(Mark One)
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 31, 2012
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OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Commission File Number: 001-32268
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Kite Realty Group Trust
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(Exact Name of Registrant as Specified in its Charter)
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Maryland
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11-3715772
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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30 S. Meridian Street, Suite 1100
Indianapolis, Indiana
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46204
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(Address of principal executive offices)
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(Zip code)
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Telephone: (317) 577-5600
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(Registrant’s telephone number, including area code)
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Not Applicable
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(Former name, former address and former fiscal year, if changed since last report)
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Yes x
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No o
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Yes x
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No o
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Large accelerated filer
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o
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Accelerated filer
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x
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Non-accelerated filer
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o
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Smaller reporting company
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o
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||||||
(Do not check if a smaller reporting company)
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Yes o
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No x
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Page
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Part I.
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Item 1.
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|||
3
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|||
4
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Consolidated Statement of Shareholders’ Equity for the Three Months Ended March 31, 2012
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5
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6
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7
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Item 2.
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16
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17
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Item 3.
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29
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Item 4.
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29
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Part II.
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Item 1.
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29
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Item 1A.
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29
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Item 2.
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29
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Item 3.
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29
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Item 4.
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30
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Item 5.
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30
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Item 6.
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30
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31
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March 31,
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December 31,
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|||||||
2012
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2011
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|||||||
Assets:
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||||||||
Investment properties, at cost:
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||||||||
Land
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$ | 235,498,319 | $ | 238,129,092 | ||||
Land held for development
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36,977,501 | 36,977,501 | ||||||
Buildings and improvements
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845,504,016 | 845,173,680 | ||||||
Furniture, equipment and other
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4,694,678 | 5,474,403 | ||||||
Construction in progress
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137,905,366 | 147,973,380 | ||||||
1,260,579,880 | 1,273,728,056 | |||||||
Less: accumulated depreciation
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(184,132,595 | ) | (178,006,632 | ) | ||||
Net real estate investments
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1,076,447,285 | 1,095,721,424 | ||||||
Cash and cash equivalents
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15,567,494 | 10,042,450 | ||||||
Tenant receivables, including accrued straight-line rent of $11,407,396 and $11,398,347, respectively, net of allowance for uncollectible accounts
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19,405,296 | 20,413,671 | ||||||
Other receivables
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3,017,991 | 2,978,225 | ||||||
Investments in unconsolidated entities, at equity
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21,899,913 | 21,646,443 | ||||||
Escrow and other deposits
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8,662,836 | 9,424,986 | ||||||
Deferred costs, net
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30,567,339 | 31,079,129 | ||||||
Prepaid and other assets
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2,144,204 | 1,959,790 | ||||||
Total Assets
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$ | 1,177,712,358 | $ | 1,193,266,118 | ||||
Liabilities and Equity:
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||||||||
Mortgage and other indebtedness
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$ | 646,405,137 | $ | 689,122,933 | ||||
Accounts payable and accrued expenses, including below-market in-place lease liability of $8,183,021 and $8,637,607, respectively
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35,712,817 | 36,048,324 | ||||||
Deferred revenue and other liabilities
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12,025,878 | 12,636,228 | ||||||
Total Liabilities
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694,143,832 | 737,807,485 | ||||||
Commitments and contingencies
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||||||||
Redeemable noncontrolling interests in Operating Partnership
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41,066,685 | 41,836,613 | ||||||
Equity:
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||||||||
Kite Realty Group Trust Shareholders' Equity:
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||||||||
Preferred Shares, $.01 par value, 40,000,000 shares authorized, 4,100,000
and 2,800,000 shares issued and outstanding at March 31, 2012 and
December 31, 2011, respectively
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102,500,000 | 70,000,000 | ||||||
Common Shares, $.01 par value, 200,000,000 shares authorized,
63,946,703 shares and 63,617,019 shares issued and outstanding at
March 31, 2012 and December 31, 2011, respectively
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639,467 | 636,170 | ||||||
Additional paid in capital and other
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449,392,925 | 449,763,528 | ||||||
Accumulated other comprehensive loss
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(1,439,098 | ) | (1,524,095 | ) | ||||
Accumulated deficit
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(113,374,751 | ) | (109,504,068 | ) | ||||
Total Kite Realty Group Trust Shareholders' Equity
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437,718,543 | 409,371,535 | ||||||
Noncontrolling Interests
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4,783,298 | 4,250,485 | ||||||
Total Equity
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442,501,841 | 413,622,020 | ||||||
Total Liabilities and Equity
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$ | 1,177,712,358 | $ | 1,193,266,118 | ||||
Three Months Ended March 31, | ||||||||
2012 |
2011
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|||||||
Revenue:
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||||||||
Minimum rent
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$ | 19,692,138 | $ | 17,802,124 | ||||
Tenant reimbursements
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5,437,829 | 5,090,031 | ||||||
Other property related revenue
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1,224,624 | 888,532 | ||||||
Construction and service fee revenue
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43,403 | 10,038 | ||||||
Total revenue
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26,397,994 | 23,790,725 | ||||||
Expenses:
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||||||||
Property operating
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4,667,283 | 4,806,268 | ||||||
Real estate taxes
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3,788,470 | 3,265,453 | ||||||
Cost of construction and services
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92,348 | 49,913 | ||||||
General, administrative, and other
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1,823,720 | 1,847,878 | ||||||
Litigation charge
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1,289,446 | — | ||||||
Depreciation and amortization
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9,728,392 | 9,000,842 | ||||||
Total expenses
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21,389,659 | 18,970,354 | ||||||
Operating income
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5,008,335 | 4,820,371 | ||||||
Interest expense
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(6,604,828 | ) | (5,641,162 | ) | ||||
Income tax (expense) benefit of taxable REIT subsidiary
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(37,564 | ) | 16,073 | |||||
Loss from unconsolidated entities
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(11,529 | ) | (87,625 | ) | ||||
Other income
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38,128 | 49,038 | ||||||
Loss from continuing operations
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(1,607,458 | ) | (843,305 | ) | ||||
Discontinued operations:
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||||||||
Discontinued operations
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99,228 | 65,994 | ||||||
Gain on sale of operating property
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5,151,989 | — | ||||||
Income from discontinued operations
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5,251,217 | 65,994 | ||||||
Consolidated net income (loss)
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3,643,759 | (777,311 | ) | |||||
Net (income) loss attributable to noncontrolling interests
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(2,097,020 | ) | 70,494 | |||||
Net income (loss) attributable to Kite Realty Group Trust
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$ | 1,546,739 | $ | (706,817 | ) | |||
Dividends on preferred shares
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(1,577,813 | ) | (1,443,750 | ) | ||||
Net loss attributable to common shareholders
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$ | (31,074 | ) | $ | (2,150,567 | ) | ||
Net loss per common share - basic & diluted:
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||||||||
Loss from continuing operations attributable to Kite Realty Group Trust common shareholders
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$ | (0.04 | ) | $ | (0.03 | ) | ||
Income from discontinued operations attributable to Kite Realty Group Trust common shareholders
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0.04 | 0.00 | ||||||
Net loss attributable to Kite Realty Group Trust common shareholders
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$ | (0.00 | ) | $ | (0.03 | ) | ||
Weighted average common shares outstanding - basic and diluted
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63,713,893 | 63,448,048 | ||||||
Dividends declared per common share
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$ | 0.06 | $ | 0.06 | ||||
Net loss attributable to Kite Realty Group Trust common shareholders:
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||||||||
Loss from continuing operations
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$ | (2,852,020 | ) | $ | (2,209,321 | ) | ||
Income from discontinued operations
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2,820,946 | 58,754 | ||||||
Net loss attributable to Kite Realty Group Trust common shareholders
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$ | (31,074 | ) | $ | (2,150,567 | ) | ||
Consolidated net income (loss)
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$ | 3,643,759 | $ | (777,311 | ) | |||
Change in fair value of derivatives
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96,547 | 1,339,980 | ||||||
Total comprehensive income
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3,740,306 | 562,669 | ||||||
Comprehensive income attributable to noncontrolling interests
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(2,108,570 | ) | (78,137 | ) | ||||
Comprehensive income attributable to Kite Realty Group Trust
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$ | 1,631,736 | $ | 484,532 | ||||
Accumulated | ||||||||||||||||||||||||||||||||
Other
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||||||||||||||||||||||||||||||||
Preferred Shares
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Common Shares
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Additional
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Comprehensive
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Accumulated
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||||||||||||||||||||||||||||
Shares
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Amount
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Shares
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Amount
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Paid-in Capital
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Loss
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Deficit
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Total
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|||||||||||||||||||||||||
Balances, December 31, 2011
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2,800,000 | $ | 70,000,000 | 63,617,019 | $ | 636,170 | $ | 449,763,528 | $ | (1,524,095 | ) | $ | (109,504,068 | ) | $ | 409,371,535 | ||||||||||||||||
Proceeds of preferred share offering, net
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1,300,000 | 32,500,000 | — | — | (1,153,070 | ) | — | — | 31,346,930 | |||||||||||||||||||||||
Issuance of common shares, net
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— | — | 98,200 | 982 | 410,425 | 411,407 | ||||||||||||||||||||||||||
Common shares issued under employee share purchase plan
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— | — | 1,475 | 15 | 6,859 | — | — | 6,874 | ||||||||||||||||||||||||
Stock compensation activity
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— | — | 223,009 | 2,230 | 68,648 | — | — | 70,878 | ||||||||||||||||||||||||
Other comprehensive income
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— | — | — | — | — | 84,997 | — | 84,997 | ||||||||||||||||||||||||
Distributions declared to common
shareholders
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— | — | — | — | — | — | (3,839,609 | ) | (3,839,609 | ) | ||||||||||||||||||||||
Distributions to preferred
shareholders
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— | — | — | — | — | — | (1,577,813 | ) | (1,577,813 | ) | ||||||||||||||||||||||
Net income attributable to Kite
Realty Group Trust
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— | — | — | — | — | — | 1,546,739 | 1,546,739 | ||||||||||||||||||||||||
Exchange of redeemable
noncontrolling interests for
common shares
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— | — | 7,000 | 70 | 90,930 | — | — | 91,000 | ||||||||||||||||||||||||
Adjustment to redeemable
noncontrolling interests -
Operating Partnership
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— | — | — | — | 205,605 | — | — | 205,605 | ||||||||||||||||||||||||
Balances, March 31, 2012
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4,100,000 | $ | 102,500,000 | 63,946,703 | $ | 639,467 | $ | 449,392,925 | $ | (1,439,098 | ) | $ | (113,374,751 | ) | $ | 437,718,543 | ||||||||||||||||
Three Months Ended March 31, | ||||||||
2012 | 2011 | |||||||
Cash flows from operating activities:
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||||||||
Consolidated net income (loss)
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$ | 3,643,759 | $ | (777,311 | ) | |||
Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities:
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||||||||
Equity in loss of unconsolidated entities
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11,529 | 87,625 | ||||||
Straight-line rent
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(722,641 | ) | (433,284 | ) | ||||
Depreciation and amortization
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10,275,022 | 9,465,260 | ||||||
Gain on sale of land
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(123,899 | ) | — | |||||
Gain on sale of operating property
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(5,151,989 | ) | — | |||||
Litigation charge
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1,289,446 | — | ||||||
Provision for credit losses
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230,406 | 172,764 | ||||||
Compensation expense for equity awards
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123,127 | 82,332 | ||||||
Amortization of debt fair value adjustment
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(37,215 | ) | (107,714 | ) | ||||
Amortization of in-place lease liabilities
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(435,144 | ) | (632,535 | ) | ||||
Changes in assets and liabilities:
|
||||||||
Tenant receivables
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549,811 | 580,227 | ||||||
Deferred costs and other assets
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(2,118,129 | ) | (3,051,745 | ) | ||||
Accounts payable, accrued expenses, deferred revenue and other liabilities
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(2,187,813 | ) | 640,446 | |||||
Net cash provided by operating activities
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5,346,270 | 6,026,065 | ||||||
Cash flows from investing activities:
|
||||||||
Acquisitions of interests in properties
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— | (3,357,501 | ) | |||||
Capital expenditures, net
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(13,567,461 | ) | (12,757,502 | ) | ||||
Net proceeds from land and operating property sales
|
31,638,372 | — | ||||||
Change in construction payables
|
324,200 | 443,620 | ||||||
Note receivable from joint venture partner
|
— | 125,780 | ||||||
Contributions to unconsolidated entities
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— | (5,762,321 | ) | |||||
Net cash provided by (used in) investing activities
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18,395,111 | (21,307,924 | ) | |||||
Cash flows from financing activities:
|
||||||||
Common share issuance proceeds, net of issuance costs
|
418,281 | (230,711 | ) | |||||
Preferred share issuance proceeds, net of issuance costs
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31,436,305 | — | ||||||
Acquisition of noncontrolling interest in The Centre
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— | (1,690,470 | ) | |||||
Loan proceeds
|
34,118,765 | 44,537,065 | ||||||
Loan transaction costs
|
(79,754 | ) | (525,860 | ) | ||||
Loan payments
|
(76,799,346 | ) | (28,055,160 | ) | ||||
Distributions paid – common shareholders
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(3,817,338 | ) | (3,800,638 | ) | ||||
Distributions paid - preferred shareholders
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(1,443,750 | ) | (1,363,542 | ) | ||||
Distributions paid – redeemable noncontrolling interests
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(470,550 | ) | (471,510 | ) | ||||
Distributions to noncontrolling interests in properties
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(1,578,950 | ) | (375,046 | ) | ||||
Net cash (used in) provided by financing activities
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(18,216,337 | ) | 8,024,128 | |||||
Net change in cash and cash equivalents
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5,525,044 | (7,257,731 | ) | |||||
Cash and cash equivalents, beginning of period
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10,042,450 | 15,394,528 | ||||||
Cash and cash equivalents, end of period
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$ | 15,567,494 | $ | 8,136,797 | ||||
Non-cash investing and financing activities
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||||||||
Settlement of loan in acquisition of noncontrolling interest in The Centre
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— | 578,200 |
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·
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the Company’s ability to refinance debt and sell the property without the consent of any other partner or owner;
|
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·
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the inability of any other partner or owner to replace the Company as manager of the property; or
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·
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being the primary beneficiary of a VIE. The primary beneficiary is defined as the entity that has (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.
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2012
|
2011
|
|||||||
Noncontrolling interests balance January 1
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$ | 4,250,485 | $ | 6,914,264 | ||||
Net income allocable to noncontrolling interests,
excluding redeemable noncontrolling interests
|
2,111,763 | 16,586 | ||||||
Acquisition of noncontrolling interest in The Centre
|
— | (2,244,333 | ) | |||||
Distributions to noncontrolling interests
|
(1,578,950 | ) | (375,045 | ) | ||||
Noncontrolling interests balance at March 31
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$ | 4,783,298 | $ | 4,311,472 | ||||
2012
|
2011
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|||||||
Redeemable noncontrolling interests balance January 1
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$ | 41,836,613 | $ | 44,115,028 | ||||
Net loss allocable to redeemable noncontrolling interests
|
(14,743 | ) | (87,080 | ) | ||||
Accrued distributions to redeemable noncontrolling interests
|
(470,130 | ) | (471,270 | ) | ||||
Other comprehensive income allocable to redeemable
noncontrolling interests 1
|
11,550 | 148,631 | ||||||
Exchange of redeemable noncontrolling interest for
common stock
|
(91,000 | ) | (52,000 | ) | ||||
Adjustment to redeemable noncontrolling interests -
operating partnership
|
(205,605 | ) | (70,555 | ) | ||||
Redeemable noncontrolling interests balance at March 31
|
$ | 41,066,685 | $ | 43,582,754 | ||||
____________________
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1
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Represents the noncontrolling interests’ share of the changes in the fair value of derivative instruments accounted for as cash flow hedges (see Note 7).
|
2012
|
2011
|
|||||||
Accumulated comprehensive loss balance at January 1
|
$ | (187,885 | ) | $ | (359,798 | ) | ||
Other comprehensive income allocable to redeemable
noncontrolling interests 1
|
11,550 | 148,631 | ||||||
Accumulated comprehensive loss balance at March 31
|
$ | (176,335 | ) | $ | (211,167 | ) | ||
____________________
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1
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Represents the noncontrolling interests’ share of the changes in the fair value of derivative instruments accounted for as cash flow hedges (see Note 7).
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Three Months Ended March 31, | ||||||||
2012
|
2011
|
|||||||
Company’s weighted average basic interest in
Operating Partnership
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89.0 | % | 89.0 | % | ||||
Redeemable noncontrolling weighted average basic
interests in Operating Partnership
|
11.0 | % | 11.0 | % | ||||
Balance at
|
||||||||
March 31, 2012
|
December 31, 2011
|
|||||||
Unsecured revolving credit facility
|
$ | 129,686,200 | $ | 134,686,200 | ||||
Notes payable secured by properties under construction -
variable rate
|
91,438,172 | 82,454,406 | ||||||
Mortgage notes payable - fixed rate
|
349,567,844 | 375,615,005 | ||||||
Mortgage notes payable - variable rate
|
75,634,083 | 96,251,268 | ||||||
Net premiums on acquired debt
|
78,838 | 116,054 | ||||||
Total mortgage and other indebtedness
|
$ | 646,405,137 | $ | 689,122,933 | ||||
Amount
|
Weighted Average Maturity (Years)
|
Weighted Average Interest Rate
|
Percentage of Total
|
|||||||||||||
Fixed rate debt
|
$ | 349,567,844 | 5.5 | 5.76 | % | 54 | % | |||||||||
Floating rate debt (hedged)
|
29,543,234 | 4.8 | 5.45 | % | 5 | % | ||||||||||
Total fixed rate debt, considering hedges
|
379,111,078 | 5.4 | 5.73 | % | 59 | % | ||||||||||
Notes payable secured by properties under construction - variable rate
|
91,438,172 | 2.0 | 3.56 | % | 14 | % | ||||||||||
Other variable rate debt
|
205,320,283 | 2.4 | 3.33 | % | 32 | % | ||||||||||
Floating rate debt (hedged)
|
(29,543,234 | ) | -4.8 | -3.39 | % | -5 | % | |||||||||
Total variable rate debt, considering hedges
|
267,215,221 | 2.0 | 3.40 | % | 41 | % | ||||||||||
Net premiums on acquired debt
|
78,838 | N/A | N/A | N/A | ||||||||||||
Total debt
|
$ | 646,405,137 | 4.0 | 4.76 | % | 100 | % | |||||||||
·
|
A draw of $25.0 million was made on the unsecured revolving credit facility that was primarily utilized to retire the $24.7 million fixed rate loan that was secured by Cedar Hill Plaza;
|
·
|
A repayment of $30.0 million was made on the unsecured revolving credit facility utilizing the majority of the proceeds from the March 2012 perpetual preferred offering;
|
·
|
The Company made draws on construction loans related to the Cobblestone Plaza, Delray Marketplace, Rivers Edge, South Elgin Commons, and Zionsville Walgreens developments totaling $9.1 million;
|
·
|
The Company retired the $20.4 million variable rate loan secured by Gateway Shopping Center utilizing a portion of the sales proceeds from the sale of the operating property;
|
·
|
The Company made scheduled principal payments on all indebtedness totaling $1.8 million.
|
Three months ended March 31, | ||||||||
2012
|
2011
|
|||||||
Net loss attributable to Kite Realty Group Trust common shareholders
|
$ | (31,074 | ) | $ | (706,817 | ) | ||
Other comprehensive income allocable to
Kite Realty Group Trust1
|
84,997 | 1,191,349 | ||||||
Comprehensive income attributable to Kite Realty Group Trust common shareholders
|
$ | 53,923 | $ | 484,532 | ||||
____________________
|
|
1
|
Reflects the Company’s share of the net change in the fair value of derivative instruments accounted for as cash flow hedges.
|
Three Months Ended March 31,
|
|||||||||||
2012
|
2011
|
||||||||||
Rental income
|
$
|
337,531
|
$
|
654,297
|
|||||||
Expenses:
|
|||||||||||
Property operations
|
55,049
|
104,318
|
|||||||||
Real estate taxes
|
10,437
|
47,491
|
|||||||||
Depreciation and amortization
|
113,115
|
176,031
|
|||||||||
Total expenses
|
178,601
|
327,840
|
|||||||||
Operating income
|
158,930
|
326,457
|
|||||||||
Interest expense
|
(59,702
|
)
|
(260,463
|
)
|
|||||||
Income from discontinued operations
|
99,228
|
65,994
|
|||||||||
Gain on sale of operating property
|
5,151,989
|
—
|
|||||||||
Total income from discontinued operations
|
$
|
5,251,217
|
$
|
65,994
|
|||||||
Income from discontinued operations attributable to Kite Realty Group Trust common shareholders
|
$
|
3,166,224
|
$
|
58,754
|
||||||
Income from discontinued operations attributable to noncontrolling interests
|
2,084,993
|
7,240
|
||||||||
Total income from discontinued operations
|
$
|
5,251,217
|
$
|
65,994
|
·
|
national and local economic, business, real estate and other market conditions, particularly in light of the recent slowing of growth in the U.S. economy;
|
·
|
financing risks, including the availability of and costs associated with sources of liquidity;
|
·
|
the Company’s ability to refinance, or extend the maturity dates of, its indebtedness;
|
·
|
the level and volatility of interest rates;
|
·
|
the financial stability of tenants, including their ability to pay rent and the risk of tenant bankruptcies;
|
·
|
the competitive environment in which the Company operates;
|
·
|
acquisition, disposition, development and joint venture risks;
|
·
|
property ownership and management risks;
|
·
|
the Company’s ability to maintain its status as a real estate investment trust (“REIT”) for federal income tax purposes;
|
·
|
potential environmental and other liabilities;
|
·
|
impairment in the value of real estate property the Company owns;
|
·
|
risks related to the geographical concentration of our properties in Indiana, Florida and Texas;
|
·
|
other factors affecting the real estate industry generally; and
|
·
|
other uncertainties and factors identified in this Quarterly Report on Form 10-Q and, from time to time, in other reports we file with the Securities and Exchange Commission (the “SEC”) or in other documents that we publicly disseminate, including, in particular, the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011.
|
Property Name
|
MSA
|
Economic Occupancy Date1
|
Owned GLA
|
||||
South Elgin Commons, Phase II2
|
Chicago, IL
|
September 2011
|
83,000
|
||||
Cobblestone Plaza2
|
Ft. Lauderdale, FL
|
March 2009
|
133,214
|
1
|
Represents the date on which we started receiving rental payments under tenant leases or ground leases at the property or the tenant took possession of the property, whichever was earlier.
|
2
|
Construction of each of these properties was completed in phases. The Economic Occupancy Date indicated for each of these properties refers to its initial phase.
|
Property Name
|
MSA
|
Transition Date1
|
Owned GLA
|
|||
Courthouse Shadows
|
Naples, Florida
|
September 2008
|
134,867
|
|||
Four Corner Square
|
Maple Valley, Washington
|
September 2008
|
29,167
|
|||
Bolton Plaza
|
Jacksonville, Florida
|
June 2008
|
172,938
|
|||
Rivers Edge2
|
Indianapolis, Indiana
|
June 2008
|
149,209
|
|||
Oleander Place
|
Wilmington, North Carolina
|
March 2011
|
43,806
|
|||
The Centre
|
Carmel, Indiana
|
March 2011
|
77,455
|
____________________
|
|
1
|
Transition date represents the date the property was transferred from our operating portfolio to our redevelopment projects.
|
2
|
This property was transitioned to the operating portfolio in the fourth quarter of 2011.
|
Three Months Ended December 31,
|
||||||||||||
2012
|
2011
|
% Change
|
||||||||||
Number of comparable properties at period end
|
52 | 52 | ||||||||||
Leased percentage at period end
|
93.1 | % | 92.5 | % | ||||||||
Net operating income – same properties (52 properties)2
|
$ | 14,003,779 | $ | 13,289,573 | 5.4 | % | ||||||
Reconciliation to Most Directly Comparable GAAP Measure:
|
||||||||||||
Net operating income – same properties
|
$ | 14,003,779 | $ | 13,289,573 | ||||||||
Other income (expense), net
|
(12,457,040 | ) | (13,996,390 | ) | ||||||||
Less: dividends on preferred shares
|
(1,577,813 | ) | (1,443,750 | ) | ||||||||
Net loss attributable to common shareholders
|
$ | (31,074 | ) | $ | (2,150,567 | ) |
1
|
Same Property analysis excludes Courthouse Shadows, Four Corner Square, The Centre and Bolton Plaza as the Company pursues redevelopment of these properties
|
2
|
Same Property net operating income is considered a non-GAAP measure because it excludes net gains from outlot sales, write offs of straight-line rent and lease intangibles, bad debt expense and related recoveries, the litigation charge, lease termination fees and significant prior year expense recoveries and adjustments, if any.
|
2012
|
2011
|
Net change 2011 to 2012
|
||||||||||
Revenue:
|
||||||||||||
Rental income (including tenant reimbursements)
|
$ | 25,129,967 | $ | 22,892,155 | $ | 2,237,812 | ||||||
Other property related revenue
|
1,224,624 | 888,532 | 336,092 | |||||||||
Construction and service fee revenue
|
43,403 | 10,038 | 33,365 | |||||||||
Total revenue
|
26,397,994 | 23,790,725 | 2,607,269 | |||||||||
Expenses:
|
||||||||||||
Property operating
|
4,667,283 | 4,806,268 | (138,985 | ) | ||||||||
Real estate taxes
|
3,788,470 | 3,265,453 | 523,017 | |||||||||
Cost of construction and services
|
92,348 | 49,913 | 42,435 | |||||||||
General, administrative, and other
|
1,823,720 | 1,847,878 | (24,158 | ) | ||||||||
Litigation settlement
|
1,289,446 | — | 1,289,446 | |||||||||
Depreciation and amortization
|
9,728,392 | 9,000,842 | 727,550 | |||||||||
Total Expenses
|
21,389,659 | 18,970,354 | 2,419,305 | |||||||||
Operating income
|
5,008,335 | 4,820,371 | 187,964 | |||||||||
Interest expense
|
(6,604,828 | ) | (5,641,162 | ) | (963,666 | ) | ||||||
Income tax (expense) benefit of taxable REIT subsidiary
|
(37,564 | ) | 16,073 | (53,637 | ) | |||||||
Loss from unconsolidated entities
|
(11,529 | ) | (87,625 | ) | 76,096 | |||||||
Other income
|
38,128 | 49,038 | (10,910 | ) | ||||||||
Loss from continuing operations
|
(1,607,458 | ) | (843,305 | ) | (764,153 | ) | ||||||
Discontinued operations:
|
||||||||||||
Discontinued operations
|
99,228 | 65,994 | 33,234 | |||||||||
Gain on sale of operating property
|
5,151,989 | — | 5,151,989 | |||||||||
Income from discontinued operations
|
5,251,217 | 65,994 | 5,185,223 | |||||||||
Consolidated net income (loss)
|
3,643,759 | (777,311 | ) | 4,421,070 | ||||||||
Net (income) loss attributable to noncontrolling interests
|
(2,097,020 | ) | 70,494 | (2,167,514 | ) | |||||||
Net income (loss) attributable to Kite Realty Group
Trust
|
1,546,739 | (706,817 | ) | 2,253,556 | ||||||||
Dividends on preferred shares
|
(1,577,813 | ) | (1,443,750 | ) | (134,063 | ) | ||||||
Net loss attributable to common shareholders
|
$ | (31,074 | ) | $ | (2,150,567 | ) | $ | 2,119,493 | ||||
Net change 2011 to 2012
|
||||
Development properties that became operational or were partially operational in 2011 and/or 2012
|
$ | 848,983 | ||
Properties acquired in 2011
|
315,128 | |||
Properties under redevelopment during 2011 and/or 2012
|
496,489 | |||
Properties fully operational during 2011 and 2012 and other
|
577,212 | |||
Total
|
$ | 2,237,812 | ||
Net change 2011 to 2012
|
||||
Development properties that became operational or were partially operational in 2011 and/or 2012
|
$ | 1,227 | ||
Properties acquired in 2011
|
64,588 | |||
Properties under redevelopment during 2011 and/or 2012
|
54,287 | |||
Properties fully operational during 2011 and 2012 and other
|
(259,087 | ) | ||
Total
|
$ | (138,985 | ) | |
Net change 2011 to 2012
|
||||
Development properties that became operational or were partially operational in 2011 and/or 2012
|
$ | 100,783 | ||
Properties acquired in 2011
|
49,681 | |||
Properties under redevelopment during 2011 and/or 2012
|
147,084 | |||
Properties fully operational during 2011 and 2012 and other
|
225,469 | |||
Total
|
$ | 523,017 | ||
Net change 2011 to 2012
|
||||
Development properties that became operational or were partially operational in 2011 and/or 2012
|
$ | 330,495 | ||
Properties acquired in 2011
|
(300,654 | ) | ||
Properties under redevelopment during 2011 and/or 2012
|
473,558 | |||
Properties fully operational during 2011 and 2012 and other
|
224,151 | |||
Total
|
$ | 727,550 | ||
Amounts due during the three months ended, excluding scheduled principal payments: | ||||||||||||||||||||
June 30
2012
|
September 30
2012
|
December 31
2012
|
March 31
2013
|
Total
|
||||||||||||||||
Mortgage Debt - Fixed Rate
|
$ | — | $ | — | $ | — | $ | 4,112,393 | $ | 4,112,393 | ||||||||||
Mortgage Debt - Variable Rate
|
— | — | — | — | — | |||||||||||||||
Construction Loans
|
— | — | — | — | — | |||||||||||||||
Corporate Debt
|
— | — | — | — | — | |||||||||||||||
Total
|
$ | — | $ | — | $ | — | $ | 4,112,393 | $ | 4,112,393 | ||||||||||
20122
|
$
|
14,632,308
|
|
20131, 2
|
102,308,049
|
||
20143
|
182,283,290
|
||
2015
|
44,500,125
|
||
20162
|
153,671,081
|
||
Thereafter
|
154,707,446
|
||
652,102,299
|
|||
Unamortized Premiums
|
78,838
|
||
Total
|
$
|
652,181,137
|
____________________
|
|
1
|
Includes our $5.8 million share of the Parkside Town Commons construction loan.
|
2
|
Subsequent to the end of the quarter, the Company closed on the $115 million unsecured Term Loan. A portion of the proceeds from the Term Loan was utilized to retire the $10.7 million fixed rate loan maturing in 2012 that was secured by Fox Lake Crossing. A portion of the proceeds from the Term Loan was utilized to retire a total of $56.7 million of variable rate or construction loans maturing in 2013 that were secured by Tarpon Springs Plaza, Estero Town Commons, and Cobblestone Plaza. In addition, a portion of the proceeds was utilized to retire the $24.5 million construction maturing in 2016 that was secured by Rivers Edge.
|
3
|
Subsequent to the end of the quarter, the Company amended the terms of its unsecured revolving credit facility and extended the maturity date to April 30, 2016 with a one-year option to extend under certain circumstances.
|
·
|
Net proceeds of $31.6 million related to the sale of the Gateway Shopping Center operating property and land at our Broadstone Station future development for a multifamily development;
|
·
|
Decrease in acquisition activities of $3.4 million as Oleander Place was acquired in February 2011 and there were no acquisitions in the first quarter of 2012;
|
·
|
Increase in capital expenditures, net of $0.7 million as construction was ongoing at Delray Marketplace, Oleander Place, Cobblestone Plaza, Rivers Edge, and New Hill Place; and
|
·
|
Decrease in contributions of $5.5 million to Parkside Town Commons.
|
·
|
A draw of $25.0 million was made on the unsecured revolving credit facility that was primarily utilized to retire the $24.7 million fixed rate loan that was secured by Cedar Hill Plaza;
|
·
|
In March 2012, we issued 1.3 million shares of Series A Cumulative Redeemable Perpetual Preferred Shares for net proceeds of $31.3 million. A repayment of $30.0 million was made on the unsecured revolving credit facility from the net proceeds of the offering
|
·
|
In March 2012, we issued 98,200 common shares pursuant to the Company’s equity distribution agreements, which generated net proceeds of $0.4 million.
|
·
|
Draws of $9.1 million were made on construction loans related to Cobblestone Plaza, Delray Marketplace, Rivers Edge, South Elgin Commons, Zionsville Walgreens to fund development and redevelopment activity.
|
·
|
The Company retired the $20.4 million variable rate loan secured by Gateway Shopping Center utilizing a portion of the sales proceeds from the sale of the operating property;
|
·
|
Distributions of $1.6 million to our partners in consolidated joint ventures. The majority of this relates to our partner’s share of net proceeds from the sale of Gateway Shopping Center.
|
·
|
Distributions to common shareholders and operating partnership unitholders of $4.3 million; and
|
·
|
Distributions to preferred shareholders of $1.4 million.
|
Three Months Ended March 31, | ||||||||
2012 | 2011 | |||||||
Consolidated net income (loss)
|
$ | 3,643,759 | $ | (777,311 | ) | |||
Less dividends on preferred shares
|
(1,577,813 | ) | (1,443,750 | ) | ||||
Less net income attributable to noncontrolling interests in properties
|
(26,770 | ) | (16,586 | ) | ||||
Less gain on sale of operating property
|
(5,151,989 | ) | — | |||||
Add depreciation and amortization, net of noncontrolling interests
|
9,717,308 | 9,097,586 | ||||||
Funds From Operations of the Kite Portfolio1
|
6,604,495 | 6,859,939 | ||||||
Less redeemable noncontrolling interests in Funds From Operations
|
(726,494 | ) | (754,593 | ) | ||||
Funds From Operations allocable to the Company1
|
$ | 5,878,001 | $ | 6,105,346 | ||||
Funds From Operations of the Kite Portfolio 1
|
$ | 6,604,495 | $ | 6,859,939 | ||||
Add back Litigation charge
|
1,289,446 | — | ||||||
Adjusted Funds From Operations of the Kite Portfolio 1
|
$ | 7,893,941 | $ | 6,859,939 | ||||
____________________
|
|
1
|
“Funds From Operations of the Kite Portfolio” measures 100% of the operating performance of our Operating Partnership’s real estate properties and subsidiaries in which the Company owns an interest. “Funds From Operations allocable to the Company” reflects a reduction for the redeemable noncontrolling weighted average diluted interest in the Operating Partnership.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
Exhibit No.
|
Description
|
Location
|
||
31.1
|
Certification of principal executive officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
Filed herewith
|
||
31.2
|
Certification of principal financial officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
Filed herewith
|
||
32.1
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
Filed herewith
|
||
101.INS
|
XBRL Instance Document
|
Filed herewith
|
||
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
Filed herewith
|
||
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
Filed herewith
|
||
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
Filed herewith
|
||
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
Filed herewith
|
||
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
Filed herewith
|
KITE REALTY GROUP TRUST
|
||
May 7, 2012
|
By:
|
/s/ John A. Kite
|
(Date)
|
John A. Kite
|
|
Chairman and Chief Executive Officer
|
||
(Principal Executive Officer)
|
||
May 7, 2012
|
By:
|
/s/ Daniel R. Sink
|
(Date)
|
Daniel R. Sink
|
|
Chief Financial Officer
|
||
(Principal Financial Officer and
|
||
Principal Accounting Officer)
|
Exhibit No.
|
Description
|
Location
|
||
3.1
|
Articles Supplementary establishing additional shares of Kite Realty Group Trust’s 8.250% Series A Cumulative Redeemable Perpetual Preferred Shares, liquidation preference $25.00 per share, par value $0.01 per share
|
Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on March 12, 2012
|
||
10.1
|
Amendment No. 2 to Amended and Restated Agreement of Limited Partnership of Kite Realty Group, L.P.
|
Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on March 12, 2012
|
||
31.1
|
Certification of principal executive officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
Filed herewith
|
||
31.2
|
Certification of principal financial officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
Filed herewith
|
||
32.1
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
Filed herewith
|
||
101.INS
|
XBRL Instance Document
|
Filed herewith
|
||
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
Filed herewith
|
||
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
Filed herewith
|
||
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
Filed herewith
|
||
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
Filed herewith
|
||
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
Filed herewith
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Kite Realty Group Trust;
|
|
2.
|
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Trustees (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: May 7, 2012
|
||
By:
|
/s/ John A. Kite
|
|
John A. Kite
|
||
Chairman and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Kite Realty Group Trust;
|
|
2.
|
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Trustees (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: May 7, 2012
|
||
By:
|
/s/ Daniel R. Sink
|
|
Daniel R. Sink
|
||
Chief Financial Officer
|
1.
|
The Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2012 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
|
2.
|
The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: May 7, 2012
|
By:
|
/s/ John A. Kite
|
John A. Kite
|
||
Chairman and Chief Executive Officer
|
Date: May 7, 2012
|
By:
|
/s/ Daniel R. Sink
|
Daniel R. Sink
|
||
Chief Financial Officer
|
Note 3 - Earnings Per Share
|
3 Months Ended |
---|---|
Mar. 31, 2012
|
|
Earnings Per Share [Text Block] |
Note
3. Earnings Per Share
Basic
earnings per share is calculated based on the weighted
average number of shares outstanding during the
period. Diluted earnings per share is determined
based on the weighted average number of shares outstanding
combined with the incremental average shares that would have
been outstanding assuming all potentially dilutive shares
were converted into common shares as of the earliest date
possible.
Potentially
dilutive securities include outstanding common share options,
units in the Operating Partnership, which may be exchanged
for either cash or common shares, at the Company’s
option, under certain circumstances, and deferred common
share units, which may be credited to the personal accounts
of non-employee trustees in lieu of the payment of cash
compensation or the issuance of common shares to such
trustees. Due to the Company’s net loss
attributable to common shareholders for the three month
period ended March 31, 2012 and 2011, the potentially
dilutive securities were not dilutive for those
periods.
Approximately
1.7 million outstanding common share options were excluded
from the computation of diluted earnings per share because
their impact was not dilutive for the three months ended
March 31, 2012 and 2011.
|