INDIANAPOLIS, Dec. 08, 2025 (GLOBE NEWSWIRE) -- Kite Realty Group (NYSE: KRG), a premier owner and operator of high-quality, open-air grocery-anchored centers and vibrant mixed-use assets, today announced that the Company closed on the disposition of a portfolio that includes eight large-format power and community centers for gross proceeds of $429.0 million. Large-Format Power and Community Centers List: Property Center Classification MSA Total Owned GLABelle Isle Station Power Oklahoma City 196,158Central ...

One major fund’s latest sale offers a window into how professional investors are reassessing long-running REIT underperformance.New York City-based HGI Capital Management fully exited its position in Kite Realty Group Trust (KRG +0.09%), reducing assets by approximately $3.4 million, according to a November 14 SEC filing.What HappenedAccording to a U.S. Securities and Exchange Commission (SEC) filing dated November 14, HGI Capital Management sold out its entire holding of Kite Realty Group Trust during the ...

Core Insights - Land & Buildings Investment Management has completely liquidated its stake in Kite Realty Group Trust, which previously constituted over 3% of the fund's portfolio, indicating a significant shift in sentiment towards retail real estate [1][3]. Company Overview - Kite Realty Group Trust (NYSE: KRG) is a retail-focused REIT with properties nationwide, benefiting from a vertically integrated business model that encompasses development, leasing, and operations [3][4]. - As of November 24, 2025, Kite Realty's shares were priced at $22.71, reflecting a 10% decline over the past year, underperforming the S&P 500 by 23.9 percentage points [2][4]. Investment Activity - The complete exit from Kite Realty involved the sale of 806,852 shares, with an estimated transaction value of approximately $18.28 million, reducing the fund's holdings from 3.6% of AUM to zero [2][3]. - Following this transaction, Land & Buildings reported 22 equity positions and $544.91 million in U.S. equity assets under management [3]. Market Conditions - The decline in Kite Realty's stock price is attributed to cautious investor sentiment, primarily due to rising financing costs impacting REIT valuations [4]. - Despite the challenges, the company's high-quality portfolio and disciplined operations are expected to support future cash flow growth, contingent on improved market conditions [4].

Core Viewpoint - Shopping center REITs are positioned to exploit a partial arbitrage opportunity between private and public real estate markets, which can enhance earnings and shareholder value [1][5]. Group 1: Arbitrage Mechanics - Arbitrage occurs when the same asset trades at different prices across markets, leading to profit opportunities [2]. - Current real estate markets exhibit a partial arbitrage, with private real estate values being 10%-40% higher than public market prices [3]. - The valuation gap between private and public markets has persisted for about two years, allowing REITs to capitalize on this discrepancy [5]. Group 2: REIT Strategies - REITs can buy back their stock and sell properties at higher private market prices, effectively closing the valuation gap [6][11]. - The implied cap rate of a REIT can be calculated by dividing its forward net operating income (NOI) by its enterprise value, which can then be compared to market cap rates for similar properties [7]. - For example, if a shopping center REIT has an implied cap rate of 8% while similar properties sell at 6%, the REIT can sell assets and use the proceeds to buy back stock, resulting in increased NOI per share [8][10]. Group 3: Case Studies - Kite Realty (KRG) plans to sell $500 million in assets to repurchase shares, highlighting the strategy of redeploying capital for shareholder value [11]. - Brixmor (BRX) is also considering buybacks as its share price remains below NAV, with a recent 7% increase in its annual dividend [23]. - CTO Realty Growth (CTO) has already begun executing buybacks, having repurchased $9.3 million in common stock in 3Q25 [24]. Group 4: Market Conditions - The shopping center sector is experiencing a significant disconnect between positive fundamentals and negative stock pricing, leading to mispricing opportunities [30][31]. - Many shopping center REITs are trading at implied cap rates of 7.5%-9%, while high-quality assets could be valued closer to 6% cap rates [32].

Core Viewpoint - Kite Realty Group (KRG) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system emphasizes the importance of earnings estimate revisions, which have a strong correlation with near-term stock price movements [4][6]. - For the fiscal year ending December 2025, Kite Realty Group is expected to earn $2.08 per share, unchanged from the previous year, but the Zacks Consensus Estimate has increased by 1.2% over the past three months [8]. Investment Implications - The upgrade reflects an improvement in Kite Realty Group's underlying business, suggesting that investors may respond positively by driving the stock price higher [5][10]. - The Zacks Rank system classifies stocks based on earnings estimates, with only the top 20% of stocks receiving a "Strong Buy" or "Buy" rating, indicating a strong potential for market-beating returns [9][10].

Core Insights - Kite Realty Group Trust has seen significant institutional investment, with 90.81% of its stock owned by institutional investors and hedge funds [1] - CEO John A. Kite sold 50,000 shares at an average price of $22.70, resulting in a 48.02% decrease in his position [2] - Analysts have mixed ratings on Kite Realty Group Trust, with a consensus rating of "Hold" and a price target of $26.70 [4] Institutional Holdings - Centersquare Investment Management LLC increased its stake by 133.6%, owning 5,960,072 shares valued at $133.33 million after purchasing an additional 3,408,442 shares [1] - Other notable acquisitions include Nuveen LLC ($70.07 million), Long Pond Capital LP ($60.62 million), and Alyeska Investment Group L.P. ($24.73 million) [1] - Oppenheimer Asset Management Inc. also bought 22,692 shares valued at approximately $514,000 during the second quarter [8] Insider Transactions - CEO John A. Kite sold 50,000 shares for a total of $1.135 million, leaving him with 54,121 shares valued at $1.23 million [2] - Insiders currently own 2.50% of the stock [2] Analyst Ratings - Weiss Ratings maintained a "hold (c+)" rating, while Wall Street Zen downgraded the stock from "hold" to "sell" [4] - LADENBURG THALM/SH SH initiated coverage with a "buy" rating and a target price of $30.00 [4] - Citigroup and Piper Sandler both reissued "neutral" ratings with reduced price targets of $24.00 [4] Financial Performance - Kite Realty Group Trust reported $0.52 earnings per share, exceeding analysts' estimates of $0.51 [6] - The company had a revenue of $205.06 million, slightly below the consensus estimate of $208.82 million [6] - FY 2025 guidance is set at 2.090-2.110 EPS, with analysts predicting an average of 2.05 EPS for the current fiscal year [6] Dividend Information - The company announced a quarterly dividend of $0.29, up from the previous $0.27, representing an annualized dividend of $1.16 and a yield of 5.2% [9] - The payout ratio is currently at 181.25% [9] Company Overview - Kite Realty Group Trust is a real estate investment trust headquartered in Indianapolis, IN, focusing on open-air shopping centers and mixed-use assets [10]

Property Ownership and Development - As of September 30, 2025, Kite Realty Group Trust owns interests in 178 operating retail/mixed-use properties, totaling approximately 29.3 million square feet [137]. - The company is actively developing the One Loudoun Expansion project, with a transition to the operating portfolio expected in September 2024, covering 119,000 square feet [148]. - The company has interests in one development project under construction and two properties with future redevelopment opportunities [137]. - The company completed major development activities at The Corner – IN and incurred $12 million of costs for the One Loudoun Expansion project as of September 30, 2025 [207]. Leasing and Revenue - During Q3 2025, the company executed new and renewal leases on 167 spaces totaling 1,229,944 square feet, achieving a 12.2% cash leasing spread on 129 comparable leases [142]. - The company signed new leases for 275,001 square feet with a 26.1% cash leasing spread on 24 comparable leases during Q3 2025 [142]. - Total revenue for the three months ended September 30, 2025, was $205.1 million, a decrease of $2.2 million or 1.1% compared to $207.3 million in 2024 [150]. - Total revenue for the nine months ended September 30, 2025, was $640.2 million, an increase of $14.9 million or 2.4% compared to $625.3 million in 2024 [162]. Financial Performance - Net income attributable to common shareholders for the nine months ended September 30, 2025, was $117.8 million, compared to a net loss of $17.8 million in 2024, reflecting a change of $135.6 million [162]. - Funds From Operations (FFO) attributable to common shareholders for the three months ended September 30, 2025, was $116.25 million, representing an increase of 3.1% from $111.96 million in 2024 [187]. - Core Funds From Operations (Core FFO) for the three months ended September 30, 2025, was $116.28 million, up from $109.16 million in 2024, indicating a year-over-year increase of 6.5% [187]. - The total property NOI for the nine months ended September 30, 2025, was $476.4 million, reflecting a 3.5% increase from the prior year [179]. Expenses and Impairments - Rental income decreased by $2.7 million, or 1.3%, primarily due to properties sold or held for sale, despite a net increase of $3.3 million from fully operational properties [150]. - Property operating expenses increased by $0.8 million, or 2.8%, with the property operating expense to total revenue ratio rising from 13.4% to 13.9% [153]. - Impairment charges recorded were $39.3 million, with $17.0 million related to City Center and $22.3 million to the Carillon medical office building [156]. - A net impairment charge of $39.3 million was recorded for the nine months ended September 30, 2025, with significant charges related to City Center and the Carillon medical office building [168]. Debt and Liquidity - The company's share of net debt as of September 30, 2025, was $3.03 billion, with a Net Debt to Adjusted EBITDA ratio of 5.0x [192]. - As of September 30, 2025, the company had approximately $68.7 million in cash and cash equivalents and $1.1 billion available under the unsecured revolving credit facility [195]. - The company believes it will have adequate liquidity over the next 12 months to meet its cash requirements [196]. - The company had $100 million of debt maturities over the next 12 months as of September 30, 2025 [195]. Shareholder Returns and Distributions - The Company declared a cash distribution of $0.27 per common share for Q3 2025, paid on October 16, 2025 [205]. - Distributions to common shareholders and holders of common partnership interests totaled $183.1 million during the nine months ended September 30, 2025, compared to $167.4 million in the same period of 2024 [222]. - The Share Repurchase Program allows for repurchases up to $300 million, with $230 million remaining available as of September 30, 2025 [208]. - The company paid $70.0 million during the nine months ended September 30, 2025, to repurchase common shares through its Share Repurchase Program [222]. Market and Economic Factors - The company monitors inflation and tariffs, which may impact tenant sales volume and rental pricing [138]. - New tax legislation effective July 4, 2025, permanently extends the 20% deduction for "qualified REIT dividends" for individuals [143].

Financial Data and Key Metrics Changes - Kite Realty Group Trust reported NAREIT FFO per share of $0.53 and Core FFO per share of $0.52, benefiting from a $0.03 contribution from the sale of an outlot [9] - Same Property NOI increased by 2.1% year over year, primarily driven by a 2.6% increase in minimum rent [9][10] - The company raised the midpoints of its 2025 NAREIT and Core FFO per share guidance by $0.02 each, with an increase in same property NOI growth assumption by 50 basis points [10][12] Business Line Data and Key Metrics Changes - The lease rate increased by 60 basis points sequentially, indicating strong demand for space across the portfolio [3] - The company executed 7 new anchor leases with notable tenants, including Whole Foods and Nordstrom Rack, and diversified its merchandising mix with 12 different retail concepts [4] - Small shop occupancy is now within 70 basis points of the previous high-water mark of 92.5% [4] Market Data and Key Metrics Changes - The company reported a disposition pipeline totaling approximately $500 million across various stages of execution, aiming to complete most transactions by year-end [5][11] - The balance sheet remains one of the strongest in the sector, providing flexibility for capital allocation [12] Company Strategy and Development Direction - The company is focused on optimizing its portfolio, embedding higher rent bumps, and driving organic growth [3][8] - The strategy includes recycling capital out of non-core large format assets and redeploying proceeds into acquisitions, debt reduction, share repurchases, or special dividends [5][6] - The company aims to minimize earnings dilution and maintain leverage within a long-term range of low to mid five times net debt to EBITDA [6][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate durable long-term growth and emphasized the importance of disciplined leasing and capital allocation [8][10] - The management team noted that the watch list of tenants is in good shape, with individual tenant issues being more manageable compared to previous years [31] - The company anticipates a special dividend of up to $45 million, contingent on fourth-quarter taxable income and the outcome of the disposition pipeline [13][36] Other Important Information - The company repurchased 3.4 million shares at an average price of $22.35, totaling approximately $75 million [6] - The Board of Trustees authorized an increase in the dividend to $0.29 per share, representing a 7.4% year-over-year increase [12] Q&A Session Summary Question: Can you expand on the dispositions and their impact on same-store growth? - Management indicated that the dispositions are primarily focused on larger format centers and power centers, which may have exposure to watch list tenants [14][15] Question: What is the occupancy level and exposure to watch list retailers? - Occupancy reflects the overall portfolio, and there is exposure to watch list tenants in larger format centers [16][17] Question: How will the $500 million in sales impact earnings in 2026? - Management stated that it is too early to determine the exact impact, but they aim to minimize earnings disruption [43][44] Question: What is the outlook for same property NOI growth? - Management expects that with current initiatives, same property NOI growth could improve to 2.75% to 3.75% on a forward basis [49][50] Question: How does the company view its tenant-related capital expenditure spend? - The decrease in capital expenditure was attributed to timing, and spending is expected to revert to previous levels [57][58]

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Financial Performance - Same Property NOI increased by 2.1% to $144.121 million for the three months ended September 30, 2025, compared to $141.109 million in the same period of 2024[84] - Same Property NOI increased by 2.8% to $429.381 million for the nine months ended September 30, 2025, compared to $417.615 million in the same period of 2024[84] - The company's share of Net Debt is $3,031.197 billion, with a Net Debt to Adjusted EBITDA ratio of 5.0x[88] - NAREIT FFO attributable to common shareholders was $116.252 million for the three months ended September 30, 2025, compared to $111.955 million for the same period in 2024[86] - Core FFO of the Operating Partnership is $116.284 million for the three months ended September 30, 2025, compared to $109.162 million for the same period in 2024[86] Portfolio Metrics - The leased percentage at period end for same properties was 93.8%[84] - The economic occupancy percentage at period end for same properties was 91.1%[84] - Signed-not-open (SNO) pipeline increased $3.0 million quarter-over-quarter to $34.6 million[26] - Of the $34.6 million SNO pipeline, 41% is from anchor tenants and 59% is from shop tenants[26] Strategic Focus - Primarily concentrated in Sun Belt markets with select strategic gateway market presence[13] - Predominantly focused on grocery-anchored centers along with vibrant mixed-use and lifestyle assets[13] - Diverse and balanced tenant mix provides strong durability in KRG's cash flow[66]