10-K 1 krg-20151231x10k.htm FORM 10K FOR THE YEAR ENDED DECEMBER 31, 2015 10-K
UNITED STATES
 
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
FORM 10-K

(Mark One)
 
 
x
Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the fiscal year ended December 31, 2015
o
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the transition period from ___________to___________
 
Commission File Number: 001-32268 (Kite Realty Group Trust)
 
Commission File Number: 333-202666-01 (Kite Realty Group, L.P.)

Kite Realty Group Trust
Kite Realty Group, L.P.
(Exact name of registrant as specified in its charter)
Maryland (Kite Realty Group Trust)
 
11-3715772
Delaware (Kite Realty Group, L.P.)
 
20-1453863
(State or other jurisdiction of incorporation or organization)
 
(IRS Employer Identification No.)
 
 
 
30 S. Meridian Street, Suite 1100
Indianapolis, Indiana 46204
(Address of principal executive offices) (Zip code)
 
 
 
(317) 577-5600
(Registrant’s telephone number, including area code)
 
 
 
Title of each class
 
Name of each exchange on which registered
Common Shares, $0.01 par value
 
New York Stock Exchange
 
Securities registered pursuant to Section 12(g) of the Act:  None
 
 
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.
Kite Realty Group Trust
Yes   x
No  o
Kite Realty Group, L.P.
Yes   x
No  o

 
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 of Section 15(d) of the Act.
 
Kite Realty Group Trust
Yes   o
No  x
Kite Realty Group, L.P.
Yes   o
No  x

 
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 
Kite Realty Group Trust
Yes   x
No  o
Kite Realty Group, L.P.
Yes   x
No  o

 
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Kite Realty Group Trust
Yes   x
No  o
Kite Realty Group, L.P.
Yes   x
No  o

  
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
 
 
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Kite Realty Group Trust:
Large accelerated filer
x
Accelerated filer
o
Non-accelerated filer
(do not check if a smaller reporting company)
o
Smaller reporting company
o
 
Kite Realty Group, L.P.:
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
(do not check if a smaller reporting company)
x
Smaller reporting company
o


Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act)
Kite Realty Group Trust
Yes   o
No  x
Kite Realty Group, L.P.
Yes   o
No  x

 
The aggregate market value of the voting and non-voting common shares held by non-affiliates of the Registrant as the last business day of the Registrant’s most recently completed second quarter was $2.0 billion based upon the closing price on the New York Stock Exchange on such date.
 
 
The number of Common Shares outstanding as of February 22, 2016 was 83,408,604 ($.01 par value).
 
 
Documents Incorporated by Reference
 
Portions of the definitive Proxy Statement relating to the Registrant’s Annual Meeting of Shareholders, scheduled to be held on May 11, 2016, to be filed with the Securities and Exchange Commission, are incorporated by reference into Part III, Items 10-14 of this Annual Report on Form 10-K as indicated herein.



EXPLANATORY NOTE


This report combines the annual reports on Form 10-K for the year ended December 31, 2015 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 and operation, acquisition, development and redevelopment of high-quality neighborhood and community shopping centers in select markets in the United States. The Parent Company is the sole general partner of the Operating Partnership and as of December 31, 2015 owned approximately 97.8% of the common partnership interests in the Operating Partnership (“General Partner Units”). The remaining 2.2% 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 because 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-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-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 TRUST AND KITE REALTY GROUP, L.P. AND SUBSIDIARIES
Annual Report on Form 10-K
For the Fiscal Year Ended
December 31, 2015
 
 
TABLE OF CONTENTS
 
 
 
 
Page
 
 
 
 
 
 
 
 
Item No.
 
 
 
 
 
 
 
Part I
 
 
 
 
 
 
 
1
 
1A.
 
1B.
 
2
 
3
 
4
 
 
 
 
 
Part II
 
 
 
 
 
 
 
5
 
6
 
7
 
7A.
 
8
 
9
 
9A.
 
9B.
 
 
 
 
 
Part III
 
 
 
 
 
 
 
10
 
11
 
12
 
13
 
14
 
 
 
 
 
Part IV
 
 
 
 
 
 
 
15
 
 
 
 
 



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, uncertainties and other factors that might cause such differences, some of which could be material, include but are not limited to:
 
national and local economic, business, real estate and other market conditions, particularly in light of low growth in the U.S. economy as well as uncertainty added to the economic forecast due to oil and energy prices remaining relatively low in 2015 and early 2016;
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 bankruptcies;
the competitive environment in which we operate;
acquisition, disposition, development and joint venture risks;
property ownership and management risks;
our ability to maintain our status as a real estate investment trust (“REIT”) for federal income tax purposes;
potential environmental and other liabilities;
impairment in the value of real estate property we own;
risks related to the geographical concentration of our properties in Florida, Texas, and Indiana;
insurance costs and coverage;
risks related to 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, from time to time, in other reports we file 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.

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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, a publicly-held real estate investment trust, through its majority-owned subsidiary, Kite Realty Group, L.P., owns interests in various operating subsidiaries and joint ventures engaged in the ownership, operation, acquisition, development, and redevelopment of high-quality neighborhood and community shopping centers in selected markets in the United States.  We derive revenues primarily from rents and reimbursement payments received from tenants under leases at our properties.  Our operating results therefore depend materially on the ability of our tenants to make required rental payments, conditions in the United States retail sector and overall economic and real estate market conditions.


As of December 31, 2015, we owned interests in 110 retail operating properties totaling approximately 22.0 million square feet of gross leasable area (including approximately 6.7 million square feet of non-owned anchor space) located in 20 states.  Our retail operating portfolio was 95.4% leased to a diversified retail tenant base, with no single retail tenant accounting for more than 3.4% of our total annualized base rent. In the aggregate, our largest 25 tenants accounted for 36.4% of our annualized base rent.  See Item 2, “Properties” for a list of our top 25 tenants by annualized base rent.

  
As of December 31, 2015, we had an interest in three development projects under construction. Upon completion, these projects are anticipated to have approximately 0.6 million square feet of gross leasable area. In addition to our development projects, as of December 31, 2015, we had six redevelopment projects, which are expected to contain 1.2 million square feet of gross leasable area upon completion.
 
  
Significant 2015 Activities
 

Operating Activities
  

We continued to drive strong operating results from our portfolio as follows: 
 
Same Property Net Operating Income ("Same Property NOI") increased 3.5% in 2015 compared to 2014 primarily due to increases in rental rates, and improved expense control and expense recoveries;
We executed leases on 188 new and 181 renewal individual spaces for approximately 2.1 million square feet of retail space in 2015, which are both records for the Company; and
Continued to maintain our operational excellence. We believe our efficiency metrics, which we define as a combination of operating margin and general and administrative expenses to revenue, are in the top third of our peer group.


Portfolio Recycling and Acquisition Activities
 
 

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In March 2015, we sold seven retail operating properties for aggregate gross proceeds of $167.4 million and a net gain of $3.4 million. In addition, in December 2015, we sold two properties for gross proceeds of $44.9 million and a net gain of $0.6 million.

 
During 2015, we acquired four operating properties with total gross leasable area ("GLA") of approximately 928,000 square feet (617,000 square feet of owned GLA) for an aggregate purchase price of $185.8 million, including the following:

Colleyville Downs – In April 2015, we acquired this shopping center with total GLA of 200,900 square feet (185,800 square feet of owned GLA) in Dallas, Texas.  Primary anchor tenants for this center include Whole Foods Market, Ace Hardware, and Petco.
Belle Isle Station – In May 2015, we acquired this shopping center with total GLA of 396,400 square feet (164,300 square feet of owned GLA) in Oklahoma City, Oklahoma.  Anchor tenants for this center include Nordstrom Rack, Old Navy, Ross Dress for Less, Shoe Carnival, Babies ‘R Us, Party City, Kirkland’s and a non-owned Wal-Mart Supercenter.
Livingston Shopping Center – In July 2015, we acquired this shopping center with total and owned GLA of 139,700 square feet in Livingston, New Jersey.  Anchor tenants for this center include Nordstrom Rack, TJ Maxx, Cost Plus World Market, Buy Buy Baby, DSW and Ulta.
Chapel Hill Shopping Center – In August 2015, we acquired this shopping center with total GLA of 191,200 square feet (126,800 square feet of owned GLA) in Fort Worth, Texas.  In connection with the acquisition, we assumed an $18.3 million fixed rate mortgage. Anchor tenants for this center include HEB Grocery, The Container Store and Cost Plus World Market.


Development and Redevelopment Activities
 
 
During 2015, we initiated, advanced, and completed a number of development and redevelopment activities, including the following:

Parkside Town Commons – Phase II near Raleigh, North Carolina We commenced construction on Phase II of this development with total GLA of 347,800 square feet (297,400 square feet of owned GLA) in the second quarter of 2014. Field & Stream and Golf Galaxy both opened in 2014 and Frank Theatres opened in July of 2015. The property is expected to be stabilized in the second half of 2016.
Holly Springs Towne Center – Phase II near Raleigh, North Carolina – We commenced construction on Phase II of this development with total GLA of 154,000 square feet (122,000 square feet of owned GLA) in the third quarter of 2014.  Phase II of the development is anchored by Bed Bath & Beyond, which opened in December 2015, and DSW, which is expected to open in the first half of 2016. The remaining anchor, Carmike Theatres, is expected to open in the summer of 2016.
Tamiami Crossing in Naples, Florida We commenced site work on this development with total GLA of 141,600 square feet (121,600 square feet of owned GLA) in the fourth quarter of 2014.  The development is expected to be stabilized by the second half of 2016. This center will be anchored by Stein Mart, Ulta, Michaels, Marshalls, Ross Dress for Less and Petsmart.
Gainesville Plaza in Gainesville, Florida – We substantially completed construction on this redevelopment and transitioned this project to the operating portfolio in the fourth quarter of 2015.  This center is anchored by Burlington Coat Factory and Ross Dress for Less.
Cool Spring Market in Nashville, Tennessee – We completed the relocation of an existing Staples to a new, smaller space and executed new leases with Buy Buy Baby and DSW on this redevelopment. We transitioned this project to the operating portfolio in the fourth quarter of 2015.



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Financing and Capital Raising Activities.
 
 
Our primary business objectives are to generate increasing cash flow, achieve long-term growth and maximize shareholder value primarily through the operation, acquisition, development and redevelopment of well-located community and neighborhood shopping centers.  In 2015, we were able to strengthen our balance sheet and improve our financial flexibility and liquidity to fund future growth.  We ended the year with approximately $373 million of combined cash and borrowing capacity on our unsecured revolving credit facility.  Significant financing and capital raising activities included:

In June 2015, we increased the existing unsecured term loan with a maturity date of July 1, 2019 from $230 million to $400 million.
In September 2015, the Operating Partnership issued $250 million of senior unsecured notes at a blended rate of 4.41% and an average maturity of 9.8 years.
In October 2015, we entered into a new seven-year unsecured term loan ("7-Year Term Loan") for up to $200 million. In December 2015, we retired the $90 million loan that was secured by City Center utilizing a draw on our unsecured revolving credit facility. Later in December 2015, we drew $100 million on the term loan and used the proceeds to pay down the unsecured revolving credit facility.
In December 2015, we redeemed all 4,100,000 outstanding shares of our 8.250% Series A Cumulative Redeemable Perpetual Preferred Share (“Series A Preferred Shares”).
During 2015, we retired $233.1 million of property level secured debt.
 

2015 Cash Distributions
 
 
In 2015, we declared total cash distributions of $1.09 per common share and $2.0912 per share of our Series A Preferred Shares.  The cash distribution per share of our Series A Preferred Shares includes the amount equal to all accrued and unpaid dividends up to, but not including, the redemption date of December 2, 2015.  On February 4, 2016, our Board of Trustees approved a quarterly common share distribution of $0.2875 per common share for the first quarter of 2016, which represents a 5.5% increase over our previous quarterly distribution.


Business Objectives and Strategies
 
 
Our primary business objectives are to increase the cash flow and build or realize capital appreciation of our properties, achieve sustainable long-term growth and maximize shareholder value primarily through the operation, acquisition, development, and redevelopment of well-located community and neighborhood shopping centers.  We invest in properties with well-located real estate and strong demographics and we use our effective leasing and management strategies to improve the long-term values and economic returns of our properties.  We believe that many of our properties represent opportunities for future renovation 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 those properties to a 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;
Growth Strategy: Using debt and equity capital prudently to selectively acquire additional retail properties, redevelop or renovate our existing properties, and develop shopping centers on land parcels that we currently

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own or newly acquired land where we believe that investment returns would meet or exceed internal benchmarks; and
Financing and Capital Preservation Strategy: Maintaining a strong balance sheet with sufficient flexibility to fund our operating and investment activities.  Funding sources include the public equity and debt market, our existing revolving credit facility, new secured debt, internally generated funds, proceeds from selling land and properties that no longer fit our strategy, and potential strategic joint ventures. We continuously monitor the capital markets and may consider raising additional capital when appropriate.


Operating Strategy. Our primary operating strategy is to maximize rental rates 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 maintain and, in many cases, increase 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 in an effort to limit our exposure to the financial condition of any one tenant or any category of tenants;
maintaining the physical appearance, condition, and design of our properties and other improvements located on our properties to maximize our ability to attract customers;
actively managing costs 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-tenanting space; and
taking advantage of under-utilized land or existing square footage, reconfiguring properties for better use, or adding ancillary income areas to existing facilities.


We successfully executed our operating strategy in 2015 in a number of ways, including improving our Same Property NOI by 3.5% and generating blended new and renewal positive cash leasing spreads of 11.4% in 2015.  We have also been successful in maintaining a diverse retail tenant mix with no tenant accounting for more than 3.4% of our annualized base rent. See Item 2, “Properties” for a list of our top tenants by gross leasable area and annualized base rent.


Growth Strategy. Our growth strategy includes the selective deployment of resources to projects that are expected to generate investment returns that meet or exceed our internal benchmarks. We continue to implement our growth strategy in a number of ways, including:
  
selectively pursuing the acquisition of retail operating properties, portfolios and companies in markets with strong demographics;
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 anchor space while increasing rental rates, or re-leasing to existing tenants at increased rental rates; and
disposing of selected assets that no longer meet our long-term investment criteria and recycling the net proceeds into assets that provide maximum returns and rent growth potential in targeted markets or using the proceeds to improve our financial position.


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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 combined 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 sale, and other related factors;
the current tenant mix at the property and the potential future tenant mix that the demographics of the property could support, including the presence of one or more additional anchors (for example, value retailers, grocers, soft goods stores, office supply stores, or sporting goods retailers), as well as an overall diverse tenant mix that includes restaurants, shoe and clothing retailers, specialty shops and service retailers such as banks, dry cleaners and hair salons, some of which provide staple goods to the community and offer a high level of convenience;
the 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.


In 2015, we were successful in completing and integrating the acquisition of four high-quality retail properties that enabled us to expand our presence in our core markets.  We also delivered three very strong development and redevelopment projects to the operating portfolio, and we expect to deliver several more projects in 2016. In addition, we are currently evaluating additional redevelopment, repositioning, and repurposing opportunities at a number of operating properties. Total estimated costs for these projects are expected to be in the range of $130 million to $145 million.
 
 
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 sale of common or preferred shares through public offerings or private placements, the reinvestment of 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 our level and type of indebtedness and when making decisions regarding additional borrowings.  Among these factors are the construction costs or purchase prices 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 of particular properties to generate cash flow to cover expected debt service.
 
 
Our efforts to strengthen our balance sheet are important.  We achieved an investment grade credit rating in 2014.  We expect that will enable us to opportunistically access the public unsecured bond market at some point and otherwise 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. In addition, through the retirement of property level secured debt in 2015, we were able to unencumber approximately $440 million of gross assets associated with our operating properties.
 
 
We intend to continue implementing our financing and capital strategies in a number of ways, including:
  
prudently managing our balance sheet, including maintaining sufficient capacity under our unsecured revolving credit facility so that we have additional capacity available to fund our development and redevelopment projects and pay down maturing debt if refinancing that debt is not feasible;

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extending the 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;
evaluating whether to enter into construction loans prior to commencement of vertical construction to fund our larger developments and redevelopments;
managing our exposure to interest rate increases on our variable-rate debt through the 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 to mitigate risk.


Competition
 
 
The United States commercial real estate market continues to be highly competitive. We face competition from other 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 in any of the primary markets where our properties are located are dominant in that market.
 
 
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.
 
 
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. Our properties must comply with Title III of the Americans with Disabilities Act, or 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 the imposition of fines or an award of damages to private litigants. 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. Effective January 2015, we may be subject to excise taxes under the employer mandate provisions of the Affordable Care Act ("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'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 million, as we have 145 full-time employees as of December 31, 2015.
 
 

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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, one of our properties has contained asbestos-containing building materials, or ACBM, and another property 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 have 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, and industry practice. Certain risks such as loss from riots, war or acts of God, and, in some cases, flooding are not insurable; 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 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.
 
 
Employees
 
 
As of December 31, 2015, we had 145 full-time employees. The majority of these employees were based at our Indianapolis, Indiana headquarters.
 
 
Segment Reporting
 
 
Our primary business is the ownership and operation of neighborhood and community shopping centers. We do not distinguish or group our operations on a geographical basis, or any other basis, when measuring performance. Accordingly, we have one operating segment, which also serves as our reportable segment for disclosure purposes in accordance with GAAP.
 

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Available Information
 
 
Our Internet 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 Internet 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.


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 flows, 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:
  
risks related to our operations;
risks related to our organization and structure; and
risks related to tax matters.


RISKS RELATED TO OUR OPERATIONS
 
 
Because of our geographical concentration in Florida, Indiana and Texas, a prolonged economic downturn in these states 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, 2015, 26% of our owned square footage and 25% of our total annualized base rent was located in Florida, 17% of our owned square footage and 15% of our total annualized base rent was located in Indiana and 13% of our owned square footage and 13% of our total annualized base rent was located in Texas.  This level of concentration could expose us to greater economic risks than if we owned properties in numerous geographic regions. Many states continue to deal with state fiscal budget shortfalls and high unemployment rates. Adverse economic or real estate trends in Florida, Indiana, Texas, 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 our financial condition, results of operations, cash flow, the trading price of our common shares and our ability to satisfy our debt service obligations and to pay distributions to our shareholders.
 
 

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Disruptions in the financial markets could affect our ability to obtain financing on reasonable terms, or at all, and have other material adverse effects on our business.
 
 
Disruptions in the credit markets generally, or relating to the real estate industry specifically, may adversely affect our ability to obtain debt financing at favorable rates or at all.  These disruptions could impact the overall amount of debt financing available, lower loan to value ratios, cause a tightening of lender underwriting standards and terms and higher interest rate spreads. As a result, we may be unable to refinance or extend our existing indebtedness or the terms of any refinancing may not be as favorable as the terms of our existing indebtedness. For example, as of December 31, 2015, we had approximately $263 million and $17 million of debt maturing in 2016 and 2017, respectively. We intend to retire $100 million of the 2016 maturities utilizing the remaining capacity on the 7-Year Term Loan. If we are not successful in refinancing our remaining outstanding debt when it becomes due, we may be forced to dispose of properties on disadvantageous terms, which might adversely affect our ability to service other debt and to meet our other obligations. We currently have sufficient capacity under the unsecured revolving credit facility to retire outstanding debt in the event we are not able to refinance such debt when it becomes due, but we cannot provide any assurances that we will be able to maintain that capacity in order to retire any or all of these loans at maturity.
 
 
If economic conditions deteriorate in any of our markets, we may be forced to seek alternative sources of potentially less attractive financing, and have to adjust our business plan accordingly. In addition, we may be unable to obtain permanent financing on development projects we temporarily financed with construction loans.  Our inability to obtain such permanent financing on favorable terms, if at all, could delay the completion of our development projects and/or cause us to incur additional capital costs in connection with completing such projects, either of which could have a material adverse effect on our business and our ability to execute our business strategy. These events also may make it more difficult or costly for us to raise capital through the issuance of our common shares or preferred shares. The disruptions in the financial markets have had and may continue to have a material adverse effect on the market value of our common shares and other adverse effects on our business.


If our tenants are unable to secure financing necessary to continue to operate and grow their businesses and pay us rent, we could be materially and adversely affected.
 
 
Many of our tenants rely on external sources of financing to operate and grow their businesses.  Disruptions in credit markets, as discussed above, may adversely affect our tenants’ ability to obtain debt financing at favorable rates or at all.  If our tenants are unable to secure financing necessary to continue to operate their businesses, they may be unable to meet their rent obligations to us or enter into new leases with us or be forced to declare bankruptcy and reject our leases, which could materially and adversely affect us.
 
 
Ongoing challenging conditions in the United States and global economy, and the challenges facing our retail tenants and non-owned anchor tenants may have a material adverse effect on our financial condition and results of operations.
 
 
Certain sectors of the United States economy are still experiencing weakness.  Over the past several years, this structural weakness has resulted in periods of high unemployment, the bankruptcy or weakened financial condition of a number of retailers, decreased consumer spending, increased home foreclosures, low consumer confidence, and reduced demand and rental rates for certain retail space. Market conditions remain challenging as higher than historical levels of unemployment and lower consumer confidence have persisted.  There can be no assurance that the recovery will continue. General economic factors that are beyond our control, including, but not limited to, economic recessions, decreases in consumer confidence, reductions in consumer credit availability, increasing consumer debt levels, rising energy costs, higher tax rates, continued business layoffs, downsizing and industry slowdowns, and/or rising inflation, could have a negative impact on the business of our retail tenants.  In turn, this could have a material adverse effect on our business because current or prospective tenants may, among other things, (i) have difficulty paying their rent obligations as they struggle to sell goods and services to consumers, (ii) be unwilling to enter into or renew leases with us on favorable terms or at all, (iii) seek to terminate their existing leases with us or request rental concessions on such leases, or (iv) be forced to curtail operations or declare bankruptcy.  We are also susceptible to other developments that, while not directly tied to the economy, could have a material adverse effect on our business. These developments include relocations of businesses, changing demographics, increased Internet shopping, infrastructure quality, federal, state, and local budgetary constraints and priorities, increases in real estate and other taxes, costs of complying with government regulations or increased regulation, decreasing valuations of real estate, and other factors.
 

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Further, we continually monitor events and changes in circumstances that could indicate that the carrying value of our real estate assets may not be recoverable.  The ongoing challenging market conditions could require us to recognize an impairment charge, with respect to one or more of our properties, or a loss on disposition of one or more of our properties. 
 
 
Our real estate assets may be subject to impairment charges, which may negatively affect our net income.
 
 
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. We evaluate whether there are any indicators, including property operating performance and general market conditions, that the value of the real estate properties (including any related amortizable intangible assets or liabilities) may not be recoverable. Through the evaluation, we compare the current carrying value of the asset to the estimated undiscounted cash flows that are directly associated with the use and ultimate disposition of the asset. Our estimated cash flows are based on several key assumptions, including rental rates, costs of tenant improvements, leasing commissions, anticipated hold periods, and assumptions regarding the residual value upon disposition, including the exit capitalization rate. These key assumptions are subjective in nature and could differ materially from actual results. 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 carrying value over fair value. If such indicators, as described above, are not identified, management will not assess the recoverability of a property's carrying value.
 
 
The fair value of real estate assets is highly subjective and is determined through comparable sales information and other market data if available or through use of an income approach such as the direct capitalization method or the traditional discounted cash flow approach. Such cash flow projections consider factors, including expected future operating income, trends and prospects, as well as the effects of demand, competition and other factors, and therefore are subject to a significant degree of management judgment. Changes in those factors could impact the determination of fair value. In estimating the fair value of undeveloped land, we generally use market data and comparable sales information.


These subjective assessments have a direct impact on our net income because recording an impairment charge results in an immediate negative adjustment to net income. There can be no assurance that we will not take additional charges in the future related to the impairment of our assets. Any future impairment could have a material adverse effect on our results of operations in the period in which the charge is taken.

 
Our business is significantly influenced by demand for retail space generally, and a decrease in such demand may have a greater adverse effect on our business than if we owned a more diversified real estate portfolio.
 
 
Because our portfolio of properties consists primarily of community and neighborhood shopping centers, a decrease in the demand for retail space, due to the economic factors discussed above or otherwise, may have a greater adverse effect on our business and financial condition than if we owned a more diversified real estate portfolio. The market for retail space has been, and could continue to be, adversely affected by weakness in the national, regional and local economies, the adverse financial condition of some large retailing companies, the ongoing consolidation in the retail sector, the excess amount of retail space in a number of markets, and increasing consumer purchases through the Internet. To the extent that any of these conditions occur, they are likely to negatively affect market rents for retail space and could materially and adversely affect our financial condition, results of operations, cash flow, the trading price of our common shares and our ability to satisfy our debt service obligations and to pay distributions to our shareholders.
 
 
The termination of any leases by any non-owned anchor tenant or major tenant with leases in multiple locations, because of a deterioration of its financial condition or otherwise, could have a material adverse effect on our results of operations.
 
 
We derive the majority of our revenue from tenants who lease space from us at our properties. Therefore, 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

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do not contain provisions designed to ensure the creditworthiness of our tenants. At any time, our tenants may experience a downturn in their business that may significantly weaken their financial condition, particularly during periods of economic uncertainty.  In the event of a prolonged or severe economic downturn, our tenants may delay lease commencements, decline to extend or renew leases upon expiration, fail to make rental payments when due, close a number of stores or declare bankruptcy. Any of these actions could result in the termination of the tenant’s leases and the loss of rental income attributable to the terminated leases. Lease terminations or failure of a major tenant or non-owned anchor to occupy the premises could result in lease terminations or reductions in rent by other tenants in the same shopping centers because of contractual co-tenancy termination or rent reduction rights under the terms of some leases.  In that event, we may be unable to re-lease the vacated space at attractive rents or at all.  Additionally, in the event our tenants are involved in mergers with or acquisitions by third parties, such tenants may choose to terminate their leases, vacate the leased premises or not renew their leases if they consolidate, downsize or relocate their operations as a result of the transaction. For example, our tenant Office Depot announced its agreement to merge with Staples, which merger is currently subject to regulatory approvals. These two tenants contribute on a combined basis approximately 2% of our total annualized base rent. In connection with the proposed merger, Office Depot and Staples may choose to close or relocate a number of their stores, which may be stores at premises they lease from us.  In that event, we may experience periods where multiple locations are not leased as we seek new tenants, which would negatively affect our net rental revenues in the near term.  The occurrence of any of the situations described above, 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. As of December 31, 2015, the five largest tenants in our operating portfolio in terms of annualized base rent were Publix, TJX Companies, Petsmart, Bed Bath & Beyond, and Ross Stores, representing 3.4%, 2.6%, 2.2%, 2.2%, and 2.1%, respectively, of our total annualized base rent.
 
 
We face potential material adverse effects from tenant bankruptcies, and we may be unable to collect balances due from any tenant in bankruptcy or replace the tenant at current rates, or at all.
 
 
Tenant bankruptcies may increase during periods of difficult economic conditions. We cannot make any assurance that a tenant that files for bankruptcy protection will continue to pay its rent obligations. A bankruptcy filing by or relating to one of our tenants or a lease guarantor would legally bar our efforts to collect pre-bankruptcy debts from that tenant or the lease guarantor, unless we receive an order permitting us to do so from the bankruptcy court. A tenant or lease guarantor bankruptcy could delay our efforts to collect past due balances under the relevant leases and could ultimately preclude collection of these sums. If a lease is assumed by the 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. 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, and there are restrictions under bankruptcy laws that limit the amount of the claim we can make if a lease is rejected. As a result, it is likely that we will 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.


Moreover, we are continually re-leasing vacant spaces resulting from tenant lease terminations. The bankruptcy of a tenant, particularly an anchor tenant, may make it more difficult to lease the remainder of the affected properties. Future tenant bankruptcies could materially adversely affect our properties or impact our ability to successfully execute our re-leasing strategy.
 
 
We had $1.7 billion of consolidated indebtedness outstanding as of December 31, 2015, which may have a material adverse effect on our financial condition and results of operations and reduce our ability to incur additional indebtedness to fund our growth.
 
 
Required repayments of debt and related interest may materially adversely affect our operating performance. We had $1.7 billion of consolidated outstanding indebtedness as of December 31, 2015.  At December 31, 2015, $711.0 million  of our debt bore interest at variable rates ($215.3 million when reduced by our $495.7 million of fixed interest rate swaps). Interest rates are currently low relative to historical levels and may increase significantly in the future. If our interest expense increased significantly, it could materially adversely affect our results of operations. For example, if market rates of interest on our variable rate debt outstanding, net of cash flow hedges, as of December 31, 2015 increased by 1%, the increase in interest expense on our unhedged variable rate debt would decrease future cash flows by $2.2 million annually.
 
 

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We also intend to incur additional debt in connection with various development and redevelopment projects and may incur additional debt with acquisitions of 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 incur or 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 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:
 
requiring us to use a substantial portion of our funds from operations to pay principal and interest, which reduces the amount available for distributions;
placing us at a competitive disadvantage compared to our competitors that have less debt;
making us more vulnerable to economic and industry downturns and reducing our flexibility in responding to changing business and economic conditions; and
limiting our ability to borrow more money for operating or capital needs or to finance development and acquisitions in the future.


Agreements with lenders supporting our unsecured revolving credit facility and various other loan agreements contain default provisions which, among other things, could result in the acceleration of principal and interest payments or the termination of the facilities.
 
 
Our unsecured revolving credit facility and various other debt agreements contain certain Events of Default which include, but are not limited to, failure to make principal or interest payments when due, failure to perform or observe any term in the agreement, covenant or condition contained in the agreements, failure to maintain certain financial and operating ratios and other criteria, misrepresentations, acceleration of other material indebtedness and bankruptcy proceedings.  In the event of a default under any of these agreements, the lender would have various rights including, but not limited to, the ability to require the acceleration of the payment of all principal and interest due and/or to terminate the agreements and, to the extent such debt is secured, to foreclose on the properties.  The declaration of a default and/or the acceleration of the amount due under any such credit agreement could have a material adverse effect on our business, limit our ability to make distributions to our shareholders, prevent us from obtaining additional funds needed to address cash shortfalls or pursue growth opportunities.


Certain of our fixed-rate and variable-rate loans contain cross-default provisions which provide that a violation by the Company of any financial covenant set forth in our unsecured revolving credit facility agreement will constitute an event of default under the loans.  The agreements relating to our unsecured revolving credit facility, Term Loan and 7-Year Term Loan contain provisions providing that any “Event of Default” under one of these facilities or loans will constitute an “Event of Default” under the other facility or loan. In addition, these agreements relating to our unsecured revolving credit facility, Term Loan and 7-Year Term Loan, as well as the agreement relating to our senior unsecured notes, include a provision providing that any payment default under an agreement relating to any material indebtedness will constitute an “Event of Default” thereunder. These provisions could allow the lending institutions to accelerate the amount due under the loans.  If payment is accelerated, our assets may not be sufficient to repay such debt in full, and, as a result, such an event may have a material adverse effect on our cash flow, financial condition and results of operations.  We were in compliance with all applicable covenants under the agreements relating to our unsecured revolving credit facility, Term Loan, 7-Year Term Loan and senior unsecured notes as of December 31, 2015, although there can be no assurance that we will continue to remain in compliance.

 
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.
 
 

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A significant amount of our indebtedness is secured by our real estate assets. If a property or group of properties is mortgaged to secure payment of debt and we are unable to meet mortgage payments, the holder of the mortgage or lender could foreclose on the property, resulting in the loss of our investment. 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 outstanding 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. 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 of cross-collateralization or cross-default provisions contained in certain of our mortgage loans, a default under one mortgage loan 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.
 
 
We are subject to risks associated with hedging agreements.
 
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 risks associated with interest rate fluctuations. There can be no assurance that our hedging activities will have the desired beneficial impact 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 the hedging agreement.
 
 
Our performance and value are subject to risks associated with real estate assets and with the real estate industry.
 
 
Our ability to make expected distributions to our shareholders depends on our being able to generate substantial revenues from our properties. Periods of economic slowdown or recession, rising interest rates or declining demand for real estate, or the public perception that any of these events may occur, could result in a general decline in rents or an increased incidence of defaults under existing leases. Such events would materially and adversely affect our financial condition, results of operations, cash flow, per share trading price of our common shares and our ability to satisfy debt service obligations and to make distributions to shareholders.
 
 
In addition, other events and conditions generally applicable to owners and operators of real property that are beyond our control may decrease cash available for distribution and the value of our properties. These events include but are not limited to:
 
 
adverse changes in the national, regional and local economic climate, particularly in: Florida, where 26% of our owned square footage and 25% of our total annualized base rent is located; Indiana, where 17% of our owned square footage and 15% of our total annualized base rent is located; and Texas, where 13% of our owned square footage and 13% of our total annualized base rent is located;
tenant bankruptcies;
local oversupply of rental space, increased competition or reduction in demand for rentable space;
inability to collect rent from tenants or having to provide significant rent concessions to tenants;
vacancies or our inability to rent space on favorable terms;
changes in market rental rates;
inability to finance property development, tenant improvements and acquisitions on favorable terms;
increased operating costs, including costs incurred for maintenance, insurance premiums, utilities and real estate taxes;
the need to periodically fund the costs to repair, renovate and re-lease space;
decreased attractiveness of our properties to tenants;

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weather conditions that may increase or decrease energy costs and other weather-related expenses (such as snow removal costs);
costs of complying with changes in governmental regulations, including those governing health, safety, usage, zoning, the environment and taxes;
civil unrest, acts of terrorism, earthquakes, hurricanes and other national disasters or acts of God that may result in underinsured or uninsured losses;
the relative illiquidity of real estate investments;
changing demographics; and
changing customer traffic patterns.


Our financial covenants may restrict our operating and acquisition activities.
 
 
Our unsecured revolving credit facility contains certain financial and operating covenants, including, among other things, certain coverage ratios, as well as limitations on our ability to incur debt, make dividend payments, sell all or substantially all of our assets and engage in mergers and consolidations and certain acquisitions. These covenants may restrict our ability to pursue certain business initiatives or certain acquisition transactions. In addition, certain of our mortgages contain customary covenants which, among other things, limit our ability, without the prior consent of the lender, to further mortgage the property, to enter into new leases or materially modify existing leases, and to discontinue insurance coverage.  Failure to meet any of the financial covenants could cause an event of default under and/or accelerate some or all of our indebtedness, which could have a material adverse effect on us.
 
 
Our current and future joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on joint venture partners’ financial condition, any disputes that may arise between us and our joint venture partners and our exposure to potential losses from the actions of our joint venture partners.
 
 
As of December 31, 2015, we owned 10 of our operating properties through consolidated joint ventures and one through an unconsolidated joint venture. As of December 31, 2015, the 10 properties represented 13.4% of the annualized base rent of the portfolio. In addition, we currently own land held for development through one joint venture.  Our joint ventures may involve risks not present with respect to our wholly owned properties, including the following:

 
we may share decision-making authority with our joint venture partners regarding certain major decisions affecting the ownership or operation of the joint venture and the joint venture property, such as the sale of the property or the making of additional capital contributions for the benefit of the property, which may prevent us from taking actions that are opposed by our joint venture partners;
prior consent of our joint venture partners may be required for a sale or transfer to a third party of our interests in the joint venture, which restricts our ability to dispose of our interest in the joint venture;
our joint venture partners might become bankrupt or fail to fund their share of required capital contributions, which may delay construction or development of a property or increase our financial commitment to the joint venture;
our joint venture partners may have business interests or goals with respect to the property that conflict with our business interests and goals, which could increase the likelihood of disputes regarding the ownership, management or disposition of the property;
disputes may develop with our joint venture partners over decisions affecting the property or the joint venture, which may result in litigation or arbitration that would increase our expenses and distract our officers and/or trustees from focusing their time and effort on our business and possibly disrupt the day-to-day operations of the property such as by delaying the implementation of important decisions until the conflict or dispute is resolved; and

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we may suffer losses as a result of the actions of our joint venture partners with respect to our joint venture investments, and the activities of a joint venture could adversely affect our ability to qualify as a REIT, even though we may not control the joint venture.


In the future, we may seek to co-invest with third parties through joint ventures that may involve similar or additional risks.
 
 
We face significant competition, which may impede our ability to renew leases or re-lease space as leases expire or require us to undertake unbudgeted capital improvements.
 
 
We compete with numerous developers, owners and operators of retail shopping centers for tenants. These competitors include institutional investors, other 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 in which our properties are located but which have greater capital resources. As of December 31, 2015, leases representing 6.5% of our owned gross leasable area (GLA) were scheduled to expire in 2016.  If our competitors offer space at rental rates below current market rates, or below the rental rates we currently charge our tenants, we may be unable to lease on satisfactory terms to potential tenants, 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 more substantial rent abatements, tenant improvements and early termination rights or accommodate requests for renovations, build-to-suit remodeling and other improvements than we have historically.  As a result, 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. Any capital improvements we undertake may reduce cash available for distributions to shareholders.
 
 
Our future developments and acquisitions may not yield the returns we expect or may result in dilution in shareholder value.
 
 
As of December 31, 2015, we have nine development and redevelopment projects. New development projects and property acquisitions are subject to a number of risks, including, but not limited to:
 
 
abandonment of development activities after expending resources to determine feasibility;
construction delays or cost overruns that may increase project costs;
our investigation of a property or building prior to our acquisition, and any representations we may receive from the seller, may fail to reveal various liabilities or defects or identify necessary repairs until after the property is acquired, which could reduce the cash flow from the property or increase our acquisition costs;
as a result of competition for attractive development and acquisition opportunities, we may be unable to acquire assets as we desire or the purchase price may be significantly elevated, which may impede our growth;
difficulty obtaining financing on acceptable terms or paying operating expenses and debt service costs associated with redevelopment properties prior to sufficient occupancy;
the failure to meet anticipated occupancy or rent levels within the projected time frame, if at all;
inability to operate successfully in new markets where new properties are located;
inability to successfully integrate new properties into existing operations;
exposure to fluctuations in the general economy due to the significant time lag between commencement and completion of redevelopment projects;
failure to receive required zoning, occupancy, land use and other governmental permits and authorizations and changes in applicable zoning and land use laws; and

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the consent of third parties such as tenants, mortgage lenders and joint venture partners may be required, and those consents may be difficult to obtain or could be withheld.


In addition, if a project is delayed or if we are unable to lease designated space to anchor tenants, certain tenants may have the right to terminate their leases. If any of these situations occur, development costs for a project may increase, which may result in reduced returns, or even losses, from such investments. In deciding whether to acquire or develop a particular property, we make certain assumptions regarding the expected future performance of that property. If these new properties do not perform as expected, our financial performance may be materially and adversely affected, or an impairment charge could occur. In addition, the issuance of equity securities as consideration for any acquisitions could be dilutive to our shareholders.
 
 
We may not be successful in pursuing suitable acquisitions, for which we face significant competition, or identifying development and redevelopment projects that meet our investment criteria, which may impede our growth.
 
 
Part of our business strategy is expansion through acquisitions and development and redevelopment projects, which requires us to identify suitable development or acquisition candidates or investment opportunities that meet our criteria and are compatible with our growth strategy. We continue to evaluate the market for available properties and may acquire properties when we believe strategic opportunities exist. However, we may be unable to acquire a desired property because of competition from other real estate investors with substantial capital, including from other REITs and institutional investment funds. Even if we are able to acquire a desired property, competition from other potential acquirers may significantly increase the purchase price. 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 fail 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.
 
 
Development and redevelopment activities may be delayed or otherwise may not perform as expected and, in the case of an unsuccessful redevelopment project, our entire investment could be at risk for loss.
 
 
We currently have three development projects under construction. We have also identified multiple redevelopment opportunities at our operating properties and expect to commence redevelopment in the future. In connection with any development or redevelopment of our properties, we will bear certain risks, including the risk of construction delays or cost overruns that may increase project costs and make a project uneconomical, the risk that occupancy or rental rates at a completed project will not be sufficient to enable us to pay operating expenses or earn the targeted rate of return on investment, and the risk of incurrence of predevelopment costs in connection with projects that are not pursued to completion. In addition, various tenants may have the right to withdraw from a property if a development and/or redevelopment project is not completed on time. In the case of a redevelopment project, consents may be required from various tenants in order to redevelop a center. In the case of an unsuccessful redevelopment project, our entire investment could be at risk for loss, or an impairment charge could occur.
 
 
We may not be able to sell properties when appropriate and could, under certain circumstances, be required to pay certain tax indemnities related to the properties we sell.
 
 
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.  In addition, in connection with our formation at the time of our initial public offering (“IPO”), we entered into an agreement that restricts our ability, prior to December 31, 2016, to dispose of six of our properties in taxable transactions and limits the amount of gain we can trigger with respect to certain other properties without incurring reimbursement obligations owed to certain limited partners of our Operating Partnership. We have agreed that if we dispose of any interest in six specified properties in a taxable transaction before December 31, 2016, we will indemnify the contributors of those properties for their tax liabilities attributable to the built-in gain that exists with respect to such property interest as of the time of our IPO (and tax liabilities incurred as a result of the reimbursement payment). The six properties to which our tax indemnity obligations relate represented 7.4% of our annualized base rent in the aggregate as of December 31, 2015. These six properties are International Speedway Square, Shops at Eagle Creek, Whitehall Pike, Portofino Shopping Center, Thirty South and Market

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Street Village. We also agreed to limit the aggregate gain certain limited partners of our Operating Partnership would recognize with respect to certain other contributed properties through December 31, 2016, to not more than $48 million in total, with certain annual limits, unless we reimburse them for the taxes attributable to the excess gain (and any taxes imposed on the reimbursement payments) and take certain other steps to help them avoid incurring taxes that were deferred in connection with the formation transactions.


The agreement described above is extremely complicated and imposes a number of procedural requirements on us, which makes it more difficult for us to ensure that we comply with all of the various terms of the agreement and therefore creates a greater risk that we may be required to make an indemnity payment. The complicated nature of this agreement also might adversely impact our ability to pursue other transactions, including certain kinds of strategic transactions and reorganizations.
 
 
Also, the tax laws applicable to REITs require that we hold our properties for investment, rather than primarily for sale in the ordinary course of business, which may cause us to forego or defer sales of properties that otherwise would be in our best interest. Therefore, we may be unable to adjust our portfolio mix promptly in response to market conditions, which may adversely affect our financial position. In addition, we will be subject to income taxes on gains from the sale of any properties owned by any taxable REIT subsidiary.
 
 
Uninsured losses or losses in excess of insurance coverage could materially and adversely affect our cash flow, financial condition and results of operations.
 
 
We do not carry insurance for generally uninsurable losses such as loss from riots, war or acts of God, and, in some cases, flooding. Some of our policies, such as those covering losses due to terrorism and floods, are insured subject to limitations involving large deductibles or co-payments and policy limits that may not be sufficient to cover all losses.  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. 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.
 
 
Insurance coverage on our properties may be expensive or difficult to obtain, exposing us to potential risk of loss.
 
 
In the future, we may be unable to renew or duplicate our current insurance coverage at adequate levels or at reasonable prices. In addition, insurance companies may no longer offer coverage against certain types of losses, such as losses due to terrorist acts, environmental liabilities, or other catastrophic events including hurricanes and floods, or, if offered, the expense of obtaining these types of insurance may not be justified. We therefore may cease to have insurance coverage against certain types of losses and/or there may be decreases in the limits of insurance available. If an uninsured loss or a loss in excess of our insured limits occurs, we could lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenue from the property after a covered period of time, but still remain obligated for any mortgage debt or other financial obligations related to the property. We cannot guarantee that material losses in excess of insurance proceeds will not occur in the future. If any of our properties were to experience a catastrophic loss, it could seriously disrupt our operations, delay revenue and result in large expenses to repair or rebuild the property. Events such as these could adversely affect our results of operations and our ability to meet our obligations.
 
 
Rising operating expenses could reduce our cash flow and funds available for future distributions, particularly if such expenses are not offset by corresponding revenues.
 
 

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Our existing properties and any properties we develop or acquire in the future are and will be subject to operating risks common to real estate in general, any or all of which may negatively affect us. The expenses of owning and operating properties generally do not decrease, and may increase, when circumstances such as market factors and competition cause a reduction in income from the properties. As a result, if any property is not fully occupied or if rents are being paid in an amount that is insufficient to cover operating expenses, we could be required to expend funds for that property’s operating expenses. Our properties continue to be subject to increases in real estate and other tax rates, utility costs, operating expenses, insurance costs, repairs and maintenance and administrative expenses, regardless of such properties’ occupancy rates. Therefore, rising operating expenses could reduce our cash flow and funds available for future distributions, particularly if such expenses are not offset by corresponding revenues.


We could incur significant costs related to environmental matters.
 
 
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 by such parties in connection with contamination. 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, may adversely affect the owner’s 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.  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 used or how businesses may be operated on that property.
 
 
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. These tanks may have released, or have the potential to release, such substances into the environment. In addition, some of our properties have tenants that 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 that 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, one of our properties has contained asbestos-containing building materials, or ACBM, and another property may have contained such materials based on the date of its construction. Environmental laws require that ACBM be properly managed and maintained, and may impose fines and penalties 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.
 
 
Our efforts to identify environmental liabilities may not be successful.
 
 
We test our properties for compliance with applicable environmental laws on a limited basis. We cannot give assurance that:
 
existing environmental studies with respect to our properties reveal all potential environmental liabilities;
any previous owner, occupant or tenant of one of our properties did not create any material environmental condition not known to us;
the current environmental condition of our properties will not be affected by tenants and occupants, by the condition of nearby properties, or by other unrelated third parties; or
future uses or conditions (including, without limitation, changes in applicable environmental laws and regulations or the interpretation thereof) will not result in environmental liabilities.



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Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make expenditures that adversely affect our cash flows.
 
 
Our properties must comply with Title III of the Americans with Disabilities Act, or 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 imposition of fines or an award of damages to private litigants and the incurrence of additional costs associated with bringing the properties into compliance. Although we believe the properties in our portfolio substantially comply with present requirements of the ADA, we have not conducted an audit or investigation of all of our properties to determine our compliance. While the 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 basis 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 use regulations, as they may be 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 restrictions could have a material adverse effect on our ability to meet our financial obligations.


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.  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. 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 face risks relating to cybersecurity attacks that could cause loss of confidential information and other business disruptions.


We rely extensively on computer systems to process transactions and manage our business, 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 hacking organizations. A cybersecurity attack could compromise the confidential information of our employees, tenants, and vendors. Additionally, we rely on a number of service providers and vendors, and cybersecurity risks at these service providers and vendors create additional risks for our information and business. A successful attack could lead to identity theft, fraud or other disruptions to our business operations, any of which may negatively affect our results of operations.
 

We employ a number of measures to prevent, detect and mitigate these threats. These prevention measures include password protection, frequent password change events, firewall detection systems, frequent backups, a redundant data system for core applications and penetration testing. We conduct periodic assessments of (i) the nature, sensitivity and location of information that we collect, process and store and the technology systems we use; (ii) internal and external cybersecurity threats to and vulnerabilities of our information and technology systems; (iii) security controls and processes currently in place; (iv) the impact should our technology systems become compromised; and (v) the effectiveness of our management of cybersecurity risk. The results of these assessments are used to create and implement a strategy designed to prevent, detect and respond to cybersecurity threats. However, there is no guarantee such efforts will be successful in preventing a cyber-attack.
 
 
RISKS RELATED TO OUR ORGANIZATION AND STRUCTURE
 

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Our organizational documents contain provisions that generally would prohibit any person (other than members of the Kite family who, as a group, are currently allowed to own up to 21.5% 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.
 
 
Our organizational documents contain provisions that may have an anti-takeover effect and inhibit a change in our management.
 
 
(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 sure 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 members of the Kite family (Al Kite, John Kite and Paul Kite, their family members and certain entities controlled by one or more of the Kites), as a group, to own more than 7% of our outstanding common shares, so long as, under the 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. 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 includes 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 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 to the board that are satisfactory to the board, 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. 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:


discourage a tender offer or other transactions or a change in management or control that might involve a premium price for our shares or otherwise be in the best interests of our shareholders; or
compel a shareholder who has acquired our shares in excess of these ownership limitations to dispose of the additional shares and, as a result, to forfeit the benefits of owning the additional shares. Any acquisition of our common shares in violation of these ownership restrictions will be void ab initio and will result in automatic transfers of our common shares to a charitable trust, which will be responsible for selling the common shares to permitted transferees and distributing at least a portion of the proceeds to the prohibited transferees.


(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 40,000,000 preferred shares, having those preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications, or terms

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or conditions of redemption as determined by our Board. Thus, our Board 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 that may have the effect of delaying, deferring or preventing a change in control of our company or the removal of existing management and, as a result, could prevent our shareholders from being paid a premium for their common shares over the then-prevailing market prices. 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, our Board of Trustees has the sole power 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 detrimental to your interests.
 
 
Certain provisions of Maryland law could inhibit changes in control.
 
 
Certain provisions of Maryland law may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide the holders of our common shares with the opportunity to realize a premium over the then-prevailing market price of such shares, including:

“business combination moratorium/fair price” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested shareholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof) for five years after the most recent date on which the shareholder becomes an interested shareholder, and thereafter imposes stringent fair price and super-majority shareholder voting requirements on these combinations; and
“control share” provisions that provide that “control shares” of our company (defined as shares which, when aggregated with other shares controlled by the shareholder, entitle the shareholder to exercise one of three increasing ranges of voting power in electing trustees) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares” from a party other than the issuer) have no voting rights except to the extent approved by our shareholders by the affirmative vote of at least two thirds of all the votes entitled to be cast on the matter, excluding all interested shares, and are subject to redemption in certain circumstances.


We have opted out of these provisions of Maryland law. However, our Board of Trustees may opt to make these provisions applicable to us at any time.
 
 
A substantial number of common shares eligible for future issuance or sale could cause our common share price to decline significantly and may be dilutive to current shareholders.
 
 
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 for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate. As of December 31, 2015, we had outstanding 83,334,865 common shares, and substantially all of these shares are freely tradable.  In addition, 1,901,278 units of our Operating Partnership were owned by our executive officers and other individuals as of December 31, 2015, and are redeemable by the holder for cash or, at our election, common shares. Pursuant to registration rights of certain of our executive officers and other individuals, we filed a registration statement with the SEC to register common shares issued (or issuable upon redemption of units in our Operating

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Partnership) in our formation transactions. As units are redeemed for common shares, the market price of our common shares could drop significantly if the holders of such shares sell them or are perceived by the market as intending to sell them.
 
 
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 refinancings 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.
 
 
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.  Our executive officers’ experience in real estate acquisition, development and finance are critical elements of our future success. We have employment agreements with each of our executive officers.  The term of each employment agreement runs through June 30, 2017, with automatic one-year renewals each July 1st thereafter unless either we or the officer elects not to renew them.  If one or more of our key executives were to die, become disabled or otherwise leave the company's employ, we may not be able to replace this person with an executive officer of equal skill, ability, and industry expertise within a reasonable timeframe. Until suitable replacements could be identified and hired, our operations and financial condition could be impaired.


We depend on external capital to fund our capital needs.
 
 
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 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 and acquisitions, with income from operations. We therefore will 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:
 
 
general market conditions;
the market’s perception of our growth potential;
our current debt levels;
our current and potential future earnings;
our cash flow and cash distributions;
our ability to qualify as a REIT for federal income tax purposes; and
the market price of our common shares.


If we cannot obtain capital from third-party sources, we may not be able to acquire or develop properties when strategic opportunities exist, satisfy our principal and interest obligations or make distributions to our shareholders.
 
 
Our rights and the rights of our shareholders to take action against our trustees and officers are limited.
 
 

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Maryland law provides that a director or officer has limited liability in that capacity if he or she performs his or her duties in good faith and in a manner that he or she reasonably believes to be in our best interests and that an ordinarily prudent person in a like position would use under similar circumstances. Our declaration of trust and bylaws require us to indemnify our trustees and officers for actions taken by them in those capacities to the extent permitted by Maryland law.
 
 
Our shareholders have limited ability to prevent us from making any changes to our policies that they believe could harm our business, prospects, operating results or share price.
 
 
Our investment, financing, borrowing and dividend policies and our policies with respect to all other activities, including growth, debt, capitalization and operations, will be determined by our management and, in certain cases, approved by our Board of Trustees. These policies may be amended or revised from time to time at the discretion of our Board of Trustees without a vote of our shareholders. This means that our shareholders will have limited control over changes in our policies. Such changes in our policies intended to improve, expand or diversify our business may not have the anticipated effects and consequently may adversely affect our business and prospects, results of operations and share price.
 
 
Our share price could be volatile and could decline, resulting in a substantial or complete loss of our shareholders’ investment.
 
 
The stock markets (including The New York Stock Exchange, or the “NYSE,” on which we list our common shares) have experienced significant price and volume fluctuations. The market price of our common shares could be similarly volatile, and investors in our shares may experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects. Among the market conditions that may affect the market price of our publicly traded securities are the following:
 
 
our financial condition and operating performance and the performance of other similar companies;
actual or anticipated differences in our quarterly operating results;
changes in our revenues or earnings estimates or recommendations by securities analysts;
publication by securities analysts of research reports about us or our industry;
additions and departures of key personnel;
strategic decisions by us or our competitors, such as acquisitions, divestments, spin-offs, joint ventures, strategic investments or changes in business strategy;
the reputation of REITs generally and the reputation of REITs with portfolios similar to ours;
the attractiveness of the securities of REITs in comparison to securities issued by other entities (including securities issued by other real estate companies);
an increase in market interest rates, which may lead prospective investors to demand a higher distribution rate in relation to the price paid for our shares;
the passage of legislation or other regulatory developments that adversely affect us or our industry including tax reform;
speculation in the press or investment community;
actions by institutional shareholders or hedge funds;
increases or decreases in dividends;
changes in accounting principles;
terrorist acts; and

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general market conditions, including factors unrelated to our performance.


 In the past, securities class action litigation has often been instituted against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management’s attention and resources.
 
 
The cash available for distribution to shareholders may not be sufficient to pay distributions at expected levels, nor can we assure you of our ability to make distributions in the future. We may use borrowed funds to make distributions.
 
 
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. 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 federal income tax purposes to the extent of the holder’s adjusted tax basis in their 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.


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, senior or subordinated notes. 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 are entitled to receive distributions. Future offerings of debt securities, or the perception that such offerings may occur, may reduce the market prices of our common shares and/or the distributions that we pay with respect to our common shares. Because we may generally issue any 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 securities or industry analysts do not publish research or reports about our business, or if they downgrade their recommendations regarding our common shares, our share price and trading volume could decline.
 
 
The trading market for our shares is influenced by the research and reports that industry or securities analysts publish about us or our business. If any of the analysts who cover us downgrades our common shares or publishes inaccurate or unfavorable research about our business, our share price may decline. If analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our common share price 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 recently experienced extreme 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.
 
 
TAX RISKS
 
 
Failure of our company to qualify as a REIT would have serious adverse consequences to us and our shareholders.
 
 

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We believe that we have qualified for taxation as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 2004.  We intend to continue to meet the requirements for qualification and taxation as a REIT, but we cannot assure shareholders that we will qualify as a REIT. 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. As a REIT, we generally will not be subject to federal income tax on our income that we distribute currently to our shareholders. Many of the REIT requirements, however, are highly technical and complex. The determination that we are a REIT requires an analysis of various factual matters and circumstances that may not be totally within our control. For example, 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. In addition, to qualify as a REIT, we cannot own specified amounts of debt and equity securities of some issuers. We also are required to distribute to our shareholders with respect to each year at least 90% of our “REIT taxable income” (determined before the deduction for dividends paid and excluding 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 rulings, that make it more difficult, or impossible, for us to remain qualified as a REIT.
 
 
If we fail to qualify as a REIT for federal income tax purposes and are unable to avail ourselves of certain savings provisions set forth in the Internal Revenue Code, we would be subject to federal income tax at regular corporate rates. As a taxable corporation, we would not be allowed to take a deduction for distributions to shareholders in computing our taxable income or pass through long term capital gains to individual shareholders at favorable rates. We also could be subject to the federal alternative minimum tax and possibly increased state and local taxes. We would not be able to elect to be taxed as a REIT for four years following the year we first failed to qualify unless the IRS were to grant us relief under certain statutory provisions. Since we were the successor to Inland Diversified Real Estate Trust, Inc. ("Inland Diversified") for federal income tax purposes as a result of our merger, the rule against re-electing 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 2011 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 with us, 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.


If we failed to qualify as a REIT, we would have to pay significant income taxes, which would reduce our net earnings available for investment or distribution to our shareholders. If we fail to qualify as a REIT, such failure would cause an event of default under our unsecured revolving credit facility and unsecured term loans and may adversely affect our ability to raise capital and to service our debt.  This likely would have a significant adverse effect on our earnings and the value of our securities. In addition, we would no longer be required to pay any distributions to shareholders. If we fail to qualify as a REIT for federal income tax purposes and are able to avail ourselves of one or more of the statutory savings provisions in order to maintain our REIT status, we would nevertheless be required to pay penalty taxes of $50,000 or more for each such failure.  If Inland Diversified failed to qualify as a REIT for a taxable year before the Merger or that includes the Merger and no relief is available, in connection with the Merger we would succeed to any earnings and profits accumulated by Inland Diversified for 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.
 
 
We will pay some taxes even if we qualify as a REIT.
 
 
Even if we qualify as a REIT for federal income tax purposes, we will be required to pay certain 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% 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.

27



 
 
In addition, any net taxable income earned directly by our taxable REIT subsidiaries, or through entities that are disregarded for federal income tax purposes as entities separate from our taxable REIT subsidiaries, will be subject to federal and possibly state corporate income tax. We have elected to treat Kite Realty Holdings, LLC as a taxable REIT subsidiary, 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 subsidiary will be subject to an appropriate level of federal income taxation. For example, a taxable REIT subsidiary 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 subsidiary 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 federal income tax on that income because not all states and localities treat REITs the same way they are treated for federal income tax purposes. To the extent that we and our affiliates are required to pay federal, state and local taxes, we will have less cash available for distributions to our shareholders.
 
 
If Inland Diversified failed to qualify as a REIT for a taxable year before the Merger or that includes the Merger and no relief is available, as a result of the Merger (a) we would inherit any corporate income tax liabilities of Inland Diversified for Inland Diversified’s open tax years (generally three years or Inland Diversified’s 2011 through 2014 tax years but possibly extending back six years or Inland Diversified’s initial 2009 tax year through its 2014 tax year), including penalties and interest, and (b) we would be subject to tax on the built-in gain on each asset of Inland Diversified existing at the time of the Merger if we were to dispose of the Inland Diversified asset within five years following the Merger (i.e. before  July 1, 2019).
 
 
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.


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 (each such hedge, a "Borrowing Hedge") or manages the risk of certain currency fluctuations (each such hedge, a "Currency Hedge"), and such instrument is properly identified under applicable Treasury Regulations. Effective for taxable years beginning after December 31, 2015 the exclusion from 95% and 75% gross income tests also will apply if we previously entered into a Borrowings Hedge or a Currency Hedge, a portion of the hedged indebtedness or property is disposed of, and in connection with such extinguishment or disposition we enter into a new properly identified hedging transaction to offset the prior hedging position. 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. This could increase the cost of our hedging activities because our taxable REIT subsidiary 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.
 
 
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, the sources of our income, the nature and diversification of our assets, the amounts that we distribute to our shareholders and the ownership of our shares. To meet these tests, we may be required to take actions we would otherwise prefer not to take or forgo taking actions that we

28



would otherwise consider advantageous. For instance, in order to satisfy the gross income or asset tests applicable to REITs under the Code, we may be required to forgo investments that we otherwise would make. Furthermore, we may be required to liquidate from our portfolio otherwise attractive investments. In addition, we may be required to make distributions to shareholders at disadvantageous times or when we do not have funds readily available for distribution. These actions could reduce our income and amounts available for distribution to our shareholders. Thus, compliance with the REIT requirements may hinder our investment performance.
 
 
Dividends paid by REITs generally do not qualify for reduced tax rates.
 
 
The maximum rate applicable to “qualified dividend income” paid by regular “C” corporations to U.S. shareholders that are individuals, trusts and estates generally is 20%.  Dividends payable by REITs, however, generally are not eligible for the current reduced rate, except to the extent that certain holding requirements have been met and a REIT’s dividends are attributable to dividends received by a REIT from taxable corporations (such as a REIT’s taxable REIT subsidiaries), to income that was subject to tax at the REIT/corporate level, or to dividends properly designated by the REIT as “capital gains dividends.” Although the reduced rates applicable to dividend income from regular “C” corporations do not adversely affect the taxation of REITs or dividends payable by REITs, it could cause investors who are non-corporate taxpayers to perceive investments in REITs to be relatively less attractive than investments in the shares of regular “C” corporations that pay dividends, which could adversely affect the value of our common shares.
 
 
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.
 
 
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 were 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.


New partnership tax audit rules could have a material adverse effect on us.
 
 
The recently enacted Bipartisan Budget Act of 2015 changes the rules applicable to federal income tax audits of partnerships. Under the new rules (which are generally effective for taxable years beginning after December 31, 2017), among other changes and subject to certain exceptions, any audit adjustment to items of income, gain, loss, deduction, or credit of a partnership (and any partner's distributive share thereof) is determined, and taxes, interest, or penalties attributable thereto are assessed and collected, at the partnership level. Although it is uncertain how these new rules will be implemented, it is possible that they could result in partnerships in which we directly or indirectly invest being required to pay additional taxes, interest and penalties as a result of an audit adjustment, and we, as a direct or indirect partner of these partnerships, could be required to bear the economic burden of those taxes, interest, and penalties even though we, as a REIT, may not otherwise have been required to pay additional corporate-level taxes had we owned the assets of the partnership directly. The new partnership tax audit rules will apply to the Operating Partnership and its subsidiaries that are classified as partnerships for federal income tax purposes. The changes created by these new rules are sweeping and in many respects dependent on the promulgation of future regulations and other guidance by the U.S. Department of the Treasury, or the Treasury, and, accordingly, there can be no assurance that these rules will not have a material adverse effect on us.


ITEM 1B. UNRESOLVED STAFF COMMENTS
 
 
None


29




ITEM 2. PROPERTIES
 
 
Retail Operating Properties
 
 
As of December 31, 2015, we owned interests in a portfolio of 110 retail operating properties totaling approximately 22.0 million square feet of total Gross Leasable Area (“GLA”) (including approximately 6.7 million square feet of non-owned anchor space).  The following tables set forth more specific information with respect to our retail operating properties as of December 31, 2015:





Property1
MSA
Year
Built/
Renovated
Owned GLA2
 
Leased %
ABR
per
Sq. ft.
Major Owned Tenants
Major
Non-owned Tenants
Total
Anchors
Shops
 
Total
Anchors
Shops
Alabama
 
 
 
 
 
 
 
 
 
 
 
 
Clay Marketplace
Birmingham
1966/2003
66,165

44,840

21,325

 
93.0
%
100.0
%
78.4
%
$
12.25

Publix
 
Trussville Promenade
Birmingham
1999
446,484

354,010

92,474

 
93.3
%
100.0
%
67.5
%
9.05

Wal-Mart, Regal Cinemas, Marshalls, Big Lots, PetSmart, Dollar Tree
Kohl's, Sam's Club
Arizona
 
 
 
 
 
 
 
 
 
 
 
 
The Corner
Tucson
2008
79,902

55,883

24,019

 
100.0
%
100.0
%
100.0
%
28.05

Nordstrom Rack, Total Wine & More
Home Depot
Connecticut
 
 
 
 
 
 
 
 
 
 
 
 
Crossing at Killingly Commons3
Killingly
2010
208,929

148,250

60,679

 
96.0
%
100.0
%
86.2
%
16.33

TJ Maxx, Bed Bath & Beyond, Michaels, Petco, Staples, Stop & Shop Supermarket, Lowe's Home Improvement
Target
Florida
 
 
 
 
 
 
 
 
 
 
 
 
12th Street Plaza
Vero Beach
1978/2003
135,016

121,376

13,640

 
99.0
%
100.0
%
89.7
%
9.67

Publix, Stein Mart, Tuesday Morning, Sunshine Furniture, Planet Fitness
 
Bayport Commons
Tampa
2008
97,193

71,540

25,653

 
95.4
%
100.0
%
82.6
%
15.90

Gander Mountain, PetSmart, Michaels
Target
Bolton Plaza
Jacksonville
1986/2014
165,555

136,195

29,360

 
93.4
%
100.0
%
62.5
%
9.48

LA Fitness, Academy Sports, Marshalls
 
Burnt Store Promenade
Punta Gorda
1989
95,543

45,600

49,943

 
76.8
%
100.0
%
55.6
%
8.66

Publix
Home Depot
Centre Point Commons
Bradenton
2007
119,275

93,574

25,701

 
100.0
%
100.0
%
100.0
%
16.98

Best Buy, Dick's Sporting Goods, Office Depot
Lowe's Home Improvement
Cobblestone Plaza
Ft Lauderdale
2011
133,213

68,169

65,044

 
100.0
%
100.0
%
100.0
%
26.39

Whole Foods, Party City, All Pets Emporium
 
Colonial Square
Fort Myers
2010
182,354

146,283

36,071

 
92.2
%
100.0
%
60.6
%
14.02

Around the Clock Fitness, Dollar Tree, Hobby Lobby, Petsmart, Sports Authority, Kohl's
 
Cove Center
Stuart
1984/2008
155,063

130,915

24,148

 
94.9
%
100.0
%
67.2
%
9.02

Publix, Beall's, Ace Hardware
 
Delray Marketplace3
Delray
2013
260,092

118,136

141,956

 
93.9
%
100.0
%
88.8
%
24.79

Franks Theater, Publix, Jos. A. Bank, Carl's Patio, Chicos, Charming Charlie, Ann Taylor
 
Estero Town Commons
Naples
2006
25,631


25,631

 
77.4
%
%
77.4
%
15.86

 
Lowe's Home Improvement
Gainesville Plaza
Gainesville
1970/2015
162,659

125,128

37,531

 
81.6
%
100.0
%
20.3
%
9.02

Ross Dress for Less, Burlington Coat Factory, 2nd and Charles, Save a Lot
 
Hunter's Creek Promenade
Orlando
1994
119,729

55,999

63,730

 
98.9
%
100.0
%
97.9
%
13.84

Publix
 
Indian River Square
Vero Beach
1997/2004
142,706

109,000

33,706

 
95.9
%
100.0
%
82.8
%
11.06

Beall's, Office Depot, Dollar Tree
Target
International Speedway Square
Daytona
1999/2013
233,495

203,457

30,038

 
99.5
%
100.0
%
96.0
%
11.17

Bed, Bath & Beyond, Stein Mart, Old Navy, Staples, Michaels, Dick’s Sporting Goods, Total Wine & More, Shoe Carnival
 
King's Lake Square
Naples
1986/2014
87,073

57,131

29,942

 
96.2
%
100.0
%
88.9
%
16.93

Publix, Royal Fitness
 
Lake City Commons
Lake City
2008
66,510

45,600

20,910

 
94.3
%
100.0
%
81.9
%
14.04

Publix
 
Lake City Commons - Phase II
Lake City
2011
16,291

12,131

4,160

 
100.0
%
100.0
%
100.0
%
14.99

Petsmart
 
Lake Mary Plaza
Orlando
2009
21,370

14,880

6,490

 
100.0
%
100.0
%
100.0
%
37.01

Walgreens
 
Lakewood Promenade
Jacksonville
1948/1998
199,577

77,840

121,737

 
84.1
%
100.0
%
74.0
%
12.20

SteinMart, Winn Dixie
 
Lithia Crossing
Tampa
2003/2013
90,499

53,547

36,952

 
100.0
%
100.0
%
100.0
%
14.89

Stein Mart, Fresh Market
 
Miramar Square
Ft Lauderdale
2008
224,794

137,505

87,289

 
86.6
%
85.5
%
88.5
%
15.85

Kohl's, Miami Children's Hospital, Dollar General
 
Northdale Promenade
Tampa
1985/2002
177,925

128,269

49,656

 
92.4
%
100.0
%
72.7
%
11.93

TJ Maxx, Bealls, Crunch Fitness
Winn Dixie
Palm Coast Landing
Palm Coast
2010
168,297

100,822

67,475

 
96.7
%
100.0
%
91.9
%
18.02

Michaels, Petsmart, Ross Dress for Less, TJ Maxx, Ulta Salon
Target
Pine Ridge Crossing
Naples
1993
105,867

66,351

39,516

 
97.8
%
100.0
%
94.1
%
16.47

Publix, Party City
Beall's, Target

31




Property1
MSA
Year
Built/
Renovated
Owned GLA2
 
Leased %
ABR
per
Sq. ft.
Major Owned Tenants
Major
Non-owned Tenants
Total
Anchors
Shops
 
Total
Anchors
Shops
Pleasant Hill Commons
Orlando
2008
70,642

45,600

25,042

 
93.5
%
100.0
%
81.6
%
$
14.36

Publix
 
Publix at St. Cloud
St. Cloud
2003
78,820

54,379

24,441

 
100.0
%
100.0
%
100.0
%
13.02

Publix
 
Riverchase Plaza
Naples
1991/2001
78,291

48,890

29,401

 
100.0
%
100.0
%
100.0
%
15.72

Publix
 
Saxon Crossing
Orange City
2009
119,894

95,304

24,590

 
98.6
%
100.0
%
93.1
%
14.71

Hobby Lobby, LA Fitness
Lowe's Home Improvement, Target
Shops at Eagle Creek
Naples
1983/2013
70,755

50,187

20,568

 
91.4
%
100.0
%
70.4
%
14.98

Fresh Market, Staples
Lowe's Home Improvement
Shops at Eastwood
Orlando
1997
69,037

51,512

17,525

 
98.2
%
100.0
%
92.7
%
12.70

Publix
 
Shops at Julington Creek
Jacksonville
2011
40,207

21,038

19,169

 
96.4
%
100.0
%
92.5
%
18.65

Fresh Market
 
Tarpon Springs Plaza
Naples
2007
82,547

60,151

22,396

 
96.6
%
100.0
%
87.5
%
21.89

World Market, Staples
Target
Temple Terrace
Temple Terrace
2012
90,377

58,798

31,579

 
100.0
%
100.0
%
100.0
%
10.83

Sweetbay, United Parcel Service
 
The Landing at Tradition
Port St Lucie
2007
359,758

290,396

69,362

 
95.0
%
100.0
%
74.2
%
14.8

TJ Maxx, Ulta Salon, Babies R Us, Bed Bath & Beyond, LA Fitness, Michaels, Office Max, Old Navy, Petsmart, Pier 1, Sports Authority, DSW
Target
Tradition Village Center
Port St Lucie
2006
84,982

45,600

39,382

 
94.2
%
100.0
%
87.4
%
16.39

Publix
 
Village Walk
Fort Myers
2009
78,533

54,340

24,193

 
93.8
%
100.0
%
80.0
%
15.76

Publix
 
Waterford Lakes Village
Orlando
1997
77,948

51,703

26,245

 
100.0
%
100.0
%
100.0
%
12.90

Winn-Dixie
 
Georgia
 
 
 
 
 
 
 
 
 
 
 
 
Mullins Crossing
Evans
2005
251,712

205,716

45,996

 
100.0
%
100.0
%
100.0
%
11.97

Ross Dress for Less, Babies R Us, Kohls, La-Z Boy, Marshalls, Office Max, Petco
Target
Publix at Acworth
Atlanta
1996
69,628

37,888

31,740

 
98.3
%
100.0
%
96.2
%
12.01

Publix
 
The Centre at Panola
Atlanta
2001
73,079

51,674

21,405

 
100.0
%
100.0
%
100.0
%
12.68

Publix
 
Illinois
 
 
 
 
 
 
 
 
 
 
 
 
Fox Lake Crossing
Chicago
2002
99,072

65,977

33,095

 
88.9
%
100.0
%
66.8
%
13.58

Dominick's Finer Foods, Dollar Tree
 
Naperville Marketplace
Chicago
2008
83,793

61,683

22,110

 
98.1
%
100.0
%
92.6
%
13.27

TJ Maxx, PetSmart
 
South Elgin Commons
Chicago
2011
128,000

128,000


 
100.0
%
100.0
%
%
14.50

LA Fitness, Ross Dress for Less, Toy R Us
Caputo's
Indiana
 
 
 
 
 
 
 
 
 
 
 
 
54th & College
Indianapolis
2008



 
%
%
%

The Fresh Market (ground lease)
 
Beacon Hill
Crown Point
2006
56,897

11,043

45,854

 
94.4
%
100.0
%
93.0
%
14.97

Anytime Fitness
Strack & Van Till, Walgreens
Bell Oaks Centre
Newburgh
2008
94,811

74,122

20,689

 
98.5
%
100.0
%
93.0
%
11.86

Schnuck Market
 
Boulevard Crossing
Kokomo
2004
124,631

74,440

50,191

 
95.7
%
100.0
%
89.4
%
14.38

Petco, TJ Maxx, Ulta Salon, Shoe Carnival
Kohl's
Bridgewater Marketplace
Indianapolis
2008
40,431

14,593

25,838

 
63.7
%
100.0
%
43.2
%
16.52

 
Walgreens
Castleton Crossing
Indianapolis
1975/2012
291,172

247,710

43,462

 
96.8
%
100.0
%
78.5
%
11.13

K&G Menswear, Value City, TJ Maxx/Home Goods, Shoe Carnival, Dollar Tree, Burlington Coat Factory
 
Cool Creek Commons
Indianapolis
2005
124,646

53,600

71,046

 
95.6
%
100.0
%
92.2
%
17.55

The Fresh Market, Stein Mart
 
Depauw University Bookstore and Café
Greencastle
2012
11,974


11,974

 
100.0
%
%
100.0
%
8.36

Folletts, Starbucks
 
Eddy Street Commons
South Bend
2009
87,991

20,154

67,837

 
94.2
%
100.0
%
92.4
%
24.05

Hammes Bookstore, Urban Outfitters
 
Geist Pavilion
Indianapolis
2006
63,910

29,700

34,210

 
96.2
%
100.0
%
92.8
%
16.35

Goodwill, Ace Hardware
 


32



Property1
MSA
Year
Built/
Renovated
Owned GLA2
 
Leased %
ABR
per
Sq. ft.
Major Owned Tenants
Major
Non-owned Tenants
Total
Anchors
Shops
 
Total
Anchors
Shops
Glendale Town Center
Indianapolis
1958/2008
393,002

329,546

63,456

 
98.4
%
100.0
%
90.2
%
$
7.22

Macy’s, Landmark Theaters, Staples, Indianapolis Library, Nexus Academy of Indianapolis
Lowe's Home Improvement, Target, Walgreens
Greyhound Commons
Indianapolis
2005
9,152


9,152

 
100.0
%
%
100.0
%
18.20

 
Lowe's Home Improvement Center
Lima Marketplace
Fort Wayne
2008
100,461

71,521

28,940

 
89.7
%
100.0
%
64.1
%
14.27

Aldi, Dollar Tree, Office Depot, Pestmart
Wal-Mart
Rangeline Crossing
Indianapolis
1986/2013
99,282

47,962

51,320

 
91.6
%
100.0
%
83.7
%
21.50

Earth Fare, Walgreens
 
Rivers Edge
Indianapolis
2011
149,209

117,890

31,319

 
100.0
%
100.0
%
100.0
%
20.19

Nordstrom Rack, The Container Store, Arhaus Furniture, Bicycle Garage of Indy, Buy Buy Baby
 
Stoney Creek Commons
Indianapolis
2000/2013
84,330

84,330


 
100.0
%
100.0
%
%
12.39

HH Gregg, Goodwill, LA Fitness
Lowe's Home Improvement Center
Traders Point
Indianapolis
2005
279,684

238,721

40,963

 
98.7
%
100.0
%
91.2
%
15.02

Dick's Sporting Goods, AMC Theatre, Marsh Supermarkets, Bed, Bath & Beyond, Michaels, Old Navy, PetSmart, Books-A-Million
 
Traders Point II
Indianapolis
2005
46,099


46,099

 
92.2
%
%
92.2
%
24.98

 
 
Whitehall Pike
Bloomington
1999
128,997

128,997


 
100.0
%
100.0
%
%
7.86

Lowe's Home Improvement Center
 
Nevada
 
 
 
 
 
 
 
 
 
 
 
 
Cannery Corner3
Las Vegas
2008
30,745


30,745

 
96.4
%
%
96.4
%
34.41

 
Lowe's Home Improvement, Sam's Club
Centennial Center3
Las Vegas
2002
334,705

158,335

176,370

 
93.6
%
100.0
%
87.8
%
22.89

Wal-Mart, Sam's Club, Ross Dress for Less, Big Lots, Famous Footwear, Michaels, Office Max, Party City, Petco, Rhapsodielle, Home Depot
 
Centennial Gateway3
Las Vegas
2005
192,999

139,861

53,138

 
84.6
%
82.1
%
91.1
%
23.58

24 Hour Fitness, Sportsman's Warehouse, Walgreens
 
Eastern Beltway Center3
Las Vegas
1998/2006
162,444

83,982

78,462

 
97.4
%
100.0
%
94.6
%
23.49

Home Consignment Center, Office Max, Petco, Ross Dress for Less, Sam's Club, Wal-Mart
Home Depot
Eastgate3
Las Vegas
2002
96,589

53,030

43,559

 
92.8
%
100.0
%
84.0
%
22.01

99 Cent Only Store, Office Depot, Party City
Wal-Mart
Lowe's Plaza3
Las Vegas
2007
30,208


30,208

 
44.4
%
%
44.4
%
32.08

 
Lowe's Home Improvement, Sam's Club
Rampart Commons
Las Vegas
1998
81,292

29,265

52,027

 
96.9
%
100.0
%
95.2
%
26.49

Ann Taylor, Chico's, Francesca's Collection, Banana Republic, Pottery Barn, Williams Sonoma
 
New Hampshire
 
 
 
 
 
 
 
 
 
 
 
 
Merrimack Village Center
Merrimack
2007
78,892

54,000

24,892

 
97.7
%
100.0
%
92.8
%
12.79

Supervalue (Shaw's)
 
New Jersey
 
 
 
 
 
 
 
 
 
 
 
 
Bayonne Crossing
Bayonne
2011
106,383

52,219

54,164

 
100.0
%
100.0
%
100.0
%
28.62

Michaels, New York Sports Club, Lowe's Home Impovement, Wal-Mart
 
Livingston Shopping Center
Newark
1997
139,657

133,177

6,480

 
95.3
%
100.0
%
%
19.77

Cost Plus, Buy Buy Baby, Nordstrom Rack, DSW, TJ Maxx, Ulta
 
North Carolina
 
 
 
 
 
 
 
 
 
 
 
 
Holly Springs Towne Center
Holly Springs
2013
207,527

109,233

98,294

 
96.8
%
100.0
%
93.3
%
17.10

Dick's Sporting Goods, Marshalls, Petco, Ulta Salon, Michaels
Target
Memorial Commons
Golsboro
2008
111,271

73,876

37,395

 
98.3
%
100.0
%
95.0
%
12.59

Harris Teeter, Office Depot
 

33



Property1
MSA
Year
Built/
Renovated
Owned GLA2
 
Leased %
ABR
per
Sq. ft.
Major Owned Tenants
Major
Non-owned Tenants
Total
Anchors
Shops
 
Total
Anchors
Shops
Northcrest Shopping Center
Charlotte
2008
133,674

76,053

57,621

 
88.9
%
86.2
%
92.5
%
$
22.04

REI, David's Bridal, Dollar Tree, Old Navy
Target
Oleander Place
Wilmington
2012
45,530

30,144

15,386

 
100.0
%
100.0
%
100.0
%
16.09

Whole Foods
 
Perimeter Woods
Charlotte
2008
126,153

105,262

20,891

 
96.8
%
100.0
%
80.7
%
20.48

Best Buy, Off Broadway Shoes, Office Max, Petsmart, Lowe's Home Improvement
 
Parkside Town Commons - Phase I
Cary
2015
55,463

22,500

32,963

 
79.5
%
55.6
%
95.8
%
25.33

Harris Teeter, Petco
Target
Toringdon Market
Charlotte
2004
60,539

26,072

34,467

 
100.0
%
100.0
%
100.0
%
20.33

Earth Fare
 
Ohio
 
 
 
 
 
 
 
 
 
 
 
 
Eastgate Pavilion
Cincinnati
1995
236,230

231,730

4,500

 
100.0
%
100.0
%
100.0
%
8.93

Best Buy, Dick's Sporting Goods, Value City Furniture, PetSmart, DSW, Bed Bath & Beyond
 
Oklahoma
 
 
 
 
 
 
 
 
 
 
 
 
Belle Isle
Oklahoma City
2000
164,372

92,783

71,589

 
98.5
%
100.0
%
96.6
%
16.93

Shoe Carnival, Old Navy, Ross Stores, Nordstrom Rack, Babies R Us
Wal-Mart
Shops at Moore
Moore
2010
259,692

187,916

71,776

 
99.9
%
100.0
%
99.6
%
12.32

Bed Bath and Beyond, Best Buy, Dustee's Fashion Accessories, Hobby Lobby, Office Depot, Petsmart, Ross Dress for Less
JC Penney
Silver Springs Pointe
Oklahoma City
2001
48,444

20,515

27,929

 
83.9
%
100.0
%
72.1
%
15.84

Kohls, Office Depot
Wal-Mart, Sam's Club, Home Depot
University Town Center
Norman
2009
158,518

77,097

81,421

 
96.2
%
100.0
%
92.7
%
17.65

Office Depot, Petco, TJ Maxx, Ulta Salon
Target
University Town Center
Phase II
Norman
2012
190,494

133,546

56,948

 
93.6
%
100.0
%
78.5
%
11.92

Academy Sports, DSW, Home Goods, Michaels, Kohls
 
South Carolina
 
 
 
 
 
 
 
 
 
 
 
 
Hitchcock Plaza
Aiken
2006
252,370

214,480

37,890

 
90.8
%
89.7
%
97.4
%
10.05

TJ Maxx, Ross Dress for Less, Academy Sports, Bed Bath and Beyond, Farmers Home Furniture, Old Navy, Petco
 
Shoppes at Plaza Green
Greenville
2000
194,807

172,136

22,671

 
94.7
%
94.1
%
100.0
%
12.83

Bed Bath & Beyond, Christmas Tree Shops, Sears, Party City, Shoe Carnival, AC Moore, Old Navy
 
Publix at Woodruff
Greenville
1997
68,055

47,955

20,100

 
100.0
%
100.0
%
100.0
%
10.67

Publix
 
Tennessee
 
 
 
 
 
 
 
 
 
 
 
 
Cool Springs Market
Nashville
1995
230,948

167,712

63,236

 
100.0
%
100.0
%
100.0
%
14.67

Dick's Sporting Goods, Marshalls, Buy Buy Baby, DSW, Staples, Jo-Ann Fabric
Kroger
Hamilton Crossing - Phase II & III
Alcoa
2008
175,464

135,737

39,727

 
100.0
%
100.0
%
100.0
%
14.65

Dicks Sporting Goods, Michaels, Old Navy, Petsmart, Ross Dress for Less
 
Texas
 
 
 
 
 
 
 
 
 
 
 
 
Burlington Coat Factory
San Antonio
1992/2000
107,400

107,400


 
100.0
%
100.0
%

5.00

Burlington Coat Factory
 
Chapel Hill Shopping Center
Fort Worth
2001
126,755

43,450

83,305

 
97.8
%
100.0
%
96.7
%
27.62

H-E-B Grocery, The Container Store, Cost Plus World Market
 
Colleyville Downs
Dallas
2014
185,848

142,073

43,775

 
93.3
%
100.0
%
71.6

12.39

Whole Foods, Westlake Hardware, Vineyard's Antique Mall, Goody Goody Liqour, Petco
 
Kingwood Commons
Houston
1999
164,366

74,836

89,530

 
99.1
%
100.0
%
98.3
%
19.27

Randall's Food and Drug, Petco, Chico's, Talbots, Ann Taylor, Jos. A. Bank
 
Market Street Village
Fort Worth
1970/2011
156,625

136,746

19,879

 
100.0
%
100.0
%
100.0

12.04

Jo-Ann Fabric, Ross, Office Depot, Buy Buy Baby
 


34



Property1
MSA
Year
Built/
Renovated
Owned GLA2
 
Leased %
ABR
per
Sq. ft.
 Major Owned Tenants
Major
Non-owned Tenants
Total
Anchors
Shops
 
Total
Anchors
Shops
Plaza at Cedar Hill
Dallas
2000/2010
303,458

244,065

59,393

 
100.0
%
100.0
%
100.0
%
$
12.64

Sprouts Farmers Market, DSW, Ross Dress for Less, Hobby Lobby, Office Max, Marshalls, Toys “R” Us/Babies “R” Us
 
Plaza Volente
Austin
2004
156,333

105,000

51,333

 
93.8
%
100.0
%
81.2

16.87

H-E-B Grocery
 
Portofino Shopping Center
Houston
1999/2010
379,637

211,858

167,779

 
92.2
%
100.0
%
82.3
%
17.84

DSW, Michaels, Sports Authority, Lifeway Christian Store, SteinMart, Petsmart, Old Navy, TJ Maxx
Sam's Club
Sunland Towne Centre
El Paso
1996/2014
306,437

265,037

41,400

 
98.9
%
100.0
%
91.7
%
11.67

Sprouts Farmers Market, PetSmart, Ross, Kmart, Bed Bath & Beyond, Specs Fine Wines
 
Waxahachie Crossing
Waxahachie
2010
97,127

72,191

24,936

 
100
%
100.0
%
100.0
%
14.64

Best Buy, Petsmart, Ross Dress for Less
Home Depot, JC Penney
Westside Market
Dallas
2013
93,377

70,000

23,377

 
100
%
100.0
%
100.0
%
16.12

Randall's Tom Thumb
 
Wheatland Town Crossing
Dallas
2012
194,727

142,302

52,425

 
98.1
%
100.0
%
92.8
%
12.64

Conn's, Dollar Tree, Office Depot, Party City, Petsmart, Ross Dress for Less, Shoe Carnival
Target, Aldi
Utah
 
 
 
 
 
 
 
 
 
 
 
 
Draper Crossing
Draper
2012
164,098

115,916

48,182

 
95.9
%
100.0
%
86.1
%
14.58

TJ Maxx, Dollar Tree, Downeast Home, Smiths
 
Draper Peaks
Draper
2012
220,594

101,464

119,130

 
95
%
100.0
%
90.7
%
18.66

Michaels, Office Depot, Petco, Quilted Bear, Ross Dress for Less
Kohl's
Virginia
 
 
 
 
 
 
 
 
 
 
Landstown Commons
Virginia Beach
2007
399,047

217,466

181,581

 
92.5
%
95.3
%
89.1
%
19.00

Bed Bath & Beyond, Best Buy, Books-A-Million, Five Below, Office Max, Pestmart, Rack Room, Ulta, Walgreens, Kirkland
Kohl's
Wisconsin
 
 
 
 
 
 
 
 
 
 
 
 
Village at Bay Park
Ashwaubenon
2005
82,254

23,878

58,376

 
83.5
%
100.0
%
76.7
%
14.51

DSW, JC Penney
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Total
 
 
15,292,509

10,447,894

4,844,615

 
95.4
%
99.0
%
87.6
%
$
15.22

 
 

____________________
1
All properties are wholly owned, except as indicated. Unless otherwise noted, each property is owned in fee simple by the Company.
2
Percentage of Owned GLA Leased reflects Owned GLA/NRA leased as of December 31, 2015, except for Greyhound Commons and 54th & College.
3
Operating property is a joint venture.


35



Operating Office Properties
 
 
As of December 31, 2015, we owned interests in one office operating property and an associated parking garage totaling 0.4 million square feet of net rentable area (“NRA”).  The following sets forth more specific information with respect to the Company’s office and parking properties as of December 31, 2015:
 
 
OPERATING OFFICE PROPERTIES
 
($ in thousands)
 
 
 
 
 
 
 
 
 
 
Property
MSA
Year Built/
Renovated
Acquired,
Redeveloped
or Developed
Owned
NRA
Percentage
Of Owned
NRA
Leased
Annualized
Base Rent
1
Percentage
of
Annualized
Office
Base Rent
Base Rent
Per Leased
Sq. Ft.
 
Major Tenants
Office and Parking Properties
 
 
 
 
 
 
 
 
 
 
Thirty South Meridian2
Indianapolis
1905/2002
Redeveloped
287,928

94.8
%
$
4,889

78.9
%
$
17.90

 
Indiana Supreme Court, City Securities, Kite Realty Group, Lumina Foundation
Union Station Parking Garage3
Indianapolis
1986
Acquired
N/A

N/A

N/A

N/A

N/A

 
Denison Parking
Stand-alone office components of retail projects
 
 
 
 
 
 
 
Eddy Street Office (part of Eddy Street Commons)4
South Bend
2009
Developed
81,628

100.0
%
$
1,188

19.2
%
$
14.56

 
University of Notre Dame Offices
Tradition Village Office (part of Tradition Village Square)
Port St. Lucie
2006
Acquired
24,917

36.6
%
116

1.9
%
12.68

 
 
Total
 
 
 
394,473

92.2
%
$
6,193

100.0
%
$
17.02

 
 


____________________
1
Annualized Base Rent represents the monthly contractual rent for December 2015 for each applicable property, multiplied by 12.
2
Annualized Base Rent includes $723,216 from the Company and subsidiaries as of December 31, 2015, which is eliminated in consolidation for purposes of our consolidated financial statement presentation.
3
The garage is managed by a third party.
4
The Company also owns the Eddy Street Commons retail shopping center in South Bend, Indiana, along with a parking garage that serves a hotel and the office and retail components of the property.


36



Development Projects

     In addition to our operating retail properties and office properties, as of December 31, 2015, we owned interests in three development projects currently under construction.  The following sets forth more specific information with respect to the Company’s retail development properties as of December 31, 2015:

($ in thousands)
 
 
 
 
 
 
 
 
 
 
 
Under Construction:
 
 
 
 
 
 
 
 
 
 
 
Project
Company Ownership %
MSA
Projected
Stabilization
Date
1
Projected
Owned
GLA
2
Projected
Total
GLA
3
Percent
of Owned
GLA
Occupied
4
Percent
of Owned
GLA
Pre-Leased/
Committed
5
Total
Estimated
Project
Cost
Cost Incurred as of December 31, 20156
 
Major Tenants and
Non-owned Anchors
Holly Springs Towne Center, NC - Phase II
100%
Raleigh
2H 2016
122,001

154,001

24.1
%
83.9
%
$
47,500

$
35,943

 
Target (non-owned), Carmike Cinemas, Bed Bath & Beyond, DSW
Parkside Town Commons, NC - Phase II
100%
Raleigh
Mid 2016
297,436

347,801

60.5
%
86.1
%
81,200

75,889

 
Frank Theatres, Golf Galaxy, Field & Stream, Stein Mart, Chuy's, Starbucks, Panera Bread
Tamiami Crossing, FL
100%
Naples
2H 2016
121,578

141,578

0.0
%
100.0
%
44,000

33,576

 
Stein Mart, Ross, Marshalls, Michaels, PetSmart, Ulta
Total
 
541,015

643,380

38.7
%
88.7
%
$
172,700

$
145,408

 
 
Cost incurred as of December 31, 2015 included in Construction in Progress on the balance sheet
 
 
$
91,733

 
 


____________________
 
 
 
 
 
 
 
 
1
Stabilization date represents the sooner of one year from project opening date and / or substantially occupied.
2
Projected Owned GLA represents gross leasable area we project we will own. It excludes square footage that we project will be attributable to non-owned outlot structures on land owned by us and expected to be ground leased to tenants. It also excludes non-owned anchor space.
3
Projected Total GLA includes Projected Owned GLA, projected square footage attributable to non-owned outlot structures on land that we own, and non-owned anchor space that currently exists or is under construction.
4
Includes tenants that have taken possession of their space or have begun paying rent.
5
Excludes outlot land parcels owned by the Company and ground leased to tenants. Includes leases under negotiation for approximately 16,728 square feet for which the Company has signed non-binding letters of intent.
6
Cost incurred is reclassified to fixed assets on the consolidated balance sheet on a pro-rata basis as portions of the asset are placed in service.
7
Additional NOI relating to redevelopment projects moved to the operating portfolio as near stabilization.

37



Redevelopment, Reposition, Repurpose Projects

In addition to our development projects, as displayed in the table above, we are also currently evaluating potential redevelopment, repositioning, and repurposing of several operating properties.
($ in thousands)
 
 
REDEVELOPMENT
Location
Description
Bolton Plaza
Jacksonville
Second phase; replace existing vacant shop space with 22,000 square foot junior anchor and center upgrades.
Bridgewater
Indianapolis
Second phase; creation of new outparcel building to relocate existing shop space. Replacing vacant shop space with 15,000 square foot junior anchor.
Burnt Store Promenade
Punta Gorda
New building construction of current grocer into 45,000 square foot space. New 20 year lease and center upgrades.
City Center*
White Plains
Pending construction start to reactivate street level retail components and enhance overall shopping experience within multilevel project.
Courthouse Shadows*
Naples
Recapture of natural lease expiration; demolition of the site to add a large format single tenant ground lease as well as an additional outparcel development.
Fishers Station*
Indianapolis
Demolition, expansion, and replacement of previous anchor.
Hamilton Crossing Centre*
Indianapolis
Recapture of lease expiration; substantially enhancing merchandising mix and replacing available space with new movie theatre for entertainment.
Portofino Shopping Center
Houston
Multiple phase project. Addition of two small shop buildings and a 33,000 square foot junior anchor. Also rightsizing of a 25,000 square foot junior anchor.
Rampart Commons
Las Vegas
Addition of new tenants replacing expiring leases. Upgrades to building façades and hardscape through the center.
Targeted Return **