Earnings Press Release The company reported a Q2 2024 net loss due to a significant impairment charge but raised full-year guidance on strong operational performance Q2 2024 Key Financial Results vs Q2 2023 | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net (Loss) Income Attributable to Common Shareholders | $(48.6) million | $32.1 million | | Diluted (Loss) Income Per Share | $(0.22) | $0.15 | | NAREIT FFO per Diluted Share | $0.53 | $0.51 | | Same Property NOI Increase | 1.8% | 5.7% | - The net loss in Q2 2024 was driven by a significant $66.2 million impairment charge related to an asset classified as held for sale4 - The company raised its quarterly dividend by 8.3% year-over-year to $0.26 per common share, payable in Q3 20241643 Updated 2024 Full-Year Guidance | Metric | Previous Guidance (as of 4/30/24) | Updated Guidance (as of 7/30/24) | | :--- | :--- | :--- | | NAREIT FFO per Diluted Share | $2.02 - $2.08 | $2.04 - $2.08 | | Same Property NOI Growth | 1.5% - 2.5% (implied) | 2.0% - 3.0% | - Achieved an all-time low Net Debt to Adjusted EBITDA ratio of 4.8x and received a corporate credit rating upgrade to BBB from S&P Ratings1618 Contact Information This section provides key contact details for the company, investor relations, and a list of covering analysts - Investor Relations contact is Tyler Henshaw, SVP, Capital Markets & IR12 - The corporate office is located in Indianapolis, IN49 Results Overview This section presents key Q2 2024 financial and operational metrics, including FFO, NOI, and credit ratings Q2 2024 Financial & Operational Highlights | Metric | Q2 2024 Value | | :--- | :--- | | NAREIT FFO per diluted share | $0.53 | | Same property NOI performance | 1.8% | | Net debt to Adjusted EBITDA | 4.8x | | Retail portfolio percent leased | 94.8% | | Total new and renewal lease cash rent spread | 15.6% | Credit Ratings as of June 30, 2024 | Rating Agency | Rating / Outlook | | :--- | :--- | | Fitch Ratings | BBB / Positive | | Moody's Investors Services | Baa2 / Stable | | Standard & Poor's Rating Services | BBB / Stable | Consolidated Balance Sheets The company's total assets were $6.96 billion and total liabilities were $3.46 billion as of June 30, 2024 Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Net investment properties | $6,098,567 | $6,358,291 | | Cash and cash equivalents | $153,835 | $36,413 | | Total Assets | $6,958,920 | $6,944,078 | | Liabilities & Equity | | | | Mortgage and other indebtedness, net | $3,015,626 | $2,829,202 | | Total Liabilities | $3,459,347 | $3,300,223 | | Total Equity | $3,423,480 | $3,570,568 | Consolidated Statements of Operations A $66.2 million impairment charge drove a net loss of $48.6 million in Q2 2024, despite a slight increase in total revenues Statement of Operations Summary (in thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Total Revenue | $212,434 | $208,759 | | Total Expenses | $233,515 | $177,890 | | Impairment Charges | $66,201 | $0 | | Net (Loss) Income Attributable to Common Shareholders | $(48,638) | $32,058 | Same Property Net Operating Income The Same Property portfolio of 177 properties generated a 1.8% year-over-year increase in Net Operating Income for Q2 2024 Same Property NOI Performance (in thousands) | Period | Same Property NOI | % Change YoY | | :--- | :--- | :--- | | Three Months Ended June 30, 2024 | $142,528 | 1.8% | | Six Months Ended June 30, 2024 | $284,801 | 2.2% | - The same property pool consisted of 177 properties, with a leased percentage of 94.8% and an economic occupancy of 91.6% at the end of Q2 20242829 Net Operating Income and Adjusted EBITDA by Quarter The company generated $153.9 million in NOI and $144.4 million in Adjusted EBITDA in Q2 2024, showing stable quarterly performance Quarterly NOI and Adjusted EBITDA (in thousands) | Metric | June 30, 2024 | March 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | :--- | | NOI | $153,925 | $152,509 | $151,917 | | Adjusted EBITDA | $144,411 | $140,040 | $138,073 | - A $66.2 million impairment charge was recorded in Q2 2024, which significantly affected the net loss for the period33 Funds From Operations (FFO) FFO per diluted share increased to $0.53 in Q2 2024 from $0.51 in the prior-year quarter, driven by core operational growth FFO Performance (in thousands, except per share data) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | FFO of the Operating Partnership | $117,487 | $113,747 | | FFO per diluted share/unit | $0.53 | $0.51 | | Total Recurring AFFO | $79,452 | $77,131 | - The reconciliation from net loss to FFO highlights significant add-backs for depreciation and amortization ($99.4 million) and impairment charges ($66.2 million) in Q2 202435 Joint Venture Summary The company's share of debt from unconsolidated joint ventures totaled $56.8 million as of June 30, 2024 KRG's Share in Unconsolidated JVs (in thousands) | Metric | Amount | | :--- | :--- | | Total KRG Share of Debt | $56,759 | | Total KRG Investment | $9,970 | | KRG Share of Quarterly Adjusted EBITDA | $611 | - On January 31, 2024, a joint venture sold the Glendale Center Apartments, resulting in a $2.3 million gain on sale for KRG65 Key Debt Metrics The company maintained a strong balance sheet with a Net Debt to Adjusted EBITDA ratio of 4.8x and total liquidity of $1.37 billion - The ratio of Company share of Net Debt to Annualized Adjusted EBITDA was 4.8x as of June 30, 202471 Key Covenant Compliance | Covenant | Actual | Threshold | | :--- | :--- | :--- | | Total debt to undepreciated assets | 36% | <60% | | Undepreciated unencumbered assets to unsecured debt | 287% | >150% | | Debt service coverage | 4.9x | >1.5x | Liquidity (in thousands) | Source | Amount | | :--- | :--- | | Cash, cash equivalents and short-term deposits | $273,835 | | Availability under unsecured credit facility | $1,100,000 | | Total Liquidity | $1,373,835 | Summary of Outstanding Debt Total outstanding debt was $3.07 billion with a 4.35% weighted average interest rate and 93% of the portfolio at a fixed rate Total Outstanding Debt Summary | Metric | Value | | :--- | :--- | | Total Debt (incl. KRG share of unconsolidated) | $3,072,385 thousand | | Fixed Rate Debt Ratio | 93% | | Weighted Average Interest Rate | 4.35% | | Weighted Average Years to Maturity | 4.2 years | - As of June 30, 2024, $820.0 million in variable rate debt is hedged to a fixed rate, while $155.0 million in fixed rate debt is hedged to a floating rate41 Maturity Schedule of Outstanding Debt The company has a well-staggered debt maturity profile with no consolidated debt maturing for the remainder of 2024 - The company repaid its $120.0 million unsecured term loan that matured on July 17, 2024, leaving no further debt maturities in 20241876 Upcoming Debt Maturities (Consolidated) | Year | Amount Maturing | | :--- | :--- | | 2024 (remainder) | $0 | | 2025 | $430,000 thousand | | 2026 | $550,000 thousand | | 2027 | $287,825 thousand | Acquisitions and Dispositions The company disposed of one retail center in Chicago for $30.6 million and made no acquisitions in the first half of 2024 - The company did not acquire any properties during the six months ended June 30, 202479 Dispositions in H1 2024 | Property Name | MSA | GLA | Sales Price | | :--- | :--- | :--- | :--- | | Ashland & Roosevelt | Chicago | 104,176 sq. ft. | $30,600 thousand | Development and Redevelopment Projects Two active projects are underway with a total estimated cost of $91.6 million and projected annual NOI of up to $5.9 million Active Development Projects | Project | MSA | Total KRG Costs | KRG Remaining Spend | Projected Stabilized NOI (KRG Share) | | :--- | :--- | :--- | :--- | :--- | | Carillon MOB | Washington, D.C. | $59.7M | $26.6M | $3.5M - $4.0M | | The Corner - IN | Indianapolis, IN | $31.9M | $0 | $1.7M - $1.9M | - The company has identified six potential future opportunities for development or redevelopment, including projects in Indianapolis, Washington D.C., Chicago, and Los Angeles105 Geographic Diversification – Retail ABR by Region and State The portfolio is concentrated in the Sun Belt, with the South region accounting for 63.9% of total retail Annualized Base Rent Top Regions by % of Weighted Retail ABR | Region | % of ABR | | :--- | :--- | | South | 63.9% | | West | 16.6% | | Midwest | 11.5% | | Northeast | 8.0% | Top 5 States by % of Weighted Retail ABR | State | % of ABR | | :--- | :--- | | Texas | 26.8% | | Florida | 11.8% | | Maryland | 5.9% | | North Carolina | 5.8% | | Virginia | 5.5% | Top 25 Tenants by ABR The tenant base is diversified among national retailers, with the top 25 tenants accounting for 28.7% of total ABR - The top 25 tenants represent 28.7% of the total weighted ABR86 Top 5 Tenants by % of Weighted ABR | Rank | Tenant | % of Weighted ABR | | :--- | :--- | :--- | | 1 | The TJX Companies, Inc. | 2.8% | | 2 | Best Buy Co., Inc. | 2.0% | | 3 | Ross Stores, Inc. | 2.0% | | 4 | PetSmart, Inc. | 1.9% | | 5 | Michaels Stores, Inc. | 1.4% | Retail Leasing Spreads The company achieved a strong blended cash rent spread of 15.6% on 1.2 million square feet of leasing activity in Q2 2024 Q2 2024 Comparable Lease Cash Rent Spreads | Lease Type | Cash Rent Spread | | :--- | :--- | | New Leases | 34.8% | | Non-Option Renewals | 14.3% | | Option Renewals | 6.0% | | Total | 15.6% | - The company signed a total of 160 leases in Q2 2024, covering 1,153,766 square feet88 Lease Expirations The lease expiration schedule is well-staggered, with only 3.8% of total Annualized Base Rent expiring in the remainder of 2024 Lease Expirations by % of Total ABR | Year | % of Total ABR Expiring | | :--- | :--- | | 2024 (remainder) | 3.8% | | 2025 | 11.5% | | 2026 | 12.0% | | 2027 | 13.1% | | 2028 | 15.7% | - The 2024 expirations include 56 month-to-month retail tenants91 Components of Net Asset Value This section details the components used to calculate Net Asset Value, arriving at a total annualized portfolio cash NOI of $603.4 million Key NAV Components (in thousands) | Component | Value | | :--- | :--- | | Annualized Consolidated Cash Property NOI (excl. ground leases) | $538,764 | | Total Annualized Portfolio Cash NOI | $603,426 | | Mortgage and other indebtedness, net | $(3,000,761) | | Common shares and Units outstanding | 223,361,957 | - The NAV calculation excludes NOI from tenants that have signed leases but have not yet commenced paying rent as of June 30, 202493 Non-GAAP Financial Measures This section defines key non-GAAP measures like FFO, NOI, and EBITDA used to evaluate core operational performance - FFO is defined according to NAREIT standards and excludes depreciation, amortization, and gains/losses from property sales to measure core operating performance95118 - NOI is defined as income from real estate less property operating expenses, and is used to evaluate the performance of individual properties98 - EBITDA and the ratio of Net Debt to Adjusted EBITDA are used to measure operational performance and leverage, excluding items like interest, taxes, and depreciation123126
Kite Realty Trust(KRG) - 2024 Q2 - Quarterly Results