KRG - Earnings call transcript Q1 2019 | Kite Realty Group Trust

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Q1 2019 Kite Realty Group Trust Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Bryan McCarthy, Senior Vice President of Marketing and Communications.

begin. may You

Bryan McCarthy

good First and Welcome Kite to Thank Earnings morning, Call. Group's Quarter Realty you, everyone.

Some comments subject assumptions materially of and of based Actual from future are today's uncertainties. events contain these forward-looking statements. and may are results to risks that inherent differ statements on

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

Chief Management, Tom turn President, On Senior Heath Officer, and the Accounting Officer, and Dave Wade President, Buell; Markets John team, Executive Colton. from Capital Kite will Vice with Officer, and Jason President, Senior today our the to President Vice John. member call Vice Chief Executive Relations, Financial Chief over Realty McGowan; Group Fear; I Achenbach; Portfolio of Vice President, Officer, Executive me newest and are Kite; the Chairman Investor Operating call now Chief

John Kite

Bryan. Thanks, everyone. Good morning,

increase quarter, past primarily by executed square all-time plan ABR maintaining A base to $X.XX quarter. an first focus of We million NOI our new demand, foot, two volume to KRG. productivity to execute good This the program, we in XXX,XXX We XX% XXXX. on compared FFO per the $XX.X while square some very of year by XX as approximately XXXX. increases same-property made for We excellence. we and is our leases of grew as driven and to progress and in compared XX% quarter, feet, testament or quality high a for XXX,XXX renewal brief which share. leasing first Box per We tenant signing compares the team. square highlights with net This representing a on disposition and operational in first X.X% rent six assets to of is $XX.XX touch of to XXXX the grew before last XX our leases to recoveries. last the compared feet. quarter quarter leasing for in continued for our summary increase on the over a and the our During of We our generated volume the

sequentially. Box anchor a As at Big XX.X%, Surge the rate retail increase leased of result of our a stands success our point basis program, XX

all-time shop increase XX retail basis XX.X%, leased sequential rate a and Our KRG. small point is an high for

Big of total portfolio our over drive economic the million of some percentage. in It's attributable $X.X spread as with the to program. to next months, XXX in pool. Our to our which desire million to we NOI point come anticipated leased success important XX%, Box occupancy Surge a online currently equates to disruption the of approximately note disposition our result our occupancy spreads that basis spread XX a will The over $X is that is

proactively with our of we deals restructured tenants. addition, In two watchlist

XX.X% the of re-leasing the that into our restructured note deals basis Excluding factored on a impacts, guidance. and basis. Please on spreads blended were these XX.X% impact combined a is cash GAAP

transactions. to on Moving

were million. During down pay these the additional an quarter, we we assets sales $XX.X quarter four sold from subsequent used sold The one end, primarily proceeds to asset million, $XXX and for to for debt.

to That's disposition under meet sales another good one range. assets our of guidance million have late about was contract, under or We feel asset which our million XXXX yesterday. we $XXX contract contract. of of $XXX very Additionally, completed under put ability

net quarter. ticked completed subsequent sales X.Xx. quarter asset and temporarily ratio end, Pro debt-to-EBITDA KRG's net our debt to forma pay-downs is the anticipated, up As this for currently debt-to-EBITDA

our our ratio the I expect We've out the changes the also we updates Xx, guided, also to highlighted wanted made the high to disposition the new be associated point standards. As range. some sheet we and of supplement. to geography providing some below balance lease end previously We've information. assuming it of hit NDE while accounting relative all cleaner with

the we now our you'll XX% addition, regions, region matching those classify into four find In assets We South largest with helpful. Bureau, nearly trust changes being with the these of of Census our ABR.

per share reconfirming guidance, range underlying XXXX the assumptions. $X.XX to both are we guidance and Regarding of FFO the $X.XX

continue the for first joining staying to are ready our is XXXX most the questions. plan, And the team importantly, and for success a in focused in and quarter of on through call. operator, rest dispositions had both great Our this plan We Thanks operations. year. we

Operator

is question first our And Instructions] Christy from Citi. McElroy from [Operator

open. is now line Your

Christy McElroy

Hi, good morning, everyone.

John Kite

morning. Good

Christy McElroy

X%, that specific wanted expect to quarter. on should it's XX-month spreads And how spreads any just activity lumpy re-leasing follow-up the from negative some to if the wondering on Just quarter in spreads, we sort quarter color to the of around in related Maybe tenant. renewal the Understanding QX. with trailing but the averaging QX trend? the is to

John Kite

properties, as on get pretty otherwise hold renewing assets. Christy. this long-term we have in that had we sell some sense the particular, it. few in we're tried was and part value wouldn't of of of big probably we a the lot on – positioning a had done all, say trying of dispo that anchor to That leases properties ready in maximize Well, I to instances dispo a quarter, Sure, first to these that to remarks, the prepared

assets very we pool. the spreads did in the are as maximize these with. are to of in we're So of that couple we lumpiness are also that to of the were with, that because these in – half actually, of tenants we of forward – of mean, mentioned, the that but aren't some going that that, But that that tenants regard. ongoing decisions made and then that ones we're reflects, that pool a kind it's leases also, – couple we in some did not we're are be and restructured basically, value, of holding, forward, those trying dispo of in terms both there the I And those more terms in these some will to also specific going dispo

particularly So as relates are focused size it's summarizing, Color understand want some first to on we pool. if the you of it was today, back of and on where but our the sit do assets. I that be more quarter this the disposition mostly lumpy on people to of second based month will track,

you're deals, overall Heath, that's think And footages that? instances. want do were to there pretty these So really it's I add portfolio, indicative based what doing you don't anchor but impactful. we're the these square the when doing in of to on

Heath Fear

No.

you've it think I well. captured

John Kite

Great. right. All Okay.

Christy McElroy

update And the of then capital site on maybe Pan ultimately? plans still just master you for ultimate this provide the And could bought, with ownership the an Am developer outlay, you interest, be potential project garage piece will monetization.

John Kite

Yes.

think a to I maximize of due price all, separate several garage the the value the land. relates control We were garage, the of years intention below-market acquire fact first whole to our to ownership site able as an all in to at along, the to the parcel. was that extreme it this was ago land

trying all again, to is it project and did that order in that, of kind intention. to cetera. move us complicated always knew in our continues was investment. forward always early the do what That we picture, a that. need will that maximize large ownership to the Overall, of total we sense the of et maximize as and, pursuing we project of to dynamics So always this to would value, percentages, It's relates our that value too to say the be big

in push for is master approvals of of et this to to project forward the think all our its of this terms to associated developer, that and developer incentive master project I continue then clearly and be packages, intention, cetera. the

our but little get a much the than plan. parcel that, further always to was And valuable. frankly, entire So more this makes of it, early part

Heath Fear

And Christy, noting original it's Am was that also our the guidance. in project Pan worth

debt-to-EBITDA terms contemplated. was goals, our net in So that of

Christy McElroy

Thank Okay. you.

John Kite

you. Thank

Operator

Thank you.

from is Thomas question Todd from next KeyBanc. Our

is Your line now open.

Todd Thomas

ramp and John, previously between morning. good kind ramping, occupancy thanks, talked talked point any spread we sort that growth same-store move-outs of you sort what with and magnitude context, about occurred. and, how have to quarter in potential that basis expect compares that of rate, that of the should XXX in Hi, or the of closures second NOI the about lease the you maybe

John Kite

Todd. Yes,

the little same-store out about, we faded quarter. a and what that you you year were anticipate but increases the been to talking the half we're And the be, bit, I saying ramp-up. year, we've see do – see I the think remainder back the year to I NOI and fourth think is third more we going the of expect think where would of we in as

"R" comparables a little be it think could lower et Us, second particularly cetera. to on quarter to Toys as relates end, continue I bit the with

is think third I fallout. the which for it on So also unanticipated ramp-up. Heath, quarter more budgeted, continues of that have want a room do and to... again, path leaving we're But any fourth you we

Heath Fear

they a one locations, the have quarter. rent. little the model a to percentage noticed we Frank's little than rent some we us our in we a expenses actually We continue to you the quarter, we lighter rent. so pay bit and Payless – and did recoveries any And were any because better No, model continue didn't and of that pay may from first had Yes. modeled first didn't rent, they some

that sort of moderate then again, ramping quarter quarter. the the will and third anticipate, into we up fourth and So second into

Todd Thomas

into occupancy, to ramping increased in little to see dip rise occupancy year? Will in Or expecting quarter we the bit small small you in next later Okay. occupancy terms of are up shop second quarter? And continue shop quarter. so before the the a

John Kite

you continue reach ago, I I long remember trying think to goal XX%. is mean if our shop leased small push percentage. when to we were to

mixture, in of And look the to feel good environment said, about to That continue economic the It be balance, you it. small line push shops continues an to with been very of the retailers. overall kind where pretty if kind We are that. that's and environment shops much are we run where the attractive – our is, at strong.

to we continue It's and part will us. that for merchandising push mixture important continues, mix hard. the that of if the especially an So

full So – when pretty like We anticipate so also tenants, properties a occupancy. there. yes, I more forwards. balance you're we or backwards for moves to pushing our there's think XX% any And to always is moves at options don't or have answer basically, interesting we up available back major anticipate you get incremental the new some as

Todd Thomas

thank All you. Great. right, Okay.

John Kite

Thank you.

Operator

Thank you.

next Bank from Our is Craig question from Schmidt of America.

is now open. line Your

Craig Schmidt

you. Thank

Given is you potential there might that raise the of any the to target? pace dispositions date,

John Kite

position a market to going receiving. be properties really only so think dependent what is to are to want value I it's the to be hit We we're our in that fair in the enough prices. trying we're upon Craig, to we're doing have goals, and pricing accept believe we what

we're think range. have But to that. through So we of an capital, non-core going do if test of more in down leverage in sales little way hit that, and hit the used top And again, high we kind we we'll always we've other we top joint before, that in that to then range, over we below that the were activity, the that that – to we natural possible venture it it's our get a just or that. that think goal then EBITDA I get as but than real the would that, market said to is rather if go end would even that growth, of end likely be goal either Xx, de-leveraging want potentially because dispo to more can straight the than offensive

if position. very try we position So a to more we'll were that good offensively do to in in be things

Craig Schmidt

And your the end-loaded, of that impact more if guidance? are dispositions drag raise on some might front the

Heath Fear

our kind Yes, our situation, disposition if underperform we FFO. will we that it's Craig, that outperform plans, of

we are more can done it'll disposition Yes, But then be as still XXXX? to less our faster average dilutive dilutive. year-over-year, the than So August these now, listen, we extent will. Will get we it as be but modeling in of things right date. that,

as done quickly we're possible. happy So as it have to

Craig Schmidt

thing, or tenants? local the more increases, And national on those regional, Great. small last then are shop

John Kite

Tom, do you want to...

Tom McGowan

diverse, would Craig, tenants medical, we the just uses, what These Yes. of be be in tenant whether services. more various really like it's terms very fitness, the local base type mostly that And just tenants. about is of

seen local. So a mostly part, most but the we've for mix, nice

John Kite

I think, are ownership. sense Craig, lot of those local of the in a also,

deals. Some of them national are franchise

lot a doing the the has who us see deals you – a So local franchise is the which franchise of national owner player of usually multiple are that locations.

and locally but see marketing can be names with you would budget. So a owned the then national that supported names

too. thing, nice a that's So

the you I our So grocery XX% basically, were at balance, all opened, tenants quarter, when openings in our service. of think openings I you more look the that when the of we've mean, entertainment, look at and restaurant, specifically,

be in very we to openings our So experiential continue and necessity-based.

most So to important that's what's us.

Craig Schmidt

Great. Thank you.

John Kite

you. Thank

Operator

Thank question R.J. from next [Operator our Baird. And Milligan you. is Instructions] from

R.J. Milligan

Hey, guys. good morning,

John Kite

Good morning.

R.J. Milligan

curious if the you already that on could color have bit of the under was little sold I assets you give buyers a contract. or guys of have

John Kite

pretty five say couple deals them It's of Of I'd of a with a the R.J., is positive. XXXX. also more buyers. and Sure. sold, we've then institutional-type local would diverse, were which couple of them kind be I'd institutional backing say that

to the what were that depth that think a of pricing. that's sense I definitely have the – lot and have the of by our number people know of ability the this. question surprised the So in a offers, of of We is I that that real leverage is depth

been So I think that's a positive.

remain I year move that'll and would accelerate deploy same, as continue people that, the the think through maybe Assuming conditions that capital. even overall and the we

R.J. Milligan

you about versus talk maybe driver Is they're are And stability looking it for growth? what guys for the to it buying value-add you could buying for when those Is see What looking seems that assets. they're they – opportunities? looking that at buyers looking purchase... that of be those

John Kite

yes, it's the it's of above. – think I I all think

where couple more knowing of We who that is value-add in a more thinking stability local very the well long of in. player a had interested fairly locked term – yield and of some is we in had think are their a I sense very, buyers play. just one situation

properties that's us, stable we stable that people with properties to Whereas the more really the while in be the don't these we're I way NOI, per thing, produce particular to – looking objectives want capital what it's match are take foot of other they not different believe, and and, grow grow going generally than these again, nice terms you've So up think is to got may some seeking of properties, are square our going we probably results, that, price. our for do. drives to demography,

and below the I the – below example, think portfolio our in ABR the objectives $XX, the sold that are. was definitely growth an we five As where NOI in was

So thought it regard. it's in what would that be we

R.J. Milligan

That's for Okay. And I helpful. guess one one last Heath.

you'd itself pro more opportunistic be the curious, bit of end – guidance, Is closer in debt-to-EBITDA. to over at disposition said target? sort balance What's is it forma, terms to several of dispositions, lends X X.X? And you years? you're are little Xx next this to top what's the under the Or if long-term run the leverage it going hit you the just X? to that and Craig's you If level below like that a sheet question, I'm the of just

Heath Fear

Yes.

high mid a X.X I activity, Xs, your sort and As it. based basis. somewhere be acquisition between an on you're anchoring high doing, and principle, long-term what an area to But comfortable above disposition of we'd And below is and activity, you'll Xs. on your float development think,

R.J. Milligan

Thanks Great. That’s guys. helpful.

John Kite

you. Thank

Operator

I Thank turn and am I time, back would the for remarks. to questions. closing no Kite, At you. further to showing over CEO, this Chairman call John like

John Kite

joining Okay. you, Well, we everyone to soon. everyone, thank forward and us, look seeing for

Operator

Ladies participation gentlemen, you conference. in This and concludes thank the your today's program. for

now disconnect. may You

Kite Realty Group Trust (KRG) 11 May 192019 Q1 Earnings call transcript