Kite Realty Trust(US:KRG)2025-04-30 20:30Explanatory Note This report combines the quarterly filings for Kite Realty Group Trust (the Parent Company) and Kite Realty Group, L.P., providing a clearer overview of the business as viewed by management - The report is a combined Form 10-Q for Kite Realty Group Trust and Kite Realty Group, L.P7 - Kite Realty Group Trust (Parent Company) is the sole general partner of the Operating Partnership and owned approximately 97.8% of its common partnership interests as of March 31, 20258 - The primary business is owning, operating, and developing high-quality, grocery-anchored open-air shopping centers and mixed-use assets, mainly in Sun Belt and strategic gateway markets8 - The main differences in the financial statements between the Parent Company and the Operating Partnership relate to shareholders' equity versus partners' capital, with the Parent Company holding no material assets other than its investment in the Operating Partnership and carrying no debt directly910 PART I — FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements for both Kite Realty Group Trust and Kite Realty Group, L.P. for the period ended March 31, 2025, including Balance Sheets, Statements of Operations, Statements of Equity, and Statements of Cash Flows KITE REALTY GROUP TRUST Financial Statements For Q1 2025, Kite Realty Group Trust reported total revenues of $221.8 million and net income of $23.7 million, or $0.11 per diluted share, with total assets decreasing to $6.68 billion from $7.09 billion at year-end 2024 due to debt reduction Kite Realty Group Trust - Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $6,682,508 | $7,091,767 | | Mortgage and other indebtedness, net | $2,910,057 | $3,226,930 | | Total Liabilities | $3,311,035 | $3,679,690 | | Total Shareholders' Equity | $3,267,953 | $3,312,110 | Kite Realty Group Trust - Consolidated Statement of Operations Highlights (in thousands) | Account | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Total Revenue | $221,762 | $207,439 | | Operating Income | $53,777 | $39,425 | | Net Income Attributable to Common Shareholders | $23,730 | $14,156 | | Net Income per Share (Diluted) | $0.11 | $0.06 | Kite Realty Group Trust - Consolidated Cash Flow Highlights (in thousands) | Activity | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $74,060 | $53,581 | | Net cash provided by (used in) investing activities | $227,837 | $(289,338) | | Net cash (used in) provided by financing activities | $(380,317) | $283,291 | KITE REALTY GROUP, L.P. AND SUBSIDIARIES Financial Statements Kite Realty Group, L.P. reported Q1 2025 net income attributable to common unitholders of $24.2 million, with revenue and operating income mirroring the Parent Company, and balance sheet and cash flow statements identical except for partners' equity presentation Kite Realty Group, L.P. - Consolidated Statement of Operations Highlights (in thousands) | Account | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Total Revenue | $221,762 | $207,439 | | Operating Income | $53,777 | $39,425 | | Net Income Attributable to Common Unitholders | $24,194 | $14,369 | | Net Income per Common Unit (Diluted) | $0.11 | $0.06 | Notes to Consolidated Financial Statements The notes detail the company's organization, accounting policies, recent acquisitions, debt structure, and derivative instruments, highlighting the acquisition of Village Commons, the Legacy West joint venture, and properties held for sale - As of March 31, 2025, the company's portfolio consisted of 180 operating retail properties (27.8 million sq. ft.), 2 office properties, and several development/redevelopment projects39 - In January 2025, the company acquired Village Commons, a multi-tenant retail property in Miami, for $68.4 million62 - Subsequent to quarter-end, a joint venture with GIC acquired Legacy West in Dallas/Ft. Worth for a gross price of $785.0 million, with the company owning 52% of the JV and acting as the operating member64 - Two properties, Stoney Creek Commons and City Center, were classified as held for sale as of March 31, 2025, with Stoney Creek Commons sold on April 4, 2025, for $9.5 million6667 Consolidated Indebtedness as of March 31, 2025 (in thousands) | Debt Type | Amount Outstanding | Ratio | Weighted Avg. Interest Rate | Weighted Avg. Years to Maturity | | :--- | :--- | :--- | :--- | :--- | | Fixed rate debt | $2,707,885 | 93% | 4.09% | 4.6 | | Variable rate debt | $203,000 | 7% | 7.27% | 1.8 | | Total | $2,910,057 | 100% | 4.31% | 4.4 | - During Q1 2025, the company repaid the $350.0 million principal balance of its 4.00% senior unsecured notes due 202579 - The Board of Trustees declared a cash distribution of $0.27 per common share for Q1 2025, an increase from $0.25 in Q1 2024107108 - The company has a $300.0 million share repurchase program, extended to February 28, 2026, with no shares repurchased under this program as of March 31, 2025109 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's business, operating results, liquidity, and capital resources, highlighting increased revenue and net income driven by acquisitions and strong operational performance, with Same Property NOI growing by 3.1% and a Core FFO per share of $0.53 Overview The company operates as a REIT focused on high-quality, grocery-anchored shopping centers and mixed-use assets in high-growth Sun Belt and strategic gateway markets, mitigating inflation risks through lease structures - The company's business model focuses on owning and operating grocery-anchored and mixed-use retail assets in high-growth U.S. markets121 - Management notes that while inflation has moderated, potential future tariffs could impact tenant sales and rent growth, with the company utilizing lease structures with rent escalations and expense reimbursements to mitigate inflation risk123 Results of Operations Operating results for Q1 2025 improved significantly, with total revenue increasing by $14.3 million (6.9%) to $221.8 million and operating income rising by $14.4 million to $53.8 million, driven by acquisitions and a 3.1% increase in Same Property NOI - In Q1 2025, the company executed 182 new and renewal leases totaling 843,829 square feet, achieving a 13.7% cash leasing spread on comparable leases126 Comparison of Operating Results (in thousands) | Account | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $221,762 | $207,439 | $14,323 | | Total Expenses | $168,076 | $167,778 | $298 | | Operating Income | $53,777 | $39,425 | $14,352 | | Net Income Attributable to Common Shareholders | $23,730 | $14,156 | $9,574 | - Rental income increased by $13.4 million, with $11.4 million of the increase coming from properties fully operational in both periods, driven by higher base rent, lease termination income, and tenant reimbursements134 - Same Property NOI for the 177 properties in the pool increased by 3.1% to $147.9 million in Q1 2025 from $143.5 million in Q1 2024, primarily due to contractual rent growth147148 FFO and Core FFO Reconciliation (in thousands) | Measure | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | FFO attributable to common shareholders | $120,317 | $111,018 | | FFO per share – diluted | $0.55 | $0.50 | | Core FFO of the Operating Partnership | $118,064 | $107,343 | | Core FFO per share – diluted | $0.53 | $0.48 | - The company's Net Debt to Annualized Adjusted EBITDA ratio was 4.7x as of March 31, 2025158 Liquidity and Capital Resources The company maintains a strong liquidity position with $49.1 million in cash and $1.1 billion availability on its revolving credit facility, with cash from operations increasing to $74.1 million in Q1 2025 - As of March 31, 2025, the company had $49.1 million in cash and $1.1 billion of availability under its unsecured revolving credit facility161164 - Short-term liquidity needs include operating expenses, debt service, dividends, and capital expenditures, with approximately $130 million in major tenant improvement costs anticipated over the next 12-24 months for executed leases168170 - The company's share of remaining costs for the One Loudoun Expansion project is estimated at $65.0 million to $75.0 million, to be incurred over the next 12-24 months171 Cash Flow Summary (in thousands) | Activity | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $74,060 | $53,581 | | Net cash provided by (used in) investing activities | $227,837 | $(289,338) | | Net cash (used in) provided by financing activities | $(380,317) | $283,291 | Quantitative and Qualitative Disclosure about Market Risk The company is exposed to market risk primarily from interest rate changes on its debt, with 93% of its $2.9 billion consolidated debt fixed-rate after hedges as of March 31, 2025 - As of March 31, 2025, after the effect of hedges, 93% ($2.7 billion) of the company's debt was fixed-rate and 7% ($203.0 million) was variable-rate186 - A 100-basis point change in interest rates on the $203.0 million of unhedged variable-rate debt would change annual cash flow by $2.0 million187 Controls and Procedures Management concluded that disclosure controls and procedures for both the Parent Company and Operating Partnership were effective as of March 31, 2025, with no material changes to internal control over financial reporting - Management concluded that disclosure controls and procedures for both the Parent Company and the Operating Partnership were effective as of March 31, 2025189191 - There were no material changes in internal control over financial reporting during the quarter ended March 31, 2025190192 PART II — OTHER INFORMATION Legal Proceedings The company is not subject to any material litigation, nor is any material litigation currently threatened, with routine claims arising in the ordinary course of business not expected to have a material adverse impact - The company reports no material litigation as of the filing date194 Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes from the risk factors disclosed in the 2024 Form 10-K195 Unregistered Sales of Equity Securities and Use of Proceeds During the quarter, the company repurchased 51,057 common shares at an average price of $23.30 per share from employees to satisfy tax obligations, separate from its $300 million authorized share repurchase program Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2025 | — | $— | | Feb 2025 | — | $— | | Mar 2025 | 51,057 | $23.30 | | Total | 51,057 | $23.30 | - The shares were repurchased from employees to satisfy tax obligations upon vesting of restricted shares, not under the public repurchase plan196 - The company has a $300 million authorized share repurchase program, which was extended to February 28, 2026197 Other Information During the first quarter of 2025, none of the company's officers or trustees adopted or terminated any Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements - No officers or trustees adopted or terminated Rule 10b5-1 trading plans during Q1 2025200 Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the principal executive and financial officers as required by the Sarbanes-Oxley Act of 2002, and the Inline XBRL documents