Kite Realty Trust(KRG) - 2024 Q1 - Quarterly Report

PART I — FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements for Kite Realty Group Trust and its Operating Partnership for the quarter ended March 31, 2024, including comparative balance sheets, statements of operations, statements of equity, and cash flows, along with detailed notes explaining accounting policies for key financial items Consolidated Financial Statements Presents the unaudited consolidated balance sheets, statements of operations and comprehensive income, statements of shareholders' equity, and statements of cash flows for both Kite Realty Group Trust (Parent Company) and Kite Realty Group, L.P. (Operating Partnership) for the three months ended March 31, 2024, with comparative data for 2023 Kite Realty Group Trust - Consolidated Statements of Operations (Q1 2024 vs Q1 2023) | Metric | Three Months Ended March 31, 2024 (Million USD) | Three Months Ended March 31, 2023 (Million USD) | | :--- | :--- | :--- | | Total Revenue | $207.4 million | $206.8 million | | Operating Income | $39.4 million | $30.8 million | | Net Income | $14.4 million | $5.6 million | | Net Income Attributable to Common Shareholders | $14.2 million | $5.4 million | | Net Income per Common Share (basic and diluted) | $0.06 | $0.02 | Kite Realty Group Trust - Consolidated Balance Sheet Highlights | Metric | March 31, 2024 (Million USD) | December 31, 2023 (Million USD) | | :--- | :--- | :--- | | Total Assets | $7,204.5 million | $6,944.1 million | | Mortgage and Other Indebtedness, net | $3,167.5 million | $2,829.2 million | | Total Liabilities | $3,598.1 million | $3,300.2 million | | Total Shareholders' Equity | $3,530.8 million | $3,568.1 million | - Net cash provided by operating activities decreased to $53.6 million from $63.6 million in the prior year period. Net cash used in investing activities increased significantly to $289.3 million, primarily due to a $265.0 million investment in short-term deposits. Net cash provided by financing activities was $283.3 million, driven by $385.3 million in loan proceeds[23] Notes to Consolidated Financial Statements Provides detailed explanations of the company's organization, accounting policies, and specific financial statement items, covering its portfolio of 180 operating retail properties, debt structure including a new $350 million senior notes offering, derivative instruments used for hedging, and shareholder equity activities such as a $0.25 per share Q1 dividend - As of March 31, 2024, the company's portfolio consisted of 180 operating retail properties totaling 28.1 million square feet and one office property[40] - In Q1 2024, the company completed a public offering of $350.0 million in 5.50% senior unsecured notes due 2034. The proceeds will be used to satisfy the $269.6 million of debt maturities due in 2024[71] - The Board of Trustees declared a cash distribution of $0.25 per common share for the first quarter of 2024, an increase from $0.24 in Q1 2023[96][97] - The company has a $300 million share repurchase program, extended to February 28, 2025. As of March 31, 2024, no shares have been repurchased under this program[99] Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations for Q1 2024, covering operating activities, a detailed comparison of operating results versus the prior year, and an analysis of non-GAAP measures like Same Property NOI (up 1.8%) and FFO, also detailing the company's liquidity position and capital expenditure plans Results of Operations Compares Q1 2024 to Q1 2023, showing a $2.8 million increase in rental income and a $7.7 million decrease in depreciation and amortization expense, breaking down changes by property type and presenting key non-GAAP metrics, including a 1.8% increase in Same Property NOI, FFO of $0.50 per diluted share, and a Net Debt to Adjusted EBITDA ratio of 5.1x - In Q1 2024, the company executed 185 new and renewal leases totaling 968,681 square feet, achieving a 12.8% cash leasing spread on comparable leases. New and non-option renewal leases had a blended cash spread of 23.3%[117] Q1 2024 vs Q1 2023 Operating Results Comparison | Metric | Q1 2024 (Million USD) | Q1 2023 (Million USD) | Change (Million USD) | | :--- | :--- | :--- | :--- | | Rental Income | $205.8M | $203.1M | +$2.7M | | Total Revenue | $207.4M | $206.8M | +$0.7M | | Depreciation and Amortization | $100.4M | $108.1M | -$7.7M | | Operating Income | $39.4M | $30.8M | +$8.6M | | Interest Expense | ($30.4M) | ($25.4M) | -$4.9M | | Net Income Attributable to Common Shareholders | $14.2M | $5.4M | +$8.8M | - Same Property NOI increased by 1.8% for Q1 2024 compared to Q1 2023, primarily due to contractual rent growth and lower bad debt expense. The same property pool consisted of 179 properties with a leased percentage of 94.0% at period end[137][138] Funds From Operations (FFO) Reconciliation | Metric | Three Months Ended March 31, 2024 (Million USD) | Three Months Ended March 31, 2023 (Million USD) | | :--- | :--- | :--- | | FFO attributable to common shareholders | $111.0 million | $112.3 million | | FFO per share of the Operating Partnership – diluted | $0.50 | $0.51 | Liquidity and Capital Resources Details the company's strong liquidity position, with $83.6 million in cash, $265.0 million in short-term deposits, and $1.1 billion available under its revolving facility as of March 31, 2024, indicating adequate liquidity for the next 12 months and beyond, with proceeds from a recent note offering set to cover all 2024 debt maturities, and outlining future capital needs including tenant improvements, development projects, and potential acquisitions - As of March 31, 2024, the company had $83.6 million in cash, $265.0 million in short-term deposits, and $1.1 billion of availability under its revolving facility[150] - The company has $619.6 million of unsecured debt maturing before March 31, 2025, which it plans to repay using proceeds from the Notes Due 2034, cash on hand, and borrowings on the Revolving Facility[158] - The company anticipates incurring approximately $100 million of additional major tenant improvement costs over the next 12 to 24 months for currently vacant space[162] Quantitative and Qualitative Disclosure about Market Risk The company's primary market risk is interest rate volatility affecting its debt, with 95% of its $3.2 billion in consolidated debt fixed-rate as of March 31, 2024, after accounting for interest rate hedges, and estimates that a 100-basis point change in interest rates would change its annual cash flow by $1.7 million on its unhedged variable-rate debt - As of March 31, 2024, the company had $3.2 billion of outstanding consolidated indebtedness. After the effects of hedge agreements, 95% of this debt was fixed-rate[179] - A 100-basis point change in interest rates on the company's unhedged variable rate debt would change annual cash flow by $1.7 million[180] Controls and Procedures Management, including the CEO and CFO, evaluated the disclosure controls and procedures for both Kite Realty Group Trust and Kite Realty Group, L.P. as of March 31, 2024, concluding that these controls were effective and noting no material changes in internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer of both the Parent Company and the Operating Partnership concluded that disclosure controls and procedures were effective as of the end of the period[181][183] - No change in internal control over financial reporting was identified during the quarter that has materially affected, or is reasonably likely to materially affect, internal controls[182][184] PART II — OTHER INFORMATION Legal Proceedings The company reports that it is not subject to any material litigation, nor is any material litigation currently threatened against it, and any ongoing legal matters are considered routine and not expected to have a material adverse impact on the company's financial condition or results - The company is not subject to any material litigation and does not expect routine claims to have a material adverse impact on its consolidated financial condition, results of operations, or cash flows[187] Risk Factors This section states that there have been no material changes from the risk factors that were previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 - There have been no material changes from the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023[188] Unregistered Sales of Equity Securities and Use of Proceeds During the first quarter of 2024, the company repurchased 42,845 of its common shares at an average price of $21.28 per share, which were surrendered by employees to satisfy tax obligations related to the vesting of restricted stock and were not part of the company's publicly announced $300 million share repurchase program Issuer Purchases of Equity Securities (Q1 2024) | Period | Total Number of Shares Purchased | Average Price Paid per Share (USD) | | :--- | :--- | :--- | | Jan 2024 | — | $— | | Feb 2024 | 1,544 | $21.28 | | Mar 2024 | 41,301 | $21.28 | | Total | 42,845 | $21.28 | - The repurchases were made from employees to satisfy tax obligations on vested restricted shares and were not part of the publicly announced $300 million Share Repurchase Program[189][190] Defaults Upon Senior Securities This item is not applicable to the company for the reporting period - Not applicable[191] Mine Safety Disclosures This item is not applicable to the company for the reporting period - Not applicable[192] Other Information The company reports that during the first quarter of 2024, none of its officers or trustees adopted or terminated any Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements - During Q1 2024, no officers or trustees adopted or terminated any Rule 10b5-1(c) trading plans[193] Exhibits This section lists all exhibits filed with the Form 10-Q, including certifications by the principal executive and financial officers, and interactive data files (XBRL) - The report includes filed exhibits such as officer certifications (31.1-31.4, 32.1-32.2) and Inline XBRL documents (101 series)[194] Signatures - The report was duly signed on May 7, 2024, by John A. Kite, Chairman and Chief Executive Officer, and Heath R. Fear, Executive Vice President and Chief Financial Officer, on behalf of both Kite Realty Group Trust and Kite Realty Group, L.P[197]