KRG - Earnings call transcript Q3 2017 | Kite Realty Group Trust

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Operator

Good day, ladies and gentlemen, and welcome to the Third Quarter 2017 Kite Realty Group Trust Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] I would now like to introduce your host for today's conference, Ms.

Ashley Underwood, Investor Relations. Ma'am, you may begin.

Ashley Underwood

morning. good and you, Thank Welcome to earnings third Realty Group's quarter call. Kite statements today's to based uncertainties. comments of that inherent contain and subject Much are forward-looking are and on risks assumptions from statements. materially differ may results Actual these

of the factors see available to Today's non-GAAP yesterday's Please financial please filings, these remarks For more contain SEC a our information that adversely website non-GAAP company's our recent affect most results. our to release refer certain measures earnings on our can for including also press results, the XX-K. reconciliation performance measures. about financial GAAP

the the Chief Executive On John. call Chief And are with Tom turn Officer, like from me Financial Kite; to company the John I'd Dan over Sink. today now Officer, McGowan; Officer, Chief Operating to call

John Kite

Thanks good us. Thanks, joining everyone. Ashley, and for morning,

like for of II increase. We the at which commenced small period construction of on Notre XXX NAREIT, per of generated quarter. increase We continues Eddy at occupancy successful some excellent development of prior the Commons, shop of highlights year the First, Phase go an retail mixed-use reached the same-property XX.X%, the Street an University the located in quarter, quarter Dame. almost $X.XX exciting X.X% end decline over at year points from the excluding initiative. points representing development basis is last the over over X.X% of increase which or same by as portfolio an reached basis X% the and of is of XX the third $XX.XX impact NOI FFO, we defined I'd our quarter. to X-R by ABR as for grew of share. We We X.X%

building $XXX,XXX results, not and Texas quarter, during the these announced details landscaping, repairs. Florida the insurance about subsidiary, ago. was we Cares and and month the centers. during limit Before on any to which in hurricanes don't we claims structural we majority fortunate currently material our Florida very the payment, third Through outreach damage national to X Also, to to I'd to go cleanup the assist from we'll address I those to than We charities Back from and that we material were damage of we were. working sustain help experienced insurance captive further to like needs The debris fortunate into of were exposure the Texas. importantly, to program, able to local efforts our minor with effects tough largely to help our total our our hurricanes operations. Kite times, community anticipate donations were deductible continue made and less we who under relief the any

operate than offerings quarter was related. otherwise leasing Our services, tenants that experiential focus to X% continues team food square provide apparel our opening businesses, footage or and of less consumer on in the

prospect. XX.X% We Ulta a for and Le included blended quarter X.X%, of leases achieved rent and Other We at tenants remain new tenant our Promenade, X-R deals continue openings Burnt that XXX,XXX healthy the Supermarket, cash Salon, renewal XX.X% new a respectively, in spreads Morning Tuesday opened spread Store one totaling and project We complement square public including rent to focused new mix. the new feet, Creuset. on store Pet XX of quarter. cash of on our for

maintaining spreads our value of on annual We had obtain with initiative primarily CapEx $X.XX for were and GAAP over XX% due to ramp-ups, per our to blended shop last a disciplined under $XX.XX an for that centers. rent foot. square anchor spreads the per very our $X.XX while number focus vacancies new a these approach, shopping year the new backfilling and able add blended foot X-R leases. leases renewals, successes and of We've foot our renewal addition, spending for high-quality spend a rent to In were per tenants

include examples PetSmart ULTA at Trader Morton's Joe's Northdale, Bolton Centennial, and Plaza. at Tarpon Village, Bay, City Some Marshalls at at in at Center, Party Market Street City

In finalizing boxes. LOIs backfill currently with and vacant we're leases X addition, to negotiating tenants

Commons Looking first at at Dame. OX development, also center. the We Phase will apartments, on townhomes, Phase of XX of our Notre Eddy at as a X opening we begun The the half construction North We've Fitness This Springs the include and neighborhood X under XXXX. assets of of construction. XXX of X expansion development XXX% community University retail September pre-leased. XX, Holly is Raleigh, in in a anticipate Street have Carolina, new

$XX on working expect would a interest. regard Eddy we new by hotel will which joint good our be these also Commons, X $XX.X maintain we're are have to full-service million returns we X% the costs expected We X-R owned unconsolidated construction, in currently With assets total continuing minority towards venture a to X% stabilization. Street make to at ranging to from progress driving We and initiative, a which range. assets in with million under

Bolton Florida, adding new complete Panera quarter. buildings Bread in We and our X small as recent most in In X Promenade outlet. Las a in Jacksonville, fourth Phase of Plaza well the Centennial addition, Vegas, expect renovating shop in we're Alabama, Trussville Nevada, as to Center Birmingham,

to and of with the quarter, asset the balance of sales. $XXX At be X.X over of from a some our we with maturing Xs and net debt only our focusing operations third from end to had cash years average through XXXX, million the $XX the liquidity of flow potential XX NOI million. weighted lowering initiative, incremental X-R debt next to our low XX we'll sheet, EBITDA Looking on at months, maturity

coverages debt of X.Xx. and X% our variable Our low only total rate charge fixed remains at

defined up respect Finally, range XXXX to $X.XX. NAREIT, we're $X.XX for with to range guidance to updating of guidance, be to $X.XX within $X.XX, our from FFO, by as

to range additional as well the property retail for the on year. the the XX.X% at the X.X% on to revised We XX% be within lease of details projected NOI provided as the guidance We same of X% to on percentage the components page also range our year-end to full last supplemental.

in we very QX, slight percentage our extremely our the results, third opportunities. property operational maintaining and leasing off same-store is economic focused as on we're on deceleration a are continuing with We focus, to we In quarter projected platform remain and our X-R executing X-R level additional sheet. in our closing, pleased achieving balance NOI new to as our very our improve strong lease our investment-grade commenced goals, projecting

thank We look us morning. forward your for So everyone, joining questions. you, this to

Operator

is line comes Instructions] our [Operator question of And open. of Thomas first the from KeyBanc. Todd your And line

Todd Thomas

morning. Hi, Good thanks.

growth is that is in that the you're guess, fourth in then, I anticipating to to commencing? quarter, disruption or the if persist some of projects the same-store And in deceleration much that you the deleasing NOI for some quantify, related how you're that, X-R can expected So XXXX? of

John Kite

the when and top know, to We you year Todd, be. guidance at about the the not as you right mean, laid we talk in not Well, where that top question, a would XXXX essentially as guidance. we we of first end thought NOI I through the year, be were give our clearly well lot so guidance, the see, part on most can we're we're estimates and as of beginning of we And aware will likely went the XXXX. out -- going going to of

to last that's the and then at LOIs. why, because going and couple the frankly, for program, do we significant to occupancy our that's looking relates that's of end, us, end really front NAV, out, back in and that's us and of in to and have backfill negotiating out, impacting last metrics, out one put you values. how we've that's And over quarter, the go that's constantly As about pick you on okay? deceleration basis the think but to top create we of it as it panicking points, that, thing going up We're the the pointed create try at I point quarters, NOI in we want givebacks when to just we properties as We're don't on X-R people gain and phase. why understand, and compression looking to terms at the constantly in story create XX economic we tenants positive obviously, NOI And the some spaces we're improve growth, size, lumpiness. and had lose you the I

openings, So understand reality time. feel look, it that pretty there's and happening, at look takes which our are darn rent look things think people we our you that. at I And the of about is high, good a tenant as you negative narrative spreads, but lot

then the you're probably impacted it So just both lumpiness being our X-Rs. of I of say by that aware would importantly, more and the bankruptcy that is

Todd Thomas

turn I you for click seeing a there grocery shadow-anchored lot then, in to that? stores like Walmarts sort of what just was And you're for other that transformation from wondering, have all, of Is portfolio. Kite and the collect or helpful. Okay. That's as exposure into whether anything commitment more at any direct And or or space services? of they some a and owned leased consideration there

John Kite

others, years. involved been Walmarts, it's store putting areas, it and either really to I outstanding [sick cetera, opinion, seen last so Walmart, as -- our of on pressure relates outside But and putting allow shadows. of excellent I say, with I change Amazon, Yes, inside continue and doing have an retailer -- X pickup, HEB, to we've to them can mind, mean, so I re-leases], And we And going first few think, of retailer they're have them that's be or for think an as all, company both Target would in that's completely that's the relates the the in Walmart, XX of particularly the creating great. my only et things, that would we is Yes, great they're that and grow. it's on it Kroger, is them to in thing.

on Now today. they're just cutting edge a

I like to and realized mean, what you've years great, that help kind it's is seen they real the also online retailer of the in of think but is to us, realized it's Target, to I last I lose going they're Walmart. back going of seeing that. I just they money, that Target from store, think they And magnitude and that I invest we're things not few I figured is money. don't anybody the great that lose And and beauty Target doing, So store, really want continue it's ignored out think after you sales aggressively it's so don't to them. think where speak let's doing over but pursuing for they,

Todd Thomas

ramp any adoption of the from on any up any feedback any some or of there reads thoughts those changes? any initiatives? of to from those that commitment they Is or consideration of Kite sort them And as service, begin then, for early

John Kite

Yes. essentially, the material. has lot I deals, and We've the lease, been point, not already work pretty TAM with been not them projects, that's some might in. the been But still Kite I Particularly, to this The store. pickup nothing get and minimal. the pretty them we create but even to non-known parking change to there, we're of done outside results. would I point involved in mean, at strong And mean, this ownership some grow. cost it's and been real area again, it's going think dollars huge, some at HEB it's we stores, land have that huge if a continue we ground but making help a generally, small has doing

yes, So you that? view I is, want important. if don't it's add our to to been Tom, know

Thomas McGowan

parking mean, et I Target, Walmart, talking size about to was cetera, also fields. the Target we've time massive of fields. a been they Yes, There the needed when also parking

them real is to rep, for in spoke collectively we've really So is broker with find store their And us and thing XX,XXX to their range. the value out those very trying doing to to concepts effectively, amount smaller foot working with other that add tremendous been add square Marshalls. opportunity Target ways of I estate XX,XXX

those eye close on a keeping well. as we're So

Todd Thomas

Okay. Thank you.

John Kite

you. Thank

Operator

open. is our O'Neill. from the line question Sandler next Alexander And of And you. your Thank of line is Goldfarb

Alexander Goldfarb

Good morning, there. out morning. Good

John Kite

morning. Good

Alexander Goldfarb

Hey.

So two questions.

John, question, growing credit same on market rating, really continues. The flow, public just the but and cash your between market the the you've the time, disconnect been first improving focused at private

how flow improve grow -- assets you versus the harvesting seller, profile? between cash contemplating credit becoming think a trade-offs you retaining do more So weigh and to do the net

John Kite

to them, mean, obviously, buying own, good at though to have we assets right. the I have that a question. them look we as we That's of always and think we're

We it asset value don't We stop own have to of out them as kind just want this and add to to that. would view and is buy that we an looking because it. go we at

your So going current where you of capital the think to I kind and that say, need is always you of cash present grow flow against would for. capital cash the of you're what balancing value and cost

would you say the think seller. net this me And seller. in want clearly comments in Last the So a we're said at I potentially been we we heard a to whether we do year, looking that that. we have that -- year, net to we not remarks prepared continue or were had

of early doing going about a clearly, it's fact well 'XX. we're our So significantly assets price. little to aware and talk exceeds stock our that of are what But disconnect we the value the into current the

located them want assets they're do be. the terms you're we So I of be we're continue and in in think looking growth and But still in engaged we'll in. think in to that, still we that to we at Alex, do think also, the market also they've

into a I relates present there say of part a math, to math would But the that lot So isn't is of that, that a equation. that it, cash obviously just flow. value big goes is

Alexander Goldfarb

can just, disclose And partner preset that JV talk market the for amount or that, cap that's follow-up that asset, rate? cap about -- as you a a Okay. or a your is buyout negotiated via the Vegas is rate to

John Kite

Yes, it was Diversified negotiated. we acquired assumed That Inland something an we Diversified. preset amount partnership. that really a was Inland when is was That

no So it. Alex. There just with it a rate amount, was associated preset was cap

Alexander Goldfarb

X% over -- your question X this Okay. the we But… year, And basically it's well. second same-store when and years, then been the trending look just plus like past is, NOI obviously, at

John Kite

over X%-plus-plus years. X the last

on second So there. there's plus a

Alexander Goldfarb

causing but growth is slow to more Or NOI say that's you earnings the been growth? not other leakage Okay, has that's growth FFO Would the the muted. disposition impacted? there portfolio in

John Kite

to Xx over debt-to-EBITDA. when Good to question. occurred and it No. beginning you line, look X-period we time, that's time is, at back of got you I'd the probably that the deleveraging say most of that go were

there. sales been there's going asset accelerated that. There significant through that So deleveraging been have has

this activities think NOI I time capital having then fact we've over So variable then raised X-R been rate that lumpiness to building the always then to fix up. back markets and you at of went of it that look that that from And our got reducing the the and where -- we we've program, rate. period

I bringing we program, did the bond NOI the and can't. said, intentional from the of we did we deleasing placement, deal, X-R as which So private down the

it You see this creates but the results of lumpiness. it,

at So great operate at no, at effective there's than more [ph] are in business. think anywhere mean, I there our in question. somebody ratios that's But don't I any you the recovery we our leakage and, cost to look center look fact, script this space business, when and operating our find you

Alexander Goldfarb

Okay. John. Thanks,

John Kite

Thank you.

Operator

you. Bank of Thank question Instructions] comes And line [Operator from of our the Schmidt of Craig next America.

open. is line Your

Unidentified Analyst

a I Hey, of occupancy. Craig. reached small XX%. John. we've think to Hey, Justin XX.X%, Dan. here that was at for nearly shop This what talk 'XX year-end about on I is I want goal see

standpoint quite level, step get from to guess, same how but of almost year here? take as here, that you've would same at I a us things look got got that this be done things first back then, all, leasing us and done to point? early. what done those And way beyond the reach there not it we a are you're there, a know I So you've we

John Kite

have talking tell small the it. can past been our about hear you and shop you the is about hear lot I years. a and few us that Well, in highlights small the years didn't deals got extremely you lot shops about organization a talking I the that deals. leasing that on we us about for big-box here remember fact big-box a what that X we started And focused everybody ago

we So we opportunity focused agenda increasing in that, had rents on portfolio. have a annually very, and internal shop that that that we very was knew to the also have would small

have a happen, that doesn't to make So business happen. it really, is business, it of like you happen, it make our you all just

to phenomenal team that doing our shop. of as done think has a the it I job small relates

to that seems and a going day of coming real care own the keep delivery this Now isn't one estate, been and and I all this. career it's some it's world us real anymore that that over about high-quality about estate. years, limited. X stuff. reality But here to in it to lowest last inventory seen today's open-air this There the I'm macro balance day create online great we is, just have in talking no of seen there's as next my all never of the relates I've low it inventory and element

NOI That years growth, today it is creates that's that. that creates was our compression, why from and benefiting that ago. ABR X creates XX-plus we're XX So --

We continue to grow and improve.

I but I before, forward, XX%, will So up that most we on go going very going to think yes, goal, really XX%, we're hitting goal is focused to that said likely. as -- from go

So just know everybody let that.

ridiculous we think, positive they're we'll a about the are able off and stock reinvest. of the of and flow, multiples. doing cash talking So, off as lot thing flow. and not off quality. of are positive real quality is on that the prices on cash keep the to the growing this creating question, And keep And focusing we'll incrementally cash They lock flow run run run estate businesses last same I the we're

Thomas McGowan

entertainment, fitness, we more the we have position can after. again. The had add food, recast fact the had really that a services. as And concentrate we where who think changed, the we only in more thing put attacking, we're I'd a would are we going time I categories of in markets host we've that is, who in tenants past, and and also success on on But pursue really we're time

Operator

it closing don't for over Kite to questions, it to have and Mr. I'd turn remarks. any further we John like back And

John Kite

hope Okay, soon. closing well, thank seeing enjoyed to you. music, classical look and Bye-bye. I you we that you forward

Operator

Ladies conference. and conclude in have a the you program, and for gentlemen, does may This participation great thank your you disconnect. day. Everybody, today's now

Kite Realty Group Trust (KRG) 27 Oct 172017 Q3 Earnings call transcript