Kite Realty Group Trust Reports First Quarter 2009 Results

Business Wire, May 07, 2009

Highlights

• Funds From Operations (FFO) was $0.20 per diluted share for the first quarter of 2009
• The Company partially repaid and extended $34 million of 2009 loan maturities for its Parkside Town Commons and Beacon Hill Shopping Center properties to 2011 and 2014, respectively
• In April 2009, the Company financed its unencumbered Eastgate Pavilion property for $15.4 million and intends to use the proceeds to pay down its line of credit
• Subsequent to March 31, 2009, the Company received commitments to extend or refinance an additional $35.5 million of its 2009 maturities
• In April 2009, Wallace V. (“Bud”) Moll, Jr. joined the Company as Executive Vice President of Leasing

INDIANAPOLIS -- Kite Realty Group Trust (NYSE: KRG) (the “Company”) today announced results for its first quarter ended March 31, 2009. Financial statements and exhibits attached to this release include results for the three months ended March 31, 2009 and March 31, 2008.

Financial and Operating Results

For the three months ended March 31, 2009, funds from operations (FFO), a widely accepted supplemental measure of REIT performance established by the National Association of Real Estate Investment Trusts, was $8.3 million for the Kite Portfolio, or $0.20 per diluted share, compared to $11.6 million, or $0.31 per diluted share, for the same period in the prior year. The decrease is largely due to the Company’s decision to reduce the volume of land and outlot sale transactions and the effects of the October 2008 equity offering. The Company’s allocable share of FFO was $6.7 million for the three months ended March 31, 2009 compared with the Company’s allocable share of $9.0 million for the same period in 2008.

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

The Company’s total revenue for the first quarter of 2009 was $30.4 million, down from $32.3 million for the same period in 2008. This decrease was primarily a result of the Company’s anticipated reduction in land and outlot sale transactions in light of current market conditions. The Company’s net income was $701 thousand for the first quarter of 2009 compared to net income of $2.7 million in the first quarter of 2008. This decline also reflects the reduction in land and outlot sales.

John A. Kite, Kite Realty Group’s Chairman and Chief Executive Officer said, “While the economic environment remains challenging, we continue to remain focused on successfully refinancing our maturing debt, enhancing our liquidity, managing our leverage levels and maintaining portfolio leasing percentages.”

Operating Portfolio

As of March 31, 2009, the Company owned interests in 51 retail operating properties totaling approximately 8.0 million square feet. The owned gross leasable area (“GLA”) in the Company’s retail operating portfolio was 90.2% leased as of March 31, 2009, compared to 91.2% leased as of the end of the prior quarter. This decrease is primarily attributable to the termination of our leases with Circuit City following their recent bankruptcy liquidation.

In addition, the Company owns three commercial operating properties totaling 499,221 square feet. As of March 31, 2009, the owned net rentable area of the commercial operating portfolio was 97.2% leased, compared to 96.5% at the end of the prior quarter. For the combined retail and commercial operating portfolio, the leased percentage was 90.8% as of March 31, 2009, compared to 91.7% at the end of the prior quarter.

On a same property basis, the leased percentage of 47 total operating properties was 91.7% at March 31, 2009 and 90.9% at March 31, 2008. Same property net operating income for these properties decreased 2.5% in the first quarter of 2009 compared to the same period in the prior year. The leased percentage increased while minimum rental income declined as the Company continues to remain focused on maintaining occupancy levels in the current economy.

Development Activities

As of March 31, 2009, the Company owned interests in three retail properties in the current development pipeline that are expected to total approximately 674,000 square feet when completed. Approximately 368,000 square feet is anticipated to be owned directly by the Company or through various joint ventures. The remaining square footage will be owned by anchor tenants. The total estimated cost of these projects is approximately $91 million, of which approximately $60 million had been incurred as of March 31, 2009. The Company also has six properties under redevelopment representing a total of 538,000 square feet.