Kite Realty Trust(KRG) - 2019 Q1 - Quarterly Report

Part I. FINANCIAL INFORMATION This section provides unaudited consolidated financial statements, management's discussion, market risk disclosures, and controls for the reporting period Item 1. Consolidated Financial Statements (Unaudited) This section presents unaudited consolidated financial statements and detailed notes for Kite Realty Group Trust and its Operating Partnership, highlighting financial performance and position Kite Realty Group Trust: Consolidated Balance Sheets Kite Realty Group Trust: Consolidated Balance Sheets (as of March 31, 2019 vs. December 31, 2018) | Metric | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | | :--------------------------------------- | :----------------------------- | :------------------------------- | | Total Assets | $3,203,177 | $3,172,013 | | Total Liabilities | $1,769,357 | $1,712,867 | | Total Equity | $1,387,522 | $1,413,403 | | Mortgage and other indebtedness, net | $1,602,603 | $1,543,301 | | Cash and cash equivalents | $28,357 | $35,376 | Kite Realty Group Trust: Consolidated Statements of Operations and Comprehensive Income Kite Realty Group Trust: Consolidated Statements of Operations (Three Months Ended March 31) | Metric | 2019 (in thousands) | 2018 (in thousands) | Change (YoY) | | :------------------------------------------------ | :------------------ | :------------------ | :----------- | | Total revenue | $83,515 | $89,763 | $(6,248) | | Total expenses | $67,126 | $91,795 | $(24,669) | | Operating income (loss) | $22,976 | $(1,532) | $24,508 | | Consolidated net income (loss) | $5,988 | $(17,997) | $23,985 | | Net income (loss) attributable to common shareholders | $5,715 | $(17,917) | $23,632 | | Net income (loss) per common share - basic & diluted | $0.07 | $(0.21) | $0.28 | | Cash dividends declared per common share | $0.3175 | $0.3175 | $0 | | Total comprehensive income (loss) | $931 | $(15,783) | $16,714 | Kite Realty Group Trust: Consolidated Statement of Shareholders' Equity Kite Realty Group Trust: Consolidated Statement of Shareholders' Equity (Three Months Ended March 31, 2019) | Metric | December 31, 2018 (in thousands) | March 31, 2019 (in thousands) | | :------------------------------------------------ | :------------------------------- | :---------------------------- | | Total Kite Realty Group Trust Shareholders' Equity | $1,412,705 | $1,386,824 | | Stock compensation activity | $1,161 | $1,161 | | Other comprehensive loss attributable to Kite Realty Group Trust | $(4,930) | $(4,930) | | Distributions declared to common shareholders | $(26,672) | $(26,672) | | Net income attributable to Kite Realty Group Trust | $5,715 | $5,715 | Kite Realty Group Trust: Consolidated Statements of Cash Flows Kite Realty Group Trust: Consolidated Statements of Cash Flows (Three Months Ended March 31) | Cash Flow Activity | 2019 (in thousands) | 2018 (in thousands) | Change (YoY) | | :----------------------------------- | :------------------ | :------------------ | :----------- | | Net cash provided by operating activities | $32,310 | $36,259 | $(3,949) | | Net cash (used in) provided by investing activities | $(29,700) | $46,374 | $(76,074) | | Net cash provided by (used in) financing activities | $3,834 | $(76,261) | $80,095 | | Net change in cash, cash equivalents, and restricted cash | $6,444 | $6,372 | $72 | | Cash, cash equivalents, and restricted cash end of period | $51,950 | $38,548 | $13,402 | Kite Realty Group, L.P. and subsidiaries: Consolidated Balance Sheets Kite Realty Group, L.P. and subsidiaries: Consolidated Balance Sheets (as of March 31, 2019 vs. December 31, 2018) | Metric | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | | :--------------------------------------- | :----------------------------- | :------------------------------- | | Total Assets | $3,203,177 | $3,172,013 | | Total Liabilities | $1,769,357 | $1,712,867 | | Total Equity | $1,387,522 | $1,413,403 | | Mortgage and other indebtedness, net | $1,602,603 | $1,543,301 | | Cash and cash equivalents | $28,357 | $35,376 | Kite Realty Group, L.P. and subsidiaries: Consolidated Statements of Operations and Comprehensive Income Kite Realty Group, L.P. and subsidiaries: Consolidated Statements of Operations (Three Months Ended March 31) | Metric | 2019 (in thousands) | 2018 (in thousands) | Change (YoY) | | :------------------------------------------------ | :------------------ | :------------------ | :----------- | | Total revenue | $83,515 | $89,763 | $(6,248) | | Total expenses | $67,126 | $91,795 | $(24,669) | | Operating income (loss) | $22,976 | $(1,532) | $24,508 | | Consolidated net income (loss) | $5,988 | $(17,997) | $23,985 | | Net income (loss) attributable to common unitholders | $5,856 | $(18,348) | $24,204 | | Net (loss) income per unit - basic & diluted | $0.07 | $(0.21) | $0.28 | | Distributions declared per common unit | $0.3175 | $0.3175 | $0 | | Total comprehensive income (loss) | $931 | $(15,783) | $16,714 | Kite Realty Group, L.P. and subsidiaries: Consolidated Statements of Partners' Equity Kite Realty Group, L.P. and subsidiaries: Consolidated Statements of Partners' Equity (Three Months Ended March 31, 2019) | Metric | December 31, 2018 (in thousands) | March 31, 2019 (in thousands) | | :------------------------------------------------ | :------------------------------- | :---------------------------- | | Total General Partner Equity | $1,412,705 | $1,386,824 | | Stock compensation activity | $1,161 | $1,161 | | Other comprehensive loss attributable to Parent Company | $(4,930) | $(4,930) | | Distributions declared to Parent Company | $(26,672) | $(26,672) | | Net income | $5,715 | $5,715 | Kite Realty Group, L.P. and subsidiaries: Consolidated Statements of Cash Flows Kite Realty Group, L.P. and subsidiaries: Consolidated Statements of Cash Flows (Three Months Ended March 31) | Cash Flow Activity | 2019 (in thousands) | 2018 (in thousands) | Change (YoY) | | :----------------------------------- | :------------------ | :------------------ | :----------- | | Net cash provided by operating activities | $32,310 | $36,259 | $(3,949) | | Net cash (used in) provided by investing activities | $(29,700) | $46,374 | $(76,074) | | Net cash provided by (used in) financing activities | $3,834 | $(76,261) | $80,095 | | Net change in cash, cash equivalents, and restricted cash | $6,444 | $6,372 | $72 | | Cash, cash equivalents, and restricted cash end of period | $51,950 | $38,548 | $13,402 | Kite Realty Group Trust and Kite Realty Group, L.P. and subsidiaries: Notes to Consolidated Financial Statements Note 1. Organization - Kite Realty Group Trust (Parent Company) operates as a REIT through its majority-owned subsidiary, Kite Realty Group, L.P. (Operating Partnership), focusing on ownership, operation, acquisition, development, and redevelopment of high-quality neighborhood and community shopping centers in select U.S. markets[35][36] - As of March 31, 2019, the Parent Company owned approximately 97.5% of the common partnership interests in the Operating Partnership and consolidates it for financial reporting purposes[37] - The Company owned interests in 111 operating and redevelopment properties totaling approximately 21.8 million square feet, plus one development project under construction, as of March 31, 2019[38] Note 2. Basis of Presentation, Consolidation, Investments in Joint Ventures, and Noncontrolling Interests - The financial statements are prepared in accordance with GAAP, with certain condensed disclosures for interim reporting. Management estimates and assumptions are used, and actual results may differ[39][40] Composition of Investment Properties (at cost) | Category | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------- | | Land, buildings and improvements | $3,543,216 | $3,600,743 | | Furniture, equipment and other | $7,765 | $7,741 | | Construction in progress | $30,930 | $32,636 | | Total | $3,581,911 | $3,641,120 | - The Company consolidates entities where it is the primary beneficiary under the VIE model or controls through majority voting interest under the VOE model. As of March 31, 2019, two joint ventures were VIEs with total debt of $56.4 million, guaranteed by the Operating Partnership[43][44][45] - The Parent Company intends to maintain its REIT qualification, generally avoiding federal income tax on distributed earnings. The Operating Partnership makes distributions to support this status[47] - The Company adopted ASU 2016-02, Leases, on January 1, 2019, using the modified retrospective approach. This resulted in recognizing a right-of-use asset of $27.0 million and a corresponding lease liability of $27.3 million for ground leases[62][69] Lease Rental Income (Three Months Ended March 31, 2019) | Category | Amount (in thousands) | | :------------------------------------ | :-------------------- | | Fixed Contractual Lease Payments - Operating Leases | $65,539 | | Variable Lease Payments - Operating Leases | $15,111 | | Straight-Line Rent Adjustment | $663 | | Amortization of In-Place Lease Liabilities, net | $1,045 | | Total | $82,358 | Note 3. Earnings Per Share or Unit - Basic EPS/unit is based on weighted average common shares/units outstanding. Diluted EPS/unit includes potentially dilutive securities like Limited Partner Units and stock options, though some were excluded due to non-dilutive impact or net loss[73][74][75] Note 4. Mortgage and Other Indebtedness Mortgage and Other Indebtedness, Net (as of March 31, 2019 vs. December 31, 2018) | Category | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Senior unsecured notes - fixed rate | $545,339 | $545,136 | | Unsecured revolving credit facility | $102,415 | $41,804 | | Unsecured term loans | $342,623 | $342,530 | | Mortgage notes payable - fixed rate | $539,210 | $540,661 | | Mortgage notes payable - variable rate | $73,016 | $73,170 | | Total mortgage and other indebtedness | $1,602,603 | $1,543,301 | - As of March 31, 2019, consolidated indebtedness was $1.6 billion, with 91% fixed rate and 9% variable rate debt (after considering interest rate swaps). The weighted average interest rate was 4.11% and weighted average maturity was 5.5 years[77][79] - The Company had a $600 million unsecured revolving credit facility (maturing April 2023) and a $200 million unsecured term loan (maturing July 2021). An additional $250 million unsecured term loan was entered into in October 2018, maturing October 2025[81][83][84] - As of March 31, 2019, $105.6 million was outstanding under the Credit Facility, with $421.2 million available for future borrowings. The Company was in compliance with all debt covenants[86][87][88] - For the three months ended March 31, 2019, new borrowings totaled $60.0 million (for property acquisition and development) and repayments were $1.2 million[90] Note 5. Derivative Instruments, Hedging Activities and Other Comprehensive Income - The Company uses interest rate derivative agreements as cash flow hedges to manage variable interest rate risk, with notional amounts totaling $391.2 million as of March 31, 2019, effectively fixing the weighted average interest rate at 3.62%[92][93] - As of March 31, 2019, the estimated fair value of interest rate derivatives was a net liability of $8.5 million, primarily classified within Level 2 of the fair value hierarchy[95][96] Note 6. Shareholders' Equity - A cash distribution of $0.3175 per common share and Common Unit was declared for Q1 2019, paid on March 29, 2019[99] - The Compensation Committee approved grants of Appreciation Only LTIP Units (AO LTIP Units) to executive officers, designed to have economics similar to stock options and vest based on time-based and stock price performance-based requirements (20% appreciation over Participation Threshold for 20 consecutive trading days within five years)[100][101][102] Note 7. Deferred Costs and Intangibles, net Deferred Costs and Intangibles, Net (as of March 31, 2019 vs. December 31, 2018) | Category | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Acquired lease intangible assets | $75,433 | $81,852 | | Deferred leasing costs and other | $73,778 | $69,870 | | Less—accumulated amortization | $(55,273) | $(56,307) | | Less: properties held for sale | $(1,111) | $(151) | | Total | $92,827 | $95,264 | Amortization of Deferred Leasing Costs and Intangibles (Three Months Ended March 31) | Category | 2019 (in thousands) | 2018 (in thousands) | | :------------------------------------------------ | :------------------ | :------------------ | | Amortization of deferred leasing costs, lease intangibles and other | $3,694 | $4,710 | | Amortization of above market lease intangibles | $399 | $754 | Note 8. Deferred Revenue, Intangibles, Net and Other Liabilities Deferred Revenue, Intangibles, Net and Other Liabilities (as of March 31, 2019 vs. December 31, 2018) | Category | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Unamortized below market lease liabilities | $68,057 | $69,501 | | Retainage payables and other | $3,042 | $2,489 | | Operating lease liability | $27,315 | $0 | | Tenant rent payments received in advance | $6,045 | $11,642 | | Less: Liabilities of assets held for sale | $(1,981) | $0 | | Total | $102,478 | $83,632 | - The amortization of below market lease intangibles, recognized as a component of minimum rent, decreased from $3.3 million in Q1 2018 to $1.4 million in Q1 2019[107] Note 9. Commitments and Contingencies - The Company is not subject to any material litigation and believes routine litigation will not materially impact its financial condition. It has completion guarantees for development/redevelopment projects and a repayment guaranty on a $33.8 million construction loan for a joint venture, with its share being $11.7 million as of March 31, 2019[108][109][110] Note 10. Disposals of Operating Properties and Impairment Charge - In Q1 2019, the Company sold its Whitehall Pike property for $13.5 million, recognizing a net gain of $6.6 million. It also recorded a $4.1 million impairment charge on an operating property due to changes in fair value estimates[111][112] - In Q1 2018, the Company sold two properties for $63.0 million, recognizing a net gain of $0.5 million, and recorded a $24.1 million impairment charge on an operating property due to a shortened expected future hold period[114][115] - As of March 31, 2019, Beechwood Promenade and Lakewood Promenade were classified as held for sale, with expected gains of $12.3 million in Q2 2019[113] Note 11. Acquisition - In March 2019, the Company acquired the Pan Am Plaza Garage for $29.5 million, allocating substantially all the purchase price to real estate investment[116] Note 12. Subsequent Events - Subsequent to March 31, 2019, the Company sold four properties (Beechwood Promenade, Village at Bay Park, Lakewood Promenade, and Palm Coast Landing) for cumulative proceeds of $121.3 million, expecting to recognize gains aggregating $13.6 million in Q2 2019[117] Item 2. Cautionary Note About Forward-Looking Statements This section cautions readers that forward-looking statements are subject to various risks and uncertainties, which may cause actual results to differ materially - Forward-looking statements are subject to risks and uncertainties, including national and local economic conditions, financing risks (liquidity, refinancing, interest rates), tenant financial stability, competitive environment, acquisition/disposition/development risks, property ownership risks, REIT status maintenance, environmental liabilities, impairment, impact of online retail, geographical concentration, insurance costs, and cybersecurity attacks[119][121] - The Company undertakes no obligation to publicly update or revise these forward-looking statements[120] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operating results, liquidity, and capital resources, including a performance comparison and non-GAAP measures Our Business and Properties - Kite Realty Group Trust, a publicly-held REIT, operates through its majority-owned subsidiary, Kite Realty Group, L.P., focusing on ownership, operation, acquisition, development, and redevelopment of high-quality neighborhood and community shopping centers in select U.S. markets[123] - As of March 31, 2019, the Company owned interests in 111 operating and redevelopment properties (21.8 million square feet) and one development project under construction, compared to 115 properties (22.5 million square feet) and two development projects as of March 31, 2018[124] Recent Activities - In February 2019, the Company announced a plan to market and sell up to $500 million in non-core assets to improve portfolio quality, reduce leverage, and focus on strategic markets. Since January 1, 2018, 5 properties were sold, generating $134.8 million in proceeds[125][129] - During Q1 2019, the Company executed 95 new and renewal leases totaling 642,105 square feet. Comparable new leases achieved a blended rent spread of 5.6%, and six anchor leases were executed as part of repositioning efforts[126][127] Operating Properties Sold Since January 1, 2018 | Property Name | MSA | Disposition Date | Owned GLA | | :---------------------- | :---------------- | :--------------- | :-------- | | Trussville Promenade | Birmingham, AL | February 2018 | 463,836 | | Memorial Commons | Goldsboro, NC | March 2018 | 111,022 | | 1 Tamiami Crossing | Naples, FL | June 2018 | 121,705 | | 1 Plaza Volente | Austin, TX | June 2018 | 156,296 | | 1 Livingston Shopping Center | Livingston, NJ | June 2018 | 139,559 | | Hamilton Crossing | Alcoa, TN | November 2018 | 175,464 | | Fox Lake Crossing | Chicago, IL | December 2018 | 99,136 | | Lowe's Plaza | Las Vegas, NV | December 2018 | 30,210 | | Whitehall Pike | Bloomington, IN | March 2019 | 128,997 | Comparison of Operating Results for the Three Months Ended March 31, 2019 to the Three Months Ended March 31, 2018 Consolidated Statements of Operations (Three Months Ended March 31) | Metric (in thousands) | 2019 | 2018 | Net Change | | :------------------------------------ | :----- | :----- | :--------- | | Rental income | $82,358 | $87,623 | $(5,265) | | Other property related revenue | $1,055 | $778 | $277 | | Fee income | $102 | $1,362 | $(1,260) | | Total revenue | $83,515 | $89,763 | $(6,248) | | Property operating expenses | $11,431 | $12,470 | $(1,039) | | Real estate taxes | $10,206 | $10,754 | $(548) | | General, administrative, and other | $6,777 | $5,945 | $832 | | Depreciation and amortization | $34,635 | $38,556 | $(3,921) | | Impairment charge | $4,077 | $24,070 | $(19,993) | | Total expenses | $67,126 | $91,795 | $(24,669) | | Gain on sale of operating properties, net | $6,587 | $500 | $6,087 | | Operating income (loss) | $22,976 | $(1,532) | $24,508 | | Interest expense | $(16,459) | $(16,337) | $(122) | | Consolidated net income (loss) | $5,988 | $(17,997) | $23,985 | | Net income (loss) attributable to common shareholders | $5,715 | $(17,917) | $23,632 | - Rental income decreased by $5.3 million (6.0%) primarily due to properties sold in 2018 and 2019, partially offset by improved contractual rent and recovery income from increased small shop occupancy[135] - Total expenses decreased by $24.7 million, largely driven by a significant reduction in impairment charges from $24.1 million in Q1 2018 to $4.1 million in Q1 2019[135][142] - Operating income shifted from a loss of $1.5 million in Q1 2018 to an income of $23.0 million in Q1 2019, an improvement of $24.5 million[135] - General, administrative, and other expenses increased by $0.8 million (14.0%) due to costs expensed upon adoption of ASU 2016-02, Leases, which were previously capitalized[140] Net Operating Income and Same Property Net Operating Income - Net Operating Income (NOI) and Same Property NOI (non-GAAP measures) are used to evaluate property performance, excluding non-operating items and properties not owned for the full period or under redevelopment[145][146][147][148] Same Property NOI and Reconciliation (Three Months Ended March 31) | Metric | 2019 (in thousands) | 2018 (in thousands) | % Change | | :------------------------------------------------ | :------------------ | :------------------ | :------- | | Number of properties for the quarter | 100 | 100 | 0% | | Leased percentage at period end | 95.0% | 94.7% | 0.3% | | Economic Occupancy percentage | 92.2% | 93.2% | (1.0%) | | Same Property NOI | $55,112 | $54,134 | 1.8% | | Net income (loss) attributable to common shareholders | $5,715 | $(17,917) | $23,632 | - Same Property NOI increased by 1.8% for Q1 2019 compared to Q1 2018, driven by increases in rental rates from increased shop leasing activity and improved expense recoveries, partially offset by a decline in economic occupancy due to recent anchor vacancies[152] Liquidity and Capital Resources - The Company's capital strategy focuses on maintaining a strong balance sheet, enhancing liquidity, reducing borrowing costs, and staggering debt maturities. It monitors capital markets for potential equity or debt offerings[153][157][158] - As of March 31, 2019, the Company had $421.2 million available under its unsecured revolving credit facility and $28.4 million in cash and cash equivalents[155] - Short-term liquidity needs include operating expenses, interest, debt principal payments, dividend payments, and recurring capital expenditures. Long-term needs include new development, redevelopment, acquisitions, and debt maturity payments[161][166] - The Company anticipates incurring $14-16 million for additional major tenant improvements and $25-35 million for releasing vacant anchor space within the next 12 months[163] Cash Capital Expenditures on Consolidated Properties (Three Months Ended March 31, 2019) | Category | Amount (in thousands) | | :------------------------------------------------ | :-------------------- | | Development Projects | $390 | | Under Construction 3-R Projects | $1,221 | | 3-R Opportunities | $133 | | Recently completed developments/redevelopments and other | $7,082 | | Recurring operating capital expenditures (primarily tenant improvement payments) | $2,723 | | Total | $11,549 | Debt Maturities (as of March 31, 2019) | Year | Scheduled Principal Payments (in thousands) | Term Maturity (in thousands) | Total (in thousands) | | :--- | :---------------------------------------- | :--------------------------- | :------------------- | | 2019 | $3,878 | $0 | $3,878 | | 2020 | $5,395 | $20,700 | $26,095 | | 2021 | $4,626 | $254,875 | $259,501 | | 2022 | $1,112 | $205,208 | $206,320 | | 2023 | $806 | $382,540 | $383,346 | | Thereafter | $6,430 | $722,041 | $728,471 | | Total | $22,247 | $1,585,364 | $1,607,611 | Cash Flows - Cash provided by operating activities decreased from $36.3 million in Q1 2018 to $32.3 million in Q1 2019, impacted by 2018 property sales and higher anchor vacancy, partially offset by completed redevelopment projects and improved shop occupancy[175] - Cash used in investing activities was $29.7 million in Q1 2019, a significant shift from $46.4 million provided in Q1 2018, primarily due to the acquisition of Pan Am Plaza Garage ($29.3 million) and lower net proceeds from property sales ($13.1 million in 2019 vs. $61.6 million in 2018)[176] - Cash provided by financing activities was $3.8 million in Q1 2019, a substantial improvement from $76.3 million used in Q1 2018, mainly due to $60.0 million in Credit Facility borrowings and $54.7 million in distributions to shareholders/unitholders[177] Funds From Operations - Funds From Operations (FFO) is a non-GAAP measure calculated per NAREIT guidelines, excluding gains/losses from sales and impairments of depreciated property, plus depreciation and amortization, and adjustments for unconsolidated partnerships[177][178] Funds From Operations (FFO) Reconciliation (Three Months Ended March 31) | Metric (in thousands) | 2019 | 2018 | | :------------------------------------------------ | :----- | :----- | | Consolidated net income (loss) | $5,988 | $(17,997) | | FFO of the Operating Partnership | $38,242 | $43,500 | | Less: Limited Partners' interests in FFO | $(918) | $(1,022) | | Funds From Operations attributable to Kite Realty Group Trust common shareholders | $37,324 | $42,478 | - FFO attributable to Kite Realty Group Trust common shareholders decreased by $5.15 million (12.1%) from $42.48 million in Q1 2018 to $37.32 million in Q1 2019[180] Earnings before Interest, Tax, Depreciation, and Amortization - EBITDA is defined as net income before depreciation, amortization, interest expense, and income tax expense of taxable REIT subsidiary. Adjusted EBITDA further excludes unconsolidated entities, gains/losses on sales, other income/expense, noncontrolling interest EBITDA, and non-recurring items[181] EBITDA and Adjusted EBITDA Reconciliation (Three Months Ended March 31, 2019) | Metric (in thousands) | Amount | | :------------------------------------------------ | :----- | | Consolidated net income | $5,988 | | Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) | $61,077 | | Adjusted EBITDA | $55,975 | | Annualized Adjusted EBITDA | $223,900 | | Company Share of Net Debt | $1,548,757 | | Net Debt to Adjusted EBITDA | 6.9x | Off-Balance Sheet Arrangements - The Company does not have any material off-balance sheet arrangements, but does have obligations related to operating and development projects[187] Contractual Obligations - There have been no significant changes to contractual obligations disclosed in the Annual Report on Form 10-K for the year ended December 31, 2018, except for debt maturities[188] Item 3. Quantitative and Qualitative Disclosure about Market Risk This section details the company's market risk exposure, primarily from interest rate fluctuations on its debt, and quantifies potential impacts - As of March 31, 2019, the Company had $1.6 billion in outstanding consolidated indebtedness. After considering interest rate hedge agreements totaling $391.2 million, 91% of the debt was fixed rate and 9% was variable rate[189] - A 100 basis point change in interest rates on unhedged variable rate debt would impact annual cash flow by $1.3 million. Fixed rate debt maturing within the next twelve months would not be materially impacted by a 100 basis point change[190] Item 4. Controls and Procedures Management confirmed the effectiveness of disclosure controls and procedures as of March 31, 2019, with no material changes in internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer of both Kite Realty Group Trust and Kite Realty Group, L.P. concluded that their disclosure controls and procedures were effective as of March 31, 2019[191][193] - No material changes in internal control over financial reporting were identified for either entity during the period[192][194] Part II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and a list of exhibits Item 1. Legal Proceedings The company is not subject to material litigation, and routine legal proceedings are not expected to significantly impact its financial condition or operations - The Company is not subject to any material litigation and believes routine litigation will not have a material adverse impact on its consolidated financial condition, results of operations, or cash flows[195] Item 1A. Risk Factors No new material risk factors are reported for the current period, with a reference to the Annual Report on Form 10-K for comprehensive risks - This section is marked 'Not Applicable', indicating no new material risk factors for the current period. Readers are referred to the Annual Report on Form 10-K for a comprehensive discussion of risk factors[196] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the repurchase of common shares from employees to satisfy tax obligations related to restricted share vesting Issuer Repurchases (Three Months Ended March 31, 2019) | Period | Total number of shares purchased | Average price paid per share | | :-------------------- | :----------------------------- | :--------------------------- | | January 1 - January 31 | — | — | | February 1 - February 28 | — | — | | March 1 - March 31 | 19,851 | $16.64 | | Total | 19,851 | | - The repurchased shares were surrendered by employees to satisfy statutory minimum federal and state tax obligations associated with the vesting of restricted common shares under the 2013 Equity Incentive Plan[196][197] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported during the current reporting period - This section is marked 'Not Applicable', indicating no defaults upon senior securities during the reporting period[197] Item 4. Mine Safety Disclosures Mine safety disclosures are not applicable to the company's operations - This section is marked 'Not Applicable', indicating that mine safety disclosures are not relevant to the Company's operations[197] Item 5. Other Information No other information is reported for the current period - This section is marked 'Not Applicable', indicating no other information to report for the current period[198] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including organizational documents, debt instruments, equity agreements, and certifications - The exhibits include Articles of Amendment and Restatement of Declaration of Trust, Bylaws, Form of Common Share Certificate, Indentures, Amendments to the Agreement of Limited Partnership, Form of Appreciation Only LTIP Unit Agreement, Certifications (31.1, 31.2, 31.3, 31.4, 32.1, 32.2), and XBRL Instance and Taxonomy Documents[198][199][200]