Kite Realty Group Trust Announces Third Quarter 2008 Financial Results

Business Wire, Nov 5, 2008

- Declared Fourth Quarter Common Share Distribution at $0.205 Per Share -

Highlights

* Funds From Operations (FFO) was $0.32 per diluted share for the third quarter of 2008. FFO for the nine months ended September 30, 2008 was $0.94 per diluted share.

* Generated liquidity by funding an additional $25 million of the previously announced $60 million variable rate unsecured term loan and fixing the interest rate with a hedge at 5.92%.

* Refinanced or extended approximately $80 million of 2009 maturities and secured refinancing commitments from lending institutions for an additional $43 million.

* In October, completed a common equity offering, receiving net proceeds of $47.8 million, which were used to pay down the Company's revolving line of credit.

* As a result of its equity offering, the Company has approximately $100 million available in cash and capacity under its revolving line of credit.

INDIANAPOLIS -- Kite Realty Group Trust (NYSE: KRG) (the "Company") today announced results for its third quarter ended September 30, 2008. Financial statements and exhibits attached to this release include results for the three and nine months ended September 30, 2008 and 2007.

Financial and Operating Results

For the three months ended September 30, 2008, funds from operations (FFO), a widely accepted supplemental measure of REIT performance established by the National Association of Real Estate Investment Trusts, was $12.0 million, or $0.32 per diluted share, for the Kite Portfolio compared to $12.0 million, or $0.32 per diluted share, for the same period in the prior year. The Company's allocable share of FFO was $9.3 million for the three months ended September 30, 2008 compared to $9.3 million for the same period in 2007. For the first nine months of 2008, FFO for the Kite Portfolio was $35.1 million, or $0.94 per diluted share, compared to $34.5 million, or $0.92 per diluted share for the same period in the prior year.

Given the nature of the Company's business as a real estate owner and operator, the Company believes that FFO is helpful to investors when measuring operating performance because it excludes various items included in net income that do not relate to or are not indicative of operating performance, such as gains (or losses) from sales of operating properties and depreciation and amortization, which can make periodic and peer analyses of operating performance more difficult. A reconciliation of net income to FFO is included in the attached table.

Total revenue for the third quarter of 2008 was $35.0 million compared to $33.3 million for the same period in 2007, an increase of approximately 5.1%. The Company's net income for the third quarter of 2008 was $2.9 million, compared to $3.9 million for the third quarter of 2007.

Total revenue for the first nine months of 2008 was $102.9 million compared to $99.2 million for the same period in 2007, an increase of 3.7%. The Company's net income for the nine months of 2008 was $8.1 million, compared to $8.3 million for the same period in 2007.

"Although recent economic developments have presented extraordinary challenges, we made strong progress during the third quarter on important initiatives including the equity offering and term loan that will contribute to the Company's long-term stability and growth," said John A. Kite, Kite Realty Group's President and Chief Executive Officer. "We are pleased to have approximately $100 million available in cash and capacity under our line of credit. This will allow us to finish the year and prepare for 2009 with flexibility and strength."

Operating Portfolio

As of September 30, 2008, the Company owned interests in 52 retail operating properties totaling approximately 8.5 million square feet. The owned gross leasable area ("GLA") in the Company's retail operating portfolio was 91.9% leased as of September 30, 2008, compared to 93.0% leased as of the end of the prior quarter. This decrease is partially attributed to the transfer of three properties from the development and redevelopment pipeline to the operating portfolio. At the end of the third quarter, Glendale Town Center, in Indianapolis, Indiana, was 91.6% leased; Bayport Commons, in Tampa, Florida, was 90.8% leased; and Gateway Shopping Center near Seattle, Washington was 76.2% leased. Including leases under negotiation with prospective tenants, Gateway's leased percentage would be approximately 91%.

In addition, the Company owns five commercial operating properties totaling 562,652 square feet. As of September 30, 2008, the owned net rentable area of the commercial operating portfolio was 97.8% leased, unchanged from the end of the prior quarter. For the combined retail and commercial operating portfolio, the leased percentage was 92.5%, compared to 93.3% at the end of the prior quarter.

On a same property basis, the leased percentage of 51 total operating properties was 93.3% at September 30, 2008 and 94.0% at September 30, 2007. Same property net operating income for these properties increased 0.4% and in the third quarter of 2008 and 0.3% the first nine months of 2008 compared to the same periods of the prior year.