Indianapolis-based Kite Realty Group Trust (NYSE: KRG) is reporting first quarter Funds From Operations of $42.3 million, compared to $17.5 million during the same quarter the previous year. Chief Executive Officer John Kite says the company is “energized and excited about the future.” April 30, 2015
INDIANAPOLIS, Ind. – Kite Realty Group Trust (NYSE: KRG) (the “Company”) announced today operating results for the first quarter ended March 31, 2015. Financial statements and exhibits attached to this release include the details of these results.
“We kicked off 2015 with another strong quarter of operating performance, balance sheet management and follow-through execution,” said John A. Kite, Chairman and CEO. “We continued to grow FFO and our free cash flow while also reporting solid same-property NOI growth. The quarter’s results are a testament to our portfolio’s strength, our operating expertise and our team’s ability to execute and seamlessly integrate new, high-growth assets. Our investment grade balance sheet and upgraded operating systems remained core to our overall strategy. We are energized and excited about the future.”
First Quarter Highlights
Generated FFO, as adjusted, of $42.3 million, or $0.50 per diluted common share, for the first quarter.
Adjusted Funds From Operations (“AFFO”) growth of 13% year-over-year from $0.39 to $0.44 per diluted common share.
Same-property net operating income (“NOI”) growth of 4.4% year-over-year.
Aggregate cash rent spread of 9.0%.
Closed final tranche of previously announced 15-asset disposition for gross proceeds of $167 million.
Completed development project at Phase I of Parkside Town Commons in Raleigh, North Carolina, and moved property to the operating portfolio.
On April 1, acquired Colleyville Downs, a 201,000 square foot Whole Foods-anchored shopping center located in the Dallas MSA.
First Quarter Financial Results
FFO, as adjusted, for the three months ended March 31, 2015, was $42.3 million, or $0.50 per diluted common share, for real estate properties in which the Company’s operating subsidiaries own an interest (to which we refer to as “Kite Portfolio”), compared to $17.5 million, or $0.51 per diluted common share, for the same period in the prior year.
The reduction in FFO per diluted common share was primarily driven by the 15-asset disposition completed in two tranches, closing in December 2014 and March 2015.
Reported FFO, as defined by NAREIT, was $42.1 million, or $0.49 per diluted common share, for the Kite Portfolio, compared to $13.0 million, or $0.38 per diluted common share, for the same period in the prior year.
Net income attributable to common shareholders for the three months ended March 31, 2015, was $5.1 million compared to a net income of $2.2 million for the same period in 2014.
Portfolio Activity During The First Quarter
Development and Redevelopment
The first phase of Parkside Town Commons, which is anchored by Target and Harris Teeter, was moved into operations in the first quarter. The remaining development projects include Phase II of Parkside Town Commons, Phase II of Holly Springs, and Tamiami Crossing. These three projects were in the aggregate 79% pre-leased or committed as of March 31, 2015, with a total estimated cost of approximately $164.5 million, of which approximately $110.7 million had been incurred as of March 31, 2015.
As of the first quarter, the primary anchors were both open at the redevelopment project at Gainesville Plaza in Gainesville, Florida. This project consists of 164,665 square feet, of which 81.6% is open, pre-leased or committed as of March 31, 2015, and is anchored by Burlington Coat Factory and Ross Dress for Less, which opened in March.
On September 16, 2014, the Company announced it had entered into a definitive agreement to sell 15 operating properties. The sale closed in two tranches, the first in December 2014 and the second in March 2015. As a result of these sales, the Company exited four states in which it did not have future growth plans. The second tranche included 7 non-core assets and resulted in gross proceeds of approximately $167 million, or net proceeds of $103 million.
On April 2, 2015, the Company announced it had closed on the acquisition of Colleyville Downs, a 201,000 square foot shopping center located in the MSA of Dallas, Texas. The center is 92% leased and anchored by Petco, Ace Hardware, and a newly constructed Whole Foods Market that opened in 2014.
As of March 31, 2015, the Company owned interests in 117 operating properties totaling approximately 23.3 million square feet. The owned GLA in the Company’s retail operating portfolio was 94.9% leased as of March 31, 2015, and the Company’s overall portfolio was 94.8% leased, excluding ground leases and non-owned anchors.
Same-property net operating income, which includes 64 operating properties, increased 4.4% in the first quarter of 2015 compared to the same period in the prior year. The leased percentage of these properties was 95.1% at March 31, 2015, compared to 95.3% at March 31, 2014, and the economic occupancy increased to 92.9% in the first quarter from 91.5% at March 31, 2014.
The Company executed 77 leases totaling 377,470 square feet during the first quarter of 2015. There were 52 comparable new and renewal leases executed during the quarter for 275,949 owned square feet. Cash spreads on new leases executed in the quarter were up 18.4%, while cash spreads on renewals were up 7.1%, for a blended spread of 9.0%.
2015 Earnings Guidance
The Company is updating its guidance for FFO, as adjusted, for the year ending December 31, 2015, to be between $1.93 to $2.00 per diluted common share from $1.90 to $2.00 per diluted common share and for net income to be within a range of $0.17 to $0.24 per diluted common share.
While other factors may impact FFO and net income, the Company’s 2015 guidance is being updated based on the following assumptions:
An increase of 3.0% to 3.5% in same-property NOI compared to the prior year from the initial guidance range of 2.5% to 3.5%;
An increase in acquisition assumptions to $125 million from $80 million.
The Company’s 2015 guidance is based on a number of other factors, many of which are outside the Company’s control and all of which are subject to change. The Company may change its guidance during the year if actual and anticipated results vary from these assumptions.
About Kite Realty Group Trust
Kite Realty Group Trust is a full-service, vertically integrated real estate investment trust engaged in the ownership, operation, management, leasing, acquisition, construction, redevelopment and development of neighborhood and community shopping centers in selected markets in the United States. As of March 31, 2015, the Company owned interests in a portfolio of 120 operating, development and redevelopment properties totaling approximately 24 million total square feet across 22 states. For more information, please visit the Company’s website at www.kiterealty.com.
Source: Kite Realty Group Trust