KITE REALTY GROUP TRUSTAND KITE REALTY GROUP, L.P. AND SUBSIDIARIES
TABLE OF CONTENTS
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| Part I | |||
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| Part II | |||
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| Part III | |||
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| Part IV | |||
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Forward-Looking Statements
This Annual Report on Form 10-K, together with other statements and information publicly disseminated by us, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are based on assumptions and expectations that may not be realized and are inherently subject to risks, uncertainties and other factors, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, performance, transactions or achievements, financial or otherwise, may differ materially from the results, performance, transactions or achievements, financial or otherwise, expressed or implied by the forward-looking statements.
Risks, uncertainties and other factors that might cause such differences, some of which could be material, include but are not limited to:
•national and local economic, business, real estate and other market conditions, particularly in light ofconnection with low or negative growth in the U.S. economy as well as economic uncertainty caused by fluctuations(including a potential economic slowdown or recession, rising interest rates, inflation, unemployment, or limited growth in the prices of oil and other energy sources and inflationary trendsconsumer income or outlook;spending);
•financing risks, including the availability of, and costs associated with, sources of liquidity;
•our ability to refinance, or extend the maturity dates of, our indebtedness;
•the level and volatility of interest rates;
•the financial stability of tenants, including their ability to pay rent and the risk of tenant bankruptcies;tenants;
•the competitive environment in which we operate;operate, including potential oversupplies of and reduction in demand for rental space;
•acquisition, disposition, development and joint venture risks;
•property ownership and management risks;risks, including the relative illiquidity of real estate investments, and expenses, vacancies or the inability to rent space on favorable terms or at all;
•our ability to maintain our status as a real estate investment trust (“REIT”) for U.S. federal income tax purposes;
•potential environmental and other liabilities;
•impairment in the value of real estate property we own;
•the attractiveness of our properties to tenants, the actual and perceived impact of online retail competition and the perception that such competition hase-commerce on the value of shopping center assets;assets and changing demographics and customer traffic patterns;
•business continuity disruptions and a deterioration in our tenants’ ability to operate in affected areas or delays in the supply of products or services to us or our tenants from vendors that are needed to operate efficiently, causing costs to rise sharply and inventory to fall;
•risks related to theour current geographical concentration of properties in Texas, Florida, Maryland, New York, and North Carolina;
•civil unrest, acts of violence, terrorism or war, acts of God, climate change, epidemics, pandemics (including the ongoing pandemic of the novel coronavirus (“COVID-19”)), natural disasters and severe weather conditions, including such events that may result in underinsured or uninsured losses or other increased costs and expenses;
•changes in laws and government regulations including governmental orders affecting the use of our properties or the ability of our tenants to operate, and the costs of complying with such changed laws and government regulations;
•possible short-term or long-term changes in Florida, Indianaconsumer behavior due to COVID-19 and Texas;the fear of future pandemics;
•our ability to satisfy environmental, social or governance standards set by various constituencies;
•insurance costs and coverage;
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•risks associated with cybersecurity attacks and the loss of confidential information and other business disruptions;
•other factors affecting the real estate industry generally; and
•other risks identified in this Annual Report on Form 10-K and in other reports we file from time to time with the Securities and Exchange Commission (the “SEC”) or in other documents that we publicly disseminate.
We undertake no obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.
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PART I
ITEM 1. BUSINESS
Unless the context suggests otherwise, references to “we,” “us,” “our” or the “Company” refer to Kite Realty Group Trust and our business and operations conducted through our directly or indirectly owned subsidiaries, including Kite Realty Group, L.P., our operating partnership (the “Operating Partnership”).
Overview
Kite Realty Group Trust is a publicly-held real estate investment trust which,publicly held REIT that, through its majority-owned subsidiary, Kite Realty Group, L.P., owns interests in various operating subsidiaries and joint ventures engaged in the ownership, operation, acquisition, development and redevelopment of high-quality, neighborhood and communityopen-air shopping centers and mixed-use assets that are primarily grocery-anchored and located in selectedhigh-growth Sun Belt and select strategic gateway markets in the United States. We derive revenuesour revenue primarily from activities associated with the collection of contractual rents and reimbursement payments from tenants under existing lease agreements at each of our properties. OurTherefore, our operating results therefore depend materially on, among other things, the ability of our tenants to make required lease payments, the health and resilience of the United StatesU.S. retail sector, interest rate volatility, job growth, the real estate market and overall economic and real estate market conditions.
As of December 31, 2017,2022, we owned interests in 117183 operating and redevelopmentretail properties totaling approximately 23.328.8 million square feet and one office property with 0.3 million square feet. Of the 183 operating retail properties, 11 contain an office component. We also owned twothree development projects under construction as of this date. Our retail operating portfolio was 94.8%94.6% leased to a diversified retail tenant base, with no single retail tenant accounting for more than 2.5% of our total annualized base rent.rent (“ABR”). In the aggregate, our largest 25 tenants accounted for 34.9%28.9% of our annualized base rent.ABR. See Item 2,2. “Properties” for a list of our top 25 tenants by annualized base rent. ABR.
On October 22, 2021, we completed a merger with Retail Properties of America, Inc. (“RPAI”) in accordance with the Agreement and Plan of Merger dated July 18, 2021 (the “Merger Agreement”), by and among Kite Realty Group Trust, its wholly owned subsidiary KRG Oak, LLC (“Merger Sub”) and RPAI, pursuant to which RPAI merged with and into Merger Sub (the “Merger”) in a stock-for-stock exchange valued at approximately $4.7 billion, including the assumption of approximately $1.8 billion of debt. We acquired 100 operating retail properties and five development projects through the Merger along with multiple parcels of entitled land for future value creation, creating a top five open-air shopping center REIT. See Note 3 to the accompanying consolidated financial statements for additional details. The Merger provided numerous positive benefits to the Company, including:
•Enhancing the portfolio quality by bolstering our presence in existing strategic markets across the Sun Belt along with providing entry into other strategic markets such as Washington, D.C. and Seattle;
•Providing multiple value creation opportunities including lease-up, completion and/or sale of development and redevelopment projects;
•Improving the strength of our balance sheet by reducing leverage and increasing liquidity to over $1.0 billion; and
•Further strengthening leasing relationships to provide more optionality to tenants due to the expanded size of the portfolio.
Significant 20172022 Activities
Operating Activities
•The Company generated Funds From Operations (“FFO”), as defined by NAREIT, of $431.2 million and FFO, as adjusted for merger and acquisition costs and the impact of prior period bad debt or the collection of accounts receivable previously written off, of $429.6 million;
•Same Property Net Operating Income ("(“Same Property NOI"NOI”) increased 2.9%, which includes the results from the properties acquired in 2017the Merger with RPAI, grew by 5.1% in 2022 compared to 20162021 primarily due to increases in rental rates,improved occupancy driven by strong leasing activity throughout the year along with an increase in economic occupancy,overage rent from certain tenants;
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•In 2022, we executed new and improved expense control and operating expense recovery;
•Our operating portfolio ABR per square foot was $16.32,$20.02 as of December 31, 2022, an increase of $0.54 or$0.66 (or 3.4%) from the end of the prior year;year.
Financing and Capital Activities
•We entered into a seven-year $300.0 million unsecured term loan to repay 2022 and 2023 debt maturities, including a $200.0 million unsecured term loan scheduled to mature in November 2023;
•We used the $125.0 million short-term deposit that matured in April 2022 to repay borrowings on our unsecured revolving credit facility. line of credit;
•We acquired Pebble Marketplace (Las Vegas metropolitan statistical area (“MSA”)), the two-tenant building adjacent to MacArthur Crossing (Dallas/Ft. Worth MSA), and Palms Plaza (Miami MSA) for a total of $100.1 million;
•We completed major redevelopment construction activities at Eddy Street Commons – Phase III (South Bend, IN MSA), Shoppes at Quarterfield (Baltimore MSA), the residential and commercial portions of the project at One Loudoun Downtown (Washington, D.C. MSA), and Circle East (Baltimore MSA);
•We received net proceeds of $75.7 million from the sale of Plaza Del Lago (Chicago MSA), a portion of Hamilton Crossing Centre (Indianapolis MSA) and the ground lease interest in Lowe’s at Lincoln Plaza (Worcester, MA MSA); and
•We declared cash dividends totaling $0.87 per share during 2022.
We have a well-laddered$284.4 million of debt maturity schedule with only $82.4 million maturingprincipal scheduled to mature through December 31, 2020 and2023, a debt service coverage ratio of 3.5x5.1x and approximately $115.8 million in cash on hand as of December 31, 2017.2022. We have been assigned investment grade corporate credit ratings from two nationally recognizedall three major credit rating agencies. Theseagencies; these ratings were unchanged during 2017.in 2022.
Impacts on Business from COVID-19
| Payment Date | Amount Per Share | |||
| April 13, 2017 | $ | 0.3025 | ||
| July 13, 2017 | $ | 0.3025 | ||
| October 13, 2017 | $ | 0.3025 | ||
| January 12, 2018 | $ | 0.3175 | ||
metrics, which could be material.
Business Objectives and Strategies
Our primary business objectives are to increase the cash flow and value of our properties, achieve sustainable long-term growth and maximize shareholder value primarily through the ownership, operation, acquisition, development and redevelopment of well-located communityhigh-quality, open-air shopping centers and neighborhood shopping centers.mixed-used assets that are primarily grocery-anchored and located in high-growth Sun Belt and select strategic gateway markets. We invest in properties with well-located real estate and strong demographics, and we use our leasing and management strategies to improve the long-term valuesvalue and economic returns of our properties. We believe thethat certain of our properties in our 3-R initiative represent attractive opportunities for profitable redevelopment, renovation, densification, and expansion.
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We seek to implement our business objectives through the following strategies, each of which is more completelyfurther described in the sections that follow:
•Operating Strategy: MaximizingMaximize the internal growth in revenue from our operating properties by leasing and re-leasing to a strong and diverse group of retail tenants at increasing rental rates, when possible, and redeveloping or renovating certain properties to make them more attractive to existing and prospective tenants and consumers;
•Financing and Capital Preservation Strategy: MaintainingMaintain a strong balance sheet with sufficient flexibility to fund our operating and investment activities. Funding sources include the public equity and debt market,markets, our existing revolving credit facility, new2022 Revolving Facility with $1.1 billion of borrowing capacity as of December 31, 2022, secured debt, internally generated funds, proceeds from selling land and properties that no longer fit our strategy, and potential strategic joint ventures. We continuously monitor theventures; and
•Growth Strategy: Prudently use available cash flow, targeted asset recycling, equity and debt capital marketsto selectivelyacquire additional retail properties and may consider raising additional capital when appropriate.
redevelop or renovate existing properties where we believe investment returns would meet or exceed internal benchmarks.Operating Strategy. Our primary operating strategy is to maximize our rental rates, returns on invested capital, and occupancy levels by attracting and retaining a strong and diverse tenant base. Most of our properties are located in regional and neighborhood trade areas with attractive demographics, which allows us to maintain and, in many cases, increasemaximize returns on invested capital, occupancy and rental rates. We seek to implement our operating strategy by, among other things:
•increasing rental rates upon the renewal of expiring leases or re-leasing space to new tenants while minimizing vacancy to the extent possible;
•maximizing the occupancy of our operating portfolio;
•minimizing tenant turnover;
•maintaining leasing and property management strategies that maximize rent growth and cost recovery;
•maintaining a diverse tenant mix that limits our exposure to the financial condition of any one tenant or any category of retail tenants;
•maintaining and improving the physical appearance, condition, layout and design of our properties and other improvements located on our properties to enhance our ability to attract customers;
•implementing offensive and defensive strategies against e-commerce competition;
•actively managing costsproperties to minimize overhead and operating costs;
•maintaining strong tenant and retailer relationships in order to avoid rent interruptions and reduce marketing, leasing and tenant improvement costs that result from re-leasing space to new tenants; and
•taking advantage of under-utilized land or existing square footage, reconfiguring properties for more profitable use, and adding ancillary income sources to existing facilities.properties.
We successfully executed our operating strategy in 20172022 in a number of ways, includingas best evidenced by our strong growth in Same Property NOI growthNOI. Additionally, our leasing process continues to perform at a high level as evidenced by the execution of 2.9%, or 3.2% excluding the impact of the 3-R initiative, a blended782 new and renewal cash leasingleases representing approximately 4.9 million square feet during the year ended December 31, 2022. Our leased to occupied spread represents approximately $33.0 million of 9.0%net operating income (“NOI”), and an increasethe majority of which is expected to commence in our small shop leased percentage to 90.5% as of year end, an increase of 160 basis points over the prior year.2023. We have placed significant emphasis on maintaining a strong and diverse retail tenant mix, which has resulted in no tenant accounting for more than 2.5% of our annualized base rent.ABR. See Item 2,2. “Properties” for a list of our top tenants by gross leasable area ("GLA"(“GLA”) and annualized base rent.ABR.
Financing and Capital Preservation Strategy. We finance our acquisition, development, and redevelopment activities seeking to useusing the most advantageous sources of capital available to us at the time. These sources may include the reinvestment of cash flows generated by operations, the sale of common or preferred shares through public offerings or private placements, the reinvestment of net proceeds from the disposition of assets, the incurrence of additional indebtedness through secured or unsecured borrowings, and entering into real estate joint ventures.
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Our primary financing and capital preservation strategy is to maintain a strong balance sheet and enhance our flexibility to fund operating and investment activities in the most cost-effective way. We consider a number of factors when evaluating the amount and type of additional indebtedness we may elect to incur. Among these factors are the construction costs or purchase pricesprice of properties to be developed or acquired, the estimated market value of our properties and the Company as a whole upon consummation of the financing, and the ability to generate durable cash flow to cover expected debt service.
We intend to continue implementing our financing and capital strategies in a number of ways, which may include one or more of the following actions:
•prudently managing our balance sheet, including maintaining sufficient capacityavailability under our unsecured revolving credit facility2022 Revolving Facility so that we have additional capacity available to fund our development and redevelopment projects and pay down maturing debt if refinancing that debt is not desired or practical;
•extending the scheduled maturity dates of and/or refinancing our near-term mortgage, construction and other indebtedness;
•expanding our unencumbered asset pool;
•raising additional capital through the issuance of common shares, preferred shares or other securities;
•managing our exposure to interest rate increases on our variable-rate debt through the selective use of fixed rate hedging transactions;
•issuing unsecured bonds in the public markets and securing property-specific long-term non-recourse financing; and
•entering into joint venture arrangements in order to access less expensive capital and to mitigate risk.
Growth Strategy. Our growth strategy includes the selective deployment of financial resources to projects that are expected to generate investment returns that meet or exceed our internal benchmarks. We implement our growth strategy in a number of ways, including:
•completing our three active development and redevelopment projects at The Landing at Tradition, Carillon and The Corner;
•evaluating the entitled land holdings to determine the optimal real estate use and capital allocation decisions;
•disposing of select assets that no longer meet our long-term investment criteria and recycling the net proceeds into properties that provide attractive returns and rent growth potential in targeted markets or using the proceeds to repay debt, thereby reducing our leverage; and
•selectively pursuing the acquisition of retail operating properties, portfolios and companies in markets with strong demographics.
In evaluating opportunities for potential acquisition, development, redevelopment and disposition, we consider a number of factors, including:
•the expected returns and related risks associated with the investments relative to our weighted cost of capital to make such investments;
•the current and projected cash flow and market value of the property and the potential to increase cash flow and market value if the property were to be successfully re-leased or redeveloped;
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•the price being offered for the property, the current and projected operating performance of the property, the tax consequences of the transaction, and other related factors;
•opportunities for strengthening the tenant mix at our properties through the placement of anchor tenants such as grocers, value retailers, hardware stores, or sporting goods retailers, as well as further enhancing a diverse tenant mix that includes restaurants, specialty shops, and other essential retailers that provide staple goods to the community and offer a high level of convenience;
•the geographic location and configuration of the property, including ease of access, availability of parking, visibility, and the demographics of the surrounding area; and
•the level of success of existing properties in the same or nearby markets.
We successfully executed our growth strategy with the completion of our transformative Merger with RPAI in October 2021 and select strategic acquisitions in 2022. The Merger created a top five open-air shopping center REIT based upon enterprise value, enhanced our portfolio quality with entry into strategic gateway markets and bolstered our presence in existing markets, lowered our cost of capital, enhanced our near-term organic growth through lease-up and select development opportunities, and strengthened our balance sheet with limited near-term debt maturities.
Competition
The United StatesU.S. commercial real estate market continues to be highly competitive. We face competition from other REITs, including other retail REITs, and other owner-operators engaged in the ownership, leasing, acquisition, and development of shopping centers as well as from numerous local, regional and national real estate developers and owners in each of our markets. Some of these competitors may have greater capital resources than we do, although we do not believe that any single competitor or group of competitors is dominant in any of the primary markets where our properties are located are dominant in that market.
which we own properties.
We face significant competition in our efforts to lease available space to prospective tenants at our operating, development and redevelopment properties. The nature of the competition for tenants varies based on the characteristics of each local market in which we own properties. We believe that the principal competitive factors in attracting tenants in our market areas are location, demographics, rental rates, the presence of anchor stores, competitor shopping centers in the same geographic area and the maintenance, appearance, access and traffic patterns of our properties. There can be no assurance that in the future that we will be able to compete successfully with our competitors in our development, acquisition and leasing activities.
Government Regulation
We and our properties are subject to a variety of federal, state, and local environmental, health, safety and similar laws, including:
Americans with Disabilities Act.Act and Other Regulations. Our properties must comply with Title III of the Americans with Disabilities Act (the "ADA"“ADA”), to the extent that such properties are public accommodations as defined by the ADA. The ADA may require removal of structural barriers to access by persons with disabilities in certain public areas of our properties where such removal is readily achievable. We believe our properties are in substantial compliance with the ADA and that we will not be required to make substantial capital expenditures to address the requirements of the ADA. However, noncompliance with the ADA could result in the imposition of finesorders requiring us to spend substantial sums to cure violations, pay attorneys’ fees or an award of damages to private litigants.other amounts. The obligation to make readily accessible accommodations is an ongoing one, and we will continue to assess our properties and make alterations as appropriate in this respect. In addition, our properties are subject to fire and safety regulations, building codes and other land use regulations.
Affordable Care Act. Effective January 2015, weWe may be subject to excise taxes under the employer mandate provisions of the Affordable Care Act ("ACA"(the “ACA”) if we (i) do not offer health care coverage to substantially all of our full-time employees and their dependents or (ii) do not offer health care coverage that meets the ACA'sACA’s affordability and minimum value standards. The excise tax is based on the number of full-time employees. We do not anticipate being subject to a penalty under the ACA; however, even in the event that we are, any such penalty would be less than $0.3$1.0 million, as we had 147236 full-time employees as of December 31, 2017. 2022.
Environmental Regulations. Some properties in our portfolio contain, may have contained or are adjacent to or near other properties that have contained or currently contain underground storage tanks for petroleum products or other hazardous or toxic substances. These storage tanks may have released, or have the potential to release, such substances into the environment.
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In addition, some of our properties have tenants whichthat may use hazardous or toxic substances in the routine course of their businesses. In general, these tenants have covenanted in their leaseslease agreements with us to use these substances, if any, in compliance with all environmental laws and have agreed to indemnify us for any damages we may suffer as a result of their use of such substances. However, these lease provisions may not fully protect us in the event that a tenant becomes insolvent. Finally, oneAlso, certain of our properties hashave contained asbestos-containing building materials or ACBM,(“ACBM”), and another propertyother properties may have contained such materials based on the date of its construction. Environmental laws require that ACBM be properly managed and maintained, and fines and penalties may be imposed on building owners or operators for failure to comply with these requirements. The laws also may allow third parties to seek recovery from owners or operators for personal injury associated with exposure to asbestos fibers.
Neither existing environmental, health, safety and similar laws nor the costs of our compliance with these laws has had a material adverse effect on our financial condition or results operations, and management does not believe that they will in the future. In addition, we have not incurred, and do not expect to incur, any material costs or liabilities due to environmental contamination at properties we currently own or have owned in the past. However, we cannot predict the impact of new or changed laws or regulations on properties we currently own or may acquire in the future.
With environmental sustainability becoming a national priority, we have continued to demonstrate our strong commitment to be a responsible corporate citizen through resource reduction and employee training that havehas resulted in reductions of energy consumption, waste and improved maintenance cycles.
Insurance
We carry comprehensive liability, fire, extended coverage, and rental loss insurance that covers all properties in our portfolio. We believe the policy specifications and insured limits are appropriate and adequate given the relative risk of loss, the cost of the coverage, geographic locations of our assets and industry practice. Certain risks such as loss from riots, war or acts of God, and, in some cases, flooding are not insurable; andinsurable or the cost to insure over these events is cost prohibitive; therefore, we do not carry insurance for these losses. Some of our policies, such as those covering losses due to terrorism and floods, are insured subject to limitations involving large deductibles or co-payments and policy limits that may not be sufficient to cover losses.
Offices
Our principal executive office isoffices are located at 30 S. Meridian Street, Suite 1100, Indianapolis, IN 46204. Our46204, and our telephone number is (317) 577-5600.
Human Capital
As of December 31, 2017,2022, we had 147236 full-time employees. The majority of these employees were based at our Indianapolis, Indiana headquarters.headquarters though we also maintain regional offices across the United States. We believe our employees are the most important part of our business. We are committed to providing a work environment that attracts, develops and retains high-performing individuals and treats employees with dignity and respect.
Diversity, Equity and Inclusion
Our primarypolicies are designed to promote fairness, equal opportunities, and diversity within the Company. When attracting, developing and retaining talent, we seek individuals who hold varied experiences and viewpoints and embody our core values to create an inclusive and diverse culture and workplace that allows each employee to do their best work and drive our collective success. We believe that a diverse workforce possesses a broader array of perspectives that businesses need to remain competitive in today’s economy. We maintain employment policies that comply with federal, state and local labor laws and promote a culture of fairness and respect. These policies set forth our goal to provide equal employment opportunity without discrimination or harassment on the basis of age, gender (including identity or expression), marital status, civil partnership status, sexual orientation, disability, color, nationality, race or ethnic origin, or religion or belief. All of our employees must adhere to a Code of Business Conduct and Ethics that sets standards for appropriate behavior, and all employees must also complete required internal training on respect in the workplace and diversity to further enhance our cultural behaviors.
We have achieved our targets of at least 30% diverse representation on our Board of Trustees and at least one female-chaired committee with the chairing of our Corporate Governance and Nominating Committee by a female trustee. As of December 31, 2022, approximately 48% of our workforce was female and minorities represented approximately 20% of our team.
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Professional Development and Training
We believe a commitment to our employees’ learning and development through training, educational opportunities and mentorship is critical to our ability to continue to innovate. We focus on leadership development at every level of the organization. We align employees’ goals with our overall strategic direction to create a clear link between individual efforts and the long-term success of the Company and provide effective feedback on employees’ performance towards goals to ensure their growth and development. We utilize the following tools to recognize our employees, advance our talent pool and create a sustainable and long-term enterprise: (i) performance plans, (ii) talent recognition via our digital employee-to-employee Recognition Wall, (iii) Level Up award that recognizes employees who have made an extraordinary effort to help the Company achieve success, (iv) newly created FOCUSED award that acknowledges employees who have embodied our FOCUSED values (forward-thinking, optimistic, collaborative, urgent, sound, empowered, and dedicated) throughout the year, and (v) individual development planning, along with reward packages. The Company also provides reimbursement for those seeking to further their education through degree or certification programs.
Community Development
We seek to foster a corporate culture where our many stakeholders, including our employees, engage in the topic of community development and collaborate to extend resources towards the advancement of this principle. We are proud to be an active citizen of the communities in which we operate. In furtherance of this commitment, we partner with and support local charitable organizations that we believe are contributing to the growth and development of the community and hosted dozens of free community events throughout our portfolio. Our Kite Cares initiative contributes to the welfare of local youth and those in need. The program’s efforts are community-focused and have included:
•charitable grants to programs benefiting our communities;
•Company-wide service projects focused on feeding those in need and supporting local farmers;
•fundraising to support displaced workers;
•contributions to healthcare workers and first responders; and
•construction of a youth community center.
In addition, our employees have donated and coordinated substantial fundraising and have spent many hours volunteering to support a variety of charities with which we partner. The Company supports these efforts with dedicated paid volunteer time off given annually to all employees and a 100% match of employee donations, subject to certain limits, to charitable causes.
Team Wellness
The health, safety and well-being of our employees is always a top priority, and we foster an environment that allows our employees to succeed while balancing work and life. We provide a wide range of employee benefits including comprehensive medical, prescription, dental, and vision insurance coverage, the majority of which is paid by the Company. We also provide paid maternity, paternity and adoption leave, matching 401(k) contributions, free life insurance, disability benefits, spousal death benefits, education assistance reimbursements, and remote working and flexible scheduling arrangements. In addition, to enhance the well-being of our employees, we provide them with access to health and wellness programs that support physical, mental and financial health such as Lunch & Learns and Wellness Wednesdays.
Environmental, Social and Governance Matters
The Company strives to be a responsible corporate citizen, and we recognize the importance that environmental, social, and governance (“ESG”) initiatives play in our ability to generate long-term, sustainable returns. In 2020, we formed a cross-functional task force (the “ESG Task Force”) that is comprised of senior leadership and members from a variety of functional areas and is led by our Chief Executive Officer. The ESG Task Force meets quarterly and focuses on setting, implementing, monitoring and communicating to our investors and other stakeholders our ESG strategy and related initiatives that are important and regularly report to the Board of Trustees.
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In October 2022, the ESG Task Force issued the Company’s inaugural Corporate Responsibility Report for 2021, which is published on our website and provides a comprehensive overview of our ESG strategies and initiatives. The Company is committed to implementing sustainable business practices at our properties and is the ownership and operation of neighborhood and community shopping centers. We do not distinguish or groupactively undertaking multiple projects to make our operations more energy efficient and reduce our environmental impact. These current projects include:
•installing LED lighting in parking lots (57% of our properties have installed such LED lighting as of December 31, 2022, with a goal of 80% of the portfolio by the end of 2026);
•implementing smart meters and other initiatives aimed at water conservation, recycling and waste diversion (53 properties have implemented water efficiency measures and 129 properties have implemented waste efficiency measures, with a goal of 25% of the portfolio by the end of 2026);
•installing electric vehicle (“EV”) charging stations (178 charging stations have been installed across 16 properties for a total of 9% of the portfolio, with a goal of 20% of the portfolio by the end of 2026); and
•receiving IREM certifications (53 properties or 29% of the portfolio have received such certifications as of December 31, 2022, with a goal of 75% of the portfolio by the end of 2026).
In addition, we implemented a policy to transition landscaping in all future redevelopment projects to drought-tolerant landscape where permitted by code. Recent business initiatives encourage tenants to adopt green leases, also known as “high-performance” or “energy-aligned” leases, to equitably align the costs and benefits of energy and water efficiency investments for building owners and tenants, based on principles and best practices from the Green Lease Leaders Reference Guide by the Institute for Market Transformation and the U.S. Department of Energy. The Company has continued its partnership with One Tree Planted, a geographical basis,non-profit organization committed to reforestation, and has planted over 17,000 new trees through its Project Green reforestation effort. We continue to evaluate potential actions that might reduce our carbon footprint or any other basis, when measuring performance. Accordingly,otherwise mitigate our environmental impact.
As described above, we have one operating segment, which also servesare highly committed to our employees, and our policies are designed to promote fairness, equal opportunities, diversity, well-being and professional development within the Company.Our corporate governance structure, led by our Board of Trustees, closely aligns our interests with those of our shareholders, as further described in our reportable segment for disclosure purposes in accordance with accounting principles generally accepted in the United States ("GAAP").
annual Proxy Statement.
Available Information
Our Internet website address is http://www.kiterealty.com. You can obtainWe make available free of charge on our website free of charge, a copy of our Annual ReportReports on Form 10-K, our quarterly reportsQuarterly Reports on Form 10-Q, our current reportsCurrent Reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after wethose reports are electronically file such reports or amendmentsfiled with, or furnish themfurnished to, the SEC. Our Internet website and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K.
Also available on our website free of charge, are copies of our Code of Business Conduct and Ethics, our Code of Ethics for Principal Executive Officer and Senior Financial Officers, our Corporate Governance Guidelines, and the charters for each of the committees of our Board of Trustees—the Audit Committee, the Corporate Governance and Nominating Committee, and the Compensation Committee. Copies of our Code of Business Conduct and Ethics, our Code of Ethics for Principal Executive Officer and Senior Financial Officers, our Corporate Governance Guidelines, and our committee charters are also available from us in print and free of charge to any shareholder upon request. Any person wishing to obtain such copies in print should contact our Investor Relations department by mail at our principal executive office.offices.
The SEC maintains a website (http://www.sec.gov) that contains reports, proxy statements, information statements, and other information regarding issuers that file electronically with the SEC.
ITEM 1A. RISK FACTORS
The following factors, among others, could cause actual results to differ materially from those contained in forward-looking statements made in this Annual Report on Form 10-K and presented elsewhere by our management from time to time. These factors, among others, may have a material adverse effect on our business, financial condition, operating results and cash flows, and you should carefully consider them.including our ability to make distributions to our shareholders. It is not possible to predict or identify all such factors. Youfactors and this list should not consider this list to be considered a complete statement of all potential risks or uncertainties. Past performance should not be considered an indication of future performance.
We have separated the risks into three categories:
(i) risks related to our operations;
(ii) risks related to our organization and structure; and
(iii) risks related to tax matters.
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RISKS RELATED TO OUR OPERATIONS
Inflation rates have increased and may continue to be elevated or increase further, which may adversely affect our financial condition and results of operations.
Prior to 2021, inflation was relatively low for many years and had a minimal impact on our operating and financial performance; however, inflation increased significantly during 2022 and may continue to be elevated or increase further. The sharp rise in inflation has negatively impacted, and could continue to negatively impact, consumer confidence and spending, which has impacted, and could continue to impact, our tenants’ sales and overall health and, in turn, put downward pricing pressure on rents that we are able to charge to new or renewing tenants, and in some cases, our percentage rents. Most of our leases contain provisions designed to mitigate the adverse impact of inflation, including stated rent increases and requirements for tenants to pay a share of operating expenses, including common area maintenance, real estate taxes, insurance or other operating expenses related to the maintenance of our properties, with escalation clauses in most leases. However, the stated rent increases or limits on such tenant’s obligation to pay its share of operating expenses could be lower than the increase in inflation at any given time. Inflation may also limit our ability to recover all of our operating expenses. In addition, a portion of our leases are based on a fixed amount or fixed percentage that is not subject to adjustment for inflation. Increased inflation could have a more pronounced negative impact on our interest and general and administrative expenses, as these costs could increase at a higher rate than our rents charged to tenants. If we are unable to lower our operating costs when revenues decline and/or are unable to pass cost increases onto our tenants, our financial performance could be materially and adversely affected.
Our business, financial condition, performance, and value are subject to risks and conditions associated with real estate assets and the real estate industry.
Ongoing challenges facing our retail tenants and non-owned anchor tenants, including bankruptcies, financial instability and consolidations, may have a material adverse effect on our financial conditionbusiness.
We derive the majority of our revenue from retail tenants who lease space from us at our properties, and resultsour ability to generate cash from operations is dependent upon the rents that we are able to charge and collect. The success of operations.
•Collections. Tenants may among other things, (i) have difficulty paying their rent obligations as they struggle to sell goods and services to consumers, (ii) be unwilling to enter into or renew leases with us on favorable terms or at all, (iii) seek to terminate their existing leases with uswhen due or request rent concessions on such leases,deferrals, reductions or (iv) be forced to curtail operationsabatements.
•Leasing. Tenants may delay or declare bankruptcy. We are also susceptible to other developments and conditions that could have a material adverse effect on our business. These developments and conditions include relocations of businesses, changing demographics (including the number of households and average household income surrounding our properties), increasing consumer shopping via the internet (or e-commerce), other changes in retailers' and consumers' preferences and behaviors, infrastructure quality, federal, state, and local budgetary constraints and priorities, increases in real estate and other taxes, increased government regulation and the related compliance cost, decreasing valuations of real estate, and other factors.
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lease with us and the related loss of rental income attributable to the terminated leases. Leaseincome. Such terminations or failure of a major tenant or non-owned anchor to occupy the premisescancellations could result in lease terminations or reductions in rent by other tenants in the same shopping centerscenter because of contractual co-tenancy termination or rent reduction rights under the terms ofcontained in some leases. In that event, we
•Re-leasing. We may be unable to re-lease the vacated space at attractive rents or at all. In some cases, it may take significantextended periods of time or increased costs to re-lease a space. The inability to re-lease space particularly space once occupied by a major tenant or non-owned anchor. Additionally, in the event our tenants are involved in mergers or acquisitions with or by third parties or undertake other restructurings, such tenants may choose to terminate their leases, vacate the leased premises or not renew their leases if they consolidate, downsize or relocate their operations as a result of the transaction. The occurrence of any of the situations described above,at attractive rents, particularly if it involves a substantial tenant or a non-owned anchor with ground leasestenant in multiple locations, could have a material adverse effect on our results of operations.
us.
Tenant bankruptcies may increase during periods ofcould make it difficult economic conditions. We cannotfor us to collect rent or make any assurances thatclaims against a tenant that files for bankruptcy protection will continue to pay its rent obligations. in bankruptcy.
A bankruptcy filing by one of our tenants or a lease guarantor would legally prohibit us from collecting pre-bankruptcy debts or unpaid rent from that tenant or the lease guarantor unless we receive an order from the bankruptcy court permitting us to do so. Such bankruptcies could delay, reduce, or ultimately preclude collection of amounts owed to us.us, including both past and future rent. A tenant in bankruptcy may attempt to renegotiate thetheir lease or request significant rent concessions. If a lease is assumed by thea tenant in bankruptcy, all pre-bankruptcy balances due under the lease must be paid to us in full. However, if a lease is rejected by a tenant in bankruptcy, we would have only a general unsecured claim for damages, including pre-bankruptcy balances.damages. Any unsecured claim we hold may be paid only to the extent that funds are available and only in the same percentage as is paid to all other holders of unsecured claims, andclaims. Under bankruptcy laws, there are restrictions under bankruptcy laws that limit the amount of the claim we can make for future rent under a lease if athe lease is rejected. As a result, it is likely that we would recover substantially less than the full value of any unsecured claimsclaim we hold from a tenant in bankruptcy, which would result in a reduction in our cash flow and could have a material adverse effect on us. As of December 31, 2022, Party City Holdings Inc., Bed Bath & Beyond Inc. and Regal Cinemas, three tenants in our portfolio with a total of 42 locations, may not be successful in implementing their strategic plans to emerge from or avoid bankruptcy; as a result, we have established reserves for these tenants. If they are not successful in their restructuring plans and reduce or stop their payment of rent, our financial condition, operating results and cash flows could be impacted.
The growth of e-commerce may impact our tenants and our business.
Retailers are increasingly impacted by e-commerce and changes in consumer buying habits, which could have an adverse impact on some of our tenants and affect decisions made by current and prospective tenants in leasing space, including reducing the size or number of their retail locations in the amount of cash availablefuture. We cannot predict with certainty how changes in e-commerce will impact the demand for distribution to our shareholders.
We face significant competition, which may impedeimpact our ability to renew leases or re-lease space as leases expire or require us to undertake unexpectedrental rates, leasing terms and capital improvements.
We compete for tenants with numerous developers, owners and operators of retail shopping centers, and regional malls, and outlet malls, for tenants. These competitors includeincluding institutional investors, other REITs, and other owner-operators of community and neighborhood shopping centers, some of which own or may in the future own properties similar to ours in the same markets as ours but which have greater capital resources.owner-operators. As of December 31, 2017,2022, leases representing 7.1%9.3% of our total annualized base rentretail ABR were scheduled to expire in 2018. If our2023. Our competitors may have greater capital resources or be willing to offer space atlower rental rates below current market rates, or below the rental rates we currently charge ourmore favorable terms for tenants, wesuch as substantial rent reductions or abatements, tenant allowances or other improvements, and early termination rights, which may be unable to lease on satisfactory terms and we may be pressuredpressure us to reduce our rental rates, below those we currently charge in orderundertake unexpected capital improvements or offer other terms less favorable to retain tenants when our leases with them expire. We also may be required to offer more substantial rent abatements, tenant improvements and early termination rights or accommodate requests for renovations, build-to-suit remodeling and other improvements than we have historically. As a result,us, which could adversely affect our financial condition, results of operations, cash flow, trading price of our common shares and ability to satisfy our debt service obligations and to pay distributions to our shareholders may be materially adversely affected. In addition, increased competition for tenants may require us to make capital improvements to properties that we would not have otherwise planned to make, which would reduce cash available for distributions to shareholders. Ifcondition. Additionally, if retailers or consumers perceive that shopping at other venues online or by phone is more convenient, cost-effective or otherwise more attractive, our revenues and profitabilityresults of operations also may suffer. There can be no assurance that in the future we will be able to compete successfully with our competitors in our development, acquisition and leasing activities.
Because of our geographic concentration in Florida, Indiana and Texas,concentrations, a prolonged economic downturn in thesecertain states and regions could materially and adversely affect our financial condition and results of operations.
The specific markets in which we operate may face challenging economic conditions that could persist into the future. In particular, as of December 31, 2017,2022, rents from our owned retail square footage in the states of Texas, Florida, IndianaMaryland, New York, and TexasNorth Carolina comprised 25%25.7%, 14%10.9%, 6.8%, 6.0%, and 12%5.4% of our annualized base rent, respectively. This level of concentration could expose us to greater market-dependent economic risks than if we owned properties in numerousmore geographic regions. Adverse economic or real estate trends in Florida, Indiana, Texas,these states or the surrounding regions or any decrease in demand for retail
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space resulting from the local regulatory environment, business climate or fiscal problems in these states could materially and adversely affect our financial condition, results of operations, cash flow, the trading price of our common sharesus and our ability to satisfy our debt service obligationsprofitability and to pay distributions to our shareholders.
Uninsured losses or losses in excess of insurance coverage could materially and adversely affect our cash flow, financial condition and results of operations.
us.
We do not carry insurance for generally uninsurable losses such as loss from riots, war or acts of God and, in some cases, flooding.floods. In addition, insurance companies may no longer offer coverage against certain types of losses such as environmental liabilities or other catastrophic events or, if offered, the expense of obtaining such coverage may not be justified. Some of our insurance policies, such as those covering losses due to terrorism and floods, are insured subject to limitations, involving large deductiblesand in the future, we may be unable to renew or co-paymentsduplicate our current insurance coverage at adequate levels or at reasonable prices. Given the continued increase in extreme climate-related events, we have experienced a significant increase in insurance rates for property insurance in 2022 and policy limits that may not be sufficientcontinue to cover all losses.do so in the future. The rates for casualty insurance have also increased significantly in 2022 due to an increase in litigation. In addition, tenants generally are required to indemnify and hold us harmless from liabilities resulting from injury to persons or damage to personal or real property on the premises due to activities conducted by tenantsthem or their agents on the properties (including, without limitation, any environmental contamination) and, at the tenant’s expense, to obtain and keep in full force during the term of the lease, liability and property damage insurance policies. However, tenants may not properly maintain their insurance policies or have the ability to pay the deductibles associated with such policies. If we experience a loss that is uninsured or that exceeds policy limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties.flows. Inflation, changes in building codes and ordinances, environmental considerations, and other factors also might make it impractical or undesirable to use insurance proceeds to replace a property after it has been damaged or destroyed. In addition, if the damaged properties are subject to recourse indebtedness, we would continue to be liable for the indebtedness, even if these properties were irreparably damaged.
Developments and redevelopments have inherent risks that could adversely impact us.
•expenditure of capital and time on projects that may not be pursued or completed;
•inability to obtain necessary zoning or regulatory approvals;
•higher than estimated construction or operating costs, including labor and material costs;
•inability to complete construction on schedule;
•significant time lag between commencement and stabilization resulting in delayed returns and greater risks due to fluctuations in the general economy, shifts in demographics and competition;
•decrease in customer traffic during the development period causing a decrease in tenant sales;
•inability to secure key anchor or other tenants or complete the lease-up at anticipated absorption rates or at all;
•occupancy and rental rates at a newly completed project may not meet expectations;
•investment returns from developments may be less than expected; and
•suspension of development projects after construction has begun due to changes in economic conditions or other factors that may result in the write-off of costs, payment of additional costs or increases in overall costs if the project is restarted.
In deciding whether to develop or redevelop a particular property, we make certain assumptions regarding the expected future performance of that property, and our financial performance could be materially and adversely affected, or in the case of an unsuccessful redevelopment project, our entire investment could be at risk for loss, or an impairment charge could occur.
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Pandemics and other health crises, including the ongoing outbreak of COVID-19, could negatively impact our business, financial performance and condition, operating results and cash flows.
Pandemics, including the ongoing COVID-19 pandemic, as well as both future widespread and localized outbreaks of infectious diseases and other health concerns, and the measures taken to prevent the spread or lessen the impact, could cause a material disruption to the retail industry or the economy as a whole. In 2020 and 2021, the COVID-19 pandemic had, and a future outbreak of a highly infectious or contagious disease or other public health crisis could similarly have, significant repercussions across domestic and global economies, including the retail sector within the U.S., and the financial markets. The COVID-19 pandemic disrupted our business and had a significant adverse effect, and a similar outbreak could, in the future, significantly adversely impact and disrupt our business, financial performance and condition, operating results and cash flows. Additional factors that may negatively impact our ability to operate successfully as a result of COVID-19, include, among others:
•the inability of our tenants to meet their lease obligations to us in full, or at all, due to changes in their businesses or local or national economic conditions, including labor shortages, inflation, or reduced discretionary spending;
•business continuity disruptions and delays in the supply of products or services to us or our tenants from vendors that are needed to operate efficiently, causing costs to rise sharply and inventory to fall; and
•changes in consumer behavior in favor of e-commerce.
The full extent of the impact of a pandemic on our propertiesbusiness is largely uncertain and dependent on a number of factors beyond our control, and we are not able to estimate with any degree of certainty the effect a pandemic or measures intended to curb its spread could have on our business, results of operations, financial condition and cash flows.
We and our tenants face risks related to cybersecurity attacks that could cause loss of confidential information and other business disruptions.
We and our tenants rely extensively on information technology systems to process transactions and manage our respective businesses, and as a result, we are at risk from, and may be expensiveimpacted by, cybersecurity incidents. These cybersecurity incidents may include unintentional or difficultmalicious attempts to obtain, exposing usgain unauthorized access to or acquisition of our data and/or information technology systems by individuals, including employees or contractors, or sophisticated organizations; failures during routine operations such as system upgrades or user errors; network or hardware failures; or introductions of malicious or disruptive software. Such cybersecurity incidents may involve social engineering, business email compromise, cyber extortion, ransomware, denial of service, or attempts to exploit vulnerabilities, or may be predicated by geopolitical events, natural disasters, failures or impairments of telecommunications networks, or other catastrophic events.
Cybersecurity incidents could compromise the confidential information of our employees, tenants, and vendors, disrupt the proper functioning of our networks, result in misstated financial reports, violations of loan covenants and/or missed reporting deadlines, impede our ability to maintain the building systems that our tenants rely on for the efficient use of their leased space, require significant management attention to remedy any damages, result in reputational damage to ourselves or our tenants, or lead to potential risklitigation or regulatory investigation, increased oversight, or fines. Increased regulation of loss.data collection, use and retention practices, including self-regulation and industry standards, changes in existing laws and regulations, enactment of new laws and regulations, increased enforcement activity, and changes in interpretation of laws, could increase our cost of compliance and operations, limit our ability to grow our business, or otherwise harm us.
We employ a variety of measures to prevent, detect and respond to cybersecurity threats; however, there is no guarantee such efforts will be successful in preventing a cybersecurity incident, and we have been targeted by e-mail phishing attempts and scams in the past. The interpretation and application of cybersecurity and data protection laws and regulations are often uncertain and evolving; there can be no assurance that our security measures will be deemed adequate, appropriate or reasonable by a regulator or court. Moreover, even security measures that are deemed appropriate, reasonable, and/or in accordance with applicable legal requirements may not be able to protect the information we maintain.
Additionally, we rely on a number of service providers and vendors, and cybersecurity risks at these service providers and vendors create additional risks for our information and business. A cybersecurity incident may result in disruption of our operations, material harm to our financial condition, cash flows and the market price of our common shares, misappropriation of assets, compromise or corruption of confidential information collected in the course of conducting our business, liability for stolen information or assets, increased cybersecurity protection and insurance costs, regulatory enforcement, litigation and damage to our stakeholder relationships.
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We depend on external financing to fulfill our capital needs, and disruptions in the financial markets could affect our ability to obtain financing on reasonable terms, or at reasonable prices. In addition, insurance companies may no longer offer coverage against certain typesall, and have other material adverse effects on our business.
Partly because of losses, such as losses due to terrorist acts, environmental liabilities, or other catastrophic events including hurricanes and floods, or, if offered, the expensedistribution requirements of obtaining these types of insurancebeing a REIT, we may not be justified. We thereforeable to fund all future capital needs with income from operations. Consequently, we may ceaserely on external financing to have insurance coverage against certain typesfulfill our capital needs. Disruptions in the financial markets could impact our ability to acquire or develop properties when strategic opportunities exist, satisfy our principal and interest obligations or make distributions to our shareholders. These disruptions could impact the overall amount of losses and/or theredebt and equity capital available, our ability to access new capital on acceptable terms, lower loan to value ratios, and cause a tightening of lender underwriting standards and terms and higher interest rate spreads. As a result, we may be decreasesunable to refinance or extend our existing indebtedness on favorable terms or at all. We have $284.4 million of debt principal scheduled to mature through December 31, 2023. Our inability to obtain debt or equity capital on favorable terms or at all could (i) result in the limitsdisruption of insurance available.our ability to operate, maintain or reinvest in our portfolio; (ii) force us to dispose of properties on disadvantageous terms, which could adversely affect our ability to service other debt and meet other obligations; (iii) impact our ability to repay or refinance our indebtedness on or before maturity; and (iv) limit our ability to acquire new properties, all of which could have a material adverse effect on our business. If an uninsured losseconomic conditions deteriorate in any of our markets, we may have to seek less attractive, alternative sources of financing and adjust our business plan accordingly.
We have a significant amount of indebtedness outstanding and rising interest rates could materially adversely affect us.
As of December 31, 2022, we had $3.0 billion of consolidated indebtedness outstanding, of which $183.3 million bore interest at variable rates after giving effect to interest rate swaps. Due to the current high inflation environment, the U.S. Federal Reserve sharply raised short-term interest rates in 2022 to curtail the high inflation levels, which has caused our borrowing costs to rise. The U.S. Federal Reserve may continue to raise interest rates, which could result in adverse impacts on the U.S. economy, including slowing economic growth and potentially a recession. If our interest expense increased significantly, it could materially adversely affect us. For example, if market rates of interest on our variable rate debt outstanding, net of interest rate hedges, as of December 31, 2022 increased by 1%, the increase in interest expense on our unhedged variable rate debt would decrease future cash flows by approximately $1.8 million annually.
We may incur additional debt in connection with various development and redevelopment projects and upon the acquisition of operating properties. Our organizational documents do not limit the amount of indebtedness that we may incur. In addition, we may increase our mortgage debt by obtaining loans secured by some or all of the real estate properties we develop or acquire. We may also borrow funds if necessary to satisfy the requirement that we distribute to shareholders at least 90% of our annual “REIT taxable income” (determined before the deduction for dividends paid and excluding net capital gains) or otherwise as is necessary or advisable to ensure that we maintain our qualification as a lossREIT for U.S. federal income tax purposes or otherwise avoid paying taxes that can be eliminated through distributions to our shareholders.
Our substantial debt could materially and adversely affect our business in other ways, including by, among other things: (i) requiring us to use a substantial portion of our cash flows from operations to service our indebtedness, which would reduce the available cash to fund general corporate purposes and distributions, (ii) limiting our ability to obtain additional financing to fund our working capital needs, capital expenditures, acquisitions, other debt service requirements or other purposes, (iii) increasing our costs of incurring additional debt and our exposure to variable interest rates, (iv) making us more vulnerable to economic and industry downturns and reducing our flexibility in responding to changing business and economic conditions, and (v) placing us at a competitive disadvantage compared to other real estate investors that have less debt. The impact of any of these potential adverse consequences could have a material adverse effect on us.
We could be adversely affected by the financial and other covenants and provisions contained in our credit facility, term loan agreements and note purchase agreements.
The debt agreements related to our senior unsecured credit facility, senior unsecured term loans and private placement notes require compliance with certain financial and operating covenants, including, among other things, the requirement to maintain maximum unencumbered, secured and consolidated leverage ratios and minimum fixed charge and unencumbered interest coverage ratios, as well as limitations on our ability to incur debt, make dividend payments, sell all or substantially all of our assets and engage in mergers, consolidations and certain acquisitions. Given the restrictions in our debt agreement covenants, we may be limited in our operating and financial flexibility and ability to respond to changes in our business or pursue strategic opportunities in the future, including the ability to obtain additional funds needed to address cash shortfalls or
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pursue growth opportunities or other accretive transactions. Further, certain of our debt agreements related to our senior unsecured credit facility and certain senior unsecured term loans are priced, in part, on leverage grids that reset quarterly. Deterioration in our leverage covenant calculations could lead to a higher credit spread component within the applicable interest rate for these debt agreements and result in higher interest expense.
In addition, these debt agreements contain certain events of default that include, but are not limited to, failure to (i) make principal or interest payments when due, (ii) perform or observe any term, covenant or condition contained in the agreements, and (iii) maintain certain financial and operating ratios and other criteria, misrepresentations, acceleration of other material indebtedness and bankruptcy proceedings. In the event of a default under any of these agreements, the lenders or holders of our credit agreement, term loan agreements and note purchase agreements would have various rights including, but not limited to, the ability to require the acceleration of the payment of all principal and interest then due and/or to terminate the agreements. The declaration of a default and/or the acceleration of the amount due under any such agreement could have a material adverse effect on our business, limit our ability to make distributions to our shareholders, and prevent us from obtaining additional funds needed to address cash shortfalls or pursue growth opportunities.
The agreements related to our unsecured credit facility, unsecured term loans and private placement notes contain cross-defaults to certain other material indebtedness (including recourse indebtedness in excess of $40.0 million, $50.0 million or $75.0 million, depending on the agreement), such that an “Event of Default” under one of these facilities or loans could trigger an “Event of Default” under the other facilities or loans. These provisions could allow the lending institutions and noteholders to accelerate the amount due under the loans and private placement notes. If payment is accelerated, our insured limits occurs,liquid assets may not be sufficient to repay such debt in full. As of December 31, 2022, we believe we were in compliance with all applicable covenants under our debt agreements, although there can be no assurance that we will continue to remain in compliance in the future.
Adverse changes in our credit ratings could lose all or a portion ofaffect our borrowing capacity and borrowing terms.
Our creditworthiness is rated by nationally recognized credit rating agencies. The credit ratings assigned are based on our operating performance, liquidity and leverage ratios, financial condition and prospects, and other factors viewed by the credit rating agencies as relevant to our industry and the general economic outlook. Our credit rating can affect our ability to access debt capital, we have invested in a property, as well as the anticipatedterms of certain existing and future revenuedebt financing we may obtain. Since we depend on debt financing to fund the growth of our business, an adverse change in our credit rating, including changes in our credit outlook, or even the initiation of a review of our credit rating that could result in an adverse change, could have a material adverse effect on us. Furthermore, certain of our senior unsecured term loans are priced, in part, on our credit rating. A downgrade of our credit rating could lead to a higher credit spread component within the applicable interest rate for these debt agreements and result in higher interest expense.
We are subject to risks associated with hedging agreements, including potential performance failures by counterparties and termination costs.
We use a combination of interest rate protection agreements, including interest rate swaps, to manage the risks associated with interest rate volatility. This may expose us to additional risks, including a risk that the counterparty to a hedging arrangement may fail to honor its obligations. Developing an effective interest rate risk strategy is complex and no strategy can completely insulate us from the property afterrisks associated with interest rate fluctuations. There can be no assurance that our hedging activities will have the desired beneficial effect on our results of operations or financial condition. Further, should we choose to terminate a covered periodhedging agreement, there could be significant costs and cash requirements involved to fulfill our initial obligation under such agreement.
We may be adversely affected by changes in LIBOR reporting practices, the method in which LIBOR is determined or the use of alternative reference rates.
As of December 31, 2022, we had approximately $155.0 million of debt and derivatives outstanding that were indexed to the London Interbank Offered Rate (“LIBOR”). Certain tenors of LIBOR will remain available through June 2023; however, LIBOR is no longer permitted to be used in new contracts. During the year ended December 31, 2022, we transitioned a majority of our existing contracts to the Secured Overnight Financing Rate (“SOFR”) and expect to transition the remaining contracts by March 2023. When LIBOR is discontinued, the interest rate for our debt instruments that remain indexed to LIBOR will be determined using various alternative methods, any of which may result in interest obligations that are more than or do not otherwise correlate over time but still remain obligated forwith the payments that would have been made on such debt if LIBOR was available in its current form, which could have a material adverse effect on our financing costs and, as a result, our financial condition, operating results and cash flows.
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The replacement of LIBOR with SOFR may adversely affect interest expense related to outstanding debt.
The debt agreements related to our senior unsecured credit facility and senior unsecured term loans require the applicable interest rate or payment amount by reference to SOFR. The use of SOFR-based rates may result in interest rates and/or payments that are higher or lower than the rates and payments that we previously experienced when referenced to LIBOR. SOFR is a relatively new reference rate, has a very limited history and is based on short-term repurchase agreements that are backed by Treasury securities. Changes in SOFR could be volatile and difficult to predict, and there can be no assurance that SOFR will perform similarly to the way LIBOR would have performed at any mortgage debttime. As a result, the amount of interest we may pay on our senior unsecured credit facility and senior unsecured term loans is difficult to predict.
Joint venture investments could be adversely affected by the structure and terms thereof and the activities of our joint venture partners.
As of December 31, 2022, we owned interests in Delray Marketplace and a residential building at One Loudoun Downtown through consolidated joint ventures and interests in the following through unconsolidated joint ventures: a three-property retail portfolio consisting of Livingston Shopping Center, Plaza Volente and Tamiami Crossing, the hotel component at Eddy Street Commons, the multifamily component at Glendale Town Center, and the development project at The Corner, and in the future, we may seek to co-invest with third parties through other joint ventures. Our joint ventures and the value and performance of such investments may involve risks not present with respect to our wholly owned properties, including (i) shared decision-making authority, which may prevent us from taking actions that are in our best interest, (ii) restrictions on the ability to sell our interests in the joint ventures without the other partners’ consent, (iii) potential conflicts of interest or other disputes, including potential litigation or arbitration that would prevent management from focusing their time and effort on our business, (iv) potential losses or increased costs or expenses arising from actions taken in respect of the joint ventures, (v) actions by our partners that could jeopardize our REIT status, require us to pay taxes or subject the properties owned by the joint venture to liabilities greater than those contemplated by the terms of the joint venture agreements, and (vi) joint venture agreements may contain buy-sell provisions pursuant to which one partner may initiate procedures requiring us to buy the other partner’s interest, all of which could affect our business, financial obligations relatedcondition, results of operations and cash flows.
To the extent we pursue acquisitions in the future, we may not be successful in acquiring desirable operating properties, which may impede our growth.
From time to time, consistent with our business strategy, we evaluate the property. market and may acquire properties when we believe strategic opportunities exist. When we pursue acquisitions, we may face competition from other real estate investors, which could (i) limit our ability to acquire properties, (ii) increase the purchase price we are required to pay, thus reducing the return to our shareholders, and (iii) cause us to agree to material restrictions or limitations in the acquisition agreements. In addition, properties we acquire in the future may fail to achieve the expected occupancy and/or rental rates within the projected time frame if at all, which may result in the properties’ failure to achieve the expected investment returns. These factors and any others could impede our growth and adversely affect our financial condition and results of operations.
We may be unable to sell properties at the time we desire, on favorable terms or at all, which could limit our ability to access capital through dispositions.
Real estate investments generally cannot guaranteebe sold quickly. Our ability to dispose of properties on advantageous terms depends on factors beyond our control, and we cannot predict the various market conditions affecting real estate investments that material losses in excess of insurance proceeds will not occurexist in the future. IfWe may not be able to dispose of any of our properties wereon terms favorable to us or at all, and each individual sale will depend on, among other things, economic and market conditions, competition from other sellers, individual asset characteristics and the availability of potential buyers and favorable financing terms at the time. Further, we may incur expenses and transaction costs in connection with dispositions.
In addition, the Internal Revenue Code of 1986, as amended (the “Code”) generally imposes a 100% penalty tax on gain recognized by REITs upon the disposition of assets if the assets are held primarily for sale in the ordinary course of business rather than for investment, which could cause us to forego or defer sales of properties that might otherwise be in our best interest to sell, which may limit our ability to appropriately adjust our portfolio mix in response to market conditions. We will also be subject to income taxes on gains from the sale of any properties owned by any taxable REIT subsidiary (“TRS”).
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We could experience a catastrophic loss, itdecline in the fair value of our real estate assets and be subject to impairment charges, which could seriously disruptbe material.
Our long-lived assets, primarily real estate held for investment, are carried at cost unless circumstances indicate that the carrying value of the assets may not be recoverable through future operations. Changes in our operations, delay revenue anddisposition strategy or in the marketplace may alter the hold period of an asset or group of assets, which may result in large expensesan impairment loss that could be material to repairour financial condition or rebuildoperating performance. To the property. Events such as theseextent the carrying value of the asset exceeds the estimated undiscounted cash flows, an impairment loss is recognized equal to the excess of the carrying value over the estimated fair value (which is highly subjective and involves a significant degree of management judgment regarding various inputs). We did not record any impairment charges during the years ended December 31, 2022, 2021 and 2020. There can be no assurance that we will not record charges in the future related to the impairment of our assets, which could adversely affecthave a material adverse effect on our results of operations in the period in which the charge is recognized.
We could be materially and adversely affected if we are found to be in breach of a ground lease at one of our properties or are unable to renew a ground lease.
As of December 31, 2022, we had 10 properties in our portfolio that are either completely or partially on land that is owned by third parties and leased to us pursuant to ground leases. If we are found to be in breach of a ground lease and that breach cannot be cured or we are unable to extend the lease terms or purchase the fee interest in the underlying land prior to expiration, as to which no assurance can be given, we could lose our interest in the improvements and the right to operate the property. As a result, we would be unable to derive income from such property. Assuming we exercise all available options to extend the terms of our ground leases, our ground leases will expire between 2043 and 2115. In certain cases, our ability to meet our obligations.
Additionally, changes in federal and state legislation and regulations on climate could have an adverse effect onresult in increased costs and expenses, such as utility expenses and/or capital expenditures to improve the energy efficiency of our cash flowexisting properties, or potentially result in fines for non-compliance.
Potential terrorist attacks and operating results.other acts of violence could also harm the demand for, and the value of, our properties, including through damage, destruction, or loss at our properties, increased security costs, utility outages, and limited availability of terrorism insurance. Such acts could impact our tenants’ abilities to meet their lease obligations, make it difficult for us to renew or re-lease space at our properties at lease rates equal to or above historical rates, or result in increased volatility in the financial markets and economies.
Any one of these events might decrease demand for real estate, decrease or delay the occupancy at our properties, and limit our access to capital or increase our cost of raising capital.
We could incur significant costs related to environmental matters.
matters, and our efforts to identify environmental liabilities may not be successful.
Under various federal, state and local laws, ordinances and regulations, an owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances or petroleum product releases at a property and may be held liable to a governmental entity or to third parties for property damage and for investigation and clean-up costs incurred by such partiesthe cost of clean-up. Some properties in connection with contamination.our portfolio contain, may have contained or are adjacent to or near other properties that have contained or currently contain underground storage tanks for petroleum products or other hazardous or toxic substances, and some of our properties have tenants that may use hazardous or toxic substances in the course of their businesses. Indemnities in our lease agreements may not fully protect us in the event that a tenant responsible for environmental
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non-compliance or contamination becomes insolvent. The cost of investigation, remediation or removal of such substances may be substantial, and the presence of such substances, or the failure to properly remediate such substances,them, may adversely affect the owner’sour ability to sell or rent such property or to borrow using such property as collateral. In connection with the ownership, operation and management of real properties, we are potentially liable for removal or remediation costs, as well as certain other related costs, including governmental fines and injuries to persons and property.property, liens on contaminated sites, and restrictions on operations. We may also be liable to third parties for damage and injuries resulting from environmental contamination emanating from the real estate. Environmental laws also may create liens on contaminated sites in favor of the government for damages and costs it incurs to address such contamination. Moreover, if contamination is discovered on our properties, environmental laws may impose restrictions on the manner in which that property may be usedestate we own or how businesses may be operated on that property.
Environmental laws require that ACBM be properly managed and maintained, and may impose fines and penalties may be imposed on building owners or operators for failure to comply with these requirements. The laws also may allow third parties to seek recovery from owners or operators for personal injury associated with exposure to asbestos fibers.
We testevaluate our properties for compliance with applicable environmental laws on a limited basis. Webasis, and we cannot give assurance that:
that existing environmental studies with respect to our properties reveal all potential environmental liabilities;
future uses or conditions (including, without limitation, changes in applicable environmental laws and regulations or the interpretation thereof) or changes in environmental laws will not result in environmental liabilities.
Compliance with the Americans with Disabilities ActADA and fire, safety and other regulations may require us to make expenditures that adversely affect our cash flows.
significant capital expenditures.
Our properties must comply with Title III of the ADA to the extent that such properties are public accommodations as defined by the ADA. The ADA may require removal of structural barriers to access by persons with disabilities in certain public areas of our properties where such removal is readily achievable. Noncompliance with the ADA could result in imposition of finesorders requiring us to spend substantial sums to cure violations and pay attorneys’ fees or an award of damages to private litigants and the incurrence of additional costs associated with bringing the properties into compliance.other amounts. Although we believe theour properties in our portfolio substantially comply with the present requirements of the ADA, we have not conducted an audit or investigation of all of our properties to determine our compliance. While theour tenants to whom our properties are leased are obligated by law to comply with the ADA provisions, and typically under tenant leases are obligated to cover costs associated with compliance, if required changes involve greater expenditures than anticipated, or if the changes must be made on a more accelerated basisfaster timelines than anticipated, the ability of these tenants to cover costs could be adversely affected. As a result, we could be required to expend funds to comply with the provisions of the ADA, which could adversely affect our results of operations and financial condition. In addition, we are required to operate the properties in compliance with fire and safety regulations, building codes and other land use regulations as they may beare adopted by governmental agencies and bodies and become applicable to the properties. We may be required to make substantial capital expenditures to comply with these regulations, and we may be restricted in our ability to renovate the properties subject to those requirements. The resulting expenditures and restrictionsthese requirements, which could have a material adverse effect on our ability to meet our financial obligations.
RISKS RELATED TO OUR ORGANIZATION AND STRUCTURE
Our organizational documents contain provisions that may have an anti-takeover effect and inhibit a change inof control transaction, which could prevent our management. shareholders from being paid a premium for their common shares over the then-prevailing market prices.
(1) There are ownership limits and restrictions on transferability in our declaration of trust. In order for us to qualify as a REIT, no more than 50% of the value of our outstanding shares may be owned, actually or constructively, by five or fewer individuals at any time during the last half of each taxable year. To make sureensure that we will not fail to satisfy this requirement and for anti-takeover reasons, our declaration of trust generally prohibits any shareholder (other than an excepted holder or certain designated investment entities, as defined in our declaration of trust) from owning (actually, constructively or by attribution), more than 7% of the value or number, whichever is more restrictive, of our outstanding common shares. Our declaration of trust provides an excepted holder limit that allows certain members of the Kite family (Al Kite, John Kite and Paul Kite, their family members and(and certain entities controlled by one or more of the Kites)Kite family members), as a group, to own more than 7% of our outstanding common shares, so long as, under thesubject to applicable tax attribution rules, no one excepted holder treated as an individual would hold more than 21.5% of our common shares, no two excepted holders treated as individuals would own more than 28.5% of our common shares, no three excepted holders treated as individuals would own more than 35.5% of our common shares, no four excepted holders treated as individuals would own more than 42.5% of our common shares, and no five excepted holders treated as individuals would own more than 49.5% of our common shares.rules. Currently, one of the excepted holders would be attributed all of the common shares owned by each other excepted holder and, accordingly, the excepted holders as a group would not be allowed to own in excess of 21.5% in value or number, whichever is more restrictive, of our common shares. If at a later time there were not one excepted holder that would be attributed all of the shares owned by the excepted holders as a group, the excepted holder limit would not permit each excepted holder to own 21.5% of our common shares. Rather, the excepted holder limit would prevent two or more excepted holders who are treated as individuals under the applicable tax attribution rules from owning a higher percentage of our common shares than the maximum amount of common shares that could be owned by any one excepted holder (21.5%), plus the maximum amount of common shares that could be owned by any one or more other individual common shareholders who are not excepted holders (7%). Certain entities that are defined as designated investment entities in our declaration of trust, which generally include pension funds, mutual funds, and certain investment management companies, are permitted to own up to 9.8% in value or number, whichever is more restrictive, of ourthe outstanding commonshares of any class or series of shares so long as each beneficial owner of the
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shares owned by such designated investment entity would satisfy the 7% ownership limit if those beneficial owners owned directly their proportionate share of the common shares owned by the designated investment entity. Our Board of Trustees may waive, and has waived in the
past, the 7% ownership limit or the 9.8% designated investment entity limit for a shareholder that is not an individual if such shareholder provides information and makes representations that are satisfactorylimits subject to the Board of Trustees, in its reasonable discretion, to establish that such person’s ownership in excess of the 7% limit or the 9.8% limit, as applicable, would not jeopardize our qualification as a REIT.certain conditions. In addition, our declaration of trust contains certain other ownership restrictions intended to prevent us from earning income from related parties if such income would cause us to fail to comply with the REIT gross income requirements. The various ownership restrictions may:
may discourage a tender offer or other transactionschange of control transaction or a change in management or control that might involve a premium price for our shares or otherwise be in the best interests of our shareholders; or
compel a shareholder who has acquired our common shares in excess of these ownership limitations to dispose of the additional shares and, as a result, to forfeit the benefits of owning the additional shares. Any acquisition of our common shares in violation of these ownership restrictions will be void ab initio and will result in automatic transfers of our common shares to a charitable trust, which will be responsible for selling the common shares to permitted transferees and distributing at least a portion of the proceeds to the prohibited transferees.
(2) Our declaration of trust permits our Board of Trustees to issue preferred shares with terms that may discourage a third party from acquiring us. Our declaration of trust permits our Board of Trustees to issue up to 40,000,00020.0 million preferred shares, having those preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications, or terms or conditions of redemption as determined by our Board of Trustees. Thus, our Board of Trustees could authorize the issuance of additional preferred shares with terms and conditions that could have the effect of discouraging a takeover or other transaction in which holders of some or a majority of our shares might receive a premium for their shares over the then-prevailing market price of our shares. In addition, any preferred shares that we issue likely would rank senior to our common shares with respect to payment of distributions, in which case we could not pay any distributions on our common shares until full distributions were paid with respect to such preferred shares.
(3) Our declaration of trust and bylaws contain other possible anti-takeover provisions. Our declaration of trust and bylaws contain other provisions such as advance notice requirements for shareholder proposals, the ability of our Board of Trustees to reclassify shares or issue additional shares, and the absence of cumulative voting rights that may have the effect of delaying, deferring or preventing a change in control of our companythe Company or the removal of existing managementmanagement.
(4) The Maryland General Corporation Law, as amended (the “MGCL”) permits our board of trustees, without shareholder approval and as a result, could preventregardless of what is currently provided in our shareholders from being paid a premium for their common shares over the then-prevailing market prices. Thesedeclaration of trust or bylaws, to implement certain takeover defenses. Although we have opted out of these provisions include advance notice requirements for shareholder proposals and our Board of Trustees’ power to reclassify shares and issue additional common shares or preferred shares and the absence of cumulative voting rights. Furthermore,Maryland law, our Board of Trustees has the sole powermay opt to amend our bylaws and may amend our bylaws in a way that may have the effect of delaying, deferring or preventing a change in control of our company or the removal of existing management or may otherwise be detrimentalmake these provisions applicable to your interests.
Our bylaws provide that the Circuit Court for Baltimore City, Maryland will be the exclusive forum for any internal corporate claims and other matters, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our trustees, officers, employees or shareholders.
The federal district courts of the United States shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Since Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder, there is uncertainty as to whether a court would enforce an exclusive forum provision for actions arising under the Securities Act. The provision may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our trustees, officers, employees or shareholders, which may discourage such lawsuits. Alternatively, if a court were to find the choice of forum provision contained in our bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially and adversely affect us.
Heightened focus on corporate responsibility, specifically related to environmental, social and governance (“ESG”) factors, may impose additional costs and expose us to risks that could adversely impact our financial condition and the price of our securities.
Investors and other stakeholders have become more focused on understanding how companies address a variety of ESG factors and may use these factors to guide their investment strategies. Potential and current employees, vendors and business combination moratorium/fair price” provisionspartners may also consider these factors when establishing and extending relationships with us. We are focused on being a responsible corporate citizen and provide disclosure regarding our existing ESG programs within our Corporate Responsibility Report for 2021, which is published on our website. We also use GRESB, an independent organization that subjectprovides validated ESG performance data and peer benchmarks, as a method of engaging with shareholders. The focus and activism related to limitations, prohibit certainESG and related matters may constrain our business combinations betweenoperations or increase expenses. We may face reputational damage in the
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event our corporate responsibility initiatives do not meet the standards set by various constituencies, including those of third-party providers of corporate responsibility ratings and reports. In addition, the SEC is currently evaluating potential new ESG disclosures and other requirements that would impact us. Furthermore, should peer companies outperform us in such metrics, potential or current investors may elect to invest with our competitors, and employees, vendors and business partners may choose not to do business with us, which could have an adverse impact on our financial condition and the price of our securities.
Our rights and the rights of our shareholders to take action against our trustees and officers are limited.
Maryland law provides that a trustee has no liability in that capacity if he or she satisfies his or her duties to us and our shareholders. Under current Maryland law, our trustees and officers will not have any liability to us or our shareholders for money damages, except for liability resulting from (a) actual receipt of an “interested shareholder” (defined generally asimproper benefit or profit in money, property or services or (b) active or deliberate dishonesty established in a judgment or other final adjudication to be material to the cause of action.
In addition, our charter and bylaws require us to indemnify our trustees and officers for actions taken by them in those capacities to the maximum extent permitted by Maryland law. As a result, we and our shareholders may have more limited rights against our trustees and officers than might otherwise exist. Accordingly, in the event that actions taken in good faith by any person who beneficially owns 10% or more of the voting power of our sharestrustees or an affiliate thereof) for five years afterofficers impede our performance, our shareholders’ ability to recover damages from such trustees or officers will be limited. In addition, we will be obligated to advance the most recent date on which the shareholder becomes an interested shareholder, and thereafter imposes stringent fair price and super-majority shareholder voting requirements on these combinations; and
Certain officers and trustees may have interests that conflict with the interests of shareholders.
Certain of our officers own limited partner units in our Operating Partnership. These individuals may have personal interests that conflict with the interests of our shareholders with respect to business decisions affecting us and our Operating Partnership, such as interests in the timing and pricing of property salesdispositions or refinancingsrefinancing transactions in order to obtain favorable tax treatment. As a result, the effect of certain transactions on these unit holders may influence our decisions affecting these properties. property dispositions or refinancing transactions.
Departure or loss of our key officers could have an adverse effect on us.
Our future success depends, to a significant extent, upon the continued services of our existing executive officers. Theofficers whose experience of our executive officers in the areas of real estate acquisition, development,acquisitions, developments, finance and management is a critical element of our future success. We have entered into employment agreements with certain members of senior management. Each employment agreement automatically renewed for one additional year on July 1, 2017. Each agreement will continue to renew each July 1st thereafter unless we or the individual elects not to renew the agreement. If one or more of our key executive officers were to die, become disabled or otherwise leave our employ,the Company, we may not be able to replace this person with an executive of equal skill, ability, and industry expertise within a reasonable timeframe. Until suitable replacementstimeframe, which could be identified and hired,negatively affect our operations and financial condition couldcondition.
The cash available for distribution to our shareholders may not be negatively affected.sufficient to pay distributions at expected levels, nor can we assure you of our ability to make distributions in the future, and we may use borrowed funds to make cash distributions and/or choose to make distributions in part payable in our common shares.
To qualify as a REIT, we are required to distribute to our shareholders each year at least 90% of our “REIT taxable income” (determined before the deduction for dividends paid and excluding net capital gains). In order to eliminate U.S. federal income tax, we are required to distribute annually 100% of our net taxable income, including capital gains. Partly because of these distribution requirements, we may not be able to fund all future capital needs, including capital for property development, redevelopment and acquisitions, with income from operations. We therefore will have to rely on third-party sources of capital, which may or may not be available on favorable terms, if at all. Any additional debt we incur will increase our leverage, expose us to the risk of default and may impose operating restrictions on us, and any additional equity we raise could be dilutive to existing shareholders. Our access to third-party sources of capital depends on a number of things, including:
If cash available for distribution generated by our assets decreases in future periods from expected levels, our inability to make expected distributions could result in a decrease in the market price of our common shares. All distributions will be made at the discretion of our Board of Trustees and will depend onupon our earnings, our financial condition, maintenance of our REIT qualification and other factors as our Board of Trustees may deem relevant from time to time. We may not be able to make distributions in the future.future at current levels or at all. In addition, some of our distributions may include a return of capital. To the extent that we decide to make distributions in excess of our current and accumulated earnings and profits, such distributions would generally be considered a return of capital for U.S. federal income tax purposes to the extent of the holder’s adjusted tax basis in their common shares. A return of capital is not taxable, but it has the effect of reducing the holder’s adjusted tax basis in itstheir investment. To the extent that distributions exceed the adjusted tax basis of a holder’s shares, they will be treated as gain from the sale or exchange of such shares. If we borrow to fund distributions, our future interest costs would increase, thereby reducing our earnings and cash available for distribution from what they otherwise would have been. Finally, although we do not currently intend to do so, in order to maintain our REIT qualification, we may make distributions that are in part payable in our common shares. Taxable shareholders receiving such distributions will be required to include the full amount of such
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distributions as ordinary dividend income to the extent of our current or accumulated earnings and profits and may be required to sell shares received in such distribution or may be required to sell other shares or assets owned by them, at a time that may be disadvantageous, in order to satisfy any tax imposed on such distribution. If a significant number of our shareholders determine that they need to sell common shares in order to pay taxes owed on dividend income, such sale may put downward pressure on the market price of our common shares.
Future offerings of debt securities, which would be senior to our equity securities, may adversely affect the market pricesprice of our common shares.
In the future, we may attempt to increase our capital resources by making offerings of debt securities, including unsecured notes, medium term notes, and senior or subordinated notes.notes, as well as debt securities that are convertible into equity. Holders of our debt securities will generally be entitled to receive interest payments, both current and in connection with any liquidation or sale, prior to the holders of our common shares being entitled to receive distributions.shares. Future offerings of debt securities, or the perception that such offerings may occur, may reduce the market pricesprice of our common shares and/or the distributions that we pay with respect to our common shares. Because we may generally issue such debt securities in the future without obtaining the consent of our shareholders, our shareholders will bear the risk of our future offerings reducing the market prices of our equity securities.
RISKSRELATED TO TAX MATTERS
If securitiesthe Merger did not qualify as a reorganization, there may be adverse tax consequences.
The parties intended that the Merger will be treated as a reorganization within the meaning of Section 368(a) of the Code, and it was a condition to the Merger that we and RPAI received opinions from each party’s respective counsel to the effect that, for U.S. federal income tax purposes, the Merger constitutes a reorganization within the meaning of Section 368(a) of the Code. These tax opinions represent the legal judgment of counsel rendering the opinion and are not binding on the Internal Revenue Service (the “IRS”) or industry analysts do not publish researchthe courts. If the Merger were to fail to qualify as a reorganization, U.S. holders of shares of RPAI common stock generally would recognize gain or reports about our business, or if they downgrade their recommendations regarding ourloss, as applicable, equal to the difference between (i) the sum of the fair market value of the Company’s common shares our share price and trading volume could be negatively affected.
We may incur adverse tax consequences if we fail, or
for U.S. federal income tax purposes.
We believe that we have qualified for taxation as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2004. We2004, and that RPAI had operated in a manner that allowed it to qualify as a REIT, and we intend to operate in a manner we believe allows us to continue to meet the requirements for qualification and taxationqualify as a REIT but we cannot assure shareholders that we will qualify as a REIT.for U.S. federal income tax purposes. We have not requested and do not plan to request a ruling from the IRS that we qualify as a REIT, and the statements in this Annual Report on Form 10-K are not binding on the IRS or any court. AsQualification as a REIT we generally will not be subject to federal income tax on our income that we distribute currently to our shareholders. Manyinvolves the application of the REIT requirements, however, are highly technical and complex.complex provisions of the Code for which there are only limited judicial and administrative interpretations. The determination that we are a REIT requires an analysis of various factual matters and circumstances that may not be totallyentirely within our control. For example,control may affect our ability to qualify as a REIT, at least 95% of our gross income must come from specific passive sources, such as rent, that are itemized in the REIT tax laws.REIT. In addition,order to qualify as a REIT, we cannot own specified amountsand RPAI must satisfy a number of debtrequirements, including the ownership of our stock and equity securitiesthe composition of some issuers. We also are requiredour gross income and assets. Also, a REIT must make distributions to distribute to our shareholders with respect to each yearaggregating annually at least 90% of our “REITits net taxable income” (determined before the deduction for dividends paid and excludingincome (excluding any net capital gains). The fact that we hold substantially all of our assets through our Operating Partnership and its subsidiaries and joint ventures further complicates the application of the REIT requirements for us. Even a technical or inadvertent mistake could jeopardize our REIT status, and, given the highly complex nature of the rules governing REITs and the ongoing importance of factual determinations, we cannot provide any assurance that we will continue to qualify as a REIT. Furthermore, Congress and the IRS might make changes to the tax laws and regulations, and the courts might issue new rulings, that make it more difficult, or impossible, for us to remain qualified as a REIT.
If we fail to qualify as a REIT for U.S. federal income tax purposes and are unable to avail ourselves of certain savings provisions set forth in the Code:Code, we will face serious tax consequences that would substantially reduce our cash available for distribution because:
•for tax years beginning after December 31, 2022, we would possibly be subject to individual shareholders at favorable rates and beingcertain taxes enacted by the Inflation Reduction Act of 2022 that are applicable to non-REIT corporations, including the nondeductible one percent excise tax on certain stock repurchases;
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•we could be subject to the federal alternative minimum tax (for taxable years beginning before December 31, 2017) and possibly increased state and local taxes;taxes for such periods;
•if we were to qualify. Since we are the successor to Inland Diversified Real Estate Trust, Inc. ("Inland Diversified") for federal income tax purposes as a result of its merger with us (the "Merger"), the rule against re-electingre-elect REIT status, following a loss of such status also would apply to us if Inland Diversified failed to qualify as a REIT in any of its 2011 through 2014 tax years. Although Inland Diversified believed that it was organized and operated in conformity with the requirements for qualification and taxation as a REIT for each of its taxable years prior to the Merger, Inland Diversified did not request a ruling from the IRS that it qualified as a REIT, and thus no assurance can be given that it qualified as a REIT;
•for the five years following re-election of REIT status, upon a taxable disposition of an asset owned as of such re-election, we would no longer be requiredsubject to paycorporate level tax with respect to any distributions to shareholders; andbuilt-in gain inherent in such asset at the time of re-election.
•unless we are entitled to relief under applicable statutory provisions, the Company, as the “successor” trust to RPAI, could not elect to be taxed as a REIT until the fifth taxable year following the year during which RPAI was disqualified;
•the Company, as the successor by Merger to RPAI, would be subject to any corporate income tax liabilities of RPAI, including penalties and interest;
•assuming that includeswe otherwise maintained our REIT qualification, we would be subject to tax on the built-in gain on each asset of RPAI existing at the time of the Merger and no relief is available, in connection withif we were to dispose of the MergerRPAI asset for up to five years following the Merger; and
•assuming that we otherwise maintained our REIT qualification, we would succeed to any earnings and profits accumulated by Inland DiversifiedRPAI for the taxable periods that it did not qualify as a REIT, and we would have to pay a special dividend and/or employ applicable deficiency dividend procedures (including significant interest payments to the IRS) to eliminate such earnings and profits.
In addition, if there is an adjustment to RPAI’s taxable income or deductions for dividends paid, we could elect to use the deficiency dividend procedure in order to maintain RPAI’s REIT status. That deficiency dividend procedure could require us to make significant distributions to our shareholders and pay significant interest to the IRS.
As a result of these factors, our failure (before or after the Merger), or RPAI’s failure (before the Merger), to qualify as a REIT could impair our ability to grow our business and raise capital and would materially adversely affect the value of our common shares.
We will pay some taxes even if we qualify as a REIT.
Even if we qualify as a REIT for U.S. federal income tax purposes, we will be required to pay certain U.S. federal, state and local taxes on our income and property. For example, we will be subject to income tax to the extent we distribute less than 100% of our REIT taxable income (including capital gains). Additionally, we will be subject to a 4% nondeductible excise tax on the amount, if any, by which dividends paid by us in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years. Moreover, if we have net income from “prohibited transactions,” that income will be subject to a 100% penalty tax. In general, prohibited transactions are sales or other dispositions of property held primarily for sale to customers in the ordinary course of business. The determination as to whether a particular sale is a prohibited transaction depends on the facts and circumstances related to that sale. While we will undertake sales of assets if those assets become inconsistent with our long-term strategic or return objectives, we do not believe that those sales should be considered prohibited transactions, but there can be no assurance that the IRS would not contend otherwise. The need to avoid prohibited transactions could cause us to forego or defer sales of properties that might otherwise be in our best interest to sell.
In addition, any net taxable income earned directly by our taxable REIT subsidiaries,TRS, or through entities that are disregarded for U.S. federal income tax purposes as entities separate from our taxable REIT subsidiaries,TRS, will be subject to U.S. federal and possibly state corporate income tax. We have elected to treat Kite Realty Holdings, LLC as a taxable REIT subsidiary,TRS. In addition, in connection with the Merger, we assumed RPAI’s existing TRS, IWR Protective Corporation, as a TRS of the Operating Partnership, and we may elect to treat other subsidiaries as taxable REIT subsidiariesTRSs in the future. In this regard, several provisions of the laws applicable to REITs and their subsidiaries ensure that a taxable REIT subsidiaryTRS will be subject to an appropriate level of U.S. federal income taxation. For example, a taxable REIT subsidiaryTRS is limited in its ability to deduct interest payments made to an affiliated REIT. In addition, the REIT has to pay a 100% penalty tax on some payments that it receives or on some deductions taken by the taxable REIT subsidiariesTRS if the economic arrangements between the REIT, the REIT’s tenants, and the taxable REIT subsidiaryTRS are not comparable to similar arrangements between unrelated parties. Finally, some state and local jurisdictions may tax some of our income even though as a REIT, we are not subject to U.S. federal income tax on that income because not all states
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and localities treat REITs the same way they are treated for U.S. federal income tax purposes. To the extent that we and our affiliates are required to pay U.S. federal, state and local taxes, we will have less cash available for distributions to our shareholders.
REIT distribution requirements may increase our indebtedness.
We may be required from time to time, under certain circumstances, to accrue income for tax purposes that has not yet been received. In such event, or upon our repayment of principal on our outstanding debt, we could have taxable income without sufficient cash to enable us to meet the distribution requirements of a REIT. Accordingly, we could be required to borrow funds or liquidate investments on adverse terms in order to meet these distribution requirements. Additionally, the sale of properties resulting in significant tax gains could require higher distributions to our shareholders or payment of additional income taxes in order to maintain our REIT status.
Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.
The REIT provisions of the Code may limit our ability to hedge our assets and operations. Under these provisions, any income that we generate from transactions intended to hedge our interest rate risk will be excluded from gross income for purposes of the REIT 75% and 95% gross income tests if the instrument hedges interest rate risk on liabilities used to carry or acquire real estate assets or manages the risk of certain currency fluctuations, and such instrument is properly identified under applicable Treasury Regulations. Income from hedging transactions that dodoes not meet these requirements will generally constitute non-qualifying income for purposes of both the REIT 75% and 95% gross income tests. As a result of these rules, we may have to limit our use of hedging techniques that might otherwise be advantageous or implement those hedges through a taxable REIT subsidiary.TRS. This could increase the cost of our hedging activities because our taxable REIT subsidiaryTRS would be subject to tax on gains or expose us to greater risks associated with changes in interest rates than we would otherwise want to bear. In addition, losses in our taxable REIT subsidiary will generally not provide any tax benefit, except for being carried back or forward against past or future taxable income in the taxable REIT subsidiary, provided, however, losses in our taxable REIT subsidiary arising in taxable years beginning after December 31, 2017 may only be carried forward and may only be deducted against 80% of future taxable income in the taxable REIT subsidiary.
Complying with the REIT requirements may cause us to forgo and/or liquidate otherwise attractive investments.
To qualify as a REIT, we must continually satisfy tests concerning, among other things, (i) the sources of our income, (ii) the nature and diversification of our assets, (iii) the amounts that we distribute to our shareholders, and (iv) the ownership of our common shares. ToIn order to meet these tests, we may be required to take actions we would otherwise prefer not to take or forgo taking actions that we would otherwise consider advantageous. For instance, in order to satisfy the gross income or asset tests applicable to REITs under the Code, we may be required to forgo investments that we might otherwise would make. Furthermore, we may be required tomake or liquidate from our portfolio investments that otherwise attractive investments.would be considered attractive. In addition, we may be required to make distributions to our shareholders at disadvantageous times or when we do not have funds readily available for distribution.available. These actions could reduce our income and amounts available for distribution to our shareholders. Thus, compliance with the REIT requirements may hinder our investment performance.
Dividends paid by REITs generally do not qualify for effective tax rates as low as dividends paid by non-REIT "C"“C” corporations.
The maximum rate applicable to “qualified dividend income” paid by non-REIT “C” corporations to certain non-corporate U.S. shareholders has been reduced by legislation to 23.8% (taking into account the 3.8% Medicare tax applicable to net investment income). Dividends payable by REITs, however, generally are not eligible for the reduced rates. Effective for taxable years beginning after December 31, 2017 and before January 1, 2026, non-corporate shareholders may deduct 20% of their dividends from REITs (excluding qualified dividend income and capital gains dividends). For non-corporate shareholders in the top marginal tax bracket of 37%, the deduction for REIT dividends yields an effective income tax rate of 29.6% on REIT dividends, which is higher than the 20% tax rate on qualified dividend income paid by non-REIT “C” corporations. This does not adversely affect the taxation of REITs,REITs; however, it could cause certain non-corporate investors to perceive investments in REITs to be relatively less attractive than investments in the shares of non-REIT “C” corporations that pay dividends, which could adversely affect the value of our common shares.
If a transaction intended to qualify as a Code Section 1031 tax-deferred exchange (a “1031 Exchange”) is later determined to be taxable, we may face adverse consequences.
From time to time, we may dispose of properties in transactions that are intended to qualify as 1031 Exchanges. It is possible that the qualification of a transaction as a 1031 Exchange could be challenged and determined to be currently taxable. In such case, our taxable income and earnings and profits would increase, which could increase the income applicable to our shareholders and, therefore, may require additional distributions to shareholders or, in lieu of that, require us to pay corporate income tax, possibly including interest and penalties. Moreover, it is possible that legislation could be enacted that could modify or repeal the laws with respect to 1031 Exchanges, which could make it more difficult or impossible for us to dispose of properties on a tax-deferred basis.
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If the Operating Partnership fails to qualify as a partnership for U.S. federal income tax purposes, we could fail to qualify as a REIT and suffer other adverse consequences.
consequences.
We believe that our Operating Partnership is organized and operated in a manner so as to be treated as a partnership and not an association or a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes. As a partnership, our Operating Partnership is not subject to U.S. federal income tax on its income. Instead, each of the partners is allocated its share of our Operating Partnership’s income. No assurance can be provided, however, that the IRS will not challenge our Operating Partnership’s status as a partnership for U.S. federal income tax purposes or that a court would not sustain such a challenge. If the IRS were successful in treating our Operating Partnership as an association or publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, we would fail to meet the gross income tests and certain of the asset tests applicable to REITs and, accordingly, would cease to qualify as a REIT. Also, the failure of the Operating Partnership to qualify as a partnership would cause it to become subject to U.S. federal corporate income tax, which would reduce significantly the amount of its cash available for distribution to its partners, including us.
There is a risk that the tax laws applicable to REITs may change.
The IRS, the United StatesU.S. Treasury Department and Congress frequently review U.S. federal income tax legislation, regulations and other guidance. The Company cannot predict whether, when or to what extent new U.S. federal tax laws, regulations, interpretations or rulings will be adopted. Any legislative action may prospectively or retroactively modify the Company'sCompany’s tax treatment and, therefore, may adversely affect our taxation or the taxation of our shareholders. In particular, H.R.1 (Tax Cuts & Jobs Act), which was signed into law on December 22, 2017 and which generally takes effect for taxable years beginning on or after January 1, 2018, makes many significant changes to the federal income tax laws that will profoundly impact the taxation of individuals and corporations (both non-REIT “C” corporations as well as corporations that have elected to be taxed as REITs). A number of changes that affect non-corporate taxpayers will expire at the end of 2025 unless Congress acts to extend them. These changes will impact us and our shareholders in various ways, some of which are adverse or potentially adverse compared to prior law. To date, the IRS has issued only limited guidance with respect to certain of the new provisions, and there are numerous interpretive issues that will require guidance. It is highly likely that technical corrections legislation will be needed to clarify certain aspects of the new law and give proper effect to Congressional intent. There can be no assurance, however, that technical clarifications or changes needed to prevent unintended or unforeseen tax consequences will be enacted by Congress in the near future.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
26
ITEM 2. PROPERTIES
As of December 31, 2017,2022, we owned interests in a portfolio of 105183 operating retail properties totaling approximately 28.8 million square feet and one office property with 0.3 million square feet in 24 states. Of the 183 operating retail properties, 11 contain an office component. We also own interests in three development projects under construction. See “Schedule III – Consolidated Real Estate and Accumulated Depreciation” for a list of encumbrances on our properties.
Operating Properties
The following table summarizes the geographic diversity of the Company’s retail operating properties totaling approximately 21.2 millionby region and state, ranked by ABR, as of December 31, 2022 (GLA and ABR in thousands):
| Region/State | Number of Properties(1) | Owned GLA/NRA(2) | Total Weighted Retail ABR(3) | % of Weighted Retail ABR(3) | ||||||||||||||||||||||
| South | ||||||||||||||||||||||||||
| Texas | 45 | 7,620 | $ | 148,879 | 25.7 | % | ||||||||||||||||||||
| Florida | 30 | 3,580 | 62,804 | 10.9 | % | |||||||||||||||||||||
| Maryland | 9 | 1,784 | 39,074 | 6.8 | % | |||||||||||||||||||||
| North Carolina | 8 | 1,536 | 31,443 | 5.4 | % | |||||||||||||||||||||
| Virginia | 7 | 1,135 | 29,566 | 5.1 | % | |||||||||||||||||||||
| Georgia | 10 | 1,707 | 26,235 | 4.5 | % | |||||||||||||||||||||
| Tennessee | 3 | 580 | 8,317 | 1.4 | % | |||||||||||||||||||||
| Oklahoma | 3 | 505 | 7,951 | 1.4 | % | |||||||||||||||||||||
| South Carolina | 2 | 258 | 3,126 | 0.5 | % | |||||||||||||||||||||
| Total South | 117 | 18,705 | 357,395 | 61.7 | % | |||||||||||||||||||||
| West | ||||||||||||||||||||||||||
| Washington | 10 | 1,683 | 30,979 | 5.4 | % | |||||||||||||||||||||
| Nevada | 5 | 839 | 27,794 | 4.8 | % | |||||||||||||||||||||
| California | 3 | 655 | 16,416 | 2.8 | % | |||||||||||||||||||||
| Arizona | 5 | 725 | 15,116 | 2.6 | % | |||||||||||||||||||||
| Utah | 2 | 388 | 8,026 | 1.4 | % | |||||||||||||||||||||
| Total West | 25 | 4,290 | 98,331 | 17.0 | % | |||||||||||||||||||||
| Midwest | ||||||||||||||||||||||||||
| Indiana | 15 | 1,624 | 29,290 | 5.1 | % | |||||||||||||||||||||
| Illinois | 8 | 1,163 | 24,360 | 4.2 | % | |||||||||||||||||||||
| Michigan | 1 | 308 | 7,150 | 1.2 | % | |||||||||||||||||||||
| Missouri | 1 | 453 | 4,197 | 0.7 | % | |||||||||||||||||||||
| Ohio | 1 | 236 | 1,912 | 0.3 | % | |||||||||||||||||||||
| Total Midwest | 26 | 3,784 | 66,909 | 11.5 | % | |||||||||||||||||||||
| Northeast | ||||||||||||||||||||||||||
| New York | 8 | 1,083 | 34,553 | 6.0 | % | |||||||||||||||||||||
| New Jersey | 4 | 340 | 11,681 | 2.0 | % | |||||||||||||||||||||
| Massachusetts | 1 | 272 | 4,873 | 0.8 | % | |||||||||||||||||||||
| Connecticut | 1 | 206 | 3,639 | 0.6 | % | |||||||||||||||||||||
| Pennsylvania | 1 | 136 | 1,982 | 0.4 | % | |||||||||||||||||||||
| Total Northeast | 15 | 2,037 | 56,728 | 9.8 | % | |||||||||||||||||||||
| Total | 183 | 28,816 | $ | 579,363 | 100.0 | % | ||||||||||||||||||||
(1)Number of properties represents consolidated and unconsolidated retail properties.
(2)Owned GLA/NRS represents gross leasable area owned by the Company and excludes the square feetfootage of total GLA (including approximately 6.2 million square feetdevelopment and redevelopment projects.
(3)Total weighted retail ABR and percent of non-owned anchor space). The following table sets forth more specific information with respectweighted retail ABR includes ground lease rent and represents the Company’s share of the ABR at consolidated and unconsolidated properties.
27
Development and Redevelopment Projects
In addition to our retail operating properties, as of December 31, 2017:
Property1 | Location (MSA) | Year Built/ Renovated | Owned GLA2 | Leased % | ABR per SqFt | Grocery Anchors4 | Other Retailers4 | |||||||||||||
| Total | Anchors | Shops | Total | Anchors | Shops | |||||||||||||||
| Alabama | ||||||||||||||||||||
| Trussville Promenade | Birmingham | 1999 | 463,836 | 376,010 | 87,826 | 95.2 | % | 100.0 | % | 74.5 | % | $ | 9.67 | Wal-Mart, (Sam's Club) | Regal Cinemas, Marshalls, Big Lots, PetSmart, Dollar Tree, Ross Dress for Less, (Kohl's) | |||||
| Arizona | ||||||||||||||||||||
| The Corner | Tucson | 2008 | 79,902 | 55,883 | 24,019 | 100.0 | % | 100.0 | % | 100.0 | % | 29.50 | Total Wine & More | Nordstrom Rack, Panera Bread, (Home Depot) | ||||||
| Connecticut | ||||||||||||||||||||
Killingly Commons3 | Killingly | 2010 | 205,683 | 148,250 | 57,433 | 96.9 | % | 100.0 | % | 89.0 | % | 16.30 | Stop & Shop Supermarket, (Target) | TJ Maxx, Bed Bath & Beyond, Michaels, Petco, Staples, Lowe's Home Improvement Center | ||||||
| Florida | ||||||||||||||||||||
| 12th Street Plaza | Vero Beach | 1978/2003 | 135,016 | 121,376 | 13,640 | 100.0 | % | 100.0 | % | 100.0 | % | 10.05 | Publix | Stein Mart, Tuesday Morning | ||||||
| Bayport Commons | Tampa | 2008 | 97,163 | 71,540 | 25,623 | 64.5 | % | 58.0 | % | 82.6 | % | 18.45 | (Target) | PetSmart, Michaels | ||||||
| Bolton Plaza | Jacksonville | 1986/2014 | 154,555 | 136,195 | 18,360 | 100.0 | % | 100.0 | % | 100.0 | % | 9.76 | Aldi | LA Fitness, Academy Sports, Marshalls, Panera Bread | ||||||
| Centre Point Commons | Bradenton | 2007 | 119,275 | 93,574 | 25,701 | 100.0 | % | 100.0 | % | 100.0 | % | 17.50 | Best Buy, Dick's Sporting Goods, Office Depot, Panera Bread, (Lowe's Home Improvement Center) | |||||||
| Cobblestone Plaza | Ft. Lauderdale | 2011 | 133,220 | 68,169 | 65,051 | 84.9 | % | 70.4 | % | 100.0 | % | 30.78 | Whole Foods | Party City | ||||||
| Colonial Square | Fort Myers | 2010 | 186,609 | 150,505 | 36,104 | 69.7 | % | 71.9 | % | 60.6 | % | 13.06 | Kohl's, Hobby Lobby, PetSmart, | |||||||
Delray Marketplace3 | Miami | 2013 | 260,181 | 118,136 | 142,045 | 99.3 | % | 100.0 | % | 98.6 | % | 26.35 | Publix | Frank Theatres, Burt & Max's, Carl's Patio, Ann Taylor Loft, Chicos, White House Black Market | ||||||
| Estero Town Commons | Naples | 2006 | 25,696 | — | 25,696 | 80.4 | % | — | % | 80.4 | % | 14.72 | Lowe's Home Improvement Center, Dollar Tree | |||||||
| Gainesville Plaza | Gainesville | 1970/2015 | 162,309 | 125,162 | 37,147 | 92.3 | % | 100.0 | % | 66.4 | % | 9.44 | Save a Lot | Ross Dress for Less, Burlington, 2nd and Charles | ||||||
| Hunter's Creek Promenade | Orlando | 1994 | 119,729 | 55,999 | 63,730 | 100.0 | % | 100.0 | % | 100.0 | % | 14.67 | Publix | |||||||
| Indian River Square | Vero Beach | 1997/2004 | 142,592 | 109,000 | 33,592 | 92.5 | % | 100.0 | % | 68.2 | % | 11.43 | (Target) | Beall's, Office Depot, Dollar Tree | ||||||
| International Speedway Square | Daytona | 1999/2013 | 233,424 | 203,405 | 30,019 | 98.3 | % | 100.0 | % | 86.7 | % | 11.30 | Total Wine & More | Bed, Bath & Beyond, Stein Mart, Old Navy, Staples, Michaels, Dick’s Sporting Goods, Shoe Carnival | ||||||
| Kings Lake Square | Naples | 1986/2014 | 88,588 | 45,600 | 42,988 | 95.5 | % | 100.0 | % | 90.8 | % | 18.50 | Publix | |||||||
| Lake City Commons | Lake City | 2008 | 65,723 | 45,600 | 20,123 | 100.0 | % | 100.0 | % | 100.0 | % | 14.82 | Publix | |||||||
| Lake City Commons - Phase II | Lake City | 2011 | 16,291 | 12,131 | 4,160 | 100.0 | % | 100.0 | % | 100.0 | % | 15.62 | Publix | PetSmart | ||||||
| Lake Mary Plaza | Orlando | 2009 | 21,370 | 14,880 | 6,490 | 100.0 | % | 100.0 | % | 100.0 | % | 37.49 | Walgreens | |||||||
| Lakewood Promenade | Jacksonville | 1948/1998 | 196,739 | 77,840 | 118,899 | 85.8 | % | 100.0 | % | 76.6 | % | 12.42 | Winn Dixie | SteinMart, Starbuck's, Salon Lofts | ||||||
| Lithia Crossing | Tampa | 2003/2013 | 90,505 | 53,547 | 36,958 | 98.7 | % | 100.0 | % | 96.8 | % | 15.19 | The Fresh Market | Stein Mart, Chili's, Panera Bread | ||||||
| Miramar Square | Ft. Lauderdale | 2008 | 224,737 | 137,505 | 87,232 | 86.6 | % | 85.5 | % | 93.6 | % | 16.07 | Kohl's, Miami Children's Hospital, Dollar General | |||||||
| Northdale Promenade | Tampa | 1985/2017 | 173,862 | 118,269 | 55,593 | 99.4 | % | 100.0 | % | 98.1 | % | 12.84 | (Winn Dixie) | TJ Maxx, Ulta Beauty, Beall's, Crunch Fitness, Tuesday Morning | ||||||
| Palm Coast Landing at Town Square | Palm Coast | 2010 | 168,352 | 100,822 | 67,530 | 98.6 | % | 100.0 | % | 96.6 | % | 18.91 | (Target) | Michaels, PetSmart, Ross Dress for Less, TJ Maxx, Ulta Beauty | ||||||
| Pine Ridge Crossing | Naples | 1993 | 105,962 | 66,435 | 39,527 | 100.0 | % | 100.0 | % | 100.0 | % | 17.92 | Publix, (Target) | Ulta Beauty, (Beall's) | ||||||
Property1 | Location (MSA) | Year Built/ Renovated | Owned GLA2 | Leased % | ABR per SqFt | Grocery Anchors4 | Other Retailers4 | |||||||||||||
| Total | Anchors | Shops | Total | Anchors | Shops | |||||||||||||||
| Pleasant Hill Commons | Orlando | 2008 | 70,643 | 45,600 | 25,043 | 98.3 | % | 100.0 | % | 95.2 | % | $ | 15.15 | Publix | ||||||
| Riverchase Plaza | Naples | 1991/2001 | 78,291 | 48,890 | 29,401 | 100.0 | % | 100.0 | % | 100.0 | % | 16.31 | Publix | |||||||
| Saxon Crossing | Orange City | 2009 | 119,907 | 95,304 | 24,603 | 94.2 | % | 100.0 | % | 71.9 | % | 15.00 | (Target) | Hobby Lobby, LA Fitness, (Lowe's Home Improvement Center) | ||||||
| Shoppes of Eastwood | Orlando | 1997 | 69,076 | 51,512 | 17,564 | 98.1 | % | 100.0 | % | 92.5 | % | 13.53 | Publix | |||||||
| Shops at Eagle Creek | Naples | 1983/2013 | 70,768 | 50,187 | 20,581 | 98.4 | % | 100.0 | % | 94.3 | % | 15.81 | The Fresh Market | Staples, (Lowe's Home Improvement Center), Panera Bread | ||||||
| Tamiami Crossing | Naples | 2016 | 121,705 | 121,705 | — | 100.0 | % | 100.0 | % | — | % | 12.51 | Aldi, (Wal-Mart) | Marshalls, Michaels, PetSmart, Ross Dress for Less, Stein Mart, Ulta Beauty | ||||||
| Tarpon Bay Plaza | Naples | 2007 | 82,528 | 60,139 | 22,389 | 96.6 | % | 100.0 | % | 87.5 | % | 17.80 | (Target) | PetSmart, Cost Plus World Market, Staples, Panera Bread | ||||||
| Temple Terrace | Temple Terrace | 2012 | 90,328 | 58,798 | 31,530 | 92.9 | % | 100.0 | % | 79.6 | % | 10.55 | Winn Dixie | Burger King | ||||||
| The Landing at Tradition | Port St. Lucie | 2007 | 360,276 | 290,396 | 69,880 | 83.8 | % | 86.1 | % | 74.2 | % | 16.00 | (Target) | TJ Maxx, Ulta Salon, Bed Bath & Beyond, LA Fitness, Michaels, Old Navy, PetSmart, Pier 1, DSW, Five Below | ||||||
| The Shops at Julington Creek | Jacksonville | 2011 | 40,219 | 21,038 | 19,181 | 96.5 | % | 100.0 | % | 92.6 | % | 19.43 | The Fresh Market | |||||||
| Tradition Village Center | Port St. Lucie | 2006 | 84,084 | 45,600 | 38,484 | 95.5 | % | 100.0 | % | 90.2 | % | 17.08 | Publix | |||||||
| Waterford Lakes Village | Orlando | 1997 | 77,971 | 51,703 | 26,268 | 98.4 | % | 100.0 | % | 95.2 | % | 13.13 | Winn Dixie | |||||||
| Georgia | ||||||||||||||||||||
| Mullins Crossing | Evans | 2005 | 251,712 | 205,716 | 45,996 | 100.0 | % | 100.0 | % | 100.0 | % | 12.73 | (Target) | Ross Dress for Less, Babies "R" Us, Kohls, La-Z Boy, Marshalls, Office Max, Petco, Ulta Beauty, Panera Bread | ||||||
| Publix at Acworth | Atlanta | 1996 | 69,640 | 37,888 | 31,752 | 98.3 | % | 100.0 | % | 96.2 | % | 12.52 | Publix | |||||||
| The Centre at Panola | Atlanta | 2001 | 73,061 | 51,674 | 21,387 | 100.0 | % | 100.0 | % | 100.0 | % | 13.04 | Publix | |||||||
| Illinois | ||||||||||||||||||||
| Fox Lake Crossing | Chicago | 2002 | 99,136 | 65,977 | 33,159 | 90.7 | % | 100.0 | % | 72.2 | % | 13.34 | Dominick's Finer Foods | Dollar Tree | ||||||
| Naperville Marketplace | Chicago | 2008 | 83,743 | 61,683 | 22,060 | 100.0 | % | 100.0 | % | 100.0 | % | 13.83 | (Caputo's Fresh Market) | TJ Maxx, PetSmart, | ||||||
| South Elgin Commons | Chicago | 2011 | 128,000 | 128,000 | — | 100.0 | % | 100.0 | % | — | % | 14.55 | (Target) | LA Fitness, Ross Dress for Less, Toys "R" Us/Babies "R" Us | ||||||
| Indiana | ||||||||||||||||||||
| 54th & College | Indianapolis | 2008 | — | — | — | — | % | — | % | — | % | 0.00 | The Fresh Market | |||||||
| Beacon Hill | Crown Point | 2006 | 56,820 | 11,043 | 45,777 | 98.0 | % | 100.0 | % | 97.5 | % | 16.09 | (Strack & Van Till) | (Walgreens), Jimmy John's, Rosati's, Great Clips | ||||||
| Bell Oaks Centre | Newburgh | 2008 | 94,958 | 74,122 | 20,836 | 100.0 | % | 100.0 | % | 100.0 | % | 12.17 | Schnuck's Market | |||||||
| Boulevard Crossing | Kokomo | 2004 | 124,634 | 74,440 | 50,194 | 94.7 | % | 100.0 | % | 86.7 | % | 14.83 | Petco, TJ Maxx, Ulta Beauty, Shoe Carnival, (Kohl's) | |||||||
| Bridgewater Marketplace | Indianapolis | 2008 | 25,975 | — | 25,975 | 86.8 | % | — | % | 86.8 | % | 20.58 | (Walgreens), The Local Eatery, Original Pancake House | |||||||
| Castleton Crossing | Indianapolis | 1975/2012 | 286,377 | 247,710 | 38,667 | 100.0 | % | 100.0 | % | 100.0 | % | 11.86 | TJ Maxx/Home Goods, Burlington, Shoe Carnival, Value City Furniture, K&G Menswear, Chipotle, Verizon, Five Below | |||||||
| Cool Creek Commons | Indianapolis | 2005 | 124,272 | 53,600 | 70,672 | 93.8 | % | 100.0 | % | 89.2 | % | 18.30 | The Fresh Market | Stein Mart, McAlister's Deli, Beauty Brands, Buffalo Wild Wings, Pet People | ||||||
| Depauw University Bookstore and Café | Greencastle | 2012 | 11,974 | — | 11,974 | 100.0 | % | — | % | 100.0 | % | 9.17 | Folletts, Starbucks | |||||||
Property1 | Location (MSA) | Year Built/ Renovated | Owned GLA2 | Leased % | ABR per SqFt | Grocery Anchors4 | Other Retailers4 | |||||||||||||
| Total | Anchors | Shops | Total | Anchors | Shops | |||||||||||||||
| Eddy Street Commons at Notre Dame | South Bend | 2009 | 87,991 | 20,154 | 67,837 | 96.0 | % | 100.0 | % | 94.8 | % | $ | 25.59 | Hammes Bookstore & Cafe, Chipotle, Urban Outfitters, Five Guy's, Kilwin's, Blaze Pizza | ||||||
| Geist Pavilion | Indianapolis | 2006 | 63,910 | 29,700 | 34,210 | 100.0 | % | 100.0 | % | 100.0 | % | 16.98 | Ace Hardware, Goodwill, Ale Emporium, Pure Barre | |||||||
| Glendale Town Center | Indianapolis | 1958/2008 | 393,002 | 329,546 | 63,456 | 97.8 | % | 100.0 | % | 86.6 | % | 7.33 | (Target) | Macy’s, Staples, Landmark Theaters, Pei Wei, LensCrafter's, Panera Bread, (Walgreens), (Lowe's Home Improvement Center) | ||||||
| Greyhound Commons | Indianapolis | 2005 | 9,152 | — | 9,152 | 100.0 | % | — | % | 100.0 | % | 13.60 | ||||||||
| Lima Marketplace | Fort Wayne | 2008 | 100,461 | 71,521 | 28,940 | 94.8 | % | 100.0 | % | 81.8 | % | 14.81 | Aldi, (Wal-Mart) | PetSmart, Office Depot, Aldi, Dollar Tree | ||||||
| Rangeline Crossing | Indianapolis | 1986/2013 | 100,196 | 47,962 | 52,234 | 99.0 | % | 100.0 | % | 98.2 | % | 22.21 | Earth Fare | Walgreens, Panera Bread, Pet Valu, City BBQ | ||||||
| Rivers Edge | Indianapolis | 2011 | 150,428 | 117,890 | 32,538 | 100.0 | % | 100.0 | % | 100.0 | % | 21.92 | Nordstrom Rack, The Container Store, Arhaus Furniture, Bicycle Garage of Indy, Buy Buy Baby, J Crew Mercantile | |||||||
| Stoney Creek Commons | Indianapolis | 2000/2013 | 84,330 | 84,330 | — | 64.1 | % | 64.1 | % | — | % | 13.44 | LA Fitness, Goodwill, (Lowe's Home Improvement Center) | |||||||
| Traders Point I | Indianapolis | 2005 | 279,646 | 238,721 | 40,925 | 74.7 | % | 71.6 | % | 93.0 | % | 14.99 | Dick's Sporting Goods, AMC Theatre, Bed, Bath & Beyond, Michaels, Old Navy, PetSmart, Books-A-Million | |||||||
| Traders Point II | Indianapolis | 2005 | 45,977 | — | 45,977 | 92.2 | % | — | % | 92.2 | % | 26.42 | ||||||||
| Whitehall Pike | Bloomington | 1999 | 128,997 | 128,997 | — | 100.0 | % | 100.0 | % | — | % | 7.86 | Lowe's Home Improvement Center | |||||||
| Nevada | ||||||||||||||||||||
Cannery Corner3 | Las Vegas | 2008 | 30,738 | — | 30,738 | 94.4 | % | — | % | 94.4 | % | 36.19 | (Sam's Club) | Chipotle, Five Guys, (Lowe's Home Improvement Center) | ||||||
Centennial Center3 | Las Vegas | 2002 | 334,377 | 158,196 | 176,181 | 88.6 | % | 85.3 | % | 91.6 | % | 24.53 | Sam's Club, Wal-Mart | Ross Dress for Less, Big Lots, Famous Footwear, Michaels, Party City, Petco, Rhapsodielle, Home Depot | ||||||
Centennial Gateway3 | Las Vegas | 2005 | 193,085 | 139,913 | 53,172 | 91.8 | % | 92.1 | % | 91.2 | % | 24.19 | Trader Joe's | 24 Hour Fitness, Sportsman's Warehouse, Walgreens | ||||||
Eastern Beltway Center3 | Las Vegas | 1998/2006 | 158,938 | 83,982 | 74,956 | 98.1 | % | 100.0 | % | 96.0 | % | 24.46 | Sam's Club, Wal-Mart | Office Max, Petco, Ross Dress for Less, Skechers, (Home Depot) | ||||||
Eastgate Plaza3 | Las Vegas | 2002 | 96,594 | 53,030 | 43,564 | 79.9 | % | 76.4 | % | 84.1 | % | 23.45 | (Wal-Mart) | 99 Cent Only Store, Party City | ||||||
Lowe's Plaza3 | Las Vegas | 2007 | 30,210 | — | 30,210 | 67.6 | % | — | % | 67.6 | % | 27.89 | Anytime Fitness, Starbucks, (Lowe's Home Improvement Center) | |||||||
| New Hampshire | ||||||||||||||||||||
| Merrimack Village Center | Merrimack | 2007 | 78,892 | 54,000 | 24,892 | 100.0 | % | 100.0 | % | 100.0 | % | 14.72 | Supervalue/Shaw's | |||||||
| New Jersey | ||||||||||||||||||||
| Bayonne Crossing | Bayonne | 2011 | 106,137 | 52,219 | 53,918 | 97.0 | % | 100.0 | % | 94.1 | % | 28.28 | Wal-Mart | Michaels, New York Sports Club, Lowe's Home Improvement Center | ||||||
| Livingston Shopping Center | Newark | 1997 | 139,559 | 133,125 | 6,434 | 95.4 | % | 100.0 | % | — | % | 19.77 | Cost Plus, Buy Buy Baby, Nordstrom Rack, DSW, TJ Maxx, Ulta Beauty | |||||||
| North Carolina | ||||||||||||||||||||
| Holly Springs Towne Center - Phase I | Raleigh | 2013 | 207,566 | 109,233 | 98,333 | 92.2 | % | 100.0 | % | 83.4 | % | 16.87 | (Target) | Dick's Sporting Goods, Marshalls, Petco, Ulta Beauty, Michaels | ||||||
| Holly Springs Towne Center - Phase II | Raleigh | 2016 | 145,009 | 111,843 | 33,166 | 100.0 | % | 100.0 | % | 100.0 | % | 17.98 | (Target) | Bed Bath & Beyond, DSW, AMC Theatre/Carmike, 02 Fitness | ||||||
Property1 | Location (MSA) | Year Built/ Renovated | Owned GLA2 | Leased % | ABR per SqFt | Grocery Anchors4 | Other Retailers4 | |||||||||||||
| Total | Anchors | Shops | Total | Anchors | Shops | |||||||||||||||
| Memorial Commons | Goldsboro | 2008 | 111,022 | 73,876 | 37,146 | 100.0 | % | 100.0 | % | 100.0 | % | $ | 13.26 | Harris Teeter/Kroger | Office Depot | |||||
| Northcrest Shopping Center | Charlotte | 2008 | 133,674 | 65,576 | 68,098 | 95.1 | % | 100.0 | % | 90.5 | % | 22.65 | (Target) | REI Co-Op, David's Bridal, Dollar Tree, Old Navy, Five Below | ||||||
| Oleander Place | Wilmington | 2012 | 45,530 | 30,144 | 15,386 | 100.0 | % | 100.0 | % | 100.0 | % | 17.03 | Whole Foods | |||||||
| Parkside Town Commons - Phase I | Raleigh | 2015 | 55,390 | 22,500 | 32,890 | 100.0 | % | 100.0 | % | 100.0 | % | 24.35 | Harris Teeter/Kroger, (Target) | Petco, Guitar Center | ||||||
| Parkside Town Commons - Phase II | Raleigh | 2017 | 291,713 | 191,988 | 99,725 | 97.5 | % | 100.0 | % | 92.5 | % | 19.66 | (Target) | Frank Theatres, Golf Galaxy, Hobby Lobby, Stein Mart, Chuy's, Starbucks, Panera Bread, Levity Live | ||||||
| Perimeter Woods | Charlotte | 2008 | 125,646 | 105,262 | 20,384 | 100.0 | % | 100.0 | % | 100.0 | % | 21.10 | Best Buy, Off Broadway Shoes, Office Max, PetSmart, Lowe's Home Improvement Center | |||||||
| Toringdon Market | Charlotte | 2004 | 60,314 | 26,072 | 34,242 | 100.0 | % | 100.0 | % | 100.0 | % | 21.49 | Earth Fare | |||||||
| Ohio | ||||||||||||||||||||
| Eastgate Pavilion | Cincinnati | 1995 | 236,230 | 231,730 | 4,500 | 100.0 | % | 100.0 | % | 100.0 | % | 9.15 | Best Buy, Dick's Sporting Goods, Value City Furniture, Petsmart, DSW, Bed Bath & Beyond | |||||||
| Oklahoma | ||||||||||||||||||||
| Belle Isle Station | Oklahoma City | 2000 | 164,407 | 92,783 | 71,624 | 98.5 | % | 100.0 | % | 96.5 | % | 17.35 | (Wal-Mart) | Shoe Carnival, Old Navy, Ross Stores, Nordstrom Rack, Babies "R" Us, Ulta Beauty | ||||||
| Shops at Moore | Moore | 2010 | 260,530 | 187,916 | 72,614 | 94.7 | % | 100.0 | % | 80.9 | % | 12.16 | Bed Bath and Beyond, Best Buy, Hobby Lobby, Office Depot, PetSmart, Ross Dress for Less, (JC Penny) | |||||||
| Silver Springs Pointe | Oklahoma City | 2001 | 48,474 | 20,515 | 27,959 | 79.1 | % | 100.0 | % | 63.7 | % | 15.88 | (Sam's Club), (Wal-Mart) | Kohls, Office Depot, (Home Depot) | ||||||
| University Town Center | Norman | 2009 | 158,375 | 77,097 | 81,278 | 91.3 | % | 100.0 | % | 83.0 | % | 18.00 | (Target) | Office Depot, Petco, TJ Maxx, Ulta Beauty | ||||||
| University Town Center Phase II | Norman | 2012 | 190,487 | 133,546 | 56,941 | 93.0 | % | 100.0 | % | 76.7 | % | 12.68 | (Target) | Academy Sports, DSW, Home Goods, Michaels, Kohls, Guitar Center | ||||||
| South Carolina | ||||||||||||||||||||
| Hitchcock Plaza | Augusta-Aiken | 2006 | 252,370 | 214,480 | 37,890 | 88.8 | % | 89.7 | % | 84.2 | % | 10.38 | TJ Maxx, Ross Dress for Less, Academy Sports, Bed Bath and Beyond, Farmers Home Furniture, Old Navy, Petco | |||||||
| Publix at Woodruff | Greenville | 1997 | 68,055 | 47,955 | 20,100 | 100.0 | % | 100.0 | % | 100.0 | % | 11.17 | Publix | |||||||
| Shoppes at Plaza Green | Greenville | 2000 | 194,807 | 172,136 | 22,671 | 94.7 | % | 94.1 | % | 100.0 | % | 13.33 | Bed Bath & Beyond, Christmas Tree Shops, Sears, Party City, Shoe Carnival, AC Moore, Old Navy | |||||||
| Tennessee | ||||||||||||||||||||
| Cool Springs Market | Nashville | 1995 | 230,980 | 172,712 | 58,268 | 99.5 | % | 100.0 | % | 97.9 | % | 15.78 | (Kroger) | Dick's Sporting Goods, Marshalls, Buy Buy Baby, DSW, Staples, Jo-Ann Fabric, Panera Bread | ||||||
| Hamilton Crossing - Phase II & III | Alcoa | 2008 | 175,464 | 135,737 | 39,727 | 94.8 | % | 100.0 | % | 77.2 | % | 14.95 | Dicks Sporting Goods, Michaels, Old Navy, PetSmart, Ross Dress for Less | |||||||
Texas4 | ||||||||||||||||||||
| Chapel Hill Shopping Center | Fort Worth | 2001 | 126,989 | 43,450 | 83,539 | 94.6 | % | 100.0 | % | 91.7 | % | 25.23 | H-E-B Grocery | The Container Store, Cost Plus World Market | ||||||
Property1 | Location (MSA) | Year Built/ Renovated | Owned GLA2 | Leased % | ABR per SqFt | Grocery Anchors4 | Other Retailers4 | |||||||||||||
| Total | Anchors | Shops | Total | Anchors | Shops | |||||||||||||||
| Colleyville Downs | Dallas | 2014 | 190,895 | 142,073 | 48,822 | 97.8 | % | 100.0 | % | 91.3 | % | $ | 12.99 | Whole Foods | Westlake Hardware, Vineyard's Antique Mall, Goody Goody Liquor, Petco | |||||
| Kingwood Commons | Houston | 1999 | 164,366 | 74,836 | 89,530 | 100.0 | % | 100.0 | % | 100.0 | % | 19.99 | Randall's Food and Drug | Petco, Chico's, Talbots, Ann Taylor | ||||||
| Market Street Village/ Pipeline Point | Fort Worth | 1970/2011 | 156,621 | 136,742 | 19,879 | 100.0 | % | 100.0 | % | 100.0 | % | 13.06 | Jo-Ann Fabric, Ross, Office Depot, Buy Buy Baby, Party City | |||||||
| Plaza at Cedar Hill | Dallas | 2000/2010 | 302,458 | 244,065 | 58,393 | 100.0 | % | 100.0 | % | 100.0 | % | 13.34 | Sprouts Farmers Market | DSW, Ross Dress for Less, Hobby Lobby, Office Max, Marshalls, Toys “R” Us/Babies “R” Us, Home Goods | ||||||
| Plaza Volente | Austin | 2004 | 156,296 | 105,000 | 51,296 | 97.2 | % | 100.0 | % | 91.4 | % | 17.41 | H-E-B Grocery | |||||||
| Portofino Shopping Center | Houston | 1999/2010 | 386,647 | 218,909 | 167,738 | 95.5 | % | 100.0 | % | 89.7 | % | 19.73 | (Sam's Club) | DSW, Michaels, PGA Superstore, SteinMart, PetSmart, Old Navy, TJ Maxx, Nordstrom Rack | ||||||
| Sunland Towne Centre | El Paso | 1996/2014 | 306,454 | 265,037 | 41,417 | 98.9 | % | 100.0 | % | 91.7 | % | 12.02 | Sprouts Farmers Market | PetSmart, Ross, Bed Bath & Beyond, Specs Fine Wines | ||||||
| Waxahachie Crossing | Waxahachie | 2010 | 97,127 | 72,191 | 24,936 | 100.0 | % | 100.0 | % | 100.0 | % | 14.76 | Best Buy, PetSmart, Ross Dress for Less, (Home Depot), (JC Penny) | |||||||
| Westside Market | Dallas | 2013 | 93,377 | 70,000 | 23,377 | 100.0 | % | 100.0 | % | 100.0 | % | 16.13 | Randall's Tom Thumb | |||||||
| Utah | ||||||||||||||||||||
| Draper Crossing | Salt Lake City | 2012 | 164,080 | 115,916 | 48,164 | 95.0 | % | 100.0 | % | 82.8 | % | 15.63 | Kroger/Smith's | TJ Maxx, Dollar Tree, Downeast Home | ||||||
| Draper Peaks | Salt Lake City | 2012 | 227,970 | 101,464 | 126,506 | 97.6 | % | 100.0 | % | 95.6 | % | 20.14 | Michaels, Office Depot, Petco, Quilted Bear, Ross Dress for Less, (Kohl's) | |||||||
| Virginia | ||||||||||||||||||||
| Landstown Commons | Virginia Beach | 2007 | 397,835 | 207,300 | 190,535 | 95.1 | % | 100.0 | % | 89.7 | % | 19.31 | Ross Dress for Less, Bed Bath & Beyond, Best Buy, PetSmart, Ulta Beauty, Walgreens, AC Moore, Kirkland's, Five Below, Office Max, (Kohl's) | |||||||
| Wisconsin | ||||||||||||||||||||
| Village at Bay Park | Ashwaubenon | 2005 | 82,238 | 23,878 | 58,360 | 88.5 | % | 100.0 | % | 83.7 | % | 16.08 | DSW, JC Penney, Kirkland's, Chico's, Dress Barn | |||||||
Total | 14,989,433 | 10,245,806 | 4,743,627 | 94.8 | % | 96.7 | % | 90.5 | % | $ | 16.07 | |||||||||
| Total Including 3-R Properties not in the Operating Portfolio | $ | 16.32 | ||||||||||||||||||
| ($ in thousands, except per square foot data) | |||||||||||||||||
| Property | MSA | Year Built/ Renovated | Acquired, Redeveloped or Developed | Owned NRA | Percentage Of Owned NRA Leased | Annualized Base Rent1 | Percentage of Annualized Office and Other Base Rent | Base Rent Per Leased Sq. Ft. | Major Tenants | ||||||||
| Office Properties | |||||||||||||||||
Thirty South Meridian2 | Indianapolis | 1905/2002 | Redeveloped | 287,928 | 70.7 | % | $ | 3,762 | 60.7 | % | $ | 18.47 | Stifel, Kite Realty Group, Lumina Foundation | ||||
Union Station Parking Garage3 | Indianapolis | 1986 | Acquired | N/A | N/A | N/A | N/A | N/A | Denison Parking | ||||||||
| Stand-alone Office Components of Retail Properties | |||||||||||||||||
Eddy Street Office (part of Eddy Street Commons)4 | South Bend | 2009 | Developed | 81,628 | 100.0 | % | 1,256 | 20.2 | % | 15.38 | University of Notre Dame Offices | ||||||
Tradition Village Office (part of Tradition Village Square)5 | Port St. Lucie | 2006 | Acquired | 24,206 | 87.4 | % | 594 | 9.6 | % | 28.05 | |||||||
| Total Office Properties | 393,762 | 77.8 | % | $ | 5,611 | 90.5 | % | $ | 18.31 | ||||||||
| Lessee of Land on Short Term Renewal | |||||||||||||||||
| Burlington | San Antonio | 1992/2000 | Acquired | 107,400 | 100.0 | % | $ | 591 | 9.5 | % | $ | 5.50 | Burlington | ||||
| 107,400 | 100.0 | % | $ | 591 | 9.5 | % | $ | 5.50 | |||||||||
| Total Office and Other | 501,162 | 82.6 | % | $ | 6,202 | 100.0 | % | $ | 14.99 | ||||||||
| Multi-Family | |||||||||||||||||
Lake Lofts at Deerwood6 | Jacksonville | 2017 | Developed | — | — | — | — | 130 Apartment Units | |||||||||
| ($ in thousands) | |||||||||||||||||||
| Project | Company Ownership % | MSA | Projected Stabilization Date1 | Projected Owned GLA2 | Projected Total GLA3 | Percent of Owned GLA Occupied | Percent of Owned GLA Pre-Leased/ Committed | KRG Share of Total Estimated Project Cost 4 | KRG Share of Cost Incurred as of December 31, 2017 | Major Tenants and Non-owned Anchors | |||||||||
| Embassy Suites at the University of Notre Dame | 35% | South Bend | Q4 2018 | 152,460 | 152,460 | NA | NA | $ | 13,895 | $ | 3,840 | Embassy Suites full-service hotel | |||||||
Eddy Street Commons at Notre Dame, IN - Phase II 5 | 100% | South Bend | Q4 2020 | 8,500 | 530,000 | — | % | — | % | $ | 8,447 | $ | 1,247 | Ground lease with multi-family developer on 450 units; 8,500 square feet of owned retail. | |||||
| Total | 160,960 | 682,460 | — | % | — | % | $ | 22,342 | $ | 5,087 | |||||||||
| Project | Metropolitan Statistical Area (MSA) | KRG Ownership % | Projected Completion Date(1) | Total Commercial GLA | Total Multifamily Units | Total Project Costs – at KRG's Share(2) | KRG Equity Requirement(2) | KRG Remaining Spend | Estimated Stabilized NOI to KRG | Estimated Remaining NOI to Come Online(3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Active Projects | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Landing at Tradition – Phase II | Port St. Lucie, FL | 100% | Q3 2023 | 39,900 | — | $ | 11,200 | $ | 11,200 | $ | 4,600 | $1.1M–$1.2M | $0.3M–$0.5M | |||||||||||||||||||||||||||||||||||||||||||||||||
| Carillon MOB | Washington, D.C./Baltimore | 100% | Q4 2024 | 126,000 | — | 59,700 | 59,700 | 39,600 | $3.5M–$4.0M | $2.2M–$2.7M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
The Corner – IN(4) | Indianapolis, IN | 50% | Q4 2024 | 24,000 | 285 | 31,900 | — | — | $1.7M–$1.9M | $1.7M–$1.9M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 189,900 | 285 | $ | 102,800 | $ | 70,900 | $ | 44,200 | $6.3M–$7.1M | $4.2M–$5.1M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(1)Projected completion date represents the earlier of one year after completion of project construction or substantial occupancy of the property.
(2)Total project costs and 3-R projects completed in 2017:KRG equity requirement represent costs to KRG post-merger and exclude any costs spent to date prior to the merger.
(3)Estimated remaining NOI to come online excludes in-place NOI and NOI related to tenants that have signed leases but have not yet commenced paying rent.
(4)The Company does not have any equity requirements related to this development. Total project costs are at KRG’s share and are net of KRG’s share of a $13.5 million TIF.
28
| COMPLETED PROJECTS DURING 2017 | ||||||
| Property | Location (MSA) | Description | Annual Projected ROI | Cost | ||
| Bolton Plaza, Phase II | Jacksonville | Replaced vacant shop space with Marshalls and a ground lease with Aldi, as well as additional center upgrades. | 10.5% | $5,217 | ||
| Castleton Crossing | Indianapolis | Demolition of existing structure to create new outparcel small shop building. | 11.8% | $3,300 | ||
| Centennial Gateway | Las Vegas | Retenanting 13,950 square foot anchor location to enhance overall quality of the center; also includes additional structural improvements and building upgrades. | 30.0% | $1,120 | ||
| Market Street Village | Fort Worth | Retenanting 15,000 square foot anchor space with Party City. | 30.9% | $840 | ||
| Northdale Promenade | Tampa | Multi-phase project involving rightsizing of an existing shop tenant to accommodate construction of new junior anchor, and the demolition of shop space to add another junior anchor, enhance space visibility, and improve overall small shop mix. | 14.4% | $4,200 | ||
| Portofino Shopping Center, Phase I | Houston | Addition of two small shop buildings on outparcels. | 9.1% | $5,100 | ||
Trussville Promenade 1 | Birmingham | Replaced vacant small shops with a 22,000 square foot Ross. | 9.5% | $3,695 | ||
| COMPLETED PROJECTS TOTALS | 12.3% | $23,472 | ||||
Tenant Diversification
No individual retail or office tenant accounted for more than 2.5% of the portfolio’s annualized base rentABR for the year ended December 31, 2017.2022. The following table sets forth certain information forsummarizes the largest 10top 25 tenants and non-owned anchor tenants (based on total GLA) open for business or for which ground lease payments are being made at the Company’s retail properties based on minimum rents in place as of December 31, 2017: 2022 (GLA and dollars in thousands):
| Tenant | Primary DBA/ Number of Stores | Number of Stores(1) | Total Leased GLA/NRA(2) | ABR(3) | % of Weighted ABR(4) | |||||||||||||||||||||||||||
| The TJX Companies, Inc. | T.J. Maxx (18), Marshalls (12), HomeGoods (11), Homesense (2), T.J. Maxx & HomeGoods combined (2) | 45 | 1,323 | $ | 14,469 | 2.5 | % | |||||||||||||||||||||||||
| Best Buy Co., Inc. | Best Buy (15), Pacific Sales (1) | 16 | 633 | 11,204 | 1.9 | % | ||||||||||||||||||||||||||
| Ross Stores, Inc. | Ross Dress for Less (31), dd’s DISCOUNTS (1) | 32 | 908 | 10,648 | 1.8 | % | ||||||||||||||||||||||||||
| PetSmart, Inc. | 32 | 657 | 10,525 | 1.8 | % | |||||||||||||||||||||||||||
| Gap Inc. | Old Navy (25), The Gap (3), Banana Republic (3), Athleta (3) | 34 | 455 | 8,348 | 1.4 | % | ||||||||||||||||||||||||||
| Bed Bath & Beyond Inc. | Bed Bath & Beyond (14), buybuy BABY (9) | 23 | 613 | 8,277 | 1.4 | % | ||||||||||||||||||||||||||
| Dick’s Sporting Goods, Inc. | Dick’s Sporting Goods (12), Golf Galaxy (1) | 13 | 652 | 8,265 | 1.4 | % | ||||||||||||||||||||||||||
| Michaels Stores, Inc. | Michaels | 28 | 631 | 8,250 | 1.4 | % | ||||||||||||||||||||||||||
| Publix Super Markets, Inc. | 14 | 669 | 6,884 | 1.2 | % | |||||||||||||||||||||||||||
| Lowe’s Companies, Inc. | 6 | — | 5,838 | 1.0 | % | |||||||||||||||||||||||||||
| The Kroger Co. | Kroger (6), Harris Teeter (2), QFC (1), Smith’s (1) | 10 | 355 | 5,753 | 1.0 | % | ||||||||||||||||||||||||||
| Total Wine & More | 14 | 332 | 5,688 | 1.0 | % | |||||||||||||||||||||||||||
| BJ’s Wholesale Club, Inc. | 3 | 115 | 5,464 | 1.0 | % | |||||||||||||||||||||||||||
Petco Health And Wellness Company, Inc. | 22 | 299 | 5,461 | 0.9 | % | |||||||||||||||||||||||||||
| Ulta Beauty, Inc. | 25 | 259 | 5,388 | 0.9 | % | |||||||||||||||||||||||||||
| Albertsons Companies, Inc. | Safeway (3), Jewel-Osco (2), Tom Thumb (2) | 7 | 395 | 5,040 | 0.9 | % | ||||||||||||||||||||||||||
| Five Below, Inc. | 29 | 258 | 4,945 | 0.9 | % | |||||||||||||||||||||||||||
| Fitness International, LLC | 6 | 242 | 4,884 | 0.9 | % | |||||||||||||||||||||||||||
| Burlington Stores, Inc. | 9 | 473 | 4,881 | 0.8 | % | |||||||||||||||||||||||||||
| Kohl’s Corporation | 7 | 361 | 4,865 | 0.8 | % | |||||||||||||||||||||||||||
| Nordstrom, Inc. | 8 | 259 | 4,494 | 0.8 | % | |||||||||||||||||||||||||||
| Ahold U.S.A. Inc. | Stop & Shop (3), Giant Foods (1) | 4 | 239 | 4,493 | 0.8 | % | ||||||||||||||||||||||||||
DSW Designer Shoe Warehouse | 16 | 314 | 4,482 | 0.8 | % | |||||||||||||||||||||||||||
| Walgreens Boots Alliance, Inc. | 8 | 133 | 4,453 | 0.8 | % | |||||||||||||||||||||||||||
| Office Depot, Inc. | Office Depot (11), OfficeMax (3) | 14 | 308 | 4,380 | 0.8 | % | ||||||||||||||||||||||||||
| Total Top Tenants | 425 | 10,883 | $ | 167,379 | 28.9 | % | ||||||||||||||||||||||||||
(2)Total leased GLA/NRA excludes the square footage of structures located on land owned by the Company and ground-leased to tenants.
(3)ABR represents the monthly contractual rent for December 31, 2022 for each applicable tenant multiplied by 12 and does not include tenant reimbursements. ABR represents 100% of the ABR at consolidated properties and the Company’s share of the ABR at unconsolidated properties.
(4)Percent of weighted ABR includes ground lease rent and represents the Company’s share of the ABR at consolidated and unconsolidated properties.
| Tenant | Number of Locations | Total GLA | Number of Leases | Company Owned GLA | Ground Lease GLA | Number of Anchor Owned Locations | Anchor Owned GLA | ||||||||||||||
Wal-Mart Stores, Inc.1 | 15 | 2,578,323 | 6 | 203,742 | 811,956 | 9 | 1,562,625 | ||||||||||||||
| Target Corporation | 15 | 2,175,101 | — | — | — | 15 | 2,175,101 | ||||||||||||||
| Lowe's Companies, Inc. | 14 | 2,072,666 | 5 | 128,997 | 650,161 | 9 | 1,293,508 | ||||||||||||||
| Home Depot Inc. | 6 | 788,167 | 1 | — | 131,858 | 5 | 656,309 | ||||||||||||||
| Kohl's Corporation | 9 | 782,386 | 5 | 184,516 | 244,010 | 4 | 353,860 | ||||||||||||||
| Publix Super Markets, Inc. | 14 | 670,665 | 14 | 670,665 | — | — | — | ||||||||||||||
The TJX Companies, Inc. 2 | 22 | 656,931 | 22 | 656,931 | — | — | — | ||||||||||||||
| Ross Stores, Inc. | 18 | 510,707 | 18 | 510,707 | — | — | — | ||||||||||||||
Bed Bath & Beyond, Inc. 3 | 19 | 493,719 | 19 | 493,719 | — | — | — | ||||||||||||||
| Petsmart, Inc. | 19 | 390,843 | 19 | 390,843 | — | — | — | ||||||||||||||
| Total | 151 | 11,119,508 | 109 | 3,240,120 | 1,837,985 | 42 | 6,041,403 | ||||||||||||||
29
In 2023, leases representing 9.3% of total retail ABR are scheduled to expire. The following table sets forth certain informationsummarizes scheduled lease expirations for the largest 25retail tenants and tenants open for business at in-process development projects as of December 31, 2022, assuming none of the Company’s retail properties based on minimumtenants exercise renewal options (dollars in thousands, except per square foot data):
Expiring GLA – Retail(2) | Expiring ABR per Sq. Ft.(3) | ||||||||||||||||||||||||||||||||||||||||||||||
Number of Expiring Leases(1) | Shop Tenants | Anchor Tenants | Expiring ABR (Pro rata) | % of Total ABR (Pro rata) | Shop Tenants | Anchor Tenants | Total | ||||||||||||||||||||||||||||||||||||||||
| 2023 | 492 | 1,146,406 | 1,008,007 | $ | 50,308 | 9.3 | % | $ | 30.13 | $ | 15.73 | $ | 23.38 | ||||||||||||||||||||||||||||||||||
| 2024 | 613 | 1,449,645 | 2,526,203 | 78,042 | 14.4 | % | 31.81 | 13.47 | 20.41 | ||||||||||||||||||||||||||||||||||||||
| 2025 | 483 | 1,158,554 | 2,483,431 | 67,122 | 12.4 | % | 30.96 | 12.89 | 18.69 | ||||||||||||||||||||||||||||||||||||||
| 2026 | 454 | 1,030,060 | 2,388,356 | 65,349 | 12.1 | % | 30.86 | 14.38 | 19.42 | ||||||||||||||||||||||||||||||||||||||
| 2027 | 512 | 1,188,641 | 2,502,486 | 71,206 | 13.2 | % | 31.13 | 13.83 | 19.42 | ||||||||||||||||||||||||||||||||||||||
| 2028 | 349 | 823,943 | 2,504,354 | 61,876 | 11.4 | % | 32.95 | 13.88 | 18.60 | ||||||||||||||||||||||||||||||||||||||
| 2029 | 186 | 457,296 | 1,184,686 | 34,359 | 6.4 | % | 32.86 | 16.43 | 20.98 | ||||||||||||||||||||||||||||||||||||||
| 2030 | 137 | 417,559 | 584,298 | 20,861 | 3.9 | % | 29.46 | 15.00 | 20.97 | ||||||||||||||||||||||||||||||||||||||
| 2031 | 128 | 346,289 | 619,508 | 20,991 | 3.9 | % | 32.11 | 16.11 | 21.81 | ||||||||||||||||||||||||||||||||||||||
| 2032 | 162 | 403,952 | 1,079,063 | 27,866 | 5.2 | % | 31.03 | 14.73 | 19.20 | ||||||||||||||||||||||||||||||||||||||
| Beyond | 170 | 400,146 | 1,567,163 | 42,245 | 7.8 | % | 34.58 | 18.16 | 21.49 | ||||||||||||||||||||||||||||||||||||||
| 3,686 | 8,822,491 | 18,447,555 | $ | 540,225 | 100.0 | % | $ | 31.43 | $ | 14.55 | $ | 20.05 | |||||||||||||||||||||||||||||||||||
(1)Lease expirations table reflects rents in place as of December 31, 2017: 2022 and does not include option periods; 2023 expirations include 44 month-to-month retail tenants. This column also excludes ground leases.
(2)Expiring GLA excludes the square footage of structures located on land owned by the Company and ground-leased to tenants.
| ($ in thousands, except per square foot data) | |||||||||||||||||||
| Tenant | Number of Stores | Leased GLA/NRA1 | % of Owned GLA/NRA of the Portfolio | Annualized Base Rent2,3 | Annualized Base Rent per Sq. Ft.3 | % of Total Portfolio Annualized Base Rent3 | |||||||||||||
The TJX Companies, Inc.4 | 22 | 656,931 | 2.7 | % | $ | 6,833 | $ | 10.40 | 2.5 | % | |||||||||
| Publix Super Markets, Inc. | 14 | 670,665 | 2.7 | % | 6,739 | 10.05 | 2.5 | % | |||||||||||
| Petsmart, Inc. | 19 | 390,843 | 1.6 | % | 6,152 | 15.74 | 2.2 | % | |||||||||||
Bed Bath & Beyond, Inc.5 | 19 | 493,719 | 2.0 | % | 6,050 | 12.25 | 2.2 | % | |||||||||||
| Ross Stores, Inc. | 18 | 510,707 | 2.1 | % | 5,791 | 11.34 | 2.1 | % | |||||||||||
| Lowe's Companies, Inc. | 5 | 128,997 | 0.5 | % | 5,039 | 6.47 | 1.8 | % | |||||||||||
| Office Depot (9) / Office Max (6) | 15 | 307,788 | 1.3 | % | 4,242 | 13.78 | 1.6 | % | |||||||||||
Dick's Sporting Goods, Inc.6 | 8 | 390,502 | 1.6 | % | 4,167 | 10.67 | 1.5 | % | |||||||||||
| Nordstrom, Inc. | 6 | 197,845 | 0.8 | % | 3,995 | 20.19 | 1.5 | % | |||||||||||
| Michaels Stores, Inc. | 14 | 295,066 | 1.2 | % | 3,884 | 13.16 | 1.4 | % | |||||||||||
Ascena Retail Group7 | 33 | 202,482 | 0.8 | % | 3,817 | 18.85 | 1.4 | % | |||||||||||
Wal-Mart Stores, Inc.8 | 6 | 203,742 | 0.8 | % | 3,655 | 3.60 | 1.3 | % | |||||||||||
| LA Fitness | 5 | 208,209 | 0.8 | % | 3,447 | 16.56 | 1.3 | % | |||||||||||
| Best Buy Co., Inc. | 6 | 213,604 | 0.9 | % | 3,069 | 14.37 | 1.1 | % | |||||||||||
| Mattress Firm Holdings Corp (18) / Sleepy's (5) | 23 | 105,001 | 0.4 | % | 2,935 | 27.95 | 1.1 | % | |||||||||||
| Kohl's Corporation | 5 | 184,516 | 0.8 | % | 2,927 | 6.83 | 1.1 | % | |||||||||||
Toys "R" Us, Inc.9 | 6 | 179,316 | 0.7 | % | 2,924 | 11.82 | 1.1 | % | |||||||||||
| National Amusements | 1 | 80,000 | 0.3 | % | 2,898 | 36.22 | 1.1 | % | |||||||||||
| Petco Animal Supplies, Inc. | 12 | 167,455 | 0.7 | % | 2,819 | 16.83 | 1.0 | % | |||||||||||
| Ulta Beauty, Inc. | 12 | 127,451 | 0.5 | % | 2,559 | 20.08 | 0.9 | % | |||||||||||
| DSW Inc. | 9 | 175,133 | 0.7 | % | 2,491 | 14.22 | 0.9 | % | |||||||||||
| Stein Mart, Inc. | 9 | 307,222 | 1.3 | % | 2,378 | 7.74 | 0.9 | % | |||||||||||
| Frank Theatres | 2 | 122,224 | 0.5 | % | 2,311 | 18.91 | 0.8 | % | |||||||||||
| Hobby Lobby Stores, Inc. | 5 | 271,254 | 1.1 | % | 2,190 | 8.07 | 0.8 | % | |||||||||||
| Walgreens Boots Alliance, Inc. | 4 | 67,212 | 0.3 | % | 2,099 | 31.23 | 0.8 | % | |||||||||||
| TOTAL | 278 | 6,657,884 | 27.1 | % | $ | 95,412 | $ | 11.36 | 34.9 | % | |||||||||
| ($ in thousands) | |||||||||||||||||||||||||||||
| Total Operating Portfolio Excluding Developments and Redevelopments | Developments and Redevelopments2 | Total Operating Portfolio Including Developments and Redevelopments | |||||||||||||||||||||||||||
| Region/State | Owned GLA/NRA1 | Annualized Base Rent | Owned GLA/NRA1 | Annualized Base Rent | Number of Properties | Owned GLA/NRA1 | Annualized Base Rent - Ground Leases | Total Annualized Base Rent | Percent of Annualized Base Rent | ||||||||||||||||||||
| Florida | |||||||||||||||||||||||||||||
| Florida | 4,211,900 | $ | 61,602 | 220,597 | $ | 1,278 | 37 | 4,432,497 | $ | 3,885 | $ | 66,765 | 24.6% | ||||||||||||||||
| Southeast | |||||||||||||||||||||||||||||
| North Carolina | 1,175,864 | 21,847 | — | — | 9 | 1,175,864 | 3,745 | 25,592 | 9.4% | ||||||||||||||||||||
| Georgia | 394,413 | 5,013 | 331,198 | 3,361 | 4 | 725,611 | 511 | 8,885 | 3.3% | ||||||||||||||||||||
| Tennessee | 406,444 | 6,113 | — | — | 2 | 406,444 | — | 6,113 | 2.3% | ||||||||||||||||||||
| South Carolina | 515,232 | 5,548 | — | — | 3 | 515,232 | — | 5,548 | 2.0% | ||||||||||||||||||||
| Alabama | 463,836 | 4,267 | — | — | 1 | 463,836 | 151 | 4,418 | 1.6% | ||||||||||||||||||||
| Total Southeast | 2,955,789 | 42,788 | 331,198 | 3,361 | 19 | 3,286,987 | 4,407 | 50,556 | 18.6% | ||||||||||||||||||||
| Mid-Central | |||||||||||||||||||||||||||||
| Texas | 1,981,230 | 31,331 | — | — | 10 | 1,981,230 | 1,082 | 32,413 | 11.9% | ||||||||||||||||||||
| Oklahoma | 822,273 | 11,267 | — | — | 5 | 822,273 | 1,188 | 12,455 | 4.6% | ||||||||||||||||||||
| Texas - Other | 107,400 | 591 | — | — | 1 | 107,400 | — | 591 | 0.2% | ||||||||||||||||||||
| Total Mid-Central | 2,910,903 | 43,189 | — | — | 16 | 2,910,903 | 2,270 | 45,459 | 16.7% | ||||||||||||||||||||
| Midwest | |||||||||||||||||||||||||||||
| Indiana - Retail | 2,169,100 | 28,998 | 178,758 | 1,619 | 23 | 2,347,858 | 1,171 | 31,788 | 11.7% | ||||||||||||||||||||
| Indiana - Other | 369,556 | 5,017 | 152,460 | — | 3 | 522,016 | — | 5,017 | 1.8% | ||||||||||||||||||||
| Illinois | 310,879 | 4,219 | — | — | 3 | 310,879 | — | 4,219 | 1.6% | ||||||||||||||||||||
| Ohio | 236,230 | 2,162 | — | — | 1 | 236,230 | — | 2,162 | 0.8% | ||||||||||||||||||||
| Wisconsin | 82,238 | 1,170 | — | — | 1 | 82,238 | 381 | 1,551 | 0.6% | ||||||||||||||||||||
| Total Midwest | 3,168,003 | 41,566 | 331,218 | 1,619 | 31 | 3,499,221 | 1,552 | 44,737 | 16.5% | ||||||||||||||||||||
| West | |||||||||||||||||||||||||||||
| Nevada | 844,942 | 18,829 | 79,455 | 1,462 | 7 | 924,397 | 3,963 | 24,254 | 8.9% | ||||||||||||||||||||
| Utah | 392,050 | 6,916 | — | — | 2 | 392,050 | 68 | 6,984 | 2.6% | ||||||||||||||||||||
| Arizona | 79,902 | 2,357 | — | — | 1 | 79,902 | — | 2,357 | 0.8% | ||||||||||||||||||||
| Total West | 1,316,894 | 28,102 | 79,455 | 1,462 | 10 | 1,396,349 | 4,031 | 33,595 | 12.3% | ||||||||||||||||||||
| Northeast | |||||||||||||||||||||||||||||
| New York | — | — | 361,618 | 9,448 | 1 | 361,618 | — | 9,448 | 3.5% | ||||||||||||||||||||
| New Jersey | 245,696 | 5,545 | — | — | 2 | 245,696 | 2,251 | 7,796 | 2.9% | ||||||||||||||||||||
| Virginia | 397,835 | 7,302 | — | — | 1 | 397,835 | 294 | 7,596 | 2.8% | ||||||||||||||||||||
| Connecticut | 205,683 | 3,250 | — | — | 1 | 205,683 | 1,034 | 4,284 | 1.6% | ||||||||||||||||||||
| New Hampshire | 78,892 | 1,162 | — | — | 1 | 78,892 | 168 | 1,330 | 0.5% | ||||||||||||||||||||
| Total Northeast | 928,106 | 17,259 | 361,618 | 9,448 | 6 | 1,289,724 | 3,747 | 30,454 | 11.3% | ||||||||||||||||||||
| 15,491,595 | $ | 234,506 | 1,324,086 | $ | 17,168 | 119 | 16,815,681 | $ | 19,892 | $ | 271,566 | 100.0% | |||||||||||||||||
| ($ in thousands, except per square foot data) | ||||||||||||||||||||||||
Number of Expiring Leases1 | Expiring GLA/NRA2 | % of Total GLA/NRA Expiring | Expiring Annualized Base Rent3, 4 | % of Total Annualized Base Rent | Expiring Annualized Base Rent per Sq. Ft. | Expiring Ground Lease Revenue | ||||||||||||||||||
| 2018 | 218 | 967,337 | 6.3 | % | $ | 17,938 | 7.1 | % | $ | 18.54 | $ | 68 | ||||||||||||
| 2019 | 254 | 1,692,272 | 11.0 | % | 25,225 | 10.0 | % | 14.91 | 653 | |||||||||||||||
| 2020 | 255 | 2,078,070 | 13.4 | % | 28,458 | 11.3 | % | 13.69 | 1,592 | |||||||||||||||
| 2021 | 300 | 1,779,909 | 11.5 | % | 29,724 | 11.8 | % | 16.70 | 911 | |||||||||||||||
| 2022 | 314 | 2,167,081 | 14.0 | % | 36,769 | 14.6 | % | 16.97 | 1,240 | |||||||||||||||
| 2023 | 227 | 1,915,798 | 12.4 | % | 32,155 | 12.8 | % | 16.78 | 1,979 | |||||||||||||||
| 2024 | 101 | 902,748 | 5.8 | % | 16,589 | 6.6 | % | 18.38 | 288 | |||||||||||||||
| 2025 | 82 | 776,566 | 5.0 | % | 13,604 | 5.4 | % | 17.52 | 806 | |||||||||||||||
| 2026 | 80 | 767,131 | 5.0 | % | 11,292 | 4.5 | % | 14.72 | 1,320 | |||||||||||||||
| 2027 | 83 | 793,480 | 5.1 | % | 12,671 | 5.0 | % | 15.97 | 358 | |||||||||||||||
| Beyond | 92 | 1,613,068 | 10.5 | % | 27,250 | 10.8 | % | 16.89 | 10,678 | |||||||||||||||
| 2,006 | 15,453,460 | 100.0 | % | $ | 251,674 | 100.0 | % | $ | 16.29 | $ | 19,892 | |||||||||||||
| ($ in thousands, except per square foot data) | ||||||||||||||||||||||||
Number of Expiring Leases2 | Expiring GLA/NRA3 | % of Total GLA/NRA Expiring | Expiring Annualized Base Rent4 | % of Total Annualized Base Rent | Expiring Annualized Base Rent per Sq. Ft. | Expiring Ground Lease Revenue | ||||||||||||||||||
| 2018 | 18 | 482,006 | 3.1 | % | $ | 5,432 | 2.2 | % | $ | 11.27 | $ | — | ||||||||||||
| 2019 | 34 | 1,103,859 | 7.1 | % | 10,789 | 4.3 | % | 9.77 | — | |||||||||||||||
| 2020 | 39 | 1,538,271 | 10.0 | % | 15,534 | 6.2 | % | 10.10 | 1,111 | |||||||||||||||
| 2021 | 43 | 1,112,245 | 7.2 | % | 12,925 | 5.1 | % | 11.62 | 318 | |||||||||||||||
| 2022 | 53 | 1,434,297 | 9.3 | % | 18,204 | 7.2 | % | 12.69 | 745 | |||||||||||||||
| 2023 | 46 | 1,244,074 | 8.1 | % | 17,651 | 7.0 | % | 14.19 | 1,454 | |||||||||||||||
| 2024 | 21 | 593,523 | 3.8 | % | 9,191 | 3.7 | % | 15.49 | — | |||||||||||||||
| 2025 | 20 | 511,713 | 3.3 | % | 7,112 | 2.8 | % | 13.90 | 381 | |||||||||||||||
| 2026 | 16 | 512,101 | 3.3 | % | 4,972 | 2.0 | % | 9.71 | 750 | |||||||||||||||
| 2027 | 20 | 570,380 | 3.7 | % | 6,839 | 2.7 | % | 11.99 | — | |||||||||||||||
| Beyond | 37 | 1,401,881 | 9.1 | % | 21,699 | 8.6 | % | 15.48 | 6,377 | |||||||||||||||
| 347 | 10,504,350 | 68.0 | % | $ | 130,347 | 51.8 | % | $ | 12.41 | $ | 11,135 | |||||||||||||
| ($ in thousands, except per square foot data) | |||||||||||||||||||||
Number of Expiring Leases1 | Expiring GLA/NRA2 | % of Total GLA/NRA Expiring | Expiring Annualized Base Rent3 | % of Total Annualized Base Rent | Expiring Annualized Base Rent per Sq. Ft. | Expiring Ground Lease Revenue | |||||||||||||||
| 2018 | 199 | 474,533 | 3.1% | $ | 12,260 | 4.9% | $ | 25.84 | $ | 68 | |||||||||||
| 2019 | 219 | 583,160 | 3.8% | 14,335 | 5.7% | 24.58 | 653 | ||||||||||||||
| 2020 | 214 | 526,488 | 3.4% | 12,667 | 5.0% | 24.06 | 481 | ||||||||||||||
| 2021 | 254 | 658,665 | 4.3% | 16,570 | 6.6% | 25.16 | 593 | ||||||||||||||
| 2022 | 256 | 667,764 | 4.3% | 17,302 | 6.9% | 25.91 | 495 | ||||||||||||||
| 2023 | 176 | 521,876 | 3.4% | 13,038 | 5.2% | 24.98 | 525 | ||||||||||||||
| 2024 | 77 | 234,999 | 1.5% | 6,197 | 2.5% | 26.37 | 288 | ||||||||||||||
| 2025 | 58 | 178,174 | 1.2% | 5,074 | 2.0% | 28.48 | 425 | ||||||||||||||
| 2026 | 64 | 255,030 | 1.7% | 6,320 | 2.5% | 24.78 | 570 | ||||||||||||||
| 2027 | 62 | 213,946 | 1.4% | 5,562 | 2.2% | 26.00 | 358 | ||||||||||||||
| Beyond | 55 | 211,187 | 1.4% | 5,550 | 2.2% | 26.28 | 4,301 | ||||||||||||||
| 1,634 | 4,525,822 | 29.3% | $ | 114,874 | 45.6% | $ | 25.38 | $ | 8,757 | ||||||||||||
| ($ in thousands, except per square foot data) | |||||||||||||||||
Number of Expiring Leases1 | Expiring GLA/NRA1 | % of Total GLA/NRA Expiring | Expiring Annualized Base Rent2 | % of Total Annualized Base Rent | Expiring Annualized Base Rent per Sq. Ft. | ||||||||||||
| 2018 | 1 | 10,798 | 0.1% | $ | 246 | 0.1% | $ | 22.81 | |||||||||
| 2019 | 1 | 5253 | —% | 101 | —% | 19.25 | |||||||||||
| 2020 | 2 | 13,311 | 0.1% | 256 | 0.1% | 19.25 | |||||||||||
| 2021 | 3 | 8,999 | 0.1% | 229 | 0.1% | 25.49 | |||||||||||
| 2022 | 5 | 65,020 | 0.4% | 1,263 | 0.5% | 19.43 | |||||||||||
| 2023 | 5 | 149,848 | 1.0% | 1,466 | 0.6% | 9.79 | |||||||||||
20243 | 3 | 74,226 | 0.5% | 1,201 | 0.5% | 16.19 | |||||||||||
| 2025 | 4 | 86,679 | 0.6% | 1,418 | 0.6% | 16.36 | |||||||||||
| 2026 | — | — | —% | — | —% | — | |||||||||||
| 2027 | 1 | 9,154 | 0.1% | 270 | 0.1% | 29.50 | |||||||||||
| Beyond | — | — | —% | — | —% | — | |||||||||||
| 25 | 423,288 | 2.7% | $ | 6,452 | 2.6% | $ | 15.24 | ||||||||||
Lease Activity – New and Renewal
ITEM 3. LEGAL PROCEEDINGS
We are not subject to any material litigation nor, to management’s knowledge, is any material litigation 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.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
30
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common shares are currently listed and tradedtrade on the NYSENew York Stock Exchange (the “NYSE”) under the symbol “KRG.” On February 16, 2018,15, 2023, the closing price of our common shares on the NYSE was $15.48. $22.60.
Holders
| Quarter Ended December 31, 2017 | $ | 20.71 | $ | 18.10 | ||||
| Quarter Ended September 30, 2017 | $ | 21.57 | $ | 18.16 | ||||
| Quarter Ended June 30, 2017 | $ | 22.34 | $ | 17.60 | ||||
| Quarter Ended March 31, 2017 | $ | 24.52 | $ | 19.91 | ||||
| Quarter Ended December 31, 2016 | $ | 27.69 | $ | 22.50 | ||||
| Quarter Ended September 30, 2016 | $ | 30.45 | $ | 27.04 | ||||
| Quarter Ended June 30, 2016 | $ | 30.00 | $ | 25.58 | ||||
| Quarter Ended March 31, 2016 | $ | 28.32 | $ | 23.75 | ||||
Distributions,
| Quarter | Record Date | Distribution Per Share | Payment Date | |||||
4th 2017 | January 5, 2018 | $ | 0.3175 | January 12, 2018 | ||||
3rd 2017 | October 6, 2017 | $ | 0.3025 | October 13, 201 | ||||
2nd 2017 | July 6, 2017 | $ | 0.3025 | July 13, 2017 | ||||
1st 2017 | April 6, 2017 | $ | 0.3025 | April 13, 2017 | ||||
| 4th 2016 | January 6, 2017 | $ | 0.3025 | January 13, 2017 | ||||
| 3rd 2016 | October 6, 2016 | $ | 0.2875 | October 13, 2016 | ||||
| 2nd 2016 | July 7, 2016 | $ | 0.2875 | July 14, 2016 | ||||
| 1st 2016 | April 6, 2016 | $ | 0.2875 | April 13, 2016 | ||||
Distributions by us to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes will be taxable to shareholders as either ordinary dividend income or capital gain income if so declared by us. Distributions in excess
of taxable earnings and profits generally will be treated as a non-taxable return of capital. These distributions, to the extent that they do not exceed the shareholder’s adjusted tax basis in its common shares, have the effect of deferring taxation until the sale of a shareholder’s common shares. To the extent that distributions are both in excess of taxable earnings and profits and in excess of the shareholder’s adjusted tax basis in its common shares, the distribution will be treated as gain from the sale of common shares. In order to maintain our qualification as a REIT, we must make annual distributions to shareholders of at least 90% of our “REIT taxable income” (determined before the deduction for dividends paid and excluding net capital gains) and we must make distributions to shareholders equal to 100% of our net taxable income to eliminate U.S. federal income tax liability. Under certain circumstances, we could be required to make distributions in excess of cash available for distributions in order to meet such requirements. For the taxable year ended December 31, 2017,2022, approximately 24%86.1% of our distributions to shareholders constituted a return of capital, approximately 65% constituted taxable ordinary income dividends and approximately 11%13.9% constituted taxable capital gains.
gains dividends.
Under our unsecured revolving credit facility,Revolving Facility, we are permitted to make distributions to our shareholders that do not exceed 95% of our Funds From Operations (“FFO”) provided that no event of default exists. If an event of default exists, we may only make distributions sufficient to maintain our REIT status. However, we may not make any distributions if any event of default resulting from nonpayment or bankruptcy exists or if our obligations under the unsecured revolving credit facilityRevolving Facility are accelerated.
Issuer Repurchases; Unregistered Sales of Securities
During the three months ended December 31, 2017, we did not repurchase any of our common shares, and none2022, certain of our employees surrendered common shares owned by them to satisfy their statutory minimum U.S. federal and state tax obligations associated with the vesting of restricted common shares of beneficial interest issued under our 2013 Equity Incentive Plan. We didPlan, as amended and restated as of May 11, 2022. These shares were repurchased by the Company.
The following table summarizes the number of shares repurchased during the three months ended December 31, 2022:
| Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs(1) | ||||||||||||||||||||||
| October 1, 2022 to October 31, 2022 | — | $ | — | N/A | $ | 300,000,000 | ||||||||||||||||||||
| November 1, 2022 to November 30, 2022 | 18,521 | $ | 21.11 | N/A | $ | 300,000,000 | ||||||||||||||||||||
| December 1, 2022 to December 31, 2022 | — | $ | — | N/A | $ | 300,000,000 | ||||||||||||||||||||
| Total | 18,521 | $ | 21.11 | |||||||||||||||||||||||
31
(1)Represents amounts outstanding under the Company’s authorized Share Repurchase Program announced in February 2021. In February 2022, the Company’s Board of Trustees extended the program until February 2023 and in April 2022, increased the size of the program from $150.0 million to $300.0 million. In February 2023, the Company’s Board of Trustees extended the program for an additional year. The program may be suspended or terminated at any time by the Company and will terminate on February 28, 2024, if not sell any unregistered securities during 2017.terminated or extended prior to that date.
Issuances Under Equity Compensation Plans
For information regarding the securities authorized for issuance under our equity compensation plans, see Item 12 of this Annual Report on Form 10-K.
Performance Graph
Notwithstanding anything to the contrary set forth in any of our filings under the Securities Act or the Exchange Act that might incorporate SEC filings, in whole or in part, the following performance graph will not be incorporated by reference into any such filings.
The following graph compares the cumulative total shareholder return of our common shares for the period from December 31, 20122017 to December 31, 2017,2022, to the S&P 500 Index and to the published NAREIT All Equity REIT Index over the same period. The graph assumes that the value of the investment in our common shares and each index was $100 at December 31, 20122017 and that all cash distributions were reinvested. The shareholder return shown on the graph below is not indicative of future performance.
The actual returns shown on the graph above are as follows:
| 12/17 | 6/18 | 12/18 | 6/19 | 12/19 | 6/20 | 12/20 | 6/21 | 12/21 | 6/22 | 12/22 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Kite Realty Group Trust | $ | 100.00 | $ | 90.43 | $ | 77.54 | $ | 88.64 | $ | 118.71 | $ | 72.31 | $ | 94.79 | $ | 142.06 | $ | 143.05 | $ | 115.61 | $ | 144.19 | |||||||||||||||||||||||||||||||||||||||||||
| S&P 500 | $ | 100.00 | $ | 102.65 | $ | 95.62 | $ | 113.34 | $ | 125.72 | $ | 121.85 | $ | 148.85 | $ | 171.56 | $ | 191.58 | $ | 153.34 | $ | 156.89 | |||||||||||||||||||||||||||||||||||||||||||
| FTSE NAREIT Equity REITs | $ | 100.00 | $ | 101.02 | $ | 95.38 | $ | 112.34 | $ | 120.17 | $ | 97.69 | $ | 110.56 | $ | 134.83 | $ | 158.36 | $ | 126.37 | $ | 119.78 | |||||||||||||||||||||||||||||||||||||||||||
 |
| 12/12 | 6/13 | 12/13 | 6/14 | 12/14 | 6/15 | 12/15 | 6/16 | 12/16 | 6/17 | 12/17 | |||||||||||||||||||||||
| Kite Realty Group Trust | 100.00 | 110.04 | 122.30 | 117.86 | 139.42 | 120.94 | 131.06 | 144.71 | 123.78 | 102.51 | 109.41 | ||||||||||||||||||||||
| S&P 500 | 100.00 | 113.82 | 132.39 | 141.84 | 150.51 | 152.36 | 152.59 | 158.45 | 170.84 | 186.80 | 208.14 | ||||||||||||||||||||||
| FTSE NAREIT Equity REITs | 100.00 | 106.49 | 102.47 | 120.56 | 133.35 | 125.78 | 137.61 | 156.02 | 149.33 | 153.37 | 157.14 | ||||||||||||||||||||||
ITEM 6. SELECTED FINANCIAL DATA
[RESERVED]
32
| Revenues: | ||||||||||||||||||||
| Rental related revenue | $ | 358,442 | $ | 354,122 | $ | 347,005 | $ | 259,528 | $ | 129,488 | ||||||||||
| Fee income | 377 | — | — | — | — | |||||||||||||||
| Total revenues | 358,819 | 354,122 | 347,005 | 259,528 | 129,488 | |||||||||||||||
| Expenses: | ||||||||||||||||||||
| Property operating | 49,643 | 47,923 | 49,973 | 38,703 | 21,729 | |||||||||||||||
| Real estate taxes | 43,180 | 42,838 | 40,904 | 29,947 | 15,263 | |||||||||||||||
| General, administrative, and other | 21,749 | 20,603 | 18,709 | 13,043 | 8,211 | |||||||||||||||
| Transaction costs | — | 2,771 | 1,550 | 27,508 | 2,214 | |||||||||||||||
| Non-cash gain from release of assumed earnout liability | — | — | (4,832 | ) | — | — | ||||||||||||||
| Impairment charge | 7,411 | — | 1,592 | — | — | |||||||||||||||
| Depreciation and amortization | 172,091 | 174,564 | 167,312 | 120,998 | 54,479 | |||||||||||||||
| Total expenses | 294,074 | 288,699 | 275,208 | 230,199 | 101,896 | |||||||||||||||
| Operating income | 64,745 | 65,423 | 71,797 | 29,329 | 27,592 | |||||||||||||||
| Interest expense | (65,702 | ) | (65,577 | ) | (56,432 | ) | (45,513 | ) | (27,994 | ) | ||||||||||
| Income tax benefit (expense) of taxable REIT subsidiary | 100 | (814 | ) | (186 | ) | (24 | ) | (262 | ) | |||||||||||
| Non-cash gain on debt extinguishment | — | — | 5,645 | — | — | |||||||||||||||
| Gain on settlement | — | — | 4,520 | — | — | |||||||||||||||
| Other expense, net | (415 | ) | (169 | ) | (95 | ) | (244 | ) | (62 | ) | ||||||||||
| (Loss) income from continuing operations | (1,272 | ) | (1,137 | ) | 25,249 | (16,452 | ) | (726 | ) | |||||||||||
| Discontinued operations: | ||||||||||||||||||||
| Income from operations, excluding impairment charge | — | — | — | — | 834 | |||||||||||||||
| Impairment charge | — | — | — | — | (5,372 | ) | ||||||||||||||
| Non-cash gain on debt extinguishment | — | — | — | — | 1,242 | |||||||||||||||
| Gains on sale of operating properties | — | — | — | 3,198 | 487 | |||||||||||||||
| Income (loss) from discontinued operations | — | — | — | 3,198 | (2,809 | ) | ||||||||||||||
| (Loss) income before gain on sale of operating properties | (1,272 | ) | (1,137 | ) | 25,249 | (13,254 | ) | (3,535 | ) | |||||||||||
| Gains on sale of operating properties, net | 15,160 | 4,253 | 4,066 | 8,578 | — | |||||||||||||||
| Consolidated net income (loss) | 13,888 | 3,116 | 29,315 | (4,676 | ) | (3,535 | ) | |||||||||||||
| Net (income) loss attributable to noncontrolling interests: | (2,014 | ) | (1,933 | ) | (2,198 | ) | (1,025 | ) | 685 | |||||||||||
| Net income (loss) attributable to Kite Realty Group Trust: | 11,874 | 1,183 | 27,117 | (5,701 | ) | (2,850 | ) | |||||||||||||
| Dividends on preferred shares | — | — | (7,877 | ) | (8,456 | ) | (8,456 | ) | ||||||||||||
| Non-cash adjustment for redemption of preferred shares | — | — | (3,797 | ) | — | — | ||||||||||||||
| Net income (loss) attributable to common shareholders | $ | 11,874 | $ | 1,183 | $ | 15,443 | $ | (14,157 | ) | $ | (11,306 | ) | ||||||||
| Income (loss) per common share – basic: | ||||||||||||||||||||
| Income (loss) from continuing operations attributable to Kite Realty Group Trust common shareholders | $ | 0.14 | $ | 0.01 | $ | 0.19 | $ | (0.29 | ) | $ | (0.37 | ) | ||||||||
| Income (loss) from discontinued operations attributable to Kite Realty Group Trust common shareholders | — | — | — | 0.05 | (0.11 | ) | ||||||||||||||
| Net income (loss) attributable to Kite Realty Group Trust common shareholders | $ | 0.14 | $ | 0.01 | $ | 0.19 | $ | (0.24 | ) | $ | (0.48 | ) | ||||||||
| Income (loss) per common share – diluted: | ||||||||||||||||||||
| Income (loss) from continuing operations attributable to Kite Realty Group Trust common shareholders | $ | 0.14 | $ | 0.01 | $ | 0.18 | $ | (0.29 | ) | $ | (0.37 | ) | ||||||||
| Income (loss) from discontinued operations attributable to Kite Realty Group Trust common shareholders | — | — | — | 0.05 | (0.11 | ) | ||||||||||||||
| Net income (loss) attributable to Kite Realty Group Trust common shareholders | $ | 0.14 | $ | 0.01 | $ | 0.18 | $ | (0.24 | ) | $ | (0.48 | ) | ||||||||
| Weighted average Common Shares outstanding – basic | 83,585,333 | 83,436,511 | 83,421,904 | 58,353,448 | 23,535,434 | |||||||||||||||
| Weighted average Common Shares outstanding – diluted | 83,690,418 | 83,465,500 | 83,534,381 | 58,353,448 | 23,535,434 | |||||||||||||||
| Distributions declared per Common Share | $ | 1.2250 | $ | 1.1700 | $ | 1.0900 | $ | 1.0200 | $ | 0.9600 | ||||||||||
| Net income (loss) attributable to Kite Realty Group Trust common shareholders: | ||||||||||||||||||||
Income (loss) from continuing operations6 | $ | 11,874 | $ | 1,183 | $ | 15,443 | $ | (17,268 | ) | $ | (8,686 | ) | ||||||||
| Income (loss) from discontinued operations | — | — | — | 3,111 | (2,620 | ) | ||||||||||||||
| Net income (loss) attributable to Kite Realty Group Trust common shareholders | $ | 11,874 | $ | 1,183 | $ | 15,443 | $ | (14,157 | ) | $ | (11,306 | ) | ||||||||
| ($ in thousands) | As of December 31 | |||||||||||||||||||
| 2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
| Balance Sheet Data (Unaudited): | ||||||||||||||||||||
| Investment properties, net | $ | 3,293,270 | $ | 3,435,382 | $ | 3,500,845 | $ | 3,417,655 | $ | 1,644,478 | ||||||||||
| Cash and cash equivalents | 24,082 | 19,874 | 33,880 | 43,826 | 18,134 | |||||||||||||||
| Assets held for sale | — | — | — | 179,642 | — | |||||||||||||||
| Total assets | 3,512,498 | 3,656,371 | 3,756,428 | 3,866,413 | 1,758,179 | |||||||||||||||
| Mortgage and other indebtedness | 1,699,239 | 1,731,074 | 1,724,449 | 1,546,460 | 851,396 | |||||||||||||||
| Liabilities held for sale | — | — | — | 81,164 | — | |||||||||||||||
| Total liabilities | 1,874,285 | 1,923,940 | 1,937,364 | 1,839,183 | 957,146 | |||||||||||||||
| Limited partners' interests in Operating Partnership and other redeemable noncontrolling interests | 72,104 | 88,165 | 92,315 | 125,082 | 43,928 | |||||||||||||||
| Kite Realty Group Trust shareholders’ equity | 1,565,411 | 1,643,574 | 1,725,976 | 1,898,784 | 753,557 | |||||||||||||||
| Noncontrolling interests | 698 | 692 | 773 | 3,364 | 3,548 | |||||||||||||||
| Total liabilities and equity | 3,512,498 | 3,656,371 | 3,756,428 | 3,866,413 | 1,758,179 | |||||||||||||||
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the accompanying audited consolidated financial statements and related notes thereto and Item 1A. “Risk Factors,” appearing elsewhere in this Annual Report on Form 10-K. In this discussion, unless the context suggests otherwise, references to “our Company,” “we,” “us,” and “our” mean Kite Realty Group Trust and its direct and indirect subsidiaries, including Kite Realty Group, L.P.
Overview
In the following overview, we discuss, among other things, the status of our business and properties, the effect that current United StatesU.S. economic conditions is having on our retail tenants and us, and the current state of the financial markets and how it impacts our financing strategy.
Our Business and Properties
Kite Realty Group Trust is a publicly-held real estate investment trust which,publicly held REIT that, through its majority-owned subsidiary, Kite Realty Group, L.P., owns interests in various operating subsidiaries and joint ventures engaged in the ownership, operation, acquisition, development and redevelopment of high-quality, neighborhood and communityopen-air shopping centers and mixed-use assets that are primarily grocery-anchored and located in selectedhigh-growth Sun Belt and select strategic gateway markets in the United States. We derive revenuesour revenue primarily from activities associated with the collection of contractual rents and reimbursement payments from tenants under existing lease agreements at each of our properties. OurTherefore, our operating results therefore depend materially on, among other things, the ability of our tenants to make required lease payments, the health and resilience of the United StatesU.S. retail sector, interest rate volatility, job growth, the real estate market and overall economic and real estate market conditions.
As of December 31, 2017,2022, we owned interests in 117183 operating and redevelopmentretail properties totaling approximately 23.328.8 million square feet and one office property with 0.3 million square feet. Of the 183 operating retail properties, 11 contain an office component. We also owned twothree development projects under construction as of this date.
Merger with RPAI
On October 22, 2021, we completed the Merger with RPAI in which we acquired 100 operating retail properties and five development projects along with multiple parcels of entitled land for future value creation, creating a top five open-air shopping center REIT. The combined high-quality, open-air portfolio is a mixture of predominantly necessity-based, grocery-anchored neighborhood and community centers, combined with vibrant mixed-use assets. The Merger served to more than double the Company’s presence in high-growth markets that have mild or temperate climates and no or relatively low income taxes, while also introducing and/or enhancing its presence in strategic gateway markets. In addition, the combined company has additional opportunities to further increase shareholder value, including leasing of pandemic-related vacancies, optimizing NOI margins, lowering the Company’s cost of capital, and completing select development projects.
Inflation
Inflationary concerns have been counteracting the retail sector’s recovery from the COVID-19 pandemic and may affect consumer confidence and spending, which has impacted, and could continue to impact, our tenants’ sales and overall health and, in turn, put downward pricing pressure on rents that we are able to charge to new or renewing tenants, and in some cases, our percentage rents. While many of our leases contain provisions designed to mitigate the adverse impact of inflation, including, for example, requirements for tenants to pay a share of operating expenses and rent increases that are tied to consumer price index increases, the stated rent increases or limits on such tenant’s obligation to pay its share of operating expenses could be lower than the increase in inflation at any given time. Inflation may also increase labor or other general and administrative expenses that cannot be easily reduced.
Portfolio Update
As has become more evident since the COVID-19 pandemic began and as we began to operate as a combined company, high-quality real estate located in high-quality markets matters. Open-air centers are thriving for a variety of reasons including their ability to act as last mile fulfillment centers and their convenient and affordable nature for retailers and consumers. This includes conveniently located and easily accessible parking fields, lower operating costs as compared to other retail formats, and essential anchors that drive daily trips. In addition, the Company’s property types are particularly suited for retailers’ current and evolving needs, including curbside pick-up and buying online and picking up in store (“BOPIS”), that we believe
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will benefit from tenant demand for additional space. The strength of the Company’s real estate is evidenced by our continued strong cash leasing spreads and ABR for the retail portfolio of $20.02 per square foot. The Company has continued to improve its asset quality and through the Merger, acquired a refined portfolio of high-quality, open-air shopping centers and mixed-use assets.
In evaluating potential acquisition, development, and redevelopment opportunities, we look for strong sub-markets where average household income, iseducational attainment, population density, traffic counts and daytime workforce populations are above the broader market average. We also focus on locations that are benefiting from current population migratory patterns, namely major cities in business-friendly states with population density, high traffic counts,no or relatively low income taxes, and strong daytime workforce populations. Household incomes inmild or temperate climates. In our largest sub-markets, household incomes are significantly higher and state income taxes are relatively lower than the medians for thosethe broader markets.
In addition to targeting sub-markets with strong consumer demographics, we focus on having the most desirable tenant mix at each center. We have aggressively targeted and executed leases with notableprominent grocers including Kroger,Publix, Lidl, Aldi, PublixWhole Foods, and Trader Joe's,Joe’s, expanding discount retailers such as Hobby Lobby, Marshalls andT.J. Maxx, HomeGoods, Ross Dress for Less, Burlington, Old Navy, and pOpshelf, service and restaurant retailers such as Starbucks, North Italia and Flower Child and other retailers such as Ulta Party CityBeauty, REI, Five Below and Tempurpedic.Total Wine & More. Additionally, we have identified cost-efficient ways to relocate, re-tenant and renegotiate leases at several of our properties allowing us to attract more suitable tenants. In addition, many of our redevelopment and 3-R projects include consolidating small shop space to accommodate construction of new junior anchor space.
Capital and Financing Activities
2023, which we expect to retire using cash on hand and our revolving line of credit.
The amount that we may borrow under our unsecured revolving credit facility is limited by the value of the assets in our unencumbered asset pool. As of December 31, 2017, the value of the assets in our unencumbered asset pool was $1.4 billion.
Results of Operations
As of December 31, 2022, we owned interests in 183 operating retail properties, one office property and three development projects currently under construction. The following table sets forth the total operating properties and development projects we owned as of December 31, 2022, 2021 and 2020:
| Number of Properties | |||||||||||||||||
| 2022 | 2021 | 2020 | |||||||||||||||
Operating retail properties(1) | 183 | 180 | 83 | ||||||||||||||
| Office properties | 1 | 1 | 1 | ||||||||||||||
| Development and redevelopment projects | 3 | 8 | 5 | ||||||||||||||
(1)Included within operating retail properties are 11, 11 and 3 properties that contain an office component as of December 31, 2022, 2021 and 2020, respectively.
The comparability of results of operations for the year ended December 31, 2022 is affected by our Merger with RPAI that was completed on October 22, 2021, in which we acquired 100 operating retail properties and five development projects, along with our development, redevelopment, and operating property acquisition and disposition activities in 2020 through 2022. Therefore, we believe it is most useful to review the comparisons of our results of operations for these years (as set forth below under “Comparison of Operating Results for the Years Ended December 31, 2022 and 2021”) in conjunction with the discussion of our activities during those periods, which is set forth below. Results from operations for the year ended December 31, 2021 reflect the combined operation for the approximately two and a half months following the Company’s Merger with RPAI on October 22, 2021.
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Acquisitions
In addition to the properties we acquired in the Merger, the following properties were acquired during the years ended December 31, 2022, 2021 and 2020:
| Property Name | MSA | Acquisition Date | Owned GLA | |||||||||||||||||
| Eastgate Crossing | Raleigh, NC | December 2020 | 156,276 | |||||||||||||||||
| Nora Plaza outparcel | Indianapolis, IN | December 2021 | 23,722 | |||||||||||||||||
| Pebble Marketplace | Las Vegas, NV | February 2022 | 85,796 | |||||||||||||||||
| MacArthur Crossing two-tenant building | Dallas, TX | April 2022 | 56,077 | |||||||||||||||||
| Palms Plaza | Miami, FL | July 2022 | 68,976 | |||||||||||||||||
Dispositions
The following operating properties were sold during the years ended December 31, 2022 and 2021. We did not sell any operating properties during the year ended December 31, 2020.
| Property Name | MSA | Disposition Date | Owned GLA | |||||||||||||||||
| Westside Market | Dallas, TX | October 2021 | 93,377 | |||||||||||||||||
Plaza Del Lago(1) | Chicago, IL | June 2022 | 100,016 | |||||||||||||||||
Lincoln Plaza – Lowe’s(2) | Worcester, MA | October 2022 | — | |||||||||||||||||
(1)Plaza Del Lago also contains 8,800 square feet of residential space comprised of 18 multifamily rental units.
(2)We sold the ground lease interest in one tenant at an existing multi-tenant operating retail property. The total number of properties in our portfolio was not affected by this transaction.
Development and Redevelopment Projects
The following properties were under active development or redevelopment during portions of the years ended December 31, 2022, 2021, and 2020 and removed from our operating portfolio:
| Project Name | MSA | Transition to Development or Redevelopment(1) | Transition to Operating Portfolio | Owned Commercial GLA | ||||||||||||||||||||||
Courthouse Shadows(2) | Naples, FL | June 2013 | Sold | 124,802 | ||||||||||||||||||||||
Hamilton Crossing Centre(3)(4) | Indianapolis, IN | June 2014 | Pending | 92,283 | ||||||||||||||||||||||
The Corner(3) | Indianapolis, IN | December 2015 | Pending | 24,000 | ||||||||||||||||||||||
| Eddy Street Commons – Phase II | South Bend, IN | September 2017 | December 2020 | 8,200 | ||||||||||||||||||||||
| Eddy Street Commons – Phase III | South Bend, IN | September 2020 | March 2022 | 18,600 | ||||||||||||||||||||||
Glendale Town Center(3) | Indianapolis, IN | March 2019 | December 2021 | 199,021 | ||||||||||||||||||||||
| The Landing at Tradition – Phase II | Port St. Lucie, FL | September 2021 | Pending | 39,900 | ||||||||||||||||||||||
Carillon MOB(5) | Washington, D.C. | October 2021 | Pending | 126,000 | ||||||||||||||||||||||
Circle East(5) | Baltimore, MD | October 2021 | September 2022 | 82,000 | ||||||||||||||||||||||
One Loudoun Downtown – Residential and Pads G&H Commercial(5) | Washington, D.C. | October 2021 | Residential: June 2022 Commercial: December 2022 | 67,000 | ||||||||||||||||||||||
Shoppes at Quarterfield(5) | Baltimore, MD | October 2021 | June 2022 | 58,000 | ||||||||||||||||||||||
(1)Transition date represents the date the property was transferred from our operating portfolio into redevelopment status. For legacy RPAI projects, the transition date represents the later of the date of the closing of the Merger and the date the project was transferred into redevelopment status.
(2)This property was sold in July 2020.
(3)This property has been identified as a redevelopment property and is not included in the operating portfolio or the same property pool. The redevelopment projects at Hamilton Crossing Centre and The Corner will include the creation of a mixed-use development.
(4)A portion of the Hamilton Crossing Centre redevelopment was sold in January 2022.
(5)Project was assumed as part of the Merger with RPAI in October 2021.
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Comparison of Operating Results for the Years Ended December 31, 2022 and 2021
The following table reflects changes in the components of our consolidated statements of operations for the years ended December 31, 2022 and 2021 (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2022 | 2021 | Change | |||||||||||||||
| Revenue: | |||||||||||||||||
| Rental income | $ | 782,349 | $ | 367,399 | $ | 414,950 | |||||||||||
| Other property-related revenue | 11,108 | 4,683 | 6,425 | ||||||||||||||
| Fee income | 8,539 | 1,242 | 7,297 | ||||||||||||||
| Total revenue | 801,996 | 373,324 | 428,672 | ||||||||||||||
| Expenses: | |||||||||||||||||
| Property operating | 107,217 | 55,561 | 51,656 | ||||||||||||||
| Real estate taxes | 104,589 | 49,530 | 55,059 | ||||||||||||||
| General, administrative and other | 54,860 | 33,984 | 20,876 | ||||||||||||||
| Merger and acquisition costs | 925 | 86,522 | (85,597) | ||||||||||||||
| Depreciation and amortization | 469,805 | 200,460 | 269,345 | ||||||||||||||
| Total expenses | 737,396 | 426,057 | 311,339 | ||||||||||||||
| Gain on sales of operating properties, net | 27,069 | 31,209 | (4,140) | ||||||||||||||
| Operating income (loss) | 91,669 | (21,524) | 113,193 | ||||||||||||||
| Other (expense) income: | |||||||||||||||||
| Interest expense | (104,276) | (60,447) | (43,829) | ||||||||||||||
| Income tax (expense) benefit of taxable REIT subsidiary | (43) | 310 | (353) | ||||||||||||||
| Equity in earnings (loss) of unconsolidated subsidiaries | 256 | (416) | 672 | ||||||||||||||
| Other income, net | 240 | 355 | (115) | ||||||||||||||
| Net loss | (12,154) | (81,722) | 69,568 | ||||||||||||||
| Net (income) loss attributable to noncontrolling interests | (482) | 916 | (1,398) | ||||||||||||||
| Net loss attributable to common shareholders | $ | (12,636) | $ | (80,806) | $ | 68,170 | |||||||||||
| Property operating expense to total revenue ratio | 13.4 | % | 14.9 | % | |||||||||||||
Rental income (including tenant reimbursements) increased $415.0 million, or 112.9%, due to the following (in thousands):
| Net change 2021 to 2022 | |||||
| Properties or components of properties sold during 2021 or 2022 | $ | (417) | |||
| Properties under redevelopment or acquired during 2021 and/or 2022 | 6,660 | ||||
| Properties acquired in the Merger with RPAI | 402,842 | ||||
| Properties fully operational during 2021 and 2022 and other | 5,865 | ||||
| Total | $ | 414,950 | |||
The net increase of $5.9 million in rental income for properties that were fully operational during 2021 and 2022 is primarily due to a $3.3 million increase in tenant reimbursements due to higher recoverable common area maintenance expenses and increases in base minimum rent of $2.8 million due to improved tenant performance, overage rent of $2.2 million and ancillary income of $1.4 million. These variances were partially offset by a $2.6 million increase in bad debt expense and a $1.3 million decrease in lease termination income. The occupancy of the fully operational properties increased from 88.0% for 2021 to 92.3% for 2022.
We continued to experience strong leasing volumes in 2022 and generate higher rents on new leases and renewals. The average rents for new comparable leases signed in 2022 were $27.07 per square foot compared to average expiring base rents of $19.65 per square foot in that period. The average base rents for renewals signed in 2022 were $18.52 per square foot compared to average expiring base rents of $17.06 per square foot in that period. For the entire portfolio, the spread between leased and occupied square footage is approximately 270 basis points and represents approximately $33.0 million of NOI, the majority of
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which will come online in 2023. In addition, the ABR per square foot of our operating retail portfolio continued to improve, as it increased to $20.02 per square foot as of December 31, 2022 from $19.36 per square foot as of December 31, 2021.
Other property-related revenue primarily consists of parking revenues, gains on the sale of land and other miscellaneous activity. This revenue increased by $6.4 million primarily as a result of higher gains on sales of undepreciated assets of $4.0 million recognized during the year ended December 31, 2022 and increases in miscellaneous income of $1.6 million and parking revenue of $0.8 million.
We recorded fee income of $8.5 million and $1.2 million during the years ended December 31, 2022 and 2021, respectively, from property management and development services provided to third parties and unconsolidated joint ventures. The increase in fee income is primarily due to $7.1 million of development fees earned related to the development of a corporate campus for Republic Airways at Hamilton Crossing Centre.
Property operating expenses increased $51.7 million, or 93.0%, due to the following (in thousands):
| Net change 2021 to 2022 | |||||
| Properties or components of properties sold during 2021 or 2022 | $ | (245) | |||
| Properties under redevelopment or acquired during 2021 and/or 2022 | 1,032 | ||||
| Properties acquired in the Merger with RPAI | 49,725 | ||||
| Properties fully operational during 2021 and 2022 and other | 1,144 | ||||
| Total | $ | 51,656 | |||
The net increase of $1.1 million in property operating expenses for properties that were fully operational during 2021 and 2022 is primarily due to increases in insurance expense of $4.0 million and utilities of $0.6 million, partially offset by a $3.8 million decrease in repairs and maintenance and landscaping expenses. As a percentage of revenue, property operating expenses decreased from 14.9% to 13.4% primarily due to an increase in revenue in 2022.
Real estate taxes increased $55.1 million, or 111.2%, primarily as a result of the Merger with RPAI as detailed below (in thousands):
| Net change 2021 to 2022 | |||||
| Properties or components of properties sold during 2021 or 2022 | $ | 38 | |||
| Properties under redevelopment or acquired during 2021 and/or 2022 | 724 | ||||
| Properties acquired in the Merger with RPAI | 55,038 | ||||
| Properties fully operational during 2021 and 2022 and other | (741) | ||||
| Total | $ | 55,059 | |||
The net decrease of $0.7 million in real estate taxes for properties that were fully operational during 2021 and 2022 is primarily due to successful real estate tax appeals at certain properties in the portfolio, most notably for certain of our Texas properties. The majority of real estate tax expense is recoverable from tenants and such recovery is reflected within rental income.
General, administrative and other expenses increased $20.9 million, or 61.4%. This increase is primarily due to incremental head count as part of the Merger and higher share-based compensation expense.
The Company incurred $0.9 million and $86.5 million of merger and acquisition costs related to the Merger with RPAI during the years ended December 31, 2022 and 2021, respectively. Costs incurred during 2022 primarily consist of professional fees and technology costs while costs incurred during 2021 primarily consist of fairness opinion, severance charges, legal, professional, and data migration costs.
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Depreciation and amortization expense increased $269.3 million, or 134.4%, primarily as a result of the Merger with RPAI as detailed below (in thousands):
| Net change 2021 to 2022 | |||||
| Properties or components of properties sold during 2021 or 2022 | $ | 2,686 | |||
| Properties under redevelopment or acquired during 2021 and/or 2022 | 4,723 | ||||
| Properties acquired in the Merger with RPAI | 260,779 | ||||
| Properties fully operational during 2021 and 2022 and other | 1,157 | ||||
| Total | $ | 269,345 | |||
The net increase of $4.7 million in depreciation and amortization for properties under redevelopment or acquired during 2021 and 2022 is primarily due to the acquisition of Pebble Marketplace and Palms Plaza in 2022. The net increase of $1.2 million in depreciation and amortization at properties that were fully operational during 2021 and 2022 is due to the timing of additions and disposals at operating properties.
We recorded a net gain of $27.1 million for the year ended December 31, 2022 on the sale of Plaza Del Lago, a portion of Hamilton Crossing Centre and the ground lease interest in Lowe’s at Lincoln Plaza compared to a net gain of $31.2 million on the sale of Westside Market and a portfolio of 17 ground leases for the year ended December 31, 2021.
Interest expense increased $43.8 million, or 72.5%, primarily due to interest costs of $39.1 million related to debt assumed in conjunction with the Merger.
Management’s discussion of the financial condition, changes in financial condition and results of operations for the year ended December 31, 2021, with comparison to the year ended December 31, 2020, was included in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2021, which is incorporated by reference in this Annual Report on Form 10-K.
Net Operating Income and Same Property Net Operating Income
We use property net operating income (“NOI”), a non-GAAP financial measure, to evaluate the performance of our properties. We define NOI as income from our real estate, including lease termination fees received from tenants, less our property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions and certain corporate level expenses, including merger and acquisition costs. We believe that NOI is helpful to investors as a measure of our operating performance because it excludes various items included in net income that do not relate to or are not indicative of our operating performance, such as depreciation and amortization, interest expense, and impairment, if any.
We also use same property NOI (“Same Property NOI”), a non-GAAP financial measure, to evaluate the performance of our properties. Same Property NOI is net income excluding properties that have not been owned for the full periods presented. However, due to the size of the RPAI portfolio acquired in the Merger with RPAI, which closed in October 2021, the legacy RPAI properties have been deemed to qualify for the same property pool beginning in 2022 if they had a full first quarter of operations in 2021 within the legacy RPAI portfolio prior to the Merger. Same Property NOI also excludes (i) net gains from outlot sales, (ii) straight-line rent revenue, (iii) lease termination income in excess of lost rent, (iv) amortization of lease intangibles, and (v) significant prior period expense recoveries and adjustments, if any. When we receive payments in excess of any accounts receivable for terminating a lease, Same Property NOI will include such excess payments as monthly rent until the earlier of the expiration of 12 months or the start date of a replacement tenant. We believe that Same Property NOI is helpful to investors as a measure of our operating performance because it includes only the NOI of properties that have been owned for the full periods presented. We believe such presentation eliminates disparities in net income due to the acquisition or disposition of properties during the particular periods presented, and thus provides a more consistent metric for the comparison of our properties. Same Property NOI includes the results of properties that have been owned for the entire current and prior year reporting periods. In order to provide meaningful comparative information across periods that, in some cases, predate the Merger, all information regarding the performance of the same property pool is presented as though the Merger was consummated on January 1, 2021 (i.e., as though the properties owned by RPAI prior to the Merger that are included in our same property pool had been owned by the Company for the entirety of all comparison periods for which same property pool information is presented).
NOI and Same Property NOI should not, however, be considered as alternatives to net income (calculated in accordance with GAAP) as indicators of our financial performance. Our computation of NOI and Same Property NOI may differ from the methodology used by other REITs and, therefore, may not be comparable to such other REITs.
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When evaluating the properties that are included in the same property pool, we have established specific criteria for determining the inclusion of properties acquired or those recently under development. An acquired property is included in the same property pool when there is a full quarter of operations in both years subsequent to the acquisition date. The properties acquired in the Merger with RPAI qualify for the same property pool beginning in 2022 if they had a full first quarter of operations in 2021 within the legacy RPAI portfolio prior to the Merger. Development and redevelopment properties are included in the same property pool four full quarters after the properties have been transferred to the operating portfolio. A redevelopment property is first excluded from the same property pool when the execution of a redevelopment plan is likely and we (a) begin recapturing space from tenants or (b) the contemplated plan significantly impacts the operations of the property. For the year ended December 31, 2022, the same property pool excludes (i) Glendale Town Center, Shoppes at Quarterfield and Circle East, which were reclassified from active redevelopment into our operating portfolio in December 2021, June 2022 and September 2022, respectively, (ii) the multifamily rental units and commercial portion at One Loudoun Downtown – Pads G & H, (iii) three active development and redevelopment projects, (iv) Arcadia Village, Pebble Marketplace and Palms Plaza, which were each acquired subsequent to January 1, 2021, and (v) office properties.
The following table presents Same Property NOI and a reconciliation to net loss attributable to common shareholders for the years ended December 31, 2022 and 2021 (unaudited) (dollars in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2022 | 2021 | Change | |||||||||||||||
Number of properties in same property pool for the period(1) | 177 | 177 | |||||||||||||||
| Leased percentage at period end | 94.7 | % | 93.5 | % | |||||||||||||
Economic occupancy percentage(2) | 91.2 | % | 90.1 | % | |||||||||||||
| Same Property NOI | $ | 531,440 | $ | 505,731 | 5.1 | % | |||||||||||
Reconciliation of Same Property NOI to most directly comparable GAAP measure: | |||||||||||||||||
| Net operating income – same properties | $ | 531,440 | $ | 505,731 | |||||||||||||
| Prior period collection impact – same properties | 3,665 | 12,414 | |||||||||||||||
Net operating income – non-same activity(3) | 46,546 | (251,154) | |||||||||||||||
| Total property NOI | 581,651 | 266,991 | 117.9 | % | |||||||||||||
| Other income, net | 8,992 | 1,491 | |||||||||||||||
| General, administrative and other | (54,860) | (33,984) | |||||||||||||||
| Merger and acquisition costs | (925) | (86,522) | |||||||||||||||
| Depreciation and amortization | (469,805) | (200,460) | |||||||||||||||
| Interest expense | (104,276) | (60,447) | |||||||||||||||
| Gain on sales of operating properties, net | 27,069 | 31,209 | |||||||||||||||
| Net (income) loss attributable to noncontrolling interests | (482) | 916 | |||||||||||||||
| Net loss attributable to common shareholders | $ | (12,636) | $ | (80,806) | |||||||||||||
(1)Same Property NOI excludes (i) Glendale Town Center, Shoppes at Quarterfield and Circle East, which were reclassified from active redevelopment into our operating portfolio in December 2021, June 2022 and September 2022, respectively, (ii) the multifamily rental units and commercial portion at One Loudoun Downtown – Pads G & H, (iii) three active development and redevelopment projects, (iv) Arcadia Village, Pebble Marketplace and Palms Plaza, which were each acquired subsequent to January 1, 2021, and (v) 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 NOI from properties not included in the same property pool, including properties sold during both periods.
Our Same Property NOI increased 5.1% in 2022 compared to 2021 primarily due to improved occupancy driven by continued strong leasing activity and an increase in overage rent.
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Funds From Operations
Funds from Operations (“FFO”) is a widely used performance measure for real estate companies and is provided here as a supplemental measure of our operating performance. We calculate FFO, a non-GAAP financial measure, in accordance with the best practices described in the April 2002 National Policy Bulletin of the National Association of Real Estate Investment Trusts (“NAREIT”), as restated in 2018. The NAREIT white paper defines FFO as net income (calculated in accordance with GAAP), excluding (i) depreciation and amortization related to real estate, (ii) gains and losses from the sale of certain real estate assets, (iii) gains and losses from change in control, and (iv) impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.
Considering the nature of our business as a real estate owner and operator, the Company believes that FFO is helpful to investors in measuring our operational performance because it excludes various items included in net income that do not relate to or are not indicative of our operating performance, such as gains or losses from sales of depreciated property and depreciation and amortization, which can make periodic and peer analyses of operating performance more difficult. FFO excludes the 2021 gain on sale of the ground lease portfolios as these sales were part of our capital strategy distinct from our ongoing operating strategy of selling individual land parcels from time to time. FFO (a) should not be considered as an alternative to net income (calculated in accordance with GAAP) for the purpose of measuring our financial performance, (b) is not an alternative to cash flows from operating activities (calculated in accordance with GAAP) as a measure of our liquidity, and (c) is not indicative of funds available to satisfy our cash needs, including our ability to make distributions. Our computation of FFO may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than we do.
From time to time, the Company may report or provide guidance with respect to “FFO, as adjusted,” which removes the impact of certain non-recurring and non-operating transactions or other items the Company does not consider to be representative of its core operating results including, without limitation, (i) gains or losses associated with the early extinguishment of debt, (ii) gains or losses associated with litigation involving the Company that is not in the normal course of business, (iii) merger and acquisition costs, (iv) the impact on earnings from employee severance, (v) the excess of redemption value over carrying value of preferred stock redemption, and (vi) the impact of prior period bad debt or the collection of accounts receivable previously written off (“prior period collection impact”), which are not otherwise adjusted in the Company’s calculation of FFO.
Our calculations of FFO and reconciliation to net income and FFO, as adjusted, for the years ended December 31, 2022, 2021 and 2020 (unaudited) are as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2022 | 2021 | 2020 | |||||||||||||||
| Net loss | $ | (12,154) | $ | (81,722) | $ | (16,123) | |||||||||||
| Less: net income attributable to noncontrolling interests in properties | (623) | (514) | (528) | ||||||||||||||
| Less: gain on sales of operating properties, net | (27,069) | (31,209) | (4,733) | ||||||||||||||
Add: depreciation and amortization of consolidated and unconsolidated entities, net of noncontrolling interests | 471,086 | 201,834 | 130,091 | ||||||||||||||
FFO of the Operating Partnership(1) | 431,240 | 88,389 | 108,707 | ||||||||||||||
| Less: Limited Partners’ interests in FFO | (5,395) | (1,945) | (2,826) | ||||||||||||||
FFO attributable to common shareholders(1) | $ | 425,845 | $ | 86,444 | $ | 105,881 | |||||||||||
FFO of the Operating Partnership(1) | $ | 431,240 | $ | 88,389 | $ | 108,707 | |||||||||||
| Add: merger and acquisition costs | 925 | 86,522 | — | ||||||||||||||
| Add: severance charges | — | — | 3,253 | ||||||||||||||
| Less: prior period collection impact | (2,556) | (3,707) | — | ||||||||||||||
| FFO, as adjusted, of the Operating Partnership | $ | 429,609 | $ | 171,204 | $ | 111,960 | |||||||||||
(1)“FFO of the Operating Partnership” measures 100% of the operating performance of the Operating Partnership’s real estate properties. “FFO attributable to common shareholders” reflects a reduction for the redeemable noncontrolling weighted average diluted interest in the Operating Partnership.
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Earnings before Interest, Tax, Depreciation, and Amortization (EBITDA)
We define EBITDA, a non-GAAP financial measure, as net income before interest expense, income tax expense of the TRS, and depreciation and amortization. For informational purposes, we also provide Adjusted EBITDA, which we define as EBITDA less (i) EBITDA from unconsolidated entities, (ii) gains on sales of operating properties or impairment charges, (iii) merger and acquisition costs, (iv) other income and expense, (v) noncontrolling interest EBITDA, and (vi) other non-recurring activity or items impacting comparability from period to period. Annualized Adjusted EBITDA is Adjusted EBITDA for the most recent quarter multiplied by four. Net Debt to Adjusted EBITDA is our share of net debt divided by Annualized Adjusted EBITDA. EBITDA, Adjusted EBITDA, Annualized Adjusted EBITDA and Net Debt to Adjusted EBITDA, as calculated by us, are not comparable to EBITDA and EBITDA-related measures reported by other REITs that do not define EBITDA and EBITDA-related measures exactly as we do. EBITDA, Adjusted EBITDA and Annualized Adjusted EBITDA do not represent cash generated from operating activities in accordance with GAAP and should not be considered alternatives to net income as an indicator of performance or as alternatives to cash flows from operating activities as an indicator of liquidity.
Considering the nature of our business as a real estate owner and operator, we believe that EBITDA, Adjusted EBITDA and the ratio of Net Debt to Adjusted EBITDA are helpful to investors in measuring our operational performance because they exclude various items included in net income that do not relate to or are not indicative of our operating performance, such as gains or losses from sales of depreciated property and depreciation and amortization, which can make periodic and peer analyses of operating performance more difficult. For informational purposes, we also provide Annualized Adjusted EBITDA, adjusted as described above. We believe this supplemental information provides a meaningful measure of our operating performance. We believe presenting EBITDA and the related measures in this manner allows investors and other interested parties to form a more meaningful assessment of our operating results.
The following table presents a reconciliation of our EBITDA, Adjusted EBITDA and Annualized Adjusted EBITDA to net income (the most directly comparable GAAP measure) and a calculation of Net Debt to Adjusted EBITDA (in thousands):
| Three Months Ended December 31, 2022 | |||||
| Net loss | $ | (1,052) | |||
| Depreciation and amortization | 112,709 | ||||
| Interest expense | 26,827 | ||||
| Income tax expense of taxable REIT subsidiary | 302 | ||||
| EBITDA | 138,786 | ||||
| Unconsolidated EBITDA | 957 | ||||
| Merger and acquisition costs | (81) | ||||
| Loss on sales of operating properties, net | 57 | ||||
| Other income and expense, net | (759) | ||||
| Noncontrolling interests | (84) | ||||
| Adjusted EBITDA | 138,876 | ||||
Annualized Adjusted EBITDA(1) | $ | 555,502 | |||
| Company share of Net Debt: | |||||
| Mortgage and other indebtedness, net | $ | 3,010,299 | |||
| Plus: Company share of unconsolidated joint venture debt | 41,015 | ||||
Less: Partner share of consolidated joint venture debt(2) | (566) | ||||
| Less: cash, cash equivalents, and restricted cash | (124,015) | ||||
| Less: debt discounts, premiums and issuance costs, net | (32,043) | ||||
| Company share of Net Debt | $ | 2,894,690 | |||
| Net Debt to Adjusted EBITDA | 5.2x | ||||
(1)Represents Adjusted EBITDA for the three months ended December 31, 2022 (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.
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Liquidity and Capital Resources
Overview
Our primary finance and capital strategy is to maintain a strong balance sheet with sufficient flexibility to fund our operating and investment activities in a cost-effective manner. We consider a number of factors when evaluating our level of indebtedness and when making decisions regarding additional borrowings or equity offerings, including the interest or dividend rate, the maturity date and the Company’s debt maturity ladder, the impact of financial metrics such as overall Company leverage levels and coverage ratios, and the Company’s ability to generate cash flow to cover debt service. We will continue to monitor the capital markets and may consider raising additional capital through the issuance of our common or preferred shares, unsecured debt securities, or other securities.
One of the benefits of the Merger was a strengthened balance sheet to provide the Company with increased liquidity, a well-staggered debt maturity ladder, and an appropriately sized development pipeline. We continued to improve the strength of our balance sheet in 2022. As part of the Merger, we assumed an $850.0 million unsecured revolving credit facility along with other indebtedness. In July 2022, we amended our revolving credit facility to increase the capacity of the unsecured revolving credit facility to $1.1 billion (as amended, the “2022 Revolving Facility”), of which the available borrowing capacity was $1.1 billion as of December 31, 2022, and entered into a seven-year $300.0 million unsecured term loan that was used to retire 2022 and 2023 debt maturities.
As of December 31, 2022, we had approximately $115.8 million in cash on hand, $6.2 million in restricted cash and escrow deposits, $1.1 billion of remaining availability under the 2022 Revolving Facility, and $284.4 million of debt maturities due in 2023. During the year ended December 31, 2022, we used the $125.0 million short-term deposit that matured on April 7, 2022 to repay borrowings on our revolving line of credit. We believe we will have adequate liquidity over the next 12 months and beyond to operate our business and meet our cash requirements.
We derive the majority of our revenue from tenants who lease space from us under existing lease agreements at each of our properties. Therefore, our ability to generate cash from operations is dependent on the rents that we are able to charge and collect from our tenants. While we believe that the nature of the properties in which we typically invest—primarily neighborhood and community shopping centers—provides a relatively stable revenue flow, an economic downturn and/or the ongoing effects of COVID-19, among other events, could adversely affect the ability of some of our tenants to meet their lease obligations.
Our Principal Capital Resources
For a discussion of cash generated from operations, see “Cash Flows” beginning on page 45. In addition to cash generated from operations, our other principal capital resources are discussed below.
Over the last several years, we have made substantial progress in enhancing our liquidity position and reducing our leverage and borrowing costs. We continue to focus on a balanced approach to growth and staggering debt maturities in order to retain our financial flexibility.
As of December 31, 2022, we had approximately $1.1 billion available under the 2022 Revolving Facility for future borrowings. We also had $115.8 million in cash and cash equivalents as of December 31, 2022.
We were in compliance with all applicable financial covenants under the 2022 Revolving Facility, unsecured term loans and senior unsecured notes as of December 31, 2022.
On July 29, 2022, the Operating Partnership entered into the Second Amendment (the “Second Amendment”) to the sixth amended and restated credit agreement with a syndicate of financial institutions to provide for a $250.0 million increase to the unsecured revolving credit facility, as amended, the “2022 Revolving Facility.” Under the Second Amendment, the Operating Partnership has the option to increase the 2022 Revolving Facility to an aggregate committed amount of up to $1.7 billion upon the Operating Partnership’s request, subject to certain conditions. In addition, the Operating Partnership entered into a seven-year $300.0 million unsecured term loan, the proceeds of which were used to repay the Operating Partnership’s existing $200.0 million unsecured term loan that was scheduled to mature on November 22, 2023, certain secured loans, and for other general corporate purposes.
On November 16, 2021, the Company filed with the SEC a shelf registration statement on Form S-3, which is effective for a term of three years, relating to the offer and sale, from time to time, of an indeterminate amount of equity and debt securities.
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Equity securities may be offered and sold by the Parent Company, and the net proceeds of any such offerings would be contributed to the Operating Partnership in exchange for additional General Partner Units. Debt securities may be offered and sold by the Operating Partnership with the Operating Partnership receiving the proceeds. From time to time, we may issue securities under this shelf registration statement for general corporate purposes, which may include acquisitions of additional properties, repayment of outstanding indebtedness, capital expenditures, the expansion, redevelopment, and/or improvement of properties in our portfolio, working capital and other general purposes.
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 $150.0 million of its common shares of beneficial interest, $0.01 par value per share under an at-the-market offering program (the “ATM Program”). On November 30, 2021, the Company and the Operating Partnership amended the Equity Distribution Agreement to reflect their filing of a shelf registration statement on November 16, 2021 with the SEC. As of December 31, 2022, the Company has 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 2022 Revolving Facility and other indebtedness and for working capital and other general corporate purposes. The Operating Partnership may also use the 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.
In the future, we will continue to monitor the capital markets and may consider raising additional capital through the issuance of our common shares, preferred shares or other securities. We may also raise capital by disposing of properties, land parcels or other assets that are no longer core components of our growth strategy. The sale price may differ from our carrying value at the time of sale.
Our Principal Liquidity Needs
Short-Term Liquidity Needs
Near-Term Debt Maturities. As of December 31, 2022, we had $189.4 million of secured debt, excluding scheduled monthly principal payments, and $95.0 million of unsecured debt scheduled to mature in 2023. We believe we have sufficient liquidity to repay these obligations from cash on hand and borrowings on the 2022 Revolving Facility.
Other Short-Term Liquidity Needs. The requirements for qualifying as a REIT and for a tax deduction for some or all of the dividends paid to shareholders necessitate that we distribute at least 90% of our taxable income on an annual basis. Such requirements cause us to have substantial liquidity needs over both the short and long term. Our short-term liquidity needs consist primarily of funds necessary to pay operating expenses associated with our operating properties, scheduled interest and principal payments on our debt of approximately $120 million and $3.0 million, respectively, in 2023, expected dividend payments to our common shareholders and Common Unit holders, and recurring capital expenditures.
In February 2023, our Board of Trustees declared a cash distribution of $0.24 per common share and Common Unit for the first quarter of 2023, which is expected to be paid on April 14, 2023 to common shareholders and Common Unit holders of record as of April 7, 2023. Future distributions, if any, are at the discretion of the Board of Trustees, who will continue to evaluate our sources and uses of capital, liquidity position, operating fundamentals, maintenance of our REIT qualification and other factors they may deem relevant. We believe we have sufficient liquidity to pay any dividend from cash on hand and borrowings on the 2022 Revolving Facility.
Other short-term liquidity needs include expenditures for tenant improvements, external leasing commissions and recurring capital expenditures. During the year ended December 31, 2022, we incurred $35.6 million for recurring capital expenditures on operating properties and $63.9 million for tenant improvements and external leasing commissions, which includes costs to re-lease anchor space at our operating properties related to tenants open and operating as of December 31, 2022 (excluding development and redevelopment properties). We currently anticipate incurring approximately $100 million of additional major tenant improvement costs related to leasing activity for space that is currently vacant at a number of our operating properties over the next 12 to 18 months. We believe we have the ability to fund these costs through cash flows from operations or borrowings on the 2022 Revolving Facility.
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remaining expected funding requirement is estimated to be $70.9 million. As of December 31, 2022, we have incurred $26.7 million of these costs. We anticipate incurring the majority of the remaining costs for these projects over the next 24 months and believe we have the ability to fund these projects through cash flows from operations or borrowings on the 2022 Revolving Facility.
Share Repurchase Program
In February 2021, our Board of Trustees approved a share repurchase program, authorizing share repurchases up to an aggregate of $150.0 million (the “Share Repurchase Program”). In February 2022, the Company extended its Share Repurchase Program for an additional year, and in February 2023, extended the program for another year so it will now terminate on February 28, 2024, if not terminated or extended prior to that date. In April 2022, our Board of Trustees authorized a $150.0 million increase to the size of the Share Repurchase Program, authorizing share repurchases up to an aggregate of $300.0 million. As of December 31, 2022, the Company has not repurchased any shares under the Share Repurchase Program. The Company intends to fund any future repurchases under the Share Purchase Program with cash on hand or availability under the 2022 Revolving Facility, subject to any applicable restrictions. 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.
Long-Term Liquidity Needs
Our long-term liquidity needs consist primarily of funds necessary to pay for any new development projects, redevelopment of existing properties, non-recurring capital expenditures, acquisitions of properties, payment of indebtedness at maturity and obligations under ground leases.
Selective Acquisitions, Developments and Joint Ventures. We may selectively pursue the acquisition, development and redevelopment of other properties, which would require additional capital. It is unlikely that we would have sufficient funds on hand to meet these long-term capital requirements. We would have to satisfy these needs through additional borrowings, sales of common or preferred shares, issuance of Operating Partnership units, cash generated through property dispositions and/or participation in joint venture arrangements. We cannot be certain that we would have access to these sources of capital on satisfactory terms, if at all, to fund our long-term liquidity requirements. We evaluate all future opportunities against pre-established criteria including, but not limited to, location, demographics, expected return, tenant credit quality, tenant relationships, and the amount of existing retail space. Our ability to access the capital markets will depend on a number of factors, including general capital market conditions.
Potential Debt Repurchases. We may from time to time, depending on market conditions and prices, contractual restrictions, our financial liquidity and other factors, seek to repurchase our senior unsecured notes maturing at various dates through September 2030 in open market transactions, by tender offer or otherwise, as market conditions warrant.
Commitments under Ground Leases. We are obligated under 12 ground leases for approximately 98 acres of land as of December 31, 2022. Most of these ground leases require fixed annual rent payments and the expiration dates of the remaining initial terms of these ground leases range from 2025 to 2092.
Capital Expenditures on Consolidated Properties
The following table summarizes cash capital expenditures for our development and redevelopment projects and other capital expenditures for the year ended December 31, 2022 (in thousands):
Year Ended December 31, 2022 | |||||
| Active development and redevelopment projects | $ | 45,250 | |||
| Redevelopment opportunities | 363 | ||||
| Recurring operating capital expenditures (primarily tenant improvements) and other | 112,927 | ||||
| Total | $ | 158,540 | |||
We capitalize certain indirect costs such as interest, payroll, and other general and administrative costs related to these development activities. If we had experienced a 10% reduction in development and redevelopment activities, without a corresponding decrease in indirect project costs, we would have recorded additional expense of $0.2 million for the year ended December 31, 2022.
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Impact of Changes in Credit Ratings on Our Liquidity
We have received investment grade corporate credit ratings from three nationally recognized credit rating agencies. These ratings did not change in 2022.
In the future, these ratings could change based upon, among other things, the impact that prevailing economic conditions may have on our results of operations and financial condition. Credit rating reductions by one or more rating agencies could also adversely affect our access to funding sources, the cost and other terms of obtaining funding, as well as our overall financial condition, operating results and cash flow.
Cash Flows
As of December 31, 2022, we had cash, cash equivalents and restricted cash of $122.0 million. We may be subject to concentrations of credit risk with regards to our cash and cash equivalents. We place our cash and short-term investments with highly rated financial institutions. While we attempt to limit our exposure at any point in time, occasionally such cash and investments may temporarily be in excess of the Federal Deposit Insurance Corporation (“FDIC”) and the Securities Investor Protection Corporation (“SIPC”) insurance limits. We also maintain certain compensating balances in several financial institutions in support of borrowings from those institutions. Such compensating balances were not material to the consolidated balance sheets.
Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021
Our cash flow activities are summarized as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2022 | 2021 | Change | |||||||||||||||
| Net cash provided by operating activities | $ | 379,283 | $ | 100,351 | $ | 278,932 | |||||||||||
| Net cash used in investing activities | (45,149) | (91,033) | 45,884 | ||||||||||||||
| Net cash (used in) provided by financing activities | (312,527) | 44,459 | (356,986) | ||||||||||||||
| Increase in cash, cash equivalents and restricted cash | 21,607 | 53,777 | (32,170) | ||||||||||||||
| Cash, cash equivalents and restricted cash, beginning of year | 100,363 | 46,586 | |||||||||||||||
| Cash, cash equivalents and restricted cash, end of year | $ | 121,970 | $ | 100,363 | |||||||||||||
Cash provided by operating activities was $379.3 million for the year ended December 31, 2022 and $100.4 million for the same period of 2021. The cash flows were positively impacted by the Merger, which generated significant incremental operating income due to the increased scale of the Company. This improvement was partially offset by higher general and administrative expenses due to increased head count and higher interest costs related to the debt assumed in the Merger.
Cash used in investing activities was $45.1 million for the year ended December 31, 2022 and $91.0 million for the same period of 2021. Highlights of significant cash sources and uses in investing activities are as follows:
•We received the proceeds from a $125.0 million short-term deposit that matured in April 2022;
•We acquired Pebble Marketplace, the two-tenant building adjacent to MacArthur Crossing and Palms Plaza in 2022 for $100.1 million compared to the acquisition of a multi-tenant retail outparcel at Nora Plaza in 2021 and acquisition deposits for $10.4 million;
•We received net proceeds of $80.4 million from the sale of Plaza Del Lago, a portion of Hamilton Crossing Centre and other land parcels in 2022 compared to net proceeds of $80.7 million from the sale of Westside Market, 17 ground leases and other land parcels in 2021; and
•Capital expenditures increased by $101.2 million driven by the construction activity at our development projects and anchor leasing activity, partially offset by a change in construction payables of $6.3 million in 2022.
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Cash used in financing activities was $312.5 million for the year ended December 31, 2022 compared to cash provided by financing activities of $44.5 million for the same period of 2021. Highlights of significant cash sources and uses in financing activities are as follows:
•We entered into a seven-year $300.0 million unsecured term loan and borrowed $155.0 million on our unsecured revolving line of credit in 2022;
•In 2022, we repaid (i) a $200.0 million unsecured term loan that was scheduled to mature in 2023, (ii) $210.0 million of borrowings on our unsecured revolving line of credit, with no amount outstanding as of December 31, 2022, and (iii) mortgages payable totaling $155.2 million along with $3.8 million of scheduled principal payments using proceeds from the $300.0 million unsecured term loan, $125.0 million short-term deposit and property sales;
•We made distributions to common shareholders and holders of common partnership interests in the Operating Partnership of $182.2 million in 2022 compared to distributions of $60.0 million in 2021; and
•In 2021, we issued $175.0 million of exchangeable senior notes in a private placement offering to proactively fund a portion of our 2022 debt maturities and other borrowings. In connection with this issuance, we incurred transaction costs of $6.0 million and purchased capped calls for $9.8 million.
Management’s discussion of the cash flows for the year ended December 31, 2020, with comparison to the year ended December 31, 2021, was included in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2021.
Other Matters
Financial Instruments
We are exposed to capital market risk, such as changes in interest rates. In order to reduce the volatility related to interest rate risk, we may enter into interest rate hedging arrangements from time to time. We do not use derivative financial instruments for trading or speculative purposes.
Obligations in Connection with Projects Under Construction
We are obligated under various completion guarantees with certain lenders and lease agreements with tenants to complete all or portions of a development project 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 free cash flow or borrowings on the 2022 Revolving Facility.
In addition, we have provided a repayment guaranty on a $33.8 million construction loan associated with the development of the Embassy Suites at the University of Notre Dame, consistent with our 35% ownership interest. Our portion of the repayment guaranty is limited to $5.9 million and the guaranty’s term is through July 1, 2024, the maturity date of the construction loan. As of December 31, 2022, the outstanding loan balance was $33.5 million, of which our share was $11.7 million.
We also provide repayment and completion guaranties on loans totaling $66.2 million associated with the development of The Corner mixed-use project in the Indianapolis MSA. As of December 31, 2022, the outstanding balance of the loans was $30.6 million, of which our share was $15.3 million.
Our share of estimated future costs for under construction and future developments and redevelopments is further discussed beginning on page 43 in the “Short- and Long-Term Liquidity Needs” section.
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Outstanding Indebtedness
The following table provides details on our outstanding consolidated indebtedness as of December 31, 2022 and 2021, adjusted for hedges (in thousands):
| December 31, 2022 | December 31, 2021 | ||||||||||
| Senior unsecured notes | $ | 1,749,635 | $ | 1,749,635 | |||||||
| Senior exchangeable notes – fixed rate | 175,000 | 175,000 | |||||||||
| Unsecured revolving line of credit | — | 55,000 | |||||||||
| Unsecured term loans | 820,000 | 720,000 | |||||||||
| Mortgages payable – fixed rate | 205,328 | 363,577 | |||||||||
| Mortgages payable – variable rate | 28,293 | 29,013 | |||||||||
| Debt discounts, premiums and issuance costs, net | 32,043 | 58,583 | |||||||||
| Total mortgage and other indebtedness, net | $ | 3,010,299 | $ | 3,150,808 | |||||||
Consolidated indebtedness, including weighted average interest rates and weighted average maturities as of December 31, 2022, is summarized below (dollars in thousands):
| Amount Outstanding | Ratio | Weighted Average Interest Rate | Weighted Average Years to Maturity | ||||||||||||||||||||
Fixed rate debt(1) | $ | 2,794,963 | 94 | % | 3.96 | % | 4.3 | ||||||||||||||||
Variable rate debt(2) | 183,293 | 6 | % | 8.08 | % | 3.2 | |||||||||||||||||
| Debt discounts, premiums and issuance costs, net | 32,043 | N/A | N/A | N/A | |||||||||||||||||||
| Total | $ | 3,010,299 | 100 | % | 4.21 | % | 4.2 | ||||||||||||||||
(1)Fixed rate debt includes the portion of variable rate debt that has been hedged by interest rate swaps. As of December 31, 2022, $820.0 million in variable rate debt is hedged to a fixed rate for a weighted average of 2.7 years.
(2)Variable rate debt includes the portion of fixed rate debt that has been hedged by interest rate swaps. As of December 31, 2022, $155.0 million in fixed rate debt is hedged to a floating rate for a weighted average of 2.7 years.
Mortgage indebtedness is collateralized by certain real estate properties and leases and is generally repaid in monthly installments of interest and principal with maturities over various terms through 2032.
The variable interest rate on mortgage indebtedness is based on the Bloomberg Short Term Bank Yield Index (“BSBY”) plus 160 basis points. As of December 31, 2022, the one-month BSBY interest rate was 4.36%. Fixed interest rates on mortgages payable range from 3.75% to 5.73%.
Critical Accounting Policies and Estimates
Our significant accounting policies are more fully described in Note 2 to the accompanying consolidated financial statements. As disclosed in Note 2, the preparation of financial statements in accordance with GAAPaccounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. We believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the compilation of our financial condition and results of operations and, in some cases, require management’s most difficult, subjective, and complex judgments.
Upon acquisition of real estate operating properties, including those assets acquired in the Merger with RPAI, we estimate the fair value of acquired identifiable tangible assets and identified intangible assets and liabilities, assumed debt, and any noncontrolling interest in the acquiree at the date of acquisition, based on evaluation of information and estimates available at that date. Based on these estimates, we record the estimated fair value to the applicable assets and liabilities. In making
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estimates of fair values,value, a number of sources are utilized,used, including information obtained as a result of pre-acquisition due diligence, marketing and leasing activities. The estimates of fair value were determined to have primarily relied upon Level 2 and Level 3 inputs, as defined below.
Fair value is determined for tangible assets and intangibles, including:
•the fair value of the building on an as-if-vacant basis and the fair value of land determined either by comparable market data, real estate tax assessments, independent appraisals or other relevant data;
•above-market and below-market in-place lease values for acquired properties, which are based on the present value (using an interest rate whichthat reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over the remaining non-cancelable term of the leases. Any below-market renewal options are also considered in the in-place lease values. The capitalized above-market and below-market lease values are amortized as a reduction of or addition to rental income over the term of the lease. Should a tenant vacate, terminate its lease, or otherwise notify us of its intent to do so, the unamortized portion of the lease intangibles would be charged or credited to income;
•the value of having a lease in place at the acquisition date. We utilizeuse independent and internal sources for our estimates to determine the respective in-place lease values. Our estimates of value are made using methods similar to those used by independent appraisers. Factors we consider in our analysis include an estimate of costs to execute similar leases, including tenant improvements, leasing commissions and foregone costs and rent received during the estimated lease-up period as if the space was vacant. The value of in-place leases is amortized to expense over the remaining initial terms of the respective leases; and
•the fair value of any assumed financing that is determined to be aboveabove- or below marketbelow-market terms. We utilizeuse third party and independent sources for our estimates to determine the respective fair value of each mortgage payable.and other indebtedness, including related derivative instruments, assumed. The fair market value of each mortgage payable is amortized to interest expense over the remaining initial terms of the respective loan.
instruments.We also consider whether there is any value to in-place leases that have a related customer relationship intangible value. Characteristics we consider in determining these values include the nature and extent of existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality, and expectations of lease renewals, among other factors. To date, ano tenant relationship has not been developed that is considered to have a current intangible value.
Valuation of Investment Properties
•a substantial decline in or continued low occupancy rate or cash flow;
•expected significant declines in occupancy in the near future;
•continued difficulty in leasing space;
•a significant concentration of financially troubled tenants;
•a reduction in the anticipated holding period;
•a cost accumulation or delay in project completion date significantly above and beyond the original development or redevelopment estimate;
•a significant decrease in the market price not in line with general market trends; and
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•any other quantitative or qualitative events or factors deemed significant by the Company’s management or Board of Trustees.
Impairment losses for investment properties and intangible assets are measured when the undiscounted cash flows estimated to be generated by the investment properties during the expected holding period are less than the carrying amounts of those assets. The evaluation of impairment is subject to certain management assumptions, including projected net operating income, anticipated hold period, expected capital expenditures and the capitalization rate used to estimate the property’s residual value. Impairment losses are recorded as the excess of the carrying value over the estimated fair value of the asset. Our impairment review for land and development properties assumes we have the intent and ability to complete the developments or projected uses for the land parcels. If we determine those plans will not be completed or our business combinationsassumptions with respect to operating assets are not realized, an impairment loss may be appropriate.
Depreciation may be accelerated for a redevelopment project, including partial demolition of existing structures, after the asset is assessed for impairment.
Operating properties will be classified as held for sale only when all factsthose properties are available for immediate sale in their present condition and circumstancesfor which management believes it is probable that a sale of the property will be completed within one year, among other factors. Operating properties classified as held for sale are understood, but in no circumstances willcarried at the measurement period exceed one year. lower of cost or fair value less estimated costs to sell. Depreciation and amortization are suspended during the held-for-sale period.
Revenue Recognition
As a lessor of real estate assets, the Company retains substantially all of the risks and benefits of ownership and accounts for its leases as operating leases.
Contractual minimum base rent, percentage rent, and expense reimbursements from tenants for common area maintenance costs, insurance and real estate taxes are our principal sources of revenue. Base minimum rents are recognized on a straight-line basis over the terms of the respective leases. Certain lease agreements contain provisions that grant additional rents based on a tenant’s sales volume (contingent overage rent). Overage rent is recognized when tenants achieve the specified sales targets as defined in their lease agreements. Overage rentIf we determine that collectibility is included in other property related revenue inprobable, we recognize income from rentals based on the accompanying consolidated statements of operations. As a result of generating this revenue,methodology described above. If we will routinelydetermine that collectibility is not probable, we recognize income only to the extent that cash has been received from the tenant. We have accounts receivable due from tenants. Wetenants and are subject to the risk of tenant defaults and bankruptcies that may affect the collection of outstanding receivables. To addressThese receivables are reduced for credit loss, which is recognized as a reduction to rental income. We regularly evaluate the collectabilitycollectibility of these lease-related receivables we analyzeby analyzing past due account balances and consider such facts as the credit quality of our customer, historical write-off experience, tenant credit-worthiness and current economic trends when evaluating the adequacycollectibility of our allowance for uncollectible accounts and straight line rent reserve.rental income. Although we estimate uncollectible receivables and provide for them through charges against income, actual experience may differ from those estimates.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our future income, cash flows and fair values relevant to financial instruments depend upon prevailing interest rates. We are exposed to interest rate changes primarily through our 2022 Revolving Facility and unsecured term loans and other property-specific variable-rate mortgages. Our objectives with respect to interest rate risk are to balance the potential impact of interest rate changes on operations and cash flows against our desire to lower our overall borrowing costs. To achieve these objectives, we may borrow at fixed or variable rates and enter into derivative financial instruments such as interest rate swaps, hedges, etc., in order to mitigate the interest rate risk. As a matter of policy, we do not use financial instruments for trading or speculative transactions.
As of December 31, 2022, we had $3.0 billion of outstanding consolidated indebtedness (inclusive of net unamortized debt discounts, premiums and issuance costs of $32.0 million). In addition, we were party to various consolidated interest rate hedge agreements totaling $975.0 million with maturities over various terms through 2026. Reflecting the effects of these hedge agreements, our fixed and variable rate debt would have been $2.8 billion (94%) and $183.3 million (6%), respectively, of our total consolidated indebtedness at December 31, 2022.
As of December 31, 2022, we had $256.5 million of fixed rate debt scheduled to mature in 2023. A 100-basis point change in interest rates on this debt as of December 31, 2022 would change our annual cash flow by $2.6 million. A 100-basis point change in interest rates on our unhedged variable rate debt as of December 31, 2022 would change our annual cash flow by $1.8 million. Based upon the terms of our variable rate debt, we are most vulnerable to a change in short-term SOFR interest rates.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Company included in this Report are listed in Part IV, Item 15(a) of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Kite Realty Group Trust
Evaluation of Disclosure Controls and Procedures
An evaluation was performed under the supervision and with the participation of the Parent Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, the Parent Company���s Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
There were no changes to the Parent Company’s internal control over financial reporting during the fourth quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.
Management Report on Internal Control Over Financial Reporting
The Parent Company is responsible for establishing and maintaining adequate internal control over financial reporting, as that term is defined in Rule 13a-15(f) of the Exchange Act. Under the supervision of and with the participation of the Parent Company’s management, including its Chief Executive Officer and Chief Financial Officer, the Parent Company conducted an evaluation of the effectiveness of its internal control over financial reporting based on the 2013 framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its evaluation under the framework in Internal Control – Integrated Framework, the Parent Company’s management has concluded that its internal control over financial reporting was effective as of December 31, 2022. The Parent Company’s independent auditors, KPMG LLP, an independent registered public accounting firm, have issued a report on its internal control over financial reporting as stated in their report which is included herein.
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The Parent Company’s internal control system was designed to provide reasonable assurance to our management and Board of Trustees regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Kite Realty Group, L.P.
Evaluation of Disclosure Controls and Procedures
An evaluation was performed under the supervision and with the participation of the Operating Partnership’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, the Operating Partnership’s Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
There were no changes to the Operating Partnership’s internal control over financial reporting during the fourth quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.
Management Report on Internal Control Over Financial Reporting
The Operating Partnership is responsible for establishing and maintaining adequate internal control over financial reporting, as that term is defined in Rule 13a-15(f) of the Exchange Act. Under the supervision of and with the participation of the Operating Partnership’s management, including its Chief Executive Officer and Chief Financial Officer, the Operating Partnership conducted an evaluation of the effectiveness of its internal control over financial reporting based on the 2013 framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its evaluation under the framework in Internal Control – Integrated Framework, the Operating Partnership’s management has concluded that its internal control over financial reporting was effective as of December 31, 2022. The Operating Partnership’s independent auditors, KPMG LLP, an independent registered public accounting firm, have issued a report on its internal control over financial reporting as stated in their report which is included herein.
The Operating Partnership’s internal control system was designed to provide reasonable assurance to our management and Board of Trustees regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees of Kite Realty Group Trust:
Opinion on Internal Control Over Financial Reporting
We have audited Kite Realty Group Trust and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes and financial statement schedule III – Consolidated Real Estate and Accumulated Depreciation (collectively, the consolidated financial statements), and our report dated February 20, 2023 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Indianapolis, Indiana
February 20, 2023
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Partners of Kite Realty Group, L.P. and subsidiaries and Board of Trustees of Kite Realty Group Trust:
Opinion on Internal Control Over Financial Reporting
We have audited Kite Realty Group, L.P. and subsidiaries’ (the Partnership) internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Partnership as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive income, partner’s equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes and financial statement schedule III – Consolidated Real Estate and Accumulated Depreciation (collectively, the consolidated financial statements), and our report dated February 20, 2023 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Partnership’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Indianapolis, Indiana
February 20, 2023
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ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this Item is hereby incorporated by reference to the material appearing in our 2023 Annual Meeting Proxy Statement (the “Proxy Statement”), which we intend to file within 120 days after our fiscal year-end in accordance with Regulation 14A.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is hereby incorporated by reference to the material appearing in our Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
The information required by this Item is hereby incorporated by reference to the material appearing in our Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
The information required by this Item is hereby incorporated by reference to the material appearing in our Proxy Statement.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item is hereby incorporated by reference to the material appearing in our Proxy Statement.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
| (a) | Documents filed as part of this report: | |||||||||||||
| (1) | Financial Statements: | |||||||||||||
| Consolidated financial statements for the Company listed on the index immediately preceding the financial statements at the end of this report. | ||||||||||||||
| (2) | Financial Statement Schedule: | |||||||||||||
| Financial statement schedule for the Company listed on the index immediately preceding the financial statements at the end of this report. | ||||||||||||||
| (3) | Exhibits: | |||||||||||||
| The Company files as part of this report the exhibits listed on the Exhibit Index. | ||||||||||||||
| (b) | Exhibits: | |||||||||||||
| The Company files as part of this report the exhibits listed on the Exhibit Index. Other financial statement schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. | ||||||||||||||
| (c) | Financial Statement Schedule: | |||||||||||||
| The Company files as part of this report the financial statement schedule listed on the index immediately preceding the financial statements at the end of this report. | ||||||||||||||
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EXHIBIT INDEX
| 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 February 11, 2014 | |||||||||||||
| 2.2 | 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 28, 2022 | |||||||||||||
| 3.2 | 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 28, 2022 | |||||||||||||
| 3.3 | Incorporated by reference to Exhibit 3.7 to the Annual Report on Form 10-K of Kite Realty Group Trust filed with the SEC on February 22, 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 Retail Properties of America, Inc. filed with the SEC on March 12, 2015 | |||||||||||||
| 4.8 | Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K of Retail Properties of America, Inc. filed with the SEC on March 12, 2015 | |||||||||||||
| 4.9 | Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of Retail Properties of America, Inc. filed with the SEC on July 21, 2020 | |||||||||||||
| 4.10 | Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of Retail Properties of America, Inc. filed with the SEC on August 25, 2020 | |||||||||||||
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| Exhibit No. | Description | Location | ||||||||||||
| 4.11 | 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 | |||||||||||||
| 4.12 | Incorporated by reference to Exhibit 4.12 to the Annual Report on Form 10-K of Kite Realty Group Trust filed with the SEC on February 28, 2022 | |||||||||||||
| 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 August 20, 2004 | |||||||||||||
| 10.2 | Incorporate by reference to Exhibit 10.1 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on December 13, 2010 | |||||||||||||
| 10.3 | Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on March 12, 2012 | |||||||||||||
| 10.4 | 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 July 29, 2014 | |||||||||||||
| 10.5 | Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on March 5, 2019 | |||||||||||||
| 10.6 | Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on March 26, 2019 | |||||||||||||
| 10.7 | 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 December 31, 2020 | |||||||||||||
| 10.8 | 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 December 31, 2020 | |||||||||||||
| 10.9 | Incorporated by reference to Exhibit 10.3 the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on December 31, 2020 | |||||||||||||
| 10.10 | 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 August 20, 2004 | |||||||||||||
| 10.11 | 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 August 20, 2004 | |||||||||||||
| 10.12 | 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 November 7, 2018 | |||||||||||||
| 10.13 | Incorporated by reference to Exhibit 10.20 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on August 20, 2004 | |||||||||||||
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| Exhibit No. | Description | Location | ||||||||||||
| 10.14 | Incorporated by reference to Exhibit 10.20 to the Annual Report on Form 10-K of Kite Realty Group Trust filed with the SEC on March 8, 2013 | |||||||||||||
| 10.15 | Incorporated by reference to Exhibit 10.21 to the Annual Report on Form 10-K of Kite Realty Group Trust filed with the SEC on March 7, 2014 | |||||||||||||
| 10.16 | Incorporated by reference to Exhibit 10.22 to the Annual Report on Form 10-K of Kite Realty Group Trust filed with the SEC on March 7, 2014 | |||||||||||||
| 10.17 | Incorporated by reference to Exhibit 10.23 to the Annual Report on Form 10-K of Kite Realty Group Trust filled with the SEC on March 7, 2014 | |||||||||||||
| 10.18 | Incorporated by reference to Exhibit 10.24 to the Annual Report on Form 10-K of Kite Realty Group Trust filed with the SEC on February 27, 2015 | |||||||||||||
| 10.19 | Incorporated by reference to Exhibit 10.26 to the Annual Report on Form 10-K of Kite Realty Group Trust filed with the SEC on February 27, 2015 | |||||||||||||
| 10.20 | Incorporated by reference to Exhibit 10.31 to the Annual Report on Form 10-K of Kite Realty Group Trust filed with the SEC on February 22, 2021 | |||||||||||||
| 10.21 | Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on March 25, 2021 | |||||||||||||
| 10.22 | 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 | |||||||||||||
| 10.23 | 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 | |||||||||||||
| 10.24 | 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 | |||||||||||||
| 10.25 | 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 | |||||||||||||
| 10.26 | 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 May 12, 2008 | |||||||||||||
| 10.27 | Incorporated by reference to Exhibit 10.32 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on August 20, 2004 | |||||||||||||
| 10.28 | Incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of Kite Realty Group Trust filed with the SEC on November 14, 2005 | |||||||||||||
58
| Exhibit No. | Description | Location | ||||||||||||
| 10.29 | Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on March 22, 2021 | |||||||||||||
| 10.30 | Incorporated by reference to Exhibit 10.33 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on August 20, 2004 | |||||||||||||
| 10.31 | 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 July 29, 2014 | |||||||||||||
| 10.32 | 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 February 3, 2016 | |||||||||||||
| 10.33 | 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 May 17, 2019 | |||||||||||||
| 10.34 | 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 May 13, 2022 | |||||||||||||
| 10.35 | 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 May 14, 2013 | |||||||||||||
| 10.36 | Incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on May 14, 2013 | |||||||||||||
| 10.37 | Incorporated by reference to Exhibit 10.1 of the Registration on Form S-8 of Kite Realty Group Trust filed with the SEC on October 22, 2021 | |||||||||||||
| 10.38 | Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of Kite Realty Group Trust filed with the SEC on August 9, 2006 | |||||||||||||
| 10.39 | Incorporated by reference to Exhibit 10.38 of the Annual Report on Form 10-K of Kite Realty Group Trust filed with the SEC on February 27, 2017 | |||||||||||||
| 10.40 | 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 November 7, 2018 | |||||||||||||
| 10.41 | 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 March 5, 2019 | |||||||||||||
| 10.42 | Incorporated by reference to Exhibit 10.46 to the Annual Report on Form 10-K of Kite Realty Group Trust filed with the SEC on February 22, 2021 | |||||||||||||
| 10.43 | Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of Kite Realty Group Trust filed with the SEC on May 6, 2022 | |||||||||||||
| 10.44 | 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 26, 2018 | |||||||||||||
59
| Exhibit No. | Description | Location | ||||||||||||
| 10.45 | 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 26, 2018 | |||||||||||||
| 10.46 | Filed herewith | |||||||||||||
| 10.47 | 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 September 3, 2015 | |||||||||||||
| 10.48 | Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of Retail Properties of America, Inc. filed with the SEC on August 4, 2021. | |||||||||||||
| 10.49 | 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 | |||||||||||||
| 10.50 | 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 August 2, 2022 | |||||||||||||
| 10.51 | 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 | |||||||||||||
| 10.52 | Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Retail Properties of America, Inc. filed with the SEC on July 23, 2019 | |||||||||||||
| 10.53 | Incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of Retail Properties of America, Inc. filed with the SEC on May 6, 2020 | |||||||||||||
| 10.54 | Incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of Retail Properties of America, Inc. filed with the SEC on August 4, 2021 | |||||||||||||
| 10.55 | 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 | |||||||||||||
| 10.56 | 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 August 2, 2022 | |||||||||||||
| 10.57 | 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 | |||||||||||||
60
| Exhibit No. | Description | Location | ||||||||||||
| 10.58 | Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Retail Properties of America, Inc. filed with the SEC on November 29, 2016 | |||||||||||||
| 10.59 | Incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q of Retail Properties of America, Inc. filed with the SEC on August 1, 2018 | |||||||||||||
| 10.60 | Incorporated by reference to Exhibit 10.10 to the Annual Report on Form 10-K of Retail Properties of America, Inc. filed with the SEC on February 13, 2019 | |||||||||||||
| 10.61 | Incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of Retail Properties of America, Inc. filed with the SEC on May 6, 2020 | |||||||||||||
| 10.62 | 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 | |||||||||||||
| 10.63 | 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 | |||||||||||||
| 10.64 | Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Retail Properties of America, Inc. filed with the SEC on May 22, 2014 | |||||||||||||
| 10.65 | 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 | |||||||||||||
| 10.66 | 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 | |||||||||||||
| 10.67 | Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Retail Properties of America, Inc. filed with the SEC on October 5, 2016 | |||||||||||||
| 10.68 | 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 | |||||||||||||
| 10.69 | 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 | |||||||||||||
| 10.70 | Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Retail Properties of America, Inc. filed with the SEC on April 9, 2019 | |||||||||||||
| 10.71 | 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 | |||||||||||||
61
| Exhibit No. | Description | Location | ||||||||||||
| 10.72 | 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 | |||||||||||||
| 21.1 | Filed herewith | |||||||||||||
| 23.1 | Filed herewith | |||||||||||||
| 23.2 | Filed herewith | |||||||||||||
| 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 | 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 | ||||||||||||
*Denotes a management contract or compensatory, plan contract or arrangement.
ITEM 16. FORM 10-K SUMMARY
Not applicable.
62
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| KITE REALTY GROUP TRUST | ||||||||||||||
| (Registrant) | ||||||||||||||
| /s/ JOHN A. KITE | ||||||||||||||
| John A. Kite | ||||||||||||||
| Date: | February 20, 2023 | Chairman and Chief Executive Officer | ||||||||||||
| (Principal Executive Officer) | ||||||||||||||
| /s/ HEATH R. FEAR | ||||||||||||||
| Heath R. Fear | ||||||||||||||
| Date: | February 20, 2023 | Executive Vice President and Chief Financial Officer | ||||||||||||
| (Principal Financial Officer) | ||||||||||||||
| KITE REALTY GROUP L.P. | ||||||||||||||
| (Registrant) | ||||||||||||||
| By: Kite Realty Group Trust, its sole general partner | ||||||||||||||
| /s/ JOHN A. KITE | ||||||||||||||
| John A. Kite | ||||||||||||||
| Date: | February 20, 2023 | Chairman and Chief Executive Officer | ||||||||||||
| (Principal Executive Officer) | ||||||||||||||
| /s/ HEATH R. FEAR | ||||||||||||||
| Heath R. Fear | ||||||||||||||
| Date: | February 20, 2023 | Executive Vice President and Chief Financial Officer | ||||||||||||
| (Principal Financial Officer) | ||||||||||||||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
63
| Signature | Title | Date | ||||||||||||
| /s/ JOHN A. KITE | Chairman, Chief Executive Officer, and Trustee (Principal Executive Officer) | February 20, 2023 | ||||||||||||
| (John A. Kite) | ||||||||||||||
| /s/ WILLIAM E. BINDLEY | Trustee | February 20, 2023 | ||||||||||||
| (William E. Bindley) | ||||||||||||||
| /s/ BONNIE S. BIUMI | Trustee | February 20, 2023 | ||||||||||||
| (Bonnie S. Biumi) | ||||||||||||||
| /s/ DERRICK BURKS | Trustee | February 20, 2023 | ||||||||||||
| (Derrick Burks) | ||||||||||||||
| /s/ VICTOR J. COLEMAN | Trustee | February 20, 2023 | ||||||||||||
| (Victor J. Coleman) | ||||||||||||||
| /s/ GERALD M. GORSKI | Trustee | February 20, 2023 | ||||||||||||
| (Gerald M. Gorski) | ||||||||||||||
| /s/ STEVEN P. GRIMES | Trustee | February 20, 2023 | ||||||||||||
| (Steven P. Grimes) | ||||||||||||||
| /s/ CHRISTIE B. KELLY | Trustee | February 20, 2023 | ||||||||||||
| (Christie B. Kelly) | ||||||||||||||
| /s/ PETER L. LYNCH | Trustee | February 20, 2023 | ||||||||||||
| (Peter L. Lynch) | ||||||||||||||
| /s/ DAVID R. O’REILLY | Trustee | February 20, 2023 | ||||||||||||
| (David R. O’Reilly) | ||||||||||||||
| /s/ BARTON R. PETERSON | Trustee | February 20, 2023 | ||||||||||||
| (Barton R. Peterson) | ||||||||||||||
| /s/ CHARLES H. WURTZEBACH | Trustee | February 20, 2023 | ||||||||||||
| (Charles H. Wurtzebach) | ||||||||||||||
| /s/ CAROLINE L. YOUNG | Trustee | February 20, 2023 | ||||||||||||
| (Caroline L. Young) | ||||||||||||||
| /s/ HEATH R. FEAR | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | February 20, 2023 | ||||||||||||
| (Heath R. Fear) | ||||||||||||||
| /s/ DAVID E. BUELL | Senior Vice President, Chief Accounting Officer | February 20, 2023 | ||||||||||||
| (David E. Buell) | ||||||||||||||
64
KITE REALTY GROUP TRUST AND KITE REALTY GROUP, L.P. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
| Page | ||||||||
| Consolidated Financial Statements: | ||||||||
| Kite Realty Group Trust | ||||||||
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 238) | ||||||||
| Kite Realty Group, L.P. and subsidiaries | ||||||||
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 238) | ||||||||
| Kite Realty Group Trust and Kite Realty Group, L.P. and subsidiaries | ||||||||
| Financial Statement Schedule: | ||||||||
| Kite Realty Group Trust and Kite Realty Group, L.P. and subsidiaries | ||||||||
All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are not applicable and therefore have been omitted.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees of Kite Realty Group Trust:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Kite Realty Group Trust and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes and financial statement schedule III – Consolidated Real Estate and Accumulated Depreciation (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 20, 2023 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Evaluation of investment properties for potential impairment
As discussed in Note 2 to the consolidated financial statements, land, buildings, and improvements, net was $7,656,765 thousand as of December 31, 2022. The Company’s investment properties are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. This review for potential impairment triggering events requires certain assumptions, estimates, and significant judgment, including about the anticipated holding period for an investment property.
We identified the evaluation of certain investment properties for potential impairment as a critical audit matter. Subjective and challenging auditor judgment was required to evaluate the Company’s intent and ability to hold investment properties for particular periods of time. A shortening of the anticipated holding period could indicate a potential impairment.
F-1
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s process to evaluate potential impairment triggering events, including a control related to the evaluation of the holding period. We compared the holding periods assumed in the Company’s analysis to the Company’s historical holding periods for similar properties. We inquired of Company management and inspected documents, such as meeting minutes of the board of trustees and its sub-committees, and management’s capital allocation committee to evaluate the Company’s intent and ability to hold investment properties for particular periods of time. We read external communications with investors and analysts in order to identify information regarding potential sales of the Company’s investment properties.
/s/ KPMG LLP
We have served as the Company’s auditor since 2020.
Indianapolis, Indiana
February 20, 2023
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Partners of Kite Realty Group, L.P. and subsidiaries and Board of Trustees of Kite Realty Group Trust:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Kite Realty Group, L.P. and subsidiaries (the Partnership) as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive income, partner’s equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes and financial statement schedule III – Consolidated Real Estate and Accumulated Depreciation (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Partnership’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 20, 2023 expressed an unqualified opinion on the effectiveness of the Partnership’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Evaluation of investment properties for potential impairment
As discussed in Note 2 to the consolidated financial statements, land, buildings, and improvements, net was $7,656,765 thousand as of December 31, 2022. The Partnership’s investment properties are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. This review for potential impairment triggering events requires certain assumptions, estimates, and significant judgment, including about the anticipated holding period for an investment property.
We identified the evaluation of certain investment properties for potential impairment as a critical audit matter. Subjective and challenging auditor judgment was required to evaluate the Partnership’s intent and ability to hold investment properties for particular periods of time. A shortening of the anticipated holding period could indicate a potential impairment.
F-3
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Partnership’s process to evaluate potential impairment triggering events, including a control related to the evaluation of the holding period. We compared the holding periods assumed in the Partnership’s analysis to the Partnership’s historical holding periods for similar properties. We inquired of Partnership management and inspected documents, such as meeting minutes of Kite Realty Group Trust’s (the Parent Company’s) board of trustees and its sub-committees, and management’s capital allocation committee to evaluate the Partnership’s intent and ability to hold investment properties for particular periods of time. We read external communications with investors and analysts in order to identify information regarding potential sales of the Partnership’s investment properties.
/s/ KPMG LLP
We have served as the Partnership’s auditor since 2020.
Indianapolis, Indiana
February 20, 2023
F-4
KITE REALTY GROUP TRUST
Consolidated Balance Sheets
(in thousands, except share and per share data)
| December 31, 2022 | December 31, 2021 | ||||||||||
| Assets: | |||||||||||
| Investment properties, at cost: | $ | 7,732,573 | $ | 7,592,348 | |||||||
| Less: accumulated depreciation | (1,161,148) | (884,809) | |||||||||
| Net investment properties | 6,571,425 | 6,707,539 | |||||||||
| Cash and cash equivalents | 115,799 | 93,241 | |||||||||
Tenant and other receivables, including accrued straight-line rent of $44,460 and $28,071, respectively | 101,301 | 68,444 | |||||||||
| Restricted cash and escrow deposits | 6,171 | 7,122 | |||||||||
| Deferred costs, net | 409,828 | 541,518 | |||||||||
| Short-term deposits | — | 125,000 | |||||||||
| Prepaid and other assets | 127,044 | 84,826 | |||||||||
| Investments in unconsolidated subsidiaries | 10,414 | 11,885 | |||||||||
| Total assets | $ | 7,341,982 | $ | 7,639,575 | |||||||
| Liabilities and Equity: | |||||||||||
| Liabilities: | |||||||||||
| Mortgage and other indebtedness, net | $ | 3,010,299 | $ | 3,150,808 | |||||||
| Accounts payable and accrued expenses | 207,792 | 184,982 | |||||||||
| Deferred revenue and other liabilities | 298,039 | 321,419 | |||||||||
| Total liabilities | 3,516,130 | 3,657,209 | |||||||||
| Commitments and contingencies | |||||||||||
| Limited Partners’ interests in Operating Partnership and other | 53,967 | 55,173 | |||||||||
| Equity: | |||||||||||
Common shares, $0.01 par value, 490,000,000 shares authorized, 219,185,658 and 218,949,569 shares issued and outstanding at December 31, 2022 and 2021, respectively | 2,192 | 2,189 | |||||||||
| Additional paid-in capital | 4,897,736 | 4,898,673 | |||||||||
| Accumulated other comprehensive income (loss) | 74,344 | (15,902) | |||||||||
| Accumulated deficit | (1,207,757) | (962,913) | |||||||||
| Total shareholders’ equity | 3,766,515 | 3,922,047 | |||||||||
| Noncontrolling interests | 5,370 | 5,146 | |||||||||
| Total equity | 3,771,885 | 3,927,193 | |||||||||
| Total liabilities and equity | $ | 7,341,982 | $ | 7,639,575 | |||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
KITE REALTY GROUP TRUST
Consolidated Statements of Operations and Comprehensive Income
(in thousands, except share and per share data)
| Year Ended December 31, | |||||||||||||||||
| 2022 | 2021 | 2020 | |||||||||||||||
| Revenue: | |||||||||||||||||
| Rental income | $ | 782,349 | $ | 367,399 | $ | 257,670 | |||||||||||
| Other property-related revenue | 11,108 | 4,683 | 8,597 | ||||||||||||||
| Fee income | 8,539 | 1,242 | 378 | ||||||||||||||
| Total revenue | 801,996 | 373,324 | 266,645 | ||||||||||||||
| Expenses: | |||||||||||||||||
| Property operating | 107,217 | 55,561 | 41,012 | ||||||||||||||
| Real estate taxes | 104,589 | 49,530 | 35,867 | ||||||||||||||
| General, administrative and other | 54,860 | 33,984 | 30,840 | ||||||||||||||
| Merger and acquisition costs | 925 | 86,522 | — | ||||||||||||||
| Depreciation and amortization | 469,805 | 200,460 | 128,648 | ||||||||||||||
| Total expenses | 737,396 | 426,057 | 236,367 | ||||||||||||||
| Gain on sales of operating properties, net | 27,069 | 31,209 | 4,733 | ||||||||||||||
| Operating income (loss) | 91,669 | (21,524) | 35,011 | ||||||||||||||
| Other (expense) income: | |||||||||||||||||
| Interest expense | (104,276) | (60,447) | (50,399) | ||||||||||||||
| Income tax (expense) benefit of taxable REIT subsidiary | (43) | 310 | 696 | ||||||||||||||
| Equity in earnings (loss) of unconsolidated subsidiaries | 256 | (416) | (1,685) | ||||||||||||||
| Other income, net | 240 | 355 | 254 | ||||||||||||||
| Net loss | (12,154) | (81,722) | (16,123) | ||||||||||||||
| Net (income) loss attributable to noncontrolling interests | (482) | 916 | (100) | ||||||||||||||
| Net loss attributable to common shareholders | $ | (12,636) | $ | (80,806) | $ | (16,223) | |||||||||||
| Net loss per common share – basic and diluted | $ | (0.06) | $ | (0.73) | $ | (0.19) | |||||||||||
| Weighted average common shares outstanding – basic | 219,074,448 | 110,637,562 | 84,142,261 | ||||||||||||||
| Weighted average common shares outstanding – diluted | 219,074,448 | 110,637,562 | 84,142,261 | ||||||||||||||
| Net loss | $ | (12,154) | $ | (81,722) | $ | (16,123) | |||||||||||
| Change in fair value of derivatives | 91,271 | 15,670 | (14,969) | ||||||||||||||
| Total comprehensive income (loss) | 79,117 | (66,052) | (31,092) | ||||||||||||||
| Comprehensive (income) loss attributable to noncontrolling interests | (1,507) | 229 | 367 | ||||||||||||||
| Comprehensive income (loss) attributable to the Company | $ | 77,610 | $ | (65,823) | $ | (30,725) | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-6
KITE REALTY GROUP TRUST
Consolidated Statements of Shareholders’ Equity
(in thousands, except share data)
| Common Shares | Additional Paid-in Capital | Accumulated Other Comprehensive (Loss) Income | Accumulated Deficit | Total | |||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||
| Balances, December 31, 2019 | 83,963,369 | $ | 840 | $ | 2,074,436 | $ | (16,283) | $ | (769,955) | $ | 1,289,038 | ||||||||||||||||||||||||
| Stock compensation activity | 206,591 | 2 | 5,483 | — | — | 5,485 | |||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | (14,602) | — | (14,602) | |||||||||||||||||||||||||||||
| Distributions to common shareholders | — | — | — | — | (38,128) | (38,128) | |||||||||||||||||||||||||||||
| Net loss attributable to common shareholders | — | — | — | — | (16,223) | (16,223) | |||||||||||||||||||||||||||||
| Acquisition of partner’s noncontrolling interest in Pan Am Plaza | — | — | (2,500) | — | — | (2,500) | |||||||||||||||||||||||||||||
| Exchange of redeemable noncontrolling interests for common shares | 18,039 | — | 187 | — | — | 187 | |||||||||||||||||||||||||||||
| Adjustment to redeemable noncontrolling interests | — | — | 7,397 | — | — | 7,397 | |||||||||||||||||||||||||||||
| Balances, December 31, 2020 | 84,187,999 | $ | 842 | $ | 2,085,003 | $ | (30,885) | $ | (824,306) | $ | 1,230,654 | ||||||||||||||||||||||||
| Stock compensation activity | 245,333 | $ | 2 | $ | 6,793 | $ | — | $ | — | $ | 6,795 | ||||||||||||||||||||||||
| Shares withheld for employee taxes | (714,569) | (7) | (15,031) | — | — | (15,038) | |||||||||||||||||||||||||||||
| Issuance of common stock – Merger | 134,931,465 | 1,349 | 2,846,020 | — | — | 2,847,369 | |||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | 14,983 | — | 14,983 | |||||||||||||||||||||||||||||
| Distributions to common shareholders | — | — | — | — | (57,801) | (57,801) | |||||||||||||||||||||||||||||
| Net loss attributable to common shareholders | — | — | — | — | (80,806) | (80,806) | |||||||||||||||||||||||||||||
| Purchase of capped calls | — | — | (9,800) | — | — | (9,800) | |||||||||||||||||||||||||||||
| Exchange of redeemable noncontrolling interests for common shares | 299,341 | 3 | 4,235 | — | — | 4,238 | |||||||||||||||||||||||||||||
| Adjustment to redeemable noncontrolling interests | — | — | (18,547) | — | — | (18,547) | |||||||||||||||||||||||||||||
| Balances, December 31, 2021 | 218,949,569 | $ | 2,189 | $ | 4,898,673 | $ | (15,902) | $ | (962,913) | $ | 3,922,047 | ||||||||||||||||||||||||
| Stock compensation activity | 151,089 | $ | 2 | $ | 9,544 | $ | — | $ | — | $ | 9,546 | ||||||||||||||||||||||||
| Other comprehensive income | — | — | — | 90,246 | — | 90,246 | |||||||||||||||||||||||||||||
| Distributions to common shareholders | — | — | — | — | (232,208) | (232,208) | |||||||||||||||||||||||||||||
| Net loss attributable to common shareholders | — | — | — | — | (12,636) | (12,636) | |||||||||||||||||||||||||||||
| Acquisition of partner’s noncontrolling interest in Killingly Commons | — | — | 416 | — | — | 416 | |||||||||||||||||||||||||||||
| Exchange of redeemable noncontrolling interests for common shares | 85,000 | 1 | 1,669 | — | — | 1,670 | |||||||||||||||||||||||||||||
| Adjustment to redeemable noncontrolling interests | — | — | (12,566) | — | — | (12,566) | |||||||||||||||||||||||||||||
| Balances, December 31, 2022 | 219,185,658 | $ | 2,192 | $ | 4,897,736 | $ | 74,344 | $ | (1,207,757) | $ | 3,766,515 | ||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-7
KITE REALTY GROUP TRUST
Consolidated Statements of Cash Flows
(in thousands)
| Year Ended December 31, | |||||||||||||||||
| 2022 | 2021 | 2020 | |||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||
| Net loss | $ | (12,154) | $ | (81,722) | $ | (16,123) | |||||||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||||||||
| Depreciation and amortization | 472,969 | 203,142 | 130,783 | ||||||||||||||
| Gain on sales of operating properties, net | (27,069) | (31,209) | (4,733) | ||||||||||||||
| Straight-line rent | (16,632) | (5,391) | 3,131 | ||||||||||||||
| Compensation expense for equity awards | 10,280 | 6,697 | 5,998 | ||||||||||||||
| Amortization of debt fair value adjustments | (13,521) | (2,993) | (444) | ||||||||||||||
| Amortization of in-place lease assets and liabilities | (4,821) | (2,611) | (3,822) | ||||||||||||||
| Changes in assets and liabilities: | |||||||||||||||||
| Tenant receivables | (16,763) | (3,102) | (3,062) | ||||||||||||||
| Deferred costs and other assets | 7,522 | 6,857 | (7,618) | ||||||||||||||
| Accounts payable, accrued expenses, deferred revenue and other liabilities | (20,528) | 10,683 | (8,595) | ||||||||||||||
| Net cash provided by operating activities | 379,283 | 100,351 | 95,515 | ||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||
| Cash and restricted cash acquired in the Merger | — | 14,992 | — | ||||||||||||||
| Acquisitions of interests in properties | (100,142) | (10,445) | (65,298) | ||||||||||||||
| Capital expenditures | (158,540) | (57,313) | (38,266) | ||||||||||||||
| Net proceeds from sales of land | 4,716 | 54,157 | 9,134 | ||||||||||||||
| Net proceeds from sales of operating properties | 75,699 | 26,556 | 13,888 | ||||||||||||||
| Investment in short-term deposits | 125,000 | (125,000) | — | ||||||||||||||
| Small business loan repayments (funding) | 657 | 712 | (2,199) | ||||||||||||||
| Change in construction payables | 6,341 | 4,413 | 2,442 | ||||||||||||||
| Distribution from unconsolidated joint venture | 1,245 | 1,029 | — | ||||||||||||||
| Capital contribution to unconsolidated joint venture | (125) | (134) | (541) | ||||||||||||||
| Net cash used in investing activities | (45,149) | (91,033) | (80,840) | ||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||
| Proceeds from issuance of common shares, net | 30 | 31 | 72 | ||||||||||||||
| Repurchases of common shares upon the vesting of restricted shares | (1,535) | (15,031) | (1,336) | ||||||||||||||
| Purchase of capped calls | — | (9,800) | — | ||||||||||||||
| Debt and equity issuance costs | (5,159) | (8,141) | — | ||||||||||||||
| Loan proceeds | 455,000 | 215,000 | 325,000 | ||||||||||||||
| Loan payments | (568,963) | (77,591) | (302,477) | ||||||||||||||
| Distributions paid – common shareholders | (179,624) | (57,801) | (38,128) | ||||||||||||||
| Distributions paid – redeemable noncontrolling interests | (2,622) | (2,208) | (1,533) | ||||||||||||||
| Acquisition of partner’s interest in Killingly Commons joint venture | (9,654) | — | — | ||||||||||||||
| Acquisition of partner’s interest in Pan Am Plaza joint venture | — | — | (2,500) | ||||||||||||||
| Net cash (used in) provided by financing activities | (312,527) | 44,459 | (20,902) | ||||||||||||||
| Net change in cash, cash equivalents and restricted cash | 21,607 | 53,777 | (6,227) | ||||||||||||||
| Cash, cash equivalents and restricted cash, beginning of year | 100,363 | 46,586 | 52,813 | ||||||||||||||
| Cash, cash equivalents and restricted cash, end of year | $ | 121,970 | $ | 100,363 | $ | 46,586 | |||||||||||
| Supplemental disclosures | |||||||||||||||||
| Cash paid for interest, net of capitalized interest | $ | 113,744 | $ | 59,552 | $ | 50,387 | |||||||||||
| Non-cash investing and financing activities | |||||||||||||||||
| Exchange of redeemable noncontrolling interests for common shares | $ | 1,670 | $ | 4,236 | $ | — | |||||||||||
| Net investment in sales-type lease | $ | — | $ | — | $ | 4,665 | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-8
KITE REALTY GROUP, L.P. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except unit and per unit data)
| December 31, 2022 | December 31, 2021 | ||||||||||
| Assets: | |||||||||||
| Investment properties, at cost: | $ | 7,732,573 | $ | 7,592,348 | |||||||
| Less: accumulated depreciation | (1,161,148) | (884,809) | |||||||||
| Net investment properties | 6,571,425 | 6,707,539 | |||||||||
| Cash and cash equivalents | 115,799 | 93,241 | |||||||||
Tenant and other receivables, including accrued straight-line rent of $44,460 and $28,071, respectively | 101,301 | 68,444 | |||||||||
| Restricted cash and escrow deposits | 6,171 | 7,122 | |||||||||
| Deferred costs, net | 409,828 | 541,518 | |||||||||
| Short-term deposits | — | 125,000 | |||||||||
| Prepaid and other assets | 127,044 | 84,826 | |||||||||
| Investments in unconsolidated subsidiaries | 10,414 | 11,885 | |||||||||
| Total assets | $ | 7,341,982 | $ | 7,639,575 | |||||||
| Liabilities and Equity: | |||||||||||
| Liabilities: | |||||||||||
| Mortgage and other indebtedness, net | $ | 3,010,299 | $ | 3,150,808 | |||||||
| Accounts payable and accrued expenses | 207,792 | 184,982 | |||||||||
| Deferred revenue and other liabilities | 298,039 | 321,419 | |||||||||
| Total liabilities | 3,516,130 | 3,657,209 | |||||||||
| Commitments and contingencies | |||||||||||
| Limited Partners’ interests in Operating Partnership and other | 53,967 | 55,173 | |||||||||
| Partners’ Equity: | |||||||||||
Common equity, 219,185,658 and 218,949,569 units issued and outstanding at December 31, 2022 and 2021, respectively | 3,692,171 | 3,937,949 | |||||||||
| Accumulated other comprehensive income (loss) | 74,344 | (15,902) | |||||||||
| Total Partners’ equity | 3,766,515 | 3,922,047 | |||||||||
| Noncontrolling interests | 5,370 | 5,146 | |||||||||
| Total equity | 3,771,885 | 3,927,193 | |||||||||
| Total liabilities and equity | $ | 7,341,982 | $ | 7,639,575 | |||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-9
KITE REALTY GROUP, L.P. AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Income
(in thousands, except unit and per unit data)
| Year Ended December 31, | |||||||||||||||||
| 2022 | 2021 | 2020 | |||||||||||||||
| Revenue: | |||||||||||||||||
| Rental income | $ | 782,349 | $ | 367,399 | $ | 257,670 | |||||||||||
| Other property-related revenue | 11,108 | 4,683 | 8,597 | ||||||||||||||
| Fee income | 8,539 | 1,242 | 378 | ||||||||||||||
| Total revenue | 801,996 | 373,324 | 266,645 | ||||||||||||||
| Expenses: | |||||||||||||||||
| Property operating | 107,217 | 55,561 | 41,012 | ||||||||||||||
| Real estate taxes | 104,589 | 49,530 | 35,867 | ||||||||||||||
| General, administrative and other | 54,860 | 33,984 | 30,840 | ||||||||||||||
| Merger and acquisition costs | 925 | 86,522 | — | ||||||||||||||
| Depreciation and amortization | 469,805 | 200,460 | 128,648 | ||||||||||||||
| Total expenses | 737,396 | 426,057 | 236,367 | ||||||||||||||
| Gain on sales of operating properties, net | 27,069 | 31,209 | 4,733 | ||||||||||||||
| Operating income (loss) | 91,669 | (21,524) | 35,011 | ||||||||||||||
| Other (expense) income: | |||||||||||||||||
| Interest expense | (104,276) | (60,447) | (50,399) | ||||||||||||||
| Income tax (expense) benefit of taxable REIT subsidiary | (43) | 310 | 696 | ||||||||||||||
| Equity in earnings (loss) of unconsolidated subsidiaries | 256 | (416) | (1,685) | ||||||||||||||
| Other income, net | 240 | 355 | 254 | ||||||||||||||
| Net loss | (12,154) | (81,722) | (16,123) | ||||||||||||||
| Net income attributable to noncontrolling interests | (623) | (514) | (528) | ||||||||||||||
| Net loss attributable to common unitholders | $ | (12,777) | $ | (82,236) | $ | (16,651) | |||||||||||
| Allocation of net loss: | |||||||||||||||||
| Limited Partners | $ | (141) | $ | (1,430) | $ | (428) | |||||||||||
| Parent Company | (12,636) | (80,806) | (16,223) | ||||||||||||||
| $ | (12,777) | $ | (82,236) | $ | (16,651) | ||||||||||||
| Net loss per unit – basic and diluted | $ | (0.06) | $ | (0.73) | $ | (0.19) | |||||||||||
| Weighted average common units outstanding – basic | 221,858,084 | 113,103,177 | 86,361,139 | ||||||||||||||
| Weighted average common units outstanding – diluted | 221,858,084 | 113,103,177 | 86,361,139 | ||||||||||||||
| Net loss | $ | (12,154) | $ | (81,722) | $ | (16,123) | |||||||||||
| Change in fair value of derivatives | 91,271 | 15,670 | (14,969) | ||||||||||||||
| Total comprehensive income (loss) | 79,117 | (66,052) | (31,092) | ||||||||||||||
| Comprehensive income attributable to noncontrolling interests | (623) | (514) | (528) | ||||||||||||||
| Comprehensive income (loss) attributable to common unitholders | $ | 78,494 | $ | (66,566) | $ | (31,620) | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-10
KITE REALTY GROUP, L.P. AND SUBSIDIARIES
Consolidated Statements of Partner’s Equity
(in thousands)
| General Partner | Total | ||||||||||||||||
| Common Equity | Accumulated Other Comprehensive (Loss) Income | ||||||||||||||||
| Balances, December 31, 2019 | $ | 1,305,321 | $ | (16,283) | $ | 1,289,038 | |||||||||||
| Stock compensation activity | 5,485 | — | 5,485 | ||||||||||||||
| Other comprehensive loss attributable to Parent Company | — | (14,602) | (14,602) | ||||||||||||||
| Distributions to Parent Company | (38,128) | — | (38,128) | ||||||||||||||
| Net loss attributable to Parent Company | (16,223) | — | (16,223) | ||||||||||||||
| Acquisition of partner’s noncontrolling interest in Pan Am Plaza | (2,500) | — | (2,500) | ||||||||||||||
| Conversion of Limited Partner Units to shares of the Parent Company | 187 | — | 187 | ||||||||||||||
| Adjustment to redeemable noncontrolling interests | 7,397 | — | 7,397 | ||||||||||||||
| Balances, December 31, 2020 | $ | 1,261,539 | $ | (30,885) | $ | 1,230,654 | |||||||||||
| Stock compensation activity | 6,795 | — | 6,795 | ||||||||||||||
| Shares withheld for employee taxes | (15,038) | — | (15,038) | ||||||||||||||
| Issuance of General Partner Units to the Parent Company – Merger | 2,847,369 | — | 2,847,369 | ||||||||||||||
| Other comprehensive income attributable to Parent Company | — | 14,983 | 14,983 | ||||||||||||||
| Distributions to Parent Company | (57,801) | — | (57,801) | ||||||||||||||
| Net loss attributable to Parent Company | (80,806) | — | (80,806) | ||||||||||||||
| Purchase of capped calls | (9,800) | — | (9,800) | ||||||||||||||
| Conversion of Limited Partner Units to shares of the Parent Company | 4,238 | — | 4,238 | ||||||||||||||
| Adjustment to redeemable noncontrolling interests | (18,547) | — | (18,547) | ||||||||||||||
| Balances, December 31, 2021 | $ | 3,937,949 | $ | (15,902) | $ | 3,922,047 | |||||||||||
| Stock compensation activity | 9,546 | — | 9,546 | ||||||||||||||
| Other comprehensive loss attributable to Parent Company | — | 90,246 | 90,246 | ||||||||||||||
| Distributions to Parent Company | (232,208) | — | (232,208) | ||||||||||||||
| Net loss attributable to Parent Company | (12,636) | — | (12,636) | ||||||||||||||
| Acquisition of partner’s noncontrolling interest in Killingly Commons | 416 | — | 416 | ||||||||||||||
| Conversion of Limited Partner Units to shares of the Parent Company | 1,670 | — | 1,670 | ||||||||||||||
| Adjustment to redeemable noncontrolling interests | (12,566) | — | (12,566) | ||||||||||||||
| Balances, December 31, 2022 | $ | 3,692,171 | $ | 74,344 | $ | 3,766,515 | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-11
KITE REALTY GROUP, L.P. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
| Year Ended December 31, | |||||||||||||||||
| 2022 | 2021 | 2020 | |||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||
| Net loss | $ | (12,154) | $ | (81,722) | $ | (16,123) | |||||||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||||||||
| Depreciation and amortization | 472,969 | 203,142 | 130,783 | ||||||||||||||
| Gain on sales of operating properties, net | (27,069) | (31,209) | (4,733) | ||||||||||||||
| Straight-line rent | (16,632) | (5,391) | 3,131 | ||||||||||||||
| Compensation expense for equity awards | 10,280 | 6,697 | 5,998 | ||||||||||||||
| Amortization of debt fair value adjustments | (13,521) | (2,993) | (444) | ||||||||||||||
| Amortization of in-place lease assets and liabilities | (4,821) | (2,611) | (3,822) | ||||||||||||||
| Changes in assets and liabilities: | |||||||||||||||||
| Tenant receivables | (16,763) | (3,102) | (3,062) | ||||||||||||||
| Deferred costs and other assets | 7,522 | 6,857 | (7,618) | ||||||||||||||
| Accounts payable, accrued expenses, deferred revenue and other liabilities | (20,528) | 10,683 | (8,595) | ||||||||||||||
| Net cash provided by operating activities | 379,283 | 100,351 | 95,515 | ||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||
| Cash and restricted cash acquired in the Merger | — | 14,992 | — | ||||||||||||||
| Acquisitions of interests in properties | (100,142) | (10,445) | (65,298) | ||||||||||||||
| Capital expenditures | (158,540) | (57,313) | (38,266) | ||||||||||||||
| Net proceeds from sales of land | 4,716 | 54,157 | 9,134 | ||||||||||||||
| Net proceeds from sales of operating properties | 75,699 | 26,556 | 13,888 | ||||||||||||||
| Investment in short-term deposits | 125,000 | (125,000) | — | ||||||||||||||
| Small business loan repayments (funding) | 657 | 712 | (2,199) | ||||||||||||||
| Change in construction payables | 6,341 | 4,413 | 2,442 | ||||||||||||||
| Distribution from unconsolidated joint venture | 1,245 | 1,029 | — | ||||||||||||||
| Capital contribution to unconsolidated joint venture | (125) | (134) | (541) | ||||||||||||||
| Net cash used in investing activities | (45,149) | (91,033) | (80,840) | ||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||
| Contributions from the General Partner | 30 | 31 | 72 | ||||||||||||||
| Repurchases of common shares upon the vesting of restricted shares | (1,535) | (15,031) | (1,336) | ||||||||||||||
| Purchase of capped calls | — | (9,800) | — | ||||||||||||||
| Debt and equity issuance costs | (5,159) | (8,141) | — | ||||||||||||||
| Loan proceeds | 455,000 | 215,000 | 325,000 | ||||||||||||||
| Loan payments | (568,963) | (77,591) | (302,477) | ||||||||||||||
| Distributions paid – common unitholders | (179,624) | (57,801) | (38,128) | ||||||||||||||
| Distributions paid – redeemable noncontrolling interests | (2,622) | (2,208) | (1,533) | ||||||||||||||
| Acquisition of partner’s interest in Killingly Commons joint venture | (9,654) | — | — | ||||||||||||||
| Acquisition of partner’s interest in Pan Am Plaza joint venture | — | — | (2,500) | ||||||||||||||
| Net cash (used in) provided by financing activities | (312,527) | 44,459 | (20,902) | ||||||||||||||
| Net change in cash, cash equivalents and restricted cash | 21,607 | 53,777 | (6,227) | ||||||||||||||
| Cash, cash equivalents and restricted cash, beginning of year | 100,363 | 46,586 | 52,813 | ||||||||||||||
| Cash, cash equivalents and restricted cash, end of year | $ | 121,970 | $ | 100,363 | $ | 46,586 | |||||||||||
| Supplemental disclosures | |||||||||||||||||
| Cash paid for interest, net of capitalized interest | $ | 113,744 | $ | 59,552 | $ | 50,387 | |||||||||||
| Non-cash investing and financing activities | |||||||||||||||||
| Conversion of Limited Partner Units to shares of the Parent Company | $ | 1,670 | $ | 4,236 | $ | — | |||||||||||
| Net investment in sales-type lease | $ | — | $ | — | $ | 4,665 | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-12
KITE REALTY GROUP TRUST AND KITE REALTY GROUP, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
($ in thousands, except share, per share, unit and per unit amounts and where indicated in millions or billions)
NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION
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, operation, acquisition, development and redevelopment of high-quality, open-air shopping centers and mixed-used assets that are primarily grocery-anchored and located in high-growth Sun Belt and select strategic gateway 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.
The Operating Partnership was formed on August 16, 2004, when the Parent Company contributed properties and the net proceeds from an initial public offering (“IPO”) 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 (“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 December 31, 2022 owned approximately 98.7% of the common partnership interests in the Operating Partnership (“General Partner Units”). The remaining 1.3% 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.
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). 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.
On October 22, 2021, we completed a merger with Retail Properties of America, Inc. (“RPAI”) in accordance with the Agreement and Plan of Merger dated July 18, 2021 (the “Merger Agreement”), by and among the Company, its wholly owned subsidiary KRG Oak, LLC (“Merger Sub”) and RPAI, pursuant to which RPAI merged with and into Merger Sub (the “Merger”). Immediately following the closing of the Merger, Merger Sub merged with and into the Operating Partnership so that all of the assets and liabilities of the Company continue to be held at or below the Operating Partnership level. The transaction value was approximately $4.7 billion, including the assumption of approximately $1.8 billion of debt. We acquired 100 operating retail properties and five development projects through the Merger along with multiple parcels of entitled land for future value creation.
Pursuant to the terms of the Merger Agreement, each outstanding share of RPAI common stock converted into the right to receive 0.623 common shares of the Company plus cash in lieu of fractional Company shares. The aggregate value of the Merger consideration paid to former holders of RPAI common stock was approximately $2.8 billion, excluding the value of RPAI restricted stock units that vested at closing and certain restricted share awards assumed by the Company at closing. In connection with the Merger, the Operating Partnership issued an equivalent amount of General Partner Units to the Parent Company.
As of December 31, 2022, we owned interests in 183 operating retail properties totaling approximately 28.8 million square feet and one office property with 0.3 million square feet. Of the 183 operating retail properties, 11 contain an office component. We also owned three development projects under construction as of this date. Of the 183 operating retail properties, 180 are consolidated in these financial statements and the remaining three are accounted for under the equity method.
F-13
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment Properties
Capitalization and Depreciation
Investment properties are recorded at cost and include costs of land acquisition, development, pre-development, construction, certain allocated overhead, tenant allowances and improvements, and interest and real estate taxes incurred during construction. Significant renovations and improvements are capitalized when they extend the useful life, increase capacity, or improve the efficiency of the asset. If a tenant vacates a space prior to the lease expiration, terminates its lease, or otherwise notifies the Company of its intent to do so, any related unamortized tenant allowances are expensed over the shortened lease period. Maintenance and repairs that do not extend the useful lives of the respective assets are reflected within “Property operating” expense in the accompanying consolidated statements of operations and comprehensive income.
Pre-development costs are incurred prior to vertical construction and for certain land held for development during the due diligence phase and include contract deposits, legal, engineering, cost of internal resources and other professional fees related to evaluating the feasibility of developing or redeveloping a shopping center or other project. These pre-development costs are capitalized and included in construction in progress in the accompanying consolidated balance sheets. If we determine that the completion of a development project is no longer probable, all previously incurred pre-development costs are immediately expensed. Land is transferred to construction in progress once construction commences on the related project.
We also capitalize costs such as land acquisition, building construction, interest, real estate taxes, and the costs of personnel directly involved with the development of our properties. As a portion of a development project becomes operational, we expense a pro rata amount of the related costs.
Depreciation on buildings and improvements is computed using the straight-line method over estimated original useful lives ranging from 10 to 35 years. Depreciation on tenant allowances and tenant improvements is computed using the straight-line method over the term of the related lease. Depreciation on equipment and fixtures is computed using the straight-line method over five to 10 years. Depreciation may be accelerated for a redevelopment project, including partial demolition of an existing structure, after the asset is assessed for impairment.
The following table summarizes the composition of the Company’s investment properties as of December 31, 2022 and 2021 (in thousands):
| December 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Land, buildings and improvements | $ | 7,656,765 | $ | 7,550,988 | |||||||
| Construction in progress | 75,808 | 41,360 | |||||||||
| Investment properties, at cost | $ | 7,732,573 | $ | 7,592,348 | |||||||
Valuation of Investment Properties
Management reviews operational and development projects, land parcels and intangible assets for impairment on a property-by-property basis whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. This review for possible impairment requires certain assumptions, estimates, and significant judgment. Examples of situations considered to be impairment indicators for both operating properties and development projects include, but are not limited to:
•a substantial decline in or continued low occupancy rate or cash flow;
•expected significant declines in occupancy in the near future;
•continued difficulty in leasing space;
•a significant concentration of financially troubled tenants;
•a reduction in the anticipated holding period;
•a cost accumulation or delay in project completion date significantly above and beyond the original development or redevelopment estimate;
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•a significant decrease in the market price not in line with general market trends; and
•any other quantitative or qualitative events or factors deemed significant by the Company’s management or Board of Trustees.
Impairment losses for investment properties and intangible assets are measured when the undiscounted cash flows estimated to be generated by the investment properties during the expected holding period are less than the carrying amounts of those assets. The evaluation of impairment is subject to certain management assumptions, including projected net operating income, anticipated hold period, expected capital expenditures and the capitalization rate used to estimate the property’s residual value. Impairment losses are recorded as the excess of the carrying value over the estimated fair value of the asset. Our impairment review for land and development properties assumes we have the intent and ability to complete the developments or projected uses for the land parcels. If we determine those plans will not be completed or our assumptions with respect to operating assets are not realized, an impairment loss may be appropriate.
Assets Held for Sale
Operating properties will be classified as held for sale only when those properties are available for immediate sale in their present condition and for which management believes it is probable that a sale of the property will be completed within one year, among other factors. Operating properties classified as held for sale are carried at the lower of cost or fair value less estimated costs to sell. Depreciation and amortization are suspended during the held-for-sale period. No properties qualified for held for sale accounting treatment as of December 31, 2022 and 2021.
Acquisition of Investment Properties
Upon acquisition of real estate operating properties, including those assets acquired in the Merger with RPAI, we estimate the fair value of acquired identifiable tangible assets and identified intangible assets and liabilities, assumed debt, and any noncontrolling interest in the acquiree at the date of acquisition, based on evaluation of information and estimates available at that date. Based on these estimates, we record the estimated fair value to the applicable assets and liabilities. In making estimates of fair value, a number of sources are used, including information obtained as a result of pre-acquisition due diligence, marketing and leasing activities. The estimates of fair value were determined to have primarily relied upon Level 2 and Level 3 inputs, as defined below.
Fair value is determined for tangible assets and intangibles, including:
•the fair value of the building on an as-if-vacant basis and the fair value of land determined either by comparable market data, real estate tax assessments, independent appraisals or other relevant data;
•above-market and below-market in-place lease values for acquired properties, which are based on the present value (using an interest rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over the remaining non-cancelable term of the leases. Any below-market renewal options are also considered in the in-place lease values. The capitalized above-market and below-market lease values are amortized as a reduction of or addition to rental income over the term of the lease. Should a tenant vacate, terminate its lease, or otherwise notify us of its intent to do so, the unamortized portion of the lease intangibles would be charged or credited to income;
•the value of having a lease in place at the acquisition date. We use independent and internal sources for our estimates to determine the respective in-place lease values. Our estimates of value are made using methods similar to those used by independent appraisers. Factors we consider in our analysis include an estimate of costs to execute similar leases, including tenant improvements, leasing commissions and foregone costs and rent received during the estimated lease-up period as if the space was vacant. The value of in-place leases is amortized to expense over the remaining initial terms of the respective leases; and
•the fair value of any assumed financing that is determined to be above- or below-market terms. We use third party and independent sources for our estimates to determine the respective fair value of each mortgage and other indebtedness, including related derivative instruments, assumed. The fair market value of each is amortized to interest expense over the remaining initial terms of the respective instruments.
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We also consider whether there is any value to in-place leases that have a related customer relationship intangible value. Characteristics we consider in determining these values include the nature and extent of existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality, and expectations of lease renewals, among other factors. To date, no tenant relationship has been developed that is considered to have a current intangible value.
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 subsidiaries (“TRSs”) 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 by evaluating each joint venture and determining 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 and 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 December 31, 2022, 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 December 31, 2022, these consolidated VIEs had mortgage debt of $28.3 million, which were secured by assets of the VIEs totaling $118.6 million. The Operating Partnership guarantees the mortgage debt 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.
As of December 31, 2022, the Company also owned investments in four unconsolidated joint ventures accounted for under the equity method as follows:
Three Property Retail Portfolio Joint Venture
On June 29, 2018, the Company formed a joint venture with Nuveen Real Estate, formerly known as TH Real Estate. The Company sold three properties to the joint venture valued at $99.8 million in the aggregate and, after considering third-party debt obtained by the joint venture upon formation, the Company contributed $10.0 million for a 20% noncontrolling ownership interest in the joint venture. The Company is the operating member responsible for the day-to-day management of the properties and receives property management and leasing fees. Both members have substantive participating rights over major decisions that impact the economics and operations of the joint venture. The Company accounts for the joint venture under the equity method as it has the ability to exercise influence but not control over the operating and financial policies.
Embassy Suites at Eddy Street Commons
In December 2017, we formed a joint venture with an unrelated third party to develop and own an Embassy Suites full-service hotel next to Eddy Street Commons, our operating retail property at the University of Notre Dame. We contributed $1.4 million of cash to the joint venture in return for a 35% ownership interest in the joint venture. The joint venture has entered into a $33.8 million construction loan, of which $33.5 million was drawn as of December 31, 2022. The joint venture is not
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considered a VIE. The Company accounts for the joint venture under the equity method as both members have substantive participating rights and we do not control the activities of the venture.
Glendale Multifamily Joint Venture
In May 2020, the Company formed a joint venture for the planned development of a multifamily project adjacent to our Glendale Town Center operating retail property. The Company contributed land valued at $1.6 million to the joint venture and retained a 12% interest in the joint venture. The Company’s partner is the operating member responsible for the day-to-day management of the property. Both members have substantive participating rights over major decisions that impact the economics and operations of the joint venture. The Company accounts for the joint venture under the equity method as it has the ability to exercise influence but not control over the operating and financial policies.
Buckingham Joint Venture
In September 2021, the Company formed a joint venture for the planned redevelopment of The Corner (Carmel, IN) into a mixed-use, multifamily and retail project. The Company contributed land valued at $4.0 million to the joint venture and retained a 50% interest in the joint venture. The Company’s partner is the operating member responsible for the day-to-day management of the property. Both members have substantive participating rights over major decisions that impact the economics and operations of the joint venture. The Company accounts for the joint venture under the equity method as it has the ability to exercise influence but not control over the operating and financial policies.
Cash and Cash Equivalents
We consider all highly liquid investments purchased with an original maturity of 90 days or less to be cash and cash equivalents. From time to time, such investments may temporarily be held in accounts that are in excess of the Federal Deposit Insurance Corporation (“FDIC”) and the Securities Investor Protection Corporation (“SIPC”) insurance limits; however, the Company attempts to limit its exposure at any one time.
The following is a summary of our total cash, cash equivalents and restricted cash as presented in the accompanying consolidated statements of cash flows for the years ended December 31, 2022, 2021, and 2020 (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2022 | 2021 | 2020 | |||||||||||||||
| Cash and cash equivalents | $ | 115,799 | $ | 93,241 | $ | 43,648 | |||||||||||
| Restricted cash and escrow deposits | 6,171 | 7,122 | 2,938 | ||||||||||||||
| Total cash, cash equivalents and restricted cash | $ | 121,970 | $ | 100,363 | $ | 46,586 | |||||||||||
Restricted Cash and Escrow Deposits
Escrow deposits consist of cash held for real estate taxes, property maintenance, insurance and other requirements at specific properties as required by lending institutions, certain municipalities or other agreements.
Short-Term Deposits
During the year ended December 31, 2022, the Company used the proceeds from a $125.0 million short-term deposit that matured on April 7, 2022 to repay borrowings on the Company’s revolving line of credit. The deposit balance was held in a custody account at Bank of New York Mellon and earned interest at a rate of the Federal Funds Rate plus 43 basis points. Interest income earned on the deposit is recorded within “Other income (expense), net” on the accompanying consolidated statements of operations and comprehensive income.
Fair Value Measurements
We follow the framework established under accounting standard FASBFinancial Accounting Standards Board (“FASB”) ASC 820, , Fair Value Measurements and Disclosures, 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.
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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.
valuation.•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.
As discussed in Note 109 to the Financial Statements,consolidated financial statements, we have determined that derivative valuations are classified inwithin Level 2 of the fair value hierarchy.
Note 8 to the consolidated financial statements includes a discussion of the estimated fair value of fixed and variable rate debt, which are estimated using Level 2 and 3 inputs. Note 3 to the consolidated financial statements includes a discussion of the fair values recorded for the assets acquired in the Merger with RPAI in 2021. Level 3 inputs to this transaction include our estimations of land values, net rental rates of anchor and small shop space and capitalization rates. Level 3 inputs to these transactions include our estimations of disposal values.
Cash and cash equivalents, accounts receivable, escrows and deposits, and other working capital balances approximate fair value.
Derivative Financial Instruments
The Company accounts for its derivative financial instruments at fair value calculated in accordance with ASC 820, Fair Value Measurements and Disclosures. Gains or losses resulting from changes in the fair value of those derivatives are accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. We use derivative instruments such as interest rate swaps or rate locks to mitigate interest rate risk on related financial instruments.
Revenue Recognition
As a lessor of real estate assets, acquiredthe Company retains substantially all of the risks and liabilities assumed. Note 8benefits of ownership and accounts for its leases as operating leases.
Contractual minimum base rent, percentage rent, and expense reimbursements from tenants for common area maintenance costs, insurance and real estate taxes are our principal sources of revenue. Base minimum rents are recognized on a straight-line basis over the terms of the respective leases. Certain lease agreements contain provisions that grant additional rents based on a tenant’s sales volume (contingent overage rent). Overage rent is recognized when tenants achieve the specified sales targets as defined in their lease agreements and is included within “Rental income” in the accompanying consolidated statements of operations and comprehensive income for the years ended December 31, 2022, 2021 and 2020. If we determine that collectibility is probable, we recognize income from rentals based on the methodology described above. We have accounts receivable due from tenants and are subject to the Financial Statements includes a discussionrisk of tenant defaults and bankruptcies that may affect the collection of the fair values recordedoutstanding receivables. These receivables are reduced for credit loss that is recognized as a reduction to rental income. We regularly evaluate the collectibility of these lease-related receivables by analyzing past due account balances and consider such facts as the credit quality of our customer, historical write-off experience and current economic trends when evaluating the
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collectibility of rental income. Although we estimate uncollectible receivables and provide for them through charges against income, actual experience may differ from those estimates.
We recognize the sale of real estate when control transfers to the buyer. As part of our ongoing business strategy, we will, from time to time, sell properties, land parcels and outlots, some of which are ground-leased to tenants. Net gains realized on such sales were $4.5 million, $0.5 million, and $5.9 million for the years ended December 31, 2022, 2021, and 2020, respectively, and are classified within “Other property-related revenue” in the accompanying consolidated statements of operations and comprehensive income.
Tenant and Other Receivables and Allowance for Uncollectible Accounts
Tenant receivables consist primarily of billed minimum rent, accrued and billed tenant reimbursements, and accrued straight-line rent. The Company generally does not require specific collateral from its tenants other than corporate or personal guarantees. Other receivables consist primarily of amounts due from municipalities and from tenants for non-rental revenue-related activities.
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. Accounts are written off when, in the opinion of management, the balance is deemed uncollectible. The provision for revenues deemed uncollectible represented 0.7%, 0.9%, and 6.0% of total revenues in each of the years ended December 31, 2022, 2021 and 2020, respectively.
Concentration of Credit Risk
We may be subject to concentrations of credit risk with regards to our cash and cash equivalents. We place cash and temporary cash investments with high-credit-quality financial institutions. From time to time, such cash and investments may temporarily be in excess of insurance limits. In addition, our leases with tenants potentially subject us to a concentration of credit risk related to our accounts receivable and revenue.
For the year ended December 31, 2022, the Company’s revenue recognized impairment chargesfrom tenants leasing space in 2017the states where the majority of our portfolio is concentrated, which includes Texas, Florida, New York, Virginia, and 2015. Level 3 inputsIndiana, was as follows:
| Texas | 26.3 | % | |||
| Florida | 9.9 | % | |||
| New York | 6.9 | % | |||
| Virginia | 6.8 | % | |||
| Indiana | 6.4 | % | |||
Earnings Per Share
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 number of common 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 (i) outstanding options to these transactions includeacquire common shares; (ii) Limited Partner Units, which may be exchanged for either cash or common shares at the Parent Company’s option and under certain circumstances; (iii) appreciation-only Long-Term Incentive Plan (“AO LTIP”) units; and (iv) deferred common share units, which may be credited to the personal accounts of non-employee trustees in lieu of compensation paid in cash 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 those amounts in the denominator would have no dilutive impact. Weighted average Limited Partner Units outstanding were 2.8 million, 2.5 million and 2.2 million for the years ended December 31, 2022, 2021 and 2020, respectively.
These potentially dilutive securities are excluded from the computation of diluted earnings per share due to the net loss position for the years ended December 31, 2022, 2021, and 2020.
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Segment Reporting
Our primary business is the ownership and operation of high-quality, open-air shopping centers and mixed-use assets. The Company’s chief operating decision maker (“CODM”), which is its Chief Executive Officer, reviews operating and financial information for each property on an individual basis and therefore, each property represents an individual operating segment. The CODM measures and evaluates the financial performance of our estimationsportfolio of market leasing rates, tenant-related costs, discount rates,properties using net operating income, which consists of rental income less property operating expenses and disposal values.real estate taxes, and does not distinguish or group our operations on a geographical or any other basis. Accordingly, we have aggregated our properties into one reportable segment for disclosure purposes in accordance with GAAP, as each property has similar economic characteristics, the Company provides similar services to its tenants and the Company’s CODM evaluates the collective performance of our properties.
Our primary business is the ownership and REIT Compliance
operation of high-quality, open-air shopping centers and mixed-use assets. The Parent Company,Company’s chief operating decision maker (“CODM”), which is considered a corporationits Chief Executive Officer, reviews operating and financial information for federal income tax purposes, has been organizedeach property on an individual basis and intends to continue to operate in a manner that will enable it to maintain its qualification as a REIT for federal income tax purposes. As a result, it generally will not be subject to federal income tax on the earnings that it distributes to the extent it distributes its “REIT taxable income” (determined before the deduction for dividends paidtherefore, each property represents an individual operating segment. The CODM measures 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 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 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 federal, state and local taxes on our income and property and to 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.
| # of Properties | |||||||||
| 2017 | 2016 | 2015 | |||||||
| Operating Retail Properties | 105 | 108 | 110 | ||||||
| Operating Office Properties and Other | 4 | 2 | 2 | ||||||
| Redevelopment Properties | 8 | 9 | 6 | ||||||
| Total Operating and Redevelopment Properties | 117 | 119 | 118 | ||||||
| Development Projects: | 2 | 2 | 3 | ||||||
| Total All Properties | 119 | 121 | 121 | ||||||
| ($ in thousands) | Years Ended December 31, | ||||||||||
| 2017 | 2016 | % Change | |||||||||
| Leased percentage at period end | 94.6 | % | 95.3 | % | |||||||
Economic Occupancy percentage2 | 93.6 | % | 93.0 | % | |||||||
Same Property NOI3 | $ | 222,267 | $ | 216,097 | 2.9 | % | |||||
| Same Property NOI - excluding the impact of the 3-R initiative | 3.2 | % | |||||||||
| Reconciliation of Same Property NOI to Most Directly Comparable GAAP Measure: | |||||||||||
| Net operating income - same properties | $ | 222,267 | $ | 216,097 | |||||||
Net operating income - non-same activity4 | 46,156 | 49,078 | |||||||||
| Provision for credit losses, net of recoveries - same properties | (2,427 | ) | (1,814 | ) | |||||||
| Other expense, net | (315 | ) | (983 | ) | |||||||
| General, administrative and other | (21,749 | ) | (20,603 | ) | |||||||
| Transaction costs | — | (2,771 | ) | ||||||||
| Impairment charge | (7,411 | ) | — | ||||||||
| Depreciation and amortization expense | (172,091 | ) | (174,564 | ) | |||||||
| Interest expense | (65,702 | ) | (65,577 | ) | |||||||
| Gains on sales of operating properties | 15,160 | 4,253 | |||||||||
| Net income attributable to noncontrolling interests | (2,014 | ) | (1,933 | ) | |||||||
| Net income attributable to common shareholders | $ | 11,874 | $ | 1,183 | |||||||
| ($ in thousands) | Years Ended December 31, | |||||||||||
| 2017 | 2016 | 2015 | ||||||||||
| Consolidated net income | $ | 13,888 | $ | 3,116 | $ | 29,315 | ||||||
| Less: cash dividends on preferred shares | — | — | (7,877 | ) | ||||||||
| Less: non-cash adjustment for redemption of preferred shares | — | — | (3,797 | ) | ||||||||
| Less: net income attributable to noncontrolling interests in properties | (1,731 | ) | (1,844 | ) | (1,854 | ) | ||||||
| Less: gains on sales of operating properties | (15,160 | ) | (4,253 | ) | (4,066 | ) | ||||||
| Add: impairment charge | 7,411 | — | 1,592 | |||||||||
| Add: depreciation and amortization of consolidated entities, net of noncontrolling interests | 170,315 | 173,578 | 166,509 | |||||||||
FFO of the Operating Partnership1 | 174,723 | 170,597 | 179,822 | |||||||||
| Less: Limited Partners' interests in FFO | (3,966 | ) | (3,872 | ) | (3,789 | ) | ||||||
FFO attributable to Kite Realty Group Trust common shareholders1 | $ | 170,757 | $ | 166,725 | $ | 176,033 | ||||||
FFO of the Operating Partnership1 | $ | 174,723 | $ | 170,597 | $ | 179,822 | ||||||
| Less: gain on settlement | — | — | (4,520 | ) | ||||||||
| Add: accelerated amortization of debt issuance costs (non-cash) | — | 1,121 | — | |||||||||
| Add: transaction costs | — | 2,771 | 1,550 | |||||||||
| Add: severance charge | — | 500 | — | |||||||||
| Add: adjustment for redemption of preferred shares (non-cash) | — | — | 3,797 | |||||||||
| Less: gain from release of assumed earnout liability (non-cash) | — | — | (4,832 | ) | ||||||||
| Add: loss on debt extinguishment | — | 819 | (5,645 | ) | ||||||||
| FFO, as adjusted, of the Operating Partnership | $ | 174,723 | $ | 175,808 | $ | 170,172 | ||||||
| ($ in thousands) | Three Months Ended December 31, | |||
| Consolidated net income | $ | 2,795 | ||
| Adjustments to net income: | ||||
| Depreciation and amortization | 40,758 | |||
| Interest expense | 16,452 | |||
| Income tax expense of taxable REIT subsidiary | (36 | ) | ||
| Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) | 59,969 | |||
| Adjustments to EBITDA: | ||||
| Unconsolidated EBITDA | 34 | |||
| Other income and expense, net | 101 | |||
| Noncontrolling interest | (351 | ) | ||
| Adjusted EBITDA | 59,753 | |||
Annualized Adjusted EBITDA1 | $ | 239,012 | ||
| Company share of net debt: | ||||
| Mortgage and other indebtedness | 1,699,239 | |||
| Less: Partner share of consolidated joint venture debt | (13,373 | ) | ||
| Less: Cash, cash equivalents, and restricted cash | (32,176 | ) | ||
| Plus: Debt Premium | 1,411 | |||
| Company Share of Net Debt | 1,655,101 | |||
| Net Debt to Adjusted EBITDA | 6.9x | |||
| ($ in thousands) | 2017 | 2016 | Net change 2016 to 2017 | ||||||||
| Revenue: | |||||||||||
| Rental income (including tenant reimbursements) | $ | 346,444 | $ | 344,541 | $ | 1,903 | |||||
| Other property related revenue | 11,998 | 9,581 | 2,417 | ||||||||
| Fee income | 377 | — | 377 | ||||||||
| Total revenue | 358,819 | 354,122 | 4,697 | ||||||||
| Expenses: | |||||||||||
| Property operating | 49,643 | 47,923 | 1,720 | ||||||||
| Real estate taxes | 43,180 | 42,838 | 342 | ||||||||
| General, administrative, and other | 21,749 | 20,603 | 1,146 | ||||||||
| Transaction costs | — | 2,771 | (2,771 | ) | |||||||
| Impairment charge | 7,411 | — | 7,411 | ||||||||
| Depreciation and amortization | 172,091 | 174,564 | (2,473 | ) | |||||||
| Total expenses | 294,074 | 288,699 | 5,375 | ||||||||
| Operating income | 64,745 | 65,423 | (678 | ) | |||||||
| Interest expense | (65,702 | ) | (65,577 | ) | (125 | ) | |||||
| Income tax benefit (expense) of taxable REIT subsidiary | 100 | (814 | ) | 914 | |||||||
| Other expense, net | (415 | ) | (169 | ) | (246 | ) | |||||
| Loss before gains on sale of operating properties, net | (1,272 | ) | (1,137 | ) | (135 | ) | |||||
| Gains on sale of operating properties, net | 15,160 | 4,253 | 10,907 | ||||||||
| Consolidated net income | 13,888 | 3,116 | 10,772 | ||||||||
| Net income attributable to noncontrolling interests | (2,014 | ) | (1,933 | ) | (81 | ) | |||||
| Net income attributable to Kite Realty Group Trust common shareholders | $ | 11,874 | $ | 1,183 | $ | 10,691 | |||||
| Property operating expense to total revenue ratio | 13.8 | % | 13.5 | % | 0.3 | % | |||||
| ($ in thousands) | Net change 2016 to 2017 | ||
| Properties sold during 2016 and 2017 | $ | (6,363 | ) |
| Properties under redevelopment during 2016 and/or 2017 | (3,323 | ) | |
| Development projects completed during 2016 and/or 2017 | 3,608 | ||
| Properties fully operational during 2016 and 2017 and other | 7,981 | ||
| Total | $ | 1,903 | |
| ($ in thousands) | Net change 2016 to 2017 | ||
| Properties sold during 2016 and 2017 | $ | (927 | ) |
| Properties under redevelopment during 2016 and/or 2017 | 722 | ||
| Development projects completed during 2016 and/or 2017 | 546 | ||
| Properties fully operational during 2016 and 2017 and other | 1,379 | ||
| Total | $ | 1,720 | |
| ($ in thousands) | Net change 2016 to 2017 | ||
| Properties sold during 2016 and 2017 | $ | (863 | ) |
| Properties under redevelopment during 2016 and/or 2017 | (81 | ) | |
| Development projects completed during 2016 and/or 2017 | 403 | ||
| Properties fully operational during 2016 and 2017 and other | 883 | ||
| Total | $ | 342 | |
| ($ in thousands) | Net change 2016 to 2017 | ||
| Properties sold during 2016 and 2017 | $ | (3,687 | ) |
| Properties under redevelopment during 2016 and/or 2017 | 3,920 | ||
| Development projects completed during 2016 and/or 2017 | (304 | ) | |
| Properties fully operational during 2016 and 2017 and other | (2,402 | ) | |
| Total | $ | (2,473 | ) |
| ($ in thousands) | 2016 | 2015 | Net change 2015 to 2016 | ||||||||
| Revenue: | |||||||||||
| Rental income (including tenant reimbursements) | $ | 344,541 | $ | 334,029 | $ | 10,512 | |||||
| Other property related revenue | 9,581 | 12,976 | (3,395 | ) | |||||||
| Total revenue | 354,122 | 347,005 | 7,117 | ||||||||
| Expenses: | |||||||||||
| Property operating | 47,923 | 49,973 | (2,050 | ) | |||||||
| Real estate taxes | 42,838 | 40,904 | 1,934 | ||||||||
| General, administrative, and other | 20,603 | 18,709 | 1,894 | ||||||||
| Transaction costs | 2,771 | 1,550 | 1,221 | ||||||||
| Non-cash gain from release of assumed earnout liability | — | (4,832 | ) | 4,832 | |||||||
| Impairment charge | — | 1,592 | (1,592 | ) | |||||||
| Depreciation and amortization | 174,564 | 167,312 | 7,252 | ||||||||
| Total expenses | 288,699 | 275,208 | 13,491 | ||||||||
| Operating income | 65,423 | 71,797 | (6,374 | ) | |||||||
| Interest expense | (65,577 | ) | (56,432 | ) | (9,145 | ) | |||||
| Income tax expense of taxable REIT subsidiary | (814 | ) | (186 | ) | (628 | ) | |||||
| Non-cash gain on debt extinguishment | — | 5,645 | (5,645 | ) | |||||||
| Gain on settlement | — | 4,520 | (4,520 | ) | |||||||
| Other expense, net | (169 | ) | (95 | ) | (74 | ) | |||||
| (Loss) income before gain on sale of operating properties | (1,137 | ) | 25,249 | (26,386 | ) | ||||||
| Gain on sale of operating properties, net | 4,253 | 4,066 | 187 | ||||||||
| Consolidated net income | 3,116 | 29,315 | (26,199 | ) | |||||||
| Net income attributable to noncontrolling interests | (1,933 | ) | (2,198 | ) | 265 | ||||||
| Net income attributable to Kite Realty Group Trust | 1,183 | 27,117 | (25,934 | ) | |||||||
| Dividends on preferred shares | — | (7,877 | ) | 7,877 | |||||||
| Non-cash adjustment for redemption of preferred shares | — | (3,797 | ) | 3,797 | |||||||
| Net income attributable to common shareholders | $ | 1,183 | $ | 15,443 | $ | (14,260 | ) | ||||
| Property operating expense to total revenue ratio | 13.5 | % | 14.4 | % | (0.9 | )% | |||||
| ($ in thousands) | Net change 2015 to 2016 | ||
| Properties acquired during 2015 | $ | 7,275 | |
| Development properties that became operational or were partially operational in 2015 and/or 2016 | 4,917 | ||
| Properties sold during 2015 and 2016 | (5,762 | ) | |
| Properties under redevelopment during 2015 and/or 2016 | 1,109 | ||
| Properties fully operational during 2015 and 2016 and other | 2,973 | ||
| Total | $ | 10,512 | |
| ($ in thousands) | Net change 2015 to 2016 | ||
| Properties acquired during 2015 | $ | 1,577 | |
| Development properties that became operational or were partially operational in 2015 and/or 2016 | 683 | ||
| Properties sold during 2015 and 2016 | (1,288 | ) | |
| Properties under redevelopment during 2015 and/or 2016 | (444 | ) | |
| Properties fully operational during 2015 and 2016 and other | (2,578 | ) | |
| Total | $ | (2,050 | ) |
| ($ in thousands) | Net change 2015 to 2016 | ||
| Properties acquired during 2015 | $ | 1,417 | |
| Development properties that became operational or were partially operational in 2015 and/or 2016 | 372 | ||
| Properties sold during 2015 and 2016 | (636 | ) | |
| Properties under redevelopment during 2015 and/or 2016 | (127 | ) | |
| Properties fully operational during 2015 and 2016 and other | 908 | ||
| Total | $ | 1,934 | |
| ($ in thousands) | Net change 2015 to 2016 | ||
| Properties acquired during 2015 | $ | 3,763 | |
| Development properties that became operational or were partially operational in 2015 and/or 2016 | 4,572 | ||
| Properties sold during 2015 and 2016 | (1,603 | ) | |
| Properties under redevelopment during 2015 and/or 2016 | 2,434 | ||
| Properties fully operational during 2015 and 2016 and other | (1,914 | ) | |
| Total | $ | 7,252 | |
| Year to Date | |||
| ($ in thousands) | December 31, 2017 | ||
| Developments | $ | 4,121 | |
| Under Construction 3-R Projects | 39,868 | ||
| 3-R Opportunities | 1,865 | ||
Recently completed developments/redevelopments and other1 | 8,659 | ||
| Recurring operating capital expenditures (primarily tenant improvement payments) | 16,013 | ||
| Total | $ | 70,526 | |
| ($ in thousands) | Consolidated Long-term Debt and Interest1 | Development Activity and Tenant Allowances2 | Operating Ground Leases | Employment Contracts3 | Total | |||||||||||||||
| 2018 | $ | 110,663 | $ | 14,538 | $ | 1,686 | $ | 943 | $ | 127,830 | ||||||||||
| 2019 | 71,514 | — | 1,694 | — | 73,208 | |||||||||||||||
| 2020 | 113,121 | — | 1,777 | — | 114,898 | |||||||||||||||
| 2021 | 480,374 | — | 1,789 | — | 482,163 | |||||||||||||||
| 2022 | 447,348 | — | 1,814 | — | 449,162 | |||||||||||||||
| Thereafter | 848,307 | — | 73,790 | — | 922,097 | |||||||||||||||
| Total | $ | 2,071,327 | $ | 14,538 | $ | 82,550 | $ | 943 | $ | 2,169,358 | ||||||||||
| ($ in thousands) | December 31, 2017 | December 31, 2016 | ||||||
| Senior unsecured notes | $ | 550,000 | $ | 550,000 | ||||
| Unsecured revolving credit facility | 60,100 | 79,600 | ||||||
| Unsecured term loans | 400,000 | 400,000 | ||||||
| Mortgage notes payable - fixed rate | 576,927 | 587,762 | ||||||
| Mortgage notes payable - variable rate | 113,623 | 114,388 | ||||||
| Net debt premiums and issuance costs, net | (1,411 | ) | (676 | ) | ||||
| Total mortgage and other indebtedness | $ | 1,699,239 | $ | 1,731,074 | ||||
| ($ in thousands) | Outstanding Amount | Ratio | Weighted Average Interest Rate | Weighted Average Maturity (in years) | ||||||||
Fixed rate debt1 | $ | 1,562,423 | 92 | % | 4.10 | % | 5.6 | |||||
| Variable rate debt | 138,227 | 8 | % | 3.06 | % | 4.1 | ||||||
| Net debt premiums and issuance costs, net | (1,411 | ) | N/A | N/A | N/A | |||||||
| Total | $ | 1,699,239 | 100 | % | 4.02 | % | 5.5 | |||||
| December 31, 2017 | December 31, 2016 | ||||||
Assets: | |||||||
| Investment properties, at cost | $ | 3,957,884 | $ | 3,996,065 | |||
| Less: accumulated depreciation | (664,614 | ) | (560,683 | ) | |||
| 3,293,270 | 3,435,382 | ||||||
| Cash and cash equivalents | 24,082 | 19,874 | |||||
| Tenant and other receivables, including accrued straight-line rent of $31,747 and $28,703 respectively, net of allowance for uncollectible accounts | 58,328 | 53,087 | |||||
| Restricted cash and escrow deposits | 8,094 | 9,037 | |||||
| Deferred costs and intangibles, net | 112,359 | 129,264 | |||||
| Prepaid and other assets | 16,365 | 9,727 | |||||
| Total Assets | $ | 3,512,498 | $ | 3,656,371 | |||
| Liabilities and Equity: | |||||||
| Mortgage and other indebtedness | $ | 1,699,239 | $ | 1,731,074 | |||
| Accounts payable and accrued expenses | 78,482 | 80,664 | |||||
| Deferred revenue and intangibles, net and other liabilities | 96,564 | 112,202 | |||||
| Total Liabilities | 1,874,285 | 1,923,940 | |||||
| Commitments and contingencies | — | — | |||||
| Limited partners' interests in Operating Partnership and other redeemable noncontrolling interests | 72,104 | 88,165 | |||||
| Equity: | |||||||
| Kite Realty Group Trust Shareholders’ Equity | |||||||
| Common Shares, $.01 par value, 225,000,000 shares authorized, 83,606,068 and 83,545,398 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively | 836 | 835 | |||||
| Additional paid in capital and other | 2,071,418 | 2,062,360 | |||||
| Accumulated other comprehensive income (loss) | 2,990 | (316 | ) | ||||
| Accumulated deficit | (509,833 | ) | (419,305 | ) | |||
| Total Kite Realty Group Trust Shareholders' Equity | 1,565,411 | 1,643,574 | |||||
| Noncontrolling Interests | 698 | 692 | |||||
| Total Equity | 1,566,109 | 1,644,266 | |||||
| Total Liabilities and Equity | $ | 3,512,498 | $ | 3,656,371 | |||
| Year Ended December 31, | |||||||||||
| 2017 | 2016 | 2015 | |||||||||
| Revenue: | |||||||||||
| Minimum rent | $ | 273,444 | $ | 274,059 | $ | 263,794 | |||||
| Tenant reimbursements | 73,000 | 70,482 | 70,235 | ||||||||
| Other property related revenue | 11,998 | 9,581 | 12,976 | ||||||||
| Fee income | 377 | — | — | ||||||||
| Total revenue | 358,819 | 354,122 | 347,005 | ||||||||
| Expenses: | |||||||||||
| Property operating | 49,643 | 47,923 | 49,973 | ||||||||
| Real estate taxes | 43,180 | 42,838 | 40,904 | ||||||||
| General, administrative, and other | 21,749 | 20,603 | 18,709 | ||||||||
| Transaction costs | — | 2,771 | 1,550 | ||||||||
| Non-cash gain from release of assumed earnout liability | — | — | (4,832 | ) | |||||||
| Impairment charge | 7,411 | — | 1,592 | ||||||||
| Depreciation and amortization | 172,091 | 174,564 | 167,312 | ||||||||
| Total expenses | 294,074 | 288,699 | 275,208 | ||||||||
| Operating income | 64,745 | 65,423 | 71,797 | ||||||||
| Interest expense | (65,702 | ) | (65,577 | ) | (56,432 | ) | |||||
| Income tax benefit (expense) of taxable REIT subsidiary | 100 | (814 | ) | (186 | ) | ||||||
| Non-cash gain on debt extinguishment | — | — | 5,645 | ||||||||
| Gain on settlement | — | — | 4,520 | ||||||||
| Other expense, net | (415 | ) | (169 | ) | (95 | ) | |||||
| (Loss) income before gains on sale of operating properties, net | (1,272 | ) | (1,137 | ) | 25,249 | ||||||
| Gains on sale of operating properties, net | 15,160 | 4,253 | 4,066 | ||||||||
| Consolidated net income | 13,888 | 3,116 | 29,315 | ||||||||
| Net income attributable to noncontrolling interests | (2,014 | ) | (1,933 | ) | (2,198 | ) | |||||
| Net income attributable to Kite Realty Group Trust | 11,874 | 1,183 | 27,117 | ||||||||
| Dividends on preferred shares | — | — | (7,877 | ) | |||||||
| Non-cash adjustment for redemption of preferred shares | — | — | (3,797 | ) | |||||||
| Net income attributable to common shareholders | $ | 11,874 | $ | 1,183 | $ | 15,443 | |||||
| Net income per common share – basic | $ | 0.14 | $ | 0.01 | $ | 0.19 | |||||
| Net income per common share – diluted | $ | 0.14 | $ | 0.01 | $ | 0.18 | |||||
| Weighted average common shares outstanding - basic | 83,585,333 | 83,436,511 | 83,421,904 | ||||||||
| Weighted average common shares outstanding - diluted | 83,690,418 | 83,465,500 | 83,534,381 | ||||||||
| Dividends declared per common share | $ | 1.225 | $ | 1.165 | $ | 1.090 | |||||
| Consolidated net income | $ | 13,888 | $ | 3,116 | $ | 29,315 | |||||
| Change in fair value of derivatives | 3,384 | 1,871 | (995 | ) | |||||||
| Total comprehensive income | 17,272 | 4,987 | 28,320 | ||||||||
| Comprehensive income attributable to noncontrolling interests | (2,092 | ) | (1,975 | ) | (2,173 | ) | |||||
| Comprehensive income attributable to Kite Realty Group Trust | $ | 15,180 | $ | 3,012 | $ | 26,147 | |||||
| Preferred Shares | Common Shares | Additional Paid-in Capital | Accumulated Other Comprehensive (Loss) Income | Accumulated Deficit | Total | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||
| Balances, December 31, 2014 | 4,100,000 | $ | 102,500 | 83,490,663 | $ | 835 | $ | 2,044,425 | $ | (1,175 | ) | $ | (247,801 | ) | $ | 1,898,784 | |||||||||||||
| Stock compensation activity | — | — | (173,798 | ) | (2 | ) | 3,744 | — | — | 3,742 | |||||||||||||||||||
| Other comprehensive loss attributable to Kite Realty Group Trust | — | — | — | — | — | (970 | ) | — | (970 | ) | |||||||||||||||||||
| Distributions declared to common shareholders | — | — | — | — | — | — | (90,899 | ) | (90,899 | ) | |||||||||||||||||||
| Distributions to preferred shareholders | — | — | — | — | — | — | (7,877 | ) | (7,877 | ) | |||||||||||||||||||
| Redemption of preferred shares | (4,100,000 | ) | (102,500 | ) | — | — | 3,797 | — | (3,797 | ) | (102,500 | ) | |||||||||||||||||
| Net income attributable to Kite Realty Group Trust | — | — | — | — | — | — | 27,117 | 27,117 | |||||||||||||||||||||
| Acquisition of partners' interests in consolidated joint ventures | — | — | — | — | 1,445 | — | — | 1,445 | |||||||||||||||||||||
| Exchange of redeemable noncontrolling interests for common shares | — | — | 18,000 | — | 487 | — | — | 487 | |||||||||||||||||||||
| Adjustment to redeemable noncontrolling interests | — | — | — | — | (3,353 | ) | — | — | (3,353 | ) | |||||||||||||||||||
| Balances, December 31, 2015 | — | $ | — | 83,334,865 | $ | 833 | $ | 2,050,545 | $ | (2,145 | ) | $ | (323,257 | ) | $ | 1,725,976 | |||||||||||||
| Stock compensation activity | — | — | 67,804 | 1 | 5,042 | — | — | 5,043 | |||||||||||||||||||||
| Issuance of common shares under at-the-market plan, net | — | — | 137,229 | 1 | 3,836 | — | — | 3,837 | |||||||||||||||||||||
| Other comprehensive income attributable to Kite Realty Group Trust | — | — | — | — | — | 1,829 | — | 1,829 | |||||||||||||||||||||
| Distributions declared to common shareholders | — | — | — | — | — | — | (97,231 | ) | (97,231 | ) | |||||||||||||||||||
| Net income attributable to Kite Realty Group Trust | — | — | — | — | — | — | 1,183 | 1,183 | |||||||||||||||||||||
| Exchange of redeemable noncontrolling interests for common shares | — | — | 5,500 | — | 149 | — | — | 149 | |||||||||||||||||||||
| Adjustment to redeemable noncontrolling interests | — | — | — | — | 2,788 | — | — | 2,788 | |||||||||||||||||||||
| Balances, December 31, 2016 | — | $ | — | 83,545,398 | $ | 835 | $ | 2,062,360 | $ | (316 | ) | $ | (419,305 | ) | $ | 1,643,574 | |||||||||||||
| Stock compensation activity | — | — | 48,670 | 1 | 5,915 | — | — | 5,916 | |||||||||||||||||||||
| Other comprehensive income attributable to Kite Realty Group Trust | — | — | — | — | 3,306 | — | 3,306 | ||||||||||||||||||||||
| Distributions declared to common shareholders | — | — | — | — | — | — | (102,402 | ) | (102,402 | ) | |||||||||||||||||||
| Net income attributable to Kite Realty Group Trust | — | — | — | — | — | — | 11,874 | 11,874 | |||||||||||||||||||||
| Acquisition of partner's noncontrolling interest in Fishers Station operating property | — | — | (3,750 | ) | — | — | (3,750 | ) | |||||||||||||||||||||
| Exchange of redeemable noncontrolling interests for common shares | — | — | 12,000 | — | 236 | — | — | 236 | |||||||||||||||||||||
| Adjustment to redeemable noncontrolling interests | — | — | 6,657 | — | — | 6,657 | |||||||||||||||||||||||
| Balances, December 31, 2017 | — | $ | — | 83,606,068 | $ | 836 | $ | 2,071,418 | $ | 2,990 | $ | (509,833 | ) | $ | 1,565,411 | ||||||||||||||
| Year Ended December 31, | |||||||||||
| 2017 | 2016 | 2015 | |||||||||
| Cash flow from operating activities: | |||||||||||
| Consolidated net income | $ | 13,888 | $ | 3,116 | $ | 29,315 | |||||
| Adjustments to reconcile consolidated net income to net cash provided by operating activities: | |||||||||||
| Gain on sale of operating properties, net of tax | (15,160 | ) | (4,253 | ) | (4,066 | ) | |||||
| Impairment charge | 7,411 | — | 1,592 | ||||||||
| Non-cash gain on debt extinguishment | — | — | (5,645 | ) | |||||||
| Loss on debt extinguishment | — | 1,430 | — | ||||||||
| Straight-line rent | (4,696 | ) | (5,453 | ) | (5,638 | ) | |||||
| Depreciation and amortization | 174,625 | 179,084 | 170,521 | ||||||||
| Provision for credit losses, net of recoveries | 2,786 | 2,771 | 4,331 | ||||||||
| Compensation expense for equity awards | 5,987 | 5,214 | 4,580 | ||||||||
| Amortization of debt fair value adjustment | (2,913 | ) | (4,412 | ) | (5,834 | ) | |||||
| Amortization of in-place lease liabilities | (3,677 | ) | (6,863 | ) | (3,347 | ) | |||||
| Non-cash gain from release of assumed earnout liability | — | — | (4,832 | ) | |||||||
| Changes in assets and liabilities: | |||||||||||
| Tenant receivables | (5,832 | ) | (519 | ) | (1,510 | ) | |||||
| Deferred costs and other assets | (12,533 | ) | (13,509 | ) | (6,646 | ) | |||||
| Accounts payable, accrued expenses, deferred revenue, and other liabilities | (6,228 | ) | (388 | ) | (903 | ) | |||||
| Payments on assumed earnout liability | — | (1,285 | ) | (2,581 | ) | ||||||
| Net cash provided by operating activities | 153,658 | 154,933 | 169,337 | ||||||||
| Cash flow from investing activities: | |||||||||||
| Acquisitions of interests in properties | — | — | (166,411 | ) | |||||||
| Capital expenditures, net | (70,526 | ) | (94,319 | ) | (92,564 | ) | |||||
| Net proceeds from sales of operating properties | 76,076 | 14,186 | 170,016 | ||||||||
| Change in construction payables | (4,276 | ) | (3,024 | ) | 4,562 | ||||||
| Collection of note receivable | — | 500 | — | ||||||||
| Capital contribution to unconsolidated joint venture | (1,400 | ) | — | — | |||||||
| Net cash used in investing activities | (126 | ) | (82,657 | ) | (84,397 | ) | |||||
| Cash flow from financing activities: | |||||||||||
| Proceeds from issuance of common shares, net | — | 4,402 | — | ||||||||
| Payments for redemption of preferred shares | — | — | (102,500 | ) | |||||||
| Repurchases of common shares upon the vesting of restricted shares | (808 | ) | (1,125 | ) | (1,002 | ) | |||||
| Purchase of redeemable noncontrolling interests | — | — | (33,998 | ) | |||||||
| Acquisition of partner's interest in Fishers Station operating property | (3,750 | ) | — | — | |||||||
| Loan proceeds | 97,700 | 608,301 | 984,303 | ||||||||
| Loan transaction costs | — | (8,084 | ) | (4,913 | ) | ||||||
| Loan payments | (129,156 | ) | (589,501 | ) | (835,019 | ) | |||||
| Loss on debt extinguishment | — | (1,430 | ) | — | |||||||
| Distributions paid – common shareholders | (101,128 | ) | (94,669 | ) | (89,379 | ) | |||||
| Distributions paid – preferred shareholders | — | — | (8,582 | ) | |||||||
| Distributions paid – redeemable noncontrolling interests | (3,921 | ) | (3,924 | ) | (3,681 | ) | |||||
| Distributions to noncontrolling interests | — | (252 | ) | (115 | ) | ||||||
| Payment for partial redemption of redeemable noncontrolling interests | (8,261 | ) | — | — | |||||||
| Net cash used in financing activities | (149,324 | ) | (86,282 | ) | (94,886 | ) | |||||
| Increase (decrease) in cash and cash equivalents | 4,208 | (14,006 | ) | (9,946 | ) | ||||||
| Cash and cash equivalents, beginning of year | 19,874 | 33,880 | 43,826 | ||||||||
| Cash and cash equivalents, end of year | $ | 24,082 | $ | 19,874 | $ | 33,880 | |||||
| Supplemental disclosures | |||||||||||
| Cash paid for interest, net of capitalized interest | $ | 68,819 | $ | 67,172 | $ | 61,306 | |||||
| Cash paid for taxes | $ | — | $ | 545 | $ | 281 | |||||
| December 31, 2017 | December 31, 2016 | ||||||
Assets: | |||||||
| Investment properties, at cost | $ | 3,957,884 | $ | 3,996,065 | |||
| Less: accumulated depreciation | (664,614 | ) | (560,683 | ) | |||
| 3,293,270 | 3,435,382 | ||||||
| Cash and cash equivalents | 24,082 | 19,874 | |||||
| Tenant and other receivables, including accrued straight-line rent of $31,747 and $28,703 respectively, net of allowance for uncollectible accounts | 58,328 | 53,087 | |||||
| Restricted cash and escrow deposits | 8,094 | 9,037 | |||||
| Deferred costs and intangibles, net | 112,359 | 129,264 | |||||
| Prepaid and other assets | 16,365 | 9,727 | |||||
| Total Assets | $ | 3,512,498 | $ | 3,656,371 | |||
| Liabilities and Equity: | |||||||
| Mortgage and other indebtedness | $ | 1,699,239 | $ | 1,731,074 | |||
| Accounts payable and accrued expenses | 78,482 | 80,664 | |||||
| Deferred revenue and intangibles, net and other liabilities | 96,564 | 112,202 | |||||
| Total Liabilities | 1,874,285 | 1,923,940 | |||||
| Commitments and contingencies | — | — | |||||
| Limited partners' interests in Operating Partnership and other redeemable noncontrolling interests | 72,104 | 88,165 | |||||
| Partners Equity: | |||||||
| Parent Company: | |||||||
| Common equity, 83,606,068 and 83,545,398 units issued and outstanding at December 31, 2017 and December 31, 2016, respectively | 1,562,421 | 1,643,890 | |||||
| Accumulated other comprehensive income (loss) | 2,990 | (316 | ) | ||||
| Total Partners Equity | 1,565,411 | 1,643,574 | |||||
| Noncontrolling Interests | 698 | 692 | |||||
| Total Equity | 1,566,109 | 1,644,266 | |||||
| Total Liabilities and Equity | $ | 3,512,498 | $ | 3,656,371 | |||
| Year Ended December 31, | |||||||||||
| 2017 | 2016 | 2015 | |||||||||
| Revenue: | |||||||||||
| Minimum rent | $ | 273,444 | $ | 274,059 | $ | 263,794 | |||||
| Tenant reimbursements | 73,000 | 70,482 | 70,235 | ||||||||
| Other property related revenue | 11,998 | 9,581 | 12,976 | ||||||||
| Fee income | 377 | — | — | ||||||||
| Total revenue | 358,819 | 354,122 | 347,005 | ||||||||
| Expenses: | |||||||||||
| Property operating | 49,643 | 47,923 | 49,973 | ||||||||
| Real estate taxes | 43,180 | 42,838 | 40,904 | ||||||||
| General, administrative, and other | 21,749 | 20,603 | 18,709 | ||||||||
| Transaction costs | — | 2,771 | 1,550 | ||||||||
| Non-cash gain from release of assumed earnout liability | — | — | (4,832 | ) | |||||||
| Impairment charge | 7,411 | — | 1,592 | ||||||||
| Depreciation and amortization | 172,091 | 174,564 | 167,312 | ||||||||
| Total expenses | 294,074 | 288,699 | 275,208 | ||||||||
| Operating income | 64,745 | 65,423 | 71,797 | ||||||||
| Interest expense | (65,702 | ) | (65,577 | ) | (56,432 | ) | |||||
| Income tax benefit (expense) of taxable REIT subsidiary | 100 | (814 | ) | (186 | ) | ||||||
| Non-cash gain on debt extinguishment | — | — | 5,645 | ||||||||
| Gain on settlement | — | — | 4,520 | ||||||||
| Other expense, net | (415 | ) | (169 | ) | (95 | ) | |||||
| (Loss) income before gains on sale of operating properties, net | (1,272 | ) | (1,137 | ) | 25,249 | ||||||
| Gain on sale of operating properties, net | 15,160 | 4,253 | 4,066 | ||||||||
| Consolidated net income | 13,888 | 3,116 | 29,315 | ||||||||
| Net income attributable to noncontrolling interests | (1,733 | ) | (1,906 | ) | (1,854 | ) | |||||
| Dividends on preferred units | — | — | (7,877 | ) | |||||||
| Non-cash adjustment for redemption of preferred shares | — | — | (3,797 | ) | |||||||
| Net income attributable to common unitholders | $ | 12,155 | $ | 1,210 | $ | 15,787 | |||||
| Allocation of net income: | |||||||||||
| Limited Partners | $ | 281 | $ | 27 | $ | 344 | |||||
| Parent Company | 11,874 | 1,183 | 15,443 | ||||||||
| $ | 12,155 | $ | 1,210 | $ | 15,787 | ||||||
| Net income per unit - basic | $ | 0.14 | $ | 0.01 | $ | 0.19 | |||||
| Net income per unit - diluted | $ | 0.14 | $ | 0.01 | $ | 0.18 | |||||
| Weighted average common units outstanding - basic | 85,566,272 | 85,374,910 | 85,219,827 | ||||||||
| Weighted average common units outstanding - diluted | 85,671,358 | 85,403,899 | 85,332,303 | ||||||||
| Distributions declared per common unit | $ | 1.225 | $ | 1.165 | $ | 1.090 | |||||
| Consolidated net income | $ | 13,888 | $ | 3,116 | $ | 29,315 | |||||
| Change in fair value of derivatives | 3,384 | 1,871 | (995 | ) | |||||||
| Total comprehensive income | 17,272 | 4,987 | 28,320 | ||||||||
| Comprehensive income attributable to noncontrolling interests | (1,733 | ) | (1,906 | ) | (1,854 | ) | |||||
| Comprehensive income attributable to common unitholders | $ | 15,539 | $ | 3,081 | $ | 26,466 | |||||
| General Partner | Total | ||||||||||||||
| Common Equity | Preferred Equity | Accumulated Other Comprehensive (Loss) Income | |||||||||||||
| Balances, December 31, 2014 | $ | 1,797,459 | $ | 102,500 | $ | (1,175 | ) | $ | 1,898,784 | ||||||
| Stock compensation activity | 3,742 | — | — | 3,742 | |||||||||||
| Other comprehensive loss attributable to Parent Company | — | — | (970 | ) | (970 | ) | |||||||||
| Distributions declared to Parent Company | (90,899 | ) | — | — | (90,899 | ) | |||||||||
| Distributions to preferred unitholders | — | (7,877 | ) | — | (7,877 | ) | |||||||||
| Redemption of preferred units | 3,797 | (102,500 | ) | — | (98,703 | ) | |||||||||
| Net income | 15,443 | 7,877 | — | 23,320 | |||||||||||
| Acquisition of partners' interests in consolidated joint ventures | 1,445 | — | — | 1,445 | |||||||||||
| Conversion of Limited Partner Units to shares of the Parent Company | 487 | — | — | 487 | |||||||||||
| Adjustment to redeemable noncontrolling interests | (3,353 | ) | — | — | (3,353 | ) | |||||||||
| Balances, December 31, 2015 | $ | 1,728,121 | $ | — | $ | (2,145 | ) | $ | 1,725,976 | ||||||
| Stock compensation activity | 5,043 | — | — | 5,043 | |||||||||||
| Capital Contribution from the General Partner | 3,837 | — | — | 3,837 | |||||||||||
| Other comprehensive income attributable to Parent Company | — | — | 1,829 | 1,829 | |||||||||||
| Distributions declared to Parent Company | (97,231 | ) | — | — | (97,231 | ) | |||||||||
| Net income | 1,183 | — | — | 1,183 | |||||||||||
| Conversion of Limited Partner Units to shares of the Parent Company | 149 | — | — | 149 | |||||||||||
| Adjustment to redeemable noncontrolling interests | 2,788 | — | — | 2,788 | |||||||||||
| Balances, December 31, 2016 | $ | 1,643,890 | $ | — | $ | (316 | ) | $ | 1,643,574 | ||||||
| Stock compensation activity | 5,916 | — | — | 5,916 | |||||||||||
| Other comprehensive income attributable to Parent Company | — | — | 3,306 | 3,306 | |||||||||||
| Distributions declared to Parent Company | (102,402 | ) | — | — | (102,402 | ) | |||||||||
| Net income | 11,874 | — | — | 11,874 | |||||||||||
| Acquisition of partner's interest in Fishers Station operating property | (3,750 | ) | — | — | (3,750 | ) | |||||||||
| Conversion of Limited Partner Units to shares of the Parent Company | 236 | — | — | 236 | |||||||||||
| Adjustment to redeemable noncontrolling interests | 6,657 | — | — | 6,657 | |||||||||||
| Balances, December 31, 2017 | $ | 1,562,421 | $ | — | $ | 2,990 | $ | 1,565,411 | |||||||
| Year Ended December 31, | |||||||||||
| 2017 | 2016 | 2015 | |||||||||
| Cash flow from operating activities: | |||||||||||
| Consolidated net income | $ | 13,888 | $ | 3,116 | $ | 29,315 | |||||
| Adjustments to reconcile consolidated net income to net cash provided by operating activities: | |||||||||||
| Gain on sale of operating properties, net of tax | (15,160 | ) | (4,253 | ) | (4,066 | ) | |||||
| Impairment charge | 7,411 | — | 1,592 | ||||||||
| Non-cash gain on debt extinguishment | — | — | (5,645 | ) | |||||||
| Loss on debt extinguishment | — | 1,430 | — | ||||||||
| Straight-line rent | (4,696 | ) | (5,453 | ) | (5,638 | ) | |||||
| Depreciation and amortization | 174,625 | 179,084 | 170,521 | ||||||||
| Provision for credit losses, net of recoveries | 2,786 | 2,771 | 4,331 | ||||||||
| Compensation expense for equity awards | 5,987 | 5,214 | 4,580 | ||||||||
| Amortization of debt fair value adjustment | (2,913 | ) | (4,412 | ) | (5,834 | ) | |||||
| Amortization of in-place lease liabilities | (3,677 | ) | (6,863 | ) | (3,347 | ) | |||||
| Non-cash gain from release of assumed earnout liability | — | — | (4,832 | ) | |||||||
| Changes in assets and liabilities: | |||||||||||
| Tenant receivables | (5,832 | ) | (519 | ) | (1,510 | ) | |||||
| Deferred costs and other assets | (12,533 | ) | (13,509 | ) | (6,646 | ) | |||||
| Accounts payable, accrued expenses, deferred revenue, and other liabilities | (6,228 | ) | (388 | ) | (903 | ) | |||||
| Payments on assumed earnout liability | — | (1,285 | ) | (2,581 | ) | ||||||
| Net cash provided by operating activities | 153,658 | 154,933 | 169,337 | ||||||||
| Cash flow from investing activities: | |||||||||||
| Acquisitions of interests in properties | — | — | (166,411 | ) | |||||||
| Capital expenditures, net | (70,526 | ) | (94,319 | ) | (92,564 | ) | |||||
| Net proceeds from sales of operating properties | 76,076 | 14,186 | 170,016 | ||||||||
| Change in construction payables | (4,276 | ) | (3,024 | ) | 4,562 | ||||||
| Collection of note receivable | — | 500 | — | ||||||||
| Capital contribution to unconsolidated joint venture | (1,400 | ) | — | — | |||||||
| Net cash used in investing activities | (126 | ) | (82,657 | ) | (84,397 | ) | |||||
| Cash flow from financing activities: | |||||||||||
| Contributions from the Parent Company | — | 4,402 | — | ||||||||
| Payments for redemption of preferred units | — | — | (102,500 | ) | |||||||
| Distributions to the Parent Company for repurchases of common shares upon the vesting of restricted shares | (808 | ) | (1,125 | ) | (1,002 | ) | |||||
| Purchase of redeemable noncontrolling interests | — | — | (33,998 | ) | |||||||
| Acquisition of partner's interest in Fishers Station operating property | (3,750 | ) | — | — | |||||||
| Loan proceeds | 97,700 | 608,301 | 984,303 | ||||||||
| Loan transaction costs | — | (8,084 | ) | (4,913 | ) | ||||||
| Loan payments | (129,156 | ) | (589,501 | ) | (835,019 | ) | |||||
| Loss on debt extinguishment | — | (1,430 | ) | — | |||||||
| Distributions paid – common unitholders | (101,128 | ) | (94,669 | ) | (89,379 | ) | |||||
| Distributions paid – preferred unitholders | — | — | (8,582 | ) | |||||||
| Distributions paid – redeemable noncontrolling interests | (3,921 | ) | (3,924 | ) | (3,681 | ) | |||||
| Distributions to noncontrolling interests | — | (252 | ) | (115 | ) | ||||||
| Payment for partial redemption of redeemable noncontrolling interests | (8,261 | ) | — | — | |||||||
| Net cash used in financing activities | (149,324 | ) | (86,282 | ) | (94,886 | ) | |||||
| Increase (decrease) in cash and cash equivalents | 4,208 | (14,006 | ) | (9,946 | ) | ||||||
| Cash and cash equivalents, beginning of year | 19,874 | 33,880 | 43,826 | ||||||||
| Cash and cash equivalents, end of year | $ | 24,082 | $ | 19,874 | $ | 33,880 | |||||
| Supplemental disclosures | |||||||||||
| Cash paid for interest, net of capitalized interest | $ | 68,819 | $ | 67,172 | $ | 61,306 | |||||
| Cash paid for taxes | $ | — | $ | 545 | $ | 281 | |||||
| ($ in thousands) | Balance at | |||||||
| December 31, 2017 | December 31, 2016 | |||||||
| Investment properties, at cost: | ||||||||
| Land, buildings and improvements | $ | 3,873,149 | $ | 3,885,223 | ||||
| Furniture, equipment and other | 8,453 | 7,246 | ||||||
| Land held for development | 31,142 | 34,171 | ||||||
| Construction in progress | 45,140 | 69,425 | ||||||
| $ | 3,957,884 | $ | 3,996,065 | |||||
| ($ in thousands) | 2017 | 2016 | 2015 | |||||||||
| Balance, beginning of year | $ | 3,998 | $ | 4,325 | $ | 2,433 | ||||||
| Provision for credit losses, net of recoveries | 2,786 | 2,771 | 4,331 | |||||||||
| Accounts written off and other | (3,297 | ) | (3,098 | ) | (2,439 | ) | ||||||
| Balance, end of year | $ | 3,487 | $ | 3,998 | $ | 4,325 | ||||||
| ($ in thousands) | As of December 31, 2017 | ||||
| 2017 | 2016 | ||||
| Florida | 61 | % | 53 | % | |
| Indiana | 9 | % | 7 | % | |
| Texas | 4 | % | 2 | % | |
| ($ in thousands) | Year Ended December 31, | |||||||
| 2017 | 2016 | 2015 | ||||||
| Florida | 24 | % | 25 | % | 25 | % | ||
| Indiana | 14 | % | 15 | % | 14 | % | ||
| Texas | 13 | % | 13 | % | 12 | % | ||
Segment Reporting
Our primary business is the ownership and operation of neighborhoodhigh-quality, open-air shopping centers and community shopping centers. We domixed-use assets. The Company’s chief operating decision maker (“CODM”), which is its Chief Executive Officer, reviews operating and financial information for each property on an individual basis and therefore, each property represents an individual operating segment. The CODM measures and evaluates the financial performance of our portfolio of properties using net operating income, which consists of rental income less property operating expenses and real estate taxes, and does not distinguish or group our operations on a geographical basis, or any other basis, when measuring and evaluating financial performance.basis. Accordingly, we have aggregated our properties into one operating segment, which also serves as our reportable segment for disclosure purposes in accordance with GAAP.GAAP, as each property has similar economic characteristics, the Company provides similar services to its tenants and the Company’s CODM evaluates the collective performance of our properties.
Income Taxes and REIT Compliance
Parent Company
The Parent Company which is considered a corporation for 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. Additionally, for tax years beginning after December 31, 2022, we would possibly also be subject to certain taxes enacted by the Inflation Reduction Act of 2022 that are applicable to non-REIT corporations, including the nondeductible one percent excise tax on certain stock repurchases. 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 subsidiaryTRS of the Operating Partnership. In addition, in connection with the Merger, we assumed RPAI’s existing TRS, IWR Protective Corporation, as a TRS of the Operating Partnership and we may elect to treat other subsidiaries as taxable REIT subsidiariesTRSs 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.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits within “Interest expense” and penalties within “General, administrative and other” expenses in the accompanying consolidated statements of operations and comprehensive income.
F-20
Our tax return for the year ended December 31, 2022 has not been filed as of the filing date of this Annual Report on Form 10-K of the Parent Company and the Operating Partnership. The taxability information presented for our dividends paid in 2022 is based upon management’s estimate. Consequently, the taxability of dividends is subject to change. A summary of the tax characterization of the dividends paid by the Parent Company for the years ended December 31, 2022, 2021, and 2020 is as follows:
| 2022 | 2021 | 2020 | |||||||||||||||
| Ordinary income | 86.1 | % | 0.0 | % | 89.3 | % | |||||||||||
| Return of capital | 0.0 | % | 13.4 | % | 0.0 | % | |||||||||||
| Capital gains | 13.9 | % | 86.6 | % | 10.7 | % | |||||||||||
| Balance, end of year | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||
Operating Partnership
The allocated share of income and loss, other than the operations of our taxable REIT subsidiary,TRSs, is included in the income tax returns of the Operating Partnership'sPartnership’s partners. Accordingly, the only U.S. federal income taxes included in the accompanying consolidated financial statements are in connection with the taxable REIT subsidiary.TRSs.
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 following table summarizes the non-redeemable noncontrolling interests in consolidated properties for the years ended December 31, 2017, 2016,2022, 2021, and 2015 were2020 (in thousands):
| 2022 | 2021 | 2020 | |||||||||||||||
| Noncontrolling interests balance as of January 1, | $ | 5,146 | $ | 698 | $ | 698 | |||||||||||
| Noncontrolling interests acquired in the Merger | — | 4,463 | — | ||||||||||||||
Net loss (income) allocable to noncontrolling interests, excluding redeemable noncontrolling interests | 224 | (15) | — | ||||||||||||||
| Distributions to noncontrolling interests | — | — | — | ||||||||||||||
| Noncontrolling interests balance as of December 31, | $ | 5,370 | $ | 5,146 | $ | 698 | |||||||||||
Noncontrolling Interests – Joint Venture
Prior to the Merger with RPAI, RPAI entered into a joint venture related to the development, ownership and operation of the multifamily rental portion of the expansion project at One Loudoun Downtown – Pads G & H. The Company owns 90% of the joint venture.
As of December 31, 2022, the Company has funded $0.9 million of the partner’s development costs related to One Loudoun Downtown – Pads G & H through a loan provided by the Company to the joint venture. The loan is secured by the joint venture project, is required to be repaid subsequent to the completion of construction and stabilization of the project and is eliminated upon consolidation. Under terms defined in the joint venture agreement, after construction completion and stabilization of the development project (as defined in the joint venture agreement), the Company has the ability to call, and the joint venture partner has the ability to put to the Company, subject to certain conditions, the joint venture partner’s interest in the joint venture at fair value. The Company expects that these conditions will be met in the second half of 2023.
The joint venture is considered a VIE primarily because the Company’s joint venture partner does not have substantive kick-out rights or substantive participating rights. The Company is considered the primary beneficiary as follows:
| ($ in thousands) | 2017 | 2016 | 2015 | |||||||||
| Noncontrolling interests balance January 1 | $ | 692 | $ | 773 | $ | 3,364 | ||||||
| Net income allocable to noncontrolling interests, excluding redeemable noncontrolling interests | 6 | 171 | 111 | |||||||||
| Distributions to noncontrolling interests | — | (252 | ) | (115 | ) | |||||||
| Acquisition of partner's interest in Beacon Hill operating property | — | — | (2,353 | ) | ||||||||
| Partner's share of loss on sale of Cornelius Gateway operating property | — | — | (234 | ) | ||||||||
| Noncontrolling interests balance at December 31 | $ | 698 | $ | 692 | $ | 773 | ||||||
it has a controlling financial interest in the joint venture. As such, the Company has consolidated this joint venture and presented the joint venture partners’ interests as noncontrolling interests.
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
F-21
corresponding adjustment to additional paid-in capital. AtAs of December 31, 2017,2022 and 2016,2021, the redemption value of the redeemable noncontrolling interests in the Operating Partnership exceeded the historical book value, and the balance wasbalances 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'sCompany’s equity. For the years ended December 31, 2017, 2016,2022, 2021, and 2015,2020, the weighted average interests of the Parent Company and the limited partners in the Operating Partnership were as follows:
| Year Ended December 31, | |||||||||||||||||
| 2022 | 2021 | 2020 | |||||||||||||||
| Parent Company’s weighted average interest in Operating Partnership | 98.7 | % | 97.8 | % | 97.4 | % | |||||||||||
| Limited partners’ weighted average interests in Operating Partnership | 1.3 | % | 2.2 | % | 2.6 | % | |||||||||||
| Year Ended December 31, | |||||||||
| 2017 | 2016 | 2015 | |||||||
| Parent Company’s weighted average interest in Operating Partnership | 97.7 | % | 97.7 | % | 97.9 | % | |||
| Limited partners' weighted average interests in Operating Partnership | 2.3 | % | 2.3 | % | 2.1 | % | |||
Parent Company’s interest and the limited partners’ redeemable noncontrolling ownership interests in the Operating Partnership were 98.9% and 1.1%.
Concurrent with the Parent Company’s initial public offeringIPO 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'sCompany’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 1,974,8302,870,697 and 1,942,3402,377,777 Limited Partner Units outstanding as of December 31, 20172022 and 2016,2021, respectively. The increase in Limited Partner Units outstanding from December 31, 20162021 is due primarily to non-cash compensation awards made to our executive officers in the form of Limited Partner Units.
Redeemable Noncontrolling Interests -– Subsidiaries
Prior to ourthe merger with Inland Diversified Real Estate Trust, Inc. ("(“Inland Diversified"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. TheAs of December 31, 2021, the Class B units related to twoone of these three joint ventures remainthat owned Crossing at Killingly Commons, our multi-tenant retail property in Dayville, Connecticut, was outstanding subsequent to the merger with Inland Diversified and are accounted for as noncontrolling interests in these properties. A portion of the remaining venture. In October 2022, the remaining Class B units became redeemable at ourthe partner’s election in March 2017, and the remaining Class B units will become redeemable at our partner's
F-22
The redeemable noncontrolling interests in the Operating Partnership and subsidiaries for the years ended December 31, 2017, 2016,2022, 2021, and 20152020 were as follows: follows (in thousands):
| 2022 | 2021 | 2020 | |||||||||||||||
| Redeemable noncontrolling interests balance as of January 1, | $ | 55,173 | $ | 43,275 | $ | 52,574 | |||||||||||
| Net income (loss) allocable to redeemable noncontrolling interests | 258 | (901) | 100 | ||||||||||||||
| Distributions declared to redeemable noncontrolling interests | (2,622) | (2,208) | (1,533) | ||||||||||||||
| Payment for redemption of redeemable noncontrolling interests | (10,070) | — | — | ||||||||||||||
| Other, net including adjustments to redemption value | 11,228 | 15,007 | (7,866) | ||||||||||||||
Total limited partners’ interests in Operating Partnership and other redeemable noncontrolling interests balance as of December 31, | $ | 53,967 | $ | 55,173 | $ | 43,275 | |||||||||||
| Limited partners’ interests in Operating Partnership | $ | 53,967 | $ | 45,103 | $ | 33,205 | |||||||||||
| Other redeemable noncontrolling interests in certain subsidiaries | — | 10,070 | 10,070 | ||||||||||||||
Total limited partners’ interests in Operating Partnership and other redeemable noncontrolling interests balance as of December 31, | $ | 53,967 | $ | 55,173 | $ | 43,275 | |||||||||||
| ($ in thousands) | 2017 | 2016 | 2015 | |||||||||
| Redeemable noncontrolling interests balance January 1 | $ | 88,165 | $ | 92,315 | $ | 125,082 | ||||||
| Acquisition of partner's interest in City Center operating property | — | — | (33,998 | ) | ||||||||
| Net income allocable to redeemable noncontrolling interests | 2,009 | 1,756 | 2,087 | |||||||||
| Distributions declared to redeemable noncontrolling interests | (4,155 | ) | (3,993 | ) | (3,773 | ) | ||||||
| Payment for partial redemption of redeemable noncontrolling interests | (8,261 | ) | — | — | ||||||||
| Other, net including adjustments to redemption value | (5,654 | ) | (1,913 | ) | 2,917 | |||||||
| Total limited partners' interests in Operating Partnership and other redeemable noncontrolling interests balance at December 31 | $ | 72,104 | $ | 88,165 | $ | 92,315 | ||||||
| Limited partners' interests in Operating Partnership | $ | 39,573 | $ | 47,373 | $ | 50,085 | ||||||
| Other redeemable noncontrolling interests in certain subsidiaries | 32,531 | 40,792 | 42,230 | |||||||||
| Total limited partners' interests in Operating Partnership and other redeemable noncontrolling interests balance at December 31 | $ | 72,104 | $ | 88,165 | $ | 92,315 | ||||||
Effects of Accounting Pronouncements
In May 2014,March 2020, the Financial Accounting Standards Board ("FASB")FASB issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”).2020-04, Reference Rate Reform (Topic 848), which contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2014-092020-04 is a comprehensive revenue recognition standardoptional and may be elected over time as reference rate reform activities occur. In March 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future London Interbank Offered Rate (“LIBOR”)-indexed cash flows to assume that will supersede nearly all existing GAAP revenue recognition guidance. It will also affect the existing GAAP guidance governing the sale of nonfinancial assets. The new standard’s core principle is that a company will recognize revenue when it satisfies performance obligations by transferring promised goods or services to customers in an amount that reflects the consideration toindex upon which the company expects to be entitled in exchange for fulfilling those performance obligations. In doing so, companies will need to exercise more judgment and make more estimates than under existing GAAP guidance.
NOTE 3. ACQUISITIONS
RPAI Merger
On October 22, 2021, we disposedcompleted a Merger with RPAI pursuant to which RPAI merged with and into Merger Sub, with the Company continuing as the surviving public company. Immediately following the closing of severalthe Merger, Merger Sub merged with and into the Operating Partnership so that all of the assets and liabilities of the Company continue to be held at or below the Operating Partnership level. The aggregate value of the Merger consideration paid to former holders of RPAI common stock was approximately $2.8 billion, excluding the value of RPAI restricted stock units that vested at closing and certain restricted share awards assumed by the Company at closing. The total purchase price was calculated based on the closing price of the Company’s common stock on October 21, 2021, the last business day prior to the effective time of the Merger, which was $21.18 per share. At the effective time of the Merger, each share of RPAI common stock issued and outstanding immediately prior to the effective time was converted into the right to receive 0.623 newly issued Company common shares plus cash in lieu of fractional Company shares. The number of RPAI common stock outstanding as of October 21, 2021 converted to shares of the Company’s common stock was determined as follows:
| RPAI common stock outstanding as of October 21, 2021 | 214,797,869 | ||||
| Exchange ratio | 0.623 | ||||
| Company common shares issued for outstanding RPAI common stock | 133,814,066 | ||||
| Company common shares issued for RPAI restricted stock units | 1,117,399 | ||||
| Total Company common shares issued | 134,931,465 | ||||
F-23
The following table presents the purchase price and total value of equity consideration paid by the Company at the close of the Merger (in thousands except share price):
| Price of Company common shares | Equity Consideration Given (Company common shares issued) | Total Value of Stock Consideration(1) | |||||||||||||||
| As of October 21, 2021 | $ | 21.18 | 134,931 | $ | 2,847,369 | ||||||||||||
(1)The total value of stock consideration is the total of the common shares issued multiplied by the closing price of the Company’s common stock on October 21, 2021 excluding the value of certain RPAI restricted stock that vested at the closing of the Merger and share awards assumed by the Company at the closing of the Merger.
As a result of the Merger, the Company acquired 100 operating retail properties and five development projects under construction along with multiple parcels of entitled land parcelsfor future value creation. During the years ended December 31, 2022 and 2021, the Company incurred $0.9 million and $86.5 million of merger and acquisition costs, respectively, consisting primarily of professional fees and technology costs in all-cash transactions2022 and fairness opinion, severance charges, and legal, professional and data migration costs in 2021, which are recorded within “Merger and acquisition costs” in the accompanying consolidated statements of operations and comprehensive income. In addition, the Company assumed approximately $1.8 billion of debt in connection with no continuingthe Merger.
“Rental income” and “Net loss attributable to common shareholders” in the accompanying consolidated statements of operations and comprehensive income include revenues from the RPAI portfolio of $94.9 million and net loss of $22.8 million for the period from October 22, 2021 through December 31, 2021, which includes $74.7 million of depreciation and amortization, as a result of the Merger during the year ended December 31, 2021.
Purchase Price Allocation
In accordance with ASC 805-10, Business Combinations, the Company accounted for the Merger as a business combination using the acquisition method of accounting. Based on the value of the common shares issued, the total fair value of the assets acquired and liabilities assumed in the Merger was $2.8 billion as of October 22, 2021, the date of the Merger.
The Company used the following valuation methodologies, inputs and assumptions to estimate the fair value of the assets acquired and liabilities assumed:
•Investment properties: The Company estimated the fair value of the buildings on an as-if-vacant basis using either a direct capitalization method or a discounted cash flow analysis. Comparable market data, real estate tax assessments and independent appraisals were used in estimating the fair value of the land acquired. These valuation methodologies are based on Level 2 and Level 3 inputs in the fair value hierarchy, such as estimates of future involvement.income growth, capitalization rates and cash flow projections at the respective properties.
•Acquired lease intangible assets: The gains recognizedCompany estimated the fair value of its above-market and below-market in-place leases based on the present value (using a discount rate that reflects the risk associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over the remaining non-cancelable term of the leases. Any below-market renewal options are also considered in the in-place lease values. This valuation methodology is based on Level 3 inputs in the fair value hierarchy.
•In-place lease liabilities: The Company estimated the fair value of its in-place leases using independent and internal sources, which are methods similar to those used by independent appraisers. Factors we consider in our analysis include an estimate of costs to execute similar leases including tenant improvements, leasing commissions and foregone costs and rent received during the estimated lease-up period as if the space was vacant. This valuation methodology is based on Level 3 inputs in the fair value hierarchy.
•Mortgage and other indebtedness: The Company estimated the fair value of the secured and unsecured debt assumed, including related derivative instruments, using third party and independent sources for our estimates. Any difference between the fair value and stated value of the assumed debt is recorded as a discount or premium and amortized over the remaining term of the loan using the interest method. This valuation methodology is based on Level 2 and Level 3 inputs in the fair value hierarchy.
F-24
The range of the most significant Level 3 assumptions used in determining the value of the real estate and related assets acquired through the Merger with RPAI are as follows:
| Range of Assumptions | |||||
| Net rental rate per square foot – Anchors | $4.00 to $45.00 | ||||
| Net rental rate per square foot – Small Shops | $7.00 to $140.00 | ||||
| Capitalization rate | 5.50% to 12.00% | ||||
The following table summarizes the final purchase price allocation, including the acquisition date fair value of the tangible and intangible assets acquired and liabilities assumed (in thousands):
| Purchase Price Allocation | |||||
| Investment properties | $ | 4,424,096 | |||
| Acquired lease intangible assets | 536,342 | ||||
| Cash, accounts receivable and other assets | 84,632 | ||||
| Total assets acquired | 5,045,070 | ||||
| Mortgage and other indebtedness, net | (1,848,476) | ||||
| Accounts payable, other liabilities, tenant security deposits and prepaid rent | (176,391) | ||||
| In-place lease liabilities | (168,371) | ||||
| Noncontrolling interests | (4,463) | ||||
| Total liabilities assumed | (2,197,701) | ||||
| Total purchase price | $ | 2,847,369 | |||
The following table details the weighted average amortization periods, in years, of the purchase price allocated to real estate and related intangible assets and liabilities acquired arising from the Merger:
| Weighted Average Amortization Period (in years) | |||||
| Land | 10.2 | ||||
| Building | 18.8 | ||||
| Tenant improvements | 6.7 | ||||
| In-place lease intangibles | 5.5 | ||||
| Above-market leases | 5.7 | ||||
| Below-market leases (including below-market option periods) | 20.5 | ||||
| Fair market value of debt adjustments | 6.8 | ||||
Pro Forma Financial Information (unaudited)
The pro forma financial information set forth below is based upon the Company’s historical consolidated statements of operations for the years ended December 31, 2021 and 2020, adjusted to give effect for the properties assumed through the Merger as if they were approximately 6%acquired as of our total revenueJanuary 1, 2020. The pro forma financial information is presented for informational purposes only and may not be indicative of what actual results of income would have been, nor does it purport to represent the results of income for future periods (in thousands, except per share data).
| Year Ended December 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| Rental income | $ | 740,954 | $ | 683,093 | |||||||
| Net income (loss) | $ | 21,283 | $ | (109,775) | |||||||
| Net income (loss) attributable to common shareholders | $ | 20,535 | $ | (107,341) | |||||||
| Net income (loss) attributable to common shareholders per common share: | |||||||||||
Basic(1) | $ | 0.09 | $ | (0.49) | |||||||
Diluted(1) | $ | 0.09 | $ | (0.49) | |||||||
F-25
(1)The pro forma earnings for the year ended December 31, 2017. As we do not have any continuing involvement in2021 were adjusted to exclude $86.5 million of merger costs incurred while the operations of the operating properties and land sold, the accounting for the transactions would have been the same under ASC 2014-09.
Supplemental Schedule of Non-Cash Investing and Financing Activities Related to the Merger
The following table summarizes the Merger-related non-cash investing and financing activities for the year ended December 31, 2021 (in thousands):
| Year Ended December 31, 2021 | |||||
| Investment properties | $ | 4,439,387 | |||
| Acquired lease intangible assets | $ | 524,058 | |||
| Mortgage and other indebtedness, net | $ | (1,848,476) | |||
| In-place lease liabilities | $ | (171,378) | |||
| Noncontrolling interests | $ | (4,463) | |||
Other assets and liabilities, net(1) | $ | (106,751) | |||
| Company common shares issued in exchange for RPAI common stock | $ | (2,847,369) | |||
(1)Includes lease liabilities arising from obtaining right-of-use assets of $41,086, which was determined using an estimate of our incremental borrowing rate that was specific to each lease based upon the term and underlying asset with a weighted average incremental borrowing rate of 5.4%.
Asset Acquisitions
The Company closed on the following asset acquisitions during the years ended December 31, 2022, 2021 and 2020 (dollars in thousands):
| Date | Property Name | Metropolitan Statistical Area (MSA) | Property Type | Square Footage | Acquisition Price | |||||||||||||||||||||||||||
| February 16, 2022 | Pebble Marketplace | Las Vegas | Multi-tenant retail | 85,796 | $ | 44,100 | ||||||||||||||||||||||||||
| April 13, 2022 | MacArthur Crossing | Dallas | Two-tenant building | 56,077 | 21,920 | |||||||||||||||||||||||||||
| July 15, 2022 | Palms Plaza | Miami | Multi-tenant retail | 68,976 | 35,750 | |||||||||||||||||||||||||||
| 210,849 | $ | 101,770 | ||||||||||||||||||||||||||||||
| December 22, 2021 | Nora Plaza Shops | Indianapolis, IN | Multi-tenant retail outparcel | 23,722 | $ | 13,500 | ||||||||||||||||||||||||||
| December 28, 2020 | Eastgate Crossing | Durham-Chapel Hill, NC | Multi-tenant retail | 156,275 | $ | 65,479 | ||||||||||||||||||||||||||
The above acquisitions were funded using a combination of available cash on hand and proceeds from the Company’s unsecured revolving line of credit. The fair value of the real estate and other assets acquired were primarily determined using the income approach, which required us to make assumptions about market leasing rates, tenant-related costs, discount rates, and disposal rates. The estimates of fair value primarily relied upon Level 2 and Level 3 inputs, as previously defined.
F-26
The following table summarizes the fair value of assets acquired and liabilities assumed for the asset acquisitions completed during the years ended December 31, 2022, 2021 and 2020 (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2022 | 2021 | 2020 | |||||||||||||||
| Investment properties, net | $ | 99,096 | $ | 13,488 | $ | 63,570 | |||||||||||
Lease-related intangible assets, net(1) | 5,223 | 304 | 2,254 | ||||||||||||||
| Other assets | 11 | — | — | ||||||||||||||
| Total acquired assets | 104,330 | 13,792 | 65,824 | ||||||||||||||
| Mortgage payable | — | 3,578 | — | ||||||||||||||
| Accounts payable and accrued expenses | 1,140 | 100 | 280 | ||||||||||||||
| Deferred revenue and other liabilities | 2,855 | 189 | 246 | ||||||||||||||
| Total assumed liabilities | 3,995 | 3,867 | 526 | ||||||||||||||
| Fair value of net assets acquired | $ | 100,335 | $ | 9,925 | $ | 65,298 | |||||||||||
(1)The weighted average remaining life of leases at the acquired properties is approximately 6.7 years, 5.3 years and 3.2 years for asset acquisitions completed during the years ended December 31, 2022, 2021 and 2020, respectively.
The range of the most significant Level 3 assumptions used in determining the value of the real estate and related assets acquired through asset acquisitions are as follows:
| 2022 | 2021 | 2020 | |||||||||||||||
| Net rental rate per square foot – Anchors | $20.50 to $40.00 | N/A to N/A | $22.50 to $27.50 | ||||||||||||||
| Net rental rate per square foot – Small Shops | $24.00 to $65.00 | $31.50 to $45.00 | $15.00 to $65.00 | ||||||||||||||
| Discount rate | 5.75% to 7.25% | 9.0% | 9.0% | ||||||||||||||
The results of operations for each of the properties acquired through asset acquisitions during the years ended December 31, 2022, 2021 and 2020 have been included in operations since their respective dates of acquisition.
NOTE 4. DISPOSITIONS
The Company closed on the following dispositions during the years ended December 31, 2022, 2021 and 2020 (dollars in thousands):
| Date | Property Name | MSA | Property Type | Square Footage | Sales Price | Gain (Loss) | ||||||||||||||||||||||||||||||||
| January 26, 2022 | Hamilton Crossing Centre | Indianapolis | Redevelopment | — | $ | 6,900 | $ | 3,168 | ||||||||||||||||||||||||||||||
| June 16, 2022 | Plaza Del Lago | Chicago | Multi-tenant retail(1) | 100,016 | 58,650 | 23,958 | ||||||||||||||||||||||||||||||||
| October 27, 2022 | Lincoln Plaza – Lowe’s | Worcester, MA | Ground lease interest(2) | — | 10,000 | (57) | ||||||||||||||||||||||||||||||||
| 100,016 | $ | 75,550 | $ | 27,069 | ||||||||||||||||||||||||||||||||||
| October 26, 2021 | Westside Market | Dallas/Ft. Worth | Multi-tenant retail | 93,377 | $ | 24,775 | $ | 4,323 | ||||||||||||||||||||||||||||||
| July 30, 2020 | Courthouse Shadows | Naples, FL | Redevelopment | — | $ | 14,000 | $ | 3,057 | ||||||||||||||||||||||||||||||
(1)Plaza Del Lago also contains 8,800 square feet of residential space comprised of 18 multifamily rental units.
(2)The Company sold the ground lease interest in one tenant at an existing multi-tenant operating retail property. The total number of properties in our portfolio was not affected by this transaction.
During the year ended December 31, 2021, the Company also sold 17 ground leases for gross proceeds of $42.0 million and a net gain on sale of $27.6 million. A portion of the proceeds was used to pay down our unsecured revolving line of credit.
There were no discontinued operations for the secured loan at this operating property.years ended December 31, 2022, 2021 and 2020 as none of the dispositions represented a strategic shift that has had, or will have, a material effect on our operations or financial results.
F-27
Overview
During the Accounting Standards Codification.
The Company recognizes forfeitures as they occur.
As of December 31, 2017,2022, there were 717,0536,372,430 shares and units available for grant under the Equity Plan.
Share Options
Pursuant to the Equity Plan, the Company may periodically grant options to purchase common shares at an exercise price equal to the grant date fair value of the Company'sCompany’s common shares. Granted optionsOptions granted typically vest over a five yearfive-year period and expire 10 years from the grant date. The Company issues new common shares upon the exercise of options.
| ($ in thousands, except share and per share data) | Aggregate Intrinsic Value | Weighted-Average Remaining Contractual Term (in years) | Options | Weighted-Average Exercise Price | |||||||||
| Outstanding at January 1, 2017 | 182,462 | $ | 37.58 | ||||||||||
| Granted | — | — | |||||||||||
| Exercised | — | — | |||||||||||
| Expired | — | — | |||||||||||
| Forfeited | (1,250 | ) | 10.56 | ||||||||||
| Outstanding at December 31, 2017 | $ | 211,809 | 0.88 | 181,212 | $ | 37.77 | |||||||
| Exercisable at December 31, 2017 | $ | 211,809 | 0.88 | 181,212 | $ | 37.77 | |||||||
| Exercisable at December 31, 2016 | 182,378 | $ | 37.60 | ||||||||||
| Options | Weighted Average Exercise Price | Aggregate Intrinsic Value | Weighted Average Remaining Contractual Term (in years) | ||||||||||||||||||||
| Outstanding as of January 1, 2022 | 1,250 | $ | 20.20 | ||||||||||||||||||||
| Exercised | (1,250) | 20.20 | |||||||||||||||||||||
| Outstanding as of December 31, 2022 | — | $ | — | $ | — | 0.00 | |||||||||||||||||
| Exercisable as of December 31, 2022 | — | $ | — | $ | — | 0.00 | |||||||||||||||||
| Exercisable as of December 31, 2021 | 1,250 | $ | 20.20 | ||||||||||||||||||||
There were no options granted in 2017, 2016during the years ended December 31, 2022, 2021 or 2015.
2020.
The aggregate intrinsic value of the 47,5911,250, 1,250 and 2,500 options exercised during the yearyears ended December 31, 20162022, 2021, and 2020 was $0.8 million.$3,300, $6,550 and $2,000, respectively.
Restricted Shares
F-28
The following table summarizes allthe restricted share activity to employees and non-employee members of the Board of Trustees as offor the year ended December 31, 2017 and changes during the year then ended: 2022:
| Number of Restricted Shares | Weighted Average Grant Date Fair Value per share | ||||||||||
| Restricted shares outstanding as of January 1, 2022 | 323,232 | $ | 18.27 | ||||||||
| Shares granted | 206,855 | 21.15 | |||||||||
| Shares forfeited | (17,674) | 21.07 | |||||||||
| Shares vested | (211,580) | 18.38 | |||||||||
| Restricted shares outstanding as of December 31, 2022 | 300,833 | $ | 19.98 | ||||||||
Number of Restricted Shares | Weighted Average Grant Date Fair Value per share | ||||||
| Restricted shares outstanding at January 1, 2017 | 291,608 | $ | 26.10 | ||||
| Shares granted | 85,150 | 22.15 | |||||
| Shares forfeited | (397 | ) | 26.24 | ||||
| Shares vested | (117,254 | ) | 26.11 | ||||
| Restricted shares outstanding at December 31, 2017 | 259,107 | $ | 24.80 | ||||
The following table summarizes the restricted share grants and vestings during the years ended December 31, 2017, 2016,2022, 2021, and 2015: 2020 (dollars in thousands, except share and per share data):
| ($ in thousands, except share and per share data) | Number of Restricted Shares Granted | Weighted Average Grant Date Fair Value per share | Fair Value of Restricted Shares Vested | ||||||||
| 2017 | 85,150 | $ | 22.15 | $ | 2,529 | ||||||
| 2016 | 81,603 | 26.87 | 3,313 | ||||||||
| 2015 | 121,075 | 28.10 | 2,948 | ||||||||
| Number of Restricted Shares Granted | Weighted Average Grant Date Fair Value per Share | Fair Value of Restricted Shares Vested | |||||||||||||||
| 2022 | 206,855 | $ | 21.15 | $ | 4,459 | ||||||||||||
| 2021 | 194,411 | $ | 19.85 | $ | 3,763 | ||||||||||||
| 2020 | 211,476 | $ | 13.21 | $ | 2,727 | ||||||||||||
As of December 31, 2017,2022, there was $4.2$3.4 million of total unrecognized compensation costexpense related to restricted shares, granted under the Plan, which is expected to be recognized in the consolidated statements of operations over a weighted-averageweighted average period of 1.370.97 years. We expect to incur $2.1 million of this expense in 2018,2023, $1.1 million in 2019, $0.6 million in 2020, $0.3 million in 2021,2024, and the remainder in 2022. 2025.
Restricted Units
prior year’s performance.
The following table summarizes the activity for time-basedthe restricted unit awards for the year ended December 31, 2017: 2022:
| Number of Restricted Units | Weighted Average Grant Date Fair Value per unit | ||||||||||
| Restricted units outstanding as of January 1, 2022 | 414,441 | $ | 13.24 | ||||||||
| Restricted units granted | 138,505 | 17.07 | |||||||||
| Restricted units vested | (145,808) | 13.60 | |||||||||
| Restricted units outstanding at December 31, 2022 | 407,138 | $ | 14.41 | ||||||||
Number of Restricted Units | Weighted Average Grant Date Fair Value per unit | ||||||
| Restricted units outstanding at January 1, 2017 | 183,979 | $ | 22.57 | ||||
| Restricted units granted | 44,490 | 23.22 | |||||
| Restricted units vested | (78,021 | ) | 21.87 | ||||
| Restricted units outstanding at December 31, 2017 | 150,448 | $ | 23.13 | ||||
The following table summarizes the time-based restricted unit grants and vestings during the years ended December 31, 2017, 2016,2022, 2021, and 2015: 2020 (dollars in thousands, except unit and per unit data):
| ($ in thousands, except unit and per unit data) | Number of Restricted Units Granted | Weighted Average Grant Date Fair Value per Unit | Fair Value of Restricted Units Vested | ||||||||
| 2017 | 44,490 | $ | 23.22 | $ | 1,516 | ||||||
| 2016 | 46,562 | 26.48 | 1,929 | ||||||||
| 2015 | — | — | 1,694 | ||||||||
| Number of Restricted Units Granted | Weighted Average Grant Date Fair Value per Unit | Fair Value of Restricted Units Vested | |||||||||||||||
| 2022 | 138,505 | $ | 17.07 | $ | 3,173 | ||||||||||||
| 2021 | 72,689 | $ | 14.26 | $ | 2,956 | ||||||||||||
| 2020 | 431,913 | $ | 13.10 | $ | 1,784 | ||||||||||||
As of December 31, 2017,2022, there was $2.4$4.5 million of total unrecognized compensation costexpense related to restricted units, granted under the Plan, which is expected to be recognized in the consolidated statements of operations over a weighted-averageweighted average period of 1.091.4 years. We expect to incur $1.4$2.0 million of this expense in 2018, $0.62023, $1.6 million in 2019, $0.3 million in 2020,2024, and the remainder in 2021.2025.
F-29
| Number of AO LTIP Units | Participation Threshold per AO LTIP Unit | |||||||||||||||||||||||||
| Executive | 2020 Awards | 2021 Awards | 2020 Awards | 2021 Awards | ||||||||||||||||||||||
| John A. Kite | 1,729,729 | 477,612 | $ | 17.76 | $ | 16.69 | ||||||||||||||||||||
| Thomas K. McGowan | 405,405 | 149,254 | $ | 17.76 | $ | 16.69 | ||||||||||||||||||||
| Heath R. Fear | 275,675 | 119,403 | $ | 17.76 | $ | 16.69 | ||||||||||||||||||||
The Company entered into award agreements with each executive officer with respect to his awards, which provide terms of vesting, conversion, distribution, and other terms. AO LTIP Units are designed to have economics similar to stock options and allow the recipient, subject to vesting requirements, to realize value above a threshold level set as of the grant date of the award (the “Participation Threshold”). The value of vested AO LTIP Units is realized through conversion into a number of vested Long-Term Incentive Plan (“LTIP”) Units in the Operating Partnership determined on the basis of how much the value of a common share of the Company has increased over the Participation Threshold.
The AO LTIP Units are only exercisable and convertible into vested LTIP Units of the Operating Partnership to the extent that they become vested AO LTIP Units. The awards of AO LTIP Units are subject to both time-based and stock price performance-based vesting requirements. Subject to the terms of the award agreements, the AO LTIP Units shall vest and become fully exercisable as of the date that both of the following requirements have been met: (i) the grantee remains in continuous service from the grant date through the third anniversary of the grant date; and (ii) at any time during the period beginning in the second year and ending at the end of the fifth year following the grant date for the 2020 and 2021 awards, the reported closing price per common share of the Company appreciates at least 15% for the 2020 and 2021 awards over the applicable Participation Threshold per AO LTIP Unit (as set forth in the table above) for a minimum of 20 consecutive trading days. Any AO LTIP Units that do not become vested will be forfeited and become null and void as of the fifth anniversary of the grant date, but AO LTIP Units may also be forfeited earlier in connection with a corporate transaction or with the holder’s termination of service.
The AO LTIP Units were valued using a Monte Carlo simulation and the resulting compensation expense is being amortized over five years for the 2020 awards and three years for the 2021 awards. Compensation expense for the awards granted in 2020 totaled $3.6 million, of which we recognized $0.6 million, $0.7 million and $0.7 million of compensation expense in 2020, 2021 and 2022, respectively, and expect to annually incur $0.7 million of this expense in 2023 and 2024 and the remainder in 2025. Compensation expense for the awards granted in 2021 totaled $3.0 million, of which we recognized $0.9 million and $1.0 million of compensation expense in 2021 and 2022, respectively, and expect to incur $1.0 million of this expense in 2023 and the remainder in 2024.
Special Long-Term Equity Award
In January 2022, the Compensation Committee of the Company’s Board of Trustees granted 363,883 LTIP Units to the Company’s named executive officers as a special long-term equity award related to the Merger, which are subject to both performance and service conditions. The LTIP Units granted are subject to an approximate three-year performance and service period, from October 23, 2021 through December 31, 2024, and the performance components are as follows: (i) cumulative annualized net operating income for executed new leases from October 1, 2021 to December 31, 2024, which will be weighted at 60%; (ii) post-Merger cash general and administrative expense synergies achieved as of the end of the performance period, which will be weighted at 20%; and (iii) same property net operating income margin improvement over the performance period, which will be weighted at 20%. Overall performance is further subject to an absolute total shareholder return modifier that has the ability to increase (or decrease) the total number of LTIP Units eligible to vest by 25% (not to exceed the maximum number of LTIP Units). Distributions will accrue during the performance period and will be paid only on LTIP Units that vest at the conclusion of the performance period, and any accrued distributions on vested LTIP Units will be settled in cash at such time.
F-30
NOTE 6. DEFERRED COSTS AND INTANGIBLES, NET
Deferred costs consist primarily of acquired lease intangible assets, broker fees and capitalized salaries and related benefitsinternal 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. AtAs of December 31, 20172022 and 2016,2021, deferred costs consisted of the following: following (in thousands):
| December 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Acquired lease intangible assets | $ | 522,152 | $ | 567,149 | |||||||
| Deferred leasing costs and other | 66,842 | 55,817 | |||||||||
| 588,994 | 622,966 | ||||||||||
| Less: accumulated amortization | (179,166) | (81,448) | |||||||||
| Total | $ | 409,828 | $ | 541,518 | |||||||
| ($ in thousands) | 2017 | 2016 | ||||||
| Acquired lease intangible assets | $ | 107,668 | $ | 125,144 | ||||
| Deferred leasing costs and other | 68,335 | 63,810 | ||||||
| 176,003 | 188,954 | |||||||
| Less—accumulated amortization | (63,644 | ) | (59,690 | ) | ||||
| Total | $ | 112,359 | $ | 129,264 | ||||
The estimated net amounts of amortization from acquired lease intangible assets for each of the next five years and thereafter are as follows:follows (in thousands):
| Amortization of above-market leases | Amortization of acquired lease intangible assets | Total | |||||||||||||||
| 2023 | $ | 11,823 | $ | 92,095 | $ | 103,918 | |||||||||||
| 2024 | 9,583 | 63,858 | 73,441 | ||||||||||||||
| 2025 | 7,339 | 43,346 | 50,685 | ||||||||||||||
| 2026 | 5,368 | 29,834 | 35,202 | ||||||||||||||
| 2027 | 4,030 | 20,156 | 24,186 | ||||||||||||||
| Thereafter | 5,792 | 60,823 | 66,615 | ||||||||||||||
| Total | $ | 43,935 | $ | 310,112 | $ | 354,047 | |||||||||||
| ($ in thousands) | Amortization of above market leases | Amortization of acquired lease intangible assets | Total | ||||||||
| 2018 | $ | 2,485 | $ | 9,441 | $ | 11,926 | |||||
| 2019 | 1,251 | 6,905 | 8,156 | ||||||||
| 2020 | 1,070 | 5,909 | 6,979 | ||||||||
| 2021 | 806 | 4,756 | 5,562 | ||||||||
| 2022 | 556 | 4,152 | 4,708 | ||||||||
| Thereafter | 2,557 | 26,412 | 28,969 | ||||||||
| Total | $ | 8,725 | $ | 57,575 | $ | 66,300 | |||||
Amortization of deferred leasing costs, leasinglease intangibles and other is included in depreciationwithin “Depreciation and amortization expenseamortization” in the accompanying consolidated statements of operations.operations and comprehensive income. The amortization of above marketabove-market lease intangibles is included as a reduction to revenue.“Rental income” in the accompanying consolidated statements of operations and comprehensive income. The amounts of such amortization included in the accompanying consolidated statements of operations and comprehensive income are as follows:follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2022 | 2021 | 2020 | |||||||||||||||
| Amortization of deferred leasing costs, lease intangibles and other | $ | 150,245 | $ | 45,423 | $ | 13,916 | |||||||||||
| Amortization of above-market lease intangibles | $ | 13,562 | $ | 3,483 | $ | 999 | |||||||||||
NOTE 7. DEFERRED REVENUE, INTANGIBLES, NET AND OTHER LIABILITIES
| ($ in thousands) | For the year ended December 31, | |||||||||||
| 2017 | 2016 | 2015 | ||||||||||
| Amortization of deferred leasing costs, lease intangibles and other | $ | 22,960 | $ | 24,898 | $ | 25,187 | ||||||
| Amortization of above market lease intangibles | 4,025 | 6,602 | 6,860 | |||||||||
Deferred revenue and other liabilities consist of (i) the unamortized fair value of below marketbelow-market lease liabilities recorded in connection with purchase accounting, (ii) retainage payables for development and redevelopment projects, and(iii) tenant rent payments received in advance of the month in which they are due.due, and (iv) lease liabilities recorded upon adoption of ASU 2016-02, Leases (Topic 842). The amortization of below marketbelow-market lease liabilities is recognized as revenue over the remaining life of the leases (including option periods for leases with below marketbelow-market renewal options) through 2046.2085. 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.
F-31
| December 31, | |||||||||||||||||||
| ($ in thousands) | 2017 | 2016 | |||||||||||||||||
| 2022 | 2021 | ||||||||||||||||||
| Unamortized in-place lease liabilities | $ | 83,117 | $ | 95,360 | Unamortized in-place lease liabilities | $ | 188,815 | $ | 210,261 | ||||||||||
| Retainages payable and other | 3,954 | 5,437 | Retainages payable and other | 12,110 | 10,796 | ||||||||||||||
| Tenant rents received in advance | 9,493 | 11,405 | Tenant rents received in advance | 29,947 | 30,125 | ||||||||||||||
| Lease liabilities | Lease liabilities | 67,167 | 70,237 | ||||||||||||||||
| Total | $ | 96,564 | $ | 112,202 | Total | $ | 298,039 | $ | 321,419 | ||||||||||
The amortization of below marketbelow-market lease intangibles is included as a component of minimum rent“Rental income” in the accompanying consolidated statements of operations and was $7.7comprehensive income and totaled $18.4 million, $13.5$6.1 million and $10.2$4.8 million for the years ended December 31, 2017, 20162022, 2021 and 2015,2020, respectively.
The estimated net amounts of amortization of in-place lease liabilities and the increasing effect on minimum rent for each of the next five years and thereafter is as follows: follows (in thousands):
| 2023 | $ | 17,582 | |||
| 2024 | 15,828 | ||||
| 2025 | 14,158 | ||||
| 2026 | 13,210 | ||||
| 2027 | 11,219 | ||||
| Thereafter | 116,818 | ||||
| Total | $ | 188,815 | |||
NOTE 8. MORTGAGE AND OTHER INDEBTEDNESS
| ($ in thousands) | |||
| 2018 | $ | 6,304 | |
| 2019 | 4,953 | ||
| 2020 | 4,454 | ||
| 2021 | 4,132 | ||
| 2022 | 3,957 | ||
| Thereafter | 59,317 | ||
| Total | $ | 83,117 | |
The following table summarizes the estimation of the fair value of assets acquired and liabilities assumed for the properties acquired in 2015:
| ($ in thousands) | |||
| Investment properties, net | $ | 176,223 | |
| Lease-related intangible assets, net | 17,436 | ||
| Other assets | 435 | ||
| Total acquired assets | 194,094 | ||
| Mortgage and other indebtedness | 18,473 | ||
| Accounts payable and accrued expenses | 2,125 | ||
| Deferred revenue and other liabilities | 8,269 | ||
| Total assumed liabilities | 28,867 | ||
| Fair value of acquired net assets | $ | 165,227 | |
| December 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Mortgages payable | $ | 233,621 | $ | 392,590 | |||||||
| Senior unsecured notes | 1,924,635 | 1,924,635 | |||||||||
| Unsecured term loans | 820,000 | 720,000 | |||||||||
| Unsecured revolving line of credit | — | 55,000 | |||||||||
| 2,978,256 | 3,092,225 | ||||||||||
| Unamortized discounts and premiums, net | 44,362 | 69,425 | |||||||||
| Unamortized debt issuance costs, net | (12,319) | (10,842) | |||||||||
| Total mortgage and other indebtedness, net | $ | 3,010,299 | $ | 3,150,808 | |||||||
| ($ in thousands) | As of December 31, 2017 | |||||||||||||||
| Principal | Unamortized Net Premiums | Unamortized Debt Issuance Costs | Total | |||||||||||||
| Senior Unsecured Notes—Fixed Rate | ||||||||||||||||
| Maturing at various dates through September 2027; interest rates ranging from 4.00% to 4.57% at December 31, 2017 | $ | 550,000 | $ | — | $ | (5,599 | ) | $ | 544,401 | |||||||
| Unsecured Revolving Credit Facility | ||||||||||||||||
Matures July 20211; borrowing level up to $373.8 million available at December 31, 2017; interest at LIBOR + 1.35% or 2.91% at December 31, 2017 | 60,100 | — | (1,895 | ) | 58,205 | |||||||||||
| Unsecured Term Loans | ||||||||||||||||
| $200 million matures July 2021; interest at LIBOR + 1.30% or 2.86% at December 31, 2017; $200 million matures October 2022; interest at LIBOR + 1.60% or 3.16% at December 31, 2017 | 400,000 | — | (1,759 | ) | 398,241 | |||||||||||
| Mortgage Notes Payable—Fixed Rate | ||||||||||||||||
| Generally due in monthly installments of principal and interest; maturing at various dates through 2030; interest rates ranging from 3.78% to 6.78% at December 31, 2017 | 576,927 | 9,196 | (755 | ) | 585,368 | |||||||||||
| Mortgage Notes Payable—Variable Rate | ||||||||||||||||
| Due in monthly installments of principal and interest; maturing at various dates through 2023; interest at LIBOR + 1.60%-2.25%, ranging from 3.16% to 3.81% at December 31, 2017 | 113,623 | — | (599 | ) | 113,024 | |||||||||||
| Total mortgage and other indebtedness | $ | 1,700,650 | $ | 9,196 | $ | (10,607 | ) | $ | 1,699,239 | |||||||
| ($ in thousands) | As of December 31, 2016 | |||||||||||||||
| Principal | Unamortized Net Premiums | Unamortized Debt Issuance Costs | Total | |||||||||||||
| Senior Unsecured Notes—Fixed Rate | ||||||||||||||||
| Maturing at various dates through September 2027; interest rates ranging from 4.00% to 4.57% at December 31, 2016 | $ | 550,000 | $ | — | $ | (6,140 | ) | $ | 543,860 | |||||||
| Unsecured Revolving Credit Facility | ||||||||||||||||
Matures July 20211; borrowing level up to $409.9 million available at December 31, 2016; interest at LIBOR + 1.35%2 or 2.12% at December 31, 2016 | 79,600 | — | (2,723 | ) | 76,877 | |||||||||||
| Unsecured Term Loans | ||||||||||||||||
$200 million matures July 2021; interest at LIBOR + 1.30%2 or 2.07% at December 31, 2016; $200 million matures October 2022; interest at LIBOR + 1.60% or 2.37% at December 31, 2016 | 400,000 | — | (2,179 | ) | 397,821 | |||||||||||
| Mortgage Notes Payable—Fixed Rate | ||||||||||||||||
| Generally due in monthly installments of principal and interest; maturing at various dates through 2030; interest rates ranging from 3.78% to 6.78% at December 31, 2016 | 587,762 | 12,109 | (994 | ) | 598,877 | |||||||||||
| Mortgage Notes Payable—Variable Rate | ||||||||||||||||
| Due in monthly installments of principal and interest; maturing at various dates through 2023; interest at LIBOR + 1.60%-2.25%, ranging from 2.37% to 3.02% at December 31, 2016 | 114,388 | — | (749 | ) | 113,639 | |||||||||||
| Total mortgage and other indebtedness | $ | 1,731,750 | $ | 12,109 | $ | (12,785 | ) | $ | 1,731,074 | |||||||
| ($ in thousands) | For the year ended December 31, | |||||||||||
| 2017 | 2016 | 2015 | ||||||||||
| Amortization of debt issuance costs | $ | 2,534 | $ | 4,521 | $ | 3,209 | ||||||
| Amount Outstanding | Ratio | Weighted Average Interest Rate | Weighted Average Years to Maturity | ||||||||||||||||||||
Fixed rate debt(1) | $ | 2,794,963 | 94 | % | 3.96 | % | 4.3 | ||||||||||||||||
Variable rate debt(2) | 183,293 | 6 | % | 8.08 | % | 3.2 | |||||||||||||||||
| Debt discounts, premiums and issuance costs, net | 32,043 | N/A | N/A | N/A | |||||||||||||||||||
| Total | $ | 3,010,299 | 100 | % | 4.21 | % | 4.2 | ||||||||||||||||
interest rate swaps. As of December 31, 2017, $60.12022, $820.0 million was outstanding underin variable rate debt is hedged to a fixed rate for a weighted average of 2.7 years.
(2)Variable rate debt includes the Credit Facility. Additionally, weportion of fixed rate debt that has been hedged by interest rate swaps. As of December 31, 2022, $155.0 million in fixed rate debt is hedged to a floating rate for a weighted average of 2.7 years.
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Mortgages Payable
The following table summarizes the Company’s mortgages payable (dollars in thousands):
| December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
| Balance | Weighted Average Interest Rate | Weighted Average Years to Maturity | Balance | Weighted Average Interest Rate | Weighted Average Years to Maturity | ||||||||||||||||||||||||||||||
Fixed rate mortgages payable(1) | $ | 205,328 | 3.98 | % | 1.4 | $ | 363,577 | 4.13 | % | 1.7 | |||||||||||||||||||||||||
Variable rate mortgage payable(2) | 28,293 | 5.96 | % | 0.6 | 29,013 | 1.70 | % | 0.1 | |||||||||||||||||||||||||||
| Total mortgages payable | $ | 233,621 | $ | 392,590 | |||||||||||||||||||||||||||||||
(1)The fixed rate mortgages had letters of credit outstanding which totaled $6.3 million, against which no amounts were advancedinterest rates ranging from 3.75% to 5.73% as of December 31, 2017.2022 and 2021.
Unsecured Notes
The following table summarizes the Company’s senior unsecured notes and exchangeable senior notes (dollars in thousands):
| December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||
| Maturity Date | Balance | Interest Rate | Balance | Interest Rate | |||||||||||||||||||||||||
| Senior notes – 4.23% due 2023 | September 10, 2023 | $ | 95,000 | 4.23 | % | $ | 95,000 | 4.23 | % | ||||||||||||||||||||
Senior notes – 4.58% due 2024(1) | June 30, 2024 | 149,635 | 4.58 | % | 149,635 | 4.58 | % | ||||||||||||||||||||||
Senior notes – 4.00% due 2025(2) | March 15, 2025 | 350,000 | 4.00 | % | 350,000 | 4.00 | % | ||||||||||||||||||||||
Senior notes – LIBOR + 3.65% due 2025(3) | September 10, 2025 | 80,000 | 8.41 | % | 80,000 | 3.86 | % | ||||||||||||||||||||||
Senior notes – 4.08% due 2026(1) | September 30, 2026 | 100,000 | 4.08 | % | 100,000 | 4.08 | % | ||||||||||||||||||||||
| Senior notes – 4.00% due 2026 | October 1, 2026 | 300,000 | 4.00 | % | 300,000 | 4.00 | % | ||||||||||||||||||||||
| Senior exchangeable notes – 0.75% due 2027 | April 1, 2027 | 175,000 | 0.75 | % | 175,000 | 0.75 | % | ||||||||||||||||||||||
Senior notes – LIBOR + 3.75% due 2027(4) | September 10, 2027 | 75,000 | 8.51 | % | 75,000 | 3.96 | % | ||||||||||||||||||||||
Senior notes – 4.24% due 2028(1) | December 28, 2028 | 100,000 | 4.24 | % | 100,000 | 4.24 | % | ||||||||||||||||||||||
Senior notes – 4.82% due 2029(1) | June 28, 2029 | 100,000 | 4.82 | % | 100,000 | 4.82 | % | ||||||||||||||||||||||
Senior notes – 4.75% due 2030(2) | September 15, 2030 | 400,000 | 4.75 | % | 400,000 | 4.75 | % | ||||||||||||||||||||||
| Total senior unsecured notes | $ | 1,924,635 | $ | 1,924,635 | |||||||||||||||||||||||||
(1)Private placement notes assumed in connection with the Merger.
(2)Publicly placed notes assumed in connection with the Merger.
(3)$80,000 of 4.47% senior unsecured notes has been swapped to a variable rate of three-month LIBOR plus 3.65% through September 10, 2025.
(4)$75,000 of 4.57% senior unsecured notes has been swapped to a variable rate of three-month LIBOR plus 3.75% through September 10, 2025.
Private Placement Senior Unsecured Notes
In October 2021, in connection with the Merger, the Operating Partnership entered into a number of assumption agreements pursuant to which the Operating Partnership assumed all of RPAI’s obligations under RPAI’s existing note purchase agreements related to an aggregate of $450.0 million in principal of privately placed senior unsecured notes. In addition, in August 2015, the Operating Partnership entered into a note purchase agreement in connection with the issuance of $250.0 million of senior unsecured notes at a blended rate of 4.41% and an average maturity of 9.8 years (collectively, the “Private Placement Notes”).
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Each series of Private Placement Notes require semi-annual interest payments each year until maturity. The Operating Partnership may prepay at any time all, or from time to time any part of, any series of the Private Placement Notes in an amount not less than 5% of the aggregate principal amount of such series of the Private Placement Notes then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid plus a Make-Whole Amount (as defined in the applicable note purchase agreement). The Make-Whole Amount is equal to the excess, if any, of the discounted value of the remaining scheduled payments with respect to the Private Placement Notes being prepaid over the amount of such Notes.
Each note purchase agreement contains customary financial maintenance covenants, including a maximum total leverage ratio, secured and unsecured leverage ratios and a minimum interest coverage ratio. Each note purchase agreement also contains restrictive covenants that restrict the ability of the Operating Partnership and its subsidiaries to, among other things, enter into transactions with affiliates, merge or consolidate, transfer assets or incur liens. Further, each note purchase agreement contains customary events of default, including in relation to non-payment, breach of covenants, defaults under certain other indebtedness, judgment defaults and bankruptcy events. In the case of an event of default, the holders of the Private Placement Notes may, among other remedies, accelerate the payment of all obligations.
Publicly Placed Senior Unsecured Notes
In October 2021, in connection with the Merger, the Operating Partnership (as successor by merger to RPAI) assumed all of RPAI’s outstanding $750.0 million aggregate principal of publicly placed senior unsecured notes. In addition, the Operating Partnership completed a $300.0 million public offering of 4.00% senior unsecured notes in September 2016 (collectively, the “Public Placement Notes”). The Public Placement Notes require semi-annual interest payments each year until maturity.
The Public Placement Notes are the direct, senior unsecured obligations of the Operating Partnership and rank equally in right of payment with all of its existing and future unsecured and unsubordinated indebtedness. The Operating Partnership may redeem the Public Placement Notes at its option and in its sole discretion, at any time or from time to time prior to three months prior to the respective maturity date (such date, the “Par Call Date”), at a redemption price equal to 100% of the principal amount of the applicable Public Placement Notes being redeemed, plus accrued and unpaid interest and a “make-whole” premium calculated in accordance with the indenture. Redemptions on or after the respective Par Call Date are not subject to the addition of a “make-whole” premium.
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 U.S. 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, and will mature on April 1, 2027. During the years ended December 31, 2022 and 2021, we recognized approximately $1.3 million and $1.6 million, respectively, of interest expense for the Exchangeable Notes.
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
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price equal to 100% of the principal amount of the Exchangeable 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 is recorded within “Additional paid-in capital” in the accompanying consolidated balance sheets.
Unsecured Term Loans and Revolving Line of Credit
The following table summarizes the Company’s term loans and revolving line of credit (dollars in thousands):
| December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||
| Maturity Date | Balance | Interest Rate | Balance | Interest Rate | |||||||||||||||||||||||||
Unsecured term loan due 2023 – fixed rate(1)(2) | November 22, 2023 | $ | — | — | % | $ | 200,000 | 4.10 | % | ||||||||||||||||||||
Unsecured term loan due 2024 – fixed rate(1)(3) | July 17, 2024 | 120,000 | 2.68 | % | 120,000 | 2.88 | % | ||||||||||||||||||||||
Unsecured term loan due 2025 – fixed rate(4) | October 24, 2025 | 250,000 | 5.09 | % | 250,000 | 5.09 | % | ||||||||||||||||||||||
Unsecured term loan due 2026 – fixed rate(1)(5) | July 17, 2026 | 150,000 | 2.73 | % | 150,000 | 2.97 | % | ||||||||||||||||||||||
Unsecured term loan due 2029 – fixed rate(6) | July 29, 2029 | 300,000 | 4.05 | % | — | — | % | ||||||||||||||||||||||
| Total unsecured term loans | $ | 820,000 | $ | 720,000 | |||||||||||||||||||||||||
Unsecured credit facility revolving line of credit – variable rate(7) | January 8, 2026 | $ | — | 5.56 | % | $ | 55,000 | 1.20 | % | ||||||||||||||||||||
(1)Unsecured term loans assumed in connection with the Merger.
(2)As of December 31, 2021, $200,000 of LIBOR-based variable rate debt had been swapped to a fixed rate of 2.85% plus a credit spread based on a leverage grid ranging from 1.20% to 1.85% through November 22, 2023. The applicable credit spread was 1.25% as of December 31, 2021.
(3)As of December 31, 2022, $120,000 of Secured Overnight Financing Rate (“SOFR”)-based variable rate debt has been swapped to a fixed rate of 1.58% plus a credit spread based on a ratings grid ranging from 0.80% to 1.65% through July 17, 2024. The applicable credit spread was 1.10% as of December 31, 2022. As of December 31, 2021, $120,000 of LIBOR-based variable rate debt had been swapped to a fixed rate of 1.68% plus a credit spread based on a leverage grid ranging from 1.20% to 1.70% through July 17, 2024. The applicable credit spread was 1.20% as of December 31, 2021.
(4)As of December 31, 2022, $250,000 of SOFR-based variable rate debt has been swapped to a fixed rate of 5.09% through October 24, 2025. As of December 31, 2021, $250,000 of LIBOR-based variable rate debt had been swapped to a fixed rate of 5.09% through October 24, 2025. The maturity date of the term loan may be extended for up to three additional periods of one year each at the Operating Partnership’s option, subject to certain conditions.
(5)As of December 31, 2022, $150,000 of SOFR-based variable rate debt has been swapped to a fixed rate of 1.68% plus a credit spread based on a ratings grid ranging from 0.75% to 1.60% through July 17, 2026. The applicable credit spread was 1.05% as of December 31, 2022. As of December 31, 2021, $150,000 of LIBOR-based variable rate debt had been swapped to a fixed rate 1.77% plus a credit spread based on a leverage grid ranging from 1.20% to 1.70% through July 17, 2026. The applicable credit spread was 1.20% as of December 31, 2021.
(6)$300,000 of SOFR-based variable rate debt has been swapped to a fixed rate of 2.70% plus a credit spread based on a ratings grid ranging from 1.15% to 2.20% through November 22, 2023. The applicable credit spread was 1.35% as of December 31, 2022.
(7)The revolving line of credit has two six-month extension options that the Company can exercise, at its election, subject to (i) customary representations and warranties, including, but not limited to, the absence of an event of default as defined in the unsecured credit agreement and (ii) payment of an extension fee equal to 0.075% of the revolving line of credit capacity. On July 29, 2022, SOFR replaced LIBOR as the interest reference rate for the revolving line of credit.
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Unsecured Revolving Credit Facility
In July 2022, the Operating Partnership, as borrower, and the Company entered into the Second Amendment (the “Second Amendment”) to the Sixth Amended and Restated Credit Agreement, dated as of July 8, 2021 (as amended, the “Credit Agreement”) with a syndicate of financial institutions to provide for (i) a $250.0 million increase to the $850.0 million unsecured revolving line of credit that was assumed in the Merger, resulting in a $1.1 billion unsecured revolving credit facility (the “2022 Revolving Facility”) and (ii) a seven-year $300.0 million unsecured term loan (the “$300M Term Loan”). Under the Second Amendment, the Operating Partnership has the option, subject to certain customary conditions, to increase the 2022 Revolving Facility and/or incur additional term loans in an aggregate amount for all such increases and additional loans of up to $600.0 million, for a total facility amount of up to $2.0 billion. The 2022 Revolving Facility has a scheduled maturity date of January 8, 2026, which maturity date may be extended for up to two additional periods of six months at the Operating Partnership’s option, subject to certain conditions.
Borrowings under the 2022 Revolving Facility bear interest at a rate per annum equal to SOFR plus a margin based on the Operating Partnership’s leverage ratio or credit rating, respectively, plus a facility fee based on the Operating Partnership’s leverage ratio or credit rating, respectively. The SOFR rate is also subject to an additional 0.10% spread adjustment as specified in the Second Amendment. The 2022 Revolving Facility is currently priced on the leverage-based pricing grid. In accordance with the Credit Agreement, the credit spread set forth in the leverage grid resets quarterly based on the Company’s leverage, as calculated at the previous quarter end. The Company may irrevocably elect to convert to the ratings-based pricing grid at any time. As of December 31, 2022, making such an election would have resulted in a lower interest rate; however, the Company had not made the election to convert to the ratings-based pricing grid. The Credit Agreement includes a sustainability metric based on targeted greenhouse gas emission reductions, which results in a reduction of the otherwise applicable interest rate margin by one basis point upon achievement of targets set forth therein.
The following table summarizes the key terms of the 2022 Revolving Facility as of December 31, 2022 (dollars in thousands):
| Leverage-Based Pricing | Investment Grade Pricing | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2022 Credit Agreement | Maturity Date | Extension Option | Extension Fee | Credit Spread | Facility Fee | Credit Spread | Facility Fee | SOFR Adjustment | ||||||||||||||||||||||||||||||||||||||||||
| $1,100,000 unsecured revolving line of credit | 1/8/2026 | 2 six-month | 0.075% | 1.05%–1.50% | 0.15%–0.30% | 0.725%–1.40% | 0.125%–0.30% | 0.10% | ||||||||||||||||||||||||||||||||||||||||||
The Operating Partnership’s ability to borrow under the Credit Agreement is subject to ongoing compliance by the Operating Partnership and its subsidiaries with various restrictive covenants, including with respect to liens, transactions with affiliates, dividends, mergers and asset sales. In addition, the Credit Agreement requires that the Operating Partnership satisfy certain financial covenants, including (i) a maximum leverage ratio; (ii) a minimum fixed charge coverage ratio; (iii) a maximum secured indebtedness ratio; (iv) a maximum unsecured leverage ratio; and (v) a minimum unencumbered interest coverage ratio. As of December 31, 2022, we were in compliance with all such covenants.
The Credit Agreement includes customary representations and warranties, which must continue to be true and correct in all material respects as a condition to future draws under the 2022 Revolving Facility. The Credit Agreement also contains customary events of default, the occurrence of which, following any applicable grace period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations under the Credit Agreement to be immediately due and payable.
As of December 31, 2022, we had letters of credit outstanding totaling $1.5 million, against which no amounts were advanced as of December 31, 2022.
Unsecured Term Loans
In July 2022, in conjunction with the Second Amendment, the Operating Partnership obtained a $300M Term Loan that is priced on a ratings-based pricing grid at a rate of SOFR plus a credit spread ranging from 1.15% to 2.20%. The SOFR rate is also subject to an additional 0.10% spread adjustment as specified in the Second Amendment. Proceeds from the $300M Term Loan were used to repay the Operating Partnership’s $200.0 million unsecured term loan that was assumed in the Merger and was scheduled to mature on November 22, 2023 (the “$200M Term Loan”), certain secured loans, and for other general corporate purposes. The Operating Partnership is permitted to prepay the $300M Term Loan in whole or in part, at any time, subject to a prepayment fee if prepaid on or before July 29, 2024. The agreement related to the $300M Term Loan includes a
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sustainability metric based on targeted greenhouse gas emission reductions, which results in a reduction of the otherwise applicable interest rate margin by one basis point upon achievement of targets set forth therein.
In October 2021, in connection with the Merger, the Operating Partnership (as successor by merger to RPAI) assumed RPAI’s $120.0 million (the “$120M Term Loan”) and $150.0 million (the “$150M Term Loan”) unsecured term loans, which were originally priced on a leverage-based pricing grid with the credit spread set forth in the leverage grid resetting quarterly based on the Company’s leverage, as calculated at the previous quarter end. The Company had the option to irrevocably elect to convert to a ratings-based pricing grid at any time. On August 2, 2022, the Company made the election to convert to the ratings-based pricing grid. The agreement related to the $150M Term Loan includes a sustainability metric based on targeted greenhouse gas emission reductions, which results in a reduction of the otherwise applicable interest rate margin by one basis point upon achievement of targets set forth therein.
Under the agreement related to the $120M Term Loan and the $150M Term Loan, the Operating Partnership has the option to increase each of the term loans to $250.0 million upon the Operating Partnership’s request, subject to certain conditions, including obtaining commitments from any one or more lenders, whether or not currently party to the term loan agreement, to provide such increased amounts. The Operating Partnership is permitted to prepay each of the $120M Term Loan and $150M Term Loan, in whole or in part, at any time without being subject to a prepayment fee.
In October 2018, the Operating Partnership entered into a term loan agreement with KeyBank National Association, as Administrative Agent, and the other lenders party thereto, providing for an unsecured term loan facility of up to $250.0 million (the “$250M Term Loan”). The Operating Partnership has the option to increase the $250M Term Loan to $300.0 million, subject to certain conditions, including obtaining commitments from any one or more lenders, whether or not currently party to the term loan agreement, to provide such increased amounts. The Operating Partnership is permitted to prepay the $250M Term Loan in whole or in part, at any time, subject to a prepayment fee if prepaid on or before October 25, 2023.
The unsecured term loan agreements contain representations, financial and other affirmative and negative covenants and events of default that are substantially similar to those contained in the Credit Agreement. The unsecured term loan agreements all rank pari passu with the Operating Partnership’s 2022 Revolving Facility and other unsecured indebtedness of the Operating Partnership.
The following table summarizes the key terms of the unsecured term loans as of December 31, 2022 (dollars in thousands):
| Unsecured Term Loans | Maturity Date | Leverage-Based Pricing Credit Spread | Investment Grade Pricing Credit Spread | SOFR Adjustment | ||||||||||||||||||||||
$120,000 unsecured term loan due 2024(1) | 7/17/2024 | 1.20% – 1.70% | 0.80% – 1.65% | 0.10% | ||||||||||||||||||||||
$250,000 unsecured term loan due 2025(2) | 10/24/2025 | 2.00% – 2.55% | 2.00% – 2.50% | 0.10% | ||||||||||||||||||||||
$150,000 unsecured term loan due 2026(1) | 7/17/2026 | 1.20% – 1.70% | 0.75% – 1.60% | 0.10% | ||||||||||||||||||||||
| $300,000 unsecured term loan due 2029 | 7/29/2029 | N/A | 1.15% – 2.20% | 0.10% | ||||||||||||||||||||||
(1)In July 2022, SOFR replaced LIBOR as the interest reference rate for these term loans.
(2)In December 2022, SOFR replaced LIBOR as the interest reference rate for this term loan. In addition, the 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.
Debt Issuance Costs
Debt issuance costs are amortized over the terms of the respective loan agreements. The following amounts of amortization of debt issuance costs are included as a component of “Interest expense” in the accompanying consolidated statements of operations and comprehensive income (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2022 | 2021 | 2020 | |||||||||||||||
| Amortization of debt issuance costs | $ | 3,163 | $ | 2,681 | $ | 2,135 | |||||||||||
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Debt Maturities
The following table presentssummarizes the scheduled maturities and principal amortization of mortgage debt and corporate debtthe Company’s indebtedness as of December 31, 2017: 2022 (in thousands):
| ($ in thousands) | Scheduled Principal Payments | Term Maturities1 | Total | |||||||||
| 2018 | $ | 5,635 | $ | 37,584 | $ | 43,219 | ||||||
| 2019 | 5,975 | — | 5,975 | |||||||||
| 2020 | 5,920 | 42,339 | 48,259 | |||||||||
| 2021 | 4,625 | 419,975 | 424,600 | |||||||||
| 2022 | 1,113 | 405,208 | 406,321 | |||||||||
| Thereafter | 7,236 | 765,040 | 772,276 | |||||||||
| $ | 30,504 | $ | 1,670,146 | $ | 1,700,650 | |||||||
| Unamortized net debt premiums and issuance costs, net | (1,411 | ) | ||||||||||
| Total | $ | 1,699,239 | ||||||||||
| Secured Debt | |||||||||||||||||||||||
| Scheduled Principal Payments | Term Maturities | Unsecured Debt | Total | ||||||||||||||||||||
| 2023 | $ | 3,020 | $ | 189,390 | $ | 95,000 | $ | 287,410 | |||||||||||||||
| 2024 | 2,721 | — | 269,635 | 272,356 | |||||||||||||||||||
| 2025 | 2,848 | — | 680,000 | 682,848 | |||||||||||||||||||
| 2026 | 2,981 | — | 550,000 | 552,981 | |||||||||||||||||||
| 2027 | 3,120 | — | 250,000 | 253,120 | |||||||||||||||||||
| Thereafter | 27,061 | 2,480 | 900,000 | 929,541 | |||||||||||||||||||
| $ | 41,751 | $ | 191,870 | $ | 2,744,635 | $ | 2,978,256 | ||||||||||||||||
| Debt discounts, premiums and issuance costs, net | 32,043 | ||||||||||||||||||||||
| Total | $ | 3,010,299 | |||||||||||||||||||||
Other Debt Activity
Fair Value of Fixed and Variable Rate Debt
As of December 31, 2017,2022, the estimated fair value and book value of our fixed rate debt was $1.1$2.0 billion compared to the book value of $2.1 billion. The fair value was estimated using Level 2 and 3 inputs with cash flows discounted at current borrowing rates for similar instruments, which ranged from 3.78%1.76% to 6.78%7.67%. As of December 31, 2017,2022, the estimated fair value of variable rate debt was $574.5$851.8 million compared to the book value of $573.7$848.3 million. The fair value was estimated using Level 2 and 3 inputs with cash flows discounted at current borrowing rates for similar instruments, which ranged from 2.86%5.41% to 3.81%6.36%.
NOTE 9. 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. We do not use suchinterest rate derivative agreements for trading or speculative purposes nor do we have any that are not designated as cash flow hedges.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.
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The following table summarizes the terms and fair values of the Company’s derivative financial instruments that were designated and qualified as part of a hedging relationship as of December 31, 2022 and 2021 (dollars in thousands):
Fair Value Assets (Liabilities)(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Type of Hedge | Number of Instruments | Aggregate Notional | Reference Rate | Interest Rate | Effective Date | Maturity Date | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||
| Cash Flow | Four | $ | 250,000 | SOFR | 2.99 | % | 12/1/2022 | 10/24/2025 | $ | 7,134 | $ | (18,282) | ||||||||||||||||||||||||||||||||||||||
| Cash Flow | Two | 100,000 | SOFR | 2.66 | % | 8/1/2022 | 8/1/2025 | 3,616 | — | |||||||||||||||||||||||||||||||||||||||||
| Cash Flow | Two | 200,000 | SOFR | 2.72 | % | 8/3/2022 | 11/22/2023 | 3,663 | (7,769) | |||||||||||||||||||||||||||||||||||||||||
| Cash Flow | Three | 120,000 | SOFR | 1.58 | % | 8/15/2022 | 7/17/2024 | 5,461 | (2,190) | |||||||||||||||||||||||||||||||||||||||||
| Cash Flow | Three | 150,000 | SOFR | 1.68 | % | 8/15/2022 | 7/17/2026 | 10,896 | (3,876) | |||||||||||||||||||||||||||||||||||||||||
| $ | 820,000 | $ | 30,770 | $ | (32,117) | |||||||||||||||||||||||||||||||||||||||||||||
Fair Value(2) | Two | $ | 155,000 | LIBOR | LIBOR + 3.70% | 4/23/2021 | 9/10/2025 | $ | (14,177) | $ | (2,630) | |||||||||||||||||||||||||||||||||||||||
Forward-Starting Cash Flow(3) | Two | $ | 150,000 | SOFR | 1.356 | % | N/A | 6/1/2032 | $ | — | $ | 299 | ||||||||||||||||||||||||||||||||||||||
Forward-Starting Cash Flow | Two | $ | 200,000 | SOFR | 2.37 | % | 11/22/2023 | 8/1/2025 | $ | 4,370 | $ | — | ||||||||||||||||||||||||||||||||||||||
(1)Derivatives in an asset position are included within “Prepaid and other assets” and derivatives in a liability position are included within “Accounts payable and accrued expenses” in the accompanying consolidated balance sheets.
(2)The derivative agreements swap a blended fixed rate of 4.52% for a blended floating rate of LIBOR on all variable rate debt resulted in fixing the weighted averageplus 3.70%.
(3)In December 2022, we terminated these two forward-starting interest rate at 3.15%.
swaps with notional amounts totaling $150.0 million and received proceeds of $30.9 million upon termination. This settlement is included as a component of accumulated other comprehensive income and will be reclassified to earnings over time as the hedged items are recognized in earnings.
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 utilizeuse Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. As of December 31, 20172022 and December 31, 2016,2021, 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.
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 $2.5$7.3 million, $4.8$7.7 million and $5.6$4.0 million was reclassified as a reduction to earnings during the years ended December 31, 2017, 20162022, 2021 and 2015,2020, respectively. As the interest payments on our derivatives are made over the next 12 months, we estimate the increasedecrease to interest expense to be $0.7approximately $27.8 million, assuming the current SOFR and LIBOR curve.
curves.
Unrealized gains and losses on our interest rate derivative agreements are the only components of the change in accumulated other comprehensive loss.
Rental Income
The Company receives rental income from the leasing of retail and office space under operating leases.space. The leaseslease agreements generally provide for certain increases in base rent, reimbursement for certain operating expenses, and may require tenants to pay contingent rentalsrent to the extent their sales exceed a defined threshold. Certain tenants have the option in their lease agreement to extend their lease upon the expiration of their contractual term. Variable lease payments are based upon tenant sales information and are
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recognized once a tenant’s sales volume exceeds a defined threshold. Variable lease payments for reimbursement of operating expenses are based upon the operating expense activity for the period. In connection with the Merger, the Company assumed all leases in place at legacy RPAI properties and began recognizing rental income under the respective leases upon completion of the Merger on October 22, 2021.
Rental income related to the Company’s operating leases is comprised of the following for the years ended December 31, 2022, 2021 and 2020, respectively (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2022 | 2021 | 2020 | |||||||||||||||
| Fixed contractual lease payments – operating leases | $ | 615,773 | $ | 292,873 | $ | 218,004 | |||||||||||
| Variable lease payments – operating leases | 151,304 | 69,422 | 52,128 | ||||||||||||||
| Bad debt reserve | (6,027) | (2,897) | (13,259) | ||||||||||||||
| Straight-line rent adjustments | 17,031 | 4,674 | 1,155 | ||||||||||||||
| Straight-line rent (reserve) recovery for uncollectibility | (553) | 716 | (4,177) | ||||||||||||||
| Amortization of in-place lease liabilities, net | 4,821 | 2,611 | 3,819 | ||||||||||||||
| Total | $ | 782,349 | $ | 367,399 | $ | 257,670 | |||||||||||
The weighted average remaining term of the lease agreements is approximately 4.67.1 years. During the years ended December 31, 2017, 2016,2022, 2021, and 2015,2020, the Company earned overage rent of $1.1$5.9 million, $1.5$0.8 million, and $1.4$0.2 million, respectively.
During 2020 and 2021, in response to the impact of the novel coronavirus (“COVID 19”) pandemic, the Company received rent relief requests from a significant portion of its tenants and agreed to defer rent for a portion of its tenants, subject to certain conditions, to be repaid over a period of time, typically 12 to 18 months. The Company had deferred the collection of $1.2 million of rental income that remains outstanding as of December 31, 2022. To the extent the Company agrees to defer rent or is otherwise unable to collect rent for certain periods, the Company will realize decreased cash flow, which could significantly decrease the cash available for its operating and capital uses.
The future impact of such modifications is dependent upon the extent of lease concessions granted to tenants as a result of COVID-19 in future periods and the elections made by the Company at the time of entering into such concessions. The Company did not provide a material amount of rent abatement to tenants as a result of COVID-19.
As of December 31, 2017,2022, future minimum rentals to be received under non-cancelable operating leases for each of the next five years and thereafter, excluding tenant reimbursements of operating expensesvariable lease payments and percentage rent based on sales volume,amounts deferred under lease concession agreements, are as follows: follows (in thousands):
| ($ in thousands) | |||
| 2018 | $ | 259,365 | |
| 2019 | 238,366 | ||
| 2020 | 215,584 | ||
| 2021 | 185,805 | ||
| 2022 | 151,127 | ||
| Thereafter | 635,979 | ||
| Total | $ | 1,686,226 | |
| Lease Payments | |||||
| 2023 | $ | 613,776 | |||
| 2024 | 552,465 | ||||
| 2025 | 474,145 | ||||
| 2026 | 402,393 | ||||
| 2027 | 323,087 | ||||
| Thereafter | 1,088,663 | ||||
| Total | $ | 3,454,529 | |||
Commitments under Ground Leases
As of December 31, 2017,2022, we are obligated under nine12 ground leases for approximately 4798 acres of land. Most of these ground leases require fixed annual rent payments. The expiration dates of the remaining initial terms of these ground leases range from 20232025 to 2092. These2092 with a weighted average remaining term of 35.0 years. Certain of these leases have five-five- to ten-year10-year extension options ranging in total from 20 to 25 years. Ground
Right-of-use assets are included within “Prepaid and other assets” and lease expense incurred byliabilities are included within “Deferred revenue and other liabilities” in the Company on these operating leases foraccompanying consolidated balance sheets.
During the years ended December 31, 2017, 2016,2022, 2021, and 2015 was $1.72020, the Company incurred ground lease expense on these operating leases of $3.9 million, $2.8 million, and $1.9 million, respectively. The Company made payments of $5.1 million,
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$2.6 million and $1.8 million during the years ended December 31, 2022, 2021 and $1.1 million, respectively. 2020, respectively, which were included in operating cash flows.
| Lease Obligations | |||||
| 2023 | $ | 5,035 | |||
| 2024 | 5,044 | ||||
| 2025 | 5,168 | ||||
| 2026 | 5,174 | ||||
| 2027 | 5,218 | ||||
| Thereafter | 110,623 | ||||
| $ | 136,262 | ||||
| Adjustment for discounting | (69,095) | ||||
| Lease liabilities as of December 31, 2022 | $ | 67,167 | |||
| ($ in thousands) | |||
| 2018 | $ | 1,686 | |
| 2019 | 1,694 | ||
| 2020 | 1,777 | ||
| 2021 | 1,789 | ||
| 2022 | 1,815 | ||
| Thereafter | 73,790 | ||
| Total | $ | 82,551 | |
Distributions
Our Board of Trustees declared a cash distribution of $0.3175$0.24 per common share and Common Unit for the fourth quarter of 2017, which represents a 5.0% increase over our previous quarterly distribution.2022. This distribution was paid on January 12, 201813, 2023 to common shareholders and Common Unit holders of record as of January 5, 2018.
6, 2023.
For the years ended December 31, 2017, 20162022, 2021 and 2015,2020, we declared cash distributions of $1.225, $1.165,totaling $0.87, $0.72, and $1.090$0.5995, respectively, per common share and Common Units.Unit.
At-The-Market Offering Program
Share Repurchase Program
In 2015, we redeemed all 4,100,000February 2021, our Board of our outstanding 8.25% Series A Cumulative Redeemable Perpetual Preferred SharesTrustees approved a share repurchase program, authorizing share repurchases up to an aggregate of $150.0 million (the “Series A Preferred Shares”“Share Repurchase Program”). The Series A Preferred Shares were redeemed atIn February 2022, the Company extended its Share Repurchase Program for an additional year, and in February 2023 extended the program for another year so it will now terminate on February 28, 2024, if not terminated or extended prior to that date. In April 2022, our Board of Trustees authorized a total price of $25.0287 per share, which includes accrued and unpaid dividends or a total of $102.6 million. Prior$150.0 million increase to redemption the carrying value of these preferred shares, netsize of the original issuance costs, was reflected in Shareholders' Equity. In conjunctionShare Repurchase Program, authorizing share repurchases up to an aggregate of $300.0 million. As of December 31, 2022, 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 the redemption, approximately $3.8 million2022 Revolving Facility, subject to any applicable restrictions. The timing of initial issuance costs were written off as a non-cash charge against income attributableshare repurchases and the number of common shares to common shareholders. be repurchased under the Share Repurchase Program will depend upon prevailing market conditions, regulatory requirements and other factors.
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Dividend Reinvestment and Share Purchase Plan
We maintain a Dividend Reinvestment and Share Purchase Plan, which offers shareholders and new investors the option to invest all or a portion of their common share dividends in additional common shares. Participants in this plan are also able to make optional cash investments with certain restrictions.
| ($ in thousands, except per share data) | Quarter Ended March 31, 2017 | Quarter Ended June 30, 2017 | Quarter Ended September 30, 2017 | Quarter Ended December 31, 2017 | ||||||||||||
| Total revenue | $ | 90,112 | $ | 92,649 | $ | 87,138 | $ | 88,919 | ||||||||
| Operating income | 8,118 | 21,084 | 16,229 | 19,312 | ||||||||||||
| (Loss) income before gains on sale of operating properties, net | (8,433 | ) | 4,568 | (204 | ) | 2,795 | ||||||||||
| Gain on sale of operating properties, net | 8,870 | 6,290 | — | — | ||||||||||||
| Consolidated net income (loss) | 437 | 10,858 | (204 | ) | 2,795 | |||||||||||
| Net income (loss) attributable to Kite Realty Group Trust common shareholders | 5 | 10,180 | (622 | ) | 2,309 | |||||||||||
| Net income (loss) per common share – basic and diluted | — | 0.12 | (0.01 | ) | 0.03 | |||||||||||
| Weighted average Common Shares outstanding - basic | 83,565,325 | 83,585,736 | 83,594,163 | 83,595,677 | ||||||||||||
| Weighted average Common Shares outstanding - diluted | 83,643,608 | 83,652,627 | 83,594,163 | 83,705,764 | ||||||||||||
| ($ in thousands, except per share data) | Quarter Ended March 31, 2016 | Quarter Ended June 30, 2016 | Quarter Ended September 30, 2016 | Quarter Ended December 31, 2016 | ||||||||||||
| Total revenue | $ | 88,550 | $ | 87,575 | $ | 89,122 | $ | 88,874 | ||||||||
| Operating income | 17,692 | 14,258 | 15,892 | 17,580 | ||||||||||||
| Income (loss) before gains on sale of operating properties, net | 1,975 | (1,690 | ) | (1,262 | ) | (159 | ) | |||||||||
| Gains on sale of operating properties, net | — | 194 | — | 4,059 | ||||||||||||
| Consolidated net income (loss) | 1,975 | (1,496 | ) | (1,262 | ) | 3,900 | ||||||||||
| Net income (loss) attributable to Kite Realty Group Trust common shareholders | 1,402 | (1,895 | ) | (1,682 | ) | 3,359 | ||||||||||
| Net income (loss) per common share – basic and diluted | 0.02 | (0.02 | ) | (0.02 | ) | 0.04 | ||||||||||
| Weighted average Common Shares outstanding - basic | 83,348,507 | 83,375,765 | 83,474,348 | 83,545,807 | ||||||||||||
| Weighted average Common Shares outstanding - diluted | 83,490,979 | 83,375,765 | 83,474,348 | 83,571,663 | ||||||||||||
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 project 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 free cash flow or borrowings on the Revolving Facility.
In 2017, we provided a repayment guaranty on a $33.8 million construction loan associated with the development of the Embassy Suites at the University of Notre Dame, consistent with our 35% ownership interest. Our portion of the repayment guaranty is limited to $5.9 million and the guaranty’s term is through July 1, 2024, the maturity date of the construction loan. As of December 31, 2022, the outstanding loan balance was $33.5 million, of which our share was $11.7 million. The loan is secured by the hotel.
In 2021, we provided repayment and completion guaranties on loans totaling $66.2 million associated with the development of The Corner mixed-use project in the Indianapolis MSA. As of December 31, 2022, the outstanding balance of the loans was $30.6 million, of which our share was $15.3 million.
As of December 31, 2022, we had outstanding letters of credit totaling $1.5 million with no amounts advanced against these instruments.
Legal Proceedings
We are not subject to any material litigation nor, to management’s knowledge, is any material litigation currently threatened against us. We are parties to routine litigation, claims, and administrative proceedings arising in the ordinary course of business. Management believes that such matters will not have a material adverse impact on our consolidated financial condition, results of operations or cash flows taken as a whole.
| ($ in thousands) | Year Ended December 31, | |||||||||||
| 2017 | 2016 | 2015 | ||||||||||
| Assumption of mortgages by buyer upon sale of operating properties | $ | — | $ | — | $ | 40,303 | ||||||
| Assumption of debt in connection with acquisition of Chapel Hill Shopping Center including debt premium of $212 | — | — | 18,462 | |||||||||
NOTE 13. RELATED PARTIES AND RELATED PARTY TRANSACTIONS
Subsidiaries of the Company provide certain management, construction management and other services to a number of entities owned by several members of the Company’s management. During each of the years ended December 31, 2022, 2021 and 2020, we earned less than $0.1 million from entities owned by certain members of management.
We reimburse entities owned by certain members of the Company’s management. During the years ended December 31, 2017, 2016 and 2015, we earned less than $0.1 million during each year presented, from entities owned by certain members of management.
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Schedule III
Consolidated Real Estate and Accumulated Depreciation
December 31, 2022
(in thousands)
| Initial Cost | Cost Capitalized Subsequent to Acquisition/Development | Gross Carrying Amount Close of Period | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Encumbrances | Land | Building & Improvements | Land | Building & Improvements | Land | Building & Improvements | Total | Accumulated Depreciation | Year Built / Renovated | Year Acquired | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Properties | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12th Street Plaza | $ | — | $ | 2,624 | $ | 12,872 | $ | — | $ | 765 | $ | 2,624 | $ | 13,637 | $ | 16,261 | $ | 5,447 | 1978/2003 | 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||
| 54th & College | — | 2,672 | — | — | — | 2,672 | — | 2,672 | — | 2008 | NA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Arcadia Village | — | 8,487 | 11,710 | — | 129 | 8,487 | 11,839 | 20,326 | 997 | 1957 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ashland & Roosevelt | — | 9,806 | 25,531 | — | 44 | 9,806 | 25,575 | 35,381 | 2,016 | 2002 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Avondale Plaza | — | 6,723 | 10,073 | — | 33 | 6,723 | 10,106 | 16,829 | 699 | 2005 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bayonne Crossing | — | 47,809 | 43,747 | — | 2,052 | 47,809 | 45,798 | 93,607 | 15,892 | 2011 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bayport Commons | — | 7,005 | 20,705 | — | 4,601 | 7,005 | 25,306 | 32,311 | 9,936 | 2008 | NA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bed Bath & Beyond Plaza | — | 4,540 | 13,131 | — | 112 | 4,540 | 13,244 | 17,784 | 1,073 | 2000 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Belle Isle Station | — | 9,130 | 41,112 | — | 6,904 | 9,130 | 48,016 | 57,146 | 17,484 | 2000 | 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bridgewater Marketplace | — | 3,407 | 8,595 | — | 1,326 | 3,407 | 9,921 | 13,328 | 4,447 | 2008 | NA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Burlington* | — | — | 2,773 | — | 29 | — | 2,802 | 2,802 | 2,747 | 1992/2000 | 2000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Castleton Crossing | — | 9,761 | 26,974 | — | 1,030 | 9,761 | 28,005 | 37,766 | 9,439 | 1975 | 2013 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cedar Park Town Center | — | 9,032 | 25,909 | — | 90 | 9,032 | 25,999 | 35,031 | 1,354 | 2013 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Centennial Center | 70,455 | 58,960 | 72,190 | — | 7,275 | 58,960 | 79,465 | 138,425 | 34,096 | 2002 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Centennial Gateway | 23,962 | 5,305 | 48,559 | — | 906 | 5,305 | 49,465 | 54,770 | 16,272 | 2005 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Central Texas Marketplace | — | 15,711 | 30,122 | — | 1,102 | 15,711 | 31,225 | 46,936 | 2,749 | 2004 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Centre at Laurel | — | 6,122 | 34,661 | — | 225 | 6,122 | 34,886 | 41,008 | 2,435 | 2005 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Centre Point Commons* | — | 2,918 | 22,285 | — | 392 | 2,918 | 22,676 | 25,594 | 7,583 | 2007 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chantilly Crossing | — | 12,309 | 17,649 | — | 349 | 12,309 | 17,998 | 30,307 | 1,313 | 2004 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chapel Hill Shopping Center* | 18,250 | — | 34,979 | — | 2,312 | — | 37,291 | 37,291 | 13,018 | 2001 | 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Circle East | — | 1,188 | 24,122 | — | — | 1,188 | 24,122 | 25,310 | 915 | 1998/2022 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| City Center | — | 20,565 | 179,714 | — | 4,849 | 20,565 | 184,563 | 205,128 | 61,467 | 2018 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Clearlake Shores Shopping Center | — | 3,845 | 6,622 | — | 177 | 3,845 | 6,799 | 10,644 | 555 | 2003 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Coal Creek Marketplace | — | 9,397 | 11,664 | — | 54 | 9,397 | 11,718 | 21,115 | 1,005 | 1991 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cobblestone Plaza | — | 10,374 | 44,608 | — | 3,113 | 10,374 | 47,721 | 58,095 | 16,598 | 2011 | NA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Colleyville Downs | — | 5,446 | 38,533 | — | 2,712 | 5,446 | 41,245 | 46,691 | 17,617 | 2014 | 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Colonial Square | — | 7,521 | 18,696 | — | 2,846 | 7,521 | 21,542 | 29,063 | 6,653 | 2010 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Colony Square | — | 20,300 | 18,838 | — | 449 | 20,300 | 19,288 | 39,588 | 1,960 | 1997 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commons at Temecula | — | 18,966 | 44,730 | — | 302 | 18,966 | 45,032 | 63,998 | 4,017 | 1999 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cool Creek Commons | — | 6,062 | 12,769 | — | 5,226 | 6,062 | 17,995 | 24,057 | 8,050 | 2005 | NA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cool Springs Market | — | 12,644 | 22,852 | 40 | 7,170 | 12,684 | 30,022 | 42,706 | 13,416 | 1995 | 2013 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Coppell Town Center | — | 5,052 | 11,286 | — | 104 | 5,052 | 11,390 | 16,442 | 982 | 1999 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Coram Plaza | — | 6,992 | 23,021 | — | 91 | 6,992 | 23,112 | 30,104 | 1,702 | 2004 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Crossing at Killingly Commons | — | 21,999 | 34,968 | — | 1,084 | 21,999 | 36,051 | 58,050 | 13,477 | 2010 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-43
| ($ in thousands) | Initial Cost | Cost Capitalized Subsequent to Acquisition/Development | Gross Carrying Amount Close of Period | |||||||||||||||||||||||||||||||||||||
| Building & | Building & | Building & | Accumulated | Year Built / | Year | |||||||||||||||||||||||||||||||||||
| Name | Encumbrances | Land | Improvements | Land | Improvements | Land | Improvements | Total | Depreciation | Renovated | Acquired | |||||||||||||||||||||||||||||
| Operating Properties | ||||||||||||||||||||||||||||||||||||||||
| 12th Street Plaza | $ | 5,000 | $ | 2,624 | $ | 13,237 | $ | — | $ | 382 | $ | 2,624 | $ | 13,619 | $ | 16,243 | $ | 3,078 | 1978/2003 | 2012 | ||||||||||||||||||||
| 54th & College * | — | 2,672 | — | — | — | 2,672 | — | 2,672 | — | 2008 | NA | |||||||||||||||||||||||||||||
| Bayonne Crossing | 44,505 | 47,809 | 44,062 | — | 1,368 | 47,809 | 45,430 | 93,239 | 6,715 | 2011 | 2014 | |||||||||||||||||||||||||||||
| Bayport Commons | 11,906 | 7,005 | 20,794 | — | 1,620 | 7,005 | 22,414 | 29,419 | 6,161 | 2008 | NA | |||||||||||||||||||||||||||||
| Beacon Hill * | — | 3,272 | 13,426 | — | 996 | 3,272 | 14,423 | 17,695 | 4,197 | 2006 | NA | |||||||||||||||||||||||||||||
| Bell Oaks Centre | 6,548 | 1,230 | 12,715 | — | 162 | 1,230 | 12,877 | 14,107 | 2,347 | 2008 | 2014 | |||||||||||||||||||||||||||||
| Belle Isle Station * | — | 9,130 | 41,449 | — | 376 | 9,130 | 41,826 | 50,956 | 5,689 | 2000 | 2015 | |||||||||||||||||||||||||||||
| Bolton Plaza * | — | 3,733 | 18,983 | 359 | 5,484 | 4,093 | 24,467 | 28,560 | 9,385 | 1986/2014 | NA | |||||||||||||||||||||||||||||
| Boulevard Crossing | 10,683 | 4,386 | 9,175 | — | 2,099 | 4,386 | 11,274 | 15,660 | 4,688 | 2004 | NA | |||||||||||||||||||||||||||||
| Bridgewater Marketplace * | — | 3,407 | 8,668 | — | 422 | 3,407 | 9,091 | 12,498 | 2,693 | 2008 | NA | |||||||||||||||||||||||||||||
| Burlington * | — | 29 | 2,773 | — | — | 29 | 2,773 | 2,802 | 1,183 | 1992/2000 | 2000 | |||||||||||||||||||||||||||||
| Cannery Corner | — | 6,267 | 10,516 | — | 415 | 6,267 | 10,932 | 17,199 | 1,862 | 2008 | 2014 | |||||||||||||||||||||||||||||
| Castleton Crossing * | — | 9,761 | 28,977 | — | 3,238 | 9,761 | 32,215 | 41,976 | 7,667 | 1975 | 2013 | |||||||||||||||||||||||||||||
| Chapel Hill Shopping Center | 18,250 | — | 35,074 | — | 409 | — | 35,483 | 35,483 | 4,026 | 2001 | 2015 | |||||||||||||||||||||||||||||
| Centennial Center | 70,455 | 58,960 | 72,756 | — | 3,345 | 58,960 | 76,101 | 135,061 | 19,174 | 2002 | 2014 | |||||||||||||||||||||||||||||
| Centennial Gateway | 44,385 | 5,305 | 48,712 | — | 1,803 | 5,305 | 50,515 | 55,820 | 9,116 | 2005 | 2014 | |||||||||||||||||||||||||||||
| Centre Point Commons | 14,410 | 2,918 | 22,647 | — | 257 | 2,918 | 22,903 | 25,821 | 3,603 | 2007 | 2014 | |||||||||||||||||||||||||||||
| Cobblestone Plaza * | — | 11,221 | 45,551 | — | 490 | 11,221 | 46,041 | 57,262 | 9,585 | 2011 | NA | |||||||||||||||||||||||||||||
| Colonial Square * | — | 11,743 | 31,299 | — | 898 | 11,743 | 32,197 | 43,940 | 4,220 | 2010 | 2014 | |||||||||||||||||||||||||||||
| Colleyville Downs * | — | 5,446 | 38,574 | — | 830 | 5,446 | 39,404 | 44,850 | 6,053 | 2014 | 2015 | |||||||||||||||||||||||||||||
| Cool Creek Commons * | — | 6,062 | 13,430 | — | 1,807 | 6,062 | 15,236 | 21,298 | 5,405 | 2005 | NA | |||||||||||||||||||||||||||||
| Cool Springs Market * | — | 12,684 | 21,454 | — | 8,262 | 12,684 | 29,716 | 42,400 | 6,726 | 1995 | 2013 | |||||||||||||||||||||||||||||
| Crossing at Killingly Commons | 33,000 | 21,999 | 35,218 | — | 132 | 21,999 | 35,350 | 57,349 | 5,827 | 2010 | 2014 | |||||||||||||||||||||||||||||
| Delray Marketplace | 56,850 | 18,750 | 88,877 | 1,284 | 4,818 | 20,034 | 93,695 | 113,729 | 14,919 | 2013 | NA | |||||||||||||||||||||||||||||
| DePauw University Bookstore and Café | — | 64 | 663 | — | 45 | 64 | 708 | 772 | 274 | 2012 | NA | |||||||||||||||||||||||||||||
| Draper Crossing * | — | 9,054 | 28,485 | — | 183 | 9,054 | 28,668 | 37,722 | 5,801 | 2012 | 2014 | |||||||||||||||||||||||||||||
| Draper Peaks * | — | 11,498 | 46,876 | 522 | 2,340 | 12,020 | 49,216 | 61,236 | 5,912 | 2012 | 2014 | |||||||||||||||||||||||||||||
| Eastern Beltway Center | 34,100 | 23,221 | 45,633 | — | 801 | 23,221 | 46,434 | 69,655 | 6,075 | 1998/2006 | 2014 | |||||||||||||||||||||||||||||
| Eastgate Plaza | — | 4,073 | 20,207 | — | 164 | 4,073 | 20,372 | 24,445 | 3,193 | 2002 | 2014 | |||||||||||||||||||||||||||||
| Eastgate Pavilion * | — | 8,026 | 18,899 | — | 1,715 | 8,026 | 20,614 | 28,640 | 8,147 | 1995 | 2004 | |||||||||||||||||||||||||||||
| Eddy Street Commons | 23,131 | 1,900 | 37,739 | — | 1,249 | 1,900 | 38,988 | 40,888 | 10,508 | 2009 | NA | |||||||||||||||||||||||||||||
| Estero Town Commons * | — | 8,973 | 9,960 | — | 979 | 8,973 | 10,939 | 19,912 | 3,033 | 2006 | NA | |||||||||||||||||||||||||||||
| Fox Lake Crossing * | — | 5,685 | 9,274 | — | 347 | 5,685 | 9,621 | 15,306 | 3,775 | 2002 | 2005 | |||||||||||||||||||||||||||||
| Gainesville Plaza * | — | 5,437 | 18,237 | — | 1,515 | 5,437 | 19,751 | 25,188 | 5,911 | 2015 | 2004 | |||||||||||||||||||||||||||||
| Geist Pavilion * | — | 1,368 | 8,449 | — | 1,820 | 1,368 | 10,269 | 11,637 | 3,752 | 2006 | NA | |||||||||||||||||||||||||||||
| Glendale Town Center * | — | 1,494 | 43,838 | — | 2,247 | 1,494 | 46,084 | 47,578 | 28,514 | 1958/2008 | 1999 | |||||||||||||||||||||||||||||
| Greyhound Commons * | — | 2,629 | 794 | — | 887 | 2,629 | 1,681 | 4,310 | 696 | 2005 | NA | |||||||||||||||||||||||||||||
| Initial Cost | Cost Capitalized Subsequent to Acquisition/Development | Gross Carrying Amount Close of Period | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Encumbrances | Land | Building & Improvements | Land | Building & Improvements | Land | Building & Improvements | Total | Accumulated Depreciation | Year Built / Renovated | Year Acquired | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Properties (continued) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cypress Mill Plaza | $ | — | $ | 6,320 | $ | 10,111 | $ | — | $ | 71 | $ | 6,320 | $ | 10,182 | $ | 16,502 | $ | 804 | 2004 | 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Davis Towne Crossing | — | 995 | 8,969 | — | 129 | 995 | 9,098 | 10,093 | 657 | 2003 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Delray Marketplace | 28,293 | 18,750 | 86,955 | 1,284 | 7,739 | 20,034 | 94,694 | 114,728 | 30,497 | 2013 | NA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Denton Crossing | — | 8,257 | 39,188 | — | 403 | 8,257 | 39,591 | 47,848 | 3,309 | 2003 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DePauw University Bookstore & Café* | — | 64 | 663 | — | 45 | 64 | 708 | 772 | 511 | 2012 | NA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Downtown Crown | — | 25,759 | 77,137 | — | 1,241 | 25,759 | 78,377 | 104,136 | 3,925 | 2014 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Draper Crossing | — | 9,054 | 27,142 | — | 2,104 | 9,054 | 29,246 | 38,300 | 10,707 | 2012 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Draper Peaks | — | 11,498 | 46,910 | 522 | 5,829 | 12,020 | 52,739 | 64,759 | 15,255 | 2012 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| East Stone Commons* | — | 3,766 | 21,920 | — | 143 | 3,766 | 22,063 | 25,829 | 1,848 | 2005 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Eastern Beltway | 34,100 | 23,221 | 45,595 | — | 7,672 | 23,221 | 53,267 | 76,488 | 15,658 | 1998/2006 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Eastgate Crossing | — | 4,244 | 59,142 | — | 4,227 | 4,244 | 63,369 | 67,613 | 5,015 | 1958/2007 | 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Eastgate Pavilion | — | 8,026 | 18,588 | — | 1,008 | 8,026 | 19,596 | 27,622 | 9,768 | 1995 | 2004 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Eastside | — | 3,305 | 12,199 | — | 7 | 3,305 | 12,207 | 15,512 | 782 | 2008 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Eastwood Towne Center | — | 3,242 | 56,143 | — | 1,510 | 3,242 | 57,653 | 60,895 | 4,733 | 2002 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Eddy Street Commons* | — | 2,186 | 48,316 | — | 3,828 | 2,186 | 52,143 | 54,329 | 15,397 | 2009/2022 | NA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Edwards Multiplex | — | 22,583 | 28,710 | — | — | 22,583 | 28,710 | 51,293 | 2,327 | 1997 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Estero Town Commons | — | 8,973 | 9,947 | — | 976 | 8,973 | 10,923 | 19,896 | 4,791 | 2006 | NA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fairgrounds Plaza | — | 12,690 | 15,254 | — | 94 | 12,690 | 15,348 | 28,038 | 1,132 | 2002 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fishers Station | — | 4,008 | 15,705 | — | 227 | 4,008 | 15,931 | 19,939 | 6,756 | 2018 | NA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fordham Place | — | 41,993 | 102,467 | — | 303 | 41,993 | 102,770 | 144,763 | 6,081 | 1920/2009 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fort Evans Plaza II | — | 14,110 | 39,623 | — | 1,542 | 14,110 | 41,164 | 55,274 | 2,640 | 2008 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fullerton Metrocenter | — | 55,794 | 43,032 | — | 1,046 | 55,794 | 44,078 | 99,872 | 3,896 | 1988 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Galvez Shopping Center | — | 494 | 4,966 | — | 145 | 494 | 5,112 | 5,606 | 375 | 2004 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gardiner Manor Mall | — | 29,521 | 20,129 | — | 531 | 29,521 | 20,660 | 50,181 | 1,962 | 2000 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gateway Pavillions | — | 44,167 | 10,414 | — | 972 | 44,167 | 11,386 | 55,553 | 1,540 | 2003 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gateway Plaza | — | 15,608 | 23,115 | — | 489 | 15,608 | 23,604 | 39,212 | 2,552 | 2000 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gateway Station | — | 10,679 | 10,590 | — | 287 | 10,679 | 10,878 | 21,557 | 860 | 2003 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gateway Village | — | 32,045 | 33,371 | — | 186 | 32,045 | 33,556 | 65,601 | 2,931 | 1996 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Geist Pavilion | — | 1,368 | 7,485 | — | 2,770 | 1,368 | 10,254 | 11,622 | 4,975 | 2006 | NA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gerry Centennial Plaza | — | 3,448 | 10,316 | — | 17 | 3,448 | 10,333 | 13,781 | 1,143 | 2006 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Grapevine Crossing | — | 7,021 | 11,946 | — | 359 | 7,021 | 12,305 | 19,326 | 1,069 | 2001 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Green's Corner | — | 4,836 | 13,845 | — | 101 | 4,836 | 13,946 | 18,782 | 1,262 | 1997 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Greyhound Commons | — | 2,629 | 794 | — | 1,090 | 2,629 | 1,884 | 4,513 | 1,107 | 2005 | NA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gurnee Town Center | — | 7,348 | 20,772 | — | 94 | 7,348 | 20,866 | 28,214 | 1,931 | 2000 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Henry Town Center | — | 9,446 | 49,835 | — | 655 | 9,446 | 50,490 | 59,936 | 4,437 | 2002 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Heritage Square | — | 11,373 | 16,180 | — | 340 | 11,373 | 16,519 | 27,892 | 1,394 | 1985 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Heritage Towne Crossing | — | 5,720 | 14,789 | — | 70 | 5,720 | 14,859 | 20,579 | 1,196 | 2002 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Holly Springs Towne Center | — | 22,324 | 94,582 | — | 7,204 | 22,324 | 101,786 | 124,110 | 26,800 | 2013 | NA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Home Depot Center* | — | — | 20,122 | — | 19 | — | 20,141 | 20,141 | 1,642 | 1996 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-44
| Initial Cost | Cost Capitalized Subsequent to Acquisition/Development | Gross Carrying Amount Close of Period | ||||||||||||||||||||||||||||||||||||||
| Building & | Building & | Building & | Accumulated | Year Built / | Year | |||||||||||||||||||||||||||||||||||
| Name | Encumbrances | Land | Improvements | Land | Improvements | Land | Improvements | Total | Depreciation | Renovated | Acquired | |||||||||||||||||||||||||||||
| Operating Properties (continued) | ||||||||||||||||||||||||||||||||||||||||
| Hamilton Crossing - Phase II & III * | $ | — | $ | 2,859 | $ | 23,190 | $ | — | $ | 451 | $ | 2,859 | $ | 23,641 | $ | 26,500 | $ | 3,427 | 2008 | 2014 | ||||||||||||||||||||
| Hitchcock Plaza * | — | 4,260 | 21,960 | — | 2,488 | 4,260 | 24,447 | 28,707 | 2,893 | 2006 | 2014 | |||||||||||||||||||||||||||||
| Holly Springs Towne Center - Phase I * | — | 12,319 | 46,689 | — | 1,458 | 12,319 | 48,147 | 60,466 | 7,474 | 2013 | NA | |||||||||||||||||||||||||||||
| Holly Springs Towne Center - Phase II * | — | 11,910 | 49,212 | — | — | 11,910 | 49,212 | 61,122 | 2,162 | 2016 | NA | |||||||||||||||||||||||||||||
| Hunters Creek Promenade * | — | 8,335 | 12,706 | — | 917 | 8,335 | 13,623 | 21,958 | 2,241 | 1994 | 2013 | |||||||||||||||||||||||||||||
| Indian River Square * | — | 5,100 | 6,354 | — | 584 | 5,100 | 6,938 | 12,038 | 2,568 | 1997/2004 | 2005 | |||||||||||||||||||||||||||||
| International Speedway Square * | 19,017 | 7,769 | 18,045 | — | 9,352 | 7,769 | 27,397 | 35,166 | 15,540 | 1999 | NA | |||||||||||||||||||||||||||||
| Kings Lake Square * | — | 4,519 | 15,630 | — | 492 | 4,519 | 16,122 | 20,641 | 7,063 | 1986/2014 | 2003 | |||||||||||||||||||||||||||||
| Kingwood Commons * | — | 5,715 | 30,891 | — | 143 | 5,715 | 31,034 | 36,749 | 6,916 | 1999 | 2013 | |||||||||||||||||||||||||||||
| Lake City Commons | 5,200 | 3,415 | 10,242 | — | 349 | 3,415 | 10,591 | 14,006 | 1,853 | 2008 | 2014 | |||||||||||||||||||||||||||||
| Lake City Commons - Phase II * | — | 1,277 | 2,225 | — | 16 | 1,277 | 2,241 | 3,518 | 361 | 2011 | 2014 | |||||||||||||||||||||||||||||
| Lake Mary Plaza | 5,080 | 1,413 | 8,719 | — | 89 | 1,413 | 8,807 | 10,220 | 1,185 | 2009 | 2014 | |||||||||||||||||||||||||||||
| Lakewood Promenade * | — | 1,783 | 25,471 | — | 1,256 | 1,783 | 26,728 | 28,511 | 6,706 | 1948/1998 | 2013 | |||||||||||||||||||||||||||||
| Landstown Commons * | — | 18,672 | 92,045 | — | 2,626 | 18,672 | 94,671 | 113,343 | 16,404 | 2007 | 2014 | |||||||||||||||||||||||||||||
| Lima Marketplace | 8,383 | 4,703 | 15,706 | — | 543 | 4,703 | 16,249 | 20,952 | 2,815 | 2008 | 2014 | |||||||||||||||||||||||||||||
| Lithia Crossing * | — | 3,065 | 9,962 | — | 5,605 | 3,065 | 15,567 | 18,632 | 4,317 | 1993/2003 | 2011 | |||||||||||||||||||||||||||||
| Livingston Shopping Center * | — | 10,372 | 35,537 | — | — | 10,372 | 35,537 | 45,909 | 3,181 | 1997 | 2015 | |||||||||||||||||||||||||||||
| Lowe's Plaza | — | 2,125 | 5,976 | — | 53 | 2,125 | 6,029 | 8,154 | 997 | 2007 | 2014 | |||||||||||||||||||||||||||||
| Market Street Village * | — | 9,764 | 16,360 | — | 2,920 | 9,764 | 19,280 | 29,044 | 6,533 | 1970/2004 | 2005 | |||||||||||||||||||||||||||||
| Memorial Commons * | — | 1,568 | 14,628 | — | 341 | 1,568 | 14,969 | 16,537 | 2,022 | 2008 | 2014 | |||||||||||||||||||||||||||||
| Merrimack Village Center | 5,445 | 1,921 | 12,777 | — | 149 | 1,921 | 12,927 | 14,848 | 2,277 | 2007 | 2014 | |||||||||||||||||||||||||||||
| Miramar Square | 31,625 | 26,392 | 30,889 | 489 | 607 | 26,880 | 31,496 | 58,376 | 5,188 | 2008 | 2014 | |||||||||||||||||||||||||||||
| Mullins Crossing * | — | 10,582 | 42,031 | — | 398 | 10,582 | 42,429 | 53,011 | 8,683 | 2005 | 2014 | |||||||||||||||||||||||||||||
| Naperville Marketplace | 7,513 | 5,364 | 11,475 | — | 106 | 5,364 | 11,580 | 16,944 | 3,336 | 2008 | NA | |||||||||||||||||||||||||||||
| Northcrest Shopping Center | 15,780 | 4,044 | 33,857 | — | 980 | 4,044 | 34,837 | 38,881 | 4,509 | 2008 | 2014 | |||||||||||||||||||||||||||||
| Northdale Promenade * | — | 1,718 | 27,481 | — | — | 1,718 | 27,481 | 29,199 | 7,732 | 2017 | NA | |||||||||||||||||||||||||||||
| Oleander Place * | — | 863 | 5,935 | — | 30 | 863 | 5,965 | 6,828 | 1,727 | 2012 | 2011 | |||||||||||||||||||||||||||||
| Palm Coast Landing | 22,274 | 4,962 | 37,995 | — | 769 | 4,962 | 38,764 | 43,726 | 5,848 | 2010 | 2014 | |||||||||||||||||||||||||||||
| Parkside Town Commons - Phase I * | — | 3,108 | 43,313 | — | — | 3,108 | 43,313 | 46,421 | 5,848 | 2015 | N/A | |||||||||||||||||||||||||||||
| Parkside Town Commons - Phase II * | — | 20,722 | 66,766 | — | — | 20,722 | 66,766 | 87,488 | 6,012 | 2017 | N/A | |||||||||||||||||||||||||||||
| Perimeter Woods | 33,330 | 35,793 | 27,257 | — | 706 | 35,793 | 27,964 | 63,757 | 3,923 | 2008 | 2014 | |||||||||||||||||||||||||||||
| Pine Ridge Crossing * | — | 5,640 | 17,084 | — | 3,480 | 5,640 | 20,564 | 26,204 | 6,122 | 1993 | 2006 | |||||||||||||||||||||||||||||
| Plaza at Cedar Hill * | — | 5,782 | 36,781 | — | 9,462 | 5,782 | 46,243 | 52,025 | 18,486 | 2000 | 2004 | |||||||||||||||||||||||||||||
| Plaza Volente * | — | 4,600 | 29,074 | — | 1,042 | 4,600 | 30,117 | 34,717 | 11,625 | 2004 | 2005 | |||||||||||||||||||||||||||||
| Pleasant Hill Commons * | — | 3,350 | 10,103 | — | 323 | 3,350 | 10,427 | 13,777 | 1,856 | 2008 | 2014 | |||||||||||||||||||||||||||||
| Portofino Shopping Center * | — | 4,754 | 75,117 | — | 14,747 | 4,754 | 89,864 | 94,618 | 17,573 | 1999 | 2013 | |||||||||||||||||||||||||||||
| Publix at Acworth | 5,557 | 1,357 | 7,938 | 39 | 1,115 | 1,395 | 9,053 | 10,448 | 3,490 | 1996 | 2004 | |||||||||||||||||||||||||||||
| Publix at Woodruff * | — | 1,783 | 6,342 | — | 303 | 1,783 | 6,645 | 8,428 | 2,245 | 1997 | 2012 | |||||||||||||||||||||||||||||
| Initial Cost | Cost Capitalized Subsequent to Acquisition/Development | Gross Carrying Amount Close of Period | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Encumbrances | Land | Building & Improvements | Land | Building & Improvements | Land | Building & Improvements | Total | Accumulated Depreciation | Year Built / Renovated | Year Acquired | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Properties (continued) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Huebner Oaks | $ | — | $ | 19,423 | $ | 36,062 | $ | — | $ | 421 | $ | 19,423 | $ | 36,483 | $ | 55,906 | $ | 2,825 | 1996 | 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Humblewood Shopping Center | — | 3,921 | 10,873 | — | 438 | 3,921 | 11,311 | 15,232 | 858 | 1979/2005 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Hunter's Creek Promenade | — | 8,017 | 12,670 | 179 | 1,781 | 8,196 | 14,451 | 22,647 | 4,816 | 1994 | 2013 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Indian River Square | — | 4,000 | 5,989 | 1,100 | 5,529 | 5,100 | 11,518 | 16,618 | 3,678 | 1997/2004 | 2005 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| International Speedway Square | — | 7,157 | 12,840 | — | 8,531 | 7,157 | 21,371 | 28,528 | 12,883 | 1999 | NA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jefferson Commons | — | 23,356 | 20,068 | — | 1,293 | 23,356 | 21,361 | 44,717 | 2,003 | 2005 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| John's Creek Village | — | 7,668 | 39,697 | — | 1,065 | 7,668 | 40,762 | 48,430 | 3,041 | 2004 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| King's Lake Square | — | 4,519 | 12,393 | — | 1,739 | 4,519 | 14,133 | 18,652 | 6,870 | 1986/2014 | 2003 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Kingwood Commons | — | 5,715 | 28,807 | — | 172 | 5,715 | 28,979 | 34,694 | 11,987 | 1999 | 2013 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| La Plaza Del Norte | — | 18,113 | 32,803 | — | 408 | 18,113 | 33,211 | 51,324 | 2,884 | 1996 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lake City Commons | — | 4,693 | 11,453 | — | 79 | 4,693 | 11,532 | 16,225 | 3,497 | 2008 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lake Mary Plaza | — | 1,413 | 8,719 | — | 291 | 1,413 | 9,010 | 10,423 | 2,640 | 2009 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lake Worth Towne Crossing | — | 6,228 | 28,776 | — | 127 | 6,228 | 28,903 | 35,131 | 2,097 | 2005 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lakewood Towne Center | — | 32,864 | 31,493 | — | 852 | 32,864 | 32,345 | 65,209 | 3,149 | 2002 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lincoln Park | — | 14,757 | 40,292 | — | 714 | 14,757 | 41,006 | 55,763 | 3,531 | 1997 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lincoln Plaza | — | 6,239 | 38,473 | — | 5,014 | 6,239 | 43,486 | 49,725 | 3,622 | 2001 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lithia Crossing | — | 3,065 | 9,958 | — | 3,380 | 3,065 | 13,338 | 16,403 | 6,021 | 1994/2003 | 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lowe's/Bed Bath & Beyond | — | 19,894 | — | — | — | 19,894 | — | 19,894 | — | 2005 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MacArthur Crossing | — | 11,190 | 31,334 | — | 1,564 | 11,190 | 32,898 | 44,088 | 1,814 | 1995 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Main Street Promenade | — | 2,630 | 60,911 | — | (191) | 2,630 | 60,720 | 63,350 | 3,072 | 2003 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Manchester Meadows | — | 10,788 | 30,434 | — | 44 | 10,788 | 30,478 | 41,266 | 3,232 | 1994 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mansfield Towne Crossing | — | 2,966 | 14,369 | — | 443 | 2,966 | 14,812 | 17,778 | 1,152 | 2003 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Market Street Village | — | 9,764 | 16,360 | — | 4,345 | 9,764 | 20,705 | 30,469 | 10,001 | 1970/2004 | 2005 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Merrifield Town Center | — | 5,186 | 41,338 | — | 144 | 5,186 | 41,482 | 46,668 | 2,619 | 2008 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Merrifield Town Center II | — | 19,614 | 23,042 | — | — | 19,614 | 23,042 | 42,656 | 1,387 | 1972/2007 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Miramar Square | — | 26,492 | 30,742 | 389 | 9,775 | 26,880 | 40,517 | 67,397 | 10,505 | 2008 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mullins Crossing* | — | 10,582 | 42,188 | — | 6,624 | 10,582 | 48,813 | 59,395 | 17,833 | 2005 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Naperville Marketplace | — | 5,364 | 11,377 | — | 160 | 5,364 | 11,537 | 16,901 | 4,935 | 2008 | NA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| New Forest Crossing | — | 7,175 | 12,076 | — | 272 | 7,175 | 12,348 | 19,523 | 1,078 | 2003 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| New Hyde Park Shopping Center | — | 10,792 | 9,766 | — | 488 | 10,792 | 10,254 | 21,046 | 642 | 1964/2011 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Newnan Crossing | — | 6,616 | 41,150 | — | 1,001 | 6,616 | 42,151 | 48,767 | 3,889 | 1999 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Newton Crossroads | — | 1,004 | 10,821 | — | 1 | 1,004 | 10,822 | 11,826 | 948 | 1997 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Nora Plaza | 3,458 | 3,790 | 21,072 | 5,002 | 13,611 | 8,792 | 34,683 | 43,475 | 5,384 | 2004 | 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| North Benson Center | — | 16,632 | 9,858 | — | 308 | 16,632 | 10,166 | 26,798 | 949 | 1988 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Northcrest Shopping Center | — | 4,044 | 33,921 | — | 1,144 | 4,044 | 35,066 | 39,110 | 10,829 | 2008 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Northdale Promenade | — | 1,718 | 27,481 | — | (539) | 1,718 | 26,943 | 28,661 | 15,356 | 2017 | NA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Northgate North | 23,010 | 20,063 | 48,746 | — | 2,117 | 20,063 | 50,863 | 70,926 | 4,326 | 1999 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Northpointe Plaza | — | 15,964 | 35,592 | — | 368 | 15,964 | 35,960 | 51,924 | 3,037 | 1991 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Oak Brook Promenade | — | 6,753 | 49,137 | — | 1,409 | 6,753 | 50,546 | 57,299 | 3,793 | 2006 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-45
| Initial Cost | Cost Capitalized Subsequent to Acquisition/Development | Gross Carrying Amount Close of Period | ||||||||||||||||||||||||||||||||||||||
| Building & | Building & | Building & | Accumulated | Year Built / | Year | |||||||||||||||||||||||||||||||||||
| Name | Encumbrances | Land | Improvements | Land | Improvements | Land | Improvements | Total | Depreciation | Renovated | Acquired | |||||||||||||||||||||||||||||
| Operating Properties (continued) | ||||||||||||||||||||||||||||||||||||||||
| Rangeline Crossing * | $ | — | $ | 2,043 | $ | 18,414 | $ | — | $ | 564 | $ | 2,043 | $ | 18,979 | $ | 21,022 | $ | 5,782 | 1986/2013 | NA | ||||||||||||||||||||
| Riverchase Plaza * | — | 3,889 | 11,404 | — | 1,348 | 3,889 | 12,752 | 16,641 | 4,369 | 1991/2001 | 2006 | |||||||||||||||||||||||||||||
| Rivers Edge * | — | 5,647 | 31,358 | — | 1,354 | 5,647 | 32,712 | 38,359 | 7,695 | 2011 | 2008 | |||||||||||||||||||||||||||||
| Saxon Crossing | 11,400 | 3,764 | 16,791 | — | 25 | 3,764 | 16,815 | 20,579 | 2,773 | 2009 | 2014 | |||||||||||||||||||||||||||||
| Shoppes at Plaza Green * | — | 3,749 | 23,853 | — | 1,269 | 3,749 | 25,122 | 28,871 | 6,329 | 2000 | 2012 | |||||||||||||||||||||||||||||
| Shoppes of Eastwood * | — | 1,688 | 8,926 | — | 563 | 1,688 | 9,489 | 11,177 | 2,361 | 1997 | 2013 | |||||||||||||||||||||||||||||
| Shops at Eagle Creek * | — | 4,550 | 8,844 | — | 5,000 | 4,550 | 13,844 | 18,394 | 4,569 | 1998 | 2003 | |||||||||||||||||||||||||||||
| Shops at Julington Creek | 4,785 | 2,372 | 7,976 | — | 103 | 2,372 | 8,079 | 10,451 | 1,351 | 2011 | 2014 | |||||||||||||||||||||||||||||
| Shops at Moore | 21,300 | 8,030 | 33,380 | — | 1,677 | 8,030 | 35,057 | 43,087 | 7,333 | 2010 | 2014 | |||||||||||||||||||||||||||||
| Silver Springs Pointe | 8,800 | 9,685 | 7,676 | — | 276 | 9,685 | 7,952 | 17,637 | 2,388 | 2001 | 2014 | |||||||||||||||||||||||||||||
| South Elgin Commons * | — | 3,916 | 22,140 | — | 49 | 3,916 | 22,188 | 26,104 | 3,629 | 2011 | 2014 | |||||||||||||||||||||||||||||
| Stoney Creek Commons * | — | 628 | 3,700 | — | 5,837 | 628 | 9,538 | 10,166 | 2,645 | 2000 | NA | |||||||||||||||||||||||||||||
| Sunland Towne Centre * | — | 14,774 | 22,542 | — | 5,099 | 14,774 | 27,641 | 42,415 | 10,823 | 1996 | 2004 | |||||||||||||||||||||||||||||
| Tamiami Crossing * | — | 19,810 | 29,227 | — | — | 19,810 | 29,227 | 49,037 | 1,567 | 2016 | NA | |||||||||||||||||||||||||||||
| Tarpon Bay Plaza * | — | 4,273 | 23,856 | — | 2,735 | 4,273 | 26,592 | 30,865 | 7,439 | 2007 | NA | |||||||||||||||||||||||||||||
| Temple Terrace * | — | 2,245 | 9,229 | — | 108 | 2,245 | 9,336 | 11,581 | 1,212 | 2012 | 2014 | |||||||||||||||||||||||||||||
| The Centre at Panola * | 1,667 | 1,986 | 8,191 | — | 372 | 1,986 | 8,563 | 10,549 | 3,727 | 2001 | 2004 | |||||||||||||||||||||||||||||
| The Corner | 14,750 | 3,772 | 24,605 | — | 80 | 3,772 | 24,686 | 28,458 | 3,344 | 2008 | 2014 | |||||||||||||||||||||||||||||
| The Landing at Tradition * | — | 18,505 | 45,821 | — | 2,109 | 18,505 | 47,929 | 66,434 | 8,992 | 2007 | 2014 | |||||||||||||||||||||||||||||
| Toringdon Market * | — | 5,448 | 9,411 | — | 291 | 5,448 | 9,703 | 15,151 | 2,084 | 2004 | 2013 | |||||||||||||||||||||||||||||
| Traders Point * | — | 9,443 | 36,433 | — | 2,428 | 9,443 | 38,861 | 48,304 | 14,382 | 2005 | NA | |||||||||||||||||||||||||||||
| Traders Point II * | — | 2,376 | 6,441 | — | 1,138 | 2,376 | 7,578 | 9,954 | 2,752 | 2005 | NA | |||||||||||||||||||||||||||||
| Tradition Village Center * | — | 3,140 | 14,809 | — | 1,149 | 3,140 | 15,958 | 19,098 | 2,714 | 2006 | 2014 | |||||||||||||||||||||||||||||
| Trussville Promenade * | — | 9,123 | 45,359 | — | 5,234 | 9,123 | 50,593 | 59,716 | 11,319 | 1999 | 2013 | |||||||||||||||||||||||||||||
| University Town Center | 18,690 | 4,125 | 31,565 | — | 735 | 4,125 | 32,300 | 36,425 | 5,024 | 2009 | 2014 | |||||||||||||||||||||||||||||
| University Town Center - Phase II | 10,500 | 7,902 | 24,164 | — | 765 | 7,902 | 24,929 | 32,831 | 4,588 | 2012 | 2014 | |||||||||||||||||||||||||||||
| Village at Bay Park | 9,183 | 8,248 | 9,942 | — | 584 | 8,248 | 10,526 | 18,774 | 1,452 | 2005 | 2014 | |||||||||||||||||||||||||||||
| Waterford Lakes Village * | — | 2,317 | 6,382 | — | 277 | 2,317 | 6,659 | 8,976 | 2,553 | 1997 | 2004 | |||||||||||||||||||||||||||||
| Waxahachie Crossing | 7,750 | 1,411 | 15,698 | — | 105 | 1,411 | 15,803 | 17,214 | 2,010 | 2010 | 2014 | |||||||||||||||||||||||||||||
| Westside Market * | — | 4,194 | 17,698 | — | 335 | 4,194 | 18,033 | 22,227 | 2,000 | 2013 | 2014 | |||||||||||||||||||||||||||||
| Whitehall Pike | 4,569 | 3,689 | 6,109 | — | 233 | 3,689 | 6,341 | 10,030 | 4,397 | 1999 | NA | |||||||||||||||||||||||||||||
| Total Operating Properties | 645,822 | 780,260 | 2,533,127 | 2,692 | 159,648 | 782,952 | 2,692,774 | 3,475,726 | 586,651 | |||||||||||||||||||||||||||||||
| Initial Cost | Cost Capitalized Subsequent to Acquisition/Development | Gross Carrying Amount Close of Period | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Encumbrances | Land | Building & Improvements | Land | Building & Improvements | Land | Building & Improvements | Total | Accumulated Depreciation | Year Built / Renovated | Year Acquired | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Properties (continued) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Oleander Place* | $ | — | $ | 847 | $ | 5,846 | $ | — | $ | 192 | $ | 847 | $ | 6,038 | $ | 6,885 | $ | 3,024 | 2012 | 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||
| One Loudoun Downtown | — | 74,400 | 236,043 | — | 1,743 | 74,400 | 237,785 | 312,185 | 13,588 | 2013/2022 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Oswego Commons | — | 5,746 | 8,311 | — | 117 | 5,746 | 8,428 | 14,174 | 878 | 2002 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Palms Plaza | — | 12,049 | 24,494 | — | 257 | 12,049 | 24,752 | 36,801 | 908 | 1988 | 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Paradise Valley Marketplace | — | 6,889 | 35,823 | — | 151 | 6,889 | 35,975 | 42,864 | 2,792 | 2002 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Parkside Town Commons | — | 21,796 | 108,611 | (60) | 10,349 | 21,736 | 118,960 | 140,696 | 35,254 | 2015 | N/A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Parkway Towne Crossing | — | 15,099 | 28,562 | — | 346 | 15,099 | 28,908 | 44,007 | 1,835 | 2010 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pavilion at King's Grant | — | 5,086 | 39,804 | — | 1,354 | 5,086 | 41,158 | 46,244 | 3,604 | 2002 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pebble Marketplace | — | 7,504 | 34,548 | — | 411 | 7,504 | 34,959 | 42,463 | 1,157 | 1997 | 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pelham Manor Shopping Plaza* | — | — | 42,293 | — | 497 | — | 42,789 | 42,789 | 2,621 | 2008 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Peoria Crossing | — | 18,879 | 16,304 | — | 676 | 18,879 | 16,980 | 35,859 | 1,674 | 2002 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Perimeter Woods | — | 6,893 | 27,277 | — | 1,828 | 6,893 | 29,105 | 35,998 | 9,004 | 2008 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pine Ridge Crossing | — | 5,640 | 16,985 | — | 5,268 | 5,640 | 22,253 | 27,893 | 9,580 | 1994 | 2006 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Plaza at Cedar Hill | — | 5,782 | 34,294 | — | 17,410 | 5,782 | 51,704 | 57,486 | 23,804 | 2000 | 2004 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Plaza at Marysville | — | 6,710 | 18,509 | — | 18 | 6,710 | 18,527 | 25,237 | 1,648 | 1995 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pleasant Hill Commons | — | 3,350 | 10,076 | — | (611) | 3,350 | 9,465 | 12,815 | 2,882 | 2008 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pleasant Run Towne Crossing | — | 4,465 | 24,945 | — | 609 | 4,465 | 25,554 | 30,019 | 2,094 | 2004 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Portofino Shopping Center | — | 4,721 | 75,011 | — | 19,164 | 4,721 | 94,175 | 98,896 | 35,805 | 1999 | 2013 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Publix at Woodruff | — | 1,783 | 6,361 | — | 875 | 1,783 | 7,236 | 9,019 | 4,553 | 1997 | 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rampart Commons | 7,336 | 1,136 | 42,174 | — | 750 | 1,136 | 42,924 | 44,060 | 15,602 | 2018 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rangeline Crossing | — | 1,981 | 18,037 | — | 4,554 | 1,981 | 22,591 | 24,572 | 8,091 | 1986/2013 | NA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reisterstown Road Plaza | — | 16,578 | 30,674 | — | 2,651 | 16,578 | 33,324 | 49,902 | 2,863 | 1986/2018 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Riverchase Plaza | — | 3,889 | 11,404 | — | 1,205 | 3,889 | 12,610 | 16,499 | 6,168 | 1991/2001 | 2006 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rivers Edge | — | 5,647 | 29,698 | — | 1,569 | 5,647 | 31,266 | 36,913 | 11,304 | 2011 | 2008 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rivery Towne Crossing | — | 5,230 | 2,430 | — | 996 | 5,230 | 3,426 | 8,656 | 273 | 2005 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Royal Oaks Village II | — | 3,462 | 9,092 | — | 709 | 3,462 | 9,802 | 13,264 | 770 | 2004 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sawyer Heights Village | — | 18,720 | 19,644 | — | 44 | 18,720 | 19,688 | 38,408 | 1,346 | 2007 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Saxon Crossing | — | 3,764 | 15,430 | — | 734 | 3,764 | 16,164 | 19,928 | 4,902 | 2009 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shoppes at Hagerstown | — | 6,796 | 16,038 | — | 264 | 6,796 | 16,302 | 23,098 | 1,126 | 2008 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shoppes at Plaza Green | — | 3,749 | 23,853 | — | 1,827 | 3,749 | 25,680 | 29,429 | 10,278 | 2000 | 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shoppes at Quarterfield | — | 4,105 | 8,708 | — | — | 4,105 | 8,708 | 12,813 | 279 | 1999/2022 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shoppes of Eastwood | — | 1,688 | 8,934 | — | 984 | 1,688 | 9,918 | 11,606 | 4,649 | 1997 | 2013 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shoppes of New Hope | — | 2,107 | 10,750 | — | 34 | 2,107 | 10,784 | 12,891 | 806 | 2004 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shoppes of Prominence Point | — | 2,945 | 11,418 | — | 164 | 2,945 | 11,583 | 14,528 | 969 | 2004 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shops at Eagle Creek | — | 2,121 | 8,728 | — | 4,345 | 2,121 | 13,073 | 15,194 | 6,594 | 1998 | 2003 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shops at Forest Commons | — | 1,616 | 9,358 | — | 431 | 1,616 | 9,789 | 11,405 | 758 | 2002 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shops at Julington Creek | — | 2,372 | 7,300 | — | 288 | 2,372 | 7,588 | 9,960 | 2,037 | 2011 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shops at Moore | — | 6,284 | 23,842 | — | 2,228 | 6,284 | 26,071 | 32,355 | 7,328 | 2010 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shops at Park Place | — | 8,042 | 18,478 | — | 50 | 8,042 | 18,528 | 26,570 | 1,598 | 2001 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-46
| Initial Cost | Cost Capitalized Subsequent to Acquisition/Development | Gross Carrying Amount Close of Period | ||||||||||||||||||||||||||||||||||||||
| Building & | Building & | Building & | Accumulated | Year Built / | Year | |||||||||||||||||||||||||||||||||||
| Name | Encumbrances | Land | Improvements | Land | Improvements | Land | Improvements | Total | Depreciation | Renovated | Acquired | |||||||||||||||||||||||||||||
| Office Properties | ||||||||||||||||||||||||||||||||||||||||
| Thirty South | $ | 17,218 | $ | 1,643 | $ | 9,669 | $ | — | $ | 18,973 | $ | 1,643 | $ | 28,642 | $ | 30,285 | $ | 14,500 | 1905/2002 | 2001 | ||||||||||||||||||||
| Union Station Parking Garage * | — | 904 | 2,650 | — | 1,268 | 904 | 3,918 | 4,822 | 1,642 | 1986 | 2001 | |||||||||||||||||||||||||||||
| Total Office Properties | 17,218 | 2,547 | 12,319 | — | 20,241 | 2,547 | 32,560 | 35,107 | 16,142 | |||||||||||||||||||||||||||||||
| Development and Redevelopment Properties | ||||||||||||||||||||||||||||||||||||||||
| Beechwood Promenade * | — | 2,734 | 47,978 | — | — | 2,734 | 47,978 | 50,712 | 9,494 | NA | NA | |||||||||||||||||||||||||||||
| Burnt Store Promenade * | — | 5,112 | 14,910 | — | — | 5,112 | 14,910 | 20,022 | 4,164 | NA | NA | |||||||||||||||||||||||||||||
| City Center * | — | 20,565 | 177,389 | — | — | 20,565 | 177,389 | 197,954 | 23,611 | NA | NA | |||||||||||||||||||||||||||||
| Courthouse Shadows * | — | 4,999 | 17,213 | — | — | 4,999 | 17,213 | 22,212 | 4,979 | NA | NA | |||||||||||||||||||||||||||||
| Eddy Street Commons - Phase II * | — | 1,379 | — | — | — | 1,379 | — | 1,379 | — | NA | NA | |||||||||||||||||||||||||||||
| Fishers Station | 6,555 | 3,736 | 16,297 | — | — | 3,736 | 16,297 | 20,033 | 4,391 | NA | NA | |||||||||||||||||||||||||||||
| Hamilton Crossing Centre | 10,214 | 5,549 | 10,289 | — | — | 5,549 | 10,289 | 15,838 | 3,641 | NA | NA | |||||||||||||||||||||||||||||
| Rampart Commons | 10,742 | 1,136 | 36,514 | — | — | 1,136 | 36,514 | 37,650 | 4,963 | NA | NA | |||||||||||||||||||||||||||||
| The Corner * | — | 304 | 3,724 | — | — | 304 | 3,724 | 4,028 | 2,100 | NA | NA | |||||||||||||||||||||||||||||
| Total Development and Redevelopment Properties | 27,511 | 45,514 | 324,314 | — | — | 45,514 | 324,314 | 369,828 | 57,342 | |||||||||||||||||||||||||||||||
| Other ** | ||||||||||||||||||||||||||||||||||||||||
| Bridgewater Marketplace * | — | 2,110 | — | — | — | 2,110 | — | 2,110 | — | NA | NA | |||||||||||||||||||||||||||||
| Deerwood Lake * | — | 1,421 | 25,272 | — | — | 1,421 | 25,272 | 26,693 | 141 | NA | NA | |||||||||||||||||||||||||||||
| Eddy Street Commons * | — | 277 | — | — | — | 277 | — | 277 | — | NA | NA | |||||||||||||||||||||||||||||
| Fox Lake Crossing II | — | 3,458 | — | — | — | 3,458 | — | 3,458 | — | NA | NA | |||||||||||||||||||||||||||||
| KRG Development | — | — | 655 | — | — | — | 656 | 656 | — | NA | NA | |||||||||||||||||||||||||||||
| KRG New Hill * | — | 5,791 | — | — | — | 5,791 | — | 5,791 | — | NA | NA | |||||||||||||||||||||||||||||
| KRG Peakway | — | 20,944 | — | — | — | 20,944 | — | 20,944 | — | NA | NA | |||||||||||||||||||||||||||||
| Pan Am Plaza | — | 8,840 | — | — | — | 8,840 | — | 8,840 | — | NA | NA | |||||||||||||||||||||||||||||
| Total Other | — | 42,841 | 25,928 | — | — | 42,841 | 25,929 | 68,770 | 141 | |||||||||||||||||||||||||||||||
| Line of credit/Term Loan/Unsecured notes | 1,010,100 | — | — | — | — | — | — | — | — | NA | NA | |||||||||||||||||||||||||||||
| Grand Total | $ | 1,700,650 | $ | 871,161 | $ | 2,895,688 | $ | 2,692 | $ | 179,889 | $ | 873,854 | $ | 3,075,577 | $ | 3,949,431 | $ | 660,276 | ||||||||||||||||||||||
| Initial Cost | Cost Capitalized Subsequent to Acquisition/Development | Gross Carrying Amount Close of Period | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Encumbrances | Land | Building & Improvements | Land | Building & Improvements | Land | Building & Improvements | Total | Accumulated Depreciation | Year Built / Renovated | Year Acquired | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Properties (continued) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Silver Springs Pointe | $ | — | $ | 7,580 | $ | 4,947 | $ | — | $ | 311 | $ | 7,580 | $ | 5,258 | $ | 12,838 | $ | 2,095 | 2001 | 2014 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Southlake Corners | — | 7,998 | 16,648 | — | 169 | 7,998 | 16,817 | 24,815 | 1,553 | 2004 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Southlake Town Square | — | 19,534 | 322,477 | — | 8,872 | 19,534 | 331,348 | 350,882 | 27,467 | 1998 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stilesboro Oaks | — | 3,712 | 11,374 | — | 60 | 3,712 | 11,434 | 15,146 | 988 | 1997 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stonebridge Plaza | — | 1,923 | 7,939 | — | 20 | 1,923 | 7,959 | 9,882 | 663 | 1997 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stoney Creek Commons | — | 628 | 3,700 | — | 5,913 | 628 | 9,613 | 10,241 | 5,088 | 2000 | NA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sunland Towne Centre | — | 14,774 | 22,542 | — | 4,370 | 14,774 | 26,912 | 41,686 | 13,090 | 1996 | 2004 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tacoma South | — | 30,058 | 3,358 | — | 26 | 30,058 | 3,384 | 33,442 | 304 | 1984 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Target South Center | — | 2,581 | 9,631 | — | — | 2,581 | 9,631 | 12,212 | 839 | 1999 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tarpon Bay Plaza | — | 3,855 | 23,796 | — | 3,114 | 3,855 | 26,910 | 30,765 | 10,032 | 2007 | NA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Brickyard | — | 29,389 | 19,616 | — | 251 | 29,389 | 19,867 | 49,256 | 1,958 | 1977/2004 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Corner | 14,750 | 3,772 | 24,609 | — | 42 | 3,772 | 24,651 | 28,423 | 7,131 | 2008 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Landing at Tradition | — | 17,605 | 46,217 | — | 8,261 | 17,605 | 54,478 | 72,083 | 14,991 | 2007 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Shoppes at Union Hill | 10,007 | 9,876 | 46,428 | — | 488 | 9,876 | 46,916 | 56,792 | 3,536 | 2003 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Shops at Legacy | — | 14,864 | 119,901 | — | 1,596 | 14,864 | 121,497 | 136,361 | 9,782 | 2002 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tollgate Marketplace | — | 11,963 | 65,457 | — | 3,404 | 11,963 | 68,861 | 80,824 | 5,733 | 1979/1994 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Toringdon Market | — | 5,448 | 9,539 | — | 423 | 5,448 | 9,962 | 15,410 | 3,636 | 2004 | 2013 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Towson Square | — | 1,412 | 27,429 | — | 38 | 1,412 | 27,467 | 28,879 | 1,780 | 2014 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Traders Point | — | 11,135 | 42,894 | — | 2,469 | 11,135 | 45,364 | 56,499 | 25,916 | 2005 | NA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tradition Village Center | — | 3,140 | 14,759 | — | 1,013 | 3,140 | 15,772 | 18,912 | 5,229 | 2006 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tysons Corner | — | 13,334 | 10,483 | — | 28 | 13,334 | 10,511 | 23,845 | 584 | 1980/2013 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Village Shoppes at Simonton | — | 1,627 | 11,941 | — | 25 | 1,627 | 11,966 | 13,593 | 946 | 2004 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Walter's Crossing | — | 13,056 | 20,699 | — | 3,206 | 13,056 | 23,905 | 36,961 | 1,545 | 2005 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Watauga Pavilion | — | 5,511 | 24,169 | — | 83 | 5,511 | 24,251 | 29,762 | 1,879 | 2003 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Waterford Lakes Village | — | 2,317 | 6,324 | — | 3,004 | 2,317 | 9,328 | 11,645 | 5,729 | 1997 | 2004 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Waxahachie Crossing | — | 1,411 | 15,698 | — | (257) | 1,411 | 15,441 | 16,852 | 4,195 | 2010 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Winchester Commons | — | 2,119 | 9,612 | — | 11 | 2,119 | 9,623 | 11,742 | 912 | 1999 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Woodinville Plaza | — | 24,722 | 30,185 | — | 689 | 24,722 | 30,873 | 55,595 | 2,634 | 1981 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Operating Properties | 233,621 | 1,834,931 | 5,248,506 | 8,454 | 320,357 | 1,843,385 | 5,568,863 | 7,412,248 | 1,088,947 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-47
| Initial Cost | Cost Capitalized Subsequent to Acquisition/Development | Gross Carrying Amount Close of Period | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Encumbrances | Land | Building & Improvements | Land | Building & Improvements | Land | Building & Improvements | Total | Accumulated Depreciation | Year Built / Renovated | Year Acquired | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Office and Other Properties | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Thirty South Meridian | $ | — | $ | 1,643 | $ | 9,663 | $ | — | $ | 24,794 | $ | 1,643 | $ | 34,457 | $ | 36,100 | $ | 17,651 | 1905/2002 | 2001 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Pan Am Plaza Garage | — | — | 28,035 | — | 126 | — | 28,161 | 28,161 | 16,057 | 1986 | 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Union Station Parking Garage | — | 904 | 2,650 | — | 2,281 | 904 | 4,931 | 5,835 | 2,390 | 1986 | 2001 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Office Properties | — | 2,547 | 40,347 | — | 27,202 | 2,547 | 67,549 | 70,096 | 36,099 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Development and Redevelopment Projects | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Carillon | — | 28,239 | 3,714 | — | 25,966 | 28,239 | 29,680 | 57,919 | 338 | 2004 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Glendale Town Center | — | 1,494 | 44,063 | (187) | 17,640 | 1,307 | 61,704 | 63,011 | 35,764 | N/A | N/A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Hamilton Crossing Centre | — | 3,514 | 2,017 | (19) | 103 | 3,495 | 2,121 | 5,616 | — | N/A | N/A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| One Loudoun – Uptown | — | 92,452 | — | — | 2 | 92,452 | 2 | 92,454 | — | N/A | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Corner | — | — | — | — | 175 | — | 175 | 175 | — | N/A | N/A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Landing at Tradition – Phase II | — | — | — | — | 6,527 | — | 6,527 | 6,527 | — | N/A | N/A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Development and Redevelopment Projects | — | 125,700 | 49,795 | (206) | 50,413 | 125,493 | 100,208 | 225,701 | 36,102 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other ** | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bridgewater Marketplace | — | 1,103 | — | 291 | — | 1,394 | — | 1,394 | — | N/A | N/A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| KRG Development | — | — | — | — | — | — | — | — | — | N/A | N/A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| KRG New Hill | — | 1,824 | — | 37 | — | 1,861 | — | 1,861 | — | N/A | N/A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| KRG Peakway | — | 3,833 | — | — | — | 3,833 | — | 3,833 | — | N/A | N/A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pan Am Plaza | — | 14,044 | — | 3,396 | — | 17,440 | — | 17,440 | — | N/A | N/A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Other | — | 20,805 | — | 3,723 | — | 24,528 | — | 24,528 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Line of credit/Term loans/Unsecured notes | 2,744,635 | — | — | — | — | — | — | — | — | N/A | N/A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Grand Total | $ | 2,978,256 | $ | 1,983,982 | $ | 5,338,648 | $ | 11,971 | $ | 397,972 | $ | 1,995,953 | $ | 5,736,620 | $ | 7,732,573 | $ | 1,161,148 | ||||||||||||||||||||||||||||||||||||||||||||||||||
* This property or a portion of the property is subject to a ground lease for the land.
F-48
KITE REALTY GROUP TRUST AND KITE REALTY GROUP, L.P. and subsidiariesAND SUBSIDIARIES
Notes to Schedule III
Consolidated Real Estate and Accumulated Depreciation
($ in thousands)
RECONCILIATION OF INVESTMENT PROPERTIES
The changes in investment properties of the Company for the years ended December 31, 2017, 2016,2022, 2021, and 20152020 are as follows:
| 2017 | 2016 | 2015 | ||||||||||
| Balance, beginning of year | $ | 3,988,819 | $ | 3,926,180 | $ | 3,897,131 | ||||||
| Acquisitions | — | — | 176,068 | |||||||||
| Improvements | 78,947 | 97,161 | 92,717 | |||||||||
| Impairment | (10,897 | ) | — | (2,293 | ) | |||||||
| Disposals | (107,438 | ) | (34,522 | ) | (237,443 | ) | ||||||
| Balance, end of year | $ | 3,949,431 | $ | 3,988,819 | $ | 3,926,180 | ||||||
| Year Ended December 31, | |||||||||||||||||
| 2022 | 2021 | 2020 | |||||||||||||||
| Balance, beginning of year | $ | 7,584,735 | $ | 3,136,982 | $ | 3,079,616 | |||||||||||
| Acquisitions related to the Merger | (16,672) | 4,440,768 | — | ||||||||||||||
| Acquisitions | 99,064 | 15,263 | 63,570 | ||||||||||||||
| Improvements | 152,165 | 54,323 | 39,544 | ||||||||||||||
| Disposals | (86,719) | (62,601) | (45,748) | ||||||||||||||
| Balance, end of year | $ | 7,732,573 | $ | 7,584,735 | $ | 3,136,982 | |||||||||||
The unaudited aggregate cost of investment properties for U.S. federal tax purposes as of December 31, 20172022 was $3.0$8.0 billion.
RECONCILIATION OF ACCUMULATED DEPRECIATION
The changes in accumulated depreciation of the Company for the years ended December 31, 2017, 2016,2022, 2021, and 20152020 are as follows:
| 2017 | 2016 | 2015 | ||||||||||
| Balance, beginning of year | $ | 556,851 | $ | 428,930 | $ | 313,524 | ||||||
| Depreciation expense | 148,346 | 148,947 | 141,516 | |||||||||
| Impairment | (3,494 | ) | — | (833 | ) | |||||||
| Disposals | (41,427 | ) | (21,026 | ) | (25,277 | ) | ||||||
| Balance, end of year | $ | 660,276 | $ | 556,851 | $ | 428,930 | ||||||
| Year Ended December 31, | |||||||||||||||||
| 2022 | 2021 | 2020 | |||||||||||||||
| Balance, beginning of year | $ | 879,306 | $ | 750,119 | $ | 661,546 | |||||||||||
| Depreciation expense | 318,809 | 154,519 | 113,973 | ||||||||||||||
| Disposals | (36,967) | (25,332) | (25,400) | ||||||||||||||
| Balance, end of year | $ | 1,161,148 | $ | 879,306 | $ | 750,119 | |||||||||||
Depreciation of investment properties reflected in the consolidated statements of operations and comprehensive income is calculated over the estimated original lives of the assets as follows:
| Buildings | |||||
| Building improvements | |||||
| Tenant improvements | Term of related lease | ||||
| Furniture and | |||||
All other schedules have been omitted because they are inapplicable, not required or the information is included elsewhere in the consolidated financial statements or notes thereto.