12th Annual Wachovia Global Real Estate Securities
Conference
December 9, 2008
DISCLAIMER
This presentation may include certain “forward-looking statements” within the meaning
of the Private Securities Litigation Reform Act of 1995. These forward-looking
statements include, but are not limited to, our plans, objectives, expectations and
intentions and other statements contained in this document that are not historical facts
and statements identified by words such as “expects”, “anticipates”, “intends”, “plans”,
“believes”, “seeks”, “estimates” or words of similar meaning. These statements are
based on our current beliefs or expectations and are inherently subject to significant
uncertainties and changes in circumstances, many of which are beyond our control.
Actual results may differ materially from these expectations due to changes in global
political, economic, business, competitive, market and regulatory risk factors.
Information concerning risk factors that could affect Kite Realty Group Trust’s actual
results is contained in the Company’s reports filed from time to time with the Securities
and Exchange Commission, including its 2007 Annual Report on Form 10-K and its
quarterly reports on Form 10-Q. Kite Realty Group Trust does not undertake any
obligation to update any forward-looking statements contained in this document, as a
result of new information, future events or otherwise.
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COMPANY OVERVIEW
Balance Sheet Management
Continue to Manage Debt Maturities
Execute Capital Plan
Development
Complete Current Development Pipeline
$105 million total cost with approximately $60 million spent
75% Pre-leased or Committed
Delay visible shadow pipeline until significant leasing is
accomplished and third party construction financing is in place
Internal Growth
Operational Efficiencies
Minimize Existing Vacancy
PRIMARY OBJECTIVES FOR THE COMPANY
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Consumer Behavior
Nationwide consumption levels will fluctuate, but a portion of the consumer’s behavior is derived from
necessity. Grocery-anchored centers and value-oriented retailers such as Target and Wal-Mart will
continue to create shopping center traffic.
COMPANY OVERVIEW
(1) Includes Projected Total GLA for properties in the Current Development/Redevelopment Pipeline. Total GLA includes owned GLA, square
footage attributable to non-owned outlot structures on land that the Company owns, and non-owned anchor space that currently exists or is
under construction.
Property Type Allocation by Projected Total GLA 1
Information as of September 30, 2008
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(1) Total GLA includes owned GLA, square footage attributable to non-owned outlot structures on land that the Company owns and
non-owned anchor space that currently exists or is under construction.
(2) Includes Projected Total GLA for properties in the Current Development, Redevelopment, and Visible Shadow Pipelines.
Projected Total GLA Including Pipelines 1,2
GEOGRAPHIC DIVERSIFICATION
COMPANY OVERVIEW
Information as of September 30, 2008
5
6
(1) As of December 4, 2008.
Information as of September 30, 2008 except as noted
COMPANY OVERVIEW
STRONG TENANT DIVERSITY
% of Portfolio
S&P
Annualized Base Rent
Credit Rating
1
1
Lowe's Home Improvement
3.4%
A+
2
PetSmart
2.7%
BB
3
Publix
2.4%
n/a
4
Marsh Supermarkets
2.1%
n/a
5
Bed Bath & Beyond
2.1%
BBB
6
Circuit City
2.0%
n/a
7
Office Depot
1.8%
BB
8
Staples
1.6%
BBB
9
Dick's Sporting Goods
1.6%
n/a
10
Ross Dress for Less
1.6%
BBB
Total
21.3%
Top 10 Retail Tenants by Base Rent
GROWTH STRATEGY
STRONG UPSIDE
Only 2% occupied
Growth source throughout 2009
LOW RISK PROFILE
75% leased or committed
55% funded
Entitlement and major construction risk has been removed – focus is on
executing small shop leases and build out tenant spaces
EMBEDDED GROWTH: CURRENT DEVELOPMENTS
Information as of September 30, 2008
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GROWTH STRATEGY
Existing Vacancy
Operating retail portfolio is 91.9% leased
Negotiating lease for 23,000 square foot junior anchor space vacated in
early 2008 - represents 0.5% increase in occupancy
Operational Efficiencies
Leveraging bargaining power with national providers
Maintain class-A properties while managing to the CAM caps
Controlling variable costs – insurance and real estate taxes
3rd Party Construction and Service Fee Revenue
Leveraging our in-house construction company to generate FFO
Utilize current infrastructure to attract 3rd party contracts
EMPHASIZING INTERNAL GROWTH
Information as of September 30, 2008
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DEVELOPMENT & REDEVELOPMENT PIPELINE
(1)
Includes owned GLA, plus square footage attributable to non-owned outlot structures and non-owned outlot anchor space.
(2)
Held in a joint venture entity.
(3)
Percent Committed includes leases under negotiation for which the company has signed non-binding letter of intent
(4)
The Company is the master developer for this project, and its share of Phase I estimated project costs is approximately $35 million.
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Information as of September 30, 2008
Project
MSA
Projected
Total GLA
1
% Leased /
Committed
3
Total Est. Cost
(000s)
Anchor Tenants
Cobblestone Plaza
2
Ft. Lauderdale, FL
163,600
79.7%
$47,000
Whole Foods Market, Staples, Party
City
South Elgin Commons I
Chicago, IL
45,000
100.0%
$9,200
LA Fitness
Beacon Hill Phase Il
2
Crown Point, IN
19,160
33.4%
$5,000
Strack & VanTil's (non-owned),
Walgreens (non-owned)
Spring Mill Medical II
2
Indianapolis, IN
41,000
100.0%
$8,500
Medical Practice Groups
Eddy Street Commons I
4
South Bend, IN
465,000
61.2%
$35,000
Follette Bookstore, retail, office
733,760
74.6%
$104,700
Redevelopments
Shops at Eagle Creek
Naples, FL
72,271
$3,500
Staples
Rivers Edge Shopping Ctr
Indianapolis, IN
110,875
$5,000
Pending
Bolton Plaza
Jacksonville, FL
172,938
$6,200
Pending
Courthouse Shadows
Naples, FL
134,867
$2,500
Publix, Office Max
Four Corner Square
Seattle, WA
29,177
$500
Johnson Hardware, Walgreens
520,128
$17,700
Total Current Development Pipeline
Total Redevelopment Pipeline
VISIBLE SHADOW PIPELINE
(1)
Total Estimated Cost and Estimated Total GLA based on preliminary siteplans.
(2)
Acquired in a joint venture with Prudential Real Estate Investors. KRG’s ownership interest will change to 20% upon commencement of
construction.
(3)
Held in a joint venture entity.
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Information as of September 30, 2008
Project
KRG %
Owned
MSA
Est. Total
GLA
1
Est. Total
Cost (000s)
1
Potential Tenancy
Unconsolidated:
Parkside Town Commons
2
40%
Raleigh, NC
1,500,000
$148,000
Frank Theatres, Discount Dept. Stores, Jr. Boxes,
Restaurants
KRG Current Share
$59,200
Consolidated:
Delray Marketplace
3
50%
Delray Beach, FL
318,000
$100,000
Publix, Frank Theatres, Jr. Boxes, Shops,
Restaurants
Maple Valley
100%
Seattle, WA
126,823
$32,000
Hardware Store, Shops, Drug Store
Broadstone Station (Apex)
100%
Raleigh, NC
345,000
$25,600
Super Wal-Mart (non-owned), Jr. Boxes, Shops,
Pad sales
South Elgin Commons II
100%
Chicago, IL
263,000
$17,000
Jr. Boxes, SuperTarget (non-owned)
New Hill Place I
100%
Raleigh, NC
364,000
$60,000
Target, Frank Theaters
1,416,823
$234,600
Total Consolidated Visible Shadow Pipeline
DEVELOPMENT PIPELINE
A CASE STUDY IN RISK MITIGATION: EDDY STREET COMMONS
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DEVELOPMENT PIPELINE
A CASE STUDY IN RISK MITIGATION: EDDY STREET COMMONS
$200 million mixed-use development next to the University of Notre Dame in South
Bend, IN will be completed in phases
$35 million Phase I, which will include retail and office, was recently added to the
Current Development Pipeline. Phase I will also include a $35 million multi-family
component that will be developed and operated by a third party.
Three goals were set and accomplished before significant capital was spent:
The land was fully entitled with a planned unit development designation
Tax Increment Financing (TIF) and other municipal incentives totaling $35M
were funded
Final deal structure with the University of Notre Dame was completed and Kite
acquired and ground leases separate parcels
Joint venture arrangements for multi-family and hotel components will be utilized to
mitigate risk and maximize expertise
Additional land for residential units can be acquired from the University at our
discretion and will be based solely on residential market demand
Information as of September 30, 2008
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DEVELOPMENT PIPELINE
A CASE STUDY IN RISK MITIGATION: EDDY STREET COMMONS
Phase I – Retail, Office, Multi-family, Parking Garage
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STRONG DEMOGRAPHICS
SUCCESS NOT DEPENDENT ON GROWTH
Source: Applied Geographic Solutions
$488M
$190M
Expenditure Potential
$466M
$186M
Expenditure Potential
$84,716
$87,910
Average HH Income
$77,007
$77,012
Average HH Income
2.3%
2.8%
Projected Annual Growth
1.8%
1.8%
Projected Annual Growth
133,272
51,023
2012 Est. Population
136,673
54,416
2012 Est. Population
118,951
44,549
2007 Est. Population
124,977
49,691
2007 Est. Population
5 Mile
3 Mile
Development Pipeline
5 Mile
3 Mile
Operating Portfolio
Radius
Radius
Operating Portfolio vs. Development Pipeline
Portfolio Demographic Comparison
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Credit Facility and Cash 1 : $100 million
Potential Asset Sales: $20 to 25 million
Targeted Asset Transfer to JVs: $25 to $30 million
Targeted Liquidity Level: $75 to $100 million
EXECUTE ON STRATEGY TO ENSURE CAPITAL AVAILABILITY
CAPITAL PLAN
Information as of September 30, 2008 except as noted
(1) Includes common equity offering net proceeds of approximately $47.8 million that were received in October 2008.
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MANAGING DEBT MATURITIES
AGGRESSIVE REFINANCING, SOLID EXECUTION
Information as of September 30, 2008
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(1)
In October 2008, the Company extended the maturity dates from 2009 to 2010 on its variable rate debt at four of its consolidated
properties. As a result, $60.9 million of obligation previously due in 2009 are now due in 2010, as reflected the table above.
(2)
The Company is pursuing a loan commitment in place to extend the maturity date from 2009 to 2011 on variable rate debt of
approximately $21.0 million at one of its properties and another loan commitment currently in place for $22.4 million of new
borrowings at one of its unencumbered properties, the proceeds of which the Company anticipates utilizing to extinguish debt at
three of its operating properties.
(3)
Amount due in 2011 includes the outstanding balance on our unsecured revolving credit facility, which has a one-year extension
option.
Including
As of
% of
Q4 2008
% of
9/30/08
Total
Refinancings
1, 2
Total
2008
$18,684
3%
$0
0%
2009
$190,284
26%
$107,770
15%
2010
$13,373
2%
$74,238
10%
2011
3
$229,798
32%
$270,131
37%
2012
$38,905
5%
$38,905
5%
Thereafter
$236,263
32%
$236,263
32%
Total Maturities
$727,307
100%
$727,307
100%
COMMITTED MANAGEMENT
Senior management owns approximately 21 percent of the Company and has
acquired over 400,000 shares and 800,000 units since the IPO at a cost of
approximately $21M
0.2%
9 years
EVP & CFO
Dan Sink
20.6%
7.3%
18 years
Chairman & CEO
John Kite
3.6%
14 years
President & COO
Tom McGowan
9.5%
48 years
Chairman Emeritus
Al Kite
Ownership 1
Tenure with
Company
(1) As of November 7, 2008, and includes units of Operating Partnership.
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OPERATING METRICS
For the Three Months Ended September 30, 2008
2.5x
2.6x
Fixed Charge Coverage 2
5.3%
5.3%
G&A / Revenue from Rental
Properties
94.8%
92.5%
Portfolio % Leased
71%
64%
FFO Payout %
70.8%
72.8%
NOI / Revenue
Selected
Peer Group
Average 1
KRG
(1)
Peer Group consists of KIM, DDR, AKR, REG and RPT.
(2)
Defined as EBITDA divided by Interest Expense plus Preferred Dividends.
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CORPORATE PROFILE
Kite Realty Group Trust is a full-service, vertically integrated real estate investment trust
engaged primarily in the ownership, operation, management, leasing, acquisition,
construction, expansion, and development of high quality neighborhood and community
shopping centers in selected growth markets in the United States. The Company owns
interests in a portfolio of operating retail properties, retail properties under development,
operating commercial properties, a related parking garage, commercial property under
development and parcels of land that may be used for future development of retail or
commercial properties.
Our strategy is to maximize the cash flow of its operating properties, successfully complete
the construction and lease-up of the development portfolio and identify additional growth
opportunities in the form of new developments and acquisitions. A significant volume of
growth opportunity is sourced through the extensive network of tenant, corporate and
institutional relationships that have been established over the last four decades. Current
investments are focused in the development and acquisition of high quality, well located
shopping centers.
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