$140mm secured debt; average rate of ~4.6%
Slide 19: Balance Sheet
BALANCE SHEET Parkside Town Commons Cary, NC Beechwood Promenade Athens, GA
Slide 20: A Balanced Approach to Capital Management
* A BALANCED APPROACH TO CAPITAL MANAGEMENT Well Managed Debt Maturity Schedule (1) ___________________________ As of September 30, 2014. Chart excludes principal payments and net premiums on fixed rate. Note: Revolver and Term Loan are shown at final maturities after extension options exercised. An
Slide 21: Future Growth Initiatives
* FUTURE GROWTH INITIATIVES Portofino Shopping Center Houston, TX Kingwood Commons Houston, TX
Slide 22: Company Objectives and Strategy
COMPANY OBJECTIVES AND STRATEGY KRG will continue to be focused on generating strong operational performance and maintaining a conservative capital structure to drive shareholder value Lease Management Identified over $100mm actionable projects across ~20 different opportunities Expected to result i
Slide 23: Repositioning the Portfolio: Tenant Optimization
REPOSITIONING THE PORTFOLIO: TENANT OPTIMIZATION * Located next to Daytona International Speedway which hosts over 300 events annually Moved Staples into existing Petco space Downsized the office supply anchor by 50% to ~12,000 SF Executed lease with Total Wine & More to backfill the original~24,000
Slide 24: Repositioning the Portfolio: Right-Sizing Large Anchor Space
REPOSITIONING THE PORTFOLIO: RIGHT-SIZING LARGE ANCHOR SPACE * Key highway intersection; traffic counts of 81,000 / day during peak season Acquired Winn-Dixie lease from bankruptcy ~50,000 SF Winn-Dixie anchor space Demised GLA into 2 right-sized spaces (~25,000 SF each) Added a specialty grocer com
Slide 25: Repositioning Case Study: Lithia Crossing
REPOSITIONING CASE STUDY: LITHIA CROSSING * Replaced existing shop space with new ground-up development building Added a specialty grocery, The Fresh Market, increasing daily traffic and Lithia’s contribution to portfolio ABR Migrated property from a single-anchor center to a multi-anchor power cent
Slide 26: Redevelopment Case Study: King's Lake Square Update
REDEVELOPMENT CASE STUDY: KING’S LAKE SQUARE UPDATE * Naples, FL Owned GLA: 87,073 89% Leased ABR per SQFT: $17.27 Demolished a 30 year old property and replaced with ground-up development Build to suit for Publix grocer, including an increased size of ~45,000 square feet and equipped with energy sa
Slide 27: Redevelopment Case Study: King's Lake Square Before & After
REDEVELOPMENT CASE STUDY: KING’S LAKE SQUARE BEFORE & AFTER * Before Before Before
Slide 28: Why Invest? Because Kite Delivers
WHY INVEST?…BECAUSE KITE DELIVERS * Kite Delivers Value Proposition (1) Successfully closed ~$2.5bn of M&A within the last year No surprises or unexpected events in full system integration Reduced net debt / EBITDA by a full turn to ~6.5x Received 2 investment grade credit ratings of BBB- and Baa3 I
Slide 29: Industry Update
* INDUSTRY UPDATE Village Walk Fort Meyers, FL Wheatland Town Crossing Wheatland, TX
Slide 30: New Supply Off the Lows But Remains Limited
NEW SUPPLY OFF THE LOWS BUT REMAINS LIMITED * Construction Starts For Aggregate REIT Industry (1) Source: CBRE and Citi Research. Portfolio Managers Quarterly, October 2014. Data shown is seasonally adjusted in thousand square feet. New shopping center supply remains depressed, growing at the slowes
Slide 31: REIT Industry Trends
REIT INDUSTRY TRENDS * Development / Redevelopment Landlords looking to reposition high-quality assets with strong tenants that increase daily traffic Focused on right-sizing anchor tenant space and optimizing mix of anchor and small shop space at shopping centers Omni-Channel Retailers continue to
Slide 32: Kite Realty Group: Quality, Quality, Quality
ri KITE REALTY GROUP QUALITY, QUALITY, QUALITY Portofino Shopping Center at Th Edy Street Com Northorest Shopping Cente Beltway Center Centennial Center
Slide 33: Forward-Looking Statements
Certain statements in this presentation that are not in the present or past tense or that discuss the Company’s expectations (including any use of the words “anticipate,” “assume,” “believe,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “may,” “might,” “outlook,” “project,” “should,” or s