QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the quarterly period ended | ||||||||
OR | ||||||||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the transition period from to | ||||||||
Commission File Number: | Kite Realty Group Trust | |||||||
Commission File Number: | Kite Realty Group, L.P. | |||||||
(Exact Name of Registrant as Specified in its Charter) |
(Kite Realty Group Trust) | ||||||||||||||
(Kite Realty Group, L.P.) | ||||||||||||||
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |||||||||||||
(Address of principal executive offices) | (Zip code) | |||||||||||||
Telephone: | ||||||||||||||
(Registrant’s telephone number, including area code) | ||||||||||||||
Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
Kite Realty Group Trust | ☒ | No | o | Kite Realty Group, L.P. | ☒ | No | o |
Kite Realty Group Trust | ☒ | No | o | Kite Realty Group, L.P. | ☒ | No | o |
x | Accelerated filer | o | Non-accelerated filer | o | Smaller reporting company | |||||||||||||||||||||
Emerging growth company |
Large accelerated filer | o | Accelerated filer | o | x | Smaller reporting company | |||||||||||||||||||||
Emerging growth company |
Kite Realty Group Trust | Yes | No | x | Kite Realty Group, L.P. | Yes | No | x |
Page | ||||||||
Part I. | ||||||||
Item 1. | ||||||||
Kite Realty Group Trust: | ||||||||
Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020 | ||||||||
Consolidated Statements of Operations and Comprehensive (Loss) Income for the Three and Nine Months Ended September 30, 2021 and 2020 | ||||||||
Consolidated Statements of Shareholders' Equity for the Three and Nine Months Ended September 30, 2021 and 2020 | ||||||||
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020 | ||||||||
Kite Realty Group, L.P. and subsidiaries: | ||||||||
Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020 | ||||||||
Consolidated Statements of Operations and Comprehensive (Loss) Income for the Three and Nine Months Ended September 30, 2021 and 2020 | ||||||||
Consolidated Statements of Partners' Equity for the Three and Nine Months Ended September 30, 2021 and 2020 | ||||||||
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020 | ||||||||
Kite Realty Group Trust and Kite Realty Group, L.P. and subsidiaries: | ||||||||
Notes to Consolidated Financial Statements | ||||||||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | |||||||
Cautionary Note About Forward-Looking Statements | ||||||||
Item 3. | Quantitative and Qualitative Disclosure about Market Risk | |||||||
Item 4. | Controls and Procedures | |||||||
Part II. | OTHER INFORMATION | |||||||
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 | |||||||
SIGNATURES |
September 30, 2021 | December 31, 2020 | ||||||||||
Assets: | |||||||||||
Investment properties at cost: | $ | $ | |||||||||
Less: accumulated depreciation | ( | ( | |||||||||
Cash and cash equivalents | |||||||||||
Tenant and other receivables, including accrued straight-line rent of $ | |||||||||||
Restricted cash and escrow deposits | |||||||||||
Deferred costs, net | |||||||||||
Short-term deposits | |||||||||||
Prepaid and other assets | |||||||||||
Investments in unconsolidated subsidiaries | |||||||||||
Assets held for sale | |||||||||||
Total Assets | $ | $ | |||||||||
Liabilities and Shareholders' Equity: | |||||||||||
Mortgage and other indebtedness, net | $ | $ | |||||||||
Accounts payable and accrued expenses | |||||||||||
Deferred revenue and other liabilities | |||||||||||
Total Liabilities | |||||||||||
Commitments and contingencies | |||||||||||
Limited Partners' interests in Operating Partnership and other | |||||||||||
Equity: | |||||||||||
Kite Realty Group Trust Shareholders' Equity: | |||||||||||
Common Shares, $ | |||||||||||
Additional paid in capital | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Accumulated deficit | ( | ( | |||||||||
Total Kite Realty Group Trust Shareholders' Equity | |||||||||||
Noncontrolling Interest | |||||||||||
Total Equity | |||||||||||
Total Liabilities and Shareholders' Equity | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Rental income | $ | $ | $ | $ | |||||||||||||||||||
Other property related revenue | |||||||||||||||||||||||
Fee income | |||||||||||||||||||||||
Total revenue | |||||||||||||||||||||||
Expenses: | |||||||||||||||||||||||
Property operating | |||||||||||||||||||||||
Real estate taxes | |||||||||||||||||||||||
General, administrative, and other | |||||||||||||||||||||||
Merger and acquisition costs | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Total expenses | |||||||||||||||||||||||
Gain on sale of properties, net | |||||||||||||||||||||||
Operating income | |||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Income tax benefit of taxable REIT subsidiary | |||||||||||||||||||||||
Equity in loss of unconsolidated subsidiaries | ( | ( | ( | ( | |||||||||||||||||||
Other income, net | ( | ||||||||||||||||||||||
Net (loss) income | ( | ( | ( | ||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests | ( | ( | ( | ||||||||||||||||||||
Net (loss) income attributable to Kite Realty Group Trust common shareholders | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
Net (loss) income per common share - basic | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
Net (loss) income per common share - diluted | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
Weighted average common shares outstanding - basic | |||||||||||||||||||||||
Weighted average common shares outstanding - diluted | |||||||||||||||||||||||
Dividends per common share | $ | $ | $ | $ | |||||||||||||||||||
Consolidated net (loss) income | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
Change in fair value of derivatives | ( | ||||||||||||||||||||||
Total comprehensive (loss) income | ( | ( | ( | ||||||||||||||||||||
Comprehensive (income) loss attributable to noncontrolling interests | ( | ( | |||||||||||||||||||||
Comprehensive (loss) income attributable to Kite Realty Group Trust | $ | ( | $ | ( | $ | $ | ( |
Common Shares | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||
Balances, December 31, 2020 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Stock compensation activity | — | — | |||||||||||||||||||||||||||||||||
Other comprehensive income attributable to Kite Realty Group Trust | — | — | — | ||||||||||||||||||||||||||||||||
Distributions to common shareholders | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Net income attributable to Kite Realty Group Trust | — | — | — | — | |||||||||||||||||||||||||||||||
Purchase of capped calls | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Exchange of redeemable noncontrolling interests for common shares | — | — | |||||||||||||||||||||||||||||||||
Adjustment to redeemable noncontrolling interests | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Balances, March 31, 2021 | ( | ( | |||||||||||||||||||||||||||||||||
Stock compensation activity | — | — | |||||||||||||||||||||||||||||||||
Other comprehensive loss attributable to Kite Realty Group Trust | — | — | ( | — | ( | ||||||||||||||||||||||||||||||
Distributions to common shareholders | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Net loss attributable to Kite Realty Group Trust | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Exchange of redeemable noncontrolling interests for common shares | — | — | — | ||||||||||||||||||||||||||||||||
Adjustment to redeemable noncontrolling interests | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Balances, June 30, 2021 | ( | ( | |||||||||||||||||||||||||||||||||
Stock compensation activity | — | — | — | ||||||||||||||||||||||||||||||||
Other comprehensive income attributable to Kite Realty Group Trust | — | — | — | ||||||||||||||||||||||||||||||||
Distributions to common shareholders | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Net loss attributable to Kite Realty Group Trust | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Exchange of redeemable noncontrolling interests for common shares | — | — | |||||||||||||||||||||||||||||||||
Adjustment to redeemable noncontrolling interests | — | — | — | — | |||||||||||||||||||||||||||||||
Balances, September 30, 2021 | ( | ( |
Common Shares | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||
Balances, December 31, 2019 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Stock compensation activity | — | — | |||||||||||||||||||||||||||||||||
Other comprehensive loss attributable to Kite Realty Group Trust | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Distributions to common shareholders | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Net loss attributable to Kite Realty Group Trust | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Adjustment to redeemable noncontrolling interests | — | — | — | — | |||||||||||||||||||||||||||||||
Balances, March 31, 2020 | ( | ( | |||||||||||||||||||||||||||||||||
Stock compensation activity | — | — | |||||||||||||||||||||||||||||||||
Other comprehensive loss attributable to Kite Realty Group Trust | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Net loss attributable to Kite Realty Group Trust | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Adjustment to redeemable noncontrolling interests | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Balances, June 30, 2020 | ( | ( | |||||||||||||||||||||||||||||||||
Stock compensation activity | — | — | |||||||||||||||||||||||||||||||||
Other comprehensive income attributable to Kite Realty Group Trust | — | — | — | — | |||||||||||||||||||||||||||||||
Distributions to common shareholders | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Net loss attributable to Kite Realty Group Trust | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Adjustment to redeemable noncontrolling interests for common shares | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Balances, September 30, 2020 | ( | ( | |||||||||||||||||||||||||||||||||
Nine Months Ended September 30, | |||||||||||
2021 | 2020 | ||||||||||
Cash flow from operating activities: | |||||||||||
Consolidated net income (loss) | $ | $ | ( | ||||||||
Adjustments to reconcile consolidated net income to net cash provided by operating activities: | |||||||||||
Straight-line rent | ( | ||||||||||
Depreciation and amortization | |||||||||||
Gain on sale of operating properties | ( | ( | |||||||||
Compensation expense for equity awards | |||||||||||
Amortization of debt fair value adjustment | ( | ( | |||||||||
Amortization of in-place lease liabilities | ( | ( | |||||||||
Changes in assets and liabilities: | |||||||||||
Tenant receivables | ( | ||||||||||
Deferred costs and other assets | ( | ( | |||||||||
Accounts payable, accrued expenses, deferred revenue, and other liabilities | |||||||||||
Net cash provided by operating activities | |||||||||||
Cash flow from investing activities: | |||||||||||
Capital expenditures | ( | ( | |||||||||
Net proceeds from sales of land | |||||||||||
Net proceeds from sales of properties | |||||||||||
Investment in short-term deposits | ( | ||||||||||
Small business loan repayments (funding) | ( | ||||||||||
Change in construction payables | ( | ||||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flow from financing activities: | |||||||||||
Proceeds from issuance of common shares, net | |||||||||||
Repurchases of common shares upon the vesting of restricted shares | ( | ( | |||||||||
Purchase of capped calls | ( | ||||||||||
Debt and equity issuance costs | ( | ||||||||||
Loan proceeds | |||||||||||
Loan payments | ( | ( | |||||||||
Distributions paid – common shareholders | ( | ( | |||||||||
Distributions paid – redeemable noncontrolling interests | ( | ( | |||||||||
Net cash provided by financing activities | |||||||||||
Net change in cash, cash equivalents, and restricted cash | |||||||||||
Cash, cash equivalents, and restricted cash beginning of period | |||||||||||
Cash, cash equivalents, and restricted cash end of period | $ | $ | |||||||||
Non-cash investing and financing activities | |||||||||||
Exchange of redeemable noncontrolling interests for common shares | $ | $ | |||||||||
Net investment in sales-type lease |
September 30, 2021 | December 31, 2020 | ||||||||||
Assets: | |||||||||||
Investment properties at cost: | $ | $ | |||||||||
Less: accumulated depreciation | ( | ( | |||||||||
Cash and cash equivalents | |||||||||||
Tenant and other receivables, including accrued straight-line rent of | |||||||||||
Restricted cash and escrow deposits | |||||||||||
Deferred costs, net | |||||||||||
Short-term deposits | |||||||||||
Prepaid and other assets | |||||||||||
Investments in unconsolidated subsidiaries | |||||||||||
Assets held for sale | |||||||||||
Total Assets | $ | $ | |||||||||
Liabilities and Equity: | |||||||||||
Mortgage and other indebtedness, net | $ | $ | |||||||||
Accounts payable and accrued expenses | |||||||||||
Deferred revenue and other liabilities | |||||||||||
Total Liabilities | |||||||||||
Commitments and contingencies | |||||||||||
Limited Partners' interests in Operating Partnership and other | |||||||||||
Partners' Equity: | |||||||||||
Parent Company: | |||||||||||
Common equity, | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total Partners' Equity | |||||||||||
Noncontrolling Interests | |||||||||||
Total Equity | |||||||||||
Total Liabilities and Equity | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Rental income | $ | $ | $ | $ | |||||||||||||||||||
Other property related revenue | |||||||||||||||||||||||
Fee income | |||||||||||||||||||||||
Total revenue | |||||||||||||||||||||||
Expenses: | |||||||||||||||||||||||
Property operating | |||||||||||||||||||||||
Real estate taxes | |||||||||||||||||||||||
General, administrative, and other | |||||||||||||||||||||||
Merger and acquisition costs | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Total expenses | |||||||||||||||||||||||
Gain on sale of operating properties, net | |||||||||||||||||||||||
Operating income | |||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Income tax benefit of taxable REIT subsidiary | |||||||||||||||||||||||
Equity in loss of unconsolidated subsidiaries | ( | ( | ( | ( | |||||||||||||||||||
Other expense, net | ( | ||||||||||||||||||||||
Net (loss) income | ( | ( | ( | ||||||||||||||||||||
Net income attributable to noncontrolling interests | ( | ( | ( | ( | |||||||||||||||||||
Net (loss) income attributable to common unitholders | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
Allocation of net (loss) income: | |||||||||||||||||||||||
Limited Partners | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Parent Company | ( | ( | ( | ||||||||||||||||||||
$ | ( | $ | ( | $ | $ | ( | |||||||||||||||||
Net (loss) income per common unit - basic & diluted | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
Weighted average common units outstanding - basic | |||||||||||||||||||||||
Weighted average common units outstanding - diluted | |||||||||||||||||||||||
Distributions per common unit | $ | $ | $ | $ | |||||||||||||||||||
Consolidated net (loss) income | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
Change in fair value of derivatives | ( | ||||||||||||||||||||||
Total comprehensive (loss) income | ( | ( | ( | ||||||||||||||||||||
Comprehensive income attributable to noncontrolling interests | ( | ( | ( | ( | |||||||||||||||||||
Comprehensive (loss) income attributable to common unitholders | $ | ( | $ | ( | $ | $ | ( |
General Partner | Total | ||||||||||||||||
Common Equity | Accumulated Other Comprehensive Loss | ||||||||||||||||
Balances, December 31, 2020 | $ | $ | ( | $ | |||||||||||||
Stock compensation activity | — | ||||||||||||||||
Other comprehensive income attributable to Parent Company | — | ||||||||||||||||
Distributions to Parent Company | ( | — | ( | ||||||||||||||
Net income | — | ||||||||||||||||
Purchase of capped calls | ( | — | ( | ||||||||||||||
Conversion of Limited Partner Units to shares of the Parent Company | — | ||||||||||||||||
Adjustment to redeemable noncontrolling interests | ( | — | ( | ||||||||||||||
Balances March 31, 2021 | ( | ||||||||||||||||
Stock compensation activity | — | ||||||||||||||||
Other comprehensive loss attributable to Parent Company | — | ( | ( | ||||||||||||||
Distributions to Parent Company | ( | — | ( | ||||||||||||||
Net loss | ( | — | ( | ||||||||||||||
Conversion of Limited Partner Units to shares of the Parent Company | — | ||||||||||||||||
Adjustment to redeemable noncontrolling interests | ( | — | ( | ||||||||||||||
Balances, June 30, 2021 | ( | ||||||||||||||||
Stock compensation activity | 0 | ||||||||||||||||
Other comprehensive income attributable to Parent Company | — | ||||||||||||||||
Distributions to Parent Company | ( | — | ( | ||||||||||||||
Net loss | ( | — | ( | ||||||||||||||
Conversion of Limited Partner Units to shares of the Parent Company | — | ||||||||||||||||
Adjustment to redeemable noncontrolling interests | — | ||||||||||||||||
Balances, September 30, 2021 | ( |
General Partner | Total | ||||||||||||||||
Common Equity | Accumulated Other Comprehensive Loss | ||||||||||||||||
Balances, December 31, 2019 | $ | $ | ( | $ | |||||||||||||
Stock compensation activity | — | ||||||||||||||||
Other comprehensive loss attributable to Parent Company | — | ( | ( | ||||||||||||||
Distributions to Parent Company | ( | — | ( | ||||||||||||||
Net loss | ( | — | ( | ||||||||||||||
Adjustment to redeemable noncontrolling interests | — | ||||||||||||||||
Balances, March 31, 2020 | ( | ||||||||||||||||
Stock compensation activity | — | ||||||||||||||||
Other comprehensive loss attributable to Parent Company | — | ( | ( | ||||||||||||||
Net loss | ( | — | ( | ||||||||||||||
Adjustment to redeemable noncontrolling interests | ( | — | ( | ||||||||||||||
Balances, June 30, 2020 | ( | ||||||||||||||||
Stock compensation activity | — | ||||||||||||||||
Other comprehensive income attributable to Parent Company | — | ||||||||||||||||
Distributions to Parent Company | ( | — | ( | ||||||||||||||
Net income | ( | — | ( | ||||||||||||||
Adjustment to redeemable noncontrolling interests | ( | — | ( | ||||||||||||||
Balances, September 30, 2020 | ( | ||||||||||||||||
Nine Months Ended September 30, | |||||||||||
2021 | 2020 | ||||||||||
Cash flow from operating activities: | |||||||||||
Consolidated net income (loss) | $ | $ | ( | ||||||||
Adjustments to reconcile consolidated net income to net cash provided by operating activities: | |||||||||||
Straight-line rent | ( | ||||||||||
Depreciation and amortization | |||||||||||
Gain on sales of operating properties | ( | ( | |||||||||
Compensation expense for equity awards | |||||||||||
Amortization of debt fair value adjustment | ( | ( | |||||||||
Amortization of in-place lease liabilities | ( | ( | |||||||||
Changes in assets and liabilities: | |||||||||||
Tenant receivables | ( | ||||||||||
Deferred costs and other assets | ( | ( | |||||||||
Accounts payable, accrued expenses, deferred revenue, and other liabilities | |||||||||||
Net cash provided by operating activities | |||||||||||
Cash flow from investing activities: | |||||||||||
Capital expenditures | ( | ( | |||||||||
Net proceeds from sales of land | |||||||||||
Net proceeds from sales of properties | |||||||||||
Investment in short-term deposits | ( | ||||||||||
Small business loan repayments (funding) | ( | ||||||||||
Change in construction payables | ( | ||||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flow from financing activities: | |||||||||||
Contributions from the General Partner | |||||||||||
Repurchases of common shares upon the vesting of restricted shares | ( | ( | |||||||||
Purchase of capped calls | ( | ||||||||||
Debt and equity issuance costs | ( | ||||||||||
Loan proceeds | |||||||||||
Loan payments | ( | ( | |||||||||
Distributions paid – common unitholders | ( | ( | |||||||||
Distributions paid – redeemable noncontrolling interests | ( | ( | |||||||||
Net cash provided by financing activities | |||||||||||
Net change in cash, cash equivalents, and restricted cash | |||||||||||
Cash, cash equivalents, and restricted cash beginning of period | |||||||||||
Cash, cash equivalents, and restricted cash end of period | $ | $ | |||||||||
Non-cash investing and financing activities | |||||||||||
Conversion of Limited Partner Units to shares of the Parent Company | $ | $ | |||||||||
Net investment in sales-type lease |
Balance at | ||||||||||||||
September 30, 2021 | December 31, 2020 | |||||||||||||
Investment properties, at cost: | ||||||||||||||
Land, buildings and improvements | $ | $ | ||||||||||||
Furniture, equipment and other | ||||||||||||||
Construction in progress | ||||||||||||||
$ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Fixed Contractual Lease Payments - Operating Leases | $ | $ | $ | $ | |||||||||||||||||||
Variable Lease Payments - Operating Leases | |||||||||||||||||||||||
Bad Debt Recovery (Reserve) | ( | ( | |||||||||||||||||||||
Straight-Line Rent Adjustment | |||||||||||||||||||||||
Straight-Line Rent Recovery (Reserve) for Uncollectability | ( | ( | |||||||||||||||||||||
Amortization of In-Place Lease Liabilities, net | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
2021 | 2020 | ||||||||||
Noncontrolling interests balance January 1 | $ | $ | |||||||||
Net income allocable to noncontrolling interests, excluding redeemable noncontrolling interests | |||||||||||
Noncontrolling interests balance at September 30 | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Parent Company’s weighted average interest in Operating Partnership | % | % | % | % | |||||||||||||||||||
Limited partners' weighted average interests in Operating Partnership | % | % | % | % |
2021 | 2020 | ||||||||||
Redeemable noncontrolling interests balance January 1 | $ | $ | |||||||||
Net income allocable to redeemable noncontrolling interests | |||||||||||
Distributions declared to redeemable noncontrolling interests | ( | ( | |||||||||
Other, net including adjustments to redemption value | ( | ||||||||||
Total limited partners' interests in Operating Partnership and other redeemable noncontrolling interests balance at September 30 | $ | $ | |||||||||
Limited partners' interests in Operating Partnership | $ | $ | |||||||||
Other redeemable noncontrolling interests in certain subsidiaries | |||||||||||
Total limited partners' interests in Operating Partnership and other redeemable noncontrolling interests balance at September 30 | $ | $ |
As of September 30, 2021 | |||||||||||||||||||||||
Principal | Unamortized Net Premiums | Unamortized Debt Issuance Costs | Total | ||||||||||||||||||||
Senior unsecured notes—fixed rate | $ | $ | $ | ( | $ | ||||||||||||||||||
Exchangeable senior notes - fixed rate | ( | ||||||||||||||||||||||
Unsecured revolving credit facility | ( | ( | |||||||||||||||||||||
Unsecured term loan | ( | ||||||||||||||||||||||
Mortgage notes payable—fixed rate | ( | ||||||||||||||||||||||
Mortgage note payable—variable rate | ( | ||||||||||||||||||||||
Total mortgage and other indebtedness | $ | $ | $ | ( | $ |
As of December 31, 2020 | |||||||||||||||||||||||
Principal | Unamortized Net Premiums | Unamortized Debt Issuance Costs | Total | ||||||||||||||||||||
Senior unsecured notes - fixed rate | $ | $ | $ | ( | $ | ||||||||||||||||||
Unsecured revolving credit facility | ( | ||||||||||||||||||||||
Unsecured term loans | ( | ||||||||||||||||||||||
Mortgage notes payable - fixed rate | ( | ||||||||||||||||||||||
Mortgage notes payable - variable rate | ( | ||||||||||||||||||||||
Total mortgage and other indebtedness | $ | $ | $ | ( | $ |
Outstanding Amount | Ratio | Weighted Average Interest Rate | Weighted Average Maturity (in years) | ||||||||||||||||||||
Fixed Rate Debt 1 | $ | % | % | ||||||||||||||||||||
Variable Rate Debt 2 | % | % | |||||||||||||||||||||
Net Debt Premiums and Issuance Costs, Net | ( | N/A | N/A | N/A | |||||||||||||||||||
Total | $ | % | % |
____________________ | ||||||||||||||||||||
1 | Fixed rate debt includes, and variable rate debt excludes, the portion of such debt that has been hedged by interest rate derivatives. As of September 30, 2021, $ | |||||||||||||||||||
2 | Variable rate debt includes, and fixed rate debt excludes, the portion of such debt that has been hedged to a floating rate. As of September 30, 2021, $ |
Nine Months Ended September 30, | ||||||||||||||
2021 | 2020 | |||||||||||||
Amortization of debt issuance costs | $ | $ |
September 30, 2021 | December 31, 2020 | ||||||||||
Acquired lease intangible assets | $ | $ | |||||||||
Deferred leasing costs and other | |||||||||||
Less—accumulated amortization | ( | ( | |||||||||
Subtotal | |||||||||||
Less - assets held for sale | ( | ||||||||||
Total | $ | $ |
Nine Months Ended September 30, | |||||||||||
2021 | 2020 | ||||||||||
Amortization of deferred leasing costs, lease intangibles and other | $ | $ | |||||||||
Amortization of above market lease intangibles |
September 30, 2021 | December 31, 2020 | ||||||||||
Unamortized in-place lease liabilities | $ | $ | |||||||||
Retainages payable and other | |||||||||||
Tenant rents received in advance | |||||||||||
Lease liabilities | |||||||||||
$ | $ |
Property Name | MSA | Transition to Redevelopment1 | Transition to Operations | Owned GLA | ||||||||||||||||||||||
Hamilton Crossing Centre2 | Indianapolis, IN | June 2014 | Pending | 92,283 | ||||||||||||||||||||||
The Corner2 | Indianapolis, IN | December 2015 | Pending | 26,500 | ||||||||||||||||||||||
Glendale Town Center 2 | Indianapolis, IN | March 2019 | Pending | 393,002 | ||||||||||||||||||||||
Courthouse Shadows 3 | Naples, FL | June 2013 | Sold | 124,802 |
____________________ | |||||
1 | Transition date represents the date the property was transferred from our operating portfolio into redevelopment status. | ||||
2 | This property has been identified as a redevelopment property and is not included in the operating portfolio or the same property pool. | ||||
3 | This property was sold in July 2020. |
Property Name | MSA | Start Date | Anticipated Completion Date | Owned GLA | ||||||||||||||||||||||
Glendale Town Center Apartments | Indianapolis, IN | Q2 2020 | Q2 2022 | 207,000 | ||||||||||||||||||||||
Eddy Street Commons - Phase II | South Bend, IN | Q3 2017 | Q4 2020 | 8,500 | ||||||||||||||||||||||
Eddy Street Commons - Phase III | South Bend, IN | Q3 2020 | Q1 2022 | 18,600 | ||||||||||||||||||||||
The Landing at Tradition - Phase II | Port St. Lucie, FL | Q2 2022 | Q2 2023 | 39,900 |
Property Name | MSA | Acquisition Quarter | Owned GLA | |||||||||||||||||
Eastgate Crossing | Raleigh, NC | Q4 2020 | 158,724 |
Three Months Ended September 30, | |||||||||||||||||
($ in thousands) | 2021 | 2020 | Net change 2020 to 2021 | ||||||||||||||
Revenue: | |||||||||||||||||
Rental income | $ | 70,216 | $ | 64,293 | $ | 5,923 | |||||||||||
Other property related revenue | 1,054 | 670 | 384 | ||||||||||||||
Fee income | 195 | 104 | 91 | ||||||||||||||
Total revenue | 71,465 | 65,067 | 6,398 | ||||||||||||||
Expenses: | |||||||||||||||||
Property operating | 10,482 | 10,330 | 152 | ||||||||||||||
Real estate taxes | 8,624 | 9,362 | (738) | ||||||||||||||
General, administrative, and other | 8,241 | 6,482 | 1,759 | ||||||||||||||
Merger and acquisition costs | 9,198 | — | 9,198 | ||||||||||||||
Depreciation and amortization | 30,193 | 33,953 | (3,760) | ||||||||||||||
Total expenses | 66,738 | 60,127 | 6,611 | ||||||||||||||
Gains on sale of operating properties, net | 1,260 | 3,226 | (1,966) | ||||||||||||||
Operating income | 5,987 | 8,166 | (2,179) | ||||||||||||||
Interest expense | (12,878) | (12,550) | (328) | ||||||||||||||
Income tax benefit of taxable REIT subsidiary | 91 | 190 | (99) | ||||||||||||||
Equity in loss of unconsolidated subsidiaries | (196) | (417) | 221 | ||||||||||||||
Other expense, net | 168 | (16) | 184 | ||||||||||||||
Net loss | (6,828) | (4,627) | (2,201) | ||||||||||||||
Net income attributable to noncontrolling interests | (132) | 40 | (172) | ||||||||||||||
Net loss attributable to Kite Realty Group Trust | $ | (6,960) | $ | (4,587) | $ | (2,373) | |||||||||||
Property operating expense to total revenue ratio | 14.7 | % | 15.9 | % |
Net change 2020 to 2021 | |||||
Properties or components of properties sold during 2020 or 2021 | $ | (573) | |||
Properties under redevelopment or acquired during 2020 and/or 2021 | 1,317 | ||||
Properties fully operational during 2020 and 2021 and other | 5,179 | ||||
Total | $ | 5,923 |
Net change 2020 to 2021 | |||||
Properties under redevelopment or acquired during 2020 and/or 2021 | 106 | ||||
Properties fully operational during 2020 and 2021 and other | 46 | ||||
Total | $ | 152 |
Net change 2020 to 2021 | |||||
Properties under redevelopment or acquired during 2020 and/or 2021 | 50 | ||||
Properties fully operational during 2020 and 2021 and other | (788) | ||||
Total | $ | (738) |
Net change 2020 to 2021 | |||||
Properties under redevelopment or acquired during 2020 and/or 2021 | 770 | ||||
Properties fully operational during 2020 and 2021 and other | (4,530) | ||||
Total | $ | (3,760) |
Nine Months Ended September 30, | |||||||||||||||||
($ in thousands) | 2021 | 2020 | Net change 2020 to 2021 | ||||||||||||||
Revenue: | |||||||||||||||||
Rental income | $ | 206,097 | $ | 191,359 | $ | 14,738 | |||||||||||
Other property related revenue | 3,133 | 6,626 | (3,493) | ||||||||||||||
Fee income | 1,144 | 299 | 845 | ||||||||||||||
Total revenue | 210,374 | 198,284 | 12,090 | ||||||||||||||
Expenses: | |||||||||||||||||
Property operating | 30,978 | 30,450 | 528 | ||||||||||||||
Real estate taxes | 26,574 | 26,551 | 23 | ||||||||||||||
General, administrative, and other | 23,676 | 19,986 | 3,690 | ||||||||||||||
Merger and acquisition costs | 9,958 | — | 9,958 | ||||||||||||||
Depreciation and amortization | 90,625 | 96,830 | (6,205) | ||||||||||||||
Total expenses | 181,811 | 173,817 | 7,994 | ||||||||||||||
Gains on sale of operating properties, net | 27,517 | 4,893 | 22,624 | ||||||||||||||
Operating income | 56,080 | 29,360 | 26,720 | ||||||||||||||
Interest expense | (37,386) | (38,115) | 729 | ||||||||||||||
Income tax benefit of taxable REIT subsidiary | 308 | 496 | (188) | ||||||||||||||
Equity in loss of unconsolidated subsidiaries | (758) | (1,256) | 498 | ||||||||||||||
Other expense, net | 189 | 234 | (45) | ||||||||||||||
Net income (loss) | 18,433 | (9,281) | 27,714 | ||||||||||||||
Net income attributable to noncontrolling interests | (1,058) | (148) | (910) | ||||||||||||||
Net income (loss) attributable to Kite Realty Group Trust | $ | 17,375 | $ | (9,429) | $ | 26,804 | |||||||||||
Property operating expense to total revenue ratio | 14.7 | % | 15.4 | % |
Net change 2020 to 2021 | |||||
Properties or components of properties sold during 2020 or 2021 | $ | (1,338) | |||
Properties under redevelopment or acquired during 2020 and/or 2021 | 3,438 | ||||
Properties fully operational during 2020 and 2021 and other | 12,638 | ||||
Total | $ | 14,738 |
Net change 2020 to 2021 | |||||
Properties under redevelopment or acquired during 2020 and/or 2021 | 501 | ||||
Properties fully operational during 2020 and 2021 and other | 27 | ||||
Total | $ | 528 |
Net change 2020 to 2021 | |||||
Properties under redevelopment or acquired during 2020 and/or 2021 | 359 | ||||
Properties fully operational during 2020 and 2021 and other | (336) | ||||
Total | $ | 23 |
Net change 2020 to 2021 | |||||
Properties under redevelopment or acquired during 2020 and/or 2021 | 2,127 | ||||
Properties fully operational during 2020 and 2021 and other | (8,332) | ||||
Total | $ | (6,205) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
($ in thousands) | 2021 | 2020 | % Change | 2021 | 2020 | % Change | |||||||||||||||||||||||||||||
Number of properties for the period1 | 83 | 83 | |||||||||||||||||||||||||||||||||
Leased percentage at period end | 92.8 | % | 93.3 | % | 92.8 | % | 93.3 | % | |||||||||||||||||||||||||||
Economic Occupancy percentage2 | 89.3 | % | 92.0 | % | 89.1 | % | 92.5 | % | |||||||||||||||||||||||||||
Same Property NOI | $ | 49,426 | $ | 44,596 | 10.8% | $ | 143,606 | $ | 135,812 | 5.7% | |||||||||||||||||||||||||
Reconciliation of Same Property NOI to Most Directly Comparable GAAP Measure: | |||||||||||||||||||||||||||||||||||
Net operating income - same properties | $ | 49,426 | $ | 44,596 | $ | 143,606 | $ | 135,812 | |||||||||||||||||||||||||||
Net operating income - non-same activity3 | 2,738 | 675 | 8,072 | 5,172 | |||||||||||||||||||||||||||||||
Other income (expense), net | 258 | (139) | 883 | (227) | |||||||||||||||||||||||||||||||
General, administrative and other | (8,241) | (6,482) | (23,676) | (19,986) | |||||||||||||||||||||||||||||||
Merger and acquisition costs | (9,198) | — | (9,958) | — | |||||||||||||||||||||||||||||||
Depreciation and amortization expense | (30,193) | (33,953) | (90,625) | (96,830) | |||||||||||||||||||||||||||||||
Interest expense | (12,878) | (12,550) | (37,386) | (38,115) | |||||||||||||||||||||||||||||||
Gain on sales of properties | 1,260 | 3,226 | 27,517 | 4,893 | |||||||||||||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests | (132) | 40 | (1,058) | (148) | |||||||||||||||||||||||||||||||
Net (loss) income attributable to common shareholders | $ | (6,960) | $ | (4,587) | $ | 17,375 | $ | (9,429) | |||||||||||||||||||||||||||
____________________ | |||||||||||||||||||||||||||||||||||||||||
1 | Same Property NOI excludes (i) The Corner, Glendale Town Center, and Hamilton Crossing redevelopments, (ii) Eddy Street Commons - Phases II and III, and The Landing at Tradition - Phase II developments, (iii) the recently acquired Eastgate Crossing, and (iv) office properties. | ||||||||||||||||||||||||||||||||||||||||
2 | Excludes leases that are signed but for which tenants have not yet commenced the payment of cash rent. Calculated as a weighted average based on the timing of cash rent commencement and expiration during the period. | ||||||||||||||||||||||||||||||||||||||||
3 | Includes non-cash activity across the portfolio as well as net operating income from properties not included in the same property pool including properties sold during both periods. |
Nine Months Ended | ||||||||
($ in thousands) | September 30, 2021 | |||||||
Active developments and redevelopment | $ | 13,440 | ||||||
Redevelopment opportunities | 10 | |||||||
Recently completed projects and other | 12,439 | |||||||
Anchor retenanting | 5,933 | |||||||
Recurring operating capital expenditures (primarily tenant improvement payments) | 5,113 | |||||||
Total | $ | 36,935 |
($ in thousands) | Scheduled Principal Payments | Term Maturity | Total | ||||||||||||||
2021 | $ | 583 | $ | — | $ | 583 | |||||||||||
2022 | 1,043 | 153,500 | 154,543 | ||||||||||||||
2023 | 806 | 256,517 | 257,323 | ||||||||||||||
2024 | 854 | — | 854 | ||||||||||||||
2025 | 904 | 330,000 | 330,904 | ||||||||||||||
Thereafter | 4,673 | 550,100 | 554,773 | ||||||||||||||
$ | 8,863 | $ | 1,290,117 | $ | 1,298,980 | ||||||||||||
Unamortized net debt premiums and issuance costs, net | (9,986) | ||||||||||||||||
Total | $ | 1,288,994 |
($ in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Consolidated net (loss) income | $ | (6,828) | $ | (4,627) | $ | 18,433 | $ | (9,281) | ||||||||||||||||||
Less: net income attributable to noncontrolling interests in properties | (132) | (132) | (396) | (396) | ||||||||||||||||||||||
Less: Gain on sales of properties | (1,260) | (3,226) | (27,517) | (4,893) | ||||||||||||||||||||||
Add: depreciation and amortization of consolidated and unconsolidated entities, net of noncontrolling interests | 30,537 | 34,295 | 91,650 | 97,827 | ||||||||||||||||||||||
FFO of the Operating Partnership1 | 22,317 | 26,310 | 82,170 | 83,257 | ||||||||||||||||||||||
Less: Limited Partners' interests in FFO | (543) | (657) | (2,301) | (2,165) | ||||||||||||||||||||||
FFO attributable to Kite Realty Group Trust common shareholders1 | $ | 21,774 | $ | 25,653 | $ | 79,869 | $ | 81,092 | ||||||||||||||||||
FFO of the Operating Partnership1 | $ | 22,317 | $ | 26,310 | $ | 82,170 | $ | 83,257 | ||||||||||||||||||
Add: merger and acquisition costs | 9,198 | — | 9,958 | — | ||||||||||||||||||||||
Less: 2020 Collection Impact | (2,063) | — | (3,329) | — | ||||||||||||||||||||||
FFO, as adjusted, of the Operating Partnership | $ | 29,452 | $ | 26,310 | $ | 88,799 | $ | 83,257 | ||||||||||||||||||
____________________ | |||||
1 | “FFO of the Operating Partnership" measures 100% of the operating performance of the Operating Partnership’s real estate properties. “FFO attributable to Kite Realty Group Trust common shareholders” reflects a reduction for the redeemable noncontrolling weighted average diluted interest in the Operating Partnership. |
($ in thousands) | Three Months Ended September 30, 2021 | ||||
Consolidated net loss | $ | (6,828) | |||
Adjustments to net income: | |||||
Depreciation and amortization | 30,193 | ||||
Interest expense | 12,878 | ||||
Income tax benefit of taxable REIT subsidiary | (91) | ||||
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) | 36,152 | ||||
Adjustments to EBITDA: | |||||
Unconsolidated EBITDA | 403 | ||||
Merger and acquisition costs | 9,198 | ||||
Gain on sales of operating properties | (1,260) | ||||
Other income and expense, net | 28 | ||||
Noncontrolling interest | (132) | ||||
Adjusted EBITDA | 44,389 | ||||
Annualized Adjusted EBITDA1 | $ | 177,556 | |||
Company Share of Net Debt: | |||||
Mortgage and other indebtedness | 1,288,994 | ||||
Plus: Company share of unconsolidated joint venture debt | 23,810 | ||||
Plus: Debt premium and debt issuance costs | 9,986 | ||||
Less: Partner share of consolidated joint venture debt 2 | (584) | ||||
Less: Cash, cash equivalents, restricted cash, and short-term deposits | (230,921) | ||||
Company Share of Net Debt | 1,091,285 | ||||
Net Debt to Adjusted EBITDA | 6.1x | ||||
____________________ | |||||
1 | Represents Adjusted EBITDA for the three months ended September 30, 2021 (as shown in the table above) multiplied by four. | ||||
2 | Partner share of consolidated joint venture debt is calculated based upon the partner's pro-rata ownership of the joint venture, multiplied by the related secured debt balance. | ||||
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 | ||||||||||||
2.1 | Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on July 19, 2021 | |||||||||||||
3.1 | Incorporated by reference to Exhibit 3.1 to the Annual Report on Form 10-K of Kite Realty Group Trust filed with the SEC on February 27, 2015 | |||||||||||||
3.2 | 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 May 28, 2015 | |||||||||||||
3.3 | 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 May 20, 2020 | |||||||||||||
3.4 | 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 August 23, 2021 | |||||||||||||
3.5 | 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 October 22, 2021 | |||||||||||||
3.6 | Incorporated by reference to Exhibit 3.2 to the Annual Report on Form 10-K of Kite Realty Group Trust filed with the SEC on February 27, 2015 | |||||||||||||
3.7 | Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on May 28, 2015 |
3.8 | Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on May 20, 2020 | |||||||||||||
3.9 | 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 July 19, 2021 | |||||||||||||
4.1 | Incorporated by reference to Exhibit 4.1 to Kite Realty Group Trust's registration statement on Form S-11 (File No. 333-114224) declared effective by the SEC on August 10, 2004 | |||||||||||||
4.2 | Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on September 27, 2016 | |||||||||||||
4.3 | Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on September 27, 2016 | |||||||||||||
4.4 | Incorporated by reference to Exhibits 4.2 and 4.3 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on September 27, 2016 | |||||||||||||
4.5 | Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on March 22, 2021 | |||||||||||||
4.6 | Incorporated by reference to Exhibit 4.1 and 4.2 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on March 22, 2021 | |||||||||||||
4.7 | Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on October 22, 2021 | |||||||||||||
10.1 | 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 October 22, 2021 | |||||||||||||
10.2 | Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on October 22, 2021 | |||||||||||||
10.3 | Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on October 22, 2021 | |||||||||||||
10.4 | Incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on October 22, 2021 | |||||||||||||
10.5 | Incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on October 22, 2021 | |||||||||||||
10.6 | Incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on October 22, 2021 | |||||||||||||
10.7 | Incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on October 22, 2021 | |||||||||||||
10.8 | Incorporated by reference to Exhibit 10.8 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on October 22, 2021 |
10.9 | Incorporated by reference to Exhibit 10.9 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on October 22, 2021 | |||||||||||||
10.10 | Incorporated by reference to Exhibit 10.10 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on October 22, 2021 | |||||||||||||
10.11 | Incorporated by reference to Exhibit 10.11 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on October 22, 2021 | |||||||||||||
10.12 | Incorporated by reference to Exhibit 10.12 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on October 22, 2021 | |||||||||||||
10.13 | Incorporated by reference to Exhibit 10.13 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on October 22, 2021 | |||||||||||||
10.14 | Incorporated by reference to Exhibit 10.14 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on October 22, 2021 | |||||||||||||
10.15 | Incorporated by reference to Exhibit 10.15 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on October 22, 2021 | |||||||||||||
10.16 | Incorporated by reference to Exhibit 10.16 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on October 22, 2021 | |||||||||||||
10.17 | Incorporated by reference to Exhibit 10.17 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on October 22, 2021 | |||||||||||||
10.18 | Incorporated by reference to Exhibit 10.18 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on October 22, 2021 | |||||||||||||
10.19 | Incorporated by reference to Exhibit 10.18 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on October 22, 2021 | |||||||||||||
31.1 | Filed herewith | |||||||||||||
31.2 | Filed herewith | |||||||||||||
31.3 | Filed herewith | |||||||||||||
31.4 | Filed herewith | |||||||||||||
32.1 | Filed herewith | |||||||||||||
32.2 | Filed herewith | |||||||||||||
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | Filed herewith | ||||||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | Filed herewith | ||||||||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Filed herewith | ||||||||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith | ||||||||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | Filed herewith |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Filed herewith | ||||||||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | Filed herewith |
KITE REALTY GROUP TRUST | ||||||||
November 5, 2021 | By: | /s/ John A. Kite | ||||||
(Date) | John A. Kite | |||||||
Chairman and Chief Executive Officer | ||||||||
(Principal Executive Officer) | ||||||||
November 5, 2021 | By: | /s/ Heath R. Fear | ||||||
(Date) | Heath R. Fear | |||||||
Executive Vice President and Chief Financial Officer | ||||||||
(Principal Financial Officer) | ||||||||
KITE REALTY GROUP, L.P. | ||||||||
By: Kite Realty Group Trust, its sole general partner | ||||||||
November 5, 2021 | By: | /s/ John A. Kite | ||||||
(Date) | John A. Kite | |||||||
Chairman and Chief Executive Officer | ||||||||
(Principal Executive Officer) | ||||||||
November 5, 2021 | By: | /s/ Heath R. Fear | ||||||
(Date) | Heath R. Fear | |||||||
Executive Vice President and Chief Financial Officer | ||||||||
(Principal Financial Officer) |
Date: November 5, 2021 | ||||||||
By: | /s/ John A. Kite | |||||||
John A. Kite | ||||||||
Chairman and Chief Executive Officer |
Date: November 5, 2021 | ||||||||
By: | /s/ Heath R. Fear | |||||||
Heath R. Fear | ||||||||
Chief Financial Officer |
Date: November 5, 2021 | ||||||||
By: | /s/ John A. Kite | |||||||
John A. Kite | ||||||||
Chief Executive Officer Kite Realty Group Trust, sole general partner of Kite Realty Group, L.P. |
Date: November 5, 2021 | ||||||||
By: | /s/ Heath R. Fear | |||||||
Heath R. Fear | ||||||||
Chief Financial Officer Kite Realty Group Trust, sole general partner of Kite Realty Group, L.P. |
Date: November 5, 2021 | By: | /s/ John A. Kite | ||||||
John A. Kite | ||||||||
Chairman and Chief Executive Officer |
Date: November 5, 2021 | By: | /s/ Heath R. Fear | ||||||
Heath R. Fear | ||||||||
Chief Financial Officer |
Date: November 5, 2021 | By: | /s/ John A. Kite | ||||||
John A. Kite | ||||||||
Chief Executive Officer Kite Realty Grou pTrust, sole general partner of Kite Realty Group, L.P. |
Date: November 5, 2021 | By: | /s/ Heath R. Fear | ||||||
Heath R. Fear | ||||||||
Chief Financial Officer Kite Realty Group Trust, sole general partner of Kite Realty Group, L.P. |
Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Accrued straight-line rent | $ 25,143 | $ 24,783 |
Common shares, par value (in USD per share) | $ 0.01 | $ 0.01 |
Common shares, shares authorized (in shares) | 225,000,000 | 225,000,000 |
Common shares, shares issued (in shares) | 84,575,441 | 84,187,999 |
Common shares, shares outstanding (in shares) | 84,575,441 | 84,187,999 |
KRG, LP | ||
Accrued straight-line rent | $ 25,143 | $ 24,783 |
Common shares, shares issued (in shares) | 84,575,441 | 84,187,999 |
Common shares, shares outstanding (in shares) | 84,575,441 | 84,187,999 |
Organization |
9 Months Ended |
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Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Kite Realty Group Trust (the "Parent Company"), through its majority-owned subsidiary, Kite Realty Group, L.P. (the “Operating Partnership”), owns interests in various operating subsidiaries and joint ventures engaged in the ownership and operation, acquisition, development and redevelopment of high-quality neighborhood and community shopping centers in certain select markets in the United States. The terms "Company," "we," "us," and "our" refer to the Parent Company and the Operating Partnership, collectively, and those entities owned or controlled by the Parent Company and/or the Operating Partnership. At September 30, 2021, we owned interests in 87 operating properties totaling approximately 16.8 million square feet. We also owned six development and redevelopment projects as of this date. The Operating Partnership was formed on August 16, 2004, when the Parent Company contributed properties and the net proceeds from an initial public offering of shares of its common stock to the Operating Partnership. The Parent Company was organized in Maryland in 2004 to succeed in the development, acquisition, construction and real estate businesses of its predecessor. We believe the Company qualifies as a real estate investment trust (a “REIT”) under provisions of the Internal Revenue Code of 1986, as amended. The Parent Company is the sole general partner of the Operating Partnership, and as of September 30, 2021 owned approximately 97.2% of the common partnership interests in the Operating Partnership (“General Partner Units”). The remaining 2.8% of the common partnership interests (“Limited Partner Units” and, together with the General Partner Units, the “Common Units”) were owned by the limited partners. As the sole general partner of the Operating Partnership, the Parent Company has full, exclusive and complete responsibility and discretion in the day-to-day management and control of the Operating Partnership. The Parent Company and the Operating Partnership are operated as one enterprise. The management of the Parent Company consists of the same members as the management of the Operating Partnership. As the sole general partner with control of the Operating Partnership, the Parent Company consolidates the Operating Partnership for financial reporting purposes, and the Parent Company does not have any significant assets other than its investment in the Operating Partnership. On October 22, 2021, we completed a merger with Retail Properties of America, Inc. (“RPAI”), in which RPAI merged with and into a wholly-owned subsidiary of ours in a stock-for-stock exchange with a transaction value of approximately $4.7 billion, including the assumption of approximately $1.9 billion of debt. See Note 11 for additional details. The retail portfolio we acquired through the merger with RPAI was comprised of 102 operating properties along with multiple parcels of entitled land for future value creation.
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Basis of Presentation, Consolidation, Investments in Joint Ventures, and Noncontrolling Interests |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation, Consolidation, Investments in Joint Ventures, and Noncontrolling Interests | Basis of Presentation, Consolidation, Investments in Joint Ventures, and Noncontrolling Interests We have prepared the accompanying unaudited financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) may have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the presentation not misleading. The unaudited financial statements as of September 30, 2021 and for the three and nine months ended September 30, 2021 and 2020 include all adjustments, consisting of normal recurring adjustments, necessary in the opinion of management to present fairly the financial information set forth therein. The consolidated financial statements in this Form 10-Q should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the combined Annual Report on Form 10-K of the Parent Company and the Operating Partnership for the year ended December 31, 2020. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reported period. Actual results could differ from these estimates. The results of operations for the interim periods are not necessarily indicative of the results that may be expected on an annual basis. Components of Investment Properties The composition of the Company’s investment properties as of September 30, 2021 and December 31, 2020 was as follows:
Components of Rental Income including Allowance for Uncollectible Accounts The Company recognized the following lease rental income for the three and nine months ended September 30, 2021 and 2020:
The Company must make estimates as to the collectability of its accounts receivable. In making these estimates, the Company reviews a variety of qualitative and quantitative data to make a subjective determination. An allowance for uncollectible accounts, including future credit losses of the accrued straight-line rent receivables, is maintained for estimated losses resulting from the inability of certain tenants to meet contractual obligations under their lease agreements. Short-Term Deposits The Company has a short-term deposit held in a custody account at Bank of New York Mellon. The primary objective of management's short-term deposit activity is to preserve capital for the purpose of funding debt maturities in 2022. The deposit balance approximates fair value and earns interest at a rate of the Federal Funds Rate plus 43 basis points with a maturity date of April 7, 2022. Interest income on the deposit is recorded within other income, net on the statement of operations. The deposit is backed by a pool of marketable securities and a guarantee of principal by Goldman Sachs Group, Inc. Consolidation and Investments in Joint Ventures The accompanying financial statements are presented on a consolidated basis and include all accounts of the Parent Company, the Operating Partnership, the taxable REIT subsidiary of the Operating Partnership, subsidiaries of the Operating Partnership that are controlled and any variable interest entities (“VIEs”) in which the Operating Partnership is the primary beneficiary. In general, a VIE is a corporation, partnership, trust or any other legal structure used for business purposes that either (a) has equity investors that do not provide sufficient financial resources for the entity to support its activities, (b) does not have equity investors with voting rights or (c) has equity investors whose votes are disproportionate from their economics and substantially all of the activities are conducted on behalf of the investor with disproportionately fewer voting rights. The Operating Partnership accounts for properties that are owned by joint ventures in accordance with the consolidation guidance. The Operating Partnership evaluates each joint venture and determines first whether to follow the VIE or the voting interest entity ("VOE") model. Once the appropriate consolidation model is identified, the Operating Partnership then evaluates whether it should consolidate the joint venture. Under the VIE model, the Operating Partnership consolidates an entity when it 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. Under the VOE model, the Operating Partnership consolidates an entity when (i) it controls the entity through ownership of a majority voting interest if the entity is not a limited partnership or (ii) it controls the entity through its ability to remove the other partners or owners in the entity, at its discretion, when the entity is a limited partnership. In determining whether to consolidate a VIE with the Operating Partnership, we consider all relationships between the Operating Partnership and the applicable VIE, including development agreements, management agreements and other contractual arrangements, in determining whether we have the power to direct the activities of the VIE that most significantly affect the VIE's performance. As of September 30, 2021, we owned investments in two consolidated joint ventures that were VIEs in which the partners did not have substantive participating rights and we were the primary beneficiary. As of this date, these consolidated VIEs had total debt of $29.2 million, which were secured by assets of the VIEs totaling $117.1 million. The Operating Partnership guarantees the debts of these VIEs. The Operating Partnership is considered a VIE as the limited partners do not hold kick-out rights or substantive participating rights. The Parent Company consolidates the Operating Partnership as it is the primary beneficiary in accordance with the VIE model. Income Taxes and REIT Compliance Parent Company The Parent Company, which is considered a corporation for U.S. federal income tax purposes, has been organized and operated and intends to continue to operate in a manner that will enable it to maintain its qualification as a REIT for U.S. federal income tax purposes. As a result, it generally will not be subject to U.S. federal income tax on the earnings that it distributes to the extent it distributes its “REIT taxable income” (determined before the deduction for dividends paid and excluding net capital gains) to shareholders of the Parent Company and meets certain other requirements on a recurring basis. To the extent that it satisfies this distribution requirement, but distributes less than 100% of its taxable income, it will be subject to U.S. federal corporate income tax on its undistributed REIT taxable income. REITs are subject to a number of organizational and operational requirements. If the Parent Company fails to qualify as a REIT in any taxable year, it will be subject to U.S. federal income tax on its taxable income at regular corporate rates for a period of four years following the year in which qualification is lost. We may also be subject to certain U.S. federal, state and local taxes on our income and property and to U.S. federal income and excise taxes on our undistributed taxable income even if the Parent Company does qualify as a REIT. The Operating Partnership intends to continue to make distributions to the Parent Company in amounts sufficient to assist the Parent Company in adhering to REIT requirements and maintaining its REIT status. We have elected to treat Kite Realty Holdings, LLC as a taxable REIT subsidiary of the Operating Partnership, and we may elect to treat other subsidiaries as taxable REIT subsidiaries in the future. This election enables us to receive income and provide services that would otherwise be impermissible for a REIT. Deferred tax assets and liabilities are established for temporary differences between the financial reporting bases and the tax bases of assets and liabilities at the tax rates expected to be in effect when the temporary differences reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. Operating Partnership The allocated share of income and loss, other than the operations of our taxable REIT subsidiary, is included in the income tax returns of the Operating Partnership's partners. Accordingly, the only federal income taxes included in the accompanying consolidated financial statements are in connection with the Operating Partnership's taxable REIT subsidiary. Noncontrolling Interests We report the non-redeemable noncontrolling interests in subsidiaries as equity, and the amount of consolidated net income attributable to these noncontrolling interests is set forth separately in the consolidated financial statements. The non-redeemable noncontrolling interests in consolidated properties for the nine months ended September 30, 2021 and 2020 were as follows:
Redeemable Noncontrolling Interests - Limited Partners Limited Partner Units are redeemable noncontrolling interests in the Operating Partnership. We classify redeemable noncontrolling interests in the Operating Partnership in the accompanying consolidated balance sheets outside of permanent equity because we may be required to pay cash to holders of Limited Partner Units upon redemption of their interests in the Operating Partnership or deliver registered shares upon their conversion. The carrying amount of the redeemable noncontrolling interests in the Operating Partnership is reflected at the greater of historical book value or redemption value with a corresponding adjustment to additional paid-in capital. At September 30, 2021 and December 31, 2020, the redemption value of the redeemable noncontrolling interests exceeded the historical book value, and the balances were accordingly adjusted to redemption value. We allocate net operating results of the Operating Partnership after noncontrolling interests in the consolidated properties based on the partners’ respective weighted average ownership interest. We adjust the redeemable noncontrolling interests in the Operating Partnership at the end of each reporting period to reflect their interests in the Operating Partnership or redemption value. This adjustment is reflected in our shareholders’ and Parent Company's equity. For the three and nine months ended September 30, 2021 and 2020, the weighted average interests of the Parent Company and the limited partners in the Operating Partnership were as follows:
At September 30, 2021, the Parent Company's interest and the limited partners' redeemable noncontrolling ownership interests in the Operating Partnership were 97.2% and 2.8%. At December 31, 2020, the Parent Company's interest and the limited partners' redeemable noncontrolling ownership interests in the Operating Partnership were 97.1% and 2.9%. Concurrent with the Parent Company’s initial public offering and related formation transactions, certain individuals received Limited Partner Units of the Operating Partnership in exchange for their interests in certain properties. The limited partners have the right to redeem Limited Partner Units for cash or, at the Parent Company's election, common shares of the Parent Company in an amount equal to the market value of an equivalent number of common shares of the Parent Company at the time of redemption. Such common shares must be registered, which is not fully in the Parent Company’s control. Therefore, the limited partners’ interest is not reflected in permanent equity. The Parent Company also has the right to redeem the Limited Partner Units directly from the limited partner in exchange for either cash in the amount specified above or a number of its common shares equal to the number of Limited Partner Units being redeemed. There were 2,429,315 and 2,532,861 Limited Partner Units outstanding as of September 30, 2021 and December 31, 2020, respectively. The decrease in Limited Partner Units outstanding from December 31, 2020 is due to conversions offset by non-cash compensation awards made to our executive officers in the form of Limited Partner Units. Redeemable Noncontrolling Interests - Subsidiaries Prior to the merger with Inland Diversified Real Estate Trust, Inc. ("Inland Diversified") in 2014, Inland Diversified formed joint ventures with the previous owners of certain properties and issued Class B units in three joint ventures that indirectly own those properties. The Class B units related to one of these three joint ventures remain outstanding and are accounted for as noncontrolling interests in the remaining venture. The remaining Class B units will become redeemable at the respective partner's election in October 2022 and the fulfillment of certain redemption criteria. Beginning in November 2022, the Class B units can be redeemed at the election of either our partner or us for cash or Limited Partner Units in the Operating Partnership. The Class B units do not have a maturity date, and none are mandatorily redeemable unless either party has elected for the units to be redeemed. We consolidate this joint venture because we control the decision making and our joint venture partner has limited protective rights. We classify the redeemable noncontrolling interests in a certain subsidiary in the accompanying consolidated balance sheets outside of permanent equity because, under certain circumstances, we may be required to pay cash to Class B unitholders in this subsidiary upon redemption of their interests. The carrying amount of these redeemable noncontrolling interests is required to be reflected at the greater of initial book value or redemption value with a corresponding adjustment to additional paid-in capital. As of September 30, 2021 and December 31, 2020, the redemption amounts of these interests did not exceed their fair value, nor did they exceed the initial book value. The redeemable noncontrolling interests in the Operating Partnership and subsidiaries for the nine months ended September 30, 2021 and 2020 were as follows:
Fair Value Measurements We follow the framework established under accounting standard FASB ASC 820 for measuring fair value of non-financial assets and liabilities that are not required or permitted to be measured at fair value on a recurring basis but only in certain circumstances, such as a business combination or upon determination of an impairment. Assets and liabilities recorded at fair value on the consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows: •Level 1 fair value inputs are quoted prices in active markets for identical instruments to which we have access. •Level 2 fair value inputs are inputs other than quoted prices included in Level 1 that are observable for similar instruments, either directly or indirectly, and appropriately consider counterparty creditworthiness in the valuations. •Level 3 fair value inputs reflect our best estimate of inputs and assumptions market participants would use in pricing an instrument at the measurement date. The inputs are unobservable in the market and significant to the valuation estimate. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Recently Issued Accounting Pronouncements In the first quarter of 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, the Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40), which, among other things, simplifies the accounting for convertible instruments by eliminating the requirement to separate conversion features from the host contract. Consequently, a convertible debt instrument will be accounted for as a single liability measured as its amortized cost. The new guidance eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. Early adoption is permitted for fiscal years beginning after December 31, 2020, including interim periods. The Company early adopted ASU 2020-06 on January 1, 2021. As such, the exchangeable notes issued in March 2021 are recorded as a single liability with no portion of the proceeds from the issuance of the exchangeable debt instrument recorded as attributable to the conversion feature.
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Earnings Per Share or Unit |
9 Months Ended |
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Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share or Unit | Earnings Per Share or Unit Basic earnings per share or unit is calculated based on the weighted average number of common shares or units outstanding during the period. Diluted earnings per share or unit is determined based on the weighted average common number of shares or units outstanding during the period combined with the incremental average common shares or units that would have been outstanding assuming the conversion of all potentially dilutive common shares or units into common shares or units as of the earliest date possible. Potentially dilutive securities include outstanding options to acquire common shares; Limited Partner Units, which may be exchanged for either cash or common shares, at the Parent Company’s option and 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. Limited Partner Units have been omitted from the Parent Company’s denominator for the purpose of computing diluted earnings per share since the effect of including these amounts in the denominator would have no dilutive impact. Weighted average Limited Partner Units outstanding for the three and nine months ended September 30, 2021 and 2020 were 2.4 million, 2.5 million, 2.2 million, and 2.2 million, respectively. Due to the net loss allocable to common shareholders and Common Unit holders for the three months ended September 30, 2021 and 2020, and nine months ended September 30, 2020, no securities had a dilutive impact for this period.
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage and Other Indebtedness | Mortgage and Other Indebtedness Mortgage and other indebtedness consisted of the following as of September 30, 2021 and December 31, 2020:
Consolidated indebtedness, including weighted average maturities and weighted average interest rates as of September 30, 2021, considering the impact of interest rate swaps, is summarized below:
Mortgage indebtedness is collateralized by certain real estate properties and leases, and is generally due in monthly installments of interest and principal and matures over various terms through 2030. Variable interest rates on mortgage indebtedness is based on LIBOR plus 160 basis points. At September 30, 2021, the one-month LIBOR interest rate was 0.13%. Fixed interest rates on mortgage indebtedness range from 3.78% to 5.73%. Debt Issuance Costs Debt issuance costs are amortized on a straight-line basis over the terms of the respective loan agreements. The accompanying consolidated statements of operations include amortization of debt issuance costs as a component of interest expense as follows:
Unsecured Revolving Credit Facility and Unsecured Term Loans As of September 30, 2021, we had an unsecured revolving credit facility (the "Credit Facility") with a total commitment of $600 million that matures in April 2023 (inclusive of one twelve-month extension option). The Operating Partnership has the option to increase the borrowing availability of the Credit Facility to $1.2 billion, subject to certain conditions, including obtaining commitments from lenders. On October 25, 2018, the Operating Partnership entered into a Term Loan Agreement (the “Agreement”) with KeyBank National Association, as Administrative Agent (the “Agent”), and the other lenders party thereto, providing for an unsecured term loan facility of up to $250 million (the “Term Loan”). The Term Loan ranks pari passu with the Operating Partnership’s existing Credit Facility documented in the Operating Partnership’s Fifth Amended and Restated Credit Agreement, dated as of July 28, 2016, as amended (the “Existing Credit Agreement”), and other unsecured indebtedness of the Operating Partnership. The Term Loan has a scheduled maturity date of October 24, 2025, which maturity date may be extended for up to three additional periods of one year each at the Operating Partnership’s option subject to certain conditions. The Operating Partnership has the option to increase the Term Loan to $300 million, subject to certain conditions, including obtaining commitments from any one or more lenders, whether or not currently party to the Agreement, to provide such increased amounts. The Operating Partnership is permitted to prepay the Term Loan in whole or in part, at any time, subject to a prepayment fee if prepaid on or before October 25, 2023. As of September 30, 2021, there was zero outstanding under the Credit Facility. Additionally, we had letters of credit outstanding which totaled $1.2 million, against which no amounts were advanced as of September 30, 2021. The amount that we may borrow under our Credit Facility is limited by the value of the assets in our unencumbered asset pool. As of September 30, 2021, the value of the assets in our unencumbered asset pool, calculated pursuant to the Credit Facility agreement, was $1.4 billion. Considering outstanding borrowings on the line of credit, term loans, unsecured notes and letters of credit, we had $416.7 million available under our Credit Facility for future borrowings as of September 30, 2021. Our ability to borrow under the Credit Facility is subject to our compliance with various restrictive and financial covenants, including with respect to liens, indebtedness, investments, dividends, mergers and asset sales. As of September 30, 2021, we were in compliance with all such covenants. Exchangeable Senior Notes In March 2021, the Operating Partnership issued $175.0 million aggregate principal amount of 0.75% Exchangeable Senior Notes maturing in April 2027 (the "Exchangeable Notes"). The Exchangeable Notes are governed by an indenture between the Operating Partnership, the Company and U.S. Bank National Association, as trustee. The Exchangeable Notes were sold in the United States only to accredited investors pursuant to an exemption from the Securities Act of 1933, as amended (the “Securities Act”), and subsequently resold to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The net proceeds from the offering of the Exchangeable Notes were approximately $169.7 million after deducting the underwriting fees and other expenses paid by the Company. The Exchangeable Notes bear interest at a rate of 0.75% per annum, payable semi-annually in arrears. The Exchangeable Notes will mature on April 1, 2027. The interest expense recognized for the Exchangeable Notes was approximately $0.5 million and $1.1 million for the three and nine months ended September 30, 2021, respectively. Prior to January 1, 2027, the Exchangeable Notes will be exchangeable into cash up to the principal amount of the Exchangeable Notes exchanged and, if applicable, cash or common shares or a combination thereof, only upon certain circumstances and during certain periods. On or after January 1, 2027, the Exchangeable Notes will be exchangeable into cash up to the principal amount of the Exchangeable Notes exchanged and, if applicable, cash or common shares or a combination thereof at the option of the holders at any time prior to the close of business on the second scheduled trading day preceding the Maturity Date. The exchange rate will initially equal 39.6628 common shares per $1,000 principal amount of Exchangeable Notes (equivalent to an exchange price of approximately $25.21 per common share and an exchange premium of approximately 25% based on the closing price of $20.17 per common share on March 17, 2021). The exchange rate will be subject to adjustment upon the occurrence of certain events, but will not be adjusted for any accrued and unpaid interest. The Operating Partnership may redeem the Exchangeable Notes, at its option, in whole or in part, on any business day on or after April 5, 2025, if the last reported sale price of the common shares has been at least 130% of the exchange price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Issuer provides notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. In connection with the Exchangeable Notes, the Operating Partnership entered into privately negotiated capped call transactions (the "Capped Call Transactions") with certain of the initial purchasers of the Exchangeable Notes or their respective affiliates. The Capped Call Transactions initially cover, subject to anti-dilution adjustments substantially similar to those applicable to the Exchangeable Notes, the number of common shares underlying the Exchangeable Notes. The Capped Call Transactions are expected generally to reduce the potential dilution to holders of common shares upon exchange of the Exchangeable Notes. The cap price of the Capped Call Transactions was initially approximately $30.26, which represents a premium of approximately 50% over the last reported sale price of common shares on March 17, 2021, and is subject to anti-dilution adjustments under the terms of the Capped Call Transactions. The cost of the Capped Call Transactions was $9.8 million and was recorded within additional paid-in capital. Senior Unsecured Notes The Operating Partnership has $550 million of senior unsecured notes maturing at various dates through September 2027 (the "Notes"). The Notes contain a number of customary financial and restrictive covenants. As of September 30, 2021, we were in compliance with all such covenants. Fair Value of Fixed and Variable Rate Debt |
Derivative Instruments, Hedging Activities and Other Comprehensive Income |
9 Months Ended |
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Sep. 30, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments, Hedging Activities and Other Comprehensive Income | Derivative Instruments, Hedging Activities and Other Comprehensive Income In order to manage potential future variable interest rate risk, we enter into interest rate derivative agreements from time to time. All such agreements are designated as cash flow hedges. We do not use interest rate derivative agreements for trading or speculative purposes. The agreements with each of our derivative counterparties provide that, in the event of default on any of our indebtedness, we could also be declared in default on our derivative obligations. As of September 30, 2021, we were party to various cash flow derivative agreements with notional amounts totaling $250.0 million that fix the interest rate on variable rate debt. These derivative agreements effectively fix the interest rate underlying certain variable rate debt instruments over expiration dates through 2025. Utilizing a weighted average interest rate spread over LIBOR on all variable rate debt resulted in fixing the weighted average interest rate at 5.09%. As of September 30, 2021, we were also party to two interest rate swap contracts with notional amounts totaling $155.0 million. The derivative agreements swap a blended fixed rate of 4.52% for a blended floating rate of LIBOR + 3.70% with an expiration date of September 10, 2025. These interest rate derivative agreements are the only assets or liabilities that we record at fair value on a recurring basis. The valuation of these assets and liabilities is determined using widely accepted techniques including discounted cash flow analysis. These techniques consider the contractual terms of the derivatives (including the period to maturity) and use observable market-based inputs such as interest rate curves and implied volatilities. We also incorporate credit valuation adjustments into the fair value measurements to reflect nonperformance risk on both our part and that of the respective counterparties. We determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, although the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. As of September 30, 2021 and December 31, 2020, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and determined the credit valuation adjustments were not significant to the overall valuation of our derivatives. As a result, we determined our derivative valuations were classified within Level 2 of the fair value hierarchy. As of September 30, 2021, the estimated fair value of our interest rate derivatives represented a net liability of $24.2 million, including accrued interest payable of $0.6 million. As of September 30, 2021, this was reflected in accounts payable and accrued expenses on the accompanying consolidated balance sheets. At December 31, 2020, the estimated fair value of our interest rate hedges was a liability of $32.1 million, including accrued interest of $0.4 million. As of December 31, 2020, this was reflected in accounts payable and accrued expenses on the accompanying consolidated balance sheets. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to earnings over time as the hedged items are recognized in earnings. Approximately $1.7 million and $1.3 million were reclassified as a decrease to earnings for the three months ended September 30, 2021 and 2020, respectively. Approximately $4.1 million and $2.7 million were reclassified as a decrease to earnings during each of the nine months ended September 30, 2021 and 2020. As the interest payments on our hedges are made over the next 12 months, we estimate the increase to interest expense to be $7.5 million, assuming the current LIBOR curve. Unrealized gains and losses on our interest rate derivative agreements are the only components of the change in accumulated other comprehensive loss.
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Shareholders' Equity |
9 Months Ended |
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Sep. 30, 2021 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ Equity Distribution Payments Our Board of Trustees declared a cash distribution of $0.18 for the third quarter of 2021 to common shareholders and Common Unit holders of record as of October 1, 2021. The distribution was paid on October 8, 2021. At-The-Market Offering Program On February 23, 2021, the Company and the Operating Partnership entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with each of BofA Securities, Inc., Citigroup Global Markets Inc., KeyBanc Capital Markets Inc. and Raymond James & Associates, Inc., pursuant to which the Company may sell, from time to time, up to an aggregate sales price of $150 million of its common shares of beneficial interest, $0.01 par value per share under an at-the-market offering program (the “ATM Program”). As of September 30, 2021, the Company had not sold any common shares under the ATM Program. The Operating Partnership intends to use the net proceeds, if any, to repay borrowings under its unsecured revolving credit facility, to repay other indebtedness and for working capital and other general corporate purposes. The Operating Partnership may also use net proceeds for acquisitions of operating properties and the development or redevelopment of properties, although there are currently no understandings, commitments or agreements to do so. Share Repurchase Plan In February 2021, the Company’s Board of Trustees approved a share repurchase program, authorizing share repurchases up to an aggregate of $150 million (the “Share Repurchase Program”). The Share Repurchase Program will end in February 2022 if not terminated earlier. As of September 30, 2021, the Company has not repurchased any shares under its Share Repurchase Program. The Company intends to fund any future repurchases under the Share Purchase Program with cash on hand or availability under its unsecured credit facility subject to any applicable restrictions under the Company’s unsecured credit facility. The timing of share repurchases and the number of common shares to be repurchased under the Share Repurchase Program will depend upon prevailing market conditions, regulatory requirements and other factors.
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Deferred Costs and Intangibles, net |
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Deferred Costs [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs and Intangibles, net | Deferred Costs and Intangibles, net Deferred costs consist primarily of acquired lease intangible assets, broker fees and capitalized commissions incurred in connection with lease originations. Deferred leasing costs, lease intangibles and similar costs are amortized on a straight-line basis over the terms of the related leases. At September 30, 2021 and December 31, 2020, deferred costs consisted of the following:
Amortization of deferred leasing costs, leasing intangibles and other is included in depreciation and amortization expense in the accompanying consolidated statements of operations. The amortization of above market lease intangibles is included as a reduction to revenue. The amounts of such amortization included in the accompanying consolidated statements of operations are as follows:
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Deferred Revenue, Intangibles, Net and Other Liabilities |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Revenue, Intangibles, Net and Other Liabilities | Deferred Revenue, Intangibles, Net and Other Liabilities Deferred revenue and other liabilities consist of the unamortized fair value of below market lease liabilities recorded in connection with purchase accounting, retainage payables for development and redevelopment projects, tenant rent payments received in advance of the month in which they are due, and lease liabilities recorded upon adoption of ASU 2016-02. The amortization of below market lease liabilities is recognized as revenue over the remaining life of the leases (including option periods for leases with below market renewal options) through 2046. Tenant rent payments received in advance are recognized as revenue in the period to which they apply, which is typically the month following their receipt. At September 30, 2021 and December 31, 2020, deferred revenue, intangibles, net and other liabilities consisted of the following:
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Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Other Commitments and Contingencies We are obligated under various completion guarantees with certain lenders and lease agreements with tenants to complete all or portions of a development and tenant-specific space currently under construction. We believe we currently have sufficient financing in place to fund these projects and expect to do so primarily through borrowings on the Credit Facility. In connection with the joint venture that owns the Embassy Suites at Notre Dame, we provided a repayment guaranty on a $33.8 million construction loan, of which our share is $11.8 million (reflecting our 35% ownership interest in the hotel). Our portion of the repayment guaranty is limited to $5.9 million. The guaranty's term is through the July 1, 2024 maturity date of the loan. The outstanding loan balance as of September 30, 2021 is $33.6 million and our share is $11.8 million. The loan is secured by the hotel. As of September 30, 2021, we had outstanding letters of credit totaling $1.2 million. At that date, there were no amounts advanced against these instruments. Legal Proceedings We are not subject to any litigation that management considers material nor, to management’s knowledge, is any litigation that management considers material currently threatened against us. We are parties to routine litigation, claims, and administrative proceedings arising in the ordinary course of business. Management believes that such matters will not have a material adverse impact on our consolidated financial condition, results of operations or cash flows taken as a whole. As previously disclosed in our joint proxy statement/prospectus, beginning on August 27, 2021, two purported RPAI stockholders filed substantially similar complaints against RPAI and the members of the RPAI board of directors (the “RPAI Board”) in the United States District Court for the Southern District of New York. One of these complaints also names Kite Realty and Merger Sub as defendants. The complaints are captioned as follows: Wang v. Retail Properties of America, Inc. et al., No. 1:21-cv-07237 (S.D.N.Y. filed August 27, 2021); and Hopkins v. Retail Properties of America, Inc. et al., No. 1:21-cv-07324 (S.D.N.Y. filed August 31, 2021). The complaints variously assert, among other things, claims under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 14a-9 promulgated thereunder against RPAI and the members of the RPAI Board and claims under Section 20(a) of the Exchange Act against the members of the RPAI Board (and, in one case, Kite Realty and Merger Sub) for allegedly causing a materially incomplete and misleading registration statement on Form S-4 to be filed on August 23, 2021 with the SEC. Four additional lawsuits were filed against RPAI and the members of the RPAI Board between September 14, 2021 and October 8, 2021 under the captions Callebs v. Retail Properties of America, Inc. et al., No. 1:21-cv-07593 (S.D.N.Y. filed September 10, 2021); Sheridan v. Retail Properties of America, Inc., et al., No. 1:21-cv-04066-SCJ (N.D.Ga. filed October 1, 2021); Whitfield v. Retail Properties of America, Inc. et al., No. 2:21-cv-04390 (E.D.Pa. filed October 6, 2021); and Reinhardt v Retail Properties of America, Inc. et al., No. 1:21-cv-04187 (N.D. Ga. filed October 8, 2021), which are substantially similar to the other two complaints. Also, on September 15, 2021, a purported Kite Realty shareholder filed a complaint against Kite Realty and the members of the Kite Realty board of trustees in the United States District Court for the Eastern District of New York, captioned as follows: Gentry v. Kite Realty Group Trust et al., No. 1:21-cv-05142 (E.D.N.Y. filed September 15, 2021). The complaint asserts substantially similar claims under Sections 14(a) and 20(a) of the Exchange Act and Rule 14a-9 as the other complaints against RPAI and the RPAI Board. Plaintiffs sought, among other things, to enjoin or rescind the merger, an award of damages in the event the merger is consummated, and an award of costs and attorneys’ fees. We believe that these claims are without merit and intend to vigorously defend against them.
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Disposals of Properties and Assets Held for Sale |
9 Months Ended |
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Sep. 30, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Disposals of Properties and Assets Held for Sale | Disposals of Properties and Assets Held for Sale During the nine months ended September 30, 2021, the Company sold seventeen ground leases for gross proceeds of $42 million and a net gain of $27.6 million. A portion of the proceeds was utilized to pay down our Credit Facility. There were no operating properties sold during the nine months ended September 30, 2021. As of September 30, 2021, the Company has classified its Westside Market operating property as held for sale. The property was sold in October 2021 at a sales price that exceeds its carrying value.
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Subsequent Events |
9 Months Ended |
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Sep. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On October 22, 2021, we completed the previously announced merger with RPAI. The transaction value was approximately $4.7 billion, including approximately $2.8 billion market value of common shares issued in the Merger and the assumption of approximately $1.9 billion of debt. The retail portfolio we acquired through the merger with RPAI is comprised of 102 operating properties along with multiple parcels of entitled land for future value creation. Under the terms of the Merger Agreement, each outstanding share of RPAI's common stock was converted into the right to receive 0.623 common shares of the Company plus cash in lieu of fractional Company shares. The Merger will be accounted for by using the business combination accounting rules, which require the application of a screen test to evaluate if substantially all of the fair value of the assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets to determine whether a transaction is accounted for as an asset acquisition or business combination. We recorded merger expense of $9.2 million and $10.0 million of merger costs for the three and nine months ended September 30, 2021, respectively, which are included in "Merger and acquisition costs" in the accompanying consolidated statements of operations. These costs primarily consist of fairness opinion, legal, professional, and data migration costs. We anticipate the total merger related costs to be approximately $105 million.
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Basis of Presentation, Consolidation, Investments in Joint Ventures, and Noncontrolling Interests (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Deposits | Short-Term Deposits The Company has a short-term deposit held in a custody account at Bank of New York Mellon. The primary objective of management's short-term deposit activity is to preserve capital for the purpose of funding debt maturities in 2022. The deposit balance approximates fair value and earns interest at a rate of the Federal Funds Rate plus 43 basis points with a maturity date of April 7, 2022. Interest income on the deposit is recorded within other income, net on the statement of operations. The deposit is backed by a pool of marketable securities and a guarantee of principal by Goldman Sachs Group, Inc. Noncontrolling Interests We report the non-redeemable noncontrolling interests in subsidiaries as equity, and the amount of consolidated net income attributable to these noncontrolling interests is set forth separately in the consolidated financial statements. The non-redeemable noncontrolling interests in consolidated properties for the nine months ended September 30, 2021 and 2020 were as follows:
Redeemable Noncontrolling Interests - Limited Partners Limited Partner Units are redeemable noncontrolling interests in the Operating Partnership. We classify redeemable noncontrolling interests in the Operating Partnership in the accompanying consolidated balance sheets outside of permanent equity because we may be required to pay cash to holders of Limited Partner Units upon redemption of their interests in the Operating Partnership or deliver registered shares upon their conversion. The carrying amount of the redeemable noncontrolling interests in the Operating Partnership is reflected at the greater of historical book value or redemption value with a corresponding adjustment to additional paid-in capital. At September 30, 2021 and December 31, 2020, the redemption value of the redeemable noncontrolling interests exceeded the historical book value, and the balances were accordingly adjusted to redemption value. We allocate net operating results of the Operating Partnership after noncontrolling interests in the consolidated properties based on the partners’ respective weighted average ownership interest. We adjust the redeemable noncontrolling interests in the Operating Partnership at the end of each reporting period to reflect their interests in the Operating Partnership or redemption value. This adjustment is reflected in our shareholders’ and Parent Company's equity. For the three and nine months ended September 30, 2021 and 2020, the weighted average interests of the Parent Company and the limited partners in the Operating Partnership were as follows:
At September 30, 2021, the Parent Company's interest and the limited partners' redeemable noncontrolling ownership interests in the Operating Partnership were 97.2% and 2.8%. At December 31, 2020, the Parent Company's interest and the limited partners' redeemable noncontrolling ownership interests in the Operating Partnership were 97.1% and 2.9%. Concurrent with the Parent Company’s initial public offering and related formation transactions, certain individuals received Limited Partner Units of the Operating Partnership in exchange for their interests in certain properties. The limited partners have the right to redeem Limited Partner Units for cash or, at the Parent Company's election, common shares of the Parent Company in an amount equal to the market value of an equivalent number of common shares of the Parent Company at the time of redemption. Such common shares must be registered, which is not fully in the Parent Company’s control. Therefore, the limited partners’ interest is not reflected in permanent equity. The Parent Company also has the right to redeem the Limited Partner Units directly from the limited partner in exchange for either cash in the amount specified above or a number of its common shares equal to the number of Limited Partner Units being redeemed. There were 2,429,315 and 2,532,861 Limited Partner Units outstanding as of September 30, 2021 and December 31, 2020, respectively. The decrease in Limited Partner Units outstanding from December 31, 2020 is due to conversions offset by non-cash compensation awards made to our executive officers in the form of Limited Partner Units. Redeemable Noncontrolling Interests - Subsidiaries Prior to the merger with Inland Diversified Real Estate Trust, Inc. ("Inland Diversified") in 2014, Inland Diversified formed joint ventures with the previous owners of certain properties and issued Class B units in three joint ventures that indirectly own those properties. The Class B units related to one of these three joint ventures remain outstanding and are accounted for as noncontrolling interests in the remaining venture. The remaining Class B units will become redeemable at the respective partner's election in October 2022 and the fulfillment of certain redemption criteria. Beginning in November 2022, the Class B units can be redeemed at the election of either our partner or us for cash or Limited Partner Units in the Operating Partnership. The Class B units do not have a maturity date, and none are mandatorily redeemable unless either party has elected for the units to be redeemed. We consolidate this joint venture because we control the decision making and our joint venture partner has limited protective rights.We classify the redeemable noncontrolling interests in a certain subsidiary in the accompanying consolidated balance sheets outside of permanent equity because, under certain circumstances, we may be required to pay cash to Class B unitholders in this subsidiary upon redemption of their interests. The carrying amount of these redeemable noncontrolling interests is required to be reflected at the greater of initial book value or redemption value with a corresponding adjustment to additional paid-in capital.
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Consolidation and Investments in Joint Ventures | Consolidation and Investments in Joint Ventures The accompanying financial statements are presented on a consolidated basis and include all accounts of the Parent Company, the Operating Partnership, the taxable REIT subsidiary of the Operating Partnership, subsidiaries of the Operating Partnership that are controlled and any variable interest entities (“VIEs”) in which the Operating Partnership is the primary beneficiary. In general, a VIE is a corporation, partnership, trust or any other legal structure used for business purposes that either (a) has equity investors that do not provide sufficient financial resources for the entity to support its activities, (b) does not have equity investors with voting rights or (c) has equity investors whose votes are disproportionate from their economics and substantially all of the activities are conducted on behalf of the investor with disproportionately fewer voting rights. The Operating Partnership accounts for properties that are owned by joint ventures in accordance with the consolidation guidance. The Operating Partnership evaluates each joint venture and determines first whether to follow the VIE or the voting interest entity ("VOE") model. Once the appropriate consolidation model is identified, the Operating Partnership then evaluates whether it should consolidate the joint venture. Under the VIE model, the Operating Partnership consolidates an entity when it 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. Under the VOE model, the Operating Partnership consolidates an entity when (i) it controls the entity through ownership of a majority voting interest if the entity is not a limited partnership or (ii) it controls the entity through its ability to remove the other partners or owners in the entity, at its discretion, when the entity is a limited partnership. In determining whether to consolidate a VIE with the Operating Partnership, we consider all relationships between the Operating Partnership and the applicable VIE, including development agreements, management agreements and other contractual arrangements, in determining whether we have the power to direct the activities of the VIE that most significantly affect the VIE's performance. As of September 30, 2021, we owned investments in two consolidated joint ventures that were VIEs in which the partners did not have substantive participating rights and we were the primary beneficiary. As of this date, these consolidated VIEs had total debt of $29.2 million, which were secured by assets of the VIEs totaling $117.1 million. The Operating Partnership guarantees the debts of these VIEs. The Operating Partnership is considered a VIE as the limited partners do not hold kick-out rights or substantive participating rights. The Parent Company consolidates the Operating Partnership as it is the primary beneficiary in accordance with the VIE model.
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Income Taxes and REIT Compliance | Income Taxes and REIT Compliance Parent Company The Parent Company, which is considered a corporation for U.S. federal income tax purposes, has been organized and operated and intends to continue to operate in a manner that will enable it to maintain its qualification as a REIT for U.S. federal income tax purposes. As a result, it generally will not be subject to U.S. federal income tax on the earnings that it distributes to the extent it distributes its “REIT taxable income” (determined before the deduction for dividends paid and excluding net capital gains) to shareholders of the Parent Company and meets certain other requirements on a recurring basis. To the extent that it satisfies this distribution requirement, but distributes less than 100% of its taxable income, it will be subject to U.S. federal corporate income tax on its undistributed REIT taxable income. REITs are subject to a number of organizational and operational requirements. If the Parent Company fails to qualify as a REIT in any taxable year, it will be subject to U.S. federal income tax on its taxable income at regular corporate rates for a period of four years following the year in which qualification is lost. We may also be subject to certain U.S. federal, state and local taxes on our income and property and to U.S. federal income and excise taxes on our undistributed taxable income even if the Parent Company does qualify as a REIT. The Operating Partnership intends to continue to make distributions to the Parent Company in amounts sufficient to assist the Parent Company in adhering to REIT requirements and maintaining its REIT status. We have elected to treat Kite Realty Holdings, LLC as a taxable REIT subsidiary of the Operating Partnership, and we may elect to treat other subsidiaries as taxable REIT subsidiaries in the future. This election enables us to receive income and provide services that would otherwise be impermissible for a REIT. Deferred tax assets and liabilities are established for temporary differences between the financial reporting bases and the tax bases of assets and liabilities at the tax rates expected to be in effect when the temporary differences reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. Operating Partnership The allocated share of income and loss, other than the operations of our taxable REIT subsidiary, is included in the income tax returns of the Operating Partnership's partners. Accordingly, the only federal income taxes included in the accompanying consolidated financial statements are in connection with the Operating Partnership's taxable REIT subsidiary.
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Noncontrolling Interests | Short-Term Deposits The Company has a short-term deposit held in a custody account at Bank of New York Mellon. The primary objective of management's short-term deposit activity is to preserve capital for the purpose of funding debt maturities in 2022. The deposit balance approximates fair value and earns interest at a rate of the Federal Funds Rate plus 43 basis points with a maturity date of April 7, 2022. Interest income on the deposit is recorded within other income, net on the statement of operations. The deposit is backed by a pool of marketable securities and a guarantee of principal by Goldman Sachs Group, Inc. Noncontrolling Interests We report the non-redeemable noncontrolling interests in subsidiaries as equity, and the amount of consolidated net income attributable to these noncontrolling interests is set forth separately in the consolidated financial statements. The non-redeemable noncontrolling interests in consolidated properties for the nine months ended September 30, 2021 and 2020 were as follows:
Redeemable Noncontrolling Interests - Limited Partners Limited Partner Units are redeemable noncontrolling interests in the Operating Partnership. We classify redeemable noncontrolling interests in the Operating Partnership in the accompanying consolidated balance sheets outside of permanent equity because we may be required to pay cash to holders of Limited Partner Units upon redemption of their interests in the Operating Partnership or deliver registered shares upon their conversion. The carrying amount of the redeemable noncontrolling interests in the Operating Partnership is reflected at the greater of historical book value or redemption value with a corresponding adjustment to additional paid-in capital. At September 30, 2021 and December 31, 2020, the redemption value of the redeemable noncontrolling interests exceeded the historical book value, and the balances were accordingly adjusted to redemption value. We allocate net operating results of the Operating Partnership after noncontrolling interests in the consolidated properties based on the partners’ respective weighted average ownership interest. We adjust the redeemable noncontrolling interests in the Operating Partnership at the end of each reporting period to reflect their interests in the Operating Partnership or redemption value. This adjustment is reflected in our shareholders’ and Parent Company's equity. For the three and nine months ended September 30, 2021 and 2020, the weighted average interests of the Parent Company and the limited partners in the Operating Partnership were as follows:
At September 30, 2021, the Parent Company's interest and the limited partners' redeemable noncontrolling ownership interests in the Operating Partnership were 97.2% and 2.8%. At December 31, 2020, the Parent Company's interest and the limited partners' redeemable noncontrolling ownership interests in the Operating Partnership were 97.1% and 2.9%. Concurrent with the Parent Company’s initial public offering and related formation transactions, certain individuals received Limited Partner Units of the Operating Partnership in exchange for their interests in certain properties. The limited partners have the right to redeem Limited Partner Units for cash or, at the Parent Company's election, common shares of the Parent Company in an amount equal to the market value of an equivalent number of common shares of the Parent Company at the time of redemption. Such common shares must be registered, which is not fully in the Parent Company’s control. Therefore, the limited partners’ interest is not reflected in permanent equity. The Parent Company also has the right to redeem the Limited Partner Units directly from the limited partner in exchange for either cash in the amount specified above or a number of its common shares equal to the number of Limited Partner Units being redeemed. There were 2,429,315 and 2,532,861 Limited Partner Units outstanding as of September 30, 2021 and December 31, 2020, respectively. The decrease in Limited Partner Units outstanding from December 31, 2020 is due to conversions offset by non-cash compensation awards made to our executive officers in the form of Limited Partner Units. Redeemable Noncontrolling Interests - Subsidiaries Prior to the merger with Inland Diversified Real Estate Trust, Inc. ("Inland Diversified") in 2014, Inland Diversified formed joint ventures with the previous owners of certain properties and issued Class B units in three joint ventures that indirectly own those properties. The Class B units related to one of these three joint ventures remain outstanding and are accounted for as noncontrolling interests in the remaining venture. The remaining Class B units will become redeemable at the respective partner's election in October 2022 and the fulfillment of certain redemption criteria. Beginning in November 2022, the Class B units can be redeemed at the election of either our partner or us for cash or Limited Partner Units in the Operating Partnership. The Class B units do not have a maturity date, and none are mandatorily redeemable unless either party has elected for the units to be redeemed. We consolidate this joint venture because we control the decision making and our joint venture partner has limited protective rights.We classify the redeemable noncontrolling interests in a certain subsidiary in the accompanying consolidated balance sheets outside of permanent equity because, under certain circumstances, we may be required to pay cash to Class B unitholders in this subsidiary upon redemption of their interests. The carrying amount of these redeemable noncontrolling interests is required to be reflected at the greater of initial book value or redemption value with a corresponding adjustment to additional paid-in capital.
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Fair Value Measurements | Fair Value Measurements We follow the framework established under accounting standard FASB ASC 820 for measuring fair value of non-financial assets and liabilities that are not required or permitted to be measured at fair value on a recurring basis but only in certain circumstances, such as a business combination or upon determination of an impairment. Assets and liabilities recorded at fair value on the consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows: •Level 1 fair value inputs are quoted prices in active markets for identical instruments to which we have access. •Level 2 fair value inputs are inputs other than quoted prices included in Level 1 that are observable for similar instruments, either directly or indirectly, and appropriately consider counterparty creditworthiness in the valuations. •Level 3 fair value inputs reflect our best estimate of inputs and assumptions market participants would use in pricing an instrument at the measurement date. The inputs are unobservable in the market and significant to the valuation estimate. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
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Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In the first quarter of 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, the Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40), which, among other things, simplifies the accounting for convertible instruments by eliminating the requirement to separate conversion features from the host contract. Consequently, a convertible debt instrument will be accounted for as a single liability measured as its amortized cost. The new guidance eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. Early adoption is permitted for fiscal years beginning after December 31, 2020, including interim periods. The Company early adopted ASU 2020-06 on January 1, 2021. As such, the exchangeable notes issued in March 2021 are recorded as a single liability with no portion of the proceeds from the issuance of the exchangeable debt instrument recorded as attributable to the conversion feature.
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Basis of Presentation, Consolidation, Investments in Joint Ventures, and Noncontrolling Interests (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Investment Properties | The composition of the Company’s investment properties as of September 30, 2021 and December 31, 2020 was as follows:
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Schedule of Lease Rental Income | The Company recognized the following lease rental income for the three and nine months ended September 30, 2021 and 2020:
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Schedule of Stockholders Equity | The non-redeemable noncontrolling interests in consolidated properties for the nine months ended September 30, 2021 and 2020 were as follows:
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Schedule of Weighted Average Interests of Parent and OP | For the three and nine months ended September 30, 2021 and 2020, the weighted average interests of the Parent Company and the limited partners in the Operating Partnership were as follows:
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Schedule of Redeemable Noncontrolling Interests | The redeemable noncontrolling interests in the Operating Partnership and subsidiaries for the nine months ended September 30, 2021 and 2020 were as follows:
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Mortgage and Other Indebtedness (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Mortgage and Other Indebtedness | Mortgage and other indebtedness consisted of the following as of September 30, 2021 and December 31, 2020:
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Schedule of Weighted Average Maturities and Interest Rates | Consolidated indebtedness, including weighted average maturities and weighted average interest rates as of September 30, 2021, considering the impact of interest rate swaps, is summarized below:
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Schedule of Amortization | The accompanying consolidated statements of operations include amortization of debt issuance costs as a component of interest expense as follows:
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Deferred Costs and Intangibles, net (Tables) |
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Deferred Costs [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Deferred Costs | At September 30, 2021 and December 31, 2020, deferred costs consisted of the following:
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Schedule of Amortization | The amounts of such amortization included in the accompanying consolidated statements of operations are as follows:
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Deferred Revenue, Intangibles, Net and Other Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Deferred Revenue, Intangibles, Net and Other Liabilities | At September 30, 2021 and December 31, 2020, deferred revenue, intangibles, net and other liabilities consisted of the following:
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Organization (Details) ft² in Millions, $ in Billions |
9 Months Ended | |
---|---|---|
Oct. 22, 2021
USD ($)
property
|
Sep. 30, 2021
ft²
property
|
|
RPAI | Subsequent Event | ||
Organization [Line Items] | ||
Number of real estate properties | 102 | |
Merger transaction value | $ | $ 4.7 | |
Assumption of debt | $ | $ 1.9 | |
Operating and Redevelopment Properties | ||
Organization [Line Items] | ||
Number of real estate properties | 87 | |
Area of real estate property | ft² | 16.8 | |
Under Construction Retail Development Project | ||
Organization [Line Items] | ||
Number of real estate properties | 6 | |
General Partner Units | ||
Organization [Line Items] | ||
Ownership interest of General Partner | 97.20% | |
KRG, LP | ||
Organization [Line Items] | ||
Ownership interest of Common Partner | 2.80% |
Basis of Presentation, Consolidation, Investments in Joint Ventures, and Noncontrolling Interests - Investment Properties (Details) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Land, buildings and improvements | $ 3,094,966 | $ 3,109,122 |
Furniture, equipment and other | 7,374 | 6,979 |
Construction in progress | 22,647 | 27,860 |
Investment properties, at cost | $ 3,124,987 | $ 3,143,961 |
Basis of Presentation, Consolidation, Investments in Joint Ventures, and Noncontrolling Interests - Leases - Lessor (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Fixed Contractual Lease Payments - Operating Leases | $ 54,894 | $ 54,301 | $ 164,095 | $ 164,219 |
Variable Lease Payments - Operating Leases | 12,461 | 12,824 | 38,540 | 38,244 |
Bad Debt Recovery (Reserve) | 1,709 | (3,136) | 338 | (9,760) |
Straight-Line Rent Adjustment | 585 | 256 | 1,109 | 1,001 |
Straight-Line Rent Recovery (Reserve) for Uncollectability | 39 | (507) | 587 | (4,264) |
Amortization of In-Place Lease Liabilities, net | 528 | 555 | 1,428 | 1,919 |
Total | $ 70,216 | $ 64,293 | $ 206,097 | $ 191,359 |
Basis of Presentation, Consolidation, Investments in Joint Ventures, and Noncontrolling Interests - Noncontrolling Interests (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
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Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||||
Balance at beginning of period | $ 698 | $ 698 | ||
Net income allocable to noncontrolling interests, excluding redeemable noncontrolling interests | $ 132 | $ (40) | 1,058 | 148 |
Balance at end of period | $ 698 | $ 698 | 698 | 698 |
Excluding Redeemable Non-Controlling Interests | ||||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||||
Net income allocable to noncontrolling interests, excluding redeemable noncontrolling interests | $ 0 | $ 0 |
Basis of Presentation, Consolidation, Investments in Joint Ventures, and Noncontrolling Interests - Weighted Average Interests in Operating Partnership (Details) - Operating Partnership |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
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Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||
Parent Company’s weighted average interest in Operating Partnership | 97.20% | 97.40% | 97.10% | 97.40% |
Limited partners' weighted average interests in Operating Partnership | 2.80% | 2.60% | 2.90% | 2.60% |
Earnings Per Share or Unit (Details) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
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Earnings Per Share [Abstract] | ||||
Weighted average limited partner units outstanding, basic (in shares) | 2,400,000 | 2,200,000 | 2,500,000 | 2,200,000 |
Dilutive impact (in shares) | 0 | 0 | 0 |
Mortgage and Other Indebtedness - Schedule of Debt Amortization (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Debt Disclosure [Abstract] | ||
Amortization of debt issuance costs | $ 1,963 | $ 1,640 |
Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Oct. 01, 2021 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Feb. 28, 2021 |
Feb. 23, 2021 |
Dec. 31, 2020 |
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Class of Stock [Line Items] | ||||||||
Common dividends declared (USD per share) | $ 0.1800 | $ 0.0520 | $ 0.5000 | $ 0.3695 | ||||
Common shares, par value (in USD per share) | $ 0.01 | $ 0.01 | $ 0.01 | |||||
Aggregate value of shares authorized to be repurchased | $ 150 | |||||||
Number of shares repurchased (in shares) | 0 | |||||||
Subsequent Event | ||||||||
Class of Stock [Line Items] | ||||||||
Common dividends declared (USD per share) | $ 0.18 | |||||||
Private Placement | ||||||||
Class of Stock [Line Items] | ||||||||
Aggregate sales price of shares authorized to be sold under offering program | $ 150 | |||||||
Shares sold under under offing program (in shares) | 0 | |||||||
Common shares, par value (in USD per share) | $ 0.01 |
Deferred Costs and Intangibles, net - Deferred Costs (Details) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Deferred Costs [Abstract] | ||
Acquired lease intangible assets | $ 48,816 | $ 55,352 |
Deferred leasing costs and other | 54,571 | 57,481 |
Deferred costs and intangibles, gross | 103,387 | 112,833 |
Less—accumulated amortization | (47,489) | (49,662) |
Subtotal | 55,898 | 63,171 |
Less - assets held for sale | (1,667) | 0 |
Total | $ 54,231 | $ 63,171 |
Deferred Costs and Intangibles, net - Amortization Expense (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Deferred Costs [Abstract] | ||
Amortization of deferred leasing costs, lease intangibles and other | $ 8,005 | $ 10,464 |
Amortization of above market lease intangibles | $ 700 | $ 725 |
Deferred Revenue, Intangibles, Net and Other Liabilities (Details) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 31, 2020 |
|
Other Liabilities Disclosure [Abstract] | |||
Unamortized in-place lease liabilities | $ 43,101 | $ 45,479 | |
Retainages payable and other | 3,505 | 1,943 | |
Tenant rents received in advance | 8,513 | 11,716 | |
Lease liabilities | 26,225 | 26,511 | |
Total | $ 81,344 | $ 85,649 | |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | Total | Total | |
Amortization of below market lease intangibles | $ 2,100 | $ 2,600 |
Disposals of Properties and Assets Held for Sale (Details) - Disposed of by Sale $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2021
USD ($)
groundLease
|
Sep. 30, 2020
property
|
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Number of ground lease properties | groundLease | 17 | |
Gross proceeds from sale of ground lease property | $ 42.0 | |
Net gain from sale of ground lease property | $ 27.6 | |
Number of real estate properties | property | 0 |
Subsequent Events (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Oct. 22, 2021
USD ($)
property
|
Sep. 30, 2021
USD ($)
|
Sep. 30, 2020
USD ($)
|
Sep. 30, 2021
USD ($)
|
Sep. 30, 2020
USD ($)
|
Nov. 05, 2021
USD ($)
|
|
Subsequent Event [Line Items] | ||||||
Merger expense | $ 9,198 | $ 0 | $ 9,958 | $ 0 | ||
RPAI | ||||||
Subsequent Event [Line Items] | ||||||
Merger expense | $ 9,200 | $ 10,000 | ||||
RPAI | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Merger transaction value | $ 4,700,000 | |||||
Market value of common shares issued in the merger | 2,800,000 | |||||
Assumption of debt | $ 1,900,000 | |||||
Number of real estate properties | property | 102 | |||||
Conversion rate of acquiree common shares | 0.623 | |||||
RPAI | Subsequent Event | Forecast | ||||||
Subsequent Event [Line Items] | ||||||
Anticipated total merger related costs | $ 105,000 |
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