Kite Realty Group Trust · NYSE:KRG
Kite Realty Group Trust — Q4 2021 Earnings Presentation
40 slides from Kite Realty Group Trust's earnings presentation, Feb 15, 2022
Slide 1: Kite Realty Group Investor Update Q4 2021
KITE REALTY GROUP INVESTOR UPDATE Q4 2021 KRG 2022 kite Realty Group | kiterealty.com LisTED
Slide 2: Company overview and key portfolio metrics
Number of Operating Retail Properties • Top 5 open-air shopping center REIT primarily focused in warmer & cheaper markets with select strategic gateway presence Total Owned Retail GLA (SF) - 63% of ABR in warmer & cheaper markets Operating Retail Portfolio Percent Leased - 23% of ABR in strategic ga
Slide 3: NAREIT FFO and 2022 guidance
NAREIT FFO1 FFO, as adjusted % Accretion over Consensus 2022 FFO2 (pre-merger) % Accretion over 2020 FFO • – Same-Property NOI growth of 2.0% – Bad debt of 1.5% of total revenues – Any transaction activity expected to be earnings neutral 1. Please see page 40 for reconciliation to GAAP metrics. 2. C
Slide 4: Q4 2021 results highlights
NAREIT FFO impacted by $0.4M from 2020 Collection Impact, offset by NAREIT FFO / FFO, as adjusted $76.6M of merger and acquisition costs Same Property NOI Increased 2020 related rent collections drove outsized SSNOI growth Total Leasing Volume Strong leasing volume continues Leased percentages incre
Slide 5: Leased-to-occupied spread and NOI upside
• 1. Excludes in-place NOI and NOI related to tenants that have signed leases but have not commenced rent as of 12/31/2021. 2. Assumes leasing up anchors to 98% and shops to 92.5% as of 4Q21 plus previous tenant recoveries. 3. Based on external estimates and completed entitlements.
Slide 6: Merger Overview
MERGER OVERVIEW OPPORTUNITY KNOCKS Q4 2021 INVESTOR UPDATE KRG LISTED 2022 Kite Realty Group | kiterealty.com NYSE
Slide 7: Total enterprise value results in $8.0B company
Total enterprise value Entry into strategic results in $8.0B markets and bolstered company presence in existing markets Lower leverage with limited Immediately near-term maturities accretive to earnings / share plus reduced cost of capital Near-term organic growth through lease-up and select develop
Slide 8: Top shopping center REITs
TOP 5 SHOPPING CENTER REITs KIM REG FRT BRX KRG PECO SITC AKR ROIC AAT UE RPT Note: Market data as of February 8, 2022. Source of peer data is FactSet.
Slide 9: Peer comparison of top 5 shopping center REITs
$29.69 6.5x 6.5x 6.6x $23.18 6.0x $19.36 $19.12 $15.42 5.1x FRT REG KRG KIM BRX REG KRG BRX FRT KIM 34% 80% 80% 26% 25% 75% 16% 71% 11% 70% FRT KRG REG KIM BRX REG KIM FRT KRG BRX 71% 63% 66% 65% 46% 45% 45% 56% 21% 47% KRG KIM BRX REG FRT REG KRG KIM BRX FRT Note: Comparison to only top 5 shopping
Slide 10: KRG Difference
KRG DIFFERENCE FURTHER STRENGTHENED PORTFOLIO HAS SIGNIFICANT POTENTIAL Q4 2021 INVESTOR UPDATE LISTED 2022 Kite Realty Group | kiterealty.com
Slide 11: Portfolio map by market
⚫ ⚫ Warmer and Cheaper Markets1 Seattle – 5% ⚫ ⚫⚫ ⚫ ⚫ ⚫ ⚫⚫ ⚫ ⚫ ⚫⚫ Strategic Gateway Markets ⚫ ⚫ ⚫ ⚫ (DC, Seattle and NYC) ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫⚫ ⚫ ⚫ ⚫⚫ ⚫ ⚫ ⚫⚫ ⚫ ⚫ ⚫⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ New York – 8% ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫⚫⚫ ⚫ ⚫⚫ ⚫ ⚫ ⚫ ⚫⚫ ⚫⚫ ⚫⚫ ⚫ ⚫⚫ ⚫ ⚫ ⚫ ⚫ ⚫⚫ ⚫ ⚫⚫ ⚫ ⚫ ⚫⚫ ⚫ ⚫⚫ ⚫⚫ Washington,
Slide 12: Grocery component and ABR by property
Grocery Grocery Grocery ABR % ABR % ABR % Component % Component % Component % • • • • • Grocery Grocery ABR % ABR % Average Population: 102,165 Component % Component % Average Household Income: $114,442 Note: 3-Mile demographic stats are weighted by 4Q 2021 ABR and sourced from PopStats. Remaining 3
Slide 13: Top properties by market
Total Owned GLA ABR PSF % of Portfolio ABR Leased % Cash Lease Spread on Past 3 New Deals 3 Mile Population 3 Mile Avg. HHI
Slide 14: Top properties by market
Total Owned GLA ABR PSF % of Portfolio ABR Leased % Cash Lease Spread on Past 3 New Deals 3 Mile Population 3 Mile Avg. HHI
Slide 15: Top properties by market
Total Owned GLA ABR PSF % of Portfolio ABR Leased % Cash Lease Spread on Past 3 New Deals 3 Mile Population 3 Mile Avg. HHI
Slide 16: Top properties by market
Total Owned GLA ABR PSF % of Portfolio ABR Leased % Cash Lease Spread on Past 3 New Deals 3 Mile Population 3 Mile Avg. HHI
Slide 17: Anchor vacancy lease-up potential
• • Count Square feet Capital / SF Total capital ($, M) Previous tenants ABR Estimated New ABR2 Cash lease spread Return on capital New NOI incl. NNN ($, M) FFO / Share 1. Estimate of potential outcomes of remaining anchor vacancy. 2. New ABR is actual for Signed Not Open and average in place ABR fo
Slide 18: Leasing activity
• • # of Leases Signed Leased SF Signed Year-over-year % Change Blended Cash Spread
Slide 19: Top tenants by ABR
1 The TJX Companies, Inc. Grocery / Drug Office Supply / Electronics 2 Best Buy Co., Inc. Medical 3 Ross Stores, Inc. Pet Stores 4 PetSmart, Inc. Hardware / Auto 5 Michael Stores, Inc. Banks 6 Gap, Inc. 7 Bed Bath & Beyond, Inc. Quick Service Restaurants 8 Dick’s Sporting Goods, Inc. Full Service Re
Slide 20: Development pipeline
• • ($ in M; GLA in ‘000s) Eddy Street Commons – South Bend 100% Q1 2022 19 0 $7.5 $7.5 $1.2 $0.4 – $0.5 Phase III The Shoppes at Washington, 100% Q2 2022 58 0 4.8 4.8 3.9 0.0 – 0.1 Quarterfield D.C. / Baltimore One Loudoun Washington, Downtown – Pads G & 90% Q2 2022 0 378 13.5 13.5 8.3 4.8 – 5.0 D.
Slide 21: Redevelopment and NOI to come online
• Total Project Costs1 KRG Ownership % • KRG Remaining Spend Estimated Stabilized NOI to KRG Remaining NOI to Come Online2 • Projected Completion Date 1. Total project costs represent costs to KRG post-merger and exclude any costs spent to date prior to the merger. 2. Excludes in-place NOI and NOI r
Slide 22: Development projects and returns
• Cost1 KRG Ownership % • KRG Equity Requirement Est. Project Cash Yield Est. Incremental NOI @ Share Expected Stabilization Date 1. KRG does not have nay equity requirements related to this development. Total project cost is net of $13.5M TIF.
Slide 23: Redevelopment examples
• • - Converted unused parking field into 267 unit - Repurposing an outdated retail center into 285 - Redeveloping an outdated retail center into the multi-family development by contributing land to multifamily units and 24k SF of retail. corporate headquarters of Republic Airways. a development JV
Slide 24: Mixed-use entitlement potential
• • • 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. 42,000 1. Based on external estimates and completed entitlements.
Slide 25: Liquidity and capital sources and uses
• – $227M of cash on hand – $795M of revolver availability – 2022 Estimated FFO (midpoint of NAREIT FFO guidance), net of dividend – NDE = 6.0x with no outstanding preferred shares1 • – ’22 debt maturities = $154M – SNO Tenant Capital Required = $84M – CapEx = $43M – Potential Re-leasing Capital (bo
Slide 26: Debt maturity schedule
Weighted Average Maturity Debt Type Weighted Average Interest Rate Rate Type $800 $700 $600 $500 $400 $300 $200 $100 $- 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031+ ($ in M) 1. Fixed rate debt includes the portion of variable rate debt that has been hedged by interest rate swaps. As of 12/31/2
Slide 27: 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 28: 5-year ESG targets
• - 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 properties 47% Install smart irrigation controls at 25% of KRG owned and managed properties 3% Implement a policy to tr
Slide 29: Open-Air Retail
OPEN-AIR RETAIL THRIVING OPEN-AIR REAL ESTATE Q4 2021 INVESTOR UPDATE LISTED 2022 Kite Realty Group | kiterealty.com
Slide 30: Retailer omnichannel growth
• Order Pickup, Drive Up, and Shipt grew Curbside pickup at ~4,300 locations 60% in 3Q, on top of 500% drive up and same-day delivery from ~3,300 growth last year stores U.S. sales comps up 34% 55% of online orders fulfilled on a two-year basis through a store in 3Q Stores enabled 90% of total sales
Slide 31: Shopping center occupancy cost advantage
• • • • • • • – Other property types operating costs can range from $20 - $70 psf – Shopping center operating costs can range from $5 - $10 psf – 30% lower gross rent charges • – Sales expected increase to $1.27M from – Lower operating costs equate to retailer savings $977k in other location
Slide 32: Omnichannel shopping options
Shop and purchase in the physical store Order online Order online and pick up in and select a store delivery time slot Drive up and Product have order shipped from brought to store your car
Slide 33: 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 34: 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 35: 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 36: 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 the taxable REIT subsidiary. For informational purposes, the Company also provides Adjusted EBITDA, which the Company defines as EBITDA less
Slide 37: Appendix: Reconciliation of Same-Property NOI to Net Income
APPENDIX: RECONCILIATION OF SAME-PROPERTY NOI! TO NET INCOME KRG UsTED NYSE © 2022 Kite Realty Group | kiterealty.com Kite Realty Group Trust Same Property Net Operating Income ("NOI") Number of properties for the period’ Leased percentage at period end Economic occupancy percentage” Minimum rent Te
Slide 38: Appendix: Funds From Operations
APPENDIX: FUNDS FROM OPERATIONS KRG UsTED NYSE Kite Realty Group Trust Funds From Operations ("FFO”)'* (dollars in thousands, except per share amounts) (unaudited) Three Months Ended Year Ended December 31, December 31, 2021 2020 2021 2020 Consolidated net loss $ (100,155) $ (6842) $ (81,722) $ (16,
Slide 39: Appendix: Reconciliation of EBITDA to Net Income
APPENDIX: RECONCILIATION OF EBITDA TO NET INCOME Kite Realty Group Trust Earnings Before Interest, Tax, Depreciation, and Amortization (“EBITDA”) (dollars in thousands) (unaudited) Three Months Ended December 31, 2021 _ Consolidated net loss $ (100,155) Adjustments to net loss: Depreciation and amor
Slide 40: Appendix: Reconciliation of Net Income to FFO, as adjusted, guidance
APPENDIX: RECONCILIATION OF NET INCOME TO FFO, AS ADJUSTED, GUIDANCE Low High Consolidated net loss ($0.35) ($0.29) NAREIT FFO $1.67 $1.73 FFO, as adjusted $1.69 $1.75 KRG LIsTED © 2022 Kite Realty Group | kiterealty.com NYSE KITE 40
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