Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial information sets forth:
• the historical financial information for the six months ended June 30, 2005 as derived from the unaudited consolidated financial statements of Kite Realty Group Trust (“the Company”);
• the combined historical financial information for the period from January 1, 2004 through August 15, 2004 as derived from the audited financial statements of the Company’s predecessor, Kite Property Group, (“the Predecessor”);
• The consolidated historical financial information for the period from August 16, 2004 through December 31, 2004 as derived from the audited financial statements of the Company;
• pro forma adjustments and eliminations assume the following transactions were completed as of January 1, 2004 and carried forward for the purposes of the unaudited pro forma condensed consolidated statements of operations. The unaudited pro forma financial information has been adjusted to give effect to:
• purchases of operating properties as more fully disclosed in Notes 2a and 2c to the unaudited pro forma condensed consolidated financial statements;
• purchases of joint venture partners’ interests for cash and units in the operating partnership as more fully disclosed in Note 2b to the unaudited pro forma condensed consolidated financial statements;
• incremental 2004 general and administrative expenses related to operating as a public company;
• reduction in interest expense from the repayment of indebtedness in place at the time of the Company’s initial public offering (“IPO”) as more fully disclosed in Note 2e to the unaudited pro forma condensed consolidated financial statements; and
• elimination of loan prepayment penalties and other one-time expenses associated with the IPO and related formation transactions as more fully disclosed in Note 2f to the unaudited pro forma condensed consolidated financial statements
An unaudited pro forma balance sheet is not presented because all property acquisitions made by the Company are reflected in the historical unaudited consolidated balance sheet as of June 30, 2005 included in the Company’s Form 10-Q for the quarter ended June 30, 2005.
The unaudited pro-forma condensed consolidated financial information reflects adjustments only for acquisitions deemed to be probable as of the date of this filing.
You should read the information below along with the consolidated historical financial statements of the Company, which were filed as part of the Company’s annual report on Form 10-K for the year ended December 31, 2004; the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2005 and the pro forma condensed consolidated financial statements and notes thereto included in the Company’s Registration Statement on Form S-11 dated August 11, 2004 related to the Company's IPO.
The unaudited pro forma condensed consolidated financial information is presented for information purposes only, and does not purport to represent the Company’s results of operations that would have actually occurred assuming the purchase of the above properties along with their related financing transactions as of the dates specified above, nor do they purport to project the Company’s financial position or results of operations as of any future date or for any future period. The unaudited pro forma adjustments and eliminations are based on available information and upon assumptions that the Company believe are reasonable.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Six Months Ended June 30, 2005
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| 2005 Property Acquisitions |
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| Acquisition of |
| Acquisition of |
| Acquisition of |
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| Other |
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| Historical |
| Fox Lake |
| Plaza |
| Indian |
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| Pro Forma |
| Pro Forma |
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| Company |
| Crossing |
| Volente |
| River Square |
| Subtotal |
| Adjustments |
| As Adjusted |
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| (a) |
| (a) |
| (a) |
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Revenue: |
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Minimum rent |
| $ | 26,781,815 |
| $ | 145,835 |
| $ | 1,076,940 |
| $ | 563,882 |
| $ | 28,568,472 |
| $ | — |
| $ | 28,568,472 |
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Tenant reimbursements |
| 5,505,544 |
| 46,096 |
| 298,972 |
| 151,368 |
| 6,001,980 |
| — |
| 6,001,980 |
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| — |
| — |
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Other property-related revenue |
| 1,356,089 |
| — |
| — |
| — |
| 1,356,089 |
| — |
| 1,356,089 |
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Service fee revenue |
| 8,679,643 |
| — |
| — |
| — |
| 8,679,643 |
| — |
| 8,679,643 |
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Other income |
| 92,459 |
| 10,694 |
| 1,153 |
| 461 |
| 104,767 |
| — |
| 104,767 |
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Total revenues |
| 42,415,550 |
| 202,625 |
| 1,377,065 |
| 715,711 |
| 44,710,951 |
| — |
| 44,710,951 |
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Expenses: |
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Property operating |
| 5,251,058 |
| 26,647 |
| 149,834 |
| 137,246 |
| 5,564,785 |
| — |
| 5,564,785 |
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Real estate taxes |
| 3,432,906 |
| 25,292 |
| 183,780 |
| 72,416 |
| 3,714,394 |
| — |
| 3,714,394 |
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Cost of construction and services |
| 7,299,339 |
| — |
| — |
| — |
| 7,299,339 |
| — |
| 7,299,339 |
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General, administrative and other |
| 2,509,370 |
| — |
| — |
| — |
| 2,509,370 |
| — |
| 2,509,370 |
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Depreciation and amortization |
| 10,434,610 |
| 52,782 |
| 624,579 |
| 523,497 |
| 11,635,468 |
| — |
| 11,635,468 |
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Total expenses |
| 28,927,283 |
| 104,721 |
| 958,193 |
| 733,159 |
| 30,723,356 |
| — |
| 30,723,356 |
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Operating Income |
| 13,488,267 |
| 97,904 |
| 418,872 |
| (17,448 | ) | 13,987,595 |
| — |
| 13,987,595 |
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Interest expense |
| 8,467,311 |
| 67,712 |
| 584,214 |
| 271,272 |
| 9,390,509 |
| — |
| 9,390,509 |
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Minority interests |
| (92,949 | ) | — |
| — |
| — |
| (92,949 | ) | — |
| (92,949 | ) | |||||||||||||
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Equity in earnings of unconsolidated entities |
| 202,351 |
| — |
| — |
| — |
| 202,351 |
| — |
| 202,351 |
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Limited Partners’ interests in operating partnership |
| (1,564,759 | ) | — |
| — |
| — |
| (1,564,759 | ) | 119,867 | (h) | (1,444,892 | ) | |||||||||||||
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Net Income (loss) |
| $ | 3,565,599 |
| $ | 30,192 |
| $ | (165,342 | ) | $ | (288,720 | ) | $ | 3,141,739 |
| $ | 119,867 |
| $ | 3,261,596 |
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Weighted Average Number of Shares Outstanding - basic |
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| 19,148,267 |
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- diluted |
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| 19,262,822 |
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Net Income Per Share - basic and diluted |
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| $ | 0.17 |
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See accompanying notes.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Twelve Months Ended December 31, 2004
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| Acquisition of |
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| 2005 |
| Joint Venture and |
| 2004 |
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| Other |
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| Historical (Note 1) |
| Property |
| Outside Minority |
| Property |
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| Pro Forma |
| Pro Forma |
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| Predecessor |
| Company |
| Acquisitions |
| Partner Interests |
| Acquisitions |
| Subtotal |
| Adjustments |
| As Adjusted |
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| (a) |
| (b) |
| (c) |
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Revenue: |
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Minimum rent |
| $ | 11,046,605 |
| $ | 15,558,827 |
| $ | 2,578,341 |
| $ | 3,104,090 |
| $ | 13,964,592 |
| $ | 46,252,455 |
| $ | — |
| $ | 46,252,455 |
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Tenant reimbursements |
| 1,662,576 |
| 2,637,230 |
| 696,717 |
| 705,997 |
| 3,371,243 |
| 9,073,763 |
| — |
| 9,073,763 |
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Other property-related revenue |
| 1,373,503 |
| 2,087,256 |
| 76,138 |
| 136,685 |
| 337,378 |
| 4,010,960 |
| — |
| 4,010,960 |
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Construction and service fee revenue |
| 5,257,201 |
| 9,333,868 |
| — |
| — |
| — |
| 14,591,069 |
| — |
| 14,591,069 |
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| — |
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Other income |
| 110,819 |
| 30,446 |
| 2,253,582 |
| 12,008 |
| 1,895 |
| 2,408,750 |
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| 2,408,750 |
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Total revenues |
| 19,450,704 |
| 29,647,627 |
| 5,604,778 |
| 3,958,780 |
| 17,675,108 |
| 76,336,997 |
| — |
| 76,336,997 |
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Expenses: |
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Property operating |
| 4,130,747 |
| 3,735,195 |
| 875,679 |
| 1,008,387 |
| 2,543,029 |
| 12,293,037 |
| — |
| 12,293,037 |
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Real estate taxes |
| 1,595,578 |
| 1,835,837 |
| 395,510 |
| 369,486 |
| 2,119,847 |
| 6,316,258 |
| — |
| 6,316,258 |
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Cost of construction and services |
| 4,405,160 |
| 8,786,999 |
| — |
| — |
| — |
| 13,192,159 |
| — |
| 13,192,159 |
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General, administrative and other |
| 1,477,112 |
| 1,780,579 |
| — |
| — |
| — |
| 3,257,691 |
| 1,600,000 | (d) | 4,857,691 |
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Depreciation and amortization |
| 3,584,290 |
| 7,864,679 |
| 1,906,792 |
| 850,310 |
| 4,103,736 |
| 18,309,807 |
| — |
| 18,309,807 |
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Total expenses |
| 15,192,887 |
| 24,003,289 |
| 3,177,981 |
| 2,228,183 |
| 8,766,612 |
| 53,368,952 |
| 1,600,000 |
| 54,968,952 |
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Operating Income |
| 4,257,817 |
| 5,644,338 |
| 2,426,797 |
| 1,730,597 |
| 8,908,496 |
| 22,968,045 |
| (1,600,000 | ) | 21,368,045 |
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Interest expense |
| 4,828,888 |
| 4,460,476 |
| 1,747,678 |
| 1,520,914 |
| 3,405,109 |
| 15,963,065 |
| (1,226,413 | )(e) | 14,506,631 |
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| (230,021 | )(f) |
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Loan prepayment penalties and expenses |
| — |
| 1,671,449 |
| — |
| — |
| — |
| 1,671,449 |
| (1,671,449 | )(g) | — |
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Minority interest (income) loss |
| 214,887 |
| (125,800 | ) | — |
| (89,087 | ) | (156,605 | ) | (156,605 | ) | — |
| (156,605 | ) | |||||||||
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Equity in earnings (loss) of unconsolidated entities |
| 163,804 |
| 134,097 |
| — |
| (3,432 | ) | — |
| 294,469 |
| — |
| 294,469 |
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Limited Partners’ interests in operating partnership |
| — |
| 146,968 |
| — |
| — |
| — |
| 146,968 |
| (2,295,746 | )(h) | (2,148,778 | ) | |||||||||
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Net Income (loss) |
| $ | (192,380 | ) | $ | (332,322 | ) | $ | 679,119 |
| $ | 117,164 |
| $ | 5,346,782 |
| $ | 5,618,363 |
| $ | (767,863 | ) | $ | 4,850,500 |
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Weighted Average Number of Shares Outstanding - basic |
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| 19,148,267 |
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- diluted |
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| 19,262,822 |
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Net Income Per Share - basic and diluted |
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| $ | 0.25 |
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See accompanying notes.
Kite Realty Group Trust
Notes and Management’s Assumptions to Unaudited
Pro Forma Condensed Consolidated Financial Statements
1. Basis of Presentation
Kite Realty Group Trust (the “Company”) was organized in Maryland on March 29, 2004 to succeed to the development, acquisition, construction and real estate businesses of Kite Property Group (the “Predecessor”). The Predecessor was owned by Al Kite, John Kite and Paul Kite (the “Principals”) and certain executives and family members and consisted of the properties, entities and interests contributed to the Company or its subsidiaries by the Principals. The Company began operations on August 16, 2004 when it completed its initial public offering (“IPO”) and concurrently consummated certain other formation transactions.
The accompanying historical combined financial information for the Predecessor reflects the results of operations for the period from January 1, 2004 through August 15, 2004. The accompanying historical consolidated financial information for the Company reflects the results of operations for the period from August 16, 2004 through December 31, 2004.
2. Adjustments to Pro Forma Condensed Consolidated Income Statements
(a) To reflect the revenues and expenses for the following properties acquired in 2005 for the periods prior to their respective acquisitions.
Property Name |
| Location |
| Acquisition |
| Acquisition |
| Financing Method | |
Fox Lake Crossing |
| Fox Lake, IL |
| February 7, 2005 |
| $ | 15.5 |
| Debt |
Indian River Square |
| Vero Beach, FL |
| May 16, 2005 |
| 16.5 |
| Debt | |
Plaza Volente |
| Austin, TX |
| May 16, 2005 |
| 35.9 |
| Debt | |
(b) To reflect the revenues and expenses for 50 S. Morton, The Corner, International Speedway Square, Burlington Coat, Martinsville Shops, 50th & 12th, 176th & Meridian and Red Bank Commons for the period prior to the IPO. The remaining joint venture and outstanding minority partners’ interests were acquired in connection with the IPO and related formation transactions. This adjustment is not required for the six months ended June 30, 2005.
(c) To reflect the revenues and expenses for the following properties acquired in 2004 for the periods prior to their respective acquisitions. This adjustment is not required for the six months ended June 30, 2005.
Property Name |
| Location |
| Acquisition |
| Acquisition |
| Financing Method | |
Silver Glen Crossings |
| South Elgin, IL |
| April 1, 2004 |
| $ | 23.4 |
| Debt |
Cedar Hill Village |
| Cedar Hill, TX |
| June 28, 2004 |
| 6.8 |
| Debt | |
Galleria Plaza |
| Dallas, TX |
| June 29, 2004 |
| 6.2 |
| Debt | |
Wal-Mart Plaza |
| Gainesville, FL |
| July 1, 2004 |
| 8.5 |
| Debt | |
Eagle Creek Pad 2 |
| Naples, FL |
| July 7, 2004 |
| 1.1 |
| Debt | |
Fishers Station |
| Fishers, IN |
| July 23, 2004 |
| 2.1 |
| Debt | |
Hamilton Crossing |
| Carmel, IN |
| August 19, 2004 |
| 15.5 |
| IPO Proceeds | |
Waterford Lakes |
| Orlando, FL |
| August 20, 2004 |
| 9.1 |
| IPO Proceeds | |
Publix at Acworth |
| Acworth, GA |
| August 20, 2004 |
| 9.2 |
| IPO Proceeds | |
Plaza at Cedar Hill |
| Cedar Hill, TX |
| August 31, 2004 |
| 38.6 |
| IPO Proceeds | |
Sunland Towne Centre |
| El Paso, TX |
| September 16, 2004 |
| 32.1 |
| Debt | |
Centre at Panola |
| Lithonia, GA |
| September 30, 2004 |
| 9.4 |
| Debt | |
Marsh Supermarket |
| Fishers, IN |
| November 24, 2004 |
| 5.0 |
| Debt | |
Eastgate Pavilion |
| Cincinnati, OH |
| December 1, 2004 |
| 27.6 |
| Debt | |
Four Corner Square |
| Maple Valley, WA |
| December 20, 2004 |
| 10.5 |
| Debt | |
(d) To reflect estimated additional general and administrative expenses to operate as a public company for the period prior to the IPO.
(e) To reflect for the period prior to the IPO the reduction in interest expense from the repayment of approximately $99 million of indebtedness at the time of the IPO, net of the increase from new permanent debt of $16.5 million and line of credit borrowings of $30.5 million.
(f) To reflect the exclusion of the write off of deferred financing costs in connection with the repayment of certain indebtedness. These expenses represent one-time charges related to the IPO and related formation transactions.
(g) To reflect the exclusion of loan prepayment penalties and other one-time expenses incurred in connection with the repayment of the Company’s bridge loan of approximately $46 million with Wachovia Bank, N.A and Lehman Commercial Paper, Inc. These penalties and other expenses represent one-time charges related to the IPO and related formation transactions.
(h) To adjust the limited partners’ interest in the Operating Partnership to reflect their weighted average interest in the revenues and expenses of properties for the periods prior to their respective acquisitions and other pro forma adjustments. On a pro forma basis, the limited partners’ interest in the Operating Partnership is 30.7%.