EXPLANATORY NOTE
This report combines the annual reports on Form 10-K for the year ended December 31, 20192021 of Kite Realty Group Trust, Kite Realty Group, L.P. and its subsidiaries. Unless stated otherwise or the context otherwise requires, references to “Kite Realty Group Trust” or the “Parent Company” mean Kite Realty Group Trust, and references to the “Operating Partnership” mean Kite Realty Group, L.P. and its consolidated subsidiaries. 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 is engaged in the ownership, operation, acquisition, development and redevelopment of high-quality, neighborhoodopen-air shopping centers and community shopping centersmixed-use assets in select markets in the United States.States, and the Parent Company conducts substantially all of its activities through the Operating Partnership and its wholly owned subsidiaries. The Parent Company is the sole general partner of the Operating Partnership and as of December 31, 20192021 owned approximately 97.5%98.9% of the common partnership interests in the Operating Partnership (“General Partner Units”). The remaining 2.5%1.1% of the common partnership interests (“Limited Partner Units” and, together with the General Partner Units, the “Common Units”) are owned by the limited partners.
We believe combining the annual reports on Form 10-K of the Parent Company and the Operating Partnership into this single report benefits investors by:
•enhancing investors’ understanding of the Parent Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
•eliminating duplicative disclosure and providing a more streamlined and readable presentation of information becauseas a substantial portion of the Company’s disclosure applies to both the Parent Company and the Operating Partnership; and
•creating time and cost efficiencies through the preparation of one combined report instead of two separate reports.
We believe it is important to understand the few differences between the Parent Company and the Operating Partnership in the context of how we operate as an interrelated consolidated company. The Parent Company has no material assets or liabilities other than its investment in the Operating Partnership. The Parent Company issues public equity from time to time but does not have any indebtedness as all debt is incurred by the Operating Partnership. In addition, the Parent Company currently does not nor does it intend to guarantee any debt of the Operating Partnership. The Operating Partnership has numerous wholly-ownedwholly owned subsidiaries, and it also owns interests in certain joint ventures. These subsidiaries and joint ventures own and operate retail shopping centers and other real estate assets. The Operating Partnership is structured as a partnership with no publicly-tradedpublicly traded equity. Except for net proceeds from equity issuances by the Parent Company, which are contributed to the Operating Partnership in exchange for General Partner Units, the Operating Partnership generates the capital required by the business through its operations, its incurrence of indebtedness and the issuance of Limited Partner Units to third parties.
Shareholders’ equity and partners’ capital are the main areas of difference between the consolidated financial statements of the Parent Company and those of the Operating Partnership. In order to highlight this and other differences between the Parent Company and the Operating Partnership, there are separate sections in this report, as applicable, that separately discuss the Parent Company and the Operating Partnership, including separate financial statements and separate Exhibit 31 and 32 certifications. In the sections that combine disclosure of the Parent Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the collective Company.
KITE REALTY GROUP TRUSTAND KITE REALTY GROUP, L.P. AND SUBSIDIARIES
Annual Report on Form 10-K
For the Fiscal Year Ended
December 31, 2019 2021
TABLE OF CONTENTS
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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,
Currently, one of the most significant factors that could cause actual outcomes to differ significantly from our forward-looking statements is the adverse effect of the current pandemic of the novel coronavirus (“COVID-19”), including possible resurgences, variants and mutations, on the financial condition, results of operations, cash flows and performance of the Company and its tenants, the real estate market and the global economy and financial markets. The COVID-19 pandemic has impacted us and our tenants significantly, and the extent to which it will continue to impact us and our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, treatment developments, public adoption rates of COVID-19 vaccines, including booster shots, and their effectiveness against variants of COVID-19, such as Delta and Omicron, the direct and indirect economic effects of the pandemic and containment measures, and potential sustained changes in consumer behavior, among others. Moreover, investors are cautioned to interpret many of the risks identified in this Annual Report on Form 10-K as being heightened as a result of the ongoing and numerous adverse effects of COVID-19.
Additional risks, uncertainties and other factors that might cause such differences, some of which could be material, include but are not limited to:
•risks associated with the Company’s Merger (defined below) with Retail Properties of America, Inc. (“RPAI”), including the integration of the businesses of the combined company, the ability to achieve expected synergies or cost savings and potential disruptions to the Company’s plans and operations;
•national and local economic, business, real estate and other market conditions, particularly in connection with low or negative growth in the U.S. economy as well as economic uncertainty;uncertainty (including the potential effects of inflation);
•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 insolvency or 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 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 e-commerce on the value of shopping center assets;assets and changing demographics and customer traffic patterns;
•business continuity disruptions and a deterioration in our tenant’s 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 our properties in Texas, Florida, Indiana, Texas, Nevada,New York, Maryland, and North Carolina;
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•civil unrest, acts of terrorism or war, acts of God, climate change, epidemics, pandemics (including 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 consumer behavior due to COVID-19 and the fear of future pandemics;
•our ability to satisfy environmental, social or governance standards set by various constituencies;
•insurance costs and coverage;
•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.
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-heldpublicly held real estate investment trust which, through its majority-owned subsidiary, Kite Realty Group, L.P., owns interests in various operating subsidiaries and joint ventures engaged in the ownership, and operation, acquisition, development and redevelopment of high-quality, neighborhoodopen-air shopping centers and community shopping centersmixed-use assets in select markets in the United States. We derive revenues primarily from activities associated with the collection of contractual rents and reimbursement payments from tenants at 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 and real estate market and overall economic conditions.
As of December 31, 2019,2021, we owned interests in 90180 operating and redevelopmentretail properties totaling approximately 17.429.0 million square feet and one office property with 0.3 million square feet. Of the 180 operating retail properties, 11 contain an office component. We also owned oneeight development projectprojects under construction as of this date. Our retail operating portfolio was 96.1%93.4% 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 32.1%29.6% of our annualized base rent.ABR. See Item 2, “Properties” for a list of our top 25 tenants by annualized base rent. ABR.
Significant 20192021 Activities
Merger with RPAI
On October 22, 2021, we completed the merger with 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. See Note 3 to the accompanying consolidated financial statements for additional details. We acquired 100 operating retail properties and five active 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 or payable 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.
The Merger provided numerous positive benefits to the Company, including:
•Enhancing the portfolio quality by bolstering our presence in existing strategic markets across the Sunbelt along with providing entry into other strategic markets such as Washington, D.C. and Seattle;
•Providing multiple value creation opportunities including lease-up and completion of development and redevelopment projects;
•Improving the strength of our balance sheet by reducing leverage and increasing liquidity to over $1.0 billion; and
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•Further strengthening leasing relationships to provide more optionality to tenants due to the expanded size of the portfolio.
Operating Activities
•The Company generated Funds From Operations, as defined by NAREIT, of $88.4 million and Funds From Operations, as adjusted for merger and acquisition costs, of impairment charges;$171.2 million;
• |
Same Property Net Operating Income ("(“Same Property NOI"NOI”) increased, which excludes the properties acquired in the Merger with RPAI, grew by 2.2%6.1% in 20192021 compared to 20182020 primarily due to increasesimproved collection activity resulting in rental rates and an improved tenant mix drivena significant reduction in bad debt expense in 2021 compared to 2020, which was more heavily impacted by strong anchor and shop leasing activity;the COVID-19 pandemic;
•Our operating portfolio annual base rent ("ABR")ABR per square foot as of December 31, 20192021 was $17.83,$19.36, an increase of $0.99 or 5.9%$0.94 (or 5.1%) from the end of the prior year;year.
•In connection with the Merger, we assumed an $850.0 million unsecured revolving credit facility (the “Revolving Facility”), of which $55.0 million was 96.1%drawn as of December 31, 2019; and
•In addition, we assumed (i) a $200.0 million unsecured term loan due 2023, (ii) a $120.0 million unsecured term loan due 2024, (iii) a $150.0 million unsecured term loan due 2026, (iv) private placement notes totaling $450.0 million maturing at various dates from June 2024 through June 2029, (v) $350.0 million of public notes due 2025, (vi) $400.0 million of public notes due 2030; and (vii) $90.1 million of mortgages payable. Subsequent to the Merger, the Company’s existing revolving credit facility.facility was terminated;
•We substantially completed the construction of Eddy Street Commons – Phase II and Glendale Town Center; and
•We declared quarterly cash dividends totaling $0.68 per share during 2021.
We have no$153.5 million of debt principal scheduled to mature through December 31, 2021, and2022, a debt service coverage ratio of 3.6x3.9x and approximately $93.2 million in cash on hand as of December 31, 2019.2021. We have been assignedpreviously received investment grade corporate credit ratings from two nationally recognized credit rating agencies. Theseagencies and these ratings were unchanged during 2019.2021. We were assigned an investment grade corporate credit rating from a third nationally recognized rating agency in October 2021.
Impacts on Business from COVID-19
The COVID-19 pandemic, and the public health measures that have been undertaken in response, have had a significant adverse impact on many of our tenants and on our business. The effects of COVID-19, including related government restrictions, mandatory quarantines, “shelter in place” orders, border closures, “social distancing” practices, masking requirements and other travel and gathering restrictions and practices, have caused many of our tenants to close stores, reduce hours or significantly limit service, each of which may continue to create headwinds for our tenants. Since we cannot estimate when the containment measures will roll back, end, or be reinstated, we cannot estimate the ultimate operational and financial impact of COVID-19 on our business.
In 2020, the effects of COVID-19 triggered a global and domestic economic recession and many of our tenants faced financial distress. As the domestic economy continued to recover in 2021, retailers continued to improve their operations to
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account for the pandemic, including using open-air centers as convenient shopping destinations and last-mile fulfillment through the use of in-store pickup, curbside pickup, and shipping from stores. Historically, economic indicators such as GDP growth, consumer confidence and employment have been correlated with demand for certain of our tenants’ products and services. If an economic recession returns, it could increase the number of our tenants that are unable to meet their lease obligations to us and could limit the demand for our space from new tenants.
We expect the significance of the COVID-19 pandemic, including the extent of its effects on our business, financial performance and condition, operating results and cash flows and the economic slowdown, to be dictated by, among other things, the duration of the COVID-19 pandemic, including possible resurgences and mutations, the success of efforts to contain it, the efficacy of vaccines, including against variants of COVID-19, public adoption rates of vaccines and the impact of other actions taken in response to the pandemic. These uncertainties make it difficult to predict operating results for our business; therefore, there can be no assurances that we will not experience further declines in revenues, net income, FFO or other operating 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, and operation, acquisition, development and redevelopment of high-quality, neighborhoodopen-air shopping centers and community shopping centers.mixed-used assets. 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 that certain of our properties represent attractive opportunities for profitable redevelopment, renovation, densification, and expansion.
We seek to implement our business objectives through the following strategies, each of which is more completely described in the sections that follow:
•Operating Strategy: Maximizing 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: Maintaining a strong balance sheet with flexibility to fund our operating and investment activities. Funding sources include the public equity and debt markets, an existing Revolving Facility with $793.5 million of borrowing capacity as of December 31, 2021, secured debt, internally generated funds, proceeds from selling land and properties that no longer fit our strategy, and potential strategic joint ventures; and • |
Growth Strategy: Prudently using available cash flow, targeted asset recycling, equity, and debt capital to selectively acquire additional retail properties and redevelop or renovate our existing properties where we believe that investment returns would meet or exceed internal benchmarks. |
Operating Strategy. Our primary operating strategy is to maximize our rental rates, our 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 maximize 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 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;
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•actively managing properties 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.
We successfully executed our operating strategy in 20192021 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 2.2%, a blended363 new and renewal cash leasingleases for approximately 2.6 million square feet, which includes leases for the legacy RPAI portfolio subsequent to the closing date of the Merger. Our leased to occupied spread represents approximately $33.0 million of 9.2%net operating income (“NOI”), an increasethe majority of which is expected to come online in our2022. Included within this amount is $15.0 million of NOI from 27 leases for approximately 767,000 square feet of vacant anchor leased percentage to 97.8% as of year-end, and an increase in our small shop leased percentage to 92.5% as of year-end.spaces. 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, “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 use 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.
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 maintain an investment grade credit rating that we expect will continue to enable us to opportunistically access the public unsecured bond market and will allow us to lower our cost of capital and provide greater flexibility in managing the acquisition and disposition of assets in our operating portfolio.
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 availability under our unsecured revolving credit facilityRevolving Facility so that we have additional capacity 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 mitigate risk.
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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:
•continually evaluating our operating properties for redevelopment and renovation opportunities that we believe will make them more attractive for leasing to new tenants, right-sizing of anchor spaces while increasing rental rates, and re-leasing spaces to existing tenants at increased rental rates;
•completion of our eight active development and redevelopment projects;
•evaluation of the entitled land holdings to determine the optimal real estate use and capital allocation decisions;
•disposing of selected 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;
•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, grocers, soft goodshardware stores, theaters, or sporting goods retailers, as well as further enhancing a diverse tenant mix that includes restaurants, specialty shops, serviceand other essential retailers such as banks, dry cleaners and hair salons, and shoe and clothing retailers, some of whichthat 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 in 2021 with the completion of our transformative Merger with RPAI. The transaction created a top five shopping center real estate investment trust (“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 markets in 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 in the future that we will be able to compete successfully with our competitors in our development, acquisition and leasing activities.
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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 orders requiring us to spend substantial sums to cure violations, pay attorneys'attorneys’ fees, or pay 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.
Affordable Care Act. We 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 133241 full-time employees as of December 31, 2019. 2021.
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.
In addition, some of our properties have tenants which may use hazardous or toxic substances in the routine course of their businesses. In general, these tenants have covenanted in their leases 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, certain of our properties have contained asbestos-containing building materials or ACBM,(“ACBM”), and other 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 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 or the cost to insure over these events is costs prohibitive; and therefore, we do not carry insurance for these losses. Some of our policies, such as those covering losses due to terrorism and floods, are
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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 is located at 30 S. Meridian Street, Suite 1100, Indianapolis, IN 46204. Our telephone number is (317) 577-5600.
Human Capital
As of December 31, 2019,2021, we had 133241 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 that treats employees with dignity and respect.
Our primary businesspolicies 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.
We previously established a diversity target of 20% female representation on our Board of Trustees and a goal of at least one committee to be chaired by a female, taking into consideration the experience and skill sets required of the Board of Trustees. As of the date of this filing, we are proud to have achieved these goals, with females comprising over 20% of our Board of Trustees and the chairing of our Corporate Governance and Nominating Committee by a female trustee. In addition, we annually conduct a respect in the workplace and diversity training to further enhance our cultural behaviors. As of December 31, 2021, approximately 47% of our workforce was female and minorities represented approximately 19% of our team.
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 ownershiporganization. We align employees’ goals with our overall strategic direction to create a clear link between individual efforts and operationthe long-term success of neighborhoodthe company and then provide effective feedback on their performance towards goals to ensure their growth. Through performance plans, talent recognition and individual development planning, along with reward packages, we advance our talent pool and create a sustainable and long-term enterprise. The Company 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 shopping centers.development and collaborate to extend resources towards the advancement of this principle. We do not distinguish or groupare 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. 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 operations oncommunities;
•fundraising to support displaced workers;
•contributions to healthcare workers and first responders; and
•construction of a geographical basis, or any other basis, when measuring performance. Accordingly,youth community center.
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In addition in recent years, our employees have donated and coordinated substantial fundraising and have spent many hours volunteering to support a variety of charities with which we have one operating segment, which also serves aspartner.
Team Wellness
The health, safety and well-being of our reportable segment for disclosure purposesemployees are always top priorities, and we believe our actions in response to COVID-19 were appropriate and in accordance with accountingstate and local health and safety laws. Among other things, we adopted remote working and flexible scheduling arrangements and implemented additional health and safety measures for employees working in our offices.
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. To assist us in setting and meeting ESG goals, we formed a cross-functional task force (“ESG Task Force”) in 2020 to review ESG issues that are important to investors and regularly report to the Board of Trustees on ESG efforts. The ESG Task Force is led by our Chief Executive Officer and includes members from our asset management, employee experience, investor relations, marketing, internal audit, and legal departments.
In 2020, the ESG Task Force issued our ESG Policy and Corporate Citizenship Report, which is published on our website. In 2021, the Company has undertaken multiple projects to make its operations more efficient and to reduce energy and water consumption, including installing LED lighting at 15 properties, receiving IREM certifications for 29 properties, increasing the number of electric-vehicle charging stations to 100 stations across eight properties, and implementing smart meters and other initiatives aimed at water conservation, recycling and waste diversion at our properties. 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 generally acceptedand best practices from the Green Lease Leaders Reference Guide by the Institute for Market Transformation and the U.S. Department of Energy. The Company also partnered with One Tree Planted, a non-profit organization committed to reforestation, to plant new trees in 2020 and continued this program in 2021. We continue to evaluate potential actions that might reduce our carbon footprint or otherwise mitigate our environmental impact.
As described above, we are highly committed to our employees, and our policies are designed to promote fairness, equal opportunities, diversity, well-being and professional development within the United States ("GAAP").
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 annual Proxy Statement.
Available Information
Our Internetinternet website address is www.kiterealty.com. You can obtain on our website, free of charge, a copy of our Annual Report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file such reports or amendments with, or furnish them to, the SEC. Our Internetinternet 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.
The Securities and Exchange CommissionSEC maintains a website (http://www.sec.gov) that contains reports, proxy statements, information statements, and other information regarding issuers that file electronically with the Securities and Exchange Commission.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
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flows, including our ability to make distributions to our shareholders, and you should carefully consider them. It is not possible to predict or identify all such factors. You should not consider this list to be 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.
RISKS RELATED TO OUR OPERATIONS
We may be unable to integrate our business with RPAI’s business successfully or realize the anticipated synergies and related benefits of the Merger or do so within the anticipated time frame. We may also incur substantial expenses related to the integration process.
The Merger effected the combination of two companies that previously operated as independent public companies. We have, and will continue to, devote significant management attention and resources to integrating the business practices and operations of RPAI with ours. Potential difficulties we may encounter in the integration process include the following:
•the inability to combine our and RPAI’s businesses successfully in a manner that permits
•the inability to successfully realize the anticipated value from the RPAI assets;
•the complexities associated with integrating personnel from the two companies and the failure of the combined company to retain key employees of either of the two companies;
•the additional complexities of combining two companies with different histories, cultures, processes, strategies, markets and tenant bases;
•the complexities associated with applying our standards, controls, policies and procedures over a significantly larger base of assets;
•potential unknown liabilities and unforeseen increased expenses, delays or regulatory conditions associated with the Merger; and
•performance shortfalls as a result of the diversion of management’s attention caused by completing the Merger and integrating the companies’ operations.
We may also incur substantial expenses in connection with integrating the business, operations, networks, systems, technologies, policies and procedures of the two companies. Although we have assumed that a certain level of transaction and integration expenses would be incurred, there are a number of factors beyond our control that could affect the total amount or timing of the integration expenses.
For all these reasons, it is possible that the integration process could result in the distraction of our management, the disruption of our ongoing business or inconsistencies in our operations, services, standards, controls, policies and procedures, and that the integration expenses associated with the Merger could, particularly in the near term, exceed the savings that we expect to achieve from the anticipated synergies, any of which could adversely affect our ability to maintain relationships with tenants, customers, vendors and employees or to achieve the anticipated benefits of the Merger, or could otherwise adversely affect our business and financial results.
The COVID-19 pandemic and measures intended to prevent its spread has caused, and other future public health crises could cause, severe disruptions in the U.S., regional and global economies.
The COVID-19 pandemic has had, and a future outbreak of a highly infectious or contagious disease or other public health crisis could similarly have, significant repercussions across local, regional, national and global economies, including the retail sector within the U.S., and has contributed to significant volatility and negative pressure in the financial markets. Since early 2020, many U.S. states and cities, including where we own properties and/or have development sites, have at times imposed measures intended to control the spread of COVID-19, such as instituting “shelter in place” rules, limitations on public gatherings and restrictions on certain business operations.
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The COVID-19 pandemic has disrupted our business and has had a significant adverse effect, and could continue to significantly adversely impact and disrupt, our business, financial performance and condition, operating results and cash flows. Additional factors that have negatively impacted, and may negatively impact in the future, our ability to operate successfully as a result of the COVID-19 pandemic, include, among others:
•the inability of our tenants to meet their lease obligations to us in full, or at all, due to (i) complete or partial closures of, or a decrease in customer traffic at, one or more of our properties resulting from government or tenant actions related to the pandemic; or (ii) local, regional or national economic conditions caused by the pandemic;
•liquidity issues resulting from (i) reduced cash flow from operations due to the pandemic, which could impact our future ability to pay dividends to our shareholders at past levels, (ii) the impact that lower operating results could have on our ability to meet the financial covenants in our debt agreements, and (iii) difficulty in accessing debt and equity capital on attractive terms or at all;
•an acceleration of changes in consumer behavior in favor of e-commerce;
•business continuity disruptions and a deterioration in our or 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;
•the potential negative impact on the health of our employees, including our executive management team and key employees, or the employees of our tenants; and
•the scaling back or delay of a significant amount of planned capital expenditures, including planned redevelopment projects, which could adversely affect the value of our properties.
The extent to which COVID-19 ultimately impacts our business and that of our tenants will depend, in part, on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, including any resurgences and variants of COVID-19, and the actions taken to contain the pandemic or mitigate its impact, all of which could vary by geographic region.
Our business, financial condition, performance, and value are subject to risks and conditions associated with real estate assets and the real estate industry.
Our primary business is the ownership, operation, acquisition development and redevelopment of high-quality, open-air shopping centers and mixed-use assets. Our business, financial condition, results of operations, cash flow, per share trading price of our common shares, ability to satisfy debt service obligations, and ability to make distributions to shareholders are subject to, and could be materially and adversely affected by, risks associated with acquiring, owning and operating such real estate assets, including events and conditions that are beyond our control such as periods of economic slowdown or recession, declines in the financial condition of our tenants, rising interest rates, difficulty in leasing vacant space or renewing existing tenants, or decline in value of our assets, or the public perception that any of these events may occur. Additionally, complying with the REIT requirements may cause us to forgo and/or liquidate otherwise attractive investments. These actions could have the effect of reducing our income and amount available for distribution to shareholders. Thus, compliance with the REIT requirements may hinder our ability to make or, in certain cases, maintain ownership of, certain attractive investments.
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 condition and results of operations.
We derive the majority of our revenue from retail tenants who lease space from us at our properties. Therefore,properties, and our ability to generate cash from operations is dependent on the rents that we are able to charge and collect from our tenants. Our leases generally do not contain provisions designed to ensurecollect.Over the creditworthinesspast several years, sustained weakness in certain sectors of the U.S. economy has resulted in the bankruptcy or weakened financial condition of a number of retailers, including some of our tenants. At any time, our tenants, and increased store closures. Tenants may experience a downturn inalso choose to consolidate, downsize or relocate their business that may significantly weaken their financial condition, particularly in the face of online competitionoperations for various reasons, including mergers or other restructurings. These events, or other similar events, and during periods of economic or political uncertainty. Economic and political uncertainty, including uncertainty related to taxation, may affect our tenants, joint venture partners, lenders, financial institutions and general economic conditions suchare beyond our control and could affect the overall economy, as consumer confidencewell as specific properties in our portfolio and spending, business confidenceour overall cash flow and spending andresults of operations, including the volatilityfollowing (any of the stock market. In the event ofwhich could have a material adverse effect on our business):
•Collections. Tenants may have difficulty paying their rent obligations when due or they may request rent deferrals, reductions or abatements.
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other tenants in the same shopping centerscenter because of contractual co-tenancy termination or rent reduction rights contained in some leases. In such an 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 extended periods of time or increased costs to re-lease a space. The inability to re-lease space particularly one previously 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 consolidate, downsize or relocate their operations, resulting in terminating or not renewing their leases with us or vacating the leased premises. 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 leases in multiple locations, could have a material adverse effect on our results of operations.
Tenant bankruptcies may increase during periods of difficult economic conditions. We cannotcould present difficulties for our business to collect rent or make any assurances thatclaims against a tenant filing 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 the 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. There are restrictions under bankruptcy laws that limit the amount of the claim we can make for future rent under a lease if the lease is rejected. As a result, it is likely that we would recover substantially less than the full value of any unsecured claims we hold from a tenant in bankruptcy, which would result in a reduction in our cash flow and in the amount of cash available for distribution to our shareholders and could have a material adverse effect on us.
The expansion of e-commerce may impact our resultstenants and our business.
The prominence of operations.
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, regional malls, and outlet malls, for tenants. These competitors includeincluding institutional investors, other REITs, including other retail 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 but which have greater capital resources.owner-operators. As of December 31, 2019,2021, leases representing 7.2%9.1% of our total annualized base rentretail ABR were scheduled to expire in 2020. If our2022. 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, we may be unable to lease on satisfactory terms and we may be pressured to reduce our rental rates below those we currently charge in order to retain tenants when our leases with them expire. We also may be required to offer moresuch as substantial rent reductions or abatements, tenant allowances or other improvements, and early termination rights, which may pressure us to reduce our rental rates, undertake unexpected capital improvements or accommodate requests for renovations, build-to-suit remodeling andoffer other improvements than we have done historically. As a result,terms less favorable to 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 phoneonline is more convenient, cost-effective or otherwise more attractive, our revenues and results of operations also may suffer.
Because of our geographic concentrations, a prolonged economic downturn in certain 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, 2019,2021, rents from our owned retail square footage in the states of Texas, Florida, Indiana, Texas, Nevada,New York, Maryland, and North Carolina comprised 26%24.0%, 16%9.9%, 15%5.8%, 10%5.8%, and 10%5.1% of our base rent, respectively. This level of concentration could expose us to greater economic risks than if we owned properties in more geographic regions. Adverse economic or real estate trends in Florida, Indiana, Texas, Nevada, North Carolina,these states or the surrounding regions or any decrease in demand for retail space resulting from the local regulatory environment, business climate or fiscal problems in these states, could materially and adversely affect us.
We depend on external financing to fulfill our financial condition, results of operations, cash flow, the trading price of our common sharescapital needs, and our ability to satisfy our debt service obligations and to pay distributions to our shareholders.
Partly because of the distribution requirements of being a REIT, we may not be able to fund all future capital needs with income from operations. Consequently, we may rely on external financing to fulfill our capital needs. Disruptions in the
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financial markets generally, or relating to the real estate industry specifically, may adversely affectcould impact our ability to obtain debt financing on favorable termsacquire or at all.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 equity and debt financing available, lower loan to value ratios, cause a tightening of lender underwriting standards and terms and cause higher interest rate spreads. As a result, we may be unable to refinance or extend our existing indebtedness on favorable terms or at all. We do not have any$153.5 million of debt principal scheduled to mature through December 31, 2021.2022. If we are not successful in refinancing our outstanding
debt when it becomes due, we may have to dispose of properties on disadvantageous terms, which could adversely affect our ability to service other debt and to meet our other obligations. While we currently have sufficient capacity under our unsecured revolving credit facility and operating cash flows to retire outstanding debt maturing through 2025 in the event we are not able to refinance such debt when it becomes due, but our credit facility has a maturity date in April 2022 (which may be extended for two additional periods of six months subject to certain conditions), and there can be no assurance that the credit facility will remain outstanding or be renewed through 2025 or that our operating cash flows will continue to provide sufficient liquidity to retire any or all of our outstanding debt during this period or beyond.
If economic conditions deteriorate in any of our markets, we may have to seek less attractive, alternative sources of financing and adjust our business plan accordingly. These factors
We have a significant amount of indebtedness outstanding and may make itneed to incur more difficult for us to sell properties or may adversely affect the selling price, as prospective buyers may experience increased costs of financing or difficulties in obtaining financing. These events also may make it difficult or costly to raise capital through the issuance of our common shares or preferred shares. The disruptions in the financial marketsfuture.
We have had, and may continue to have, a material adverse effect on the market value of our common shares and other aspects of our business, as well as the economy in general. Furthermore, there can be no assurances that government responses to disruptions in the financial markets will restore consumer confidence, stabilize the markets or increase liquidity and the availability of equity or debt financing.
the future. If our interest expense increased significantly, it could materially adversely affect our results of operations.us. For example, if market rates of interest on our variable rate debt outstanding, net of cash flow hedges, as of December 31, 20192021 increased by 1%, the increase in interest expense on our unhedged variable rate debt would decrease future cash flows by approximately $0.4$2.4 million annually.
We may incur additional debt in connection with various development and redevelopment projects and may incur additional debt upon the future acquisition of operating properties. Our organizational documents do not limit the amount of indebtedness that we may incur. We may borrow new funds to develop or acquire properties. 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 also may 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 of dividends paid and excluding net capital gains) or otherwise as is necessary or advisable to ensure that we maintain our qualification as a REIT 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 fundscash flows from operations to pay principalservice our indebtedness, which would reduce the available cash flow to fund general corporate purposes and interest, which reduces the amount availablereduce cash for distributions;
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 floating 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 our competitors that have less debt. The impact of any of these potential adverse consequences could have a material adverse effect on us.
Our debt agreements relating 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 borrow more money forincur debt, make dividend payments, sell all or substantially all of our assets and engage in mergers and consolidations and certain acquisitions. Given the restrictions in our debt agreement covenants, we may be limited in our operating and financial flexibility and in our ability to respond to changes in our business or capital needs or to finance development and acquisitionspursue strategic opportunities in the future.
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such credit agreement or note purchase 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.
Our credit ratings may not reflect all the risks of an investment in our debt.
Our credit ratings are assessments by rating agencies of our ability to pay our debts when due. Credit ratings may be revised or withdrawn at any time by a rating agency at its sole discretion. We do not undertake any obligation to maintain our ratings or advise our debt holders of any change in our ratings, and there can be no assurance that we will be able to maintain our current credit ratings. Adverse changes in our credit ratings could significantly reduce the market price of our publicly traded debt and could impact our ability to obtain additional debt and equity financing on favorable terms or at all.
Mortgage debt obligations expose us to the possibility of foreclosure, which could result in the loss of our investment in a property or group of properties subject to mortgage debt.
A significant amountportion of our indebtedness is secured by our real estate assets. If a property or group of properties is mortgagedassets, which could be subject to secure payment of debt and we are unable to make the required periodic mortgage payments,foreclosure by the lender or the holder of the
mortgage could foreclose on the property, resulting in the loss of our investment.if we fail to make required mortgage payments. For tax purposes, a foreclosure of any of our properties would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstandingsuch balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure but we would not receive any cash proceeds, which could hinder our ability to meet the REIT distribution requirements imposed by the Internal Revenue Code of 1986, as amended (the "Code"“Code”). If any of our properties are foreclosed on due to a default, our ability to pay cash distributions to our shareholders and our earnings will be limited. In addition, as a result oflimited, and due to cross-collateralization or cross-default provisions, contained in certain of our mortgage loans, a default under onecertain mortgage loanloans could result in a default on other indebtedness and cause us to lose other better performing properties, which could materially and adversely affect our financial condition and results of operations.
properties.
We are subject to risks associated with hedging agreements.
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 risk 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 risks 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 hedging 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, 2019,2021, we had approximately $305.8$959.0 million of debt and $875.0 million of derivatives outstanding that waswere indexed to the London Interbank Offered Rate (“LIBOR”). In July 2017, the United Kingdom regulator that regulatesCertain tenors of LIBOR announced its intention to phase out LIBOR rates by the end of 2021. It is not possible to predict the further effect of this announcement, any changes in the methods by whichwill remain available through June 2023, however, LIBOR is determined or any other reforms to LIBOR that may be enacted in the United Kingdom, the European Union or elsewhere. In April 2018, the New York Federal Reserve commenced publishing an alternative reference rate, the Secured Overnight Financing Rate (“SOFR”), proposed by a group of major market participants convened by the U.S. Federal Reserve with participation by SEC Staff and other regulators, the Alternative Reference Rates Committee ("ARRC"). SOFR is based on transactions in the more robust U.S. Treasury repurchase market and has been proposed as the alternative to LIBOR for use in derivatives and other financial contracts that currently rely on LIBOR as a reference rate. ARRC has proposed a paced market transition plan to SOFR from LIBOR and organizations are currently working on industry-wide and company-specific transition plans as it relates to derivatives and cash markets exposed to LIBOR. At this time, no consensus exists as to what rate or rates may become accepted alternatives to LIBOR, and it is impossible to predict whether and to what extent banks will continue to provide LIBOR submissions to the administrator of LIBOR, whether LIBOR rates will ceaselonger permitted to be published or supported before orused in new contracts after December 31, 2021 or whether any additional reformsand existing contracts will be transitioned to LIBOR may be enacted in the United Kingdom or elsewhere. Such developments and any other legal or regulatory changes in the method by whichalternative interest rates. When LIBOR is determined or the transition from LIBOR to a successor benchmark may result in, among other things, a sudden or prolonged increase or decrease in LIBOR, a delay in the publication of LIBOR, and changes in the rules or methodologies in LIBOR, which may discourage market participants from continuing to administer or to participate in LIBOR’s determination and, in certain situations, could result in LIBOR no longer being determined and published. If a published U.S. dollar LIBOR rate is unavailable after 2021,discontinued, the interest rates onrate for certain of our debt which isinstruments that are indexed to LIBOR will be determined using various alternative methods, any of which may result in interest obligations whichthat are more than or do not otherwise correlate over time with the payments that would have been made on such debt if U.S. dollar LIBOR was available in its current form. Further, the same costs and risks that may lead to the unavailability of U.S. dollar LIBOR may make one or more of the alternative methods impossible or impracticable to determine. Any of these proposals or consequencesform, 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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As of December 31, 2019,2021, we owned interests in two of our operating retail properties and one development project through consolidated joint ventures and interests in fourthree operating retail properties, a hotel component of an operating property, a multifamily component of an operating property, and one development project through unconsolidated joint ventures. In addition,ventures, and in the future, we currently own land held for developmentmay seek to co-invest with third parties through one consolidatedother joint venture.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 the following:
Developments and redevelopments have inherent risks that could adversely affect our ability to qualify as a REIT, even though we may not control the joint venture.
impact us.
As of December 31, 2019,2021, we have oneeight development projectand redevelopment projects under construction and threefive redevelopment opportunities currently in the planning stage, including de-leasing space and evaluating development plans and costs with potential tenants and partners. Some of these plans include non-retail uses, such as multifamily housing. New development and redevelopment projects and property acquisitions are subject to a number of risks, including but not limited to: the following:
•inability to operate successfully in new markets where new properties are located;obtain necessary zoning or regulatory approvals;
•higher than estimated construction or operating costs, including labor and material costs;
•inability to successfully integrate new properties into existing operations;complete construction on schedule;
•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 the significant time lag between commencement and completion of development and redevelopment projects;
In deciding whether to acquire, develop or redevelop a particular property, we make certain assumptions regarding the expected future performance of that property. If these properties do not perform as expected,property, and our financial performance may 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. In addition, the issuance of equity securities as consideration for any significant acquisitions could be dilutive to our shareholders.
To the extent that we pursue acquisitions in the future, we may not be successful in acquiring desirable operating properties, for which we face significant competition, or identifying development and redevelopment projects that meet our investment criteria, both of which may impede our growth.
From time to time, consistent with our business strategy, we evaluate the market and may acquire properties when we believe strategic opportunities exist. When we pursue acquisitions, we may be unable to acquire a desired property because offace competition from other real estate investors, with substantial capital, including other REITs and institutional investment funds. Even if we are ablewhich could limit our ability to acquire a desired property, competition from other potential acquirers may significantlyproperties, increase the purchase price we are required to pay thus reducing the return to our shareholders. Additionally, we may not be successful in identifying suitable real estate properties or other assets that meet our development or redevelopment criteria, or we may failshareholders, and cause us to complete developments, redevelopments, acquisitions or investments on satisfactory terms. Failure to identify or complete developments, redevelopments or acquisitions could slow our growth, which could in turn materially adversely affect our operations. Furthermore, when we pursue acquisitions, we may agree to provisions that materially restrict us from selling that property for a period of timematerial restrictions or impose other restrictions, such as limitations onin the amount of debt that can be placed or repaid on that property.acquisition agreements. These factors and any others that wouldcould impede our ability to respond to adverse changes in the performance of our properties couldgrowth and adversely affect our financial condition and results of operations.
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access capital through dispositions.
Real estate property investments generally cannot be sold quickly. Our ability to dispose of properties on advantageous terms depends on factors beyond our control, including competition from other sellers and the availability of attractive financing for potential buyers of our properties, and we cannot predict the various market conditions affecting real estate investments that will exist at any particular time in the future. Before a property can be sold, we may need to make expenditures to correct defects or to make improvements. We may not have funds available to correct such defects or to make such improvements, and if we cannot do so, we might not be able to sell the property or might be required to sell the property on unfavorable terms. We may
not be able to dispose of any of theour properties on 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 willmay incur marketing expenses and other transaction costs in connection with dispositions, anddispositions.
In addition, the process of marketing and selling a large pool of properties may distract the attention of our personnel from the operation of our business.
We could experience a decline in the fair value of our real estate assets and be subject to impairment charges, which could be 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 disposition strategy or changes in the marketplace may alter the hold period of an asset or asset group, which may result in an impairment loss, and such loss could be material to our financial condition or operating performance. To the extent that 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 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, 2021 and 2020. During the year ended December 31, 2019, we recorded impairment charges totaling $37.7 million related to a reduction in the expected holding period of certain operating properties. There can be no assurances that we will not take additional charges in the future related to the impairment of our assets, which could result in an immediate negative adjustment to net income and have a material adverse effect on our results of operations in the period in which the charge is taken.
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, 2021, 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, and 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 exercise the extension option is subject to the condition that we are not in default at the time we exercise such option, and we can provide no assurances that we will be able to exercise our options.
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.flooding, and 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 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-payments and policy limits that may not be sufficient to cover all losses.duplicate our current insurance coverage at adequate levels or at reasonable prices. 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 tenants 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.
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Our business faces potential risks associated with natural disasters, severe weather conditions, and climate change and related legislation and regulations, and terrorism, any of which could have an adverse effect on our cash flowus.
Our properties are located in many areas that are subject to, or have been affected by, natural disasters and operating results.
Potential terrorist attacks and other related aspectsacts of violence could also harm the demand for, and the value of, our properties, in order to comply with such regulations or otherwise adapt to climate change. These regulations may require unplanned capital improvements, and increased engagement to manage occupant energy use, which is a large driver of building performance. Ifincluding through damage, destruction, loss at our properties, cannotincreased security costs, and limited availability of insurance for such acts. Such acts could impact our tenant’s ability to meet performance standards, we could be exposedobligations in their existing leases, make it difficult for us to finesrenew or re-lease our properties at lease rates equal to or above historical rates, or result in increased volatility in financial markets and economies.
Any one of these events might decrease demand for non-compliance, as well as areal estate, decrease in demandor delay the occupancy of our properties, and a decline in value. As a result,limit our financial condition and resultsaccess to capital or increase our cost of operations could be adversely affected.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 bycost of clean-up. Some of the 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, and some of our properties have tenants that may use hazardous or toxic substances in the course of their businesses. Indemnities in our leases may not fully protect us in the event that a tenant responsible for such parties in connection with contamination.releases 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.
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 and results of operations.
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 orders requiring us to spend substantial sums to cure violations, pay attorneys'attorneys’ fees, or pay 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 thecompliance, and while our 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
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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, 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, as well asaffect our cash flows and results of operations.
Inflation may adversely affect our financial condition and results of operations.
Most of our leases contain provisions requiring the tenant to pay a share of operating expenses, including common area maintenance real estate taxes and insurance. In many of our leases, the tenant's obligation for common area maintenance or other operating expenses, may be based on a fixed amount ofor fixed percentage that is not subject to adjustment for inflation. However, increased inflation could have a more pronounced negative impact on our mortgage and debt interest and general and administrative expenses, as these costs could increase at a rate higher than our rents. Also, inflation may adversely affect tenant leases with stated rent increases or limits on such tenant’s obligation to pay its share of operating expenses, which could be lower than the increase in inflation at any given time. It may also limit our ability to recover all of our operating expenses. InflationIn addition, inflation could also have an adverse effect on consumer spending, which could impact our tenants’ sales and, in turn, our average rents, and in some cases, our percentage rents where applicable. In addition, renewals of leases or future leases may not be negotiated on current terms, in which event we may recover a smaller percentage of our operating expenses.
We and our tenants face risks relating to cybersecurity attacks that could cause loss of confidential information and other business disruptions.
We and our tenants rely extensively on computer systems to process transactions and manage our business, and although we utilizerespective businesses. Although various measures are utilized to prevent, detect and mitigate threats, we have been targeted by e-mail phishing attempts and scams in the past, and our business is at risk from, and may be impacted by, cybersecurity attacks. These could include attempts to gain unauthorized access to our data and computer systems. Attacks can be both individual and/or highly organized attempts by very sophisticated
While we conduct periodic cybersecurity assessments and use the results of operations.
cyberattack.
RISKS RELATED TO OUR ORGANIZATION AND STRUCTURE
Our organizational documents and Maryland law contain provisions that generally would prohibit any person (other than membersmay delay, defer or prevent a change in control of the Kite family who,Company, even if such a change in control may be in the best interest of our shareholders, and as a group, are currently allowed to own up to 21.5%result may depress the market price of our outstanding common shares) from beneficially owning more than 7% of our outstanding common shares (or up to 9.8% in the case of certain designated investment entities, as defined in our declaration of trust), which may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for our shares or otherwise benefit our shareholders.
shares.
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 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% 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% of our outstanding common shares, so long as each beneficial owner of the shares owned by such designated investment entity would satisfy the 7% ownership limit if those beneficial owners owned directly their
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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 compel a change in management or control that might involve a premium price forshareholder who has acquired our shares or otherwise be in the best interests of our shareholders; or
(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 40,000,00020,000,000 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 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.
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 against us and our trustees, officers, employees or shareholders. Alternatively, if a court were to find the choice of forum provision contained in our bylaws to be inapplicable or unenforceable in an “interested shareholder” (defined generally as any person who beneficially owns 10% or more ofaction, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially and adversely affect us.
Our rights and the voting powerrights of our sharesshareholders to take action against our trustees and officers are limited.
Maryland law provides that a director or an affiliate thereof) for five years after the most recent date on which the shareholder becomes an interested shareholder,officer has limited liability in that capacity if he or she performs his or her duties in good faith and thereafter imposes stringent fair price and super-majority shareholder voting requirements on these combinations; and
Our declaration of trust authorizes our Board of Trustees to, among other things, issue additional common shares without shareholder approval. The issuance of substantial numbers of our common shares in the public market or the perception that such issuances might occur could adversely affect the per share trading price of our common shares. In addition, any such issuance could dilute our existing shareholders' interests in our company. Furthermore, if our shareholders sell, or the market perceives that our shareholders intend to sell, substantial amounts of our common shares in the public market, the market price of our common shares could decline significantly. These sales also might make it more difficult forand bylaws require us to sell equity or equity-related securitiesindemnify our trustees and officers for actions taken by them in those capacities to the extent permitted by Maryland law.
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 sales or refinancing 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.
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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, finance and management is a critical element of our future success. We have entered into employment agreements with certain members of executive management. Each agreement will continue to renew after expiration of its initial term or applicable renew periods 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.
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.
We are committed to sustainability and corporate responsibility, specifically related to environmental, social and governance factors. Some investors may use these factors to guide their investment strategies, and potential and current employees, vendors and business partners may 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 ESG Policy and Corporate Citizenship Report, which is published on our website. The focus and activism related to ESG and related matters may constrain our business operations or increase expenses. Additionally, we may face reputational damage in the 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. 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.
The cash available for distribution to shareholders may not be negatively affected.
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 may 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 on 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 his or hertheir shares. A return of capital is not taxable, but it has the effect of reducing the holder’s adjusted tax basis in its 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 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 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 prices 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
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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.
If the Merger does not qualify as a reorganization, there may be adverse tax consequences.
The trading market for our shares is influenced byparties intend that the research and reports that industry or securities analysts publish about us or our business. If anyMerger will be treated as a reorganization within the meaning of Section 368(a) of the analysts who cover us downgrade ourCode, 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 or the 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 loss, as applicable, equal to the difference between (i) the sum of the fair market value of the Company’s common shares or publish inaccurate or unfavorable research about our business, our share price may decline. If analysts cease coverageand cash in lieu of us or fail to regularly publish reports on us, we could lose visibilityfractional common shares of the Company received by such holder in the financial markets, whichMerger; and (ii) such holder’s adjusted tax basis in turn could cause ourits RPAI common share pricestock.
We may incur adverse tax consequences if we fail, or trading volume to decline and our shares to be less liquid. An inactive market may also impair our ability to raise capital by selling shares and may impair our ability to acquire additional properties or other businesses by using our shares as consideration, which in turn could materially adversely affect our business. In addition, the stock market in general, and the NYSE and REITs in particular, have within the last year experienced significant price and volume fluctuations. These broad market and industry factors may decrease the market price of our shares, regardless of our actual operating performance. For these reasons, among others, the market price of our shares may decline substantially and quickly.
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 U.S. 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 ruling, 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:
•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 U.S. 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 2012 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;
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•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 dividends paid deductions, 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 expand 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, and we may elect to treat other subsidiaries as taxable REIT subsidiaries 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 subsidiaries 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 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 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 do 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.
24
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 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
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, 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 an Internal Revenue 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, which 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.
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 waswere 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. We urge you to consult with your tax advisor with respect to the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in our stock. Although REITs generally receive certain tax advantages compared to entities taxed as non-REIT “C” corporations, it is possible that future legislation would result in a REIT having fewer tax advantages, and it could become more advantageous for a company that invests in real estate to elect to be treated for U.S. federal income tax purposes as a non-REIT “C” corporation.
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ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
As of December 31, 2019,2021, we owned interests in a portfolio of 82180 operating retail operating properties totaling approximately 16.029.0 million square feet of total GLA (including approximately 4.5and one office property with 0.3 million square feet in 24 states. Of the 180 operating retail properties, 11 contain an office component. We also own interests in eight development projects under construction. See “Schedule III – Consolidated Real Estate and Accumulated Depreciation” for a list of non-owned anchor space). encumbrances on our properties.
Operating Properties
The following table sets forth more specific information with respect to our retailsummarizes the Company’s operating properties by region and state as of December 31, 2019:2021:
Property1 | Location (MSA) | Year Built/ Renovated | Owned GLA2 | Leased % | ABR per SqFt | Grocery Anchors4 | Other Retailers4 | |||||||||||
| Total | Anchors | Shops | Total | Anchors | Shops | |||||||||||||
| Arizona | ||||||||||||||||||
| The Corner | Tucson | 2008 | 79,902 | 55,883 | 24,019 | 100.0 | % | 100.0 | % | 100.0 | % | 30.87 | Total Wine & More | Nordstrom Rack, Panera Bread, (Home Depot) | ||||
| Connecticut | ||||||||||||||||||
Crossing at Killingly Commons | Willimantic, CT | 2010 | 205,683 | 148,250 | 57,433 | 86.0 | % | 86.2 | % | 85.5 | % | 14.50 | Stop & Shop Supermarket, (Target) | TJ Maxx, 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 | % | 10.32 | Publix | Stein Mart, Tuesday Morning | ||||
| Bayport Commons | Tampa | 2008 | 97,163 | 71,540 | 25,623 | 100.0 | % | 100.0 | % | 100.0 | % | 15.38 | (Target) | PetSmart, Michaels | ||||
| Centre Point Commons | Sarasota | 2007 | 119,320 | 93,574 | 25,746 | 98.7 | % | 100.0 | % | 93.8 | % | 17.74 | Best Buy, Dick's Sporting Goods, Office Depot, Panera Bread, (Lowe's Home Improvement Center) | |||||
| Cobblestone Plaza | Miami | 2011 | 133,259 | 68,219 | 65,040 | 96.7 | % | 100.0 | % | 93.2 | % | 28.16 | Whole Foods | Party City, Planet Fitness | ||||
| Colonial Square | Fort Myers | 2010 | 186,517 | 150,505 | 36,012 | 92.4 | % | 100.0 | % | 60.7 | % | 11.94 | Kohl's, Hobby Lobby, PetSmart, | |||||
Delray Marketplace 3 | Miami | 2013 | 260,298 | 118,136 | 142,162 | 91.6 | % | 100.0 | % | 84.6 | % | 26.42 | Publix | Frank Theatres, Burt & Max's, Ann Taylor Loft, Chico's, White House Black Market | ||||
| Estero Town Commons | Fort Meyers | 2006 | 25,696 | — | 25,696 | 94.7 | % | — | % | 94.7 | % | 15.23 | Lowe's Home Improvement Center, Dollar Tree | |||||
| Hunter's Creek Promenade | Orlando | 1994 | 119,759 | 55,999 | 63,760 | 100.0 | % | 100.0 | % | 100.0 | % | 15.60 | Publix | |||||
| Indian River Square | Vero Beach | 1997/2004 | 142,592 | 109,000 | 33,592 | 95.9 | % | 100.0 | % | 82.7 | % | 12.17 | (Target) | Beall's, Office Depot, Dollar Tree, Panera | ||||
| International Speedway Square | Daytona Beach | 1999/2013 | 233,424 | 203,405 | 30,019 | 94.6 | % | 100.0 | % | 57.9 | % | 11.23 | Total Wine & More | Bed Bath & Beyond, Stein Mart, Old Navy, Staples, Michaels, Dick’s Sporting Goods, Shoe Carnival | ||||
| Kings Lake Square | Naples | 1986/2014 | 88,611 | 45,600 | 43,011 | 100.0 | % | 100.0 | % | 100.0 | % | 19.30 | Publix | |||||
| Lake City Commons | Lake City | 2008 | 65,746 | 45,600 | 20,146 | 100.0 | % | 100.0 | % | 100.0 | % | 15.58 | Publix | |||||
| Lake City Commons - Phase II | Lake City | 2011 | 16,291 | 12,131 | 4,160 | 100.0 | % | 100.0 | % | 100.0 | % | 15.80 | Publix | PetSmart | ||||
| Lake Mary Plaza | Orlando | 2009 | 21,385 | 14,880 | 6,505 | 100.0 | % | 100.0 | % | 100.0 | % | 38.00 | Walgreens | |||||
| Lithia Crossing | Tampa | 2003/2013 | 90,515 | 53,547 | 36,968 | 100.0 | % | 100.0 | % | 100.0 | % | 16.06 | The Fresh Market | Stein Mart, Chili's, Panera Bread | ||||
| Miramar Square | Miami | 2008 | 225,205 | 147,505 | 77,700 | 99.5 | % | 100.0 | % | 98.5 | % | 17.53 | Sprouts Farmers Market | Kohl's, Miami Children's Hospital | ||||
| Northdale Promenade | Tampa | 1985/2017 | 179,602 | 130,269 | 49,333 | 96.6 | % | 100.0 | % | 87.5 | % | 13.00 | (Winn Dixie) | TJ Maxx, Ulta Beauty, Beall's, Crunch Fitness, Tuesday Morning | ||||
| Pine Ridge Crossing | Naples | 1993 | 105,962 | 66,435 | 39,527 | 96.3 | % | 100.0 | % | 90.0 | % | 18.06 | Publix, (Target) | Ulta Beauty, (Beall's) | ||||
| Pleasant Hill Commons | Orlando | 2008 | 70,645 | 45,600 | 25,045 | 100.0 | % | 100.0 | % | 100.0 | % | 15.86 | Publix | |||||
| Riverchase Plaza | Naples | 1991/2001 | 78,291 | 48,890 | 29,401 | 96.3 | % | 100.0 | % | 90.3 | % | 16.77 | Publix | |||||
| Saxon Crossing | Daytona Beach | 2009 | 119,907 | 95,304 | 24,603 | 97.2 | % | 100.0 | % | 86.2 | % | 15.39 | (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 | % | 13.87 | Publix | |||||
| Shops at Eagle Creek | Naples | 1983/2013 | 70,731 | 50,187 | 20,544 | 100.0 | % | 100.0 | % | 100.0 | % | 16.53 | The Fresh Market | Staples, Panera Bread, (Lowe's Home Improvement Center) | ||||
Tamiami Crossing 3 | Naples | 2016 | 121,705 | 121,705 | — | 100.0 | % | 100.0 | % | — | % | 12.55 | Aldi, (Walmart) | Marshalls, Michaels, PetSmart, Ross Stores, Stein Mart, Ulta Beauty | ||||
Property1 | Location (MSA) | Year Built/ Renovated | Owned GLA2 | Leased % | ABR per SqFt | Grocery Anchors4 | Other Retailers4 | |||||||||||
| Total | Anchors | Shops | Total | Anchors | Shops | |||||||||||||
| Tarpon Bay Plaza | Naples | 2007 | 81,864 | 59,442 | 22,422 | 97.4 | % | 100.0 | % | 90.6 | % | 17.43 | (Target) | PetSmart, Cost Plus World Market, Ross Stores, Panera Bread | ||||
| The Landing at Tradition | Port St. Lucie | 2007 | 359,474 | 283,064 | 76,410 | 78.7 | % | 79.4 | % | 76.2 | % | 16.33 | (Target) | TJ Maxx, Ulta Beauty, Bed Bath & Beyond, LA Fitness, Michaels, Old Navy, PetSmart, Pier 1, DSW, Five Below, Ross Stores | ||||
| The Shops at Julington Creek | Jacksonville | 2011 | 40,254 | 21,038 | 19,216 | 100.0 | % | 100.0 | % | 100.0 | % | 20.48 | The Fresh Market | |||||
| Tradition Village Center | Port St. Lucie | 2006 | 84,086 | 45,600 | 38,486 | 98.6 | % | 100.0 | % | 97.0 | % | 18.55 | Publix | |||||
| Waterford Lakes Village | Orlando | 1997 | 77,975 | 51,703 | 26,272 | 96.7 | % | 100.0 | % | 90.2 | % | 13.20 | Winn Dixie | |||||
| Georgia | ||||||||||||||||||
| Mullins Crossing | Augusta | 2005 | 276,318 | 228,224 | 48,094 | 99.3 | % | 100.0 | % | 96.1 | % | 13.35 | (Target) | Ross Stores, Old Navy, Five Below, Kohls, La-Z-Boy, Marshalls, Office Max, Petco, Ulta Beauty, Panera Bread | ||||
| Illinois | ||||||||||||||||||
| Naperville Marketplace | Chicago | 2008 | 83,759 | 61,683 | 22,076 | 97.7 | % | 100.0 | % | 91.1 | % | 13.91 | (Caputo's Fresh Market) | TJ Maxx, PetSmart | ||||
| Indiana | ||||||||||||||||||
| 54th & College | Indianapolis | 2008 | — | — | — | — | % | — | % | — | % | — | The Fresh Market | |||||
| Bridgewater Marketplace | Westfield | 2008 | 25,975 | — | 25,975 | 100.0 | % | — | % | 100.0 | % | 21.49 | (Walgreens), The Local Eatery, Original Pancake House | |||||
| Castleton Crossing | Indianapolis | 1975/2012 | 286,377 | 247,710 | 38,667 | 100.0 | % | 100.0 | % | 100.0 | % | 12.30 | TJ Maxx/HomeGoods, Burlington, Shoe Carnival, Value City Furniture, K&G Menswear, Chipotle, Verizon, Five Below | |||||
| Cool Creek Commons | Westfield | 2005 | 124,303 | 53,600 | 70,703 | 96.4 | % | 100.0 | % | 93.7 | % | 19.30 | The Fresh Market | Stein Mart, McAlister's Deli, Buffalo Wild Wings, Pet People | ||||
| Depauw University Bookstore and Café | Indianapolis | 2012 | 11,974 | — | 11,974 | 100.0 | % | — | % | 100.0 | % | 9.17 | Follett's, Starbucks | |||||
| Eddy Street Commons at Notre Dame | South Bend | 2009 | 87,987 | 20,154 | 67,833 | 98.8 | % | 100.0 | % | 98.4 | % | 26.66 | Hammes Bookstore & Cafe, Chipotle, Urban Outfitters, Five Guys, Kilwins, Blaze Pizza | |||||
| Fishers Station | Fishers | 1989/2018 | 52,400 | 15,441 | 36,959 | 97.8 | % | 100.0 | % | 96.9 | % | 17.72 | Dollar Tree, Goodwill | |||||
| Geist Pavilion | Fishers | 2006 | 63,910 | 29,700 | 34,210 | 100.0 | % | 100.0 | % | 100.0 | % | 17.43 | Ace Hardware, Goodwill, Ale Emporium, Pure Barre | |||||
| Greyhound Commons | Carmel | 2005 | 9,152 | — | 9,152 | 100.0 | % | — | % | 100.0 | % | 14.74 | (Lowe's Home Improvement Center), Abuelo's Mexican, Koto Japenese Steakhouse | |||||
| Nora Plaza | Indianapolis | 2004 | 139,743 | 73,589 | 66,154 | 100.0 | % | 100.0 | % | 100.0 | % | 15.17 | Whole Foods, (Target) | Marshalls | ||||
| Rangeline Crossing | Carmel | 1986/2013 | 99,226 | 47,962 | 51,264 | 97.2 | % | 100.0 | % | 94.5 | % | 22.94 | Walgreens, Panera Bread, Pet Valu, City BBQ | |||||
| Rivers Edge | Indianapolis | 2011 | 150,428 | 117,890 | 32,538 | 100.0 | % | 100.0 | % | 100.0 | % | 22.20 | Nordstrom Rack, The Container Store, Arhaus Furniture, Bicycle Garage of Indy, Buy Buy Baby, J Crew Mercantile | |||||
| Stoney Creek Commons | Noblesville | 2000/2013 | 84,226 | 84,226 | — | 64.1 | % | 64.1 | % | — | % | 14.38 | LA Fitness, Goodwill, (Lowe's Home Improvement Center) | |||||
| Traders Point I | Indianapolis | 2005 | 279,786 | 238,721 | 41,065 | 73.9 | % | 71.6 | % | 87.5 | % | 14.69 | Dick's Sporting Goods, AMC Theatres, Bed Bath & Beyond, Michaels, Old Navy, PetSmart, Books-A-Million | |||||
| Traders Point II | Indianapolis | 2005 | 45,977 | — | 45,977 | 92.2 | % | — | % | 92.2 | % | 27.59 | Starbucks, Noodles & Company, Qdoba | |||||
Property1 | Location (MSA) | Year Built/ Renovated | Owned GLA2 | Leased % | ABR per SqFt | Grocery Anchors4 | Other Retailers4 | |||||||||||
| Total | Anchors | Shops | Total | Anchors | Shops | |||||||||||||
| Nevada | ||||||||||||||||||
| Centennial Center | Las Vegas | 2002 | 334,042 | 147,824 | 186,218 | 96.5 | % | 100.0 | % | 93.7 | % | 25.45 | Sam's Club, Walmart | Ross Stores, Big Lots, Famous Footwear, Michaels, Petco, Home Depot, HomeGoods, Skechers, Five Below, Sephora | ||||
| Centennial Gateway | Las Vegas | 2005 | 193,072 | 139,913 | 53,159 | 99.4 | % | 100.0 | % | 97.8 | % | 25.55 | Trader Joe's | 24 Hour Fitness, Party City, Sportsman's Warehouse, Walgreens | ||||
| Eastern Beltway Center | Las Vegas | 1998/2006 | 162,317 | 77,436 | 84,881 | 90.9 | % | 100.0 | % | 82.5 | % | 27.36 | Sam's Club, Walmart | Petco, Ross Stores, Skechers, Old Navy, (Home Depot) | ||||
| Rampart Commons | Las Vegas | 2002/2018 | 79,314 | 11,965 | 67,349 | 100.0 | % | 100.0 | % | 100.0 | % | 33.45 | Athleta, North Italia, Pottery Barn, Williams Sonoma, Flower Child, Crunch Fitness | |||||
| New Jersey | ||||||||||||||||||
| Bayonne Crossing | New York / Northern New Jersey | 2011 | 106,146 | 52,219 | 53,927 | 100.0 | % | 100.0 | % | 100.0 | % | 29.46 | Walmart | Michaels, New York Sports Club, Lowe's Home Improvement Center | ||||
Livingston Shopping Center 3 | New York / Northern New Jersey | 1997 | 139,022 | 133,125 | 5,897 | 100.0 | % | 100.0 | % | 100.0 | % | 20.26 | Cost Plus World Market, Buy Buy Baby, Nordstrom Rack, DSW, TJ Maxx, Ulta Beauty | |||||
| New York | ||||||||||||||||||
| City Center | New York / Northern New Jersey | 2004/2018 | 363,103 | 325,139 | 37,964 | 96.9 | % | 100.0 | % | 70.7 | % | 26.43 | ShopRite | Nordstrom Rack, New York Sports Club, Burlington, Club Champion Golf, National Amusements | ||||
| North Carolina | ||||||||||||||||||
| Holly Springs Towne Center - Phase I | Raleigh | 2013 | 209,852 | 121,761 | 88,091 | 95.9 | % | 100.0 | % | 90.2 | % | 18.04 | (Target) | Dick's Sporting Goods, Marshalls, Petco, Ulta Beauty, Michaels, Old Navy, Five Below | ||||
| Holly Springs Towne Center - Phase II | Raleigh | 2016 | 144,995 | 111,843 | 33,152 | 100.0 | % | 100.0 | % | 100.0 | % | 17.83 | (Target) | Bed Bath & Beyond, DSW, AMC Theatres, 02 Fitness | ||||
| Northcrest Shopping Center | Charlotte | 2008 | 133,627 | 65,576 | 68,051 | 97.0 | % | 100.0 | % | 94.1 | % | 23.77 | (Target) | REI Co-Op, David's Bridal, Old Navy, Five Below | ||||
| Oleander Place | Wilmington | 2012 | 45,524 | 30,144 | 15,380 | 100.0 | % | 100.0 | % | 100.0 | % | 17.91 | Whole Foods | |||||
| Parkside Town Commons - Phase I | Raleigh | 2015 | 55,368 | 22,500 | 32,868 | 100.0 | % | 100.0 | % | 100.0 | % | 25.61 | Harris Teeter/Kroger, (Target) | Petco, Guitar Center | ||||
| Parkside Town Commons - Phase II | Raleigh | 2017 | 296,715 | 187,406 | 109,309 | 99.5 | % | 100.0 | % | 98.6 | % | 17.33 | (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 | % | 20.71 | Best Buy, Off Broadway Shoes, PetSmart, Michaels, (Lowe's Home Improvement Center) | |||||
| Toringdon Market | Charlotte | 2004 | 60,627 | 26,072 | 34,555 | 97.9 | % | 100.0 | % | 96.3 | % | 22.71 | Earth Fare | |||||
| Ohio | ||||||||||||||||||
| Eastgate Pavilion | Cincinnati | 1995 | 236,230 | 231,730 | 4,500 | 100.0 | % | 100.0 | % | 100.0 | % | 9.12 | Best Buy, Dick's Sporting Goods, Value City Furniture, Petsmart, DSW, Bed Bath & Beyond | |||||
| Oklahoma | ||||||||||||||||||
| Belle Isle Station | Oklahoma City | 2000 | 196,298 | 115,783 | 80,515 | 96.9 | % | 100.0 | % | 92.4 | % | 17.92 | (Walmart) | REI, Shoe Carnival, Old Navy, Ross Stores, Nordstrom Rack, Ulta Beauty, Five Below | ||||
| Shops at Moore | Oklahoma City | 2010 | 260,482 | 187,916 | 72,566 | 97.2 | % | 100.0 | % | 90.0 | % | 12.25 | Bed Bath & Beyond, Best Buy, Hobby Lobby, Office Depot, PetSmart, Ross Stores, (J.C. Penney) | |||||
Property1 | Location (MSA) | Year Built/ Renovated | Owned GLA2 | Leased % | ABR per SqFt | Grocery Anchors4 | Other Retailers4 | ||||||||||||
| Total | Anchors | Shops | Total | Anchors | Shops | ||||||||||||||
| Silver Springs Pointe | Oklahoma City | 2001 | 48,440 | 20,515 | 27,925 | 83.0 | % | 100.0 | % | 70.4 | % | 13.28 | (Sam's Club), (Walmart) | Kohls, Office Depot, (Home Depot) | |||||
| South Carolina | |||||||||||||||||||
| Publix at Woodruff | Greenville | 1997 | 68,119 | 47,955 | 20,164 | 96.8 | % | 100.0 | % | 89.3 | % | 11.06 | Publix | ||||||
| Shoppes at Plaza Green | Greenville | 2000 | 189,564 | 161,900 | 27,664 | 98.2 | % | 100.0 | % | 87.6 | % | 13.51 | 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 | 100.0 | % | 100.0 | % | 100.0 | % | 16.48 | (Kroger) | Dick's Sporting Goods, Marshalls, Buy Buy Baby, DSW, Staples, Jo-Ann Fabric, Panera Bread | |||||
| Texas | |||||||||||||||||||
| Chapel Hill Shopping Center | Dallas/Ft. Worth | 2001 | 126,986 | 43,450 | 83,536 | 97.2 | % | 100.0 | % | 95.8 | % | 26.28 | H-E-B Grocery | The Container Store, Cost Plus World Market | |||||
| Colleyville Downs | Dallas/Ft. Worth | 2014 | 194,666 | 139,219 | 55,447 | 97.3 | % | 100.0 | % | 90.4 | % | 15.45 | Whole Foods | Westlake Hardware, Goody Goody Liquor, Petco, Fit Factory | |||||
| Kingwood Commons | Houston | 1999 | 158,109 | 74,836 | 83,273 | 94.3 | % | 100.0 | % | 89.2 | % | 21.24 | Randall's Food and Drug | Petco, Chico's, Talbots, Ann Taylor | |||||
| Market Street Village/ Pipeline Point | Dallas/Ft. Worth | 1970/2011 | 156,621 | 136,742 | 19,879 | 100.0 | % | 100.0 | % | 100.0 | % | 13.20 | Jo-Ann Fabric, Ross Stores, Office Depot, Buy Buy Baby, Party City | ||||||
| Plaza at Cedar Hill | Dallas/Ft. Worth | 2000/2010 | 295,758 | 234,358 | 61,400 | 98.5 | % | 100.0 | % | 92.6 | % | 13.75 | Sprouts Farmers Market, Total Wine | DSW, Ross Stores, Hobby Lobby, Office Max, Marshalls, Home Goods | |||||
Plaza Volente 3 | Austin | 2004 | 156,150 | 105,000 | 51,150 | 100.0 | % | 100.0 | % | 100.0 | % | $ | 17.94 | H-E-B Grocery | |||||
| Portofino Shopping Center | Houston | 1999/2010 | 369,846 | 218,861 | 150,985 | 94.0 | % | 100.0 | % | 85.2 | % | 19.72 | (Sam's Club) | DSW, Michaels, PGA Superstore, SteinMart, PetSmart, Old Navy, TJ Maxx, Nordstrom Rack, Five Below | |||||
| Sunland Towne Centre | El Paso | 1996/2014 | 306,454 | 265,037 | 41,417 | 98.9 | % | 100.0 | % | 91.7 | % | 11.26 | Sprouts Farmers Market | PetSmart, Ross Stores, Bed Bath & Beyond, Spec's Fine Wines, At Home | |||||
| Waxahachie Crossing | Dallas/Ft. Worth | 2010 | 97,127 | 72,191 | 24,936 | 100.0 | % | 100.0 | % | 100.0 | % | 15.07 | Best Buy, PetSmart, Ross Stores, (Home Depot), (J.C. Penney) | ||||||
| Westside Market | Dallas/Ft. Worth | 2013 | 93,377 | 70,000 | 23,377 | 100.0 | % | 100.0 | % | 100.0 | % | 16.61 | Randalls Tom Thumb | ||||||
| Utah | |||||||||||||||||||
| Draper Crossing | Salt Lake City | 2012 | 164,657 | 115,916 | 48,741 | 100.0 | % | 100.0 | % | 100.0 | % | 16.97 | Kroger/Smith's | TJ Maxx, Dollar Tree, Downeast Home | |||||
| Draper Peaks | Salt Lake City | 2012 | 227,500 | 101,464 | 126,036 | 95.2 | % | 100.0 | % | 91.3 | % | 20.64 | Michaels, Office Depot, Petco, Quilted Bear, Ross Stores, (Kohl's) | ||||||
| Total | 11,554,229 | 7,878,569 | 3,675,660 | 96.1 | % | 97.8 | % | 92.5 | % | 17.83 | |||||||||
| Total at Pro-Rata Share | 11,220,882 | 7,590,705 | 3,630,177 | 96.0 | % | 97.7 | % | 92.4 | % | 17.85 | |||||||||
| (GLA and ABR in thousands) | Total Retail Operating Portfolio | Total Office Components | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Region/State | Number of Properties1 | Owned GLA/NRA2 | Total % Leased | Total Weighted ABR3 | % of Weighted ABR3 | Owned GLA/NRA2 | Total % Leased | Total Weighted ABR3 | % of Weighted ABR3 | |||||||||||||||||||||||||||||||||||||||||||||||
| South | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Texas | 45 | 7,718 | 93.0 | % | $ | 141,449 | 24.0 | % | 434 | 84.2 | % | $ | 11,350 | 1.9 | % | |||||||||||||||||||||||||||||||||||||||||
| Florida | 29 | 3,537 | 92.9 | % | 58,314 | 9.9 | % | 38 | 97.9 | % | 1,054 | 0.2 | % | |||||||||||||||||||||||||||||||||||||||||||
| Maryland | 7 | 1,745 | 92.0 | % | 34,147 | 5.8 | % | 224 | 100.0 | % | 3,314 | 0.6 | % | |||||||||||||||||||||||||||||||||||||||||||
| North Carolina | 8 | 1,537 | 94.0 | % | 30,306 | 5.1 | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||||||||||||||||
| Virginia | 7 | 1,121 | 88.6 | % | 27,864 | 4.7 | % | 158 | 96.4 | % | 5,007 | 0.8 | % | |||||||||||||||||||||||||||||||||||||||||||
| Georgia | 10 | 1,706 | 99.4 | % | 25,716 | 4.4 | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||||||||||||||||
| Tennessee | 3 | 580 | 98.4 | % | 8,158 | 1.4 | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||||||||||||||||
| Oklahoma | 3 | 505 | 88.5 | % | 7,455 | 1.3 | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||||||||||||||||
| South Carolina | 2 | 258 | 95.4 | % | 3,073 | 0.5 | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||||||||||||||||
| Total South | 114 | 18,707 | 93.4 | % | 336,482 | 57.1 | % | 854 | 91.2 | % | 20,725 | 3.5 | % | |||||||||||||||||||||||||||||||||||||||||||
| West | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Washington | 10 | 1,682 | 94.3 | % | 29,702 | 5.0 | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||||||||||||||||
| Nevada | 4 | 766 | 98.7 | % | 23,976 | 4.1 | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||||||||||||||||
| California | 3 | 652 | 98.6 | % | 14,738 | 2.5 | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||||||||||||||||
| Arizona | 5 | 727 | 95.7 | % | 14,425 | 2.4 | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||||||||||||||||
| Utah | 2 | 392 | 97.0 | % | 7,417 | 1.3 | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||||||||||||||||
| Total West | 24 | 4,219 | 96.3 | % | 90,258 | 15.3 | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||||||||||||||||
| Midwest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Indiana | 16 | 1,618 | 90.4 | % | 28,220 | 4.8 | % | 369 | 100.0 | % | 7,285 | 1.2 | % | |||||||||||||||||||||||||||||||||||||||||||
| Illinois | 9 | 1,264 | 89.2 | % | 25,958 | 4.4 | % | 163 | 73.8 | % | 4,013 | 0.7 | % | |||||||||||||||||||||||||||||||||||||||||||
| Michigan | 1 | 308 | 83.6 | % | 6,602 | 1.1 | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||||||||||||||||
| Missouri | 1 | 453 | 92.3 | % | 4,124 | 0.7 | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||||||||||||||||
| Ohio | 1 | 236 | 89.0 | % | 1,899 | 0.3 | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||||||||||||||||
| Total Midwest | 28 | 3,879 | 89.6 | % | 66,803 | 11.3 | % | 532 | 92.0 | % | 11,298 | 1.9 | % | |||||||||||||||||||||||||||||||||||||||||||
| Northeast | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| New York | 8 | 1,212 | 95.1 | % | 34,312 | 5.8 | % | 174 | 100.0 | % | 7,527 | 1.3 | % | |||||||||||||||||||||||||||||||||||||||||||
| New Jersey | 4 | 343 | 89.6 | % | 10,999 | 1.9 | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||||||||||||||||
| Massachusetts | 1 | 272 | 96.2 | % | 5,435 | 0.9 | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||||||||||||||||
| Connecticut | 1 | 206 | 89.3 | % | 3,625 | 0.6 | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||||||||||||||||
| Pennsylvania | 1 | 136 | 100.0 | % | 1,982 | 0.4 | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||||||||||||||||
| Total Northeast | 15 | 2,169 | 94.1 | % | 56,353 | 9.6 | % | 174 | 100.0 | % | 7,527 | 1.3 | % | |||||||||||||||||||||||||||||||||||||||||||
| Total | 181 | 28,974 | 93.4 | % | $ | 549,896 | 93.3 | % | 1,560 | 92.4 | % | $ | 39,550 | 6.7 | % | |||||||||||||||||||||||||||||||||||||||||
| Number of properties represents consolidated and unconsolidated retail properties and the Company’s single standalone office property in Indianapolis, IN. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ($ 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 | ||||||||
| Commercial Properties | |||||||||||||||||
Thirty South Meridian2 | Indianapolis | 1905/2002 | Redeveloped | 284,874 | 95.9 | % | $ | 5,392 | 67.5 | % | $ | 19.74 | Carrier, Kite Realty Group, Lumina Foundation | ||||
Union Station Parking Garage3 | Indianapolis | 1986 | Acquired | N/A | N/A | N/A | N/A | N/A | Denison Parking (manager) | ||||||||
Pan Am Plaza Parking Garage3 | Indianapolis | Acquired | N/A | N/A | N/A | N/A | N/A | Denison Parking (manager) | |||||||||
| Stand-alone Office Components of Retail Properties | |||||||||||||||||
Eddy Street Office (part of Eddy Street Commons)4 | South Bend | 2009 | Developed | 81,628 | 100.0 | % | 1,292 | 16.2 | % | 15.82 | University of Notre Dame Offices | ||||||
| Tradition Village Office (part of Tradition Village Square) | Port St. Lucie | 2006 | Acquired | 24,340 | 100.0 | % | 713 | 8.9 | % | 29.30 | |||||||
| Total Commercial Properties | 390,842 | 96.2 | % | $ | 7,397 | 92.6 | % | $ | 19.51 | ||||||||
| Other Properties | |||||||||||||||||
| Burlington | 1992/2000 | Acquired | 107,400 | 100.0 | % | $ | 591 | 7.4 | % | $ | 5.50 | Burlington | |||||
| 107,400 | 100.0 | % | $ | 591 | 7.4 | % | $ | 5.50 | |||||||||
| Total Commercial and Other | 498,242 | 97.7 | % | $ | 7,988 | 100.0 | % | $ | 16.42 | ||||||||
| Multi-Family/Lodging | |||||||||||||||||
Embassy Suites South Bend at Notre Dame5 | South Bend | 2018 | Developed | — | N/A | $ | — | — | % | $ | — | Full service hotel with 164 rooms | |||||
| The Foundry Lofts and Apartments at Eddy Street | South Bend | 2009 | Developed | — | 100.0 | % | — | — | $ | — | Air rights lease for apartment complex with 266 units | ||||||
| Summit at City Center Apartments | New York / Northern New Jersey | 2004 | Acquired | — | 100.0 | % | — | — | $ | — | Apartment complex with 26 units. | ||||||
| 3 | |||||||||||||||||||||||||||||||||||||||||||||||
27
Development Project Under Construction
In addition to our retail and office operating properties, as of December 31, 2019,2021, we owned an interest in oneeight development projectprojects currently under construction. The following table sets forth more specific information with respect to the Company’s active development propertyprojects as of December 31, 2019:2021:
| ($ in thousands) | |||||||||||||||
| Project | MSA | Anticipated Start Date | Projected Stabilization Date1 | Projected New Total GLA | Projected New Owned GLA | KRG Share of Estimated Project Cost | KRG Share of Cost Incurred | Estimated Return on Investment3 | |||||||
Eddy Street Commons at Notre Dame, IN - Phase II 2 | South Bend, IN | N/A | Q4 2020 | 530,000 | 8,500 | $ | 10,000 | $ | 6,286 | 11.0% - 13.0% | |||||
| ($ in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Project | MSA | KRG Ownership % | Projected Completion Date1 | Total Commercial GLA | Total Multifamily Units | Total Project Costs2 | KRG Equity Requirement2 | KRG Remaining Spend | Estimated Stabilized NOI to KRG | Estimated Remaining NOI to Come Online3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Active Projects | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Eddy Street Commons at Notre Dame, IN – Phase III | South Bend, IN | 100% | Q1 2022 | 18,600 | — | $ | 7,500 | $ | 7,500 | $ | 1,200 | $0.6M–$0.7M | $0.4M–$0.5M | |||||||||||||||||||||||||||||||||||||||||||||||||
| Shoppes at Quarterfield | Washington, D.C./Baltimore | 100% | Q2 2022 | 58,000 | — | 4,800 | 4,800 | 3,900 | $1.0M–$1.1M | $0.0M–$0.1M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| One Loudoun – Residential | Washington, D.C./Baltimore | 90% | Q2 2022 | — | 378 | 13,500 | 13,500 | 8,325 | $6.3M–$6.5M | $4.8M–$5.0M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Circle East | Washington, D.C./Baltimore | 100% | Q3 2022 | 82,000 | 370 | 15,100 | 15,100 | 14,700 | $1.9M–$2.2M | $1.1M–$1.4M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| One Loudoun – Pads G&H Commercial | Washington, D.C./Baltimore | 100% | Q2 2023 | 67,000 | — | 10,200 | 10,200 | 8,600 | $1.7M–$2.1M | $0.2M–$0.6M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Landing at Tradition – Phase II | Port St. Lucie, FL | 100% | Q2 2023 | 39,900 | — | 10,900 | 10,900 | 10,800 | $1.1M–$1.2M | $0.6M–$0.7M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Carillon MOB | Washington, D.C./Baltimore | 100% | Q4 2024 | 126,000 | — | 59,700 | 59,700 | 57,600 | $3.5M–$4.0M | $3.1M–$3.6M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
The Corner – IN4 | Indianapolis, IN | 50% | Q4 2024 | 24,000 | 285 | 63,900 | — | — | $1.7M–$1.9M | $1.7M–$1.9M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 415,500 | 1,033 | $ | 185,600 | $ | 121,700 | $ | 105,125 | $17.8M–$19.7M | $11.9M–$13.8M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2 | Total | |||||||||||
| 3 | ||||||||||||
| 4 | KRG does not have any equity requirements related to this development. Total project costs | |||||||||||
28
Tenant Diversification
No individual retail or office tenant accounted for more than 2.5% of the portfolio’s annualized base rentABR for the year ended December 31, 2019.2021. The following table sets forth certain information for the largest 25 tenants open for business at the Company’s retail properties based on minimum rents in place as of December 31, 2019: 2021:
| ($ in thousands, except per square foot data) | |||||||||||||||||
| Number of Stores | |||||||||||||||||
| Tenant | Wholly Owned | JV1 | Total Leased GLA/NRA2 | Annualized Base Rent 3 | Annualized Base Rent per Sq. Ft. | % of Total Portfolio Annualized Base Rent4 | |||||||||||
| Publix Super Markets, Inc. | 11 | — | 535,466 | $ | 5,454 | $ | 10.19 | 2.5 | % | ||||||||
The TJX Companies, Inc.5 | 14 | 2 | 471,798 | 4,749 | 11.00 | 2.2 | % | ||||||||||
Bed Bath & Beyond, Inc.6 | 14 | 2 | 422,348 | 4,281 | 11.04 | 1.9 | % | ||||||||||
| PetSmart, Inc. | 13 | 1 | 291,389 | 4,077 | 14.59 | 1.8 | % | ||||||||||
| Ross Stores, Inc. | 12 | 1 | 364,476 | 3,986 | 11.57 | 1.8 | % | ||||||||||
Dick's Sporting Goods, Inc.7 | 7 | — | 340,502 | 3,647 | 10.71 | 1.7 | % | ||||||||||
| Nordstrom Rack | 5 | 1 | 197,797 | 3,571 | 20.75 | 1.6 | % | ||||||||||
| Michaels Stores, Inc. | 11 | 1 | 253,936 | 3,222 | 13.41 | 1.5 | % | ||||||||||
| National Amusements | 1 | — | 80,000 | 2,953 | 36.92 | 1.3 | % | ||||||||||
| Kohl's Corporation | 4 | — | 184,516 | 2,832 | 7.87 | 1.3 | % | ||||||||||
Walmart Stores, Inc.8 | 5 | — | — | 2,652 | 3.27 | 1.2 | % | ||||||||||
| Best Buy Co., Inc. | 5 | — | 183,604 | 2,612 | 14.22 | 1.2 | % | ||||||||||
The Gap9 | 11 | — | 162,773 | 2,588 | 15.90 | 1.2 | % | ||||||||||
| Lowe's Companies, Inc. | 3 | — | — | 2,375 | 4.91 | 1.1 | % | ||||||||||
| LA Fitness | 3 | — | 125,209 | 2,292 | 18.31 | 1.0 | % | ||||||||||
| Burlington Stores, Inc. | 3 | — | 238,400 | 2,226 | 9.34 | 1.0 | % | ||||||||||
| Hobby Lobby Stores, Inc. | 5 | — | 271,254 | 2,190 | 8.07 | 1.0 | % | ||||||||||
| Petco Animal Supplies, Inc. | 9 | — | 125,897 | 2,188 | 17.38 | 1.0 | % | ||||||||||
| Whole Foods Market, Inc. | 4 | — | 139,781 | 2,130 | 15.24 | 1.0 | % | ||||||||||
The Kroger Co.10 | 3 | — | 60,268 | 2,099 | 9.19 | 1.0 | % | ||||||||||
| Mattress Firm Holdings Corp (12) / Sleepy's (4) | 16 | — | 76,408 | 2,069 | 27.08 | 0.9 | % | ||||||||||
| Office Depot (6) / Office Max (2) | 8 | — | 167,606 | 1,957 | 11.67 | 0.9 | % | ||||||||||
| New York Sports Club | 2 | — | 86,717 | 1,921 | 22.16 | 0.9 | % | ||||||||||
| Randall's Food and Drugs | 2 | — | 133,990 | 1,754 | 13.09 | 0.8 | % | ||||||||||
| Walgreens | 3 | — | 52,662 | 1,726 | 32.78 | 0.8 | % | ||||||||||
| TOTAL | 174 | 8 | 4,966,797 | $ | 71,553 | $ | 11.18 | 32.1 | % | ||||||||
| ($ and GLA in thousands, except per square foot data) | ||||||||||||||||||||||||||||||||
| Tenant | Number of Stores1 | Total Leased GLA/NRA2 | ABR3 | ABR per Sq. Ft.3 | % of Weighted ABR4 | |||||||||||||||||||||||||||
The TJX Companies, Inc.5 | 44 | 1,294 | $ | 14,536 | $ | 11.24 | 2.5 | % | ||||||||||||||||||||||||
Best Buy Co., Inc.6 | 16 | 633 | 10,915 | 17.25 | 2.0 | % | ||||||||||||||||||||||||||
| Ross Stores, Inc. | 31 | 885 | 10,444 | 11.80 | 1.9 | % | ||||||||||||||||||||||||||
| PetSmart, Inc. | 31 | 637 | 10,241 | 16.07 | 1.8 | % | ||||||||||||||||||||||||||
| Michaels Stores, Inc. | 29 | 651 | 8,814 | 13.54 | 1.6 | % | ||||||||||||||||||||||||||
Gap Inc.7 | 35 | 468 | 8,490 | 18.14 | 1.5 | % | ||||||||||||||||||||||||||
Bed Bath & Beyond Inc.8 | 23 | 613 | 8,303 | 13.55 | 1.5 | % | ||||||||||||||||||||||||||
Dick's Sporting Goods, Inc.9 | 12 | 591 | 7,187 | 12.15 | 1.3 | % | ||||||||||||||||||||||||||
| Publix Super Markets, Inc. | 14 | 669 | 6,884 | 10.28 | 1.3 | % | ||||||||||||||||||||||||||
Albertsons Companies, Inc.10 | 9 | 481 | 6,613 | 13.74 | 1.2 | % | ||||||||||||||||||||||||||
| Lowe's Companies, Inc. | 7 | 168 | 400 | 2.38 | 1.1 | % | ||||||||||||||||||||||||||
The Kroger Co.11 | 10 | 355 | 3,460 | 9.73 | 1.0 | % | ||||||||||||||||||||||||||
Petco Health And Wellness Company, Inc. | 22 | 299 | 5,346 | 17.90 | 1.0 | % | ||||||||||||||||||||||||||
| Ulta Beauty, Inc. | 24 | 248 | 5,589 | 22.51 | 0.9 | % | ||||||||||||||||||||||||||
| Total Wine & More | 13 | 305 | 5,069 | 16.60 | 0.9 | % | ||||||||||||||||||||||||||
| BJ's Wholesale Club, Inc. | 2 | 245 | 4,939 | 20.18 | 0.9 | % | ||||||||||||||||||||||||||
| Five Below, Inc. | 29 | 258 | 4,901 | 18.97 | 0.9 | % | ||||||||||||||||||||||||||
| Kohl's Corporation | 7 | 361 | 2,993 | 8.28 | 0.9 | % | ||||||||||||||||||||||||||
| Burlington Stores, Inc. | 8 | 445 | 4,496 | 10.11 | 0.8 | % | ||||||||||||||||||||||||||
Ahold U.S.A. Inc.12 | 4 | 239 | 4,464 | 18.66 | 0.8 | % | ||||||||||||||||||||||||||
Mattress Firm Group Inc.13 | 32 | 158 | 4,417 | 27.97 | 0.8 | % | ||||||||||||||||||||||||||
DSW Designer Shoe Warehouse | 16 | 314 | 4,678 | 14.92 | 0.8 | % | ||||||||||||||||||||||||||
Office Depot, Inc.14 | 14 | 308 | 4,347 | 14.11 | 0.8 | % | ||||||||||||||||||||||||||
| Fitness International, LLC | 5 | 205 | 4,092 | 19.92 | 0.7 | % | ||||||||||||||||||||||||||
| Party City Holdings Inc. | 18 | 263 | 3,988 | 15.17 | 0.7 | % | ||||||||||||||||||||||||||
| Total Top Tenants | 455 | 11,093 | $ | 155,606 | $ | 14.03 | 29.6 | % | ||||||||||||||||||||||||
| 1 | Number of stores represents stores at consolidated and unconsolidated properties. | ||||
| 2 | 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, 2021, 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 excluding ground lease rent. | ||||
| 4 | Percent of weighted ABR includes ground lease rent and represents the Company's share of the ABR at consolidated and unconsolidated properties. | ||||
| 5 | Includes TJ Maxx (19), Marshalls (13), HomeGoods (10), Homesense (1) and T.J. Maxx & HomeGoods combined (1). | ||||
| 6 | Includes Best Buy (15) and Pacific Sales (1). | ||||
| 7 | Includes Old Navy (25), The Gap (5), Banana Republic (3) and Athleta (2). | ||||
| 8 | Includes Bed Bath and Beyond (14) and buybuy BABY (9). | ||||
| 9 | Includes Dick's Sporting Goods (11) and Golf Galaxy (1). | ||||
| 10 | Includes Safeway (4), Jewel-Osco (3) and Tom Thumb (2). | ||||
| 11 | Includes Kroger (6), Harris Teeter (2), QFC (1) and Smith's (1). | ||||
| 12 | Includes Stop & Shop (3) and Giant Foods (1). | ||||
| 13 | Includes Mattress Firm (27) and Sleepy's (5). | ||||
| 14 | Includes Office Depot (11) and OfficeMax (3). | ||||
29
Lease Expirations
In 2022, leases representing 9.1% of total retail ABR are scheduled to expire. The following tables show scheduled lease expirations for retail and office tenants and tenants open for business at in-process development projects as of December 31, 2021, assuming none of the tenants exercise renewal options.
| ($ in thousands, except per square foot data) | |||||||||||||||||||||||||||||||||||||||||||||||
| Retail Portfolio | |||||||||||||||||||||||||||||||||||||||||||||||
Expiring GLA – Retail2 | Expiring ABR per Sq. Ft.3 | ||||||||||||||||||||||||||||||||||||||||||||||
Number of Expiring Leases1 | Shop Tenants | Anchor Tenants | Expiring ABR (Pro-rata) | % of Total ABR (Pro-rata) | Shop Tenants | Anchor Tenants | Total | ||||||||||||||||||||||||||||||||||||||||
| 2022 | 520 | 1,177,508 | 1,196,248 | $ | 47,408 | 9.1 | % | $ | 28.33 | $ | 11.81 | $ | 19.99 | ||||||||||||||||||||||||||||||||||
| 2023 | 585 | 1,361,374 | 2,634,810 | 78,221 | 15.0 | % | 30.43 | 13.99 | 19.59 | ||||||||||||||||||||||||||||||||||||||
| 2024 | 584 | 1,334,044 | 2,580,920 | 75,482 | 14.5 | % | 32.09 | 13.50 | 20.06 | ||||||||||||||||||||||||||||||||||||||
| 2025 | 442 | 1,061,370 | 2,551,286 | 64,728 | 12.4 | % | 30.80 | 12.86 | 18.17 | ||||||||||||||||||||||||||||||||||||||
| 2026 | 436 | 984,890 | 2,447,939 | 63,743 | 12.3 | % | 30.43 | 14.11 | 18.86 | ||||||||||||||||||||||||||||||||||||||
| 2027 | 309 | 763,399 | 1,915,123 | 46,774 | 9.0 | % | 29.40 | 12.88 | 17.61 | ||||||||||||||||||||||||||||||||||||||
| 2028 | 166 | 422,238 | 956,761 | 28,473 | 5.5 | % | 33.39 | 15.07 | 20.67 | ||||||||||||||||||||||||||||||||||||||
| 2029 | 154 | 359,184 | 1,111,043 | 30,350 | 5.8 | % | 32.76 | 16.78 | 20.67 | ||||||||||||||||||||||||||||||||||||||
| 2030 | 124 | 375,170 | 565,268 | 19,201 | 3.7 | % | 28.97 | 15.10 | 20.57 | ||||||||||||||||||||||||||||||||||||||
| 2031 | 123 | 339,768 | 606,950 | 20,070 | 3.9 | % | 31.09 | 15.83 | 21.27 | ||||||||||||||||||||||||||||||||||||||
| Beyond | 149 | 328,386 | 2,067,162 | 45,829 | 8.8 | % | 31.66 | 17.43 | 19.37 | ||||||||||||||||||||||||||||||||||||||
| 3,592 | 8,507,331 | 18,633,510 | $ | 520,279 | 100.0 | % | $ | 30.61 | $ | 14.23 | $ | 19.40 | |||||||||||||||||||||||||||||||||||
| Office Portfolio | ||||||||||||||||||||||||||||||||
Expiring GLA2 | ||||||||||||||||||||||||||||||||
Number of Expiring Leases1 | Office Tenants | Expiring ABR (Pro-rata) | % of Total ABR (Pro-rata) | Expiring ABR per Sq. Ft.3 | ||||||||||||||||||||||||||||
| 2022 | 47 | 361,608 | $ | 8,872 | 22.4 | % | $ | 24.53 | ||||||||||||||||||||||||
| 2023 | 35 | 126,396 | 3,878 | 9.8 | % | 30.68 | ||||||||||||||||||||||||||
| 2024 | 42 | 234,639 | 6,354 | 16.1 | % | 27.08 | ||||||||||||||||||||||||||
| 2025 | 11 | 166,084 | 3,531 | 8.9 | % | 21.26 | ||||||||||||||||||||||||||
| 2026 | 11 | 51,422 | 1,727 | 4.4 | % | 33.59 | ||||||||||||||||||||||||||
| 2027 | 10 | 61,513 | 2,094 | 5.3 | % | 34.03 | ||||||||||||||||||||||||||
| 2028 | 5 | 112,519 | 2,951 | 7.5 | % | 26.23 | ||||||||||||||||||||||||||
| 2029 | 5 | 75,943 | 2,813 | 7.1 | % | 37.04 | ||||||||||||||||||||||||||
| 2030 | 4 | 41,061 | 903 | 2.3 | % | 21.99 | ||||||||||||||||||||||||||
| 2031 | 4 | 121,003 | 3,058 | 7.7 | % | 25.28 | ||||||||||||||||||||||||||
| Beyond | 4 | 90,599 | 3,369 | 8.5 | % | 37.19 | ||||||||||||||||||||||||||
| 178 | 1,442,787 | $ | 39,550 | 100.0 | % | $ | 27.41 | |||||||||||||||||||||||||
| 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in thousands) | ||||||||||||||||||||||||||||||||||||
| Total Operating Portfolio Excluding Developments and Redevelopments | Developments and Redevelopments2 | Joint Ventures 3 | Total Operating Portfolio Including Developments and Redevelopments | |||||||||||||||||||||||||||||||||
| Region/State | Owned GLA/NRA1 | Annualized Base Rent | 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 | |||||||||||||||||||||||||
| South | ||||||||||||||||||||||||||||||||||||
| Florida | 3,323,004 | $ | 53,003 | 124,802 | $ | 251 | 121,705 | $ | 1,528 | 30 | 3,569,511 | $ | 3,845 | $ | 58,627 | 25.9% | ||||||||||||||||||||
| Texas | 1,798,944 | 28,690 | — | — | 156,150 | 2,801 | 10 | 1,955,094 | 1,351 | 32,842 | 14.5% | |||||||||||||||||||||||||
| North Carolina | 1,072,354 | 20,596 | — | — | — | — | 8 | 1,072,354 | 2,004 | 22,600 | 10.0% | |||||||||||||||||||||||||
| Oklahoma | 505,220 | 7,044 | — | — | — | — | 3 | 505,220 | 850 | 7,894 | 3.5% | |||||||||||||||||||||||||
| Georgia | 276,318 | 3,664 | — | — | — | — | 1 | 276,318 | 336 | 4,000 | 1.8% | |||||||||||||||||||||||||
| Tennessee | 230,980 | 3,808 | — | — | — | — | 1 | 230,980 | — | 3,808 | 1.7% | |||||||||||||||||||||||||
| South Carolina | 257,683 | 3,245 | — | — | ��� | — | 2 | 257,683 | — | 3,245 | 1.4% | |||||||||||||||||||||||||
| Texas - Other | 107,400 | 591 | — | — | — | — | 1 | 107,400 | — | 591 | 0.3% | |||||||||||||||||||||||||
| Total South | 7,571,903 | 120,641 | 124,802 | 251 | 277,855 | 4,329 | 56 | 7,974,560 | 8,386 | 133,607 | 59.1% | |||||||||||||||||||||||||
| Midwest | ||||||||||||||||||||||||||||||||||||
| Indiana - Retail | 1,461,464 | 23,634 | 519,216 | 3,071 | — | — | 19 | 1,980,680 | 1,626 | 28,331 | 12.5% | |||||||||||||||||||||||||
| Indiana - Other | 366,502 | 6,684 | — | — | — | — | 3 | 366,502 | — | 6,684 | 3.0% | |||||||||||||||||||||||||
| Illinois | 83,759 | 1,138 | — | — | — | — | 1 | 83,759 | — | 1,138 | 0.5% | |||||||||||||||||||||||||
| Ohio | 236,230 | 2,155 | — | — | — | — | 1 | 236,230 | — | 2,155 | 1.0% | |||||||||||||||||||||||||
| Total Midwest | 2,147,955 | 33,611 | 519,216 | 3,071 | — | — | 24 | 2,667,171 | 1,626 | 38,308 | 17.0% | |||||||||||||||||||||||||
| West | ||||||||||||||||||||||||||||||||||||
| Nevada | 768,745 | 19,791 | — | — | — | — | 4 | 768,745 | 3,592 | 23,383 | 10.3% | |||||||||||||||||||||||||
| Utah | 392,157 | 7,263 | — | — | — | — | 2 | 392,157 | — | 7,263 | 3.2% | |||||||||||||||||||||||||
| Arizona | 79,902 | 2,467 | — | — | — | — | 1 | 79,902 | — | 2,467 | 1.1% | |||||||||||||||||||||||||
| Total West | 1,240,804 | 29,521 | — | — | — | — | 7 | 1,240,804 | 3,592 | 33,113 | 14.6% | |||||||||||||||||||||||||
| Northeast | ||||||||||||||||||||||||||||||||||||
| New York | 363,103 | 9,302 | — | — | — | — | 1 | 363,103 | — | 9,302 | 4.1% | |||||||||||||||||||||||||
| New Jersey | 106,146 | 3,127 | — | — | 139,022 | 2,817 | 2 | 245,168 | 2,263 | 8,207 | 3.6% | |||||||||||||||||||||||||
| Connecticut | 205,683 | 2,566 | — | — | — | — | 1 | 205,683 | 1,061 | 3,627 | 1.6% | |||||||||||||||||||||||||
| Total Northeast | 674,932 | 14,995 | — | — | 139,022 | 2,817 | 4 | 813,954 | 3,324 | 21,136 | 9.3% | |||||||||||||||||||||||||
| 11,635,594 | $ | 198,768 | 644,018 | $ | 3,322 | 416,877 | $ | 7,146 | 91 | 12,696,489 | $ | 16,928 | $ | 226,164 | 100.0% | |||||||||||||||||||||
| ($ in thousands, except per square foot data) | |||||||||||||||||||||||||||||||||
Expiring GLA2 | Expiring Annualized Base Rent per Sq. Ft.3 | ||||||||||||||||||||||||||||||||
Number of Expiring Leases1 | Shop Tenants | Anchor Tenants | Office and Other Tenants | Expiring Annualized Base Rent (Pro-rata) | % of Total Annualized Base Rent (Pro-rata) | Shop Tenants | Anchor Tenants | Office and Other Tenants | Total | ||||||||||||||||||||||||
| 2020 | 154 | 332,585 | 534,529 | 3,242 | $ | 14,567 | 7.2 | % | $ | 25.24 | $ | 11.83 | $ | 19.25 | $ | 16.90 | |||||||||||||||||
| 2021 | 212 | 451,708 | 865,234 | 17,868 | 22,455 | 11.0 | % | 27.19 | 11.65 | 21.97 | 16.96 | ||||||||||||||||||||||
| 2022 | 256 | 535,220 | 1,078,093 | 65,020 | 29,813 | 14.6 | % | 26.94 | 13.17 | 19.67 | 17.80 | ||||||||||||||||||||||
| 2023 | 252 | 536,662 | 1,125,475 | 129,935 | 33,020 | 16.2 | % | 28.29 | 14.86 | 9.15 | 18.45 | ||||||||||||||||||||||
| 2024 | 210 | 458,244 | 868,181 | 33,827 | 24,609 | 12.1 | % | 29.30 | 15.08 | 13.96 | 20.38 | ||||||||||||||||||||||
| 2025 | 149 | 310,145 | 1,015,606 | 116,988 | 21,270 | 10.5 | % | 29.05 | 10.77 | 16.20 | 15.24 | ||||||||||||||||||||||
| 2026 | 78 | 212,668 | 496,033 | — | 10,007 | 4.9 | % | 26.49 | 9.85 | — | 15.23 | ||||||||||||||||||||||
| 2027 | 70 | 192,682 | 365,093 | 9,154 | 9,875 | 4.9 | % | 28.23 | 12.99 | 31.29 | 18.94 | ||||||||||||||||||||||
| 2028 | 70 | 163,274 | 371,802 | 61,747 | 11,524 | 5.7 | % | 30.71 | 14.02 | 21.75 | 19.36 | ||||||||||||||||||||||
| 2029 | 54 | 128,882 | 243,700 | 2,200 | 7,186 | 3.5 | % | 29.90 | 13.11 | 62.73 | 19.17 | ||||||||||||||||||||||
| Beyond | 67 | 159,699 | 820,149 | 54,721 | 19,192 | 9.4 | % | 28.73 | 16.70 | 21.59 | 18.72 | ||||||||||||||||||||||
| 1,572 | 3,481,769 | 7,783,895 | 494,702 | $ | 203,520 | 100.0 | % | $ | 27.93 | $ | 13.25 | $ | 16.66 | $ | 17.81 | ||||||||||||||||||
| Lease expiration | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2 | Expiring GLA excludes estimated square footage attributable to non-owned structures on land owned by the Company and | |||||||||||||||||||||||||||||||||||||||||||||||||
| 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Activity – New and Renewal
In 2019,2021, the Company executed new and renewal leases on 302363 individual spaces totaling 2.02.6 million square feet (9.2%(10.7% cash leasing spread and 14.5% GAAP leasing spread on 242245 comparable leases). New leases were signed on 114132 individual spaces for 0.50.7 million square feet of GLA (35.5%(24.2% cash leasing spread and 44.8% GAAP leasing spread on 6467 comparable leases), while renewal leases were signed on 188231 individual spaces for 1.51.8 million square feet of GLA (3.3%(6.9% cash leasing spread and 7.5% GAAP leasing spread on 178 comparable leases). Total executed leases includes leasing activity for the legacy RPAI portfolio from October 22, 2021 through December 31, 2021.
30
ITEM 3. LEGAL PROCEEDINGS
business. Management believes that such matters will not have a material adverse impact on our consolidated financial condition, results of operations or cash flows taken as a whole.
As previously disclosed in our joint proxy statement/prospectus, beginning on August 27, 2021, two purported RPAI stockholders filed substantially similar complaints against RPAI and the members of the RPAI board of directors (the “RPAI Board”) in the United States District Court for the Southern District of New York. One of these complaints also named Kite Realty and Merger Sub as defendants. The complaints were captioned as follows: Wang v. Retail Properties of America, Inc. et al., No. 1:21-cv-07237 (S.D.N.Y. filed August 27, 2021); and Hopkins v. Retail Properties of America, Inc. et al., No. 1:21-cv-07324 (S.D.N.Y. filed August 31, 2021). The complaints variously asserted, among other things, claims under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 14a-9 promulgated thereunder against RPAI and the members of the RPAI Board and claims under Section 20(a) of the Exchange Act against the members of the RPAI Board (and, in one case, Kite Realty and Merger Sub) for allegedly causing a materially incomplete and misleading registration statement on Form S-4 to be filed on August 23, 2021 with the SEC. Four additional lawsuits were filed against RPAI and the members of the RPAI Board between September 14, 2021 and October 8, 2021 under the captions Callebs v. Retail Properties of America, Inc. et al., No. 1:21-cv-07593 (S.D.N.Y. filed September 10, 2021); Sheridan v. Retail Properties of America, Inc., et al., No. 1:21-cv-04066-SCJ (N.D.Ga. filed October 1, 2021); Whitfield v. Retail Properties of America, Inc. et al., No. 2:21-cv-04390 (E.D.Pa. filed October 6, 2021); and Reinhardt v Retail Properties of America, Inc. et al., No. 1:21-cv-04187 (N.D. Ga. filed October 8, 2021), which were substantially similar to the other two complaints. Also, on September 15, 2021, a purported Kite Realty shareholder filed a complaint against Kite Realty and the members of the Kite Realty board of trustees in the United States District Court for the Eastern District of New York, captioned as follows: Gentry v. Kite Realty Group Trust et al., No. 1:21-cv-05142 (E.D.N.Y. filed September 15, 2021). The complaint asserted substantially similar claims under Sections 14(a) and 20(a) of the Exchange Act and Rule 14a-9 as the other complaints against RPAI and the RPAI Board.
Plaintiffs sought, among other things, to enjoin or rescind the Merger, an award of damages in the event the Merger was consummated, and an award of costs and attorneys’ fees. Subsequent to completion of the RPAI merger, and subsequent to December 31, 2021, the lawsuits described in the preceding paragraph were voluntarily dismissed. We believe that the claims asserted in the actions were without merit.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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 traded on the NYSENew York Stock Exchange (the “NYSE”) under the symbol “KRG.” On February 14, 2020,24, 2022, the closing price of our common shares on the NYSE was $17.92. $21.91.
Holders
The number of registered holders of record of our common shares was 1,14310,651 as of February 14, 2020.24, 2022. This total excludes beneficial or non-registered holders that held their shares through various brokerage firms. This figure does not represent the actual number of beneficial owners of our common shares because our common shares are frequently held in “street name” by securities dealers and others for the benefit of beneficial owners who may vote the shares.
Distributions, if any, will be declared and paid at the discretion of our Board of Trustees and will depend upon a number of factors, including cash generated by operating activities, our financial condition, capital requirements, annual distribution requirements under the REIT provisions of the Code, and such other factors as our Board of Trustees deem relevant.
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, 2019,2021, approximately 35%13.4% of our distributions to shareholders constituted a return of capital and approximately 35%86.6% constituted taxable capital gains dividends, and approximately 30% constituted taxable ordinary income dividends.
Under our unsecured revolving credit facility,Revolving Facility, we are permitted to make distributions to our shareholders 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, 2019,2021, 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 Plan. These shares were repurchased by the Company.
The following table summarizes all of these repurchases during the three months ended December 31, 2019:2021:
| 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 of shares that may yet be purchased under the plans or programs1 | ||||||||||||||||||||||
| October 1, 2021 to October 31, 2021 | 488,206 | $ | 21.01 | N/A | $ | 150,000,000 | ||||||||||||||||||||
| November 1, 2021 to November 30, 2021 | 202,116 | $ | 21.62 | N/A | $ | 150,000,000 | ||||||||||||||||||||
| December 1, 2021 to December 31, 2021 | — | $ | — | N/A | $ | 150,000,000 | ||||||||||||||||||||
| Total | 690,322 | $ | 21.12 | |||||||||||||||||||||||
32
| 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 of shares that may yet be purchased under the plans or programs | ||||
| October 1 - October 31 | — | — | N/A | N/A | ||||
| November 1 - November 30 | 5,505 | $18.03 | N/A | N/A | ||||
| December 1 - December 31 | — | — | N/A | N/A | ||||
| Total | 5,505 | |||||||
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, 20142016 to December 31, 2019,2021, 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, 20142016 and that all cash distributions were reinvested. The shareholder return shown on the graph below is not indicative of future performanceperformance.
The actual returns shown on the graph above are as follows:
| 12/16 | 6/17 | 12/17 | 6/18 | 12/18 | 6/19 | 12/19 | 6/20 | 12/20 | 6/21 | 12/21 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Kite Realty Group Trust | $ | 100.00 | $ | 82.82 | $ | 88.39 | $ | 79.93 | $ | 68.54 | $ | 78.35 | $ | 104.93 | $ | 63.91 | $ | 83.78 | $ | 125.57 | $ | 126.45 | |||||||||||||||||||||||||||||||||||||||||||
| S&P 500 | $ | 100.00 | $ | 109.34 | $ | 121.83 | $ | 125.06 | $ | 116.49 | $ | 138.09 | $ | 153.17 | $ | 148.45 | $ | 181.35 | $ | 209.01 | $ | 233.41 | |||||||||||||||||||||||||||||||||||||||||||
| FTSE NAREIT Equity REITs | $ | 100.00 | $ | 102.70 | $ | 105.23 | $ | 106.30 | $ | 100.36 | $ | 118.21 | $ | 126.45 | $ | 102.80 | $ | 116.34 | $ | 141.88 | $ | 166.64 | |||||||||||||||||||||||||||||||||||||||||||
33
| 12/14 | 6/15 | 12/15 | 6/16 | 12/16 | 6/17 | 12/17 | 6/18 | 12/18 | 6/19 | 12/19 | |||||||||||||||||||||||
| Kite Realty Group Trust | 100.00 | 86.75 | 94.00 | 103.79 | 88.78 | 73.53 | 78.47 | 70.96 | 60.85 | 69.56 | 93.16 | ||||||||||||||||||||||
| S&P 500 | 100.00 | 101.23 | 101.38 | 105.27 | 113.51 | 124.11 | 138.29 | 141.95 | 132.23 | 156.74 | 173.86 | ||||||||||||||||||||||
| FTSE NAREIT Equity REITs | 100.00 | 94.33 | 103.20 | 117.00 | 111.99 | 115.01 | 117.84 | 119.04 | 112.39 | 132.38 | 141.61 | ||||||||||||||||||||||
ITEM 6. SELECTED FINANCIAL DATA[RESERVED]
| ($ in thousands, except per share data) | Year Ended December 31 (Unaudited) | |||||||||||||||||||
| 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||
| Operating Data: | ||||||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Rental income and other property related revenue | $ | 314,725 | $ | 351,661 | $ | 358,442 | $ | 354,122 | $ | 347,005 | ||||||||||
| Fee income | 448 | 2,523 | 377 | — | — | |||||||||||||||
| Total revenues | 315,173 | 354,184 | 358,819 | 354,122 | 347,005 | |||||||||||||||
| Expenses: | ||||||||||||||||||||
| Property operating | 45,575 | 50,356 | 49,643 | 47,923 | 49,973 | |||||||||||||||
| Real estate taxes | 38,777 | 42,378 | 43,180 | 42,838 | 40,904 | |||||||||||||||
| General, administrative, and other | 28,214 | 21,320 | 21,749 | 20,603 | 18,709 | |||||||||||||||
| Transaction costs | — | — | — | 2,771 | 1,550 | |||||||||||||||
| Non-cash gain from release of assumed earnout liability | — | — | — | — | (4,832 | ) | ||||||||||||||
| Depreciation and amortization | 132,098 | 152,163 | 172,091 | 174,564 | 167,312 | |||||||||||||||
| Impairment charge | 37,723 | 70,360 | 7,411 | — | 1,592 | |||||||||||||||
| Total expenses | 282,387 | 336,577 | 294,074 | 288,699 | 275,208 | |||||||||||||||
| Gains on sales of operating properties, net | 38,971 | 3,424 | 15,160 | 4,253 | 4,066 | |||||||||||||||
| Operating income | 71,757 | 21,031 | 79,905 | 69,676 | 75,863 | |||||||||||||||
| Interest expense | (59,268 | ) | (66,785 | ) | (65,702 | ) | (65,577 | ) | (56,432 | ) | ||||||||||
| Income tax benefit (expense) of taxable REIT subsidiary | 282 | 227 | 100 | (814 | ) | (186 | ) | |||||||||||||
| (Loss) gain on debt extinguishment | (11,572 | ) | — | — | — | 5,645 | ||||||||||||||
| Gain on settlement | — | — | — | — | 4,520 | |||||||||||||||
| Equity in loss of unconsolidated subsidiaries | (628 | ) | (278 | ) | — | — | — | |||||||||||||
| Other expense, net | (573 | ) | (646 | ) | (415 | ) | (169 | ) | (95 | ) | ||||||||||
| Consolidated net (loss) income | (2 | ) | (46,451 | ) | 13,888 | 3,116 | 29,315 | |||||||||||||
| Net income attributable to noncontrolling interests: | (532 | ) | (116 | ) | (2,014 | ) | (1,933 | ) | (2,198 | ) | ||||||||||
| Net (loss) income attributable to Kite Realty Group Trust: | (534 | ) | (46,567 | ) | 11,874 | 1,183 | 27,117 | |||||||||||||
| Dividends on preferred shares | — | — | — | — | (7,877 | ) | ||||||||||||||
| Non-cash adjustment for redemption of preferred shares | — | — | — | — | (3,797 | ) | ||||||||||||||
| Net (loss) income attributable to common shareholders | $ | (534 | ) | $ | (46,567 | ) | $ | 11,874 | $ | 1,183 | $ | 15,443 | ||||||||
| (Loss) income per common share – basic: | ||||||||||||||||||||
| (Loss) income from continuing operations attributable to Kite Realty Group Trust common shareholders | $ | (0.01 | ) | $ | (0.56 | ) | $ | 0.14 | $ | 0.01 | $ | 0.19 | ||||||||
| Income from discontinued operations attributable to Kite Realty Group Trust common shareholders | — | — | — | — | — | |||||||||||||||
| Net (loss) income attributable to Kite Realty Group Trust common shareholders | $ | (0.01 | ) | $ | (0.56 | ) | $ | 0.14 | $ | 0.01 | $ | 0.19 | ||||||||
| (Loss) income per common share – diluted: | ||||||||||||||||||||
| (Loss) income from continuing operations attributable to Kite Realty Group Trust common shareholders | $ | (0.01 | ) | $ | (0.56 | ) | $ | 0.14 | $ | 0.01 | $ | 0.18 | ||||||||
| Income from discontinued operations attributable to Kite Realty Group Trust common shareholders | — | — | — | — | — | |||||||||||||||
| Net (loss) income attributable to Kite Realty Group Trust common shareholders | $ | (0.01 | ) | $ | (0.56 | ) | $ | 0.14 | $ | 0.01 | $ | 0.18 | ||||||||
| Weighted average Common Shares outstanding – basic | 83,926,296 | 83,693,385 | 83,585,333 | 83,436,511 | 83,421,904 | |||||||||||||||
| Weighted average Common Shares outstanding – diluted | 83,926,296 | 83,693,385 | 83,690,418 | 83,465,500 | 83,534,831 | |||||||||||||||
| Distributions declared per Common Share | $ | 1.2700 | $ | 1.2700 | $ | 1.2250 | $ | 1.1700 | $ | 1.0900 | ||||||||||
| ($ in thousands) | As of December 31 | |||||||||||||||||||
| 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||
| Balance Sheet Data (Unaudited): | ||||||||||||||||||||
| Investment properties, net | $ | 2,420,439 | $ | 2,941,193 | $ | 3,293,270 | $ | 3,435,382 | $ | 3,500,845 | ||||||||||
| Cash and cash equivalents | 31,336 | 35,376 | 24,082 | 19,874 | 33,880 | |||||||||||||||
| Assets held for sale | — | 5,731 | — | — | — | |||||||||||||||
| Total assets | 2,648,887 | 3,172,013 | 3,512,498 | 3,656,371 | 3,756,428 | |||||||||||||||
| Mortgage and other indebtedness | 1,146,580 | 1,543,301 | 1,699,239 | 1,731,074 | 1,724,449 | |||||||||||||||
| Total liabilities | 1,306,577 | 1,712,867 | 1,874,285 | 1,923,940 | 1,937,364 | |||||||||||||||
| Limited partners' interests in Operating Partnership and other redeemable noncontrolling interests | 52,574 | 45,743 | 72,104 | 88,165 | 92,315 | |||||||||||||||
| Kite Realty Group Trust shareholders’ equity | 1,289,038 | 1,412,705 | 1,565,411 | 1,643,574 | 1,725,976 | |||||||||||||||
| Noncontrolling interests | 698 | 698 | 698 | 692 | 773 | |||||||||||||||
| Total liabilities and equity | 2,648,887 | 3,172,013 | 3,512,498 | 3,656,371 | 3,756,428 | |||||||||||||||
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-heldpublicly held real estate investment trust which, through its majority-owned subsidiary, Kite Realty Group, L.P., owns interests in various operating subsidiaries and joint ventures engaged in the ownership, and operation, acquisition, development and redevelopment of high-quality, neighborhoodopen-air shopping centers and community shopping centersmixed-use assets in select markets in the United States. We derive revenues primarily from activities associated with the collection of contractual rents and reimbursement payments from tenants at 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 and real estate market and overall economic conditions.
As of December 31, 2019,2021, we owned interests in 90180 operating and redevelopmentretail properties totaling approximately 17.429.0 million square feet and one office property with 0.3 million square feet. Of the 180 operating retail properties, 11 contain an office component. We also owned oneeight development projectprojects under construction as of this date.
Merger with RPAI
On October 22, 2021, we completed the merger with 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. As a result of the Merger, we acquired 100 operating retail properties and five active 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 serves 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. 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 Operating Partnership issued an equivalent amount of General Partner Units to the Parent Company.
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 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 $19.36 per square foot. The Company has continued to improve its asset quality and through its Merger with RPAI, acquired a refined portfolio of high-quality, open-air shopping centers and mixed-use assets.
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In evaluating potential acquisition, development, and redevelopment opportunities, we look for strong sub-markets where average household income, educational attainment, population density, traffic counts and daytime workforce populations are above the broader market average. We also focus on locations that are benefittingbenefiting from current population migratory patterns, namely major cities in business-friendly states with no or relatively low income taxes, and mild 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 prominent grocers including Publix, Aldi, Whole Foods, and Trader Joe's,Joe’s, expanding retailers such as TJ Maxx, Ross Dress for Less, Burlington, and Old Navy, service and restaurant retailers such as and other retailers such as Ulta Beauty, REI, Party CityFive Below and Total Wine. 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.
Capital and Financing Activities
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, 2019, the value of the assets in our unencumbered asset pool was $1.4 billion.
Results of Operations
As of December 31, 2019,2021, we owned interests in 90180 operating retail properties, one office property and redevelopment properties and oneeight development projectprojects currently under construction. Of the 180 operating retail properties, 11 contain an office component. The following table sets forth the total operating and redevelopment properties and development projects that we owned as of December 31, 2019, 20182021, 2020 and 2017:2019:
| # of Properties | |||||||||
| 2019 | 2018 | 2017 | |||||||
| Operating Retail Properties | 82 | 105 | 105 | ||||||
| Operating Office Properties and Other | 4 | 3 | 4 | ||||||
| Redevelopment Properties | 4 | 3 | 8 | ||||||
| Total Operating and Redevelopment Properties | 90 | 111 | 117 | ||||||
| Development Projects: | 1 | 1 | 2 | ||||||
| Total All Properties | 91 | 112 | 119 | ||||||
| Number of Properties | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| Operating retail properties | 180 | 83 | 82 | ||||||||||||||
| Office and other components | 12 | 4 | 4 | ||||||||||||||
| Development and redevelopment projects | 8 | 5 | 5 | ||||||||||||||
The comparability of results of operations is affected by our Merger with RPAI completed on October 22, 2021, in which we acquired 100 operating retail properties as well as five active development projects, along with the development, redevelopment, and operating property acquisition and disposition activities in 20182019 through 2019.2021. 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, 20192021 and 20182020”) in conjunction with the discussion of these activities during those periods, which is set forth below.
Property Acquisitions
During the years ended December 31, 2021, 2020 and 2019, in addition to the properties we acquired in the Merger, we acquired the properties listed in the table below. We did not acquire any properties in 2018.
following properties:
| Property Name | MSA | Acquisition Date | Owned GLA | |||||||||||||||||
| Pan Am Plaza Garage | Indianapolis, IN | March 2019 | N/A | |||||||||||||||||
| Nora Plaza | Indianapolis, IN | August 2019 | 139,670 | |||||||||||||||||
| Eastgate Crossing | Raleigh, NC | December 2020 | 156,276 | |||||||||||||||||
| Nora Plaza outparcel | Indianapolis, IN | December 2021 | 23,722 | |||||||||||||||||
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Operating Property Dispositions
During the years ended December 31, 2021 and 2019, we sold the following operating properties. We did not sell any operating properties during the year ended December 31, 2020.
| Property Name | MSA | Disposition Date | Owned GLA | |||||||||||||||||
| Whitehall Pike | Bloomington, IN | March 2019 | 128,997 | |||||||||||||||||
| Beechwood Promenade | Athens, GA | April 2019 | 297,369 | |||||||||||||||||
| Village at Bay Park | Green Bay, WI | May 2019 | 82,254 | |||||||||||||||||
| Lakewood Promenade | Jacksonville, FL | May 2019 | 196,655 | |||||||||||||||||
| Palm Coast Landing | Palm Coast, FL | May 2019 | 168,352 | |||||||||||||||||
| Lowe’s – Perimeter Woods | Charlotte, NC | May 2019 | 166,085 | |||||||||||||||||
| Cannery Corner | Las Vegas, NV | May 2019 | 30,738 | |||||||||||||||||
| Temple Terrace | Tampa, FL | June 2019 | 90,328 | |||||||||||||||||
| University Town Center | Oklahoma City, OK | June 2019 | 348,877 | |||||||||||||||||
| Gainesville Plaza | Gainesville, FL | July 2019 | 162,189 | |||||||||||||||||
| Bolton Plaza | Jacksonville, FL | July 2019 | 154,155 | |||||||||||||||||
| Eastgate Plaza | Las Vegas, NV | July 2019 | 96,594 | |||||||||||||||||
| Burnt Store | Punta Gorda, FL | July 2019 | 95,625 | |||||||||||||||||
| Landstown Commons | Virginia Beach, VA | August 2019 | 398,139 | |||||||||||||||||
| Lima Marketplace | Fort Wayne, IN | September 2019 | 100,461 | |||||||||||||||||
| Hitchcock Plaza | Aiken, SC | September 2019 | 252,211 | |||||||||||||||||
| Merrimack Village Center | Manchester, NH | September 2019 | 78,892 | |||||||||||||||||
| Publix at Acworth | Atlanta, GA | October 2019 | 69,628 | |||||||||||||||||
| The Centre at Panola | Atlanta, GA | October 2019 | 73,075 | |||||||||||||||||
| Beacon Hill | Crown Point, IN | October 2019 | 56,820 | |||||||||||||||||
| Bell Oaks Centre | Evansville, IN | November 2019 | 94,958 | |||||||||||||||||
| Boulevard Crossing | Kokomo, IN | December 2019 | 124,634 | |||||||||||||||||
| South Elgin Commons | Chicago, IL | December 2019 | 128,000 | |||||||||||||||||
| Westside Market | Dallas, TX | October 2021 | 93,377 | |||||||||||||||||
Development and Redevelopment Projects
During portions of the years ended December 31, 2021, 2020, and 2019, the following projects were under active development or redevelopment and removed from our operating portfolio:
| Project Name | MSA | Transition to Development or Redevelopment1 | Transition to Operating Portfolio | Owned Commercial GLA | ||||||||||||||||||||||
Courthouse Shadows2 | Naples, FL | June 2013 | 124,802 | |||||||||||||||||||||||
Hamilton Crossing Centre | Indianapolis, IN | June 2014 | Pending | |||||||||||||||||||||||
The Corner | Indianapolis, IN | December 2015 | Pending | |||||||||||||||||||||||
| December | ||||||||||||||||||||||||||
Glendale Town Center | Indianapolis, IN | March 2019 | ||||||||||||||||||||||||
| The Landing at Tradition – Phase II | Port St. Lucie, FL | September 2021 | Pending | 39,900 | ||||||||||||||||||||||
Carillon MOB5 | Washington, D.C. | October 2021 | Pending | 126,000 | ||||||||||||||||||||||
Circle East5 | Baltimore, MD | October 2021 | Pending | 82,000 | ||||||||||||||||||||||
One Loudoun Downtown – Residential and Pads G&H Commercial5 | Washington, D.C. | October 2021 | Pending | 67,000 | ||||||||||||||||||||||
Shoppes at Quarterfield5 | Baltimore, MD | October 2021 | Pending | 58,000 | ||||||||||||||||||||||
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| 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 2020. | ||||
| 3 | This property has been identified as a redevelopment property and is not included in the operating portfolio or the same property pool. | ||||
| This redevelopment | |||||
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.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"NOI”), a non-GAAP financial measure, to evaluate the performance of our retail properties. Same Property NOI excludes properties that have not been owned for the full period presented. It also excludes net gains from outlot sales, straight-line rent revenue, lease termination fees,income in excess of lost rent, amortization of lease intangibles and 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 period presented, whichpresented. We believe such presentation eliminates disparities in net income due to the acquisition or disposition of properties during the particular periodperiods presented and thus provides a more consistent metric for the comparison of our properties. Full year Same Property NOI representsincludes the sumresults of properties that have been owned for the four quarters, as reported.
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.
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. 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.tenants or (b) the contemplated plan significantly impacts the operations of the property. At December 31, 2019,2021, the same property pool excluded four properties in redevelopment, one(i) the recently completed Glendale Town Center and Eddy Street Commons – Phase II development projects, (ii) eight active development and redevelopment one acquired property,projects, (iii) the 2020 acquisition of Eastgate Crossing, (iv) the legacy RPAI portfolio, and three commercial(v) office properties.
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The following table reflects Same Property NOI1 and a reconciliation to net incomeloss attributable to common shareholders for the years ended December 31, 20192021 and 20182020 (unaudited):
| ($ in thousands) | Years Ended December 31, | ||||||||||
| 2019 | 2018 | % Change | |||||||||
| Leased percentage at period end | 96.0 | % | 95.0 | % | |||||||
Economic Occupancy percentage2 | 92.6 | % | 92.6 | % | |||||||
Same Property NOI3 | $ | 204,586 | $ | 200,111 | 2.2 | % | |||||
| Reconciliation of Same Property NOI to Most Directly Comparable GAAP Measure: | |||||||||||
| Net operating income - same properties | $ | 204,586 | $ | 200,111 | |||||||
Net operating income - non-same activity4 | 25,787 | 58,816 | |||||||||
| Other (expense) income, net | (471 | ) | 1,826 | ||||||||
| General, administrative and other | (28,214 | ) | (21,320 | ) | |||||||
| Loss on debt extinguishment | (11,572 | ) | — | ||||||||
| Impairment charges | (37,723 | ) | (70,360 | ) | |||||||
| Depreciation and amortization expense | (132,098 | ) | (152,163 | ) | |||||||
| Interest expense | (59,268 | ) | (66,785 | ) | |||||||
| Gains on sales of operating properties | 38,971 | 3,424 | |||||||||
| Net income attributable to noncontrolling interests | (532 | ) | (116 | ) | |||||||
| Net (loss) income attributable to common shareholders | $ | (534 | ) | $ | (46,567 | ) | |||||
| Year Ended December 31, | |||||||||||||||||
| ($ in thousands) | 2021 | 2020 | Change | ||||||||||||||
| Number of properties in same property pool for the period | 82 | 82 | |||||||||||||||
| Leased percentage at period end | 93.1 | % | 91.4 | % | |||||||||||||
Economic occupancy percentage2 | 89.1 | % | 92.0 | % | |||||||||||||
| Same Property NOI | $ | 190,232 | $ | 179,325 | 6.1 | % | |||||||||||
Reconciliation of Same Property NOI to most directly comparable GAAP measure: | |||||||||||||||||
| Net operating income – same properties | $ | 190,232 | $ | 179,325 | |||||||||||||
Net operating income – non-same activity3 | 76,759 | 10,063 | |||||||||||||||
| Total property net operating income | 266,991 | 189,388 | |||||||||||||||
| Other income (expense), net | 1,491 | (357) | |||||||||||||||
| General, administrative and other | (33,984) | (30,840) | |||||||||||||||
| Merger and acquisition costs | (86,522) | — | |||||||||||||||
| Depreciation and amortization | (200,460) | (128,648) | |||||||||||||||
| Interest expense | (60,447) | (50,399) | |||||||||||||||
| Gain on sales of operating properties, net | 31,209 | 4,733 | |||||||||||||||
| Net loss (income) attributable to noncontrolling interests | 916 | (100) | |||||||||||||||
| Net loss attributable to common shareholders | $ | (80,806) | $ | (16,223) | |||||||||||||
| Same Property NOI excludes (i) | ||||||||||||||||
| 2 | Excludes leases that are signed but for which tenants have not yet commenced the payment of cash rent. Calculated as a weighted average based on the timing of cash rent commencement and expiration during the period. | |||||||||||||||
| 3 | ||||||||||||||||
| Includes non-cash activity across the portfolio as well as net operating income from properties not included in the same property pool including properties sold during both periods. | ||||||||||||||||
Our Same Property NOI increased 2.2%6.1% in 20192021 compared to 2018. This increase was2020 primarily due to growthimproved collection activity resulting in rental rates and contractual rent increasesa significant reduction in existing leases. bad debt expense in 2021 compared to 2020, which was more heavily impacted by the COVID-19 pandemic. When excluding the impact of 2020 collections, Same Property NOI grew by approximately 4.0%.
Funds From Operations
Funds from Operations ("FFO"(“FFO”) is a widely used performance measure for real estate companies and is provided here as a supplemental measure of 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"(“NAREIT”), as restated in 2018. The NAREIT white paper defines FFO as net income (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control, and 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 gain on the 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 flow 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
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current NAREIT definition or that interpret the current NAREIT definition differently than we do. For informational purposes, we have also provided FFO adjusted for loss on debt extinguishment.
From time to time, the Company may report or provide guidance with respect to “NAREIT 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, gains or losses associated with the early extinguishment of debt, gains or losses associated with litigation involving the Company that is not in the normal course of business, merger and acquisition costs, the impact on earnings from executive separation, andemployee severance, the excess of redemption value over carrying value of preferred stock redemption, and the impact of 2020 bad debt or the collection of 2020 accounts receivable previously written off (“2020 Collection Impact”), which are not otherwise adjusted in the Company’s calculation of FFO.
Our calculations of FFO1 and reconciliation to consolidated net income and FFO, as adjusted, for the years ended December 31, 2019, 20182021, 2020 and 20172019 (unaudited) are as follows:
| ($ in thousands) | Years Ended December 31, | |||||||||||
| 2019 | 2018 | 2017 | ||||||||||
| Consolidated net (loss) income | $ | (2 | ) | $ | (46,451 | ) | $ | 13,888 | ||||
| Less: net income attributable to noncontrolling interests in properties | (528 | ) | (1,151 | ) | (1,731 | ) | ||||||
| Less: (Gain) loss on sales of operating properties | (38,971 | ) | (3,424 | ) | (15,160 | ) | ||||||
| Add: impairment charges | 37,723 | 70,360 | 7,411 | |||||||||
| Add: depreciation and amortization of consolidated and unconsolidated entities, net of noncontrolling interests | 133,184 | 151,856 | 170,315 | |||||||||
FFO of the Operating Partnership1 | 131,406 | 171,190 | 174,723 | |||||||||
| Less: Limited Partners' interests in FFO | (3,153 | ) | (4,109 | ) | (3,966 | ) | ||||||
FFO attributable to Kite Realty Group Trust common shareholders1 | $ | 128,253 | $ | 167,081 | $ | 170,757 | ||||||
FFO of the Operating Partnership1 | $ | 131,406 | $ | 171,190 | $ | 174,723 | ||||||
| Add: loss on debt extinguishment | 11,572 | — | — | |||||||||
| FFO, as adjusted, of the Operating Partnership | $ | 142,978 | $ | 171,190 | $ | 174,723 | ||||||
| Year Ended December 31, | |||||||||||||||||
| ($ in thousands) | 2021 | 2020 | 2019 | ||||||||||||||
| Consolidated net loss | $ | (81,722) | $ | (16,123) | $ | (2) | |||||||||||
| Less: net income attributable to noncontrolling interests in properties | (514) | (528) | (528) | ||||||||||||||
| Less: gain on sales of operating properties, net | (31,209) | (4,733) | (38,971) | ||||||||||||||
| Add: impairment charges | — | — | 37,723 | ||||||||||||||
| Add: depreciation and amortization of consolidated and unconsolidated entities, net of noncontrolling interests | 201,834 | 130,091 | 133,184 | ||||||||||||||
FFO of the Operating Partnership1 | 88,389 | 108,707 | 131,406 | ||||||||||||||
| Less: Limited Partners' interests in FFO | (1,945) | (2,826) | (3,153) | ||||||||||||||
FFO attributable to Kite Realty Group Trust common shareholders1 | $ | 86,444 | $ | 105,881 | $ | 128,253 | |||||||||||
FFO of the Operating Partnership1 | $ | 88,389 | $ | 108,707 | $ | 131,406 | |||||||||||
| Add: merger and acquisition costs | 86,522 | — | — | ||||||||||||||
| Add: severance charges | — | 3,253 | — | ||||||||||||||
| Add: loss on debt extinguishment | — | — | 11,572 | ||||||||||||||
| Less: 2020 Collection Impact | (3,707) | — | — | ||||||||||||||
| FFO, as adjusted, of the Operating Partnership | $ | 171,204 | $ | 111,960 | $ | 142,978 | |||||||||||
| 1 | “FFO of the Operating | |||
Earnings before Interest, Tax, Depreciation, and Amortization (EBITDA)
We define EBITDA, a non-GAAP financial measure, as net income before depreciation and amortization, interest expense and income tax expense of taxable REIT subsidiary.the TRS. For informational purposes, we have also providedprovide 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, (iv)(v) noncontrolling interest EBITDA, and (v)(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 have also providedprovide 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.
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The following table presents a reconciliation of our EBITDA, Adjusted EBITDA and Annualized Adjusted EBITDA to consolidated net income (the most directly comparable GAAP measure) and a calculation of Net Debt to Adjusted EBITDA.
| ($ in thousands) | Three Months Ended December 31, 2019 | |||
| Consolidated net income | $ | 15,855 | ||
| Adjustments to net income: | ||||
| Depreciation and amortization | 30,765 | |||
| Interest expense | 12,383 | |||
| Income tax benefit of taxable REIT subsidiary | (94 | ) | ||
| Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) | 58,909 | |||
| Adjustments to EBITDA: | ||||
| Unconsolidated EBITDA | 774 | |||
| Gain on sales of operating properties | (14,005 | ) | ||
| Loss on debt extinguishment | 1,950 | |||
| Other income and expense, net | 92 | |||
| Noncontrolling interest | (132 | ) | ||
Pro-forma adjustments 1 | (1,519 | ) | ||
| Adjusted EBITDA | 46,069 | |||
Annualized Adjusted EBITDA1 | $ | 184,276 | ||
| Company share of net debt: | ||||
| Mortgage and other indebtedness | 1,146,580 | |||
| Less: Partner share of consolidated joint venture debt | (1,117 | ) | ||
| Less: Cash, cash equivalents, and restricted cash | (53,464 | ) | ||
| Plus: Company share of unconsolidated joint venture debt | 22,148 | |||
| Plus: Debt Premium | 6,722 | |||
Less: Pro-forma adjustment 3 | (27,200 | ) | ||
| Company Share of Net Debt | 1,093,669 | |||
| Net Debt to Adjusted EBITDA | 5.9x | |||
| Three Months Ended December 31, 2021 | |||||
| (100,155) | |||||
| Adjustments to | |||||
| Depreciation and amortization | 109,835 | ||||
| Interest expense | 23,061 | ||||
| Income tax benefit of taxable REIT subsidiary | (2) | ||||
| EBITDA | 32,739 | ||||
| Adjustments to EBITDA: | |||||
| Unconsolidated EBITDA | 882 | ||||
| Merger and acquisition costs | 76,564 | ||||
Pro forma adjustments1 | 14,368 | ||||
| Gain on sales of operating properties, | (3,692) | ||||
| Other income and expense, net | (508) | ||||
| Noncontrolling interests | (118) | ||||
| Adjusted EBITDA | 120,235 | ||||
Annualized Adjusted EBITDA2 | $ | 480,939 | |||
| Company share of Net Debt: | |||||
| Mortgage and other indebtedness, net | $ | 3,150,808 | |||
Less: Partner share of consolidated joint venture debt3 | (580) | ||||
| Less: cash, cash equivalents, restricted cash and short-term deposits | (226,644) | ||||
| Plus: Company share of unconsolidated joint venture debt | 30,164 | ||||
| Less: debt discounts, premiums and issuance costs, net | (58,583) | ||||
| Company share of Net Debt | $ | 2,895,165 | |||
| Net Debt to Adjusted EBITDA | 6.0x | ||||
| 1 | Pro forma adjustments to reflect as if the properties (including the legacy RPAI portfolio) acquired during the fourth quarter | ||||
| 2 | Represents Adjusted EBITDA for the three months ended December 31, | ||||
| 3 | |||||
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Comparison of Operating Results for the Years Ended December 31, 20192021 and 2018
The following table reflects changes in the components of our consolidated statements of operations for the years ended December 31, 20192021 and 2018:2020:
| ($ in thousands) | 2019 | 2018 | Net change 2018 to 2019 | ||||||||
| Revenue: | |||||||||||
| Rental income | $ | 308,399 | $ | 338,523 | $ | (30,124 | ) | ||||
| Other property related revenue | 6,326 | 13,138 | (6,812 | ) | |||||||
| Fee income | 448 | 2,523 | (2,075 | ) | |||||||
| Total revenue | 315,173 | 354,184 | (39,011 | ) | |||||||
| Expenses: | |||||||||||
| Property operating | 45,575 | 50,356 | (4,781 | ) | |||||||
| Real estate taxes | 38,777 | 42,378 | (3,601 | ) | |||||||
| General, administrative, and other | 28,214 | 21,320 | 6,894 | ||||||||
| Depreciation and amortization | 132,098 | 152,163 | (20,065 | ) | |||||||
| Impairment charge | 37,723 | 70,360 | (32,637 | ) | |||||||
| Total expenses | 282,387 | 336,577 | (54,190 | ) | |||||||
| Gains on sale of operating properties, net | 38,971 | 3,424 | 35,547 | ||||||||
| Operating income | 71,757 | 21,031 | 50,726 | ||||||||
| Interest expense | (59,268 | ) | (66,785 | ) | 7,517 | ||||||
| Income tax benefit of taxable REIT subsidiary | 282 | 227 | 55 | ||||||||
| Loss on debt extinguishment | (11,572 | ) | — | (11,572 | ) | ||||||
| Equity in loss of unconsolidated subsidiary | (628 | ) | (278 | ) | (350 | ) | |||||
| Other expense, net | (573 | ) | (646 | ) | 73 | ||||||
| Consolidated net loss | (2 | ) | (46,451 | ) | 46,449 | ||||||
| Net income attributable to noncontrolling interests | (532 | ) | (116 | ) | (416 | ) | |||||
| Net loss attributable to Kite Realty Group Trust common shareholders | $ | (534 | ) | $ | (46,567 | ) | $ | 46,033 | |||
| Property operating expense to total revenue ratio | 14.5 | % | 14.2 | % | 0.3 | % | |||||
| ($ in thousands) | 2021 | 2020 | Net change 2020 to 2021 | ||||||||||||||
| Revenue: | |||||||||||||||||
| Rental income | $ | 367,399 | $ | 257,670 | $ | 109,729 | |||||||||||
| Other property-related revenue | 4,683 | 8,597 | (3,914) | ||||||||||||||
| Fee income | 1,242 | 378 | 864 | ||||||||||||||
| Total revenue | 373,324 | 266,645 | 106,679 | ||||||||||||||
| Expenses: | |||||||||||||||||
| Property operating | 55,561 | 41,012 | 14,549 | ||||||||||||||
| Real estate taxes | 49,530 | 35,867 | 13,663 | ||||||||||||||
| General, administrative and other | 33,984 | 30,840 | 3,144 | ||||||||||||||
| Merger and acquisition costs | 86,522 | — | 86,522 | ||||||||||||||
| Depreciation and amortization | 200,460 | 128,648 | 71,812 | ||||||||||||||
| Total expenses | 426,057 | 236,367 | 189,690 | ||||||||||||||
| Gain on sales of operating properties, net | 31,209 | 4,733 | 26,476 | ||||||||||||||
| Operating (loss) income | (21,524) | 35,011 | (56,535) | ||||||||||||||
| Interest expense | (60,447) | (50,399) | (10,048) | ||||||||||||||
| Income tax benefit of taxable REIT subsidiary | 310 | 696 | (386) | ||||||||||||||
| Equity in loss of unconsolidated subsidiaries | (416) | (1,685) | 1,269 | ||||||||||||||
| Other income, net | 355 | 254 | 101 | ||||||||||||||
| Net loss | (81,722) | (16,123) | (65,599) | ||||||||||||||
| Net loss (income) attributable to noncontrolling interests | 916 | (100) | 1,016 | ||||||||||||||
| Net loss attributable to Kite Realty Group Trust | (80,806) | (16,223) | $ | (64,583) | |||||||||||||
| Property operating expense to total revenue ratio | 14.9 | % | 15.4 | % | (0.5 | %) | |||||||||||
Rental income decreased $30.1(including tenant reimbursements) increased $109.7 million, or 8.9%42.6%, due to the following:
| ($ in thousands) | Net change 2018 to 2019 | ||
| Properties sold during 2018 and 2019 | $ | (37,041 | ) |
| Properties under redevelopment or acquired during 2018 and/or 2019 | 923 | ||
| Properties fully operational during 2018 and 2019 and other | 5,994 | ||
| Total | $ | (30,124 | ) |
| ($ in thousands) | Net change 2020 to 2021 | ||||
| Properties or components of properties sold during 2020 or 2021 | $ | (2,606) | |||
| Properties under redevelopment or acquired during 2020 and/or 2021 | 4,243 | ||||
| Properties acquired in the Merger with RPAI | 94,716 | ||||
| Properties fully operational during 2020 and 2021 and other | 13,376 | ||||
| Total | $ | 109,729 | |||
The net increase of $6.0$13.4 million in rental income for properties that were fully operational during 20182020 and 20192021 is attributable to an increase in rental rates along with an increase in occupancy. Rental income for recently completed redevelopment projects and acquisitions increased $0.9 million primarily due to the completionimproved collection activity leading to a decrease in bad debt expense, which contributed a positive variance of Rampart Commons$10.7 million on billed rent and acquisition$5.1 million on straight-line rent. These positive variances were partially offset by lower base minimum rent of Nora Plaza. Tenant reimbursements increased $3.3$1.7 million from 2018 to 2019 due to an increase in vacancies driven by the COVID-19 pandemic. The occupancy as noted above. The Company's recovery levels of recoverable operating expensesthe fully operational properties declined from 92.0% for 2020 to 89.1% for 2021.
We continued to experience strong leasing volumes in 2021 and real estate taxes were 89.7% and 87.7%, for the years ended December 31, 2019 and 2018.
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We recorded fee income of $1.2 million and $0.4 million for the yearyears ended December 31, 2019 compared to fee income of $2.5 million for the year ended December 31, 2018. The 2018 activity is for2021 and 2020, respectively, from property management and development services provided as part of a multi-family development at our Eddy Street Commons operating property.
to unconsolidated joint ventures.
Property operating expenses decreased $4.8increased $14.5 million, or 9.5%35.5%, due to the following:
| ($ in thousands) | Net change 2018 to 2019 | ||
| Properties sold during 2018 and 2019 | $ | (4,772 | ) |
| Properties under redevelopment or acquired during 2018 and/or 2019 | 996 | ||
| Properties fully operational during 2018 and 2019 and other | (1,005 | ) | |
| Total | $ | (4,781 | ) |
| ($ in thousands) | Net change 2020 to 2021 | ||||
| Properties or components of properties sold during 2020 or 2021 | $ | (8) | |||
| Properties under redevelopment or acquired during 2020 and/or 2021 | (27) | ||||
| Properties acquired in the Merger with RPAI | 14,247 | ||||
| Properties fully operational during 2020 and 2021 and other | 337 | ||||
| Total | $ | 14,549 | |||
The net decreaseincrease of $1.0$0.3 million in property operating expenses for properties that were fully operational during 20182020 and 20192021 is primarily due to bad debt being included as a component of rental income in 2019 while it was a component ofcontinued focus on cost controls over certain operating expense spend in 2018. This decrease due to the reclassification was2021. These provided savings of $1.3 million that were partially offset by increases of $0.4 million in repairs and maintenance costs and $0.6 millionan increase in insurance expense.
As a percentage of rental revenue, property operating expenses increaseddecreased between years from 14.2%15.4% to 14.5%14.9%. The increasedecrease was mostlyprimarily due to lower other property relatedan increase in revenue in 2019.2021.
Real estate taxes decreased $3.6increased $13.7 million, or 8.5%38.1%, due toprimarily as a result of the following:Merger with RPAI as detailed below:
| ($ in thousands) | Net change 2018 to 2019 | ||
| Properties sold during 2018 and 2019 | $ | (4,223 | ) |
| Properties under redevelopment or acquired during 2018 and/or 2019 | 151 | ||
| Properties fully operational during 2018 and 2019 and other | 471 | ||
| Total | $ | (3,601 | ) |
| ($ in thousands) | Net change 2020 to 2021 | ||||
| Properties or components of properties sold during 2020 or 2021 | $ | (189) | |||
| Properties under redevelopment or acquired during 2020 and/or 2021 | 494 | ||||
| Properties acquired in the Merger with RPAI | 13,929 | ||||
| Properties fully operational during 2020 and 2021 and other | (571) | ||||
| Total | $ | 13,663 | |||
The net increasedecrease of $0.5$0.6 million in real estate taxes for properties that were fully operational during 20182020 and 20192021 is primarily due to an increase in current yearsuccessful real estate tax assessmentsappeals at certain operating properties.properties in the portfolio in 2021. The majority of real estate tax expense is recoverable from tenants and such recovery is reflected in rental income.
General, administrative and other expenses increased $6.9$3.1 million, or 32.3%10.2%. The increase is primarily due to incremental head count as part of the Merger and higher share-based compensation expense.
The Company incurred $86.5 million of merger and acquisition costs incurred that are not incremental costs of obtaining a lease contract.related to its Merger with RPAI in 2021. These costs were $5.4 million in 2019primarily consist of fairness opinion, severance charges, legal, professional, and are now expensed upon the adoption of ASU 2016-02, Leases. See additional discussion in Note 2 to the financial statements. The remainder of the increase is due to higher personneldata migration costs.
Depreciation and amortization expense decreased $20.1increased $71.8 million, or 13.2%55.8%, due toprimarily as a result of the following:Merger with RPAI as detailed below:
| ($ in thousands) | Net change 2018 to 2019 | ||
| Properties sold during 2018 and 2019 | $ | (19,523 | ) |
| Properties under redevelopment or acquired during 2018 and/or 2019 | 3,846 | ||
| Properties fully operational during 2018 and 2019 and other | (4,388 | ) | |
| Total | $ | (20,065 | ) |
| ($ in thousands) | Net change 2020 to 2021 | ||||
| Properties or components of properties sold during 2020 or 2021 | $ | (175) | |||
| Properties under redevelopment or acquired during 2020 and/or 2021 | 3,062 | ||||
| Properties acquired in the Merger with RPAI | 79,790 | ||||
| Properties fully operational during 2020 and 2021 and other | (10,865) | ||||
| Total | $ | 71,812 | |||
The net increase of $3.8$3.1 million in properties under redevelopment or acquired during 20182020 and 20192021 is primarily due to the acquisitiona full year of Nora Plaza and Pan Am Plaza Garage.operations for Eastgate Crossing, which was acquired in 2020. The net decrease of $4.4$10.9 million in depreciation and amortization at properties fully operational during 20182020 and 20192021 is due to $4.0 million of accelerated depreciation
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recorded in 2020 in connection with the write-off of assets taken out of service along with certain assets being fully depreciated in the prior year.
Interest expense increased $10.0 million or 19.9%. The increase is primarily due to certain assets becoming fully depreciated in 2018.
We recorded a net gain of $39.0$31.2 million for the year ended December 31, 20192021 on the sale of twenty-three assets,one operating property and a portfolio of 17 ground leases compared to a net gain of $3.4$4.7 million on the sale of six operating properties and the sale of an 80% interest in three operating properties to a joint venture with TH Real Estateone redevelopment property for the year ended December 31, 2018.
Management’s discussion of the financial condition, changes in financial condition and results of operations for the year ended December 31, 2017,2020, with comparison to the year ended December 31, 2018,2019, was included in Item 7, "Management’s“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, 2018.2020.
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 estimated value of properties to be developedinterest or acquired,dividend rate, the estimated market value of our propertiesmaturity date and the Company’s debt maturity ladder, the impact of financial metrics such as overall Company as a whole upon placement of the borrowing or offering,leverage levels and coverage ratios, and the Company’s ability of particular properties 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. As part of the Merger, we assumed an $850.0 million revolving line of credit, of which the borrowing capacity was $793.5 million as of December 31, 2021, along with other indebtedness.
Prior to the Merger, we had taken various steps to enhance our liquidity, including the issuance of $175.0 million of Exchangeable Notes in the first quarter of 2021 to proactively fund our 2022 debt maturities. In addition, we closed on multiple sales for net proceeds of $80.7 million during the year ended December 31, 2021, with the majority of the activity related to the sale of 17 ground leases and one operating property. As of December 31, 2021, we had approximately $93.2 million in cash on hand, $7.1 million in restricted cash and escrow deposits, $793.5 million of remaining availability under our Revolving Facility, $125.0 million of short-term deposits, and $153.5 million of debt maturities due in 2022. We believe we will have adequate liquidity over the next 12 months and beyond 2022 to operate our business and to meet our cash requirement. However, because we do not know the ultimate severity and length of the COVID-19 pandemic or the short- or long-term impact it may have on consumer behavior, and thus cannot predict the impact it will have on our tenants and on the debt and equity capital markets, we cannot estimate the ultimate impact it will have on our liquidity and capital resources.
Our Principal Capital Resources
For a discussion of cash generated from operations, see “Cash Flows,” beginning on page 59.46. In addition to cash generated from operations, we discuss below our other principal capital resources. resources are discussed below.
As of December 31, 2019,2021, we had approximately $583$793.5 million available under our unsecured revolving credit facilityRevolving Facility for future borrowings based on the unencumbered asset pool allocated to the unsecured revolving credit facility.borrowings. We also had $31.3$218.2 million in cash, and cash equivalents and short-term deposits as of December 31, 2019.
We were in compliance with all applicable financial covenants under our unsecured revolving credit facility, ourRevolving Facility, unsecured term loans, and our senior unsecured notes as of December 31, 2019.2021.
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securities. 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 to fund thefor general corporate purposes, which may include acquisitions of additional properties, repayment of long-term debt upon maturity,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 the filing by the Company and the Operating Partnership of a shelf registration statement on November 16, 2021 with the SEC. As of December 31, 2021, 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 Revolving Facility and other indebtedness and for working capital and other general corporate purposespurposes. The Operating Partnership may also use net proceeds for acquisitions of operating properties and the development or as otherwise set forth in the applicable prospectus supplement.
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, 2019,2021, we did not have anyhad $153.5 million of secured debt scheduled to mature in 2020 or 2021,2022, excluding scheduled monthly principal payments. We believe we have sufficient liquidity to repay this obligation from cash on hand and short-term deposits.
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 term and the long term. Our short-term liquidity needs consist primarily of funds necessary to pay operating expenses associated with our operating properties, scheduled interest expensepayments of approximately $115 million in 2022 and scheduled principal payments on our debt of approximately $3.7 million in 2022, expected dividend payments to our common shareholders and to Common Unit holders, and recurring capital expenditures.
In February 2020,2022, our Board of Trustees declared a cash distribution of $0.3175$0.20 per common share and Common Unit for the first quarter of 2020.2022. This distribution is expected to be paid on or about April 3, 202015, 2022 to common shareholders and Common Unit holders of record as of March 27, 2020.
April 8, 2022. 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.
Other short-term liquidity needs also include expenditures for tenant improvements, renovation costs, external leasing commissions and recurring capital expenditures. During the year ended December 31, 2019,2021, we incurred $4.3$3.8 million of costs for recurring capital expenditures on operating properties, $10.3$14.7 million of costs for tenant improvements and external leasing commissions, and $14.3$9.7 million to re-lease anchor space at our operating properties related to tenants open and operating as of December 31, 20192021 (excluding development and redevelopment properties)projects). We currently anticipate incurring approximately $14 million to $20$100 million of additional major tenant improvements and $14 million to $18 millionimprovement costs related to releasingexecuted leases for currently vacant anchor space at a number of our operating properties.
As of December 31, 2019,2021, we had oneeight development projectprojects under construction, at our Eddy Street Commons property acrossincluding five projects assumed in the street from the University of Notre Dame in South Bend, Indiana.Merger with RPAI. Total estimated costs for this project, Eddy Street Commons - Phase II,these projects are $90.8$185.6 million, of which our share is estimated to be $121.7 million. This estimate consistsAs of our projected costsDecember 31, 2021, we have incurred $16.6 million of $10.0 million, tax increment financing of $16.1 million, and construction costs of $64.7 million for residential apartments and townhomes costs that we expect will be covered by an unrelated third party under a ground sublease that is currently being negotiated. We have provided a completion guaranty to the South Bend Redevelopment Commission and the South Bend Economic Development Commission on the construction of the entire project.these costs. We anticipate incurring the majority of the remaining costs for the projectthese projects over the next 12 months. We24 months and believe we have the ability to fund this projectthese projects through cash flow from operations. operations or by borrowing on the Revolving Facility.
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Share Repurchase Plan
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, and payment of indebtedness at maturity.
obligations under ground leases.
Selective Acquisitions, Developments and Joint Ventures. We may selectively pursue the acquisition, development and developmentredevelopment 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, requiring usrequirements. 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 in the market.space. Our ability to access the capital markets will be dependent 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.
Capital Expenditures on Consolidated Properties
The following table summarizes cash capital expenditures for our development and redevelopment propertiesprojects and other capital expenditures for the year ended December 31, 2019:2021:
| Year Ended | |||
| ($ in thousands) | December 31, 2019 | ||
| Developments | $ | 1,445 | |
| Redevelopment Opportunities | 1,021 | ||
| Recently completed redevelopments and other | 13,755 | ||
| Big Box Surge activity | 24,197 | ||
| Recurring operating capital expenditures (primarily tenant improvement payments) | 12,860 | ||
| Total | $ | 53,278 | |
| ($ in thousands) | Year Ended December 31, 2021 | ||||
| Active development and redevelopment projects | $ | 22,546 | |||
| Redevelopment opportunities | 10 | ||||
| Recently completed projects and other | 13,686 | ||||
| Anchor re-tenanting | 9,662 | ||||
| Recurring operating capital expenditures (primarily tenant improvements) | 11,409 | ||||
| Total | $ | 57,313 | |||
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, 2019.
Impact of Changes in Credit Ratings on Our Liquidity
We have been assignedpreviously received investment grade corporate credit ratings from two nationally recognized credit rating agencies. Theseagencies and these ratings were unchanged during 2019.2021. We were assigned an investment grade corporate credit rating from a third nationally recognized rating agency in October 2021.
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In the future, thethese ratings could change based upon, among other things, the impact that prevailing economic conditions may have on our results of operations and financial condition.condition, including as a result of the impact of the COVID-19 pandemic. 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, 2019,2021, we had cash, and cash equivalents on handand restricted cash of $31.3$100.4 million. We may be subject to concentrations of credit risk with regard to our cash and cash equivalents. We place our cash and short-term cash 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 FDIC and 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, 20192021 to the Year Ended December 31, 2018
2020
Cash provided by operating activities was $138.0$100.4 million for the year ended December 31, 2019, a decrease2021, an increase of $16.4$4.8 million from the same period of 2018.2020. The decreasecash flows were positively impacted by the completion of the Merger, which generated incremental operating income, along with improved collection activity including previously deferred rent from the COVID-19 pandemic. This improvement was primarily due to a decrease in cash provided by operating activities due to our significant property sale activity partially offset by improvementcosts paid as part of the Merger along with higher interest costs related to the debt assumed in anchor and shop occupancy.
the Merger.
Cash provided byused in investing activities was $416.6$91.0 million for the year ended December 31, 2019, as compared to cash provided by investing activities of $148.32021, and $80.8 million in the same period of 2018. The major changes2020. Highlights of significant cash sources and uses in cash provided by investing activities are as follows:
•Cash acquired in the Merger with RPAI in 2021 of $15.0 million;
•Net proceeds of $529.4$80.7 million related to the sale of twenty-three assetsone operating property and 17 ground leases in 20192021 and other land parcels compared to salenet proceeds of $208.4$23.0 million fromrelated to the sale of six assetsone redevelopment property and five parcels of land in 2018 for net proceeds of $119 million and the sale of an 80% interest in three core assets for net proceeds of $89 million;2020;
•Acquisition of a multi-tenant retail outparcel at Nora Plaza in 2021 and Pan Am Plaza Garageacquisition deposits for $10.4 million compared to the acquisition of Eastgate Crossing in 20192020 for $58.2$65.3 million;
•Investment in a short-term interest-bearing deposit of $125.0 million using the proceeds from the March 2021 Exchangeable Notes; and
Cash used inprovided by financing activities was $547.2$44.5 million for the year ended December 31, 2019, compared to2021, and cash used in financing activities of $289.4was $20.9 million in the same period of 2018.2020. Highlights of significant cash sources and uses in financing activities during 2019 are as follows:
•In March 2021, we issued $175.0 million of Exchangeable Notes in a private placement offering to proactively fund our 2022 debt maturities. In connection with this issuance, we incurred transaction costs of $6.0 million and purchased capped calls for $9.8 million;
•In 2021, we paid down debt by $77.6 million using a portion of the proceeds from the sale of operating properties to pay down $395.5 million of secured17 ground leases and unsecured debt;the Exchangeable Notes;
•In March 2020, we borrowed $300.0 million on our $600.0 million unsecured revolving line of credit as a precautionary measure to increase our cash position and preserve financial flexibility in light of uncertainty in the global markets resulting from the COVID-19 pandemic. During the remainder of 2020, we repaid the $300.0 million borrowing on the unsecured revolving line of credit as we became incrementally more confident in the recovery from the COVID-19 pandemic; and
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•In December 2020, we borrowed $25.0 million on the $600.0 million unsecured revolving line of credit to fund a portion of the purchase price of Eastgate Crossing, which was repaid in February 2021.
Management’s discussion of the cash flows for the year ended December 31, 2017,2019, with comparison to the year ended December 31, 2018,2020, was included in Item 7, "Management’s“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2018.
Other Matters
Financial Instruments
We are exposed to capital market risk, such as changes in interest rates. In order to reduce the volatility relating to interest rate risk, we may enter into interest rate hedging arrangements from time to time. We do not utilizeuse derivative financial instruments for trading or speculative purposes.
| ($ in thousands) | Consolidated Long-term Debt and Interest1 | Development Activity and Tenant Allowances2 | Operating Ground Leases | Employment Contracts3 | Total | |||||||||||||||
| 2020 | $ | 50,122 | $ | 8,927 | $ | 1,777 | $ | 1,263 | $ | 62,089 | ||||||||||
| 2021 | 50,093 | — | 1,789 | 375 | 52,257 | |||||||||||||||
| 2022 | 223,743 | — | 1,815 | — | 225,558 | |||||||||||||||
| 2023 | 310,147 | — | 1,636 | — | 311,783 | |||||||||||||||
| 2024 | 29,609 | — | 1,600 | — | 31,209 | |||||||||||||||
| Thereafter | 751,997 | — | 70,554 | — | 822,551 | |||||||||||||||
| Total | $ | 1,415,711 | $ | 8,927 | $ | 79,171 | $ | 1,638 | $ | 1,505,447 | ||||||||||
Obligations in Connection with Projects Under Construction
We are obligated under various completion guarantees with lenders and tenants to complete all or portions of a development project and tenant-specific spacescurrentlyspaces currently under construction. We believe we currently have sufficient financing in place to fund our investment in any existing or future projects through cash from operations or borrowings on our unsecured revolving credit facility.
In addition, we have provided a repayment guaranty on a $33.8 million construction loan with the development of Embassy Suites at the University of Notre DameEddy Street Commons consistent with our 35% ownership interest. As of December 31, 2019,2021, the current outstanding loan balance is $33.6 million, of which our share is $11.8 million.
Our share of estimated future costs for under construction and future developments and redevelopments is further discussed on page 5844 in the "Short“Short- and Long-Term Liquidity Needs"Needs” section.
Outstanding Indebtedness
The following table presents details of outstanding consolidated indebtedness as of December 31, 20192021 and 20182020, adjusted for hedges:
| ($ in thousands) | December 31, 2021 | December 31, 2020 | |||||||||
| Senior unsecured notes | $ | 1,749,635 | $ | 550,000 | |||||||
| Exchangeable senior notes – fixed rate | 175,000 | — | |||||||||
| Unsecured revolving credit facility | 55,000 | 25,000 | |||||||||
| Unsecured term loans | 720,000 | 250,000 | |||||||||
| Mortgage notes payable – fixed rate | 363,577 | 295,966 | |||||||||
| Mortgage notes payable – variable rate | 29,013 | 55,110 | |||||||||
| Debt discounts, premiums and issuance costs, net | 58,583 | (5,282) | |||||||||
| Total mortgage and other indebtedness, net | $ | 3,150,808 | $ | 1,170,794 | |||||||
| ($ in thousands) | December 31, 2019 | December 31, 2018 | ||||||
| Senior unsecured notes | $ | 550,000 | $ | 550,000 | ||||
| Unsecured revolving credit facility | — | 45,600 | ||||||
| Unsecured term loans | 250,000 | 345,000 | ||||||
| Mortgage notes payable - fixed rate | 297,472 | 534,679 | ||||||
| Mortgage notes payable - variable rate | 55,830 | 73,491 | ||||||
| Net debt premiums and issuance costs, net | (6,722 | ) | (5,469 | ) | ||||
| Total mortgage and other indebtedness | $ | 1,146,580 | $ | 1,543,301 | ||||
Consolidated indebtedness, including weighted average maturities and weighted average interest rates at December 31, 2019,2021, is summarized below:
| ($ in thousands) | Outstanding Amount | Ratio | Weighted Average Interest Rate | Weighted Average Maturity (in years) | ||||||||
Fixed rate debt1 | $ | 1,113,672 | 97 | % | 3.94 | % | 5.7 | |||||
| Variable rate debt | 39,630 | 3 | % | 3.68 | % | 7.6 | ||||||
| Net debt premiums and issuance costs, net | (6,722 | ) | N/A | N/A | N/A | |||||||
| Total | $ | 1,146,580 | 100 | % | 3.93 | % | 5.8 | |||||
| ($ in thousands) | Amount Outstanding | Ratio | Weighted Average Interest Rate | Weighted Average Maturity (in years) | |||||||||||||||||||
Fixed rate debt1 | $ | 2,853,212 | 92 | % | 4.00 | % | 4.6 | ||||||||||||||||
Variable rate debt2 | 239,013 | 8 | % | 3.01 | % | 4.2 | |||||||||||||||||
| Debt discounts, premiums and issuance costs, net | 58,583 | N/A | N/A | N/A | |||||||||||||||||||
| Total consolidated debt | $ | 3,150,808 | 100 | % | 3.92 | % | 4.6 | ||||||||||||||||
| Fixed rate debt includes | ||||||||||||||
| 2 | Variable rate debt includes the portion of fixed rate debt that has been hedged by interest rate swaps. As of December 31, 2021, $155.0 million in fixed rate debt is hedged to a floating rate for a weighted average of 3.7 years. | |||||||||||||
Mortgage indebtedness is collateralized by certain real estate properties and leases. Mortgage indebtednessleases and is generally repaid in monthly installments of interest and principal and matureswith maturities over various terms through 2030.2032.
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Variable interest rates on mortgage indebtedness is based on LIBOR plus 160 basis points. At December 31, 2019,2021, the one-month LIBOR interest rate was 1.76%0.10%. Fixed interest rates on mortgage loansmortgages payable range from 3.78%3.75% to 5.73%.
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 accounting 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.
Acquisition of Real Estate Investments
In accordance with ASC 805, Business Combinations, we accounted for the Merger as a business combination using the acquisition method of accounting, which requires the application of a screen test to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets to determine whether a transaction is accounted for as an asset acquisition or business combination.
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 values, a number of sources are utilized, 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 utilize 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 utilize 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 instrument.
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.
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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 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 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.
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 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.
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. 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 risk of tenant defaults and bankruptcies that may affect the collection of outstanding receivables. These receivables are reduced for credit loss, which 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, tenant credit-worthiness and current economic trends when evaluating the collectibility of 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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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.
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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 variable-rate unsecured credit facilityRevolving Facility and unsecured term loans and other property-specific variable-rate mortgages. Our objectives with respect to interest rate risk are to limitbalance the potential impact of interest rate changes on operations and cash flows andagainst our desire to lower itsour overall borrowing costs. To achieve these objectives, we may borrow at fixed or variable rates and may enter into derivative financial instruments such as interest rate swaps, hedges, etc., in order to mitigate itsthe interest rate risk on a related variable-rate financial instrument.risk. As a matter of policy, we do not utilizeuse financial instruments for trading or speculative transactions.
We had $1.1$3.2 billion of outstanding consolidated indebtedness as of December 31, 20192021 (inclusive of net unamortized net debt discounts, premiums and issuance costs of $6.7$58.6 million). As of December 31, 2019,2021, we were party to various consolidated interest rate hedge agreements totaling $266.2$875.0 million with maturities over various terms through 2025.2026. Reflecting the effects of these hedge agreements, our fixed and variable rate debt would have been $1.1$2.9 billion (97%(92%) and $39.6$239.0 million (3%(8%), respectively, of our total consolidated indebtedness at December 31, 2019. 2021.
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'sCompany’s Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective.
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'sCompany’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'sCompany’s management has concluded that its internal control over financial reporting was effective as of December 31, 2019. 2021.
The SEC permits companies to exclude certain acquisitions from their assessments of internal control over financial reporting during the first year of an acquisition while integrating the acquired company. Accordingly, due to the fourth quarter closing date of the Merger, management’s assessment of the effectiveness of the Parent Company’s internal control over financial reporting excluded the operations of the RPAI portfolio, which was acquired by the Parent Company, through the Operating Partnership, on October 22, 2021. On that date, RPAI and its related entities became wholly owned subsidiaries of the Parent Company with total assets of $5.0 billion and total revenues of $94.9 million included in the Parent Company’s consolidated financial statements as of and for the year ended December 31, 2021.
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The Parent Company'sCompany’s independent auditors, Ernst & YoungKPMG 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.
There was no change to the Parent Company’s internal control over financial reporting during the fourth quarter ended December 31, 2021 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.
The Parent Company'sCompany’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'sPartnership’s Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective.
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'sPartnership’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'sPartnership’s management has concluded that its internal control over financial reporting was effective as of December 31, 2019. 2021.
The SEC permits companies to exclude certain acquisitions from their assessments of internal control over financial reporting during the first year of an acquisition while integrating the acquired company. Accordingly, due to the fourth quarter closing date of the Merger, management’s assessment of the effectiveness of the Operating Partnership’s internal control over financial reporting excluded the operations of the RPAI portfolio, which was acquired by the Operating Partnership on October 22, 2021. On that date, RPAI and its related entities became wholly owned subsidiaries of the Operating Partnership with total assets of $5.0 billion and total revenues of $94.9 million included in the Operating Partnership’s consolidated financial statements as of and for the year ended December 31, 2021.
The Operating Partnership'sPartnership’s independent auditors, Ernst & YoungKPMG 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.
There was no change to the Operating Partnership’s internal control over financial reporting during the fourth quarter ended December 31, 2021 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.
The Operating Partnership'sPartnership’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.
52
Opinion on Internal Control overOver Financial Reporting
We have audited Kite Realty Group Trust’sTrust and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2019,2021, based on criteria established in Internal Control -– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (the COSO criteria).Commission. In our opinion, Kite Realty Group Trust (the Company)the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019,2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the COSO criteria.
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, 20192021 and 2018,2020, the related consolidated statements of operations and comprehensive income, shareholders’ equity, and cash flows for each of the three years in the periodthen ended, December 31, 2019, and the related notes and financial statement schedule listed inIII – Consolidated Real Estate and Accumulated Depreciation (collectively, the Index at Item 15(a)consolidated financial statements), and our report dated February 20, 2020,28, 2022 expressed an unqualified opinion thereon.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’sManagement 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, andrisk. 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.
53
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/ Ernst & YoungKPMG LLP
Indianapolis, Indiana
February 20, 202028, 2022
54
Opinion on Internal Control overOver Financial Reporting
We have audited Kite Realty Group, L.P. and subsidiaries’ (the Partnership) internal control over financial reporting as of December 31, 2019,2021, based on criteria established in Internal Control -– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (the COSO criteria).Commission. In our opinion, Kite Realty Group, L.P and subsidiaries (the Partnership)the Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019,2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the COSO criteria.
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, 20192021 and 2018,2020, the related consolidated statements of operations and comprehensive income, partners’partner’s equity, and cash flows for each of the three years in the periodthen ended, December 31, 2019, and the related notes and financial statement schedule listed inIII – Consolidated Real Estate and Accumulated Depreciation (collectively, the Index at Item 15(a)consolidated financial statements), and our report dated February 20, 202028, 2022 expressed an unqualified opinion thereon.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’sManagement 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, andrisk. 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.
55
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/ Ernst & YoungKPMG LLP
Indianapolis, Indiana
February 20, 202028, 2022
56
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III
ITEM 10. INFORMATION ABOUT OURDIRECTORS, EXECUTIVE OFFICERS
AND CORPORATE GOVERNANCE
The information required by this Item is hereby incorporated by reference to the material appearing in our 20202022 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 SCHEDULE
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 | Filed herewith | |||||||||||||
| 3.2 | Filed herewith | |||||||||||||
| 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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| 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 | Filed herewith | |||||||||||||
| 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 10.8 to the Quarterly Report on Form 10-Q of Kite Realty Group Trust filed with the SEC on November 10, 2014 | |||||||||||||
| 10.11 | Incorporated by reference to Exhibit 10.11 to the Annual Report on Form 10-K of Kite Realty Group Trust filed with the SEC on February 22, 2021 | |||||||||||||
| 10.12 | 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 | |||||||||||||
| 10.13 | 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 | |||||||||||||
| 10.14 | Incorporated by reference to Exhibit 10.13 to the Annual Report on Form 10-K of Kite Realty Group Trust filed with the SEC on February 27, 2015 | |||||||||||||
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| 10.15 | 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 | |||||||||||||
| 10.16 | 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 | |||||||||||||
| 10.17 | 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 | |||||||||||||
| 10.18 | 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 | |||||||||||||
| 10.19 | 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 | |||||||||||||
| 10.20 | 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 | |||||||||||||
| 10.21 | 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 | |||||||||||||
| 10.22 | 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 | |||||||||||||
| 10.23 | 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 | |||||||||||||
| 10.24 | 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 | |||||||||||||
| 10.25 | 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 | |||||||||||||
| 10.26 | 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 | |||||||||||||
| 10.27 | 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 | |||||||||||||
| 10.28 | 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 | |||||||||||||
| 10.29 | 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 May 12, 2008 | |||||||||||||
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| 10.30 | 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 | |||||||||||||
| 10.31 | 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 | |||||||||||||
| 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 March 22, 2021 | |||||||||||||
| 10.33 | 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 | |||||||||||||
| 10.34 | 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 | |||||||||||||
| 10.35 | 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 February 3, 2016 | |||||||||||||
| 10.36 | 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 | |||||||||||||
| 10.37 | 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 | |||||||||||||
| 10.38 | 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 | |||||||||||||
| 10.39 | 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 | |||||||||||||
| 10.40 | 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 | |||||||||||||
| 10.41 | 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 | |||||||||||||
| 10.42 | 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 | |||||||||||||
| 10.43 | 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 | |||||||||||||
| 10.44 | 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 | |||||||||||||
62
| 10.45 | 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 4, 2012 | |||||||||||||
| 10.46 | 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 March 4, 2013 | |||||||||||||
| 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 August 27, 2013 | |||||||||||||
| 10.48 | 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 May 4, 2012 | |||||||||||||
| 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 26, 2018 | |||||||||||||
| 10.50 | 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 | |||||||||||||
| 10.51 | 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 | |||||||||||||
| 10.52 | 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. | |||||||||||||
| 10.53 | 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 | |||||||||||||
| 10.54 | 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 | |||||||||||||
| 10.55 | 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 | |||||||||||||
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| 10.56 | 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 | |||||||||||||
| 10.57 | 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 | |||||||||||||
| 10.58 | 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 | |||||||||||||
| 10.59 | Incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on October 22, 2021 | |||||||||||||
| 10.60 | 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 | |||||||||||||
| 10.61 | 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 | |||||||||||||
| 10.62 | 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 | |||||||||||||
| 10.63 | 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 | |||||||||||||
| 10.64 | 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 | |||||||||||||
| 10.65 | 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 | |||||||||||||
| 10.66 | 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 | |||||||||||||
| 10.67 | 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 | |||||||||||||
| 10.68 | 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 | |||||||||||||
| 10.69 | 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 | |||||||||||||
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| 10.70 | 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 | |||||||||||||
| 10.71 | 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 | |||||||||||||
| 10.72 | 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 | |||||||||||||
| 10.73 | Incorporated by reference to Exhibit 10.14 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on October 22, 2021 | |||||||||||||
| 10.74 | 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 | |||||||||||||
| 23.3 | Filed herewith | |||||||||||||
| 23.4 | 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 | ||||||||||||
65
| 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.
66
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant hasRegistrants 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 28, 2022 | Chairman and Chief Executive Officer | ||||||||||||
| (Principal Executive Officer) | ||||||||||||||
| /s/ HEATH R. FEAR | ||||||||||||||
| Heath R. Fear | ||||||||||||||
| Date: | February 28, 2022 | |||||||||||||
| 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 28, 2022 | |||||||||||||
| Chairman and Chief Executive Officer | ||||||||||||||
| (Principal Executive Officer) | ||||||||||||||
| /s/ HEATH R. FEAR | ||||||||||||||
| Heath R. Fear | ||||||||||||||
| Date: | February 28, 2022 | |||||||||||||
| 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.
67
| Signature | Title | Date | ||||||||||||
| /s/ JOHN A. KITE | Chairman, Chief Executive Officer, and Trustee (Principal Executive Officer) | February 28, 2022 | ||||||||||||
| (John A. Kite) | ||||||||||||||
| /s/ WILLIAM E. BINDLEY | Trustee | February 28, 2022 | ||||||||||||
| (William E. Bindley) | ||||||||||||||
| /s/ BONNIE S. BIUMI | Trustee | February 28, 2022 | ||||||||||||
| (Bonnie S. Biumi) | ||||||||||||||
| (Derrick Burks) | ||||||||||||||
| Trustee | February 28, 2022 | |||||||||||||
| (Victor J. Coleman) | ||||||||||||||
| /s/ | Trustee | February | ||||||||||||
| (Gerald M. Gorski) | ||||||||||||||
| /s/ STEVEN P. GRIMES | Trustee | February 28, 2022 | ||||||||||||
| (Steven P. Grimes) | ||||||||||||||
| /s/ CHRISTIE B. KELLY | Trustee | February 28, 2022 | ||||||||||||
| (Christie B. Kelly) | ||||||||||||||
| /s/ | Trustee | February | ||||||||||||
| (Peter L. Lynch) | ||||||||||||||
| /s/ DAVID R. O’REILLY | Trustee | February 28, 2022 | ||||||||||||
| (David R. O’Reilly) | ||||||||||||||
| /s/ | Trustee | February | ||||||||||||
| (Barton R. Peterson) | ||||||||||||||
| /s/ | Trustee | February | ||||||||||||
| (Charles H. Wurtzebach) | ||||||||||||||
| /s/ | Trustee | February 28, 2022 | ||||||||||||
| (Caroline L. Young) | ||||||||||||||
| /s/ HEATH R. | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | February | ||||||||||||
| (Heath R. Fear) | ||||||||||||||
| /s/ | Senior Vice President, Chief Accounting Officer | February | ||||||||||||
| (David E. Buell) | ||||||||||||||
INDEX TO FINANCIAL STATEMENTS
| Page | |||||||||
| Consolidated Financial Statements: | |||||||||
| Kite Realty Group Trust: | |||||||||
| F-1 | |||||||||
| Kite Realty Group, L.P. and subsidiaries | |||||||||
Reports of Independent Registered Public Accounting Firms (PCAOB ID Nos. 238 and 42) | F-3 | ||||||||
| 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 inapplicable and therefore have been omitted. | |||||||||
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, 20192021 and 2018,2020, the related consolidated statements of operations and comprehensive income, shareholders’ equity, and cash flows for each of the three years in the periodthen ended, December 31, 2019, and the related notes and financial statement schedule listed inIII – Consolidated Real Estate and Accumulated Depreciation (collectively, the Index at Item 15(a) (collectively referred to as the “consolidatedconsolidated financial statements”)statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company atas of December 31, 20192021 and 2018,2020, and the results of its operations and its cash flows for each of the three years in the two-year period ended December 31, 2019,2021, in conformity with U.S. generally accepted accounting principles.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, 2019,2021, based on criteria established in Internal Control-IntegratedControl – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, (2013 Framework) and our report dated February 20, 202028, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’sthese 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 MatterMatters
The critical audit mattermatters communicated below is a matterare matters arising from the current period audit of the consolidated financial statements that waswere communicated or required to be communicated to the audit committee and that: (1) relatesrelate 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 the critical audit mattermatters 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 mattermatters below, providing a separate opinionopinions on the critical audit mattermatters or on the accounts or disclosures to which it relates.they relate.
As discussed in Note 2 to the consolidated financial statements, land, buildings, and improvements, net was $7,543,376 thousand as of December 31, 2021. 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.
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 allocate the purchase price to the acquired assets and liabilities. This included controls related to the selection and review of the above noted inputs. We assessed the Company’s forecasts of individual property net operating income by comparing projected amounts to the Company’s budgets. We evaluated the Company’s ability to prepare accurate budgets by comparing previous budgets of net operating income for the Company’s individual properties to actual results. We involved valuation professionals with specialized skills and knowledge who assisted in:
•for a selection of properties, evaluating the Company’s estimates of fair values of land by comparing the recorded values to comparable land sales using publicly available market data
•for a selection of buildings, comparing the Company’s capitalization rates to available market information and industry research publications
•for a sample of lease intangible assets and liabilities, comparing market rental rates and discount rates used by the Company to available market information and industry research publications.
/s/ Ernst & YoungKPMG LLP
We have served as the Company’s auditor since 2004.2020.
Indianapolis, Indiana
February 20, 202028, 2022
F-2
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, 20192021 and 2018,2020, the related consolidated statements of operations and comprehensive income, partner’s equity, and cash flows for each of the three years in the periodthen ended, December 31, 2019, and the related notes and financial statement schedule listed inIII – Consolidated Real Estate and Accumulated Depreciation (collectively, the Index at Item 15(a) (collectively referred to as the “consolidatedconsolidated financial statements”)statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership atas of December 31, 20192021 and 2018,2020, and the results of its operations and its cash flows for each of the three years in the two-year period ended December 31, 2019,2021, in conformity with U.S. generally accepted accounting principles.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, 2019,2021, based on criteria established in Internal Control -– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, (2013 Framework) and our report dated February 20, 202028, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
These consolidated financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on the Partnership’sthese 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 Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate 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 critical audit matters 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Evaluation of investment properties for potential impairment
As discussed in Note 2 to the consolidated financial statements, land, buildings, and improvements, net was $7,543,376 thousand as of December 31, 2021. 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.
Valuation of assets and liabilities acquired in the Retail Properties of America, Inc. acquisition
As discussed in Note 3 to the consolidated financial statements, on October 22, 2021, the Partnership completed a merger with Retail Properties of America, Inc. (“RPAI”) in a transaction accounted for as a business combination for consideration of approximately $2.8 billion. The consideration paid was allocated to the acquired assets and liabilities of each property based on their estimated fair values.
We identified the evaluation of the estimated fair values of land, buildings, and above and below market lease intangible assets and liabilities acquired in the RPAI acquisition as a critical audit matter. Subjective auditor judgment was required to evaluate the Partnership’s land valuations and certain inputs used in the Partnership’s determination of the estimated fair values of certain other assets and liabilities, specifically forecasted individual property net operating income and capitalization rates that were used as inputs to the building valuations, and market rental rates and discount rates that were used as inputs to the valuation of the above and below market lease intangible assets and liabilities.
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 allocate the purchase price to the acquired assets and liabilities. This included controls related to the selection and review of the above noted inputs. We assessed the Partnership’s forecasts of individual property net operating income by comparing projected amounts to the Partnership’s budgets. We evaluated the Partnership’s ability to prepare accurate budgets by comparing previous budgets of net operating income for the Partnership’s individual properties to actual results. We involved valuation professionals with specialized skills and knowledge who assisted in:
•for a selection of properties, evaluating the Partnership’s estimates of fair values of land by comparing the recorded values to comparable land sales using publicly available market data
•for a selection of buildings, comparing the Partnership’s capitalization rates to available market information and industry research publications
•for a sample of lease intangible assets and liabilities, comparing market rental rates and discount rates used by the Partnership to available market information and industry research publications.
/s/ KPMG LLP
We have served as the Partnership’s auditor since 2020.
Indianapolis, Indiana
February 28, 2022
F-4
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Shareholders and Board of Trustees of Kite Realty Group Trust:
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of operations and comprehensive income, shareholders’ equity and cash flows of Kite Realty Group Trust (the Company) for the year ended December 31, 2019, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations of the Company and its cash flows for the year ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.
Adoption of ASU No. 2016-02
As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases in 2019 due to the adoption of Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), and the related amendments.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements 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 auditsaudit 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 financial statements are free of material misstatement, whether due to error or fraud. Our auditsaudit included performing procedures to assess the risks of material misstatement of the 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 financial statements. Our auditsaudit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provideaudit provides a reasonable basis for our opinion.
February 20, 2020
F-5
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Partners of Kite Realty Group, L.P. and subsidiaries and the Board of Trustees of Kite Realty Group Trust:
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of operations and comprehensive income, partner’s equity and cash flows of Kite Realty Group, L.P. and subsidiaries (the Partnership) for the year ended December 31, 2019, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations of the Partnership and its cash flows for the year ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.
Adoption of ASU No. 2016-02
As discussed in Note 2 to the consolidated financial statements, the Partnership changed its method of accounting for leases in 2019 due to the adoption of Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), and the related amendments.
Basis for Opinion
These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on the Partnership’s financial statements 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 the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the 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 financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We have served as the Partnership’s auditor since 2015.from 2015 to 2020.
Indianapolis, Indiana
February 20, 2020
F-6
Consolidated Balance Sheets
($ in thousands, except share data)
| December 31, 2019 | December 31, 2018 | December 31, 2021 | December 31, 2020 | |||||||||||||||
| Assets: | Assets: | |||||||||||||||||
| Investment properties at cost: | $ | 3,087,391 | $ | 3,641,120 | Investment properties at cost: | $ | 7,592,348 | $ | 3,143,961 | |||||||||
| Less: accumulated depreciation | (666,952 | ) | (699,927 | ) | Less: accumulated depreciation | (884,809) | (755,100) | |||||||||||
| 2,420,439 | 2,941,193 | |||||||||||||||||
| Net investment properties | Net investment properties | 6,707,539 | 2,388,861 | |||||||||||||||
| Cash and cash equivalents | 31,336 | 35,376 | Cash and cash equivalents | 93,241 | 43,648 | |||||||||||||
| Tenant and other receivables, including accrued straight-line rent of $27,256 and $31,347, respectively | 55,286 | 58,059 | ||||||||||||||||
Tenant and other receivables, including accrued straight-line rent of $28,071 and $24,783, respectively | Tenant and other receivables, including accrued straight-line rent of $28,071 and $24,783, respectively | 68,444 | 57,154 | |||||||||||||||
| Restricted cash and escrow deposits | 21,477 | 10,130 | Restricted cash and escrow deposits | 7,122 | 2,938 | |||||||||||||
| Deferred costs, net | 73,157 | 95,264 | Deferred costs, net | 541,518 | 63,171 | |||||||||||||
| Short-term deposits | Short-term deposits | 125,000 | — | |||||||||||||||
| Prepaid and other assets | 34,548 | 12,764 | Prepaid and other assets | 84,826 | 39,975 | |||||||||||||
| Investments in unconsolidated subsidiaries | 12,644 | 13,496 | Investments in unconsolidated subsidiaries | 11,885 | 12,792 | |||||||||||||
| Assets held for sale | — | 5,731 | ||||||||||||||||
| Total Assets | $ | 2,648,887 | $ | 3,172,013 | ||||||||||||||
| Total assets | Total assets | $ | 7,639,575 | $ | 2,608,539 | |||||||||||||
| Liabilities and Shareholders' Equity: | Liabilities and Shareholders' Equity: | |||||||||||||||||
| Mortgage and other indebtedness, net | $ | 1,146,580 | $ | 1,543,301 | Mortgage and other indebtedness, net | $ | 3,150,808 | $ | 1,170,794 | |||||||||
| Accounts payable and accrued expenses | 69,817 | 85,934 | Accounts payable and accrued expenses | 184,982 | 77,469 | |||||||||||||
| Deferred revenue and other liabilities | 90,180 | 83,632 | Deferred revenue and other liabilities | 321,419 | 85,649 | |||||||||||||
| Total Liabilities | 1,306,577 | 1,712,867 | ||||||||||||||||
| Total liabilities | Total liabilities | 3,657,209 | 1,333,912 | |||||||||||||||
| Commitments and contingencies | Commitments and contingencies | 0 | 0 | |||||||||||||||
| Limited Partners' interests in Operating Partnership and other | 52,574 | 45,743 | ||||||||||||||||
| Limited Partners’ interests in Operating Partnership and other | Limited Partners’ interests in Operating Partnership and other | 55,173 | 43,275 | |||||||||||||||
| Equity: | Equity: | |||||||||||||||||
| Kite Realty Group Trust Shareholders' Equity: | ||||||||||||||||||
| Common Shares, $.01 par value, 225,000,000 shares authorized, 83,963,369 and 83,800,886 shares issued and outstanding at December 31, 2019 and December 31, 2018, respectively | 840 | 838 | ||||||||||||||||
| Additional paid in capital | 2,074,436 | 2,078,099 | ||||||||||||||||
| Kite Realty Group Trust Shareholders’ Equity: | Kite Realty Group Trust Shareholders’ Equity: | |||||||||||||||||
Common Shares, $0.01 par value, 490,000,000 and 225,000,000 shares authorized, 218,949,569 and 84,187,999 shares issued and outstanding at December 31, 2021 and 2020, respectively | Common Shares, $0.01 par value, 490,000,000 and 225,000,000 shares authorized, 218,949,569 and 84,187,999 shares issued and outstanding at December 31, 2021 and 2020, respectively | 2,189 | 842 | |||||||||||||||
| Additional paid-in capital | Additional paid-in capital | 4,898,673 | 2,085,003 | |||||||||||||||
| Accumulated other comprehensive loss | (16,283 | ) | (3,497 | ) | Accumulated other comprehensive loss | (15,902) | (30,885) | |||||||||||
| Accumulated deficit | (769,955 | ) | (662,735 | ) | Accumulated deficit | (962,913) | (824,306) | |||||||||||
| Total Kite Realty Group Trust Shareholders' Equity | 1,289,038 | 1,412,705 | ||||||||||||||||
| Noncontrolling Interest | 698 | 698 | ||||||||||||||||
| Total Equity | 1,289,736 | 1,413,403 | ||||||||||||||||
| Total Liabilities and Shareholders' Equity | $ | 2,648,887 | $ | 3,172,013 | ||||||||||||||
| Total Kite Realty Group Trust shareholders’ equity | Total Kite Realty Group Trust shareholders’ equity | 3,922,047 | 1,230,654 | |||||||||||||||
| Noncontrolling interests | Noncontrolling interests | 5,146 | 698 | |||||||||||||||
| Total equity | Total equity | 3,927,193 | 1,231,352 | |||||||||||||||
| Total liabilities and shareholders’ equity | Total liabilities and shareholders’ equity | $ | 7,639,575 | $ | 2,608,539 | |||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Operations and Comprehensive Income
($ in thousands, except share and per share data)
| Year Ended December 31, | |||||||||||
| 2019 | 2018 | 2017 | |||||||||
| Revenue: | |||||||||||
| Rental income | $ | 308,399 | $ | 338,523 | $ | 346,444 | |||||
| Other property related revenue | 6,326 | 13,138 | 11,998 | ||||||||
| Fee income | 448 | 2,523 | 377 | ||||||||
| Total revenue | 315,173 | 354,184 | 358,819 | ||||||||
| Expenses: | |||||||||||
| Property operating | 45,575 | 50,356 | 49,643 | ||||||||
| Real estate taxes | 38,777 | 42,378 | 43,180 | ||||||||
| General, administrative, and other | 28,214 | 21,320 | 21,749 | ||||||||
| Depreciation and amortization | 132,098 | 152,163 | 172,091 | ||||||||
| Impairment charges | 37,723 | 70,360 | 7,411 | ||||||||
| Total expenses | 282,387 | 336,577 | 294,074 | ||||||||
| Gains on sale of operating properties, net | 38,971 | 3,424 | 15,160 | ||||||||
| Operating income | 71,757 | 21,031 | 79,905 | ||||||||
| Interest expense | (59,268 | ) | (66,785 | ) | (65,702 | ) | |||||
| Income tax benefit of taxable REIT subsidiary | 282 | 227 | 100 | ||||||||
| Loss on debt extinguishment | (11,572 | ) | — | ||||||||
| Equity in loss of unconsolidated subsidiary | (628 | ) | (278 | ) | — | ||||||
| Other expense, net | (573 | ) | (646 | ) | (415 | ) | |||||
| Consolidated net (loss) income | (2 | ) | (46,451 | ) | 13,888 | ||||||
| Net income attributable to noncontrolling interests | (532 | ) | (116 | ) | (2,014 | ) | |||||
| Net (loss) income attributable to Kite Realty Group Trust | (534 | ) | (46,567 | ) | 11,874 | ||||||
| Net (loss) income per common share – basic | $ | (0.01 | ) | $ | (0.56 | ) | $ | 0.14 | |||
| Net (loss) income per common share – diluted | $ | (0.01 | ) | $ | (0.56 | ) | $ | 0.14 | |||
| Weighted average common shares outstanding - basic | 83,926,296 | 83,693,385 | 83,585,333 | ||||||||
| Weighted average common shares outstanding - diluted | 83,926,296 | 83,693,385 | 83,690,418 | ||||||||
| Dividends declared per common share | $ | 1.270 | $ | 1.270 | $ | 1.225 | |||||
| Consolidated net (loss) income | $ | (2 | ) | $ | (46,451 | ) | $ | 13,888 | |||
| Change in fair value of derivatives | (13,158 | ) | (6,647 | ) | 3,384 | ||||||
| Total comprehensive (loss) income | (13,160 | ) | (53,098 | ) | 17,272 | ||||||
| Comprehensive loss (income) attributable to noncontrolling interests | (160 | ) | 44 | (2,092 | ) | ||||||
| Comprehensive (loss) income attributable to Kite Realty Group Trust | $ | (13,320 | ) | $ | (53,054 | ) | $ | 15,180 | |||
| Year Ended December 31, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| Revenue: | |||||||||||||||||
| Rental income | $ | 367,399 | $ | 257,670 | $ | 308,399 | |||||||||||
| Other property-related revenue | 4,683 | 8,597 | 6,326 | ||||||||||||||
| Fee income | 1,242 | 378 | 448 | ||||||||||||||
| Total revenue | 373,324 | 266,645 | 315,173 | ||||||||||||||
| Expenses: | |||||||||||||||||
| Property operating | 55,561 | 41,012 | 45,575 | ||||||||||||||
| Real estate taxes | 49,530 | 35,867 | 38,777 | ||||||||||||||
| General, administrative and other | 33,984 | 30,840 | 28,214 | ||||||||||||||
| Merger and acquisition costs | 86,522 | — | — | ||||||||||||||
| Depreciation and amortization | 200,460 | 128,648 | 132,098 | ||||||||||||||
| Impairment charges | — | — | 37,723 | ||||||||||||||
| Total expenses | 426,057 | 236,367 | 282,387 | ||||||||||||||
| Gain on sales of operating properties, net | 31,209 | 4,733 | 38,971 | ||||||||||||||
| Operating (loss) income | (21,524) | 35,011 | 71,757 | ||||||||||||||
| Interest expense | (60,447) | (50,399) | (59,268) | ||||||||||||||
| Income tax benefit of taxable REIT subsidiary | 310 | 696 | 282 | ||||||||||||||
| Loss on debt extinguishment | — | — | (11,572) | ||||||||||||||
| Equity in loss of unconsolidated subsidiaries | (416) | (1,685) | (628) | ||||||||||||||
| Other income (expense), net | 355 | 254 | (573) | ||||||||||||||
| Consolidated net loss | (81,722) | (16,123) | (2) | ||||||||||||||
| Net loss (income) attributable to noncontrolling interests | 916 | (100) | (532) | ||||||||||||||
| Net loss attributable to Kite Realty Group Trust common shareholders | $ | (80,806) | $ | (16,223) | $ | (534) | |||||||||||
| Net loss per common share – basic & diluted | $ | (0.73) | $ | (0.19) | $ | (0.01) | |||||||||||
| Weighted average common shares outstanding – basic | 110,637,562 | 84,142,261 | 83,926,296 | ||||||||||||||
| Weighted average common shares outstanding – diluted | 110,637,562 | 84,142,261 | 83,926,296 | ||||||||||||||
| Dividends declared per common share | $ | 0.68 | $ | 0.4495 | $ | 1.27 | |||||||||||
| Consolidated net loss | $ | (81,722) | $ | (16,123) | $ | (2) | |||||||||||
| Change in fair value of derivatives | 15,670 | (14,969) | (13,158) | ||||||||||||||
| Total comprehensive loss | (66,052) | (31,092) | (13,160) | ||||||||||||||
| Comprehensive loss (income) attributable to noncontrolling interests | 229 | 367 | (160) | ||||||||||||||
| Comprehensive loss attributable to Kite Realty Group Trust | $ | (65,823) | $ | (30,725) | $ | (13,320) | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Shareholders’ Equity
($ in thousands, except share data)
| Common Shares | Additional Paid-in Capital | Accumulated Other Comprehensive (Loss) Income | Accumulated Deficit | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Shares | Additional Paid-in Capital | Accumulated Other Comprehensive (Loss) Income | Accumulated Deficit | Total | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | ||||||||||||||||||||||||||||||||||||||||||||||
| Stock compensation activity | 163,318 | 2 | 5,695 | — | — | 5,697 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss attributable to Kite Realty Group Trust | — | — | (6,487 | ) | — | (6,487 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions declared to common shareholders | — | — | — | — | (106,335 | ) | (106,335 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to Kite Realty Group Trust | — | — | — | — | (46,567 | ) | (46,567 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Exchange of redeemable noncontrolling interests for common shares | 31,500 | — | 561 | — | — | 561 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustment to redeemable noncontrolling interests | — | — | 425 | — | — | 425 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances, December 31, 2018 | 83,800,886 | $ | 838 | $ | 2,078,099 | $ | (3,497 | ) | $ | (662,735 | ) | $ | 1,412,705 | Balances, December 31, 2018 | 83,800,886 | $ | 838 | $ | 2,078,099 | $ | (3,497) | $ | (662,735) | $ | 1,412,705 | |||||||||||||||||||||||||||||||||
| Stock compensation activity | 152,184 | 2 | 6,147 | — | — | 6,149 | Stock compensation activity | 152,184 | 2 | 6,147 | — | — | 6,149 | |||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss attributable to Kite Realty Group Trust | — | — | (12,786 | ) | — | (12,786 | ) | Other comprehensive loss attributable to Kite Realty Group Trust | — | — | — | (12,786) | — | (12,786) | ||||||||||||||||||||||||||||||||||||||||||||
| Distributions declared to common shareholders | — | — | — | — | (106,686 | ) | (106,686 | ) | Distributions declared to common shareholders | — | — | — | — | (106,686) | (106,686) | |||||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to Kite Realty Group Trust | — | — | — | — | (534 | ) | (534 | ) | Net loss attributable to Kite Realty Group Trust | — | — | — | — | (534) | (534) | |||||||||||||||||||||||||||||||||||||||||||
| Exchange of redeemable noncontrolling interests for common shares | 10,299 | — | 167 | — | — | 167 | Exchange of redeemable noncontrolling interests for common shares | 10,299 | — | 167 | — | — | 167 | |||||||||||||||||||||||||||||||||||||||||||||
| Adjustment to redeemable noncontrolling interests | — | — | (9,977 | ) | — | — | (9,977 | ) | Adjustment to redeemable noncontrolling interests | — | — | (9,977) | — | — | (9,977) | |||||||||||||||||||||||||||||||||||||||||||
| Balances, December 31, 2019 | 83,963,369 | $ | 840 | $ | 2,074,436 | $ | (16,283 | ) | $ | (769,955 | ) | $ | 1,289,038 | Balances, December 31, 2019 | 83,963,369 | $ | 840 | $ | 2,074,436 | $ | (16,283) | $ | (769,955) | $ | 1,289,038 | |||||||||||||||||||||||||||||||||
| Stock compensation activity | Stock compensation activity | 206,591 | $ | 2 | $ | 5,483 | $ | — | $ | — | $ | 5,485 | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss attributable to Kite Realty Group Trust | Other comprehensive loss attributable to Kite Realty Group Trust | — | — | — | (14,602) | — | (14,602) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions declared to common shareholders | Distributions declared to common shareholders | — | — | — | — | (38,128) | (38,128) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to Kite Realty Group Trust | Net loss attributable to Kite Realty Group Trust | — | — | — | — | (16,223) | (16,223) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition of partner’s noncontrolling interest in Pan Am Plaza | Acquisition of partner’s noncontrolling interest in Pan Am Plaza | — | — | (2,500) | — | — | (2,500) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Exchange of redeemable noncontrolling interests for common shares | Exchange of redeemable noncontrolling interests for common shares | 18,039 | — | 187 | — | — | 187 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustment to redeemable noncontrolling interests | Adjustment to redeemable noncontrolling interests | — | — | 7,397 | — | — | 7,397 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances, December 31, 2020 | Balances, December 31, 2020 | 84,187,999 | $ | 842 | $ | 2,085,003 | $ | (30,885) | $ | (824,306) | $ | 1,230,654 | ||||||||||||||||||||||||||||||||||||||||||||||
| Stock compensation activity | Stock compensation activity | 245,333 | $ | 2 | $ | 6,793 | $ | — | $ | — | $ | 6,795 | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares withheld for employee taxes | Shares withheld for employee taxes | (714,569) | (7) | (15,031) | — | — | (15,038) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock – Merger | Issuance of common stock – Merger | 134,931,465 | 1,349 | 2,846,020 | — | — | 2,847,369 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income attributable to Kite Realty Group Trust | Other comprehensive income attributable to Kite Realty Group Trust | — | — | — | 14,983 | — | 14,983 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions declared to common shareholders | Distributions declared to common shareholders | — | — | — | — | (57,801) | (57,801) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to Kite Realty Group Trust | Net loss attributable to Kite Realty Group Trust | — | — | — | — | (80,806) | (80,806) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of capped calls | Purchase of capped calls | — | — | (9,800) | — | — | (9,800) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Exchange of redeemable noncontrolling interests for common shares | Exchange of redeemable noncontrolling interests for common shares | 299,341 | 3 | 4,235 | — | — | 4,238 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustment to redeemable noncontrolling interests | Adjustment to redeemable noncontrolling interests | — | — | (18,547) | — | — | (18,547) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances, December 31, 2021 | Balances, December 31, 2021 | 218,949,569 | $ | 2,189 | $ | 4,898,673 | $ | (15,902) | $ | (962,913) | $ | 3,922,047 | ||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Cash Flows
($ in thousands)
| Year Ended December 31, | ||||||||||||||||||||||||||||
| Year Ended December 31, | 2021 | 2020 | 2019 | |||||||||||||||||||||||||
| 2019 | 2018 | 2017 | ||||||||||||||||||||||||||
| Cash flow from operating activities: | ||||||||||||||||||||||||||||
| Consolidated net (loss) income | $ | (2 | ) | $ | (46,451 | ) | $ | 13,888 | ||||||||||||||||||||
| Adjustments to reconcile consolidated net (loss) income to net cash provided by operating activities: | ||||||||||||||||||||||||||||
| Gain on sale of operating properties | (38,971 | ) | (3,424 | ) | (15,160 | ) | ||||||||||||||||||||||
| Impairment charge | 37,723 | 70,360 | 7,411 | |||||||||||||||||||||||||
| Cash flows from operating activities: | Cash flows from operating activities: | |||||||||||||||||||||||||||
| Consolidated net loss | Consolidated net loss | $ | (81,722) | $ | (16,123) | $ | (2) | |||||||||||||||||||||
| Adjustments to reconcile consolidated net loss to net cash provided by operating activities: | Adjustments to reconcile consolidated net loss to net cash provided by operating activities: | |||||||||||||||||||||||||||
| Gain on sales of operating properties, net | Gain on sales of operating properties, net | (31,209) | (4,733) | (38,971) | ||||||||||||||||||||||||
| Impairment charges | Impairment charges | — | — | 37,723 | ||||||||||||||||||||||||
| Loss on debt extinguishment | 11,572 | — | — | Loss on debt extinguishment | — | — | 11,572 | |||||||||||||||||||||
| Straight-line rent | (2,158 | ) | (3,060 | ) | (4,696 | ) | Straight-line rent | (5,391) | 3,131 | (2,158) | ||||||||||||||||||
| Depreciation and amortization | 134,860 | 156,107 | 174,625 | Depreciation and amortization | 203,142 | 130,783 | 134,860 | |||||||||||||||||||||
| Compensation expense for equity awards | 5,375 | 4,869 | 5,988 | Compensation expense for equity awards | 6,697 | 5,998 | 5,375 | |||||||||||||||||||||
| Amortization of debt fair value adjustment | (1,467 | ) | (2,630 | ) | (2,913 | ) | ||||||||||||||||||||||
| Amortization of debt fair value adjustments | Amortization of debt fair value adjustments | (2,993) | (444) | (1,467) | ||||||||||||||||||||||||
| Amortization of in-place lease liabilities | (3,776 | ) | (6,360 | ) | (3,677 | ) | Amortization of in-place lease liabilities | (2,611) | (3,822) | (3,776) | ||||||||||||||||||
| Changes in assets and liabilities: | Changes in assets and liabilities: | |||||||||||||||||||||||||||
| Tenant receivables | 3,170 | (642 | ) | (3,442 | ) | Tenant receivables | (3,102) | (3,062) | 3,170 | |||||||||||||||||||
| Deferred costs and other assets | (6,265 | ) | (13,396 | ) | (11,569 | ) | Deferred costs and other assets | 6,857 | (7,618) | (6,265) | ||||||||||||||||||
| Accounts payable, accrued expenses, deferred revenue, and other liabilities | (2,099 | ) | (990 | ) | (5,832 | ) | Accounts payable, accrued expenses, deferred revenue, and other liabilities | 10,683 | (8,595) | (2,099) | ||||||||||||||||||
| Net cash provided by operating activities | 137,962 | 154,383 | 154,623 | Net cash provided by operating activities | 100,351 | 95,515 | 137,962 | |||||||||||||||||||||
| Cash flow from investing activities: | ||||||||||||||||||||||||||||
| Cash flows from investing activities: | Cash flows from investing activities: | |||||||||||||||||||||||||||
| Cash and restricted cash acquired in the Merger | Cash and restricted cash acquired in the Merger | 14,992 | — | — | ||||||||||||||||||||||||
| Acquisitions of interests in properties | (58,205 | ) | — | — | Acquisitions of interests in properties | (10,445) | (65,298) | (58,205) | ||||||||||||||||||||
| Capital expenditures, net | (53,278 | ) | (59,304 | ) | (72,433 | ) | ||||||||||||||||||||||
| Capital expenditures | Capital expenditures | (57,313) | (38,266) | (53,278) | ||||||||||||||||||||||||
| Net proceeds from sales of land | Net proceeds from sales of land | 54,157 | 9,134 | — | ||||||||||||||||||||||||
| Net proceeds from sales of operating properties | 529,417 | 218,387 | 76,075 | Net proceeds from sales of operating properties | 26,556 | 13,888 | 529,417 | |||||||||||||||||||||
| Investment in short-term deposits | Investment in short-term deposits | (125,000) | — | — | ||||||||||||||||||||||||
| Small business loan repayments (funding) | Small business loan repayments (funding) | 712 | (2,199) | — | ||||||||||||||||||||||||
| Change in construction payables | (542 | ) | (777 | ) | (4,276 | ) | Change in construction payables | 4,413 | 2,442 | (542) | ||||||||||||||||||
| Distribution from unconsolidated joint venture | Distribution from unconsolidated joint venture | 1,029 | — | — | ||||||||||||||||||||||||
| Capital contribution to unconsolidated joint venture | (798 | ) | (9,973 | ) | (1,400 | ) | Capital contribution to unconsolidated joint venture | (134) | (541) | (798) | ||||||||||||||||||
| Net cash provided by (used in) investing activities | 416,594 | 148,333 | (2,034 | ) | ||||||||||||||||||||||||
| Cash flow from financing activities: | ||||||||||||||||||||||||||||
| Net cash (used in) provided by investing activities | Net cash (used in) provided by investing activities | (91,033) | (80,840) | 416,594 | ||||||||||||||||||||||||
| Cash flows from financing activities: | Cash flows from financing activities: | |||||||||||||||||||||||||||
| Proceeds from issuance of common shares, net | 350 | 76 | 28 | Proceeds from issuance of common shares, net | 31 | 72 | 350 | |||||||||||||||||||||
| Repurchases of common shares upon the vesting of restricted shares | (533 | ) | (350 | ) | (835 | ) | Repurchases of common shares upon the vesting of restricted shares | (15,031) | (1,336) | (533) | ||||||||||||||||||
| Acquisition of partner's interest in Fishers Station operating property | — | — | (3,750 | ) | ||||||||||||||||||||||||
| Purchase of capped calls | Purchase of capped calls | (9,800) | — | — | ||||||||||||||||||||||||
| Debt and equity issuance costs | Debt and equity issuance costs | (8,141) | — | — | ||||||||||||||||||||||||
| Loan proceeds | 75,000 | 399,500 | 97,700 | Loan proceeds | 215,000 | 325,000 | 75,000 | |||||||||||||||||||||
| Loan transaction costs | — | (5,208 | ) | (357 | ) | |||||||||||||||||||||||
| Loan payments | (470,515 | ) | (551,379 | ) | (128,800 | ) | Loan payments | (77,591) | (302,477) | (470,515) | ||||||||||||||||||
| Debt extinguishment costs | (14,455 | ) | — | — | Debt extinguishment costs | — | — | (14,455) | ||||||||||||||||||||
| Distributions paid – common shareholders | (133,258 | ) | (106,316 | ) | (101,128 | ) | Distributions paid – common shareholders | (57,801) | (38,128) | (133,258) | ||||||||||||||||||
| Distributions paid – redeemable noncontrolling interests | (3,838 | ) | (3,716 | ) | (3,922 | ) | Distributions paid – redeemable noncontrolling interests | (2,208) | (1,533) | (3,838) | ||||||||||||||||||
| Acquisition of partners' interests in Territory joint venture | — | (21,993 | ) | (8,261 | ) | |||||||||||||||||||||||
| Net cash used in financing activities | (547,249 | ) | (289,386 | ) | (149,325 | ) | ||||||||||||||||||||||
| Increase in cash, cash equivalents, and restricted cash | 7,307 | 13,330 | 3,264 | |||||||||||||||||||||||||
| Cash, cash equivalents, and restricted cash beginning of year | 45,506 | 32,176 | 28,912 | |||||||||||||||||||||||||
| Cash, cash equivalents, and restricted cash end of year | $ | 52,813 | $ | 45,506 | $ | 32,176 | ||||||||||||||||||||||
| Acquisition of partner's interest in Pan Am Plaza joint venture | Acquisition of partner's interest in Pan Am Plaza joint venture | — | (2,500) | — | ||||||||||||||||||||||||
| Net cash provided by (used in) financing activities | Net cash provided by (used in) financing activities | 44,459 | (20,902) | (547,249) | ||||||||||||||||||||||||
| Net change in cash, cash equivalents and restricted cash | Net change in cash, cash equivalents and restricted cash | 53,777 | (6,227) | 7,307 | ||||||||||||||||||||||||
| Cash, cash equivalents, and restricted cash, beginning of period | Cash, cash equivalents, and restricted cash, beginning of period | 46,586 | 52,813 | 45,506 | ||||||||||||||||||||||||
| Cash, cash equivalents, and restricted cash, end of period | Cash, cash equivalents, and restricted cash, end of period | $ | 100,363 | $ | 46,586 | $ | 52,813 | |||||||||||||||||||||
| Supplemental disclosures | Supplemental disclosures | |||||||||||||||||||||||||||
| Cash paid for interest, net of capitalized interest | $ | 60,534 | $ | 67,998 | $ | 68,819 | Cash paid for interest, net of capitalized interest | $ | 59,552 | $ | 50,387 | $ | 60,534 | |||||||||||||||
| Non-cash investing and financing activities | Non-cash investing and financing activities | |||||||||||||||||||||||||||
| Exchange of redeemable noncontrolling interests for common shares | Exchange of redeemable noncontrolling interests for common shares | $ | 4,236 | $ | — | $ | — | |||||||||||||||||||||
| Net investment in sales-type lease | Net investment in sales-type lease | $ | — | $ | 4,665 | $ | — | |||||||||||||||||||||