Bay Street News

Kite Realty Group Trust Reports Fourth Quarter and Full Year 2023 Operating Results and Provides 2024 Guidance

Bay Street

INDIANAPOLIS, Feb. 13, 2024 (GLOBE NEWSWIRE) — Kite Realty Group Trust (NYSE: KRG), a premier owner and operator of high-quality, open-air grocery-anchored neighborhood and community centers, along with vibrant mixed-use assets, reported today its operating results for the fourth quarter and year ended December 31, 2023. For the quarters ended December 31, 2023 and 2022, net income attributable to common shareholders was $8.0 million, or $0.04 per diluted share, compared to a net loss of $1.1 million, or $0.01 per diluted share, respectively. For the years ended December 31, 2023 and 2022, net income attributable to common shareholders was $47.5 million, or $0.22 per diluted share, compared to a net loss of $12.6 million, or $0.06 per diluted share, respectively.

Increased NAREIT FFO per share by 4.6% on a year-over-year basis
Leased approximately 4.9 million square feet in 2023 at 14.3% comparable blended cash leasing spreads
2023 Same Property NOI increased by 4.8% on a year-over-year basis
Increased ABR per square foot to $20.70
Subsequent to year end, issued $350 million of 5.50% senior unsecured notes due March 2034
Company provides initial 2024 outlook

“The KRG team capped off a remarkably productive year with over 380,000 square feet of new leasing volume in the fourth quarter – the highest quarterly new leasing activity in our Company’s history,” said John A. Kite, Chairman and CEO. “Our dedicated team enables us to consistently deliver outstanding results and long-term value to all stakeholders. Over the course of 2024, we will continue to operate from a position of strength with a best-in-class operating platform and balance sheet.”

Full Year 2023 Highlights

Fourth Quarter 2023 Financial and Operational Results

Fourth Quarter 2023 Capital Allocation Activity

Fourth Quarter 2023 Balance Sheet Overview

Dividend
On February 7, 2024, the Company’s Board of Trustees declared a first quarter 2024 dividend of $0.25 per common share, which represents a 4.2% year-over-year increase. The first quarter dividend will be paid on or about April 12, 2024, to shareholders of record as of April 5, 2024.

2024 Earnings Guidance
The Company expects to generate net income attributable to common shareholders of $0.29 to $0.35 per diluted share in 2024 and NAREIT FFO of $2.00 to $2.06 per diluted share, based, in part, on the following assumptions:

The following table reconciles the Company’s 2024 net income guidance range to the Company’s 2024 NAREIT FFO guidance range:

    Low     High
Net income   $ 0.29   $ 0.35
Depreciation and amortization        1.71        1.71
NAREIT FFO   $ 2.00   $ 2.06

Earnings Conference Call

Kite Realty Group Trust will conduct a conference call to discuss its financial results on Wednesday, February 14, 2024, at 1:00 p.m. Eastern Time. A live webcast of the conference call will be available on KRG’s website at www.kiterealty.com or at the following link: KRG Fourth Quarter 2023 Webcast. The dial-in registration link is: KRG Fourth Quarter 2023 Teleconference Registration. In addition, a webcast replay link will be available on KRG’s website.

About Kite Realty Group Trust

Kite Realty Group Trust (NYSE: KRG) is a real estate investment trust (REIT) headquartered in Indianapolis, IN that is one of the largest publicly traded owners and operators of open-air shopping centers and mixed-use assets. The Company’s primarily grocery-anchored portfolio is located in high-growth Sun Belt and select strategic gateway markets. The combination of necessity-based grocery-anchored neighborhood and community centers, along with vibrant mixed-use assets makes the KRG portfolio an ideal mix for both retailers and consumers. Publicly listed since 2004, KRG has nearly 60 years of experience in developing, constructing and operating real estate. Using operational, investment, development, and redevelopment expertise, KRG continuously optimizes its portfolio to maximize value and return to shareholders. As of December 31, 2023, the Company owned interests in 180 U.S. open-air shopping centers and mixed-use assets, comprising approximately 28.1 million square feet of gross leasable space. For more information, please visit kiterealty.com.

Connect with KRG: LinkedIn | Twitter | Instagram | Facebook

Safe Harbor

This release, together with other statements and information publicly disseminated by us, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934. Such statements are based on assumptions and expectations that may not be realized and are inherently subject to risks, uncertainties and other factors, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, performance, transactions or achievements, financial or otherwise, may differ materially from the results, performance, transactions or achievements, financial or otherwise, expressed or implied by the forward-looking statements.

Risks, uncertainties and other factors that might cause such differences, some of which could be material, include but are not limited to: our ability to deliver continued outperformance and maintain a best-in-class balance sheet; national and local economic, business, banking, real estate and other market conditions, particularly in connection with low or negative growth in the U.S. economy as well as economic uncertainty (including a potential economic slowdown or recession, rising interest rates, inflation, unemployment, or limited growth in consumer income or spending); financing risks, including the availability of, and costs associated with, sources of liquidity; the Company’s ability to refinance, or extend the maturity dates of, the Company’s indebtedness; the level and volatility of interest rates; the financial stability of tenants; the competitive environment in which the Company operates, including potential oversupplies of and reduction in demand for rental space; acquisition, disposition, development and joint venture risks; property ownership and management risks, including the relative illiquidity of real estate investments, and expenses, vacancies or the inability to rent space on favorable terms or at all; the Company’s ability to maintain the Company’s status as a real estate investment trust for U.S. federal income tax purposes; potential environmental and other liabilities; impairment in the value of real estate property the Company owns; the attractiveness of our properties to tenants, the actual and perceived impact of e-commerce on the value of shopping center assets and changing demographics and customer traffic patterns; business continuity disruptions and a deterioration in our tenant’s ability to operate in affected areas or delays in the supply of products or services to us or our tenants from vendors that are needed to operate efficiently, causing costs to rise sharply and inventory to fall; risks related to our current geographical concentration of the Company’s properties in the states of Texas, Florida, and North Carolina and the metropolitan statistical areas of New York, Atlanta, Seattle, Chicago, and Washington, D.C.; civil unrest, acts of violence, terrorism or war, acts of God, climate change, epidemics, pandemics (including COVID-19), natural disasters and severe weather conditions, including such events that may result in underinsured or uninsured losses or other increased costs and expenses; changes in laws and government regulations including governmental orders affecting the use of the Company’s properties or the ability of its tenants to operate, and the costs of complying with such changed laws and government regulations; possible short-term or long-term changes in consumer behavior due to COVID-19 and the fear of future pandemics; our ability to satisfy environmental, social or governance standards set by various constituencies; insurance costs and coverage, especially in Florida and Texas coastal areas; risks associated with 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 reports the Company files with the Securities and Exchange Commission (“the SEC”) or in other documents that it publicly disseminates, including, in particular, the section titled “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and in the Company’s quarterly reports on Form 10-Q. The Company undertakes no obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

This Earnings Release also includes certain forward-looking non-GAAP information. These non-GAAP financial measures should be considered along with, but not as alternatives to, net income (loss) as a measure of our operating performance. Please see the following pages for the corresponding definitions and reconciliations of such non-GAAP financial measures.

Kite Realty Group Trust
Consolidated Balance Sheets
(dollars in thousands)
(unaudited)

  December 31,
2023		   December 31,
2022
Assets:      
Investment properties, at cost $ 7,740,061     $ 7,732,573  
Less: accumulated depreciation   (1,381,770 )     (1,161,148 )
Net investment properties   6,358,291       6,571,425  
       
Cash and cash equivalents   36,413       115,799  
Tenant and other receivables, including accrued straight-line rent of $55,482 and $44,460, respectively   113,290       101,301  
Restricted cash and escrow deposits   5,017       6,171  
Deferred costs, net   304,171       409,828  
Prepaid and other assets   117,834       127,044  
Investments in unconsolidated subsidiaries   9,062       10,414  
Total assets $ 6,944,078     $ 7,341,982  
       
Liabilities and Equity:      
Liabilities:      
Mortgage and other indebtedness, net $ 2,829,202     $ 3,010,299  
Accounts payable and accrued expenses   198,079       207,792  
Deferred revenue and other liabilities   272,942       298,039  
Total liabilities   3,300,223       3,516,130  
       
Commitments and contingencies      
Limited Partners’ interests in the Operating Partnership   73,287       53,967  
       
Equity:      
Common shares, $0.01 par value, 490,000,000 shares authorized, 219,448,429 and 219,185,658 shares issued and outstanding at December 31, 2023 and 2022, respectively   2,194       2,192  
Additional paid-in capital   4,886,592       4,897,736  
Accumulated other comprehensive income   52,435       74,344  
Accumulated deficit   (1,373,083 )     (1,207,757 )
Total shareholders’ equity   3,568,138       3,766,515  
Noncontrolling interests   2,430       5,370  
Total equity   3,570,568       3,771,885  
Total liabilities and equity $ 6,944,078     $ 7,341,982  

Kite Realty Group Trust
Consolidated Statements of Operations
(dollars in thousands, except per share amounts)
(unaudited)

  Three Months Ended
December 31,		   Year Ended
December 31,
    2023       2022       2023       2022  
Revenue:              
Rental income $ 197,257     $ 199,577     $ 810,146     $ 782,349  
Other property-related revenue   2,521       3,176       8,492       11,108  
Fee income   498       1,936       4,366       8,539  
Total revenue   200,276       204,689       823,004       801,996  
               
Expenses:              
Property operating   25,768       29,659       107,958       107,217  
Real estate taxes   22,093       24,144       102,426       104,589  
General, administrative and other   14,342       12,883       56,142       54,860  
Merger and acquisition costs   —       (81 )     —       925  
Depreciation and amortization   102,898       112,709       426,361       469,805  
Impairment charges   —       —       477       —  
Total expenses   165,101       179,314       693,364       737,396  
               
Gain (loss) on sales of operating properties, net   133       (57 )     22,601       27,069  
               
Operating income   35,308       25,318       152,241       91,669  
Other (expense) income:              
Interest expense   (27,235 )     (26,827 )     (105,349 )     (104,276 )
Income tax expense of taxable REIT subsidiary   (449 )     (302 )     (533 )     (43 )
Equity in earnings of unconsolidated subsidiaries   206       312       33       256  
Other income, net   334       447       1,991       240  
Net income (loss)   8,164       (1,052 )     48,383       (12,154 )
Net income attributable to noncontrolling interests   (185 )     (74 )     (885 )     (482 )
Net income (loss) attributable to common shareholders $ 7,979     $ (1,126 )   $ 47,498     $ (12,636 )
               
Net income (loss) per common share – basic and diluted $ 0.04     $ (0.01 )   $ 0.22     $ (0.06 )
               
Weighted average common shares outstanding – basic   219,407,927       219,137,140       219,344,832       219,074,448  
Weighted average common shares outstanding – diluted   219,795,602       219,137,140       219,728,283       219,074,448  

Kite Realty Group Trust
Funds From Operations (“FFO”)(1)(2)
(dollars in thousands, except per share amounts)
(unaudited)

  Three Months Ended
December 31,		   Year Ended
December 31,
    2023       2022       2023       2022  
               
Net income (loss) $ 8,164     $ (1,052 )   $ 48,383     $ (12,154 )
Less: net income attributable to noncontrolling interests in properties   (56 )     (88 )     (257 )     (623 )
Less: (gain) loss on sales of operating properties, net   (133 )     57       (22,601 )     (27,069 )
Add: impairment charges   —       —       477       —  
Add: depreciation and amortization of consolidated and unconsolidated entities, net of noncontrolling interests   103,119       112,925       427,335       471,086  
FFO of the Operating Partnership(1)   111,094       111,842       453,337       431,240  
Less: Limited Partners’ interests in FFO   (1,708 )     (1,463 )     (6,447 )     (5,395 )
FFO attributable to common shareholders(1) $ 109,386     $ 110,379     $ 446,890     $ 425,845  
FFO, as defined by NAREIT, per share of the Operating Partnership – basic $ 0.50     $ 0.50     $ 2.04     $ 1.94  
FFO, as defined by NAREIT, per share of the Operating Partnership – diluted $ 0.50     $ 0.50     $ 2.03     $ 1.94  
               
FFO of the Operating Partnership(1) $ 111,094     $ 111,842     $ 453,337     $ 431,240  
Add: merger and acquisition costs   —       (81 )     —       925  
Add (less): prior period collection impact   —       189       —       (2,556 )
FFO, as adjusted, of the Operating Partnership $ 111,094     $ 111,950     $ 453,337     $ 429,609  
FFO, as adjusted, per share of the Operating Partnership – basic $ 0.50     $ 0.50     $ 2.04     $ 1.94  
FFO, as adjusted, per share of the Operating Partnership – diluted $ 0.50     $ 0.50     $ 2.03     $ 1.93  
               
Weighted average common shares outstanding – basic   219,407,927       219,137,140       219,344,832       219,074,448  
Weighted average common shares outstanding – diluted   219,795,602       219,763,609       219,728,283       219,710,514  
               
Weighted average common shares and units outstanding – basic   222,827,090       222,055,880       222,514,956       221,858,084  
Weighted average common shares and units outstanding – diluted   223,214,765       222,682,349       222,898,407       222,494,151  
               
FFO, as defined by NAREIT, per diluted share/unit              
Net income (loss) $ 0.04     $ 0.00     $ 0.22     $ (0.05 )
Less: net income attributable to noncontrolling interests in properties   0.00       0.00       0.00       0.00  
Less: (gain) loss on sales of operating properties, net   0.00       0.00       (0.10 )     (0.12 )
Add: impairment charges   0.00       0.00       0.00       0.00  
Add: depreciation and amortization of consolidated and unconsolidated entities, net of noncontrolling interests   0.46       0.51       1.92       2.12  
FFO, as defined by NAREIT, of the Operating Partnership per diluted share/unit(1)(2) $ 0.50     $ 0.50     $ 2.04     $ 1.94  
Add: merger and acquisition costs   0.00       0.00       0.00       0.00  
Less: prior period collection impact   0.00       0.00       0.00       (0.01 )
FFO, as adjusted, of the Operating Partnership per diluted share/unit(2) $ 0.50     $ 0.50     $ 2.03     $ 1.93  
(2) “FFO of the Operating Partnership” measures 100% of the operating performance of the Operating Partnership’s real estate properties. “FFO attributable to common shareholders” reflects a reduction for the redeemable noncontrolling weighted average diluted interest in the Operating Partnership.
(1) Per share/unit amounts of components will not necessarily sum to the total due to rounding to the nearest cent.

Funds From Operations (“FFO”) is a widely used performance measure for real estate companies and is provided here as a supplemental measure of operating performance. The Company calculates FFO, a non-GAAP financial measure, in accordance with the best practices described in the April 2002 National Policy Bulletin of the National Association of Real Estate Investment Trusts (“NAREIT”), as restated in 2018. The NAREIT white paper defines FFO as net income (calculated in accordance with GAAP), excluding (i) depreciation and amortization related to real estate, (ii) gains and losses from the sale of certain real estate assets, (iii) gains and losses from change in control, and (iv) impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.

Considering the nature of our business as a real estate owner and operator, the Company believes that FFO is helpful to investors in measuring our operational performance because it excludes various items included in net income that do not relate to or are not indicative of our operating performance, such as gains or losses from sales of depreciated property and depreciation and amortization, which can make periodic and peer analyses of operating performance more difficult. FFO (a) should not be considered as an alternative to net income (calculated in accordance with GAAP) for the purpose of measuring our financial performance, (b) is not an alternative to cash flow from operating activities (calculated in accordance with GAAP) as a measure of our liquidity, and (c) is not indicative of funds available to satisfy our cash needs, including our ability to make distributions. The Company’s computation of FFO may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than we do.

From time to time, the Company may report or provide guidance with respect to “FFO, as adjusted,” which removes the impact of certain non-recurring and non-operating transactions or other items the Company does not consider to be representative of its core operating results including, without limitation, (i) gains or losses associated with the early extinguishment of debt, (ii) gains or losses associated with litigation involving the Company that is not in the normal course of business, (iii) merger and acquisition costs, (iv) the impact on earnings from employee severance, (v) the excess of redemption value over carrying value of preferred stock redemption, and (vi) in 2022, the impact of prior period bad debt or the collection of accounts receivable previously written off (“prior period collection impact”) due to the recovery from the COVID-19 pandemic, which are not otherwise adjusted in the Company’s calculation of FFO.

Kite Realty Group Trust
Same Property Net Operating Income (“NOI”)
(dollars in thousands)
(unaudited)

  Three Months Ended December 31,   Year Ended December 31,
    2023       2022     Change     2023       2022     Change
                                       
Number of properties in same property pool for the period(1)   175       175           175       175      
                                       
Leased percentage at period end   94.0 %     95.4 %         94.0 %     95.4 %    
Economic occupancy percentage at period end   91.2 %     92.5 %         91.2 %     92.5 %    
Economic occupancy percentage(2)   91.3 %     92.7 %         92.0 %     91.8 %    
                                       
Minimum rent $ 145,532     $ 143,253         $ 579,322     $ 563,144      
Tenant recoveries   37,385       39,160           160,323       157,979      
Bad debt reserve   (1,492 )     (2,077 )         (3,203 )     (7,718 )    
Other income, net   3,430       4,049           9,801       7,884      
Total revenue   184,855        184,385            746,243        721,289       
                                       
Property operating   (22,721 )     (24,756 )         (91,690 )     (90,061 )    
Real estate taxes   (21,909 )     (23,261 )         (99,157 )     (101,207 )    
Total expenses   (44,630 )     (48,017 )         (190,847 )     (191,268 )    
                                       
Same Property NOI $ 140,225     $ 136,368     2.8%   $ 555,396     $ 530,021     4.8%
Reconciliation of Same Property NOI to most
directly comparable GAAP measure:		                      
Net operating income – same properties $ 140,225     $ 136,368         $ 555,396     $ 530,021      
Net operating income – non-same activity(3)   11,692       12,582           52,858       51,630      
Total property NOI   151,917       148,950     2.0%     608,254       581,651     4.6%
Other income, net   589       2,393           5,857       8,992      
General, administrative and other   (14,342 )     (12,883 )         (56,142 )     (54,860 )    
Merger and acquisition costs   —       81           —       (925 )    
Impairment charges   —       —           (477 )     —      
Depreciation and amortization   (102,898 )     (112,709 )         (426,361 )     (469,805 )    
Interest expense   (27,235 )     (26,827 )         (105,349 )     (104,276 )    
Gain (loss) on sales of operating properties, net   133       (57 )         22,601       27,069      
Net income attributable to noncontrolling interests   (185 )     (74 )         (885 )     (482 )    
Net income (loss) attributable to common shareholders $ 7,979     $ (1,126 )       $ 47,498     $ (12,636 )    
(2) Same Property NOI excludes the following: (i) properties acquired or placed in service during 2022 and 2023; (ii) the multifamily rental units and commercial portion at One Loudoun Downtown – Pads G & H; (iii) Shoppes at Quarterfield, Circle East and The Landing at Tradition – Phase II, which were reclassified from active redevelopment into our operating portfolio in June 2022, September 2022 and June 2023, respectively; (iv) two active development and redevelopment projects; (v) Hamilton Crossing Centre and Edwards Multiplex – Ontario, which were reclassified from our operating portfolio into redevelopment in June 2014 and March 2023, respectively; (vi) properties sold or classified as held for sale during 2022 and 2023; and (vii) office properties.
(3) 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 and expiration during the period.
(4) Includes non-cash activity across the portfolio as well as NOI from properties not included in the same property pool, including properties sold during both periods.

The Company uses property NOI, a non-GAAP financial measure, to evaluate the performance of our properties. The Company defines NOI as income from our real estate, including lease termination fees received from tenants, less our property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions and certain corporate level expenses, including merger and acquisition costs. The Company believes that NOI is helpful to investors as a measure of our operating performance because it excludes various items included in net income that do not relate to or are not indicative of our operating performance, such as depreciation and amortization, interest expense, and impairment, if any.

The Company also uses same property NOI (“Same Property NOI”), a non-GAAP financial measure, to evaluate the performance of our properties. Same Property NOI is net income excluding properties that have not been owned for the full periods presented. Same Property NOI also excludes (i) net gains from outlot sales, (ii) straight-line rent revenue, (iii) lease termination income in excess of lost rent, (iv) amortization of lease intangibles, and (v) significant prior period expense recoveries and adjustments, if any. When the Company receives payments in excess of any accounts receivable for terminating a lease, Same Property NOI will include such excess payments as monthly rent until the earlier of the expiration of 12 months or the start date of a replacement tenant. The Company believes that Same Property NOI is helpful to investors as a measure of our operating performance because it includes only the NOI of properties that have been owned for the full periods presented. The Company believes such presentation eliminates disparities in net income due to the acquisition or disposition of properties during the particular periods presented and thus provides a more consistent metric for the comparison of our properties. Same Property NOI includes the results of properties that have been owned for the entire current and prior year reporting periods.

NOI and Same Property NOI should not, however, be considered as alternatives to net income (calculated in accordance with GAAP) as indicators of our financial performance. The Company’s computation of NOI and Same Property NOI may differ from the methodology used by other REITs and, therefore, may not be comparable to such other REITs.

When evaluating the properties that are included in the same property pool, we have established specific criteria for determining the inclusion of properties acquired or those recently under development. An acquired property is included in the same property pool when there is a full quarter of operations in both years subsequent to the acquisition date. Development and redevelopment properties are included in the same property pool four full quarters after the properties have been transferred to the operating portfolio. A redevelopment property is first excluded from the same property pool when the execution of a redevelopment plan is likely and we (a) begin recapturing space from tenants or (b) the contemplated plan significantly impacts the operations of the property. For the three months and year ended December 31, 2023, the same property pool excludes the following: (i) properties acquired or placed in service during 2022 and 2023; (ii) the multifamily rental units and commercial portion at One Loudoun Downtown – Pads G & H; (iii) Shoppes at Quarterfield, Circle East and The Landing at Tradition – Phase II, which were reclassified from active redevelopment into our operating portfolio in June 2022, September 2022 and June 2023, respectively; (iv) two active development and redevelopment projects; (v) Hamilton Crossing Centre and Edwards Multiplex – Ontario, which were reclassified from our operating portfolio into redevelopment in June 2014 and March 2023, respectively; (vi) properties sold or classified as held for sale during 2022 and 2023; and (vii) office properties.

Kite Realty Group Trust
Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”)
(dollars in thousands)
(unaudited)

  Three Months Ended
December 31, 2023
   
Net income $ 8,164  
Depreciation and amortization   102,898  
Interest expense   27,235  
Income tax expense of taxable REIT subsidiary   449  
EBITDA   138,746  
Unconsolidated Adjusted EBITDA   828  
Gain on sales of operating properties, net   (133 )
Other income and expense, net   (540 )
Noncontrolling interests   (189 )
Adjusted EBITDA $ 138,712  
   
Annualized Adjusted EBITDA(1) $ 554,849  
   
Company share of Net Debt:  
Mortgage and other indebtedness, net $ 2,829,202  
Plus: Company share of unconsolidated joint venture debt   55,911  
Less: Partner share of consolidated joint venture debt(2)   (9,849 )
Less: cash, cash equivalents, and restricted cash   (43,986 )
Less: debt discounts, premiums and issuance costs, net   (26,261 )
Company share of Net Debt $ 2,805,017  
   
Net Debt to Adjusted EBITDA 5.1x
(1) Represents Adjusted EBITDA for the three months ended December 31, 2023 (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.

The Company defines EBITDA, a non-GAAP financial measure, as net income before interest expense, income tax expense of the taxable REIT subsidiary, and depreciation and amortization. For informational purposes, the Company also provides Adjusted EBITDA, which it defines as EBITDA less (i) Adjusted EBITDA from unconsolidated entities, (ii) gains on sales of operating properties or impairment charges, (iii) merger and acquisition costs, (iv) other income and expense, (v) noncontrolling interest Adjusted EBITDA, and (vi) other non-recurring activity or items impacting comparability from period to period. Annualized Adjusted EBITDA is Adjusted EBITDA for the most recent quarter multiplied by four. Net Debt to Adjusted EBITDA is the Company’s share of net debt divided by Annualized Adjusted EBITDA. EBITDA, Adjusted EBITDA, Annualized Adjusted EBITDA and Net Debt to Adjusted EBITDA, as calculated by the Company, are not comparable to EBITDA and EBITDA-related measures reported by other REITs that do not define EBITDA and EBITDA-related measures exactly as we do. EBITDA, Adjusted EBITDA and Annualized Adjusted EBITDA do not represent cash generated from operating activities in accordance with GAAP and should not be considered alternatives to net income as an indicator of performance or as alternatives to cash flows from operating activities as an indicator of liquidity.

Considering the nature of our business as a real estate owner and operator, the Company believes that EBITDA, Adjusted EBITDA and the ratio of Net Debt to Adjusted EBITDA are helpful to investors in measuring our operational performance because they exclude various items included in net income that do not relate to or are not indicative of our operating performance, such as gains or losses from sales of depreciated property and depreciation and amortization, which can make periodic and peer analyses of operating performance more difficult. For informational purposes, the Company also provides Annualized Adjusted EBITDA, adjusted as described above. The Company believes this supplemental information provides a meaningful measure of its operating performance. The Company believes presenting EBITDA and the related measures in this manner allows investors and other interested parties to form a more meaningful assessment of the Company’s operating results.

Contact Information: Kite Realty Group Trust
Tyler Henshaw
SVP, Capital Markets & Investor Relations
317.713.7780
thenshaw@kiterealty.com


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