Kite Realty Group Trust Announces Second Quarter 2006 Financial Results
INDIANAPOLIS, Aug. 7 -- Kite Realty Group Trust
(NYSE: KRG) today announced results for the quarter ended June 30, 2006.
Financial statements and exhibits attached to this release include results
for the three and six months ended June 30, 2006 and June 30, 2005.
Second Quarter Highlights
-- Funds From Operations (FFO) for the quarter of $10.3 million, an
increase of 27.8 percent over the same period in 2005
-- FFO of $0.28 per diluted share for the quarter
-- Total revenues of $30.9 million, an increase of 38.8 percent over the
same period in 2005
-- Executed 33 new leases for approximately 129,000 square feet
-- Acquired three operating shopping centers in Naples, Florida for a
total purchase price of $58 million (July 2006)
-- Board of Trustees declares quarterly dividend of $0.195 per common
share, an increase of 4.0 percent over the prior quarter (August 2006)
Financial and Operating Results
For the three months ended June 30, 2006, Funds From Operations (FFO),
a widely accepted supplemental measure of REIT performance established by
the National Association of Real Estate Investment Trusts, for the Kite
Portfolio was $10.3 million, or $0.28 per diluted share, compared to $8.1
million, or $0.29 per diluted share, for the same period in 2005. The
average number of diluted shares and units outstanding was 37,318,081 for
the quarter ended June 30, 2006 and 27,758,512 for the quarter ended June
30, 2005. The Company's allocable share of diluted FFO was $8.0 million for
the three months ended June 30, 2006, compared to the Company's allocable
share of $5.6 million for the quarter ended June 30, 2005.
For the six months ended June 30, 2006, FFO for the Kite Portfolio was
$20.1 million, or $0.54 per diluted share, compared to $15.6 million, or
$0.57 per diluted share, for the same period in 2005. The average number of
diluted shares and units outstanding was 37,320,221 for the six months
ended June 30, 2006 and 27,653,503 for the six months ended June 30, 2005.
The increased number of shares reflects the Company's follow-on common
stock offering in October 2005, the proceeds from which were used to
finance development activities and pay down debt. The Company's allocable
share of diluted FFO was $15.5 million for the six months ended June 30,
2006 compared with the Company's allocable share of $10.9 million for the
same period in 2005.
Given the nature of the Company's business as a real estate owner and
operator, the Company believes that FFO is helpful to investors when
measuring operating performance because it excludes various items included
in net income that do not relate to or are not indicative of operating
performance, such as gains (or losses) from sales of operating properties
and depreciation and amortization, which can make periodic and peer
analyses of operating performance more difficult. A reconciliation of net
income to FFO is included in the attached table.
The Company's total revenue for the second quarter of 2006 increased
38.8 percent to $30.9 million from $22.3 million for the same period in
2005. The Company's net income was $1.54 million for the second quarter of
2006, compared to $1.75 million for the second quarter of 2005.
The Company's total revenue for the first six months of 2006 increased
43.1 percent to $59.4 million from $41.5 million for the same period in
2005. The Company's net income was $3.3 million for the first six months of
2006, compared to $3.6 million for the second quarter of 2005.
"We continue to maintain strong operating metrics during a period of
significant growth for the Company, as evidenced by the 28 percent increase
in FFO year over year," said John A. Kite, President and Chief Executive
Officer. "We are also pleased with the high-quality operating properties
and development parcels that we have acquired in recent months. These
properties are all located in high-growth, affluent areas and will further
diversify and enhance our portfolio."
Operating Portfolio
As of June 30, 2006, the Company owned interests in 43 retail operating
properties totaling approximately 7.3 million square feet, including its
Traders Point II property, which was added to the operating portfolio in
June 2006. The owned gross leasable area (GLA) in the Company's retail
operating portfolio was 93.0 percent leased at quarter end, compared to
93.8 percent leased as of June 30, 2005. The decline from the prior year is
largely attributable to the termination of the Company's lease with
Winn-Dixie which is discussed in more detail below. In addition, the
Company owned four commercial operating properties totaling 562,652 square
feet and a related parking garage. As of June 30, 2006, the owned net
rentable area of the commercial operating portfolio was 96.9 percent
leased, compared to 97.7 percent leased as of June 30, 2005.
On May 18, 2006, the Company terminated its lease with Winn-Dixie at
its Shops at Eagle Creek property in Naples, Florida. The Company paid
Winn-Dixie $1.35 million to acquire the lease in a bankruptcy auction and
subsequently terminated the lease. Discussions are underway with several
potential replacement tenants for the 51,703 square-foot space.
On June 30, 2006, the Company terminated its lease with Marsh
Supermarkets at its Naperville, Illinois development property and
simultaneously sold the asset to suburban Chicago-based Caputo's Fresh
Markets. The land and building were sold for gross proceeds (including a
termination payment) of $14 million, of which approximately $11.6 million
was used to pay off related debt. The sale resulted in a net loss of
approximately $458,000 after income taxes. The Company retained the
remainder of the Naperville Marketplace property.
Development Activities
As of June 30, 2006, the Company owned interests in 11 retail
properties under development that are expected to total about 1.5 million
square feet. Approximately 820,000 square feet are anticipated to be owned
by the Company or located on land owned by the Company and ground leased to
tenants. The remaining square footage will be owned by anchor tenants upon
completion of the developments. The total estimated cost of these projects
is $150 million, of which approximately $94 million had been incurred as of
June 30, 2006. Approximately 67 percent of the owned GLA at properties in
the development pipeline is currently leased or in various stages of lease
negotiations.
During the second quarter of 2006, the Company executed 33 new leases
for 129,452 square feet of GLA.
On April 3, 2006, the Company acquired Kedron Village, a community
shopping center under construction in Peachtree City, Georgia, a suburb of
Atlanta. The center is currently 82 percent pre-leased. The contract price
for Kedron Village was $36.9 million, of which $22 million was paid at the
initial funding. The remaining purchase price was paid on July 31, 2006.
Currently, the center's four anchors (Target, Bed Bath & Beyond, Ross Dress
For Less and PETCO) are open for business.
On April 28, 2006, the Company contributed cash of $7.25 million for a
60 percent interest in a joint venture that acquired approximately 14 acres
of land in Oldsmar, Florida, a suburb of Tampa. This development is
projected to include approximately 74,500 square feet of Company-owned GLA
and three outparcels. The center will be anchored by a big-box retailer.
Construction on this center is expected to commence in the third quarter of
2006.
Subsequent Events
On July 6, 2006, the Company acquired three shopping centers in Naples,
Florida, for a total purchase price of $58 million, or an average of $182
per square foot, in an off-market transaction.
-- Courthouse Shadows Shopping Center is a 134,667 square-foot
neighborhood shopping center anchored by Albertson's and Office Max.
The property is located at U.S. 41 East and Peter Street in Naples,
Florida. Courthouse Shadows is currently 100 percent leased.
-- Pine Ridge Shopping Center is a 258,890 square-foot regional shopping
center anchored by Publix, a non-owned Target, and a non-owned Bealls.
The Company acquired 105,515 square feet at Pine Ridge Shopping Center.
The property is located at the southwest corner of Pine Ridge Road and
Airport Pulling Road in Naples, Florida. Pine Ridge is currently 100
percent leased.
-- Riverchase Shopping Center is a 78,340 square-foot neighborhood
shopping center anchored by Publix and Blockbuster. The property is
located at the northeast corner of U.S. 41 North and Immokalee Road in
Naples, Florida. Riverchase is currently 100 percent leased.
On July 14, 2006, the Company acquired approximately 100 acres in Cary,
North Carolina for $35.6 million. The site is in the middle of the
"Triangle" of Raleigh, Durham, and Chapel Hill and is adjacent to Research
Triangle Park. The site is zoned as part of the Alston Regional Activity
Center to support up to 705,000 square feet of retail space, in addition to
office space and either residential units or a hotel. The Company intends
to contribute this asset into a joint venture prior to the commencement of
construction, in which it expects to retain a minority interest.
Distributions
On May 4, 2006, the Board of Trustees declared a quarterly cash
distribution of $0.1875 per common share for the quarter ended June 30,
2006 to shareholders of record as of July 6, 2006. This distribution was
paid on July 18, 2006.
On August 3, 2006, the Board of Trustees declared a quarterly cash
distribution of $0.195 per common share for the quarter ending September
30, 2006 to shareholders of record as of October 5, 2006. This distribution
will be paid on October 17, 2006. The increase in the dividend represents a
four percent increase on an annualized basis.
Earnings Guidance
The Company is providing revised FFO guidance for the fiscal year ended
December 31, 2006 in the range of $1.14 to $1.19 per diluted share.
Following is a reconciliation of the calculation of net income per share to
FFO per share:
Guidance Range for 2006 Low High
Net income per share $0.29 $0.33
Limited Partners' interests in Operating
Partnership 0.09 0.10
Loss on sale of operating property 0.01 0.01
Depreciation and amortization of consolidated
entities 0.74 0.74
Depreciation and amortization of unconsolidated
entities 0.01 0.01
Funds From Operations $1.14 $1.19
Earnings Conference Call
Management will host a conference call on Tuesday, August 8, 2006, at
10:30 a.m. EDT to discuss financial results for the quarter ended June 30,
2006. A live webcast of the conference call will be available online on the
Company's corporate website at http://www.kiterealty.com . The dial-in
numbers are (877) 407-8035 for domestic callers and (201) 689-8035 for
international callers. After the live webcast, the call will remain
available on Kite Realty Group Trust's website through November 10, 2006.
In addition, a telephonic replay of the call will be available until
September 10, 2006. The replay dial-in numbers are (877) 660-6853 for
domestic callers and (201) 612-7415 for international callers. Please use
account number 286 and reservation code 208413 for the telephonic replay.
About Kite Realty Group Trust
Kite Realty Group Trust is a full-service, vertically integrated real
estate investment trust focused primarily on the development, construction,
acquisition, ownership and operation of high quality neighborhood and
community shopping centers in selected growth markets in the United States.
The Company owns interests in a portfolio of operating retail properties,
retail properties under development, operating commercial properties, a
related parking garage, and parcels of land that may be used for future
development of retail or commercial properties.
Safe Harbor
Certain statements in this document that are not historical fact may
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may
cause the actual results of the Company to differ materially from
historical results or from any results expressed or implied by such
forward-looking statements, including without limitation: national and
local economic, business, real estate and other market conditions; the
ability of tenants to pay rent; the competitive environment in which the
Company operates; financing risks; property management risks; the level and
volatility of interest rates; financial stability of tenants; the Company's
ability to maintain its status as a REIT for federal income tax purposes;
acquisition, disposition, development and joint venture risks; potential
environmental and other liabilities; and other factors affecting the real
estate industry generally. The Company refers you to the documents filed by
the Company from time to time with the Securities and Exchange Commission,
which discuss these and other factors that could adversely affect the
Company's results. The Company undertakes no obligation to publicly update
or revise these forward-looking statements (including the FFO estimate),
whether as a result of new information, future events or otherwise.
Kite Realty Group Trust
Consolidated Balance Sheets
(Unaudited)
June 30, December 31,
2006 2005
Assets:
Investment properties, at cost:
Land $169,513,693 $172,509,684
Land held for development 61,341,811 51,340,820
Buildings and improvements 481,030,140 485,129,649
Furniture, equipment and other 5,426,138 5,675,980
Construction in progress and other 120,753,907 65,903,868
838,065,689 780,560,001
Less: accumulated depreciation (52,455,552) (41,825,911)
785,610,137 738,734,090
Cash and cash equivalents 10,750,083 15,208,835
Tenant receivables, including accrued
straight-line rent, net of allowance
for bad debts 14,898,601 11,302,923
Other receivables 13,961,902 6,082,511
Investments in unconsolidated
entities, at equity 1,164,978 1,303,919
Escrow deposits 7,706,098 6,718,198
Other assets 23,424,530 19,879,330
Total Assets $857,516,329 $799,229,806
Liabilities and Shareholders' Equity:
Mortgage and other indebtedness $439,156,807 $375,245,837
Accounts payable and accrued expenses 32,702,300 30,642,822
Deferred revenue and other
liabilities 27,109,721 25,369,152
Minority interest 4,431,111 4,847,801
Total Liabilities 503,399,939 436,105,612
Commitments and contingencies
Limited Partners' interests in
operating partnership 79,977,187 84,244,814
Shareholders' Equity:
Preferred Shares, $.01 par value,
40,000,000 shares authorized,
no shares issued and outstanding - -
Common Shares, $.01 par value,
200,000,000 shares authorized,
28,808,483 shares and 28,555,187
shares issued and outstanding,
respectively 288,085 285,552
Additional paid in capital 290,623,080 288,976,563
Unearned compensation - (808,015)
Accumulated other comprehensive
income 677,878 427,057
Accumulated deficit (17,449,840) (10,001,777)
Total shareholders' equity 274,139,203 278,879,380
Total Liabilities and Shareholders'
Equity $857,516,329 $799,229,806
Kite Realty Group Trust
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended June 30,
2006 2005
Revenue:
Minimum rent $16,509,839 $13,346,462
Tenant reimbursements 4,417,611 2,871,856
Other property related revenue 944,966 407,589
Construction and service fee
revenue 9,036,996 5,590,667
Other income, net 31,312 79,894
Total revenue 30,940,724 22,296,468
Expenses:
Property operating 3,274,984 2,451,267
Real estate taxes 3,122,720 1,874,849
Cost of construction and services 7,899,325 4,390,955
General, administrative, and other 1,601,176 1,277,102
Depreciation and amortization 7,842,914 5,356,577
Total expenses 23,741,119 15,350,750
Operating income 7,199,605 6,945,718
Interest expense (4,615,175) (4,742,869)
Loss on sale of asset (764,008) -
Income tax expense benefit of
taxable REIT subsidiary 150,303 -
Minority interest in income of
consolidated subsidiaries (37,986) (51,930)
Equity in earnings of
unconsolidated entities 61,749 126,556
Limited Partners' interests in the
continuing operations of the
Operating Partnership (454,117) (701,701)
Income from continuing operations 1,540,371 1,575,774
Operating income from discontinued
operations, net of Limited
Partners' interests - 175,165
Net income $1,540,371 $1,750,939
Income per common share - basic:
Continuing operations $0.05 $0.08
Discontinued operations - 0.01
$0.05 $0.09
Income per common share - diluted:
Continuing operations $0.05 $0.08
Discontinued operations - 0.01
$0.05 $0.09
Weighted average common shares
outstanding - basic 28,690,680 19,148,267
Weighted average common shares
outstanding - diluted 28,802,913 19,262,581
Dividends declared per common share $0.1875 $0.1875
Kite Realty Group Trust
Funds From Operations
For the Three and Six Months Ended June 30, 2006 and 2005
(Unaudited)
Three Months Ended June 30 Six Months Ended June 30
2006 2005 2006 2005
Net income $1,540,371 $1,750,939 $3,312,918 $3,565,599
Loss on sale of asset,
net of tax 458,405 - 458,405 -
Add Limited Partners'
interests in income 454,117 779,669 989,574 1,564,759
Add depreciation and
amortization of
consolidated entities
and discontinued
operations, net of
minority interest 7,750,309 5,450,335 15,179,002 10,364,038
Add depreciation and
amortization of
unconsolidated
entities 99,651 79,465 201,670 148,631
Funds From
Operations of the
Kite Portfolio (1) 10,302,853 8,060,408 20,141,569 15,643,027
Less Limited Partners'
interests in Funds
From Operations (2,351,423) (2,474,545) (4,623,375) (4,771,123)
Funds From
Operations
allocable to the
Company (1) $7,951,430 $5,585,863 $15,518,194 $10,871,904
Basic FFO per share of
the Kite Portfolio $0.28 $0.29 $0.54 $0.57
Diluted FFO per share
of the Kite Portfolio $0.28 $0.29 $0.54 $0.57
Basic weighted average
common shares
outstanding 28,690,680 19,148,267 28,631,389 19,148,267
Diluted weighted
average common shares
outstanding 28,802,913 19,262,581 28,753,591 19,262,822
Basic weighted average
common shares and
units outstanding 37,205,848 27,644,198 37,198,019 27,538,947
Diluted weighted
average common shares
and units outstanding 37,318,081 27,758,512 37,320,221 27,653,503
(1) "Funds From Operations of the Kite Portfolio" measures 100% of the
operating performance of the Operating Partnership's real estate
properties and construction and service subsidiaries in which the
Company owns an interest. "Funds From Operations allocable to the
Company" reflects a reduction for the Limited Partners' diluted
weighted average interest in the Operating Partnership.
