x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2016 | |
OR | |
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) | ||
Telephone: (317) 577-5600 | ||
(Registrant’s telephone number, including area code) | ||
Not Applicable | ||
(Former name, former address and former fiscal year, if changed since last report) |
Kite Realty Group Trust | Yes x | No o | Kite Realty Group, L.P. | Yes x | No o |
Kite Realty Group Trust | Yes x | No o | Kite Realty Group, L.P. | Yes x | No o |
x | Large accelerated filer | o | Accelerated filer | o | Non-accelerated filer | o | Smaller reporting company |
o | Large accelerated filer | o | Accelerated filer | x | Non-accelerated filer | o | Smaller reporting company |
Kite Realty Group Trust | Yes o | No x | Kite Realty Group, L.P. | Yes o | No x |
• | 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. |
Page | ||
Part I. | ||
Item 1. | ||
Kite Realty Group Trust: | ||
Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015 | ||
Consolidated Statements of Operations and Comprehensive Income for the Three and Nine Months Ended September 30, 2016 and 2015 | ||
Consolidated Statement of Shareholders' Equity for the Nine Months Ended September 30, 2016 | ||
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2016 and 2015 | ||
Kite Realty Group, L.P. and subsidiaries: | ||
Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015 | ||
Consolidated Statements of Operations and Comprehensive Income for the Three and Nine Months Ended September 30, 2016 and 2015 | ||
Consolidated Statement of Partners' Equity for the Nine Months Ended September 30, 2016 | ||
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2016 and 2015 | ||
Kite Realty Group Trust and Kite Realty Group, L.P. and subsidiaries: | ||
Notes to Consolidated Financial Statements | ||
Item 2. | Cautionary Note About Forward-Looking Statements | |
Management's Discussion and Analysis of Financial Condition and Results of Operations | ||
Item 3. | Quantitative and Qualitative Disclosure about Market Risk | |
Item 4. | Controls and Procedures | |
Part II. | OTHER INFORMATION | |
Item 1. | Legal Proceedings | |
Item 1A. | Risk Factors | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |
Item 3. | Defaults upon Senior Securities | |
Item 4. | Mine Safety Disclosures | |
Item 5. | Other Information | |
Item 6. | Exhibits | |
SIGNATURES |
September 30, 2016 | December 31, 2015 | ||||||
Assets: | |||||||
Investment properties, at cost | $ | 3,990,208 | $ | 3,933,140 | |||
Less: accumulated depreciation | (531,946 | ) | (432,295 | ) | |||
3,458,262 | 3,500,845 | ||||||
Cash and cash equivalents | 28,793 | 33,880 | |||||
Tenant and other receivables, including accrued straight-line rent of $27,875 and $23,809, respectively, net of allowance for uncollectible accounts | 50,350 | 51,101 | |||||
Restricted cash and escrow deposits | 9,585 | 13,476 | |||||
Deferred costs and intangibles, net | 133,114 | 148,274 | |||||
Prepaid and other assets | 10,814 | 8,852 | |||||
Total Assets | $ | 3,690,918 | $ | 3,756,428 | |||
Liabilities and Equity: | |||||||
Mortgage and other indebtedness, net | $ | 1,732,344 | $ | 1,724,449 | |||
Accounts payable and accrued expenses | 93,440 | 81,356 | |||||
Deferred revenue and intangibles, net and other liabilities | 120,550 | 131,559 | |||||
Total Liabilities | 1,946,334 | 1,937,364 | |||||
Commitments and contingencies | — | — | |||||
Limited partners' interests in Operating Partnership and other redeemable noncontrolling interests | 99,478 | 92,315 | |||||
Equity: | |||||||
Kite Realty Group Trust Shareholders' Equity: | |||||||
Common Shares, $.01 par value, 225,000,000 shares authorized, 83,545,486 and 83,334,865 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively | 835 | 833 | |||||
Additional paid in capital and other | 2,049,702 | 2,050,545 | |||||
Accumulated other comprehensive loss | (8,738 | ) | (2,145 | ) | |||
Accumulated deficit | (397,391 | ) | (323,257 | ) | |||
Total Kite Realty Group Trust Shareholders' Equity | 1,644,408 | 1,725,976 | |||||
Noncontrolling Interests | 698 | 773 | |||||
Total Equity | 1,645,106 | 1,726,749 | |||||
Total Liabilities and Equity | $ | 3,690,918 | $ | 3,756,428 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenue: | |||||||||||||||
Minimum rent | $ | 69,518 | $ | 66,279 | $ | 205,436 | $ | 196,656 | |||||||
Tenant reimbursements | 17,531 | 16,787 | 52,691 | 51,891 | |||||||||||
Other property related revenue | 2,073 | 4,081 | 7,120 | 9,163 | |||||||||||
Total revenue | 89,122 | 87,147 | 265,247 | 257,710 | |||||||||||
Expenses: | |||||||||||||||
Property operating | 11,916 | 11,994 | 35,454 | 36,519 | |||||||||||
Real estate taxes | 10,690 | 10,045 | 32,327 | 29,821 | |||||||||||
General, administrative, and other | 5,081 | 4,559 | 15,228 | 14,131 | |||||||||||
Transaction costs | — | 1,089 | 2,771 | 1,550 | |||||||||||
Depreciation and amortization | 45,543 | 42,549 | 131,625 | 124,196 | |||||||||||
Total expenses | 73,230 | 70,236 | 217,405 | 206,217 | |||||||||||
Operating income | 15,892 | 16,911 | 47,842 | 51,493 | |||||||||||
Interest expense | (17,139 | ) | (13,881 | ) | (47,964 | ) | (40,995 | ) | |||||||
Income tax expense of taxable REIT subsidiary | (15 | ) | (9 | ) | (763 | ) | (134 | ) | |||||||
Gain on settlement | — | — | — | 4,520 | |||||||||||
Other expense, net | — | (60 | ) | (94 | ) | (189 | ) | ||||||||
(Loss) income before gain on sale of operating properties | (1,262 | ) | 2,961 | (979 | ) | 14,695 | |||||||||
Gain on sales of operating properties | — | — | 194 | 3,363 | |||||||||||
Consolidated net (loss) income | (1,262 | ) | 2,961 | (785 | ) | 18,058 | |||||||||
Net income attributable to noncontrolling interests | (420 | ) | (435 | ) | (1,391 | ) | (1,626 | ) | |||||||
Net (loss) income attributable to Kite Realty Group Trust | $ | (1,682 | ) | $ | 2,526 | $ | (2,176 | ) | $ | 16,432 | |||||
Dividends on preferred shares | — | (2,114 | ) | — | (6,342 | ) | |||||||||
Net (loss) income attributable to common shareholders | $ | (1,682 | ) | $ | 412 | $ | (2,176 | ) | $ | 10,090 | |||||
Net (loss) income per common share - basic & diluted | $ | (0.02 | ) | $ | 0.00 | $ | (0.03 | ) | $ | 0.12 | |||||
Weighted average common shares outstanding - basic | 83,474,348 | 83,325,074 | 83,399,813 | 83,453,660 | |||||||||||
Weighted average common shares outstanding - diluted | 83,474,348 | 83,433,379 | 83,399,813 | 83,566,554 | |||||||||||
Common dividends declared per common share | $ | 0.2875 | $ | 0.2725 | $ | 0.8625 | $ | 0.8175 | |||||||
Consolidated net (loss) income | $ | (1,262 | ) | $ | 2,961 | $ | (785 | ) | $ | 18,058 | |||||
Change in fair value of derivatives | 3,185 | (3,436 | ) | (6,747 | ) | (5,153 | ) | ||||||||
Total comprehensive income (loss) | 1,923 | (475 | ) | (7,532 | ) | 12,905 | |||||||||
Comprehensive income attributable to noncontrolling interests | (493 | ) | (399 | ) | (1,237 | ) | (1,507 | ) | |||||||
Comprehensive income (loss) attributable to Kite Realty Group Trust | $ | 1,430 | $ | (874 | ) | $ | (8,769 | ) | $ | 11,398 |
Common Shares | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total | ||||||||||||||||||
Shares | Amount | |||||||||||||||||||||
Balances, December 31, 2015 | 83,334,865 | $ | 833 | $ | 2,050,545 | $ | (2,145 | ) | $ | (323,257 | ) | $ | 1,725,976 | |||||||||
Stock compensation activity | 68,392 | 1 | 3,640 | — | — | 3,641 | ||||||||||||||||
Issuance of common shares under at-the-market plan, net | 137,229 | 1 | 3,836 | — | — | 3,837 | ||||||||||||||||
Other comprehensive loss attributable to Kite Realty Group Trust | — | — | — | (6,593 | ) | — | (6,593 | ) | ||||||||||||||
Distributions declared to common shareholders | — | — | — | — | (71,958 | ) | (71,958 | ) | ||||||||||||||
Net loss attributable to Kite Realty Group Trust | — | — | — | — | (2,176 | ) | (2,176 | ) | ||||||||||||||
Exchange of redeemable noncontrolling interests for common shares | 5,000 | — | 136 | — | — | 136 | ||||||||||||||||
Adjustment to redeemable noncontrolling interests | — | — | (8,455 | ) | — | — | (8,455 | ) | ||||||||||||||
Balances, September 30, 2016 | 83,545,486 | $ | 835 | $ | 2,049,702 | $ | (8,738 | ) | $ | (397,391 | ) | $ | 1,644,408 |
Nine Months Ended September 30, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities: | |||||||
Consolidated net (loss) income | $ | (785 | ) | $ | 18,058 | ||
Adjustments to reconcile consolidated net (loss) income to net cash provided by operating activities: | |||||||
Straight-line rent | (4,318 | ) | (4,408 | ) | |||
Depreciation and amortization | 135,369 | 126,580 | |||||
Gain on sale of operating properties, net | (194 | ) | (3,363 | ) | |||
Provision for credit losses | 1,883 | 2,984 | |||||
Compensation expense for equity awards | 3,932 | 3,239 | |||||
Amortization of debt fair value adjustment | (3,008 | ) | (4,641 | ) | |||
Amortization of in-place lease liabilities, net | (5,822 | ) | (2,148 | ) | |||
Changes in assets and liabilities: | |||||||
Tenant receivables and other | 2,354 | 1,777 | |||||
Deferred costs and other assets | (11,846 | ) | (7,310 | ) | |||
Accounts payable, accrued expenses, deferred revenue and other liabilities | 3,141 | 8,056 | |||||
Payments on assumed earnout liability | — | (2,869 | ) | ||||
Net cash provided by operating activities | 120,706 | 135,955 | |||||
Cash flows from investing activities: | |||||||
Acquisitions of interests in properties | — | (167,831 | ) | ||||
Capital expenditures, net | (68,352 | ) | (69,792 | ) | |||
Net proceeds from sales of operating properties | 139 | 126,460 | |||||
Collection of note receivable | 500 | — | |||||
Change in construction payables | 621 | 1,005 | |||||
Net cash used in investing activities | (67,092 | ) | (110,158 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of common shares, net | 4,383 | — | |||||
Purchase of redeemable noncontrolling interests | — | (33,998 | ) | ||||
Repurchases of common shares upon the vesting of restricted shares | (1,124 | ) | (964 | ) | |||
Loan proceeds | 550,194 | 640,895 | |||||
Loan transaction costs | (7,280 | ) | (3,032 | ) | |||
Loan payments and related financing escrows | (531,070 | ) | (553,255 | ) | |||
Distributions paid – common shareholders | (70,650 | ) | (67,191 | ) | |||
Distributions paid - preferred shareholders | — | (6,342 | ) | ||||
Distributions paid – redeemable noncontrolling interests | (2,932 | ) | (2,721 | ) | |||
Distributions to noncontrolling interests | (222 | ) | (64 | ) | |||
Net cash used in financing activities | (58,701 | ) | (26,672 | ) | |||
Net change in cash and cash equivalents | (5,087 | ) | (875 | ) | |||
Cash and cash equivalents, beginning of period | 33,880 | 43,826 | |||||
Cash and cash equivalents, end of period | $ | 28,793 | $ | 42,951 | |||
Non-cash investing and financing activities | |||||||
Assumption of mortgages by buyer upon sale of properties | $ | — | $ | 40,303 | |||
Assumption of debt in connection with acquisition of Chapel Hill Shopping Center including debt premiums of $223 | — | 18,473 |
September 30, 2016 | December 31, 2015 | ||||||
Assets: | |||||||
Investment properties, at cost | $ | 3,990,208 | $ | 3,933,140 | |||
Less: accumulated depreciation | (531,946 | ) | (432,295 | ) | |||
3,458,262 | 3,500,845 | ||||||
Cash and cash equivalents | 28,793 | 33,880 | |||||
Tenant and other receivables, including accrued straight-line rent of $27,875 and $23,809, respectively, net of allowance for uncollectible accounts | 50,350 | 51,101 | |||||
Restricted cash and escrow deposits | 9,585 | 13,476 | |||||
Deferred costs and intangibles, net | 133,114 | 148,274 | |||||
Prepaid and other assets | 10,814 | 8,852 | |||||
Total Assets | $ | 3,690,918 | $ | 3,756,428 | |||
Liabilities and Equity: | |||||||
Mortgage and other indebtedness, net | $ | 1,732,344 | $ | 1,724,449 | |||
Accounts payable and accrued expenses | 93,440 | 81,356 | |||||
Deferred revenue and intangibles, net and other liabilities | 120,550 | 131,559 | |||||
Total Liabilities | 1,946,334 | 1,937,364 | |||||
Commitments and contingencies | — | — | |||||
Redeemable Limited Partners’ and other redeemable noncontrolling interests | 99,478 | 92,315 | |||||
Partners Equity: | |||||||
Parent Company: | |||||||
Common equity, 83,545,486 and 83,334,865 units issued and outstanding at September 30, 2016 and December 31, 2015, respectively | 1,653,146 | 1,728,121 | |||||
Accumulated other comprehensive loss | (8,738 | ) | (2,145 | ) | |||
Total Partners Equity | 1,644,408 | 1,725,976 | |||||
Noncontrolling Interests | 698 | 773 | |||||
Total Equity | 1,645,106 | 1,726,749 | |||||
Total Liabilities and Equity | $ | 3,690,918 | $ | 3,756,428 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenue: | |||||||||||||||
Minimum rent | $ | 69,518 | $ | 66,279 | $ | 205,436 | $ | 196,656 | |||||||
Tenant reimbursements | 17,531 | 16,787 | 52,691 | 51,891 | |||||||||||
Other property related revenue | 2,073 | 4,081 | 7,120 | 9,163 | |||||||||||
Total revenue | 89,122 | 87,147 | 265,247 | 257,710 | |||||||||||
Expenses: | |||||||||||||||
Property operating | 11,916 | 11,994 | 35,454 | 36,519 | |||||||||||
Real estate taxes | 10,690 | 10,045 | 32,327 | 29,821 | |||||||||||
General, administrative, and other | 5,081 | 4,559 | 15,228 | 14,131 | |||||||||||
Transaction costs | — | 1,089 | 2,771 | 1,550 | |||||||||||
Depreciation and amortization | 45,543 | 42,549 | 131,625 | 124,196 | |||||||||||
Total expenses | 73,230 | 70,236 | 217,405 | 206,217 | |||||||||||
Operating income | 15,892 | 16,911 | 47,842 | 51,493 | |||||||||||
Interest expense | (17,139 | ) | (13,881 | ) | (47,964 | ) | (40,995 | ) | |||||||
Income tax expense of taxable REIT subsidiary | (15 | ) | (9 | ) | (763 | ) | (134 | ) | |||||||
Gain on settlement | — | — | — | 4,520 | |||||||||||
Other expense, net | — | (60 | ) | (94 | ) | (189 | ) | ||||||||
(Loss) income before gain on sale of operating properties | (1,262 | ) | 2,961 | (979 | ) | 14,695 | |||||||||
Gain on sales of operating properties | — | — | 194 | 3,363 | |||||||||||
Consolidated net (loss) income | (1,262 | ) | 2,961 | (785 | ) | 18,058 | |||||||||
Net income attributable to noncontrolling interests | (461 | ) | (410 | ) | (1,443 | ) | (1,411 | ) | |||||||
Distributions on preferred units | — | (2,114 | ) | — | (6,342 | ) | |||||||||
Net (loss) income attributable to common unitholders | $ | (1,723 | ) | $ | 437 | $ | (2,228 | ) | $ | 10,305 | |||||
Allocation of net (loss) income: | |||||||||||||||
Limited Partners | $ | (41 | ) | $ | 25 | $ | (52 | ) | $ | 215 | |||||
Parent Company | (1,682 | ) | 412 | (2,176 | ) | 10,090 | |||||||||
$ | (1,723 | ) | $ | 437 | $ | (2,228 | ) | $ | 10,305 | ||||||
Net (loss) income per unit - basic & diluted | $ | (0.02 | ) | $ | 0.00 | $ | (0.03 | ) | $ | 0.12 | |||||
Weighted average common units outstanding - basic | 85,417,753 | 85,238,537 | 85,336,859 | 85,214,390 | |||||||||||
Weighted average common units outstanding - diluted | 85,417,753 | 85,346,842 | 85,336,859 | 85,327,283 | |||||||||||
Distributions declared per common unit | $ | 0.2875 | $ | 0.2725 | $ | 0.8625 | $ | 0.8175 | |||||||
Consolidated net (loss) income | $ | (1,262 | ) | $ | 2,961 | $ | (785 | ) | $ | 18,058 | |||||
Change in fair value of derivatives | 3,185 | (3,436 | ) | (6,747 | ) | (5,153 | ) | ||||||||
Total comprehensive income (loss) | 1,923 | (475 | ) | (7,532 | ) | 12,905 | |||||||||
Comprehensive income attributable to noncontrolling interests | (461 | ) | (410 | ) | (1,443 | ) | (1,411 | ) | |||||||
Comprehensive income (loss) attributable to common unitholders | $ | 1,462 | $ | (885 | ) | $ | (8,975 | ) | $ | 11,494 |
General Partner | Total | ||||||||||
Common Equity | Accumulated Other Comprehensive Loss | ||||||||||
Balances, December 31, 2015 | $ | 1,728,121 | $ | (2,145 | ) | $ | 1,725,976 | ||||
Stock compensation activity | 3,641 | — | 3,641 | ||||||||
Capital Contribution from the General Partner | 3,837 | — | 3,837 | ||||||||
Other comprehensive loss attributable to Parent Company | — | (6,593 | ) | (6,593 | ) | ||||||
Distributions declared to Parent Company | (71,958 | ) | — | (71,958 | ) | ||||||
Net loss | (2,176 | ) | — | (2,176 | ) | ||||||
Conversion of Limited Partner Units to shares of the Parent Company | 136 | — | 136 | ||||||||
Adjustment to redeemable noncontrolling interests | (8,455 | ) | — | (8,455 | ) | ||||||
Balances, September 30, 2016 | $ | 1,653,146 | $ | (8,738 | ) | $ | 1,644,408 |
Nine Months Ended September 30, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities: | |||||||
Consolidated net (loss) income | $ | (785 | ) | $ | 18,058 | ||
Adjustments to reconcile consolidated net (loss) income to net cash provided by operating activities: | |||||||
Straight-line rent | (4,318 | ) | (4,408 | ) | |||
Depreciation and amortization | 135,369 | 126,580 | |||||
Gain on sale of operating properties, net | (194 | ) | (3,363 | ) | |||
Provision for credit losses | 1,883 | 2,984 | |||||
Compensation expense for equity awards | 3,932 | 3,239 | |||||
Amortization of debt fair value adjustment | (3,008 | ) | (4,641 | ) | |||
Amortization of in-place lease liabilities, net | (5,822 | ) | (2,148 | ) | |||
Changes in assets and liabilities: | |||||||
Tenant receivables and other | 2,354 | 1,777 | |||||
Deferred costs and other assets | (11,846 | ) | (7,310 | ) | |||
Accounts payable, accrued expenses, deferred revenue and other liabilities | 3,141 | 8,056 | |||||
Payments on assumed earnout liability | — | (2,869 | ) | ||||
Net cash provided by operating activities | 120,706 | 135,955 | |||||
Cash flows from investing activities: | |||||||
Acquisitions of interests in properties | — | (167,831 | ) | ||||
Capital expenditures, net | (68,352 | ) | (69,792 | ) | |||
Net proceeds from sales of operating properties | 139 | 126,460 | |||||
Collection of note receivable | 500 | — | |||||
Change in construction payables | 621 | 1,005 | |||||
Net cash used in investing activities | (67,092 | ) | (110,158 | ) | |||
Cash flows from financing activities: | |||||||
Contributions from the General Partner | 4,383 | — | |||||
Purchase of redeemable noncontrolling interests | — | (33,998 | ) | ||||
Repurchases of common shares upon the vesting of restricted shares | (1,124 | ) | (964 | ) | |||
Loan proceeds | 550,194 | 640,895 | |||||
Loan transaction costs | (7,280 | ) | (3,032 | ) | |||
Loan payments and related financing escrows | (531,070 | ) | (553,255 | ) | |||
Distributions paid – common unitholders | (70,650 | ) | (67,191 | ) | |||
Distributions paid - preferred unitholders | — | (6,342 | ) | ||||
Distributions paid – redeemable noncontrolling interests - subsidiaries | (2,932 | ) | (2,721 | ) | |||
Distributions to noncontrolling interests | (222 | ) | (64 | ) | |||
Net cash used in financing activities | (58,701 | ) | (26,672 | ) | |||
Net change in cash and cash equivalents | (5,087 | ) | (875 | ) | |||
Cash and cash equivalents, beginning of period | 33,880 | 43,826 | |||||
Cash and cash equivalents, end of period | $ | 28,793 | $ | 42,951 | |||
Non-cash investing and financing activities | |||||||
Assumption of mortgages by buyer upon sale of properties | $ | — | $ | 40,303 | |||
Assumption of debt in connection with acquisition of Chapel Hill Shopping Center including debt premiums of $223 | — | 18,473 |
2016 | 2015 | ||||||
Noncontrolling interests balance January 1 | $ | 773 | $ | 3,364 | |||
Net income allocable to noncontrolling interests, excluding redeemable noncontrolling interests | 147 | 84 | |||||
Distributions to noncontrolling interests | (222 | ) | (87 | ) | |||
Acquisition of partner's interest in Beacon Hill | — | (2,353 | ) | ||||
Noncontrolling interests balance at September 30 | $ | 698 | $ | 1,008 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Parent Company’s weighted average basic interest in Operating Partnership | 97.7 | % | 97.8 | % | 97.7 | % | 97.9 | % | |||
Limited partners' weighted average basic interests in Operating Partnership | 2.3 | % | 2.2 | % | 2.3 | % | 2.1 | % |
2016 | 2015 | ||||||
Redeemable noncontrolling interests balance January 1 | $ | 92,315 | $ | 125,082 | |||
Acquisition of partner's interest in City Center operating property | — | (33,998 | ) | ||||
Net income allocable to redeemable noncontrolling interests | 1,244 | 1,541 | |||||
Distributions declared to redeemable noncontrolling interests | (2,973 | ) | (2,810 | ) | |||
Other, net, including adjustments to redemption value | 8,892 | (2,858 | ) | ||||
Total limited partners' interests in Operating Partnership and other redeemable noncontrolling interests balance at September 30 | $ | 99,478 | $ | 86,957 | |||
Limited partners' interests in Operating Partnership | $ | 55,368 | $ | 46,166 | |||
Other redeemable noncontrolling interests in certain subsidiaries | 44,110 | 40,791 | |||||
Total limited partners' interests in Operating Partnership and other redeemable noncontrolling interests balance at September 30 | $ | 99,478 | $ | 86,957 |
• | Level 1 fair value inputs are quoted prices in active markets for identical instruments to which we have access. |
• | Level 2 fair value inputs are inputs other than quoted prices included in Level 1 that are observable for similar instruments, either directly or indirectly, and appropriately considers counterparty creditworthiness in the valuations. |
• | Level 3 fair value inputs reflect our best estimate of inputs and assumptions market participants would use in pricing an instrument at the measurement date. The inputs are unobservable in the market and significant to the valuation estimate. |
As of September 30, 2016 | |||||||||||||||
Principal | Unamortized Net Premiums | Unamortized Deferred Financing Costs | Total | ||||||||||||
Senior unsecured notes | $ | 550,000 | $ | — | $ | (6,349 | ) | $ | 543,651 | ||||||
Unsecured revolving credit facility | 43,700 | — | (2,991 | ) | 40,709 | ||||||||||
Unsecured term loans | 400,000 | — | (2,309 | ) | 397,691 | ||||||||||
Mortgage notes payable - fixed rate | 624,064 | 13,513 | (1,068 | ) | 636,509 | ||||||||||
Mortgage notes payable - variable rate | 114,570 | — | (786 | ) | 113,784 | ||||||||||
Total mortgage and other indebtedness | $ | 1,732,334 | $ | 13,513 | $ | (13,503 | ) | $ | 1,732,344 |
As of December 31, 2015 | |||||||||||||||
Principal | Unamortized Net Premiums | Unamortized Deferred Financing Costs | Total | ||||||||||||
Senior unsecured notes | $ | 250,000 | $ | — | $ | (2,755 | ) | $ | 247,245 | ||||||
Unsecured revolving credit facility | 20,000 | — | (1,727 | ) | 18,273 | ||||||||||
Unsecured term loans | 500,000 | — | (2,985 | ) | 497,015 | ||||||||||
Notes payable secured by properties under construction - variable rate | 132,776 | — | (133 | ) | 132,643 | ||||||||||
Mortgage notes payable - fixed rate | 756,494 | 16,521 | (1,555 | ) | 771,460 | ||||||||||
Mortgage notes payable - variable rate | 58,268 | — | (455 | ) | 57,813 | ||||||||||
Total mortgage and other indebtedness | $ | 1,717,538 | $ | 16,521 | $ | (9,610 | ) | $ | 1,724,449 |
Outstanding Amount | Ratio | Weighted Average Interest Rate | Weighted Average Maturity (Years) | ||||||||
Fixed rate debt1 | $ | 1,648,718 | 95 | % | 4.13 | % | 6.7 | ||||
Variable rate debt | 83,616 | 5 | % | 2.03 | % | 5.4 | |||||
Net debt premiums and issuance costs, net | 10 | N/A | N/A | N/A | |||||||
Total | $1,732,344 | 100 | % | 4.03 | % | 6.6 |
____________________ | |
1 | Fixed rate debt includes, and variable rate debt excludes, the portion of such debt that has been hedged by interest rate derivatives. As of September 30, 2016, $474.7 million in variable rate debt is hedged for a weighted average 2.9 years. |
• | In the first nine months of 2016, we retired the $16.3 million loan secured by our Cool Creek Commons operating property, the $23.6 million loan secured by our Sunland Towne Centre operating property, the $20.3 million loan secured by our Mullins Crossing operating property, the $16.5 million loan secured by our Pine Ridge Crossing operating property, the $9.9 million loan secured by our Riverchase Plaza operating property and the $42.2 million loan secured by our Traders Point operating property; |
• | We borrowed $150.2 million on the unsecured revolving credit facility to fund the above retirements of secured debt and for general business purposes; |
• | In the third quarter of 2016, we refinanced the $56.9 million construction loan secured by our Delray Marketplace operating property and extended the maturity of the loan to February 2022; |
• | In the third quarter of 2016, we incurred $6.5 million of debt issuance costs related to amending the unsecured term loans and completing the issuance of our senior unsecured notes. |
• | In the third quarter of 2016, we recorded $1.2 million in non-cash accelerated amortization of debt issuance costs as a result of amending the unsecured revolving credit facility, the unsecured term loans, retiring Term Loan A, retiring the Parkside Town Commons construction loan and refinancing the Delray Marketplace construction loan; and |
• | We made scheduled principal payments on indebtedness totaling $4.3 million in the first nine months of 2016. |
September 30, 2016 | December 31, 2015 | ||||||
Acquired lease intangible assets | $ | 126,515 | $ | 138,796 | |||
Deferred leasing costs and other | 63,116 | 55,332 | |||||
189,631 | 194,128 | ||||||
Less—accumulated amortization | (56,517 | ) | (45,854 | ) | |||
Total | $ | 133,114 | $ | 148,274 |
Nine Months Ended September 30, | |||||||
2016 | 2015 | ||||||
Amortization of deferred leasing costs, lease intangibles and other | $ | 19,177 | $ | 17,538 | |||
Amortization of above market lease intangibles | 4,803 | 4,523 |
September 30, 2016 | December 31, 2015 | ||||||
Unamortized in-place lease liabilities | $ | 100,972 | $ | 112,405 | |||
Retainage payables and other | 6,589 | 5,636 | |||||
Assumed earnout liability (Note 9) | 1,285 | 1,380 | |||||
Tenant rent payments received in advance | 11,704 | 12,138 | |||||
Total | $ | 120,550 | $ | 131,559 |
Property Name | MSA | Acquisition Date | Owned GLA | ||||
Colleyville Downs | Dallas, TX | April 2015 | 191,126 | ||||
Belle Isle Station | Oklahoma City, OK | May 2015 | 164,362 | ||||
Livingston Shopping Center | New York - Newark | July 2015 | 139,605 | ||||
Chapel Hill Shopping Center | Fort Worth / Dallas, TX | August 2015 | 126,755 |
• | 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 economic uncertainty caused by fluctuations in the prices of oil and other energy sources; |
• | 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 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, Indiana and Texas; |
• | 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 Quarterly Report on Form 10-Q 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, including, in particular, the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015. |
Property Name | MSA | Acquisition Date | Owned GLA | ||||
Colleyville Downs | Dallas, TX | April 2015 | 191,126 | ||||
Belle Isle Station | Oklahoma City, OK | May 2015 | 164,362 | ||||
Livingston Shopping Center | New York - Newark | July 2015 | 139,605 | ||||
Chapel Hill Shopping Center | Fort Worth / Dallas, TX | August 2015 | 126,755 |
Property Name | MSA | Disposition Date | Owned GLA | ||||
Sale of seven operating properties | Various1 | March 2015 | 740,034 | ||||
Cornelius Gateway | Portland, OR | December 2015 | 21,326 | ||||
Four Corner Square | Seattle, WA | December 2015 | 107,998 | ||||
Shops at Otty | Portland, OR | June 2016 | 9,845 |
____________________ | |
1 | Shortly after the merger with Inland Diversified, we identified and sold certain properties located in multiple MSAs that were not consistent with the Company's strategic plan. |
Property Name | MSA | Economic Occupancy Date1 | Owned GLA | ||||
Holly Springs Towne Center – Phase II | Raleigh, NC | December 2015 | 122,032 | ||||
Tamiami Crossing | Naples, FL | March 2016 | 121,949 |
____________________ | |
1 | Represents the earlier of the date on which we started receiving rental payments at the property or a tenant took possession of its space. |
Property Name | MSA | Transition to Redevelopment1 | Transition to Operations | Owned GLA | |||||
Gainesville Plaza | Gainesville, FL | June 2013 | December 2015 | 162,693 | |||||
Cool Springs Market | Nashville, TN | July 2015 | December 2015 | 230,988 | |||||
Courthouse Shadows2,3 | Naples, FL | June 2013 | Pending | 8,160 | |||||
Hamilton Crossing Centre2 | Indianapolis, IN | June 2014 | Pending | 93,839 | |||||
City Center2 | White Plains, NY | December 2015 | Pending | 313,139 | |||||
Fishers Station2 | Indianapolis, IN | December 2015 | Pending | 175,290 | |||||
Beechwood Promenade2 | Athens, GA | December 2015 | Pending | 353,970 | |||||
The Corner2 | Indianapolis, IN | December 2015 | Pending | 26,500 | |||||
Rampart Commons2 | Las Vegas, NV | March 2016 | Pending | 81,292 | |||||
Northdale Promenade2 | Tampa, FL | March 2016 | Pending | 179,680 | |||||
Burnt Store2 | Punta Gorda, FL | June 2016 | Pending | 95,787 |
____________________ | |
1 | Transition date represents the date the property was transferred from our operating portfolio into redevelopment status. |
2 | These operating properties have been identified as redevelopment properties and they are not included in the operating portfolio or the same property pool. |
3 | Our redevelopment plan is to demolish the site to add a large format single tenant ground lease with projected total GLA at the site of 140,710 square feet. |
($ in thousands) | 2016 | 2015 | Net change 2015 to 2016 | ||||||||
Revenue: | |||||||||||
Rental income (including tenant reimbursements) | $ | 87,049 | $ | 83,066 | $ | 3,983 | |||||
Other property related revenue | 2,073 | 4,081 | (2,008 | ) | |||||||
Total revenue | 89,122 | 87,147 | 1,975 | ||||||||
Expenses: | |||||||||||
Property operating | 11,916 | 11,994 | (78 | ) | |||||||
Real estate taxes | 10,690 | 10,045 | 645 | ||||||||
General, administrative, and other | 5,081 | 4,559 | 522 | ||||||||
Transaction costs | — | 1,089 | (1,089 | ) | |||||||
Depreciation and amortization | 45,543 | 42,549 | 2,994 | ||||||||
Total expenses | 73,230 | 70,236 | 2,994 | ||||||||
Operating income | 15,892 | 16,911 | (1,019 | ) | |||||||
Interest expense | (17,139 | ) | (13,881 | ) | (3,258 | ) | |||||
Income tax expense of taxable REIT subsidiary | (15 | ) | (9 | ) | (6 | ) | |||||
Other expense, net | — | (60 | ) | 60 | |||||||
(Loss) income before gain on sale of operating properties | (1,262 | ) | 2,961 | (4,223 | ) | ||||||
Gain on sales of operating properties | — | — | — | ||||||||
Consolidated net (loss) income | (1,262 | ) | 2,961 | (4,223 | ) | ||||||
Net income attributable to noncontrolling interests | (420 | ) | (435 | ) | 15 | ||||||
Net (loss) income attributable to Kite Realty Group Trust | (1,682 | ) | 2,526 | (4,208 | ) | ||||||
Dividends on preferred shares | — | (2,114 | ) | 2,114 | |||||||
Net (loss) income attributable to common shareholders | $ | (1,682 | ) | $ | 412 | $ | (2,094 | ) | |||
Property operating expense to total revenue ratio | 13.4 | % | 13.8 | % |
($ in thousands) | Net change 2015 to 2016 | ||
Properties acquired during 2015 | $ | 855 | |
Development properties that became operational or were partially operational in 2015 and/or 2016 | 1,170 | ||
Properties sold during 2015 and 2016 | (780 | ) | |
Properties under redevelopment during 2015 and/or 2016 | 1,458 | ||
Properties fully operational during 2015 and 2016 and other | 1,280 | ||
Total | $ | 3,983 |
($ in thousands) | Net change 2015 to 2016 | ||
Properties acquired during 2015 | $ | 303 | |
Development properties that became operational or were partially operational in 2015 and/or 2016 | 335 | ||
Properties sold during 2015 and 2016 | (202 | ) | |
Properties under redevelopment during 2015 and/or 2016 | (145 | ) | |
Properties fully operational during 2015 and 2016 and other | (369 | ) | |
Total | $ | (78 | ) |
($ in thousands) | Net change 2015 to 2016 | ||
Properties acquired during 2015 | $ | 308 | |
Development properties that became operational or were partially operational in 2015 and/or 2016 | 112 | ||
Properties sold during 2015 and 2016 | (87 | ) | |
Properties under redevelopment during 2015 and/or 2016 | 28 | ||
Properties fully operational during 2015 and 2016 and other | 284 | ||
Total | $ | 645 |
($ in thousands) | Net change 2015 to 2016 | ||
Properties acquired during 2015 | $ | 415 | |
Development properties that became operational or were partially operational in 2015 and/or 2016 | 2,375 | ||
Properties sold during 2015 and 2016 | (409 | ) | |
Properties under redevelopment during 2015 and/or 2016 | 1,747 | ||
Properties fully operational during 2015 and 2016 and other | (1,134 | ) | |
Total | $ | 2,994 |
($ in thousands) | 2016 | 2015 | Net change 2015 to 2016 | ||||||||
Revenue: | |||||||||||
Rental income (including tenant reimbursements) | $ | 258,127 | $ | 248,547 | $ | 9,580 | |||||
Other property related revenue | 7,120 | 9,163 | (2,043 | ) | |||||||
Total revenue | 265,247 | 257,710 | 7,537 | ||||||||
Expenses: | |||||||||||
Property operating | 35,454 | 36,519 | (1,065 | ) | |||||||
Real estate taxes | 32,327 | 29,821 | 2,506 | ||||||||
General, administrative, and other | 15,228 | 14,131 | 1,097 | ||||||||
Transaction costs | 2,771 | 1,550 | 1,221 | ||||||||
Depreciation and amortization | 131,625 | 124,196 | 7,429 | ||||||||
Total expenses | 217,405 | 206,217 | 11,188 | ||||||||
Operating income | 47,842 | 51,493 | (3,651 | ) | |||||||
Interest expense | (47,964 | ) | (40,995 | ) | (6,969 | ) | |||||
Income tax expense of taxable REIT subsidiary | (763 | ) | (134 | ) | (629 | ) | |||||
Gain on settlement | — | 4,520 | (4,520 | ) | |||||||
Other expense, net | (94 | ) | (189 | ) | 95 | ||||||
Income before gain on sale of operating properties | (979 | ) | 14,695 | (15,674 | ) | ||||||
Gain on sales of operating properties | 194 | 3,363 | (3,169 | ) | |||||||
Consolidated net income | (785 | ) | 18,058 | (18,843 | ) | ||||||
Net income attributable to noncontrolling interests | (1,391 | ) | (1,626 | ) | 235 | ||||||
Net (loss) income attributable to Kite Realty Group Trust | (2,176 | ) | 16,432 | (18,608 | ) | ||||||
Dividends on preferred shares | — | (6,342 | ) | 6,342 | |||||||
Net (loss) income attributable to common shareholders | $ | (2,176 | ) | $ | 10,090 | $ | (12,266 | ) | |||
Property operating expense to total revenue ratio | 13.4 | % | 14.2 | % |
($ in thousands) | Net change 2015 to 2016 | ||
Properties acquired during 2015 | $ | 7,418 | |
Development properties that became operational or were partially operational in 2015 and/or 2016 | 3,580 | ||
Properties sold during 2015 and 2016 | (5,165 | ) | |
Properties under redevelopment during 2015 and/or 2016 | 794 | ||
Properties fully operational during 2015 and 2016 and other | 2,953 | ||
Total | $ | 9,580 |
($ in thousands) | Net change 2015 to 2016 | ||
Properties acquired during 2015 | $ | 1,655 | |
Development properties that became operational or were partially operational in 2015 and/or 2016 | 709 | ||
Properties sold during 2015 and 2016 | (981 | ) | |
Properties under redevelopment during 2015 and/or 2016 | (459 | ) | |
Properties fully operational during 2015 and 2016 and other | (1,989 | ) | |
Total | $ | (1,065 | ) |
($ in thousands) | Net change 2015 to 2016 | ||
Properties acquired during 2015 | $ | 1,605 | |
Development properties that became operational or were partially operational in 2015 and/or 2016 | 249 | ||
Properties sold during 2015 and 2016 | (514 | ) | |
Properties under redevelopment during 2015 and/or 2016 | (37 | ) | |
Properties fully operational during 2015 and 2016 and other | 1,203 | ||
Total | $ | 2,506 |
($ in thousands) | Net change 2015 to 2016 | ||
Properties acquired during 2015 | $ | 3,923 | |
Development properties that became operational or were partially operational in 2015 and/or 2016 | 3,286 | ||
Properties sold during 2015 and 2016 | (1,202 | ) | |
Properties under redevelopment during 2015 and/or 2016 | 2,067 | ||
Properties fully operational during 2015 and 2016 and other | (644 | ) | |
Total | $ | 7,430 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||
($ in thousands) | 2016 | 2015 | % Change | 2016 | 2015 | % Change | |||||||||||||||
Number of properties for the quarter1 | 103 | 103 | |||||||||||||||||||
Leased percentage | 95.3 | % | 95.4 | % | 95.3 | % | 95.2 | % | |||||||||||||
Economic Occupancy percentage2 | 93.6 | % | 93.7 | % | 93.8 | % | 93.6 | % | |||||||||||||
Net operating income - same properties3 | $ | 53,662 | $ | 52,579 | 2.1 | % | $ | 158,368 | $ | 154,220 | 2.7 | % | |||||||||
Net operating income - same properties excluding the impact of the 3-R initiative4 | 2.9 | % | |||||||||||||||||||
Reconciliation of Same Property NOI to Most Directly Comparable GAAP Measure: | |||||||||||||||||||||
Net operating income - same properties | $ | 53,662 | $ | 52,579 | $ | 158,368 | $ | 154,220 | |||||||||||||
Net operating income - non-same activity5 | 12,854 | 12,529 | 39,098 | 37,150 | |||||||||||||||||
Other expense, net | (15 | ) | (69 | ) | (857 | ) | (323 | ) | |||||||||||||
General, administrative and other | (5,081 | ) | (4,559 | ) | (15,228 | ) | (14,131 | ) | |||||||||||||
Transaction costs | — | (1,089 | ) | (2,771 | ) | (1,550 | ) | ||||||||||||||
Depreciation expense | (45,543 | ) | (42,549 | ) | (131,625 | ) | (124,196 | ) | |||||||||||||
Interest expense | (17,139 | ) | (13,881 | ) | (47,964 | ) | (40,995 | ) | |||||||||||||
Gain on settlement | — | — | — | 4,520 | |||||||||||||||||
Gains on sales of operating properties | — | — | 194 | 3,363 | |||||||||||||||||
Net income attributable to noncontrolling interests | (420 | ) | (435 | ) | (1,391 | ) | (1,626 | ) | |||||||||||||
Dividends on preferred shares | — | (2,114 | ) | — | (6,342 | ) | |||||||||||||||
Net (loss) income attributable to common shareholders | $ | (1,682 | ) | $ | 412 | $ | (2,176 | ) | $ | 10,090 |
____________________ | ||||||||||||
1 | Same property analysis excludes operating properties in redevelopment as well as office properties (Thirty South Meridian and Eddy Street Commons). | |||||||||||
2 | Excludes leases that are signed but for which tenants have not yet commenced the payment of cash rent. Calculated as a weighted average based on the timing of cash rent commencement during the period. | |||||||||||
3 | Same property net operating income excludes net gains from outlot sales, straight-line rent revenue, bad debt expense and recoveries, lease termination fees, amortization of lease intangibles and significant prior year expense recoveries and adjustments, if any. | |||||||||||
4 | See pages 27 and 28 of the Quarterly Financial Supplemental for further detail of the properties included in the 3-R initiative. | |||||||||||
5 | Includes non-cash activity across the portfolio as well as net operating income from properties not included in the same property pool. |
Year to Date – | Cumulative – | ||||||
($ in thousands) | September 30, 2016 | September 30, 2016 | |||||
Developments | $ | 3,767 | $ | 80,213 | |||
Redevelopments | 23,027 | N/A | |||||
Recently completed developments/redevelopments1 | 29,063 | N/A | |||||
Miscellaneous other activity, net | 3,889 | N/A | |||||
Recurring operating capital expenditures (primarily tenant improvement payments) | 8,606 | N/A | |||||
Total | $ | 68,352 | $ | 80,213 |
____________________ | |
1 | This classification includes Tamiami Crossing, Holly Springs Towne Center – Phase I and Phase II, Parkside Town Commons – Phase I, Bolton Plaza, Gainesville Plaza, and Cool Springs. |
($ in thousands) | Scheduled Principal Payments | Term Maturity1 | Total | ||||||||
2016 | $ | 954 | $ | — | $ | 954 | |||||
2017 | 5,103 | 17,025 | 22,128 | ||||||||
2018 | 5,635 | 62,584 | 68,219 | ||||||||
2019 | 5,975 | — | 5,975 | ||||||||
2020 | 5,920 | 42,339 | 48,259 | ||||||||
Thereafter | 12,976 | 1,573,823 | 1,586,799 | ||||||||
$ | 36,563 | $ | 1,695,771 | $ | 1,732,334 | ||||||
Unamortized net debt premiums and issuance costs, net | 10 | ||||||||||
Total | $ | 1,732,344 |
____________________ | |
1 | This presentation reflects the Company's exercise of its option to extend the maturity date by one year to July 28, 2021 for the Company's unsecured credit facility. |
• | Net proceeds of $0.1 million related to the sale of Shops at Otty in June 2016, compared to net proceeds of $126.5 million related to the sale of seven operating properties in March 2015; |
• | There were no property acquisitions in the first nine months of 2016, while there was a net cash outflow of $167.8 million related to acquisitions over the same period in 2015; |
• | Decrease in capital expenditures of $1.4 million, partially offset by an increase in construction payables of $0.6 million. In the first nine months of 2016, we substantially completed construction at our Tamiami Crossing and Holly Springs Towne Center - Phase II development properties, and incurred additional construction costs at several of our redevelopment properties. |
• | We retired the $16.3 million loan secured by our Cool Creek Commons operating property, the $23.6 million loan secured by our Sunland Towne Centre operating property, the $20.3 million loan secured by our Mullins Crossing operating property, the $16.5 million loan secured by our Pine Ridge Crossing operating property, the $9.9 million loan secured by our Riverchase Plaza operating property and the $42.2 million loan secured by our Traders Point operating property using draws on the unsecured revolving credit facility; |
• | We issued $300 million of senior unsecured notes in a public offering. The net proceeds of which were utilized to retire the $200 million Term Loan A and the $75.9 million construction loan secured by our Parkside Town Commons operating property and to pay down our unsecured revolving credit facility; |
• | We drew the remaining $100 million on our $200 million seven-year unsecured term loan and used the proceeds to pay down the unsecured revolving credit facility; and |
• | We made distributions to common shareholders and Common Unit holders of $73.6 million. |
($ in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Consolidated net (loss) income | $ | (1,262 | ) | $ | 2,961 | $ | (785 | ) | $ | 18,058 | |||||
Less: cash dividends on preferred shares | — | (2,114 | ) | — | (6,342 | ) | |||||||||
Less: net income attributable to noncontrolling interests in properties | (461 | ) | (415 | ) | (1,383 | ) | (1,416 | ) | |||||||
Less: gains on sales of operating properties | — | — | (194 | ) | (3,363 | ) | |||||||||
Add: depreciation and amortization of consolidated entities, net of noncontrolling interests | 45,310 | 42,387 | 130,909 | 123,812 | |||||||||||
Funds From Operations of the Operating Partnership1 | 43,587 | 42,819 | 128,547 | 130,749 | |||||||||||
Less: Limited Partners' interests in Funds From Operations | (918 | ) | (967 | ) | (2,708 | ) | (2,698 | ) | |||||||
Funds From Operations attributable to Kite Realty Group Trust common shareholders1 | $ | 42,669 | $ | 41,852 | $ | 125,839 | $ | 128,051 | |||||||
Funds From Operations of the Operating Partnership1 | $ | 43,587 | $ | 42,819 | $ | 128,547 | $ | 130,749 | |||||||
Less: gain on settlement | — | — | — | (4,520 | ) | ||||||||||
Add: accelerated amortization of debt issuance costs (non-cash)2 | 1,121 | — | 1,121 | — | |||||||||||
Add: transaction costs | — | 1,089 | 2,771 | 1,550 | |||||||||||
Add: severance charge | — | — | 500 | — | |||||||||||
Funds From Operations of the Operating Partnership, as adjusted | $ | 44,708 | $ | 43,908 | $ | 132,939 | $ | 127,779 |
____________________ | |
1 | “Funds From Operations of the Kite Portfolio" measures 100% of the operating performance of the Operating Partnership’s real estate properties and construction and service subsidiaries in which the Company owns an interest. “Funds From Operations attributable to Kite Realty Group Trust common shareholders” reflects a reduction for the redeemable noncontrolling weighted average diluted interest in the Operating Partnership. |
2 | Primarily related to the debt extinguished with the proceeds from our inaugural public debt offering. |
($ in thousands) | Three Months Ended September 30, 2016 | ||
Consolidated net loss | $ | (1,262 | ) |
Adjustments to net loss | |||
Depreciation and amortization | 45,543 | ||
Interest expense | 17,139 | ||
Income tax expense of taxable REIT subsidiary | 15 | ||
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) | 61,435 | ||
Unconsolidated EBITDA | 34 | ||
Noncontrolling interest | (461 | ) | |
Adjusted EBITDA | 61,008 | ||
Annualized Adjusted EBITDA1 | $ | 244,032 | |
Company share of net debt: | |||
Mortgage and other indebtedness | 1,732,344 | ||
Less: Partner share of consolidated joint venture debt2 | (13,741 | ) | |
Less: Cash, Cash Equivalents, and Restricted Cash | (38,378 | ) | |
Less: Net debt premiums and issuance costs, net | (10 | ) | |
Company Share of Net Debt2 | 1,680,215 | ||
Company Share of Net Debt to EBITDA | 6.9x |
____________________ | |
1 | Represents Adjusted EBITDA for the three months ended September 30, 2016 (as shown in the table above) multiplied by four. |
2 | Partner share of consolidated joint venture debt is calculated based upon the partner's pro-rata ownership of the joint venture, multiplied by the related secured debt balance. In all cases, this debt is the responsibility of the consolidated joint venture. |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Period | Total number of shares purchased1 | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Maximum number of shares that may yet be purchased under the plans or programs | ||||||||
July 1 - July 31 | 891 | $ | 28.07 | — | N/A | |||||||
August 1 - August 31 | 715 | $ | 28.60 | — | N/A | |||||||
September 1 - September 30 | — | — | N/A | N/A | ||||||||
Total | 1,606 |
____________________ | |
1 | The number of shares purchased represents common shares surrendered by certain of our employees to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common shares of beneficial interest issued under our 2013 Plan. With respect to these shares, the price paid per share is based on the closing price of our common shares as of the date of the determination of the statutory minimum federal and state tax obligations. |
Item 3. | Defaults Upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
Exhibit No. | Description | Location | ||
3.1 | Articles of Amendment and Restatement of Declaration of Trust of the Company, as supplemented and amended | Incorporated by reference to Exhibit 3.1 to the Annual Report on Form 10-K of Kite Realty Group Trust filed with the SEC on February 27, 2015 | ||
3.2 | Articles of Amendment to the Articles of Amendment and Restatement of Declaration of Trust of the Company, as supplemented and amended | Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on May 28, 2015 | ||
3.3 | Second Amended and Restated Bylaws of the Company, as amended | Incorporated by reference to Exhibit 3.2 to the Annual Report on Form 10-K of Kite Realty Group Trust filed with the SEC on February 27, 2015 | ||
3.4 | First Amendment to the Second Amended and Restated Bylaws of Kite Realty Group Trust, as amended | Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on May 28, 2015 | ||
4.1 | Form of Common Share Certificate | Incorporated by reference to Exhibit 4.1 to Kite Realty Group Trust's registration statement on Form S-11 (File No. 333-114224) declared effective by the SEC on August 10, 2004 | ||
4.2 | Indenture, dated September 26, 2016, between Kite Realty Group, L.P., as issuer, and U.S. Bank National Association, as trustee | Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on September 27, 2016 | ||
4.3 | First Supplemental Indenture, dated September 26, 2016, among Kite Realty Group, L.P., Kite Realty Group Trust, as possible future guarantor, and U.S. Bank National Association | Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on September 27, 2016 | ||
4.4 | Form of Global Note representing the Notes | Incorporated by reference to Exhibits 4.2 and 4.3 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on September 27, 2016 | ||
10.1 | Fifth Amended and Restated Credit Agreement, dated as of July 28, 2016, by and among Kite Realty Group, L.P., KeyBank National Association, as Administrative Agent, and the other lenders party thereto | Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on July 29, 2016 | ||
10.2 | First Amended and Restated Springing Guaranty, dated as of July 28, 2016, by Kite Realty Group Trust | Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on July 29, 2016 | ||
10.3 | First Amendment to Term Loan Agreement, dated as of July 28, 2016, by and among Kite Realty Group, L.P., Kite Realty Group Trust, KeyBank National Association, as Administrative Agent, and the other lenders party thereto | Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on July 29, 2016 | ||
31.1 | Certification of principal executive officer of the Parent Company required by Rule 13a-14(a)/15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith | ||
31.2 | Certification of principal financial officer of the Parent Company required by Rule 13a-14(a)/15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith | ||
31.3 | Certification of principal executive officer of the Operating Partnership required by Rule 13a-14(a)/15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith | ||
31.4 | Certification of principal financial officer of the Operating Partnership required by Rule 13a-14(a)/15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith | ||
32.1 | Certification of Chief Executive Officer and Chief Financial Officer of the Parent Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Filed herewith | ||
32.2 | Certification of Chief Executive Officer and Chief Financial Officer of the Operating Partnership pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Filed herewith | ||
101.INS | XBRL Instance Document | Filed herewith | ||
101.SCH | XBRL Taxonomy Extension Schema Document | Filed herewith | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | Filed herewith | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith | ||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | Filed herewith | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | Filed herewith |
KITE REALTY GROUP TRUST | ||
November 8, 2016 | By: | /s/ John A. Kite |
(Date) | John A. Kite | |
Chairman and Chief Executive Officer | ||
(Principal Executive Officer) | ||
November 8, 2016 | By: | /s/ Daniel R. Sink |
(Date) | Daniel R. Sink | |
Chief Financial Officer | ||
(Principal Financial Officer) |
Exhibit No. | Description | Location | ||
3.1 | Articles of Amendment and Restatement of Declaration of Trust of the Company, as supplemented and amended | Incorporated by reference to Exhibit 3.1 to the Annual Report on Form 10-K of Kite Realty Group Trust filed with the SEC on February 27, 2015 | ||
3.2 | Articles of Amendment to the Articles of Amendment and Restatement of Declaration of Trust of the Company, as supplemented and amended | Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on May 28, 2015 | ||
3.3 | Second Amended and Restated Bylaws of the Company, as amended | Incorporated by reference to Exhibit 3.2 to the Annual Report on Form 10-K of Kite Realty Group Trust filed with the SEC on February 27, 2015 | ||
3.4 | First Amendment to the Second Amended and Restated Bylaws of Kite Realty Group Trust, as amended | Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on May 28, 2015 | ||
4.1 | Form of Common Share Certificate | Incorporated by reference to Exhibit 4.1 to Kite Realty Group Trust's registration statement on Form S-11 (File No. 333-114224) declared effective by the SEC on August 10, 2004 | ||
4.2 | Indenture, dated September 26, 2016, between Kite Realty Group, L.P., as issuer, and U.S. Bank National Association, as trustee | Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on September 27, 2016 | ||
4.3 | First Supplemental Indenture, dated September 26, 2016, among Kite Realty Group, L.P., Kite Realty Group Trust, as possible future guarantor, and U.S. Bank National Association | Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on September 27, 2016 | ||
4.4 | Form of Global Note representing the Notes | Incorporated by reference to Exhibits 4.2 and 4.3 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on September 27, 2016 |
10.1 | Fifth Amended and Restated Credit Agreement, dated as of July 28, 2016, by and among Kite Realty Group, L.P., KeyBank National Association, as Administrative Agent, and the other lenders party thereto | Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on July 29, 2016 | ||
10.2 | First Amended and Restated Springing Guaranty, dated as of July 28, 2016, by Kite Realty Group Trust | Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on July 29, 2016 | ||
10.3 | First Amendment to Term Loan Agreement, dated as of July 28, 2016, by and among Kite Realty Group, L.P., Kite Realty Group Trust, KeyBank National Association, as Administrative Agent, and the other lenders party thereto | Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K of Kite Realty Group Trust filed with the SEC on July 29, 2016 | ||
31.1 | Certification of principal executive officer of the Parent Company required by Rule 13a-14(a)/15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith | ||
31.2 | Certification of principal financial officer of the Parent Company required by Rule 13a-14(a)/15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith | ||
31.3 | Certification of principal executive officer of the Operating Partnership required by Rule 13a-14(a)/15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith | ||
31.4 | Certification of principal financial officer of the Operating Partnership required by Rule 13a-14(a)/15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith | ||
32.1 | Certification of Chief Executive Officer and Chief Financial Officer of the Parent Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Filed herewith | ||
32.2 | Certification of Chief Executive Officer and Chief Financial Officer of the Operating Partnership pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Filed herewith | ||
101.INS | XBRL Instance Document | Filed herewith | ||
101.SCH | XBRL Taxonomy Extension Schema Document | Filed herewith | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | Filed herewith | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith | ||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | Filed herewith | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | Filed herewith |
1. | I have reviewed this quarterly report on Form 10-Q of Kite Realty Group Trust; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: November 8, 2016 | ||
By: | /s/ John A. Kite | |
John A. Kite | ||
Chairman and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Kite Realty Group Trust; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 8, 2016 | ||
By: | /s/ Daniel R. Sink | |
Daniel R. Sink | ||
Chief Financial Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Kite Realty Group, L.P.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 8, 2016 | ||
By: | /s/ John A. Kite | |
John A. Kite | ||
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Kite Realty Group, L.P.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 8, 2016 | ||
By: | /s/ Daniel R. Sink | |
Daniel R. Sink | ||
Chief Financial Officer |
1. | The Quarterly Report on Form 10-Q of the Parent Company for the quarter ended September 30, 2016 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and |
2. | The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Parent Company. |
Date: November 8, 2016 | By: | /s/ John A. Kite |
John A. Kite | ||
Chairman and Chief Executive Officer |
Date: November 8, 2016 | By: | /s/ Daniel R. Sink |
Daniel R. Sink | ||
Chief Financial Officer |
1. | The Quarterly Report on Form 10-Q of the Operating Partnership for the quarter ended September 30, 2016 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and |
2. | The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership. |
Date: November 8, 2016 | By: | /s/ John A. Kite |
John A. Kite | ||
Chief Executive Officer |
Date: November 8, 2016 | By: | /s/ Daniel R. Sink |
Daniel R. Sink | ||
Chief Financial Officer |
Document And Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Oct. 31, 2016 |
|
Entity Information [Line Items] | ||
Entity Registrant Name | KITE REALTY GROUP TRUST | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 83,545,986 | |
Amendment Flag | false | |
Entity Central Index Key | 0001286043 | |
Entity Filer Category | Large Accelerated Filer | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
KRG, LP | ||
Entity Information [Line Items] | ||
Entity Registrant Name | KITE REALTY GROUP, L.P. | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 0 | |
Amendment Flag | false | |
Entity Central Index Key | 0001636315 | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 |
Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Accrued straight-line rent (in Dollars) | $ 27,875 | $ 23,809 |
Common Shares, par value (in Dollars per share) | $ 0.01 | $ 0.01 |
Shares authorized (in shares) | 225,000,000 | 225,000,000 |
Common Shares, shares issued | 83,546,178 | 83,334,865 |
Common Shares, shares outstanding | 83,546,178 | 83,334,865 |
KRG, LP | ||
Accrued straight-line rent (in Dollars) | $ 27,875 | $ 23,809 |
Common Shares, shares issued | 83,546,178 | 83,334,865 |
Common Shares, shares outstanding | 83,546,178 | 83,334,865 |
Consolidated Statements of Partners' Equity (Unaudited) - KRG, LP - 9 months ended Sep. 30, 2016 - USD ($) $ in Thousands |
Total |
General Partner
Common Stock
|
General Partner
Accumulated Other Comprehensive Income (Loss)
|
---|---|---|---|
Partners' capital, beginning balance at Dec. 31, 2015 | $ 1,725,976 | $ 1,728,121 | $ (2,145) |
Increase (Decrease) in Partners' Capital [Roll Forward] | |||
Stock compensation activity | 3,641 | 3,641 | |
Stock Issued During Period, Value, New Issues | 3,837 | 3,837 | |
Other comprehensive loss attributable to Parent Company | (6,593) | (6,593) | |
Distributions declared to Parent Company | (71,958) | (71,958) | |
Net loss allocated to Parent Company | (2,176) | (2,176) | |
Conversion of Limited Partner Units to shares of the Parent Company | 136 | 136 | |
Adjustment to redeemable noncontrolling interests | (8,455) | (8,455) | |
Partners' capital, ending balance at Sep. 30, 2016 | $ 1,644,408 | $ 1,653,146 | $ (8,738) |
Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) - USD ($) |
Sep. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Debt premium | $ 13,513,000 | |
Chapel Hill Operating Property | ||
Debt premium | 0 | $ 223,000 |
KRG, LP | Chapel Hill Operating Property | ||
Debt premium | $ 0 | $ 223,000 |
Organization |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Kite Realty Group Trust (the "Parent Company"), through its majority-owned subsidiary, Kite Realty Group, L.P. (the “Operating Partnership”), owns interests in various operating subsidiaries and joint ventures engaged in the ownership and operation, acquisition, development and redevelopment of high-quality neighborhood and community shopping centers in selected markets in the United States. 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 was formed on August 16, 2004, when the Parent Company contributed properties and the net proceeds from an initial public offering of shares of its common stock to the Operating Partnership. The Parent Company was organized in Maryland in 2004 to succeed in the development, acquisition, construction and real estate businesses of its predecessor. We believe the Company qualifies as a real estate investment trust (a “REIT”) under provisions of the Internal Revenue Code of 1986, as amended. The Parent Company is the sole general partner of the Operating Partnership, and as of September 30, 2016 owned approximately 97.7% of the common partnership interests in the Operating Partnership (“General Partner Units”). The remaining 2.3% of the common partnership interests (“Limited Partner Units” and, together with the General Partner Units, the “Common Units”) were owned by the limited partners. As the sole general partner of the Operating Partnership, the Parent Company has full, exclusive and complete responsibility and discretion in the day-to-day management and control of the Operating Partnership. The Parent Company and the Operating Partnership are operated as one enterprise. The management of the Parent Company consists of the same members as the management of the Operating Partnership. As the sole general partner with control of the Operating Partnership, the Parent Company consolidates the Operating Partnership for financial reporting purposes, and the Parent Company does not have any significant assets other than its investment in the Operating Partnership. At September 30, 2016, we owned interests in 120 operating and redevelopment properties consisting of 109 retail properties, nine retail redevelopment properties, one office operating property and an associated parking garage. We also owned one development property under construction as of this date. |
Basis of Presentation, Consolidation, Investments in Joint Ventures, and Noncontrolling Interests |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation, Consolidation, Investments in Joint Ventures, and Noncontrolling Interests | Basis of Presentation, Consolidation, Investments in Joint Ventures, and Noncontrolling Interests We have prepared the accompanying unaudited financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) may have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the presentation not misleading. The unaudited financial statements as of September 30, 2016 and for the three and nine months ended September 30, 2016 and 2015 include all adjustments, consisting of normal recurring adjustments, necessary in the opinion of management to present fairly the financial information set forth therein. The consolidated financial statements in this Form 10-Q should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the combined Annual Report on Form 10-K of the Parent Company and the Operating Partnership for the year ended December 31, 2015. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the disclosure of contingent assets and liabilities, the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reported period. Actual results could differ from these estimates. The results of operations for the interim periods are not necessarily indicative of the results that may be expected on an annual basis. Consolidation and Investments in Joint Ventures The accompanying financial statements are presented on a consolidated basis and include all accounts of the Parent Company, the Operating Partnership, the taxable REIT subsidiary of the Operating Partnership, subsidiaries of the Operating Partnership that are controlled and any variable interest entities (“VIEs”) in which the Operating Partnership is the primary beneficiary. In general, a VIE is a corporation, partnership, trust or any other legal structure used for business purposes that either (a) has equity investors that do not provide sufficient financial resources for the entity to support its activities, (b) does not have equity investors with voting rights or (c) has equity investors whose votes are disproportionate from their economics and substantially all of the activities are conducted on behalf of the investor with disproportionately fewer voting rights. As of January 1, 2016, we adopted Accounting Standards Update ("ASU") 2015-02, Consolidation: Amendments to the Consolidation Analysis, as required. See the below section entitled "Recently Issued Accounting Pronouncements" for further details. The Operating Partnership accounts for properties that are owned by joint ventures in accordance with the consolidation guidance. The Operating Partnership evaluates each joint venture and determines first whether to follow the VIE or the voting interest entity ("VOE") model. Once the appropriate consolidation model is identified, the Operating Partnership then evaluates whether it should consolidate the joint venture. Under the VIE model, the Operating Partnership consolidates an entity when it has (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Under the VOE model, the Operating Partnership consolidates an entity when (i) it controls the entity through ownership of a majority voting interest if the entity is not a limited partnership or (ii) it controls the entity through its ability to remove the other partners or owners in the entity, at its discretion, when the entity is a limited partnership. In determining whether to consolidate a VIE with the Operating Partnership, we consider all relationships between the Operating Partnership and the applicable VIE, including development agreements, management agreements and other contractual arrangements, in determining whether we have the power to direct the activities of the VIE that most significantly affect the VIE's performance. We also periodically reassess primary beneficiary status of the VIE. Prior to the adoption of ASC 2015-02, we treated one of our consolidated joint ventures as a VIE. As a result of the adoption of ASC 2015-02, we concluded that two additional previously-consolidated joint ventures of the Operating Partnership were VIEs as the partners did not have substantive participating rights and we were the primary beneficiary. As a result, as of September 30, 2016, we owned investments in three joint ventures that were VIEs in which we were the primary beneficiary. As of this date, these VIEs had total debt of $237.7 million, which were secured by assets of the VIEs totaling $498.9 million. The Operating Partnership guarantees the debt of these VIEs. These conclusions did not impact the Company's financial position or results of operations. As part of the adoption of ASC 2015-02, the Company concluded the Operating Partnership was a VIE as the limited partners do not hold kick-out rights or substantive participating rights. The Parent Company consolidates the Operating Partnership as it is the primary beneficiary in accordance with the VIE model. Beacon Hill In June 2015, we acquired our partner's interest in our Beacon Hill operating property. The transaction was accounted for as an equity transaction as we retained our controlling financial interest. Income Taxes and REIT Compliance Parent Company The Parent Company, which is considered a corporation for federal income tax purposes, has been organized and intends to continue to operate in a manner that will enable it to maintain its qualification as a REIT for federal income tax purposes. As a result, it generally will not be subject to federal income tax on the earnings that it distributes to the extent it distributes its “REIT taxable income” (determined before the deduction for dividends paid and excluding net capital gains) to shareholders of the Parent Company and meets certain other requirements on a recurring basis. To the extent that it satisfies this distribution requirement, but distributes less than 100% of its taxable income, it will be subject to federal corporate income tax on its undistributed REIT taxable income. REITs are subject to a number of organizational and operational requirements. If the Parent Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate rates for a period of four years following the year in which qualification is lost. We may also be subject to certain federal, state and local taxes on our income and property and to federal income and excise taxes on our undistributed taxable income even if the Parent Company does qualify as a REIT. The Operating Partnership intends to continue to make distributions to the Parent Company in amounts sufficient to assist the Parent Company in adhering to REIT requirements and maintaining its REIT status. We have elected to treat Kite Realty Holdings, LLC as a taxable REIT subsidiary of the Operating Partnership, and we may elect to treat other subsidiaries as taxable REIT subsidiaries in the future. This election enables us to receive income and provide services that would otherwise be impermissible for a REIT. Deferred tax assets and liabilities are established for temporary differences between the financial reporting bases and the tax bases of assets and liabilities at the tax rates expected to be in effect when the temporary differences reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. Operating Partnership The allocated share of income and loss, other than the operations of our taxable REIT subsidiary, is included in the income tax returns of the Operating Partnership's partners. Accordingly, the only federal income taxes included in the accompanying consolidated financial statements are in connection with the Operating Partnership's taxable REIT subsidiary. Noncontrolling Interests We report the non-redeemable noncontrolling interests in subsidiaries as equity, and the amount of consolidated net income attributable to these noncontrolling interests is set forth separately in the consolidated financial statements. The noncontrolling interests in consolidated properties for the nine months ended September 30, 2016 and 2015 were as follows:
Redeemable Noncontrolling Interests - Limited Partners Limited Partner Units are redeemable noncontrolling interests in the Operating Partnership. We classify redeemable noncontrolling interests in the Operating Partnership in the accompanying consolidated balance sheets outside of permanent equity because we may be required to pay cash to holders of Limited Partner Units upon redemption of their interests in the Operating Partnership or deliver registered shares upon their conversion. The carrying amount of the redeemable noncontrolling interests in the Operating Partnership is reflected at the greater of historical book value or redemption value with a corresponding adjustment to additional paid-in capital. At September 30, 2016 and December 31, 2015, the redemption value of the redeemable noncontrolling interests exceeded the historical book value, and the balance was accordingly adjusted to redemption value. We allocate net operating results of the Operating Partnership after preferred dividends and noncontrolling interests in the consolidated properties based on the partners’ respective weighted average ownership interest. We adjust the redeemable noncontrolling interests in the Operating Partnership at the end of each reporting period to reflect their interests in the Operating Partnership or redemption value. This adjustment is reflected in our shareholders’ and Parent Company's equity. For the three and nine months ended September 30, 2016 and 2015, the weighted average interests of the Parent Company and the limited partners in the Operating Partnership were as follows:
At September 30, 2016 and December 31, 2015, the Parent Company's interest and the limited partners' redeemable noncontrolling ownership interests in the Operating Partnership were 97.7% and 2.3% and 97.8% and 2.2%, respectively. Concurrent with the Parent Company’s initial public offering and related formation transactions, certain individuals received Limited Partner Units of the Operating Partnership in exchange for their interests in certain properties. The limited partners were granted the right to redeem Limited Partner Units on or after August 16, 2005 for cash or, at the Parent Company's election, common shares of the Parent Company in an amount equal to the market value of an equivalent number of common shares of the Parent Company at the time of redemption. Such common shares must be registered, which is not fully in the Parent Company’s control. Therefore, the limited partners’ interest is not reflected in permanent equity. The Parent Company also has the right to redeem the Limited Partner Units directly from the limited partner in exchange for either cash in the amount specified above or a number of its common shares equal to the number of Limited Partner Units being redeemed. For the nine months ended September 30, 2016 and 2015, respectively, 5,000 and 7,000 Limited Partner Units were exchanged for the same number of common shares of the Parent Company. There were 1,942,840 and 1,901,278 Limited Partner Units outstanding as of September 30, 2016 and December 31, 2015, respectively. The increase in Limited Partner Units outstanding from December 31, 2015 is due primarily to non-cash compensation awards made to our executive officers in the form of Limited Partner Units. Redeemable Noncontrolling Interests - Subsidiaries Prior to the merger with Inland Diversified Real Estate Trust, Inc. ("Inland Diversified") in 2014, Inland Diversified formed joint ventures with the previous owners of certain properties and issued Class B units in three joint ventures that indirectly own those properties. The Class B units related to two of these three joint ventures remain outstanding subsequent to the merger with Inland Diversified and are accounted for as noncontrolling interests in these properties. The Class B units will become redeemable at our applicable partner’s election at future dates generally beginning in March 2017 or October 2022 based on the applicable joint venture and the fulfillment of certain redemption criteria. Beginning in June 2018 and November 2022, with respect to the applicable joint venture, the Class B units can be redeemed at the election of either our partner or us for cash or Limited Partner Units in the Operating Partnership. None of the issued Class B units have a maturity date and none are mandatorily redeemable. We consolidate these joint ventures because we control the decision making of each of the joint ventures and our joint venture partners have limited protective rights. On February 13, 2015, we acquired our partner’s redeemable interest in the City Center operating property for $34.0 million and other non-redeemable rights and interests held by our partner for $0.4 million. We funded this acquisition in part with a $30 million draw on our unsecured revolving credit facility and the remainder in Limited Partner Units in the Operating Partnership. As a result of this transaction, our guarantee of a $26.6 million loan on behalf of LC White Plains Retail, LLC and LC White Plains Recreation, LLC was terminated. We classify redeemable noncontrolling interests in certain subsidiaries in the accompanying consolidated balance sheets outside of permanent equity because, under certain circumstances, we may be required to pay cash to Class B unitholders in specific subsidiaries upon redemption of their interests. The carrying amount of these redeemable noncontrolling interests is required to be reflected at the greater of initial book value or redemption value with a corresponding adjustment to additional paid-in capital. As of September 30, 2016 and December 31, 2015, the redemption amounts of these interests did not exceed the fair value of each interest. As of September 30, 2016 and December 31, 2015, the redemption value of the redeemable noncontrolling interests exceeded the initial book value. The redeemable noncontrolling interests in the Operating Partnership and subsidiaries for the nine months ended September 30, 2016 and 2015 were as follows:
Fair Value Measurements We follow the framework established under accounting standard FASB ASC 820 for measuring fair value of non-financial assets and liabilities that are not required or permitted to be measured at fair value on a recurring basis but only in certain circumstances, such as a business combination or upon determination of an impairment. Assets and liabilities recorded at fair value on the consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows:
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Reclassifications Certain amounts in the accompanying consolidated financial statements for 2015 have been reclassified to conform to the 2016 consolidated financial statement presentation. The reclassifications had no impact on net income previously reported. Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-9, Revenue from Contracts with Customers (“ASU 2014-9”). ASU 2014-9 is a comprehensive revenue recognition standard that will supersede nearly all existing GAAP revenue recognition guidance. It will also affect the existing GAAP guidance governing the sale of nonfinancial assets. The new standard’s core principle is that a company will recognize revenue when it satisfies performance obligations by transferring promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for fulfilling those performance obligations. In doing so, companies will need to exercise more judgment and make more estimates than under existing GAAP guidance. Under this standard, entities will now generally recognize the sale, and any associated gain or loss, of a real estate property when control of the property transfers, as long as collectability of the consideration is probable. The new standard also amends ASC 340-40, Other Assets and Deferred Costs - Contracts with Customers. Under ASC 340-40, incremental costs of obtaining a contract are recognized as an asset if the entity expects to recover them. Other costs related to originating a revenue transaction, such as salary expense, that is based on other qualitative or quantitative metrics likely do not meet the criteria for capitalization because they are not directly related to obtaining a contract. Upon adoption of the new standard, we expect an increase in general, administrative, and other expense and a decrease in amortization expense on our consolidated statement of operations, as well as a decrease in capitalized leasing costs on our consolidated balance sheets. We are currently evaluating the impact adopting the new accounting standard and the transition method of such adoption will have on our consolidated financial statements. ASU 2014-9 is effective for public entities for annual and interim reporting periods beginning after December 15, 2017 and early adoption is not permitted. ASU 2014-9 allows for either recognizing the cumulative effect of application (i) at the start of the earliest comparative period presented (with the option to use any or all of three practical expedients) or (ii) as a cumulative effect adjustment as of the date of initial application, with no restatement of comparative periods presented. In February 2015, the FASB issued ASU 2015-02, Consolidation: Amendments to the Consolidation Analysis. ASU 2015-02 makes changes to both the VIE and VOE models, amended the criteria for determining VIEs and eliminated the presumption that a general partner should consolidate a limited partnership. All reporting entities involved with limited partnerships and similar entities were required to re-evaluate whether these entities, including the Operating Partnership, are subject to the VIE or VOE model and whether they qualify for consolidation. We adopted ASU 2015-02 in the first quarter of 2016 and, although we classified two additional consolidated joint ventures of the Operating Partnership as VIEs (for a total of three consolidated VIEs as of March 31, 2016), there was no material effect on our consolidated financial statements. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. Prior to the issuance of ASU 2015-03, debt issuance costs were required to be presented as deferred charge assets, separate from the related debt liability. ASU 2015-03 is effective for annual and interim reporting periods beginning on or after December 15, 2015. We adopted ASU 2015-03 retrospectively in the first quarter of 2016. As a result of the retrospective adoption, we reclassified unamortized deferred financing costs of $9.6 million as of December 31, 2015, from deferred costs and intangibles, net to a reduction in mortgage and other indebtedness, net on our consolidated balance sheets. Other than this reclassification, the adoption of ASU 2015-03 did not have an impact on our consolidated financial statements. In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. ASU 2015-16 eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. ASU 2015-16 requires that an acquirer must recognize measurement-period adjustments in the period in which they determine the amounts, including the effect on earnings of any amounts they would have recorded in previous periods if the accounting had been completed at the acquisition date. ASU 2015-16 is effective for annual and interim reporting periods beginning on or after December 15, 2015. We adopted ASU 2015-16 in the first quarter of 2016 and there was no effect on our consolidated financial statements as we did not have any business combinations during this period. In February 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making certain changes to lessor accounting, including the accounting for sales-type and direct financing leases. ASU 2016-02 will be effective for annual and interim reporting periods beginning on or after December 15, 2018, with early adoption permitted. The new standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. We are currently evaluating the impact adopting the new accounting standard will have on our consolidated financial statements. |
Earnings Per Share or Unit |
9 Months Ended |
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Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share or Unit | Earnings Per Share or Unit Basic earnings per share or unit is calculated based on the weighted average number of common shares or units outstanding during the period. Diluted earnings per share or unit is determined based on the weighted average common number of shares or units outstanding during the period combined with the incremental average common shares or units that would have been outstanding assuming the conversion of all potentially dilutive common shares or units into common shares or units as of the earliest date possible. Potentially dilutive securities include outstanding options to acquire common shares; Limited Partner Units, which may be exchanged for either cash or common shares, at the Parent Company’s option and under certain circumstances; units under our Outperformance Incentive Compensation Plan; potential settlement of redeemable noncontrolling interests in certain joint ventures; and deferred common share units, which may be credited to the personal accounts of non-employee trustees in lieu of the payment of cash compensation or the issuance of common shares to such trustees. Limited Partner Units have been omitted from the Parent Company’s denominator for the purpose of computing diluted earnings per share because the effect of including these amounts in the denominator would have no dilutive impact. Weighted average Limited Partner Units outstanding for the nine months ended September 30, 2016 and 2015 were 1.9 million and 1.8 million, respectively. Approximately 0.2 million and 0.1 million outstanding options to acquire common shares were excluded from the computations of diluted earnings per share or unit because their impact was not dilutive for the three and nine months ended September 30, 2016 and 2015, respectively. Due to the net loss allocable to common shareholders and Common Unit holders for the three and nine months ended September 30, 2016, no securities had a dilutive impact for these periods. |
Mortgage and Other Indebtedness |
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Mortgage and Other Indebtedness | Mortgage and Other Indebtedness Mortgage and other indebtedness consisted of the following as of September 30, 2016 and December 31, 2015:
Consolidated indebtedness, including weighted average maturities and weighted average interest rates as of September 30, 2016, considering the impact of interest rate swaps, is summarized below:
Mortgage indebtedness is collateralized by certain real estate properties and leases. Mortgage indebtedness is generally due in monthly installments of interest and principal and mature over various terms through 2030. Variable interest rates on mortgage indebtedness are based on LIBOR plus spreads ranging from 160 to 225 basis points. At September 30, 2016, the one-month LIBOR interest rate was 0.53%. Fixed interest rates on mortgage indebtedness range from 3.78% to 6.78%. Seven-Year Unsecured Term Loan On June 29, 2016, we drew the remaining $100 million on our $200 million seven-year unsecured term loan and used the proceeds to pay down the unsecured revolving credit facility. We had $200 million outstanding on our seven-year unsecured term loan as of September 30, 2016. Unsecured Revolving Credit Facility and Unsecured Term Loan On July 28, 2016, the Operating Partnership entered into an amended and restated credit agreement (the “amended credit agreement”) with respect to our $500 million unsecured revolving credit facility maturing July 28, 2020 (with two six-month extension options), our $200 million unsecured term loan maturing July 1, 2019 ("Term Loan A") and our $200 million unsecured term loan maturing July 28, 2021 ("Term Loan B"). As noted below, we paid off Term Loan A during the quarter with the proceeds from the issuance of our 4.00% Senior Notes due October 1, 2026. The Operating Partnership has the option to increase the borrowing availability of the unsecured revolving credit facility to $1 billion and, the option to increase Term Loan B to provide for an additional $200 million, in each case subject to certain conditions, including obtaining commitments from any one or more lenders. Borrowings under the amended credit agreement with respect to (i) the unsecured revolving credit facility bear interest at a rate of LIBOR plus an applicable margin of 135 to 195 basis points, (ii) Term Loan A (prior to its payoff) bore interest at a rate of LIBOR plus an applicable margin of 135 to 190 basis points, and (iii) Term Loan B bear interest at a rate of LIBOR plus an applicable margin of 130 to 190 basis points, in each case depending on the Operating Partnership’s leverage ratio and subject to certain exceptions. The Operating Partnership is required to pay a quarterly facility fee on the unused portion of the unsecured revolving credit facility ranging from 15 to 25 basis points. As of September 30, 2016, $43.7 million was outstanding under the unsecured revolving credit facility. Additionally, we had letters of credit outstanding which totaled $12.2 million, against which no amounts were advanced as of September 30, 2016. The amount that we may borrow under our unsecured revolving credit facility is limited by the value of the assets in our unencumbered asset pool. As of September 30, 2016, the value of the assets in our unencumbered asset pool was $413.2 million. Taking into account outstanding borrowings and letters of credit, we had $401 million available under our unsecured revolving credit facility for future borrowings as of September 30, 2016. Our ability to borrow under the unsecured revolving credit facility is subject to our compliance with various restrictive and financial covenants, including with respect to liens, indebtedness, investments, dividends, mergers and asset sales. As of September 30, 2016, we were in compliance with all such covenants. Senior Unsecured Notes On September 26, 2016, the Operating Partnership completed a $300 million public offering of 4.00% Senior Notes due October 1, 2026 ("the Notes"). The net proceeds from the issuance of the Notes were utilized to retire the $200 million Term Loan A and retire the $75.9 million construction loan secured by our Parkside Town Commons operating property and to pay down our unsecured revolving credit facility. The Notes contain a number of customary financial and restrictive covenants. As of September 30, 2016, we were in compliance with all such covenants. Other Debt Activity For the nine months ended September 30, 2016, we had total new borrowings of $550.2 million and total repayments of $531.1 million. In addition to the items mentioned above, the remaining components of this activity were as follows:
See Note 13 for indebtedness transactions occurring subsequent to September 30, 2016. Fair Value of Fixed and Variable Rate Debt As of September 30, 2016, the estimated fair value of our fixed rate debt was $1.3 billion compared to the book value of $1.2 billion. The fair value was estimated using Level 2 and 3 inputs with cash flows discounted at current borrowing rates for similar instruments, which ranged from 3.78% to 6.78%. As of September 30, 2016, the fair value of variable rate debt was $601.1 million compared to the book value of $558.3 million. The fair value was estimated using Level 2 and 3 inputs with cash flows discounted at current borrowing rates for similar instruments, which ranged from 1.83% to 2.78%. |
Derivative Instruments, Hedging Activities and Other Comprehensive Income |
9 Months Ended |
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Sep. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments, Hedging Activities and Other Comprehensive Income | Derivative Instruments, Hedging Activities and Other Comprehensive Income In order to manage potential future volatility relating to variable interest rate risk, we enter into interest rate hedging agreements from time to time. We do not use derivatives for trading or speculative purposes, nor do we have any derivatives that are not designated as cash flow hedges. The agreements with each of our derivative counterparties provide that, in the event of default on any of our indebtedness, we could also be declared in default on our derivative obligations. As of September 30, 2016, we were party to various cash flow hedge agreements with notional amounts totaling $474.7 million. These hedge agreements effectively fix the interest rate underlying certain variable rate debt instruments over terms ranging from 2017 through 2021. Utilizing a weighted average interest rate spread over LIBOR on all variable rate debt resulted in fixing the weighted average interest rate at 3.17%. In January 2016, we entered into two forward-starting interest rate swaps that effectively fixed the interest rate on $150 million of previously unhedged variable rate debt at 3.208%. The effective date of the swaps was June 30, 2016, and they will expire on July 1, 2021. These interest rate hedge agreements are the only assets or liabilities that we record at fair value on a recurring basis. The valuation of these assets and liabilities is determined using widely accepted techniques including discounted cash flow analysis. These techniques consider the contractual terms of the derivatives (including the period to maturity) and use observable market-based inputs such as interest rate curves and implied volatilities. We also incorporate credit valuation adjustments into the fair value measurements to reflect nonperformance risk on both our part and that of the respective counterparties. We determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, although the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. As of September 30, 2016 and December 31, 2015, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and determined the credit valuation adjustments were not significant to the overall valuation of our derivatives. As a result, we determined our derivative valuations were classified within Level 2 of the fair value hierarchy. As of September 30, 2016, the estimated fair value of our interest rate hedges was a liability of $11.0 million, including accrued interest of $0.4 million. As of September 30, 2016, $11.0 million was reflected in accounts payable and accrued expenses on the accompanying consolidated balance sheets. At December 31, 2015, the estimated fair value of our interest rate hedges was a net liability of $4.8 million, including accrued interest of $0.4 million. As of December 31, 2015, $0.2 million was reflected in prepaid and other assets and $5.0 million was reflected in accounts payable and accrued expenses on the accompanying consolidated balance sheets. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to earnings over time as the hedged items are recognized in earnings. During the nine months ended September 30, 2016 and 2015, $3.5 million and $4.2 million, respectively, were reclassified as a reduction to earnings. As the interest payments on our hedges are made over the next 12 months, we estimate the impact to interest expense to be $3.7 million. Our share of net unrealized gains and losses on our interest rate hedge agreements are the only components of the change in accumulated other comprehensive loss. |
Shareholders' Equity |
9 Months Ended |
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Sep. 30, 2016 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Shareholders’ Equity Distribution Payments Our Board of Trustees declared a cash distribution of $0.2875 for the third quarter of 2016 to common shareholders and Common Unit holders of record as of October 6, 2016. The distribution was paid on October 13, 2016. Outperformance Plan In January 2016, the Compensation Committee of our Board of Trustees adopted the 2016 Outperformance Incentive Compensation Plan for members of executive management and certain other employees, pursuant to which participants are eligible to earn profits interests ("LTIP Units") in the Operating Partnership based on the achievement of certain performance criteria related to the Company’s common shares. Participants in the 2016 Outperformance Incentive Compensation Plan were awarded the right to earn, in the aggregate, up to $6 million of share-settled awards (the “bonus pool”) if, and only to the extent of which, performance measures based on our total shareholder return (“TSR”) are achieved for the three-year period beginning January 4, 2016 and ending December 31, 2018. Awarded interests not earned based on the TSR measures are forfeited. If the TSR performance measures are achieved at the end of the three-year performance period, participants will receive their percentage interest in the bonus pool as LTIP Units in the Operating Partnership. Such LTIP Units vest over an additional two-year service period. The compensation cost of the 2016 Outperformance Plan was fixed as of the grant date and will be recognized regardless of whether the LTIP Units are ultimately earned assuming the service requirement is met. Restricted Award Grants In February 2016, a total of 103,685 restricted awards were granted to members of executive management and certain other employees. The restricted awards will vest ratably over periods ranging from three to five years. Performance Awards In February 2016, the Compensation Committee awarded each of our four named executive officers a three-year performance award in the form of restricted performance share units ("PSUs"). These PSUs may be earned over a three-year performance period from January 1, 2016 to December 31, 2018. The performance criteria are based on the relative total shareholder return achieved by the Company measured against a peer group over the three-year measurement period. Any PSUs earned at the end of the three-year period will be fully vested at that date. The total number of PSUs issued to the executive officers was based on a target value of $1.0 million but may be earned in a range from 0% to 200% of the target value depending on our TSR over the measurement period in relation to the peer group. At-the-Market Equity Program During the third quarter of 2016, we issued 137,229 of our common shares at an average price per share of $29.52 pursuant to our at-the-market equity program, generating gross proceeds of approximately $4.1 million and, after deducting commissions and other costs, net proceeds of approximately $3.8 million. The proceeds from these offerings were contributed to the Operating Partnership and used to pay down our unsecured revolving credit facility. |
Deferred Costs |
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Deferred Costs [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs | Deferred Costs and Intangibles, net Deferred costs consist primarily of acquired lease intangible assets, broker fees and capitalized salaries and related benefits incurred in connection with lease originations. Deferred leasing costs, lease intangibles and similar costs are amortized on a straight-line basis over the terms of the related leases. At September 30, 2016 and December 31, 2015, deferred costs consisted of the following:
The accompanying consolidated statements of operations include amortization expense as follows:
Amortization of deferred leasing costs, leasing intangibles and other is included in depreciation and amortization expense. The amortization of above market lease intangibles is included as a reduction to revenue. |
Deferred Revenue and Other Liabilities |
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Deferred Revenue Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Revenue and Other Liabilities | Deferred Revenue and Other Liabilities Deferred revenue and other liabilities consist of unamortized fair value of in-place lease liabilities recorded in connection with purchase accounting, potential earnout payments related to property acquisitions, retainage payables for development and redevelopment projects, and tenant rent payments received in advance. The amortization of in-place lease liabilities is recognized as revenue over the remaining life of the leases (including option periods for leases with below market renewal options) through 2046. Tenant rent payments received in advance are recognized as revenue in the period to which they apply, which is typically the month following their receipt. At September 30, 2016 and December 31, 2015, deferred revenue and other liabilities consisted of the following:
The amortization of below market lease intangibles was $10.6 million and $6.7 million for the nine months ended September 30, 2016 and 2015, respectively. The amortization of below market lease intangibles is included as an increase to revenue. |
Commitments and Contingencies |
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Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Other Commitments and Contingencies We are not subject to any material litigation nor, to management’s knowledge, is any material litigation currently threatened against us. We are parties to routine litigation, claims, and administrative proceedings arising in the ordinary course of business. Management believes that such routine litigation, claims, and administrative proceedings will not have a material adverse impact on our consolidated financial statements. We are obligated under various completion guarantees with certain lenders and lease agreements with tenants to complete all or portions of the development and redevelopment projects. We believe we currently have sufficient financing in place to fund these projects and expect to do so primarily through borrowings on our unsecured revolving credit facility. As of September 30, 2016, we had outstanding letters of credit totaling $12.2 million. At that date, there were no amounts advanced against these instruments. Earnout Liability We are a party to an earnout arrangement with the former seller of one of our operating properties, whereby we were required to pay the seller additional consideration based on whether the seller satisfied certain post-sale obligations. The estimated potential earnout liability was $1.3 million at September 30, 2016 and $1.4 million at December 31, 2015. On October 6, 2016, we paid $1.3 million related to the remaining earnout liability. We do not have any further earnout obligations after this date. |
Disposal of Operating Properties |
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Sep. 30, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Disposal of Operating Properties | Disposals of Operating Properties During the three months ended June 30, 2016, we sold our Shops at Otty operating property in Portland, Oregon for a net gain of $0.2 million. In the fourth quarter of 2015, we wrote off the book value of this property and recorded a non-cash impairment charge of $1.6 million, as the estimated undiscounted cash flows over the remaining holding period did not exceed the carrying value of the asset. During the fourth quarter of 2015, we sold our Four Corner operating property in Seattle, Washington, and our Cornelius Gateway operating property in Portland, Oregon, for aggregate proceeds of $44.9 million and a net gain of $0.6 million. In March 2015, we sold seven properties for aggregate net proceeds of $103.0 million and a net gain of $3.4 million. The results of these operating properties are not included in discontinued operations in the accompanying statements of operations as none of the operating properties individually, nor in the aggregate, represent a strategic shift that has had or will have a material effect on our operations or financial results. |
Acquisitions and Transaction Costs |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Acquisitions and Transaction Costs During the nine months ended September 30, 2016, we incurred $2.8 million of terminated transaction costs. We record transaction costs as they are incurred, regardless of whether the transaction is ultimately completed or terminated. Transaction costs generally consist of legal, lender, due diligence, and other expenses for professional services. In 2015, we acquired four operating properties for total consideration of $185.8 million, including the assumption of an $18.3 million loan, which are summarized below:
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Gain on Settlement Gain on Settlement |
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Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Gain on Settlement | Gain on Settlement In June 2015, we received $4.75 million to settle a dispute related to eminent domain and related damages at one of our operating properties. The settlement agreement did not restrict our use of the proceeds. These proceeds, net of certain costs, are included in gain on settlement within the statement of operations. We used the net proceeds to pay down the secured loan at this operating property. |
Subsequent Events Subsequent Events |
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Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Retirement of Secured Debt On November 1, 2016, we retired the $25 million loan secured by our Colonial Square and Village Walk operating properties using a draw on our unsecured revolving credit facility. On November 1, 2016, we retired the $10.4 million loan secured by our Geist Pavilion operating property, which included a release of a $1.6 million letter of credit, using a draw on our unsecured revolving credit facility. |
Basis of Presentation, Consolidation, Investments in Joint Ventures, and Noncontrolling Interests (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidation and Investments in Joint Ventures | Consolidation and Investments in Joint Ventures The accompanying financial statements are presented on a consolidated basis and include all accounts of the Parent Company, the Operating Partnership, the taxable REIT subsidiary of the Operating Partnership, subsidiaries of the Operating Partnership that are controlled and any variable interest entities (“VIEs”) in which the Operating Partnership is the primary beneficiary. In general, a VIE is a corporation, partnership, trust or any other legal structure used for business purposes that either (a) has equity investors that do not provide sufficient financial resources for the entity to support its activities, (b) does not have equity investors with voting rights or (c) has equity investors whose votes are disproportionate from their economics and substantially all of the activities are conducted on behalf of the investor with disproportionately fewer voting rights. As of January 1, 2016, we adopted Accounting Standards Update ("ASU") 2015-02, Consolidation: Amendments to the Consolidation Analysis, as required. See the below section entitled "Recently Issued Accounting Pronouncements" for further details. The Operating Partnership accounts for properties that are owned by joint ventures in accordance with the consolidation guidance. The Operating Partnership evaluates each joint venture and determines first whether to follow the VIE or the voting interest entity ("VOE") model. Once the appropriate consolidation model is identified, the Operating Partnership then evaluates whether it should consolidate the joint venture. Under the VIE model, the Operating Partnership consolidates an entity when it has (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Under the VOE model, the Operating Partnership consolidates an entity when (i) it controls the entity through ownership of a majority voting interest if the entity is not a limited partnership or (ii) it controls the entity through its ability to remove the other partners or owners in the entity, at its discretion, when the entity is a limited partnership. In determining whether to consolidate a VIE with the Operating Partnership, we consider all relationships between the Operating Partnership and the applicable VIE, including development agreements, management agreements and other contractual arrangements, in determining whether we have the power to direct the activities of the VIE that most significantly affect the VIE's performance. We also periodically reassess primary beneficiary status of the VIE. Prior to the adoption of ASC 2015-02, we treated one of our consolidated joint ventures as a VIE. As a result of the adoption of ASC 2015-02, we concluded that two additional previously-consolidated joint ventures of the Operating Partnership were VIEs as the partners did not have substantive participating rights and we were the primary beneficiary. As a result, as of September 30, 2016, we owned investments in three joint ventures that were VIEs in which we were the primary beneficiary. As of this date, these VIEs had total debt of $237.7 million, which were secured by assets of the VIEs totaling $498.9 million. The Operating Partnership guarantees the debt of these VIEs. These conclusions did not impact the Company's financial position or results of operations. As part of the adoption of ASC 2015-02, the Company concluded the Operating Partnership was a VIE as the limited partners do not hold kick-out rights or substantive participating rights. The Parent Company consolidates the Operating Partnership as it is the primary beneficiary in accordance with the VIE model. |
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Income Tax, Policy | Income Taxes and REIT Compliance Parent Company The Parent Company, which is considered a corporation for federal income tax purposes, has been organized and intends to continue to operate in a manner that will enable it to maintain its qualification as a REIT for federal income tax purposes. As a result, it generally will not be subject to federal income tax on the earnings that it distributes to the extent it distributes its “REIT taxable income” (determined before the deduction for dividends paid and excluding net capital gains) to shareholders of the Parent Company and meets certain other requirements on a recurring basis. To the extent that it satisfies this distribution requirement, but distributes less than 100% of its taxable income, it will be subject to federal corporate income tax on its undistributed REIT taxable income. REITs are subject to a number of organizational and operational requirements. If the Parent Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate rates for a period of four years following the year in which qualification is lost. We may also be subject to certain federal, state and local taxes on our income and property and to federal income and excise taxes on our undistributed taxable income even if the Parent Company does qualify as a REIT. The Operating Partnership intends to continue to make distributions to the Parent Company in amounts sufficient to assist the Parent Company in adhering to REIT requirements and maintaining its REIT status. We have elected to treat Kite Realty Holdings, LLC as a taxable REIT subsidiary of the Operating Partnership, and we may elect to treat other subsidiaries as taxable REIT subsidiaries in the future. This election enables us to receive income and provide services that would otherwise be impermissible for a REIT. Deferred tax assets and liabilities are established for temporary differences between the financial reporting bases and the tax bases of assets and liabilities at the tax rates expected to be in effect when the temporary differences reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. Operating Partnership The allocated share of income and loss, other than the operations of our taxable REIT subsidiary, is included in the income tax returns of the Operating Partnership's partners. Accordingly, the only federal income taxes included in the accompanying consolidated financial statements are in connection with the Operating Partnership's taxable REIT subsidiary. |
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Investments, Policy | Noncontrolling Interests We report the non-redeemable noncontrolling interests in subsidiaries as equity, and the amount of consolidated net income attributable to these noncontrolling interests is set forth separately in the consolidated financial statements. The noncontrolling interests in consolidated properties for the nine months ended September 30, 2016 and 2015 were as follows:
Redeemable Noncontrolling Interests - Limited Partners Limited Partner Units are redeemable noncontrolling interests in the Operating Partnership. We classify redeemable noncontrolling interests in the Operating Partnership in the accompanying consolidated balance sheets outside of permanent equity because we may be required to pay cash to holders of Limited Partner Units upon redemption of their interests in the Operating Partnership or deliver registered shares upon their conversion. The carrying amount of the redeemable noncontrolling interests in the Operating Partnership is reflected at the greater of historical book value or redemption value with a corresponding adjustment to additional paid-in capital. At September 30, 2016 and December 31, 2015, the redemption value of the redeemable noncontrolling interests exceeded the historical book value, and the balance was accordingly adjusted to redemption value. We allocate net operating results of the Operating Partnership after preferred dividends and noncontrolling interests in the consolidated properties based on the partners’ respective weighted average ownership interest. We adjust the redeemable noncontrolling interests in the Operating Partnership at the end of each reporting period to reflect their interests in the Operating Partnership or redemption value. This adjustment is reflected in our shareholders’ and Parent Company's equity. For the three and nine months ended September 30, 2016 and 2015, the weighted average interests of the Parent Company and the limited partners in the Operating Partnership were as follows:
At September 30, 2016 and December 31, 2015, the Parent Company's interest and the limited partners' redeemable noncontrolling ownership interests in the Operating Partnership were 97.7% and 2.3% and 97.8% and 2.2%, respectively. Concurrent with the Parent Company’s initial public offering and related formation transactions, certain individuals received Limited Partner Units of the Operating Partnership in exchange for their interests in certain properties. The limited partners were granted the right to redeem Limited Partner Units on or after August 16, 2005 for cash or, at the Parent Company's election, common shares of the Parent Company in an amount equal to the market value of an equivalent number of common shares of the Parent Company at the time of redemption. Such common shares must be registered, which is not fully in the Parent Company’s control. Therefore, the limited partners’ interest is not reflected in permanent equity. The Parent Company also has the right to redeem the Limited Partner Units directly from the limited partner in exchange for either cash in the amount specified above or a number of its common shares equal to the number of Limited Partner Units being redeemed. For the nine months ended September 30, 2016 and 2015, respectively, 5,000 and 7,000 Limited Partner Units were exchanged for the same number of common shares of the Parent Company. There were 1,942,840 and 1,901,278 Limited Partner Units outstanding as of September 30, 2016 and December 31, 2015, respectively. The increase in Limited Partner Units outstanding from December 31, 2015 is due primarily to non-cash compensation awards made to our executive officers in the form of Limited Partner Units. Redeemable Noncontrolling Interests - Subsidiaries Prior to the merger with Inland Diversified Real Estate Trust, Inc. ("Inland Diversified") in 2014, Inland Diversified formed joint ventures with the previous owners of certain properties and issued Class B units in three joint ventures that indirectly own those properties. The Class B units related to two of these three joint ventures remain outstanding subsequent to the merger with Inland Diversified and are accounted for as noncontrolling interests in these properties. The Class B units will become redeemable at our applicable partner’s election at future dates generally beginning in March 2017 or October 2022 based on the applicable joint venture and the fulfillment of certain redemption criteria. Beginning in June 2018 and November 2022, with respect to the applicable joint venture, the Class B units can be redeemed at the election of either our partner or us for cash or Limited Partner Units in the Operating Partnership. None of the issued Class B units have a maturity date and none are mandatorily redeemable. We consolidate these joint ventures because we control the decision making of each of the joint ventures and our joint venture partners have limited protective rights. On February 13, 2015, we acquired our partner’s redeemable interest in the City Center operating property for $34.0 million and other non-redeemable rights and interests held by our partner for $0.4 million. We funded this acquisition in part with a $30 million draw on our unsecured revolving credit facility and the remainder in Limited Partner Units in the Operating Partnership. As a result of this transaction, our guarantee of a $26.6 million loan on behalf of LC White Plains Retail, LLC and LC White Plains Recreation, LLC was terminated. We classify redeemable noncontrolling interests in certain subsidiaries in the accompanying consolidated balance sheets outside of permanent equity because, under certain circumstances, we may be required to pay cash to Class B unitholders in specific subsidiaries upon redemption of their interests. The carrying amount of these redeemable noncontrolling interests is required to be reflected at the greater of initial book value or redemption value with a corresponding adjustment to additional paid-in capital. As of September 30, 2016 and December 31, 2015, the redemption amounts of these interests did not exceed the fair value of each interest. As of September 30, 2016 and December 31, 2015, the redemption value of the redeemable noncontrolling interests exceeded the initial book value. |
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Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-9, Revenue from Contracts with Customers (“ASU 2014-9”). ASU 2014-9 is a comprehensive revenue recognition standard that will supersede nearly all existing GAAP revenue recognition guidance. It will also affect the existing GAAP guidance governing the sale of nonfinancial assets. The new standard’s core principle is that a company will recognize revenue when it satisfies performance obligations by transferring promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for fulfilling those performance obligations. In doing so, companies will need to exercise more judgment and make more estimates than under existing GAAP guidance. Under this standard, entities will now generally recognize the sale, and any associated gain or loss, of a real estate property when control of the property transfers, as long as collectability of the consideration is probable. The new standard also amends ASC 340-40, Other Assets and Deferred Costs - Contracts with Customers. Under ASC 340-40, incremental costs of obtaining a contract are recognized as an asset if the entity expects to recover them. Other costs related to originating a revenue transaction, such as salary expense, that is based on other qualitative or quantitative metrics likely do not meet the criteria for capitalization because they are not directly related to obtaining a contract. Upon adoption of the new standard, we expect an increase in general, administrative, and other expense and a decrease in amortization expense on our consolidated statement of operations, as well as a decrease in capitalized leasing costs on our consolidated balance sheets. We are currently evaluating the impact adopting the new accounting standard and the transition method of such adoption will have on our consolidated financial statements. ASU 2014-9 is effective for public entities for annual and interim reporting periods beginning after December 15, 2017 and early adoption is not permitted. ASU 2014-9 allows for either recognizing the cumulative effect of application (i) at the start of the earliest comparative period presented (with the option to use any or all of three practical expedients) or (ii) as a cumulative effect adjustment as of the date of initial application, with no restatement of comparative periods presented. In February 2015, the FASB issued ASU 2015-02, Consolidation: Amendments to the Consolidation Analysis. ASU 2015-02 makes changes to both the VIE and VOE models, amended the criteria for determining VIEs and eliminated the presumption that a general partner should consolidate a limited partnership. All reporting entities involved with limited partnerships and similar entities were required to re-evaluate whether these entities, including the Operating Partnership, are subject to the VIE or VOE model and whether they qualify for consolidation. We adopted ASU 2015-02 in the first quarter of 2016 and, although we classified two additional consolidated joint ventures of the Operating Partnership as VIEs (for a total of three consolidated VIEs as of March 31, 2016), there was no material effect on our consolidated financial statements. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. Prior to the issuance of ASU 2015-03, debt issuance costs were required to be presented as deferred charge assets, separate from the related debt liability. ASU 2015-03 is effective for annual and interim reporting periods beginning on or after December 15, 2015. We adopted ASU 2015-03 retrospectively in the first quarter of 2016. As a result of the retrospective adoption, we reclassified unamortized deferred financing costs of $9.6 million as of December 31, 2015, from deferred costs and intangibles, net to a reduction in mortgage and other indebtedness, net on our consolidated balance sheets. Other than this reclassification, the adoption of ASU 2015-03 did not have an impact on our consolidated financial statements. In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. ASU 2015-16 eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. ASU 2015-16 requires that an acquirer must recognize measurement-period adjustments in the period in which they determine the amounts, including the effect on earnings of any amounts they would have recorded in previous periods if the accounting had been completed at the acquisition date. ASU 2015-16 is effective for annual and interim reporting periods beginning on or after December 15, 2015. We adopted ASU 2015-16 in the first quarter of 2016 and there was no effect on our consolidated financial statements as we did not have any business combinations during this period. In February 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making certain changes to lessor accounting, including the accounting for sales-type and direct financing leases. ASU 2016-02 will be effective for annual and interim reporting periods beginning on or after December 15, 2018, with early adoption permitted. The new standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. We are currently evaluating the impact adopting the new accounting standard will have on our consolidated financial statements. |
Basis of Presentation, Consolidation, Investments in Joint Ventures, and Noncontrolling Interests (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stockholders Equity | The noncontrolling interests in consolidated properties for the nine months ended September 30, 2016 and 2015 were as follows:
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Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | For the three and nine months ended September 30, 2016 and 2015, the weighted average interests of the Parent Company and the limited partners in the Operating Partnership were as follows:
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Redeemable Noncontrolling Interest | The redeemable noncontrolling interests in the Operating Partnership and subsidiaries for the nine months ended September 30, 2016 and 2015 were as follows:
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Mortgage and Other Indebtedness (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Participating Mortgage Loans | Mortgage and other indebtedness consisted of the following as of September 30, 2016 and December 31, 2015:
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Schedule of Debt | Consolidated indebtedness, including weighted average maturities and weighted average interest rates as of September 30, 2016, considering the impact of interest rate swaps, is summarized below:
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Deferred Costs (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure | At September 30, 2016 and December 31, 2015, deferred costs consisted of the following:
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Deferred Cost Amortization | The accompanying consolidated statements of operations include amortization expense as follows:
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Deferred Revenue and Other Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Revenue Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Revenue, by Arrangement, Disclosure | At September 30, 2016 and December 31, 2015, deferred revenue and other liabilities consisted of the following:
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Acquisitions and Transaction Costs (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Real Estate Properties | In 2015, we acquired four operating properties for total consideration of $185.8 million, including the assumption of an $18.3 million loan, which are summarized below:
|
Basis of Presentation, Consolidation, Investments in Joint Ventures, and Noncontrolling Interests - Noncontrolling Interests (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||||
Beginning Balance | $ 773 | $ 3,364 | ||
Net income allocable to noncontrolling interests, excluding redeemable noncontrolling interests | $ 420 | $ 435 | 1,391 | 1,626 |
Distributions to noncontrolling interests | (222) | (87) | ||
Noncontrolling Interest, Decrease from Redemptions or Purchase of Interests | 0 | (2,353) | ||
Ending Balance | $ 698 | $ 1,008 | 698 | 1,008 |
Excluding Redeemable Non-Controlling Interests | ||||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||||
Net income allocable to noncontrolling interests, excluding redeemable noncontrolling interests | $ 147 | $ 84 |
Basis of Presentation, Consolidation, Investments in Joint Ventures, and Noncontrolling Interests - Weighted Average Interests in Operating Partnership (Details) - Operating Partnership |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||
Parent Company’s weighted average basic interest in Operating Partnership | 97.70% | 97.80% | 97.70% | 97.90% |
Limited partners' weighted average basic interests in Operating Partnership | 2.30% | 2.20% | 2.30% | 2.10% |
Earnings Per Share or Unit (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Earnings Per Share [Abstract] | ||||
Weighted average limited partnership units outstanding, basic | 1.9 | 1.8 | ||
Antidilutive securities excluded from computation of earnings per share, amount | 0.2 | 0.1 | 0.2 | 0.1 |
Mortgage and Other Indebtedness - Consolidated Indebtedness by Type of Interest Rate (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Debt Instrument [Line Items] | ||
Amount | $ 1,732,344 | $ 1,724,449 |
Percentage of Total | 100.00% | |
Weighted Average Interest Rate | 4.03% | |
Weighted Average Maturity (Years) | 6 years 7 months 6 days | |
Fixed Rate Debt Considering Hedges | ||
Debt Instrument [Line Items] | ||
Amount | $ 1,648,718 | |
Percentage of Total | 95.00% | |
Weighted Average Interest Rate | 4.13% | |
Weighted Average Maturity (Years) | 6 years 8 months 12 days | |
Variable Rate Debt Considering Hedges | ||
Debt Instrument [Line Items] | ||
Amount | $ 83,616 | |
Percentage of Total | 5.00% | |
Weighted Average Interest Rate | 2.03% | |
Weighted Average Maturity (Years) | 5 years 4 months 24 days | |
Net Premiums On Acquired Debt | ||
Debt Instrument [Line Items] | ||
Amount | $ 10 | |
Variable Rate Debt | Floating Rate Debt Hedged | ||
Debt Instrument [Line Items] | ||
Amount | $ 474,700 | |
Weighted Average Maturity (Years) | 2 years 10 months 24 days |
Deferred Costs - Deferred Costs (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Deferred Costs [Abstract] | ||
Acquired lease intangible assets | $ 126,515 | $ 138,796 |
Deferred leasing costs and other | 63,116 | 55,332 |
Deferred Costs Gross | 189,631 | 194,128 |
Less—accumulated amortization | (56,517) | (45,854) |
Total | $ 133,114 | $ 148,274 |
Deferred Costs - Amortization Expense (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Deferred Costs [Abstract] | ||
Amortization of deferred leasing costs, lease intangibles and other | $ 19,177 | $ 17,538 |
Amortization of Above Market Lease Intangibles | $ 4,803 | $ 4,523 |
Deferred Revenue and Other Liabilities (Details) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
|
Deferred Revenue Arrangement [Line Items] | |||
Deferred revenue | $ 120,550 | $ 131,559 | |
Amortization of below market lease intangibles | 10,600 | $ 6,700 | |
Unamortized in-place lease liabilities | |||
Deferred Revenue Arrangement [Line Items] | |||
Deferred revenue | 100,972 | 112,405 | |
Retainage payables and other | |||
Deferred Revenue Arrangement [Line Items] | |||
Deferred revenue | 6,589 | 5,636 | |
Potential earnout payments due | |||
Deferred Revenue Arrangement [Line Items] | |||
Deferred revenue | 1,285 | 1,380 | |
Tenant rent payments received in advance | |||
Deferred Revenue Arrangement [Line Items] | |||
Deferred revenue | $ 11,704 | $ 12,138 |
Commitments and Contingencies - Additional Information (Details) |
9 Months Ended | |||
---|---|---|---|---|
Oct. 06, 2016
USD ($)
|
Sep. 30, 2016
USD ($)
property
|
Sep. 30, 2015
USD ($)
|
Dec. 31, 2015
USD ($)
|
|
Commitments and Contingencies [Line Items] | ||||
Letters of credit outstanding, amount | $ 12,200,000 | |||
Amount advanced | $ 0 | |||
Number of real estate properties | property | 120 | |||
Payments on assumed earnout liability | $ 0 | $ (2,869,000) | ||
Earnout | Inland Diversified Real Estate Trust | ||||
Commitments and Contingencies [Line Items] | ||||
Number of real estate properties | property | 1 | |||
Contingent consideration, liability | $ 1,300,000 | $ 1,400,000 | ||
Subsequent Event | Earnout | Inland Diversified Real Estate Trust | ||||
Commitments and Contingencies [Line Items] | ||||
Payments on assumed earnout liability | $ 1,300,000 |
Acquisitions and Transaction Costs - Additional Information (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2015
USD ($)
|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2015
USD ($)
|
Dec. 31, 2015
USD ($)
property
|
|
Business Acquisition [Line Items] | |||||
Transaction costs | $ 0 | $ 1,089 | $ 2,771 | $ 1,550 | |
Number of operating properties acquired | property | 4 | ||||
Assumption of mortgages by buyer upon sale of properties | $ 0 | $ 40,303 | |||
Colleyville Downs, Belle Isle Station, Livingston Shopping Center and Chapel Hill Shopping Center | |||||
Business Acquisition [Line Items] | |||||
Payments to Acquire Real Estate | $ 185,800 | ||||
Chapel Hill Operating Property | |||||
Business Acquisition [Line Items] | |||||
Assumption of mortgages by buyer upon sale of properties | $ 18,300 |
Acquisitions and Transaction Costs - Property Acquisitions (Details) |
Sep. 30, 2016
ft²
|
---|---|
Colleyville Downs | |
Real Estate Properties [Line Items] | |
Net Rentable Area | 191,126 |
Belle Isle Station | |
Real Estate Properties [Line Items] | |
Net Rentable Area | 164,362 |
Livingston Shopping Center | |
Real Estate Properties [Line Items] | |
Net Rentable Area | 139,605 |
Chapel Hill Operating Property | |
Real Estate Properties [Line Items] | |
Net Rentable Area | 126,755 |
Gain on Settlement Gain on Settlement (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016
USD ($)
property
|
Sep. 30, 2015
USD ($)
|
Jun. 30, 2015
USD ($)
|
Sep. 30, 2016
USD ($)
property
|
Sep. 30, 2015
USD ($)
|
|
Gain Contingencies [Line Items] | |||||
Gain on settlement | $ 0 | $ 0 | $ 0 | $ 4,520 | |
Number of real estate properties | property | 120 | 120 | |||
Positive Outcome of Litigation | |||||
Gain Contingencies [Line Items] | |||||
Gain on settlement | $ 4,750 | ||||
Number of real estate properties | 1 |
Subsequent Events Subsequent Events (Details) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Nov. 01, 2016 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Subsequent Event [Line Items] | |||
Repayments of long-term debt | $ 531,070 | $ 553,255 | |
Letters of credit outstanding, amount | $ 12,200 | ||
Geist Pavilion Operating Property | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Letters of credit outstanding, amount | $ 1,600 | ||
Secured Debt | Colonial Square and Village Walk Operating Properties | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Repayments of long-term debt | 25,000 | ||
Secured Debt | Geist Pavilion Operating Property | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Repayments of long-term debt | $ 10,400 |
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