(Mark One)
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended September 30, 2014
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OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Commission File Number: 001-32268
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Kite Realty Group Trust
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(Exact Name of Registrant as Specified in its Charter)
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Maryland
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11-3715772
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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30 S. Meridian Street, Suite 1100
Indianapolis, Indiana
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46204
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(Address of principal executive offices)
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(Zip code)
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Telephone: (317) 577-5600
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(Registrant’s telephone number, including area code)
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Not Applicable
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(Former name, former address and former fiscal year, if changed since last report)
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Yes x
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No o
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Yes x
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No o
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Large accelerated filer
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o
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Accelerated filer
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x
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Non-accelerated filer
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o
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Smaller reporting company
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o
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||||||
(Do not check if a smaller reporting company)
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Yes o
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No x
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Page
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Part I.
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Item 1.
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3
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4
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5
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6
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7
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Item 2.
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23
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24
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Item 3.
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41
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Item 4.
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41
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Part II.
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Item 1.
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41
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Item 1A.
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41
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Item 2.
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41
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Item 3.
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41
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Item 4.
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42
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Item 5.
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42
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Item 6.
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42
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45
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September 30,
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December 31,
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|||||||
2014
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2013
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|||||||
Assets:
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||||||||
Investment properties, at cost
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$ | 3,673,832 | $ | 1,877,057 | ||||
Less: accumulated depreciation
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(282,693 | ) | (232,580 | ) | ||||
3,391,139 | 1,644,477 | |||||||
Cash and cash equivalents
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31,213 | 18,134 | ||||||
Tenant receivables, including accrued straight-line rent of $17,304 and
$14,490, respectively, net of allowance for uncollectible accounts
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38,623 | 24,768 | ||||||
Other receivables
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4,891 | 4,567 | ||||||
Restricted cash and escrow deposits
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17,442 | 11,046 | ||||||
Deferred costs, net
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168,237 | 56,388 | ||||||
Prepaid and other assets
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12,073 | 4,547 | ||||||
Assets held for sale (see Note 10)
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344,466 | - | ||||||
Total Assets
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$ | 4,008,084 | $ | 1,763,927 | ||||
Liabilities and Equity:
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||||||||
Mortgage and other indebtedness
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$ | 1,556,496 | $ | 857,144 | ||||
Accounts payable and accrued expenses
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87,823 | 61,437 | ||||||
Deferred revenue and other liabilities
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141,865 | 44,313 | ||||||
Liabilities held for sale (see Note 10)
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176,636 | - | ||||||
Total Liabilities
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1,962,820 | 962,894 | ||||||
Commitments and contingencies
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||||||||
Limited partners' interests in Operating Partnership and other redeemable noncontrolling interests
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109,554 | 43,928 | ||||||
Equity:
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||||||||
Kite Realty Group Trust Shareholders' Equity:
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||||||||
Preferred Shares, $.01 par value, 40,000,000 shares authorized, 4,100,000
shares issued and outstanding at September 30, 2014 and
December 31, 2013, respectively, with a liquidation value of $102,500
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102,500 | 102,500 | ||||||
Common Shares, $.01 par value, 450,000,000 shares authorized,
83,459,618 shares and 32,706,554 shares issued and outstanding at
September 30, 2014 and December 31, 2013, respectively
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835 | 327 | ||||||
Additional paid in capital and other
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2,059,063 | 822,507 | ||||||
Accumulated other comprehensive income
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1,151 | 1,353 | ||||||
Accumulated deficit
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(231,203 | ) | (173,130 | ) | ||||
Total Kite Realty Group Trust Shareholders' Equity
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1,932,346 | 753,557 | ||||||
Noncontrolling Interests
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3,364 | 3,548 | ||||||
Total Equity
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1,935,710 | 757,105 | ||||||
Total Liabilities and Equity
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$ | 4,008,084 | $ | 1,763,927 |
Three Months Ended
September 30,
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Nine Months Ended
September 30,
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|||||||||||||||
2014 |
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2013
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2014
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2013
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||||||||||||
Revenue:
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||||||||||||||||
Minimum rent
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$ | 69,033 | $ | 23,726 | $ | 131,515 | $ | 66,859 | ||||||||
Tenant reimbursements
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17,605 | 6,258 | 35,083 | 17,351 | ||||||||||||
Other property related revenue
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1,938 | 2,569 | 5,481 | 9,300 | ||||||||||||
Total revenue
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88,576 | 32,553 | 172,079 | 93,510 | ||||||||||||
Expenses:
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||||||||||||||||
Property operating
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11,850 | 5,449 | 26,057 | 15,582 | ||||||||||||
Real estate taxes
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10,632 | 3,724 | 20,048 | 10,685 | ||||||||||||
General, administrative, and other
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3,939 | 2,115 | 9,358 | 6,069 | ||||||||||||
Merger and acquisition costs
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19,088 | 153 | 26,849 | 567 | ||||||||||||
Depreciation and amortization
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44,383 | 15,374 | 81,559 | 40,566 | ||||||||||||
Total expenses
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89,892 | 26,815 | 163,871 | 73,469 | ||||||||||||
Operating (loss) income
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(1,316 | ) | 5,738 | 8,208 | 20,041 | |||||||||||
Interest expense
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(15,386 | ) | (7,541 | ) | (30,291 | ) | (20,812 | ) | ||||||||
Income tax expense of taxable REIT subsidiary
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(14 | ) | (31 | ) | (37 | ) | (107 | ) | ||||||||
Other expense
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(13 | ) | (47 | ) | (119 | ) | (39 | ) | ||||||||
Loss from continuing operations
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(16,729 | ) | (1,881 | ) | (22,239 | ) | (917 | ) | ||||||||
Discontinued operations:
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||||||||||||||||
Discontinued operations
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— | 1,394 | — | 604 | ||||||||||||
Impairment charge
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— | — | — | (5,371 | ) | |||||||||||
Non-cash gain on debt extinguishment
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— | 1,242 | — | 1,242 | ||||||||||||
Gain on sale of operating property, net
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— | 486 | 3,199 | 486 | ||||||||||||
Income (loss) from discontinued operations
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— | 3,122 | 3,199 | (3,039 | ) | |||||||||||
(Loss) income before gain on sale of operating properties, net
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(16,729 | ) | 1,241 | (19,040 | ) | (3,956 | ) | |||||||||
Gain on sale of operating properties, net
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2,749 | — | 6,336 | — | ||||||||||||
Consolidated net (loss) income
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(13,980 | ) | 1,241 | (12,704 | ) | (3,956 | ) | |||||||||
Net (income) loss attributable to noncontrolling interests
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(304 | ) | 15 | (224 | ) | 651 | ||||||||||
Net (loss) income attributable to Kite Realty Group Trust
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$ | (14,284 | ) | $ | 1,256 | $ | (12,928 | ) | $ | (3,305 | ) | |||||
Dividends on preferred shares
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(2,114 | ) | (2,114 | ) | (6,342 | ) | (6,342 | ) | ||||||||
Net loss attributable to common shareholders
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$ | (16,398 | ) | $ | (858 | ) | $ | (19,270 | ) | $ | (9,647 | ) | ||||
Net loss per common share - basic & diluted:
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||||||||||||||||
Loss from continuing operations attributable to Kite Realty
Group Trust common shareholders
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$ | (0.20 | ) | $ | (0.16 | ) | $ | (0.45 | ) | $ | (0.31 | ) | ||||
Income (loss) from discontinued operations attributable
to Kite Realty Group Trust common shareholders
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0.00 | 0.12 | 0.06 | (0.13 | ) | |||||||||||
Net loss attributable to Kite Realty Group Trust common shareholders
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$ | (0.20 | ) | $ | (0.04 | ) | $ | (0.39 | ) | $ | (0.44 | ) | ||||
Weighted average common shares outstanding - basic and diluted
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83,455,900 | 23,450,974 | 49,884,469 | 21,906,686 | ||||||||||||
Dividends declared per common share
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$ | 0.26 | $ | 0.24 | $ | 0.76 | $ | 0.72 | ||||||||
Net loss attributable to Kite Realty Group Trust common shareholders:
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||||||||||||||||
Loss from continuing operations
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$ | (16,398 | ) | $ | (3,772 | ) | $ | (22,366 | ) | $ | (6,824 | ) | ||||
Income (loss) from discontinued operations
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— | 2,914 | 3,096 | (2,823 | ) | |||||||||||
Net loss attributable to Kite Realty Group Trust common
shareholders
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$ | (16,398 | ) | $ | (858 | ) | $ | (19,270 | ) | $ | (9,647 | ) | ||||
Consolidated net (loss) income
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$ | (13,980 | ) | $ | 1,241 | $ | (12,704 | ) | $ | (3,956 | ) | |||||
Change in fair value of derivatives
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2,671 | (1,107 | ) | (249 | ) | 5,469 | ||||||||||
Total comprehensive loss
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(11,309 | ) | 134 | (12,953 | ) | 1,513 | ||||||||||
Comprehensive loss attributable to noncontrolling interests
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(400 | ) | 89 | (177 | ) | 212 | ||||||||||
Comprehensive (loss) income attributable to Kite Realty Group Trust
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$ | (11,709 | ) | $ | 223 | $ | (13,130 | ) | $ | 1,725 |
Accumulated
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||||||||||||||||||||||||||||||||
Other
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||||||||||||||||||||||||||||||||
Preferred Shares
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Common Shares
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Additional
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Comprehensive
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Accumulated
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||||||||||||||||||||||||||||
Shares
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Amount
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Shares
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Amount
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Paid-in Capital
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Income
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Deficit
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Total
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|||||||||||||||||||||||||
Balances, December 31, 2013
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4,100,000 | $ | 102,500 | 32,706,554 | $ | 327 | $ | 822,507 | $ | 1,353 | $ | (173,130 | ) | $ | 753,557 | |||||||||||||||||
Common shares issued under
employee share purchase plan
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— | — | 571 | — | 14 | — | — | 14 | ||||||||||||||||||||||||
Common shares issued as part of
merger, net of offering costs
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— | — | 50,272,308 | 503 | 1,232,829 | — | — | 1,233,332 | ||||||||||||||||||||||||
Common shares retired in connection
with reverse share split
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— | — | (2,436 | ) | — | (60 | ) | — | — | (60 | ) | |||||||||||||||||||||
Stock compensation activity
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— | — | 478,121 | 5 | 2,110 | — | — | 2,115 | ||||||||||||||||||||||||
Other comprehensive loss
attributable to Kite Realty Group Trust
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— | — | — | — | — | (202 | ) | — | (202 | ) | ||||||||||||||||||||||
Distributions declared to common
shareholders
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— | — | — | — | — | — | (38,803 | ) | (38,803 | ) | ||||||||||||||||||||||
Distributions to preferred
shareholders
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— | — | — | — | — | — | (6,342 | ) | (6,342 | ) | ||||||||||||||||||||||
Net loss attributable to Kite
Realty Group Trust
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— | — | — | — | — | — | (12,928 | ) | (12,928 | ) | ||||||||||||||||||||||
Exchange of redeemable
noncontrolling interests for
common shares
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— | — | 4,500 | — | 113 | — | — | 113 | ||||||||||||||||||||||||
Adjustment to redeemable
noncontrolling interests -
Operating Partnership
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— | — | — | — | 1,550 | — | — | 1,550 | ||||||||||||||||||||||||
Balances, September 30, 2014
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4,100,000 | $ | 102,500 | 83,459,618 | $ | 835 | $ | 2,059,063 | $ | 1,151 | $ | (231,203 | ) | $ | 1,932,346 |
Nine Months Ended September 30,
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|||||||
2014
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2013
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||||||
Cash flows from operating activities:
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|||||||
Consolidated net loss
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$ | (12,704 | ) | $ | (3,956 | ) | |
Adjustments to reconcile consolidated net loss to net cash provided by operating activities:
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|||||||
Straight-line rent
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(3,351 | ) | (2,539 | ) | |||
Depreciation and amortization
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83,472 | 43,313 | |||||
Impairment charge
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— | 5,371 | |||||
Gain on debt extinguishment
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— | (1,242 | ) | ||||
Gain on sale of operating properties, net
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(9,535 | ) | (487 | ) | |||
Provision for credit losses
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1,206 | 255 | |||||
Compensation expense for equity awards
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1,336 | 1,044 | |||||
Amortization of debt fair value adjustment
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(1,663 | ) | (125 | ) | |||
Amortization of in-place lease liabilities, net
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(3,582 | ) | (1,912 | ) | |||
Changes in assets and liabilities:
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|||||||
Tenant receivables and other
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(6,811 | ) | 542 | ||||
Deferred costs and other assets
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(5,542 | ) | (11,029 | ) | |||
Accounts payable, accrued expenses, deferred revenue and other liabilities
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(32,258 | ) | 7,784 | ||||
Net cash provided by operating activities
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10,568 | 37,019 | |||||
Cash flows from investing activities:
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|||||||
Acquisitions of interests in properties
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— | (102,685 | ) | ||||
Capital expenditures, net
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(72,345 | ) | (75,077 | ) | |||
Net proceeds from sales of operating properties
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40,771 | 7,293 | |||||
Net proceeds from sales of marketable securities acquired from merger
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18,601 | — | |||||
Net cash received from merger
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108,666 | — | |||||
Change in construction payables
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(7,075 | ) | (12,970 | ) | |||
Collection of note receivable
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542 | — | |||||
Net cash provided by (used in) investing activities
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89,160 | (183,439 | ) | ||||
Cash flows from financing activities:
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|||||||
Common share issuance proceeds, net of issuance costs
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(46 | ) | 97,185 | ||||
Offering costs
|
(1,819 | ) | — | ||||
Loan proceeds
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84,207 | 290,071 | |||||
Loan transaction costs
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(3,709 | ) | (1,942 | ) | |||
Loan payments
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(131,786 | ) | (216,675 | ) | |||
Distributions paid – common shareholders
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(24,953 | ) | (14,963 | ) | |||
Distributions paid - preferred shareholders
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(6,342 | ) | (6,342 | ) | |||
Distributions paid – redeemable noncontrolling interests
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(1,914 | ) | (1,185 | ) | |||
Distributions to noncontrolling interests in properties
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(287 | ) | (82 | ) | |||
Net cash (used in) provided by financing activities
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(86,649 | ) | 146,067 | ||||
Net change in cash and cash equivalents
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13,079 | (353 | ) | ||||
Cash and cash equivalents, beginning of period
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18,134 | 12,483 | |||||
Cash and cash equivalents, end of period
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$ | 31,213 | $ | 12,130 | |||
Non-cash investing and financing activities
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|||||||
Extinguishment of mortgage upon transfer of Kedron Village operating property to lender
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$ | — | $ | 29,195 | |||
Assumption of mortgages upon completion of merger including debt premium of $33,298
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892,909 | — | |||||
Properties and other assets added upon completion of merger
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2,367,600 | — | |||||
Marketable securities added upon completion of merger
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18,602 | — |
Balance at
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||||||||
September 30,
2014
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December 31,
2013
|
|||||||
Investment properties, at cost:
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||||||||
Land
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$ | 763,563 | $ | 333,458 | ||||
Buildings and improvements
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2,749,023 | 1,351,642 | ||||||
Furniture, equipment and other
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6,315 | 4,970 | ||||||
Land held for development
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54,778 | 56,078 | ||||||
Construction in progress
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100,153 | 130,909 | ||||||
$ | 3,673,832 | $ | 1,877,057 |
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·
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our ability to refinance debt and sell the property without the consent of any other partner or owner;
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·
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the inability of any other partner or owner to replace the Company as manager of the property; or
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·
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being the primary beneficiary of a VIE. The primary beneficiary is defined as the entity that 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.
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2014
|
2013
|
|||||||
Noncontrolling interests balance January 1
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$ | 3,548 | $ | 3,535 | ||||
Net income allocable to noncontrolling interests,
excluding redeemable noncontrolling interests
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103 | 90 | ||||||
Distributions to noncontrolling interests
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(287 | ) | (82 | ) | ||||
Noncontrolling interests balance at September 30
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$ | 3,364 | $ | 3,543 |
Three Months Ended
September 30,
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Nine Months Ended
September 30,
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|||||||||||||||
2014
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2013
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2014
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2013
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|||||||||||||
Company’s weighted average basic interest in
Operating Partnership
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98.1 | % | 93.3 | % | 96.8 | % | 92.9 | % | ||||||||
Limited partners' redeemable noncontrolling
weighted average basic interests in Operating
Partnership
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1.9 | % | 6.7 | % | 3.2 | % | 7.1 | % |
2014
|
2013
|
|||||||
Redeemable noncontrolling interests balance January 1
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$ | 43,928 | $ | 37,670 | ||||
Acquired redeemable noncontrolling interests from merger
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69,356 | — | ||||||
Net income allocable to redeemable noncontrolling interests
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118 | (741 | ) | |||||
Distributions declared to redeemable noncontrolling interests
|
(1,946 | ) | (1,189 | ) | ||||
Other comprehensive (loss) income allocable to redeemable
noncontrolling interests 1
|
(47 | ) | 440 | |||||
Exchange of redeemable noncontrolling interest for
common stock
|
(113 | ) | (73 | ) | ||||
Adjustment to redeemable noncontrolling interests -
Operating Partnership and other
|
(1,742 | ) | 4,007 | |||||
Total Limited partners' interests in Operating Partnership and other
redeemable noncontrolling interests balance at September 30
|
$ | 109,554 | $ | 40,114 | ||||
Limited partners' interests in Operating Partnership
|
40,198 | 40,114 | ||||||
Other redeemable noncontrolling interests in certain subsidiaries
|
69,356 | — | ||||||
Total Limited partners' interests in Operating Partnership and other
redeemable noncontrolling interests balance at September 30
|
$ | 109,554 | $ | 40,114 |
____________________
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1
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Represents the noncontrolling interests’ share of the changes in the fair value of derivative instruments accounted for as cash flow hedges (see Note 5).
|
2014
|
2013
|
|||||||
Accumulated comprehensive income (loss) balance at January 1
|
$ | 69 | $ | (456 | ) | |||
Other comprehensive (loss) income allocable to redeemable
noncontrolling interests 1
|
(47 | ) | 440 | |||||
Accumulated comprehensive (loss) income balance at September 30
|
$ | 22 | $ | (16 | ) |
____________________
|
|
1
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Represents the noncontrolling interests’ share of the changes in the fair value of derivative instruments accounted for as cash flow hedges (see Note 5).
|
Balance at
|
||||||||
September 30,
2014
|
December 31,
2013
|
|||||||
Unsecured revolving credit facility
|
$ | 113,000 | $ | 145,000 | ||||
Unsecured term loan
|
230,000 | 230,000 | ||||||
Notes payable secured by properties under construction -
variable rate
|
147,041 | 144,389 | ||||||
Mortgage notes payable - fixed rate
|
800,078 | 276,504 | ||||||
Mortgage notes payable - variable rate
|
238,916 | 61,185 | ||||||
Net premiums on acquired debt
|
27,461 | 66 | ||||||
Total mortgage and other indebtedness
|
1,556,496 | 857,144 | ||||||
Mortgage notes - properties held for sale 1
|
144,316 | — | ||||||
Total
|
$ | 1,700,812 | $ | 857,144 |
____________________
|
|
1
|
Includes net premiums on acquired debt of $4.2 million.
|
Amount
|
Weighted Average
Maturity (Years)
|
Weighted Average
Interest Rate
|
Percentage
of Total
|
|||||||||||||
Fixed rate debt
|
$ | 800,078 | 5.6 | 5.06 | % | 52 | % | |||||||||
Floating rate debt (hedged to fixed)
|
456,275 | 3.6 | 3.25 | % | 30 | % | ||||||||||
Total fixed rate debt, considering hedges
|
1,256,353 | 4.9 | 4.40 | % | 82 | % | ||||||||||
Notes payable secured by properties under construction - variable rate
|
147,041 | 1.0 | 2.15 | % | 10 | % | ||||||||||
Other variable rate debt
|
238,916 | 4.8 | 2.42 | % | 16 | % | ||||||||||
Corporate unsecured variable rate debt
|
343,000 | 5.1 | 1.52 | % | 22 | % | ||||||||||
Floating rate debt (hedged to fixed)
|
(456,275 | ) | -3.6 | -1.94 | % | -30 | % | |||||||||
Total variable rate debt, considering hedges
|
272,682 | 5.2 | 1.94 | % | 18 | % | ||||||||||
Net premiums on acquired debt
|
27,461 | N/A | N/A | N/A | ||||||||||||
Total debt
|
$ | 1,556,496 | 4.9 | 3.96 | % | 100 | % |
·
|
In January 2014, we paid off the $4.0 million loan secured by the 50th and 12th operating property using a portion of the proceeds from the sale of the property (see Note 10);
|
·
|
In February 2014, we drew $14.7 million on the unsecured revolving credit facility to fund redevelopment and tenant improvement costs;
|
·
|
In March 2014, we paid down $14.7 million on the unsecured revolving credit facility utilizing a portion of proceeds from property sales;
|
·
|
In March 2014, we refinanced the $6.9 million Beacon Hill variable rate loan and extended the maturity of the loan to April 2018;
|
·
|
In May 2014, we paid down $1.2 million on the loan secured by Delray Marketplace operating property;
|
·
|
In July 2014, we retired the $17.7 million loan secured by our Rangeline Crossing operating property, the $18.9 million loan secured by our Four Corner Square operating property and the $5.0 million loan secured by land at 951 and 41 in Naples, Florida using cash acquired as part of the merger;
|
·
|
In July 2014, as a result of the merger with Inland Diversified, we assumed $859.6 million in debt secured by 41 properties. As part of the purchase price allocation, a debt premium of $33.3 million was recorded. The variable interest rates on these mortgage loans are based on LIBOR plus spreads ranging from 175 to 275 basis points. The fixed interest rates on these mortgage loans range from 3.81% to 6.19% and mature over various terms through 2022;
|
·
|
We paid down $32 million on the unsecured revolving credit facility during the third quarter utilizing cash on hand;
|
·
|
In September 2014, we retired the $4.5 million loan secured by the Zionsville Walgreens operating property upon the sale of the asset (see Note 10);
|
·
|
We drew $40.5 million during the period on construction loans related to the Holly Springs – Phase I and Parkside – Phases I and II development projects; and
|
·
|
We made scheduled principal payments on indebtedness totaling $4.7 million.
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Net loss attributable to Kite Realty Group Trust common shareholders
|
$ | (16,398 | ) | $ | (858 | ) | $ | (19,270 | ) | $ | (9,647 | ) | ||||
Other comprehensive income (loss) allocable to
Kite Realty Group Trust1
|
2,576 | (1,033 | ) | (202 | ) | 5,030 | ||||||||||
Comprehensive loss attributable to Kite Realty Group Trust common shareholders
|
$ | (13,822 | ) | $ | (1,891 | ) | $ | (19,472 | ) | $ | (4,617 | ) |
____________________
|
|
1
|
Reflects our share of the net change in the fair value of derivative instruments accounted for as cash flow hedges.
|
September 30,
2014
|
December 31,
2013
|
|||||||
Deferred financing costs
|
$ | 14,341 | $ | 11,293 | ||||
Acquired lease intangible assets
|
162,542 | 24,930 | ||||||
Deferred leasing costs and other
|
44,449 | 41,626 | ||||||
221,332 | 77,849 | |||||||
Less—accumulated amortization
|
(31,139 | ) | (21,461 | ) | ||||
Total
|
190,193 | 56,388 | ||||||
Deferred costs – properties held for sale
|
(21,956 | ) | -- | |||||
Total
|
$ | 168,237 | $ | 56,388 |
Nine Months Ended
September 30,
|
||||||||
2014 | 2013 | |||||||
Amortization of deferred financing costs
|
$ | 1,912 | $ | 1,923 | ||||
Amortization of deferred leasing costs, lease intangibles and other
|
11,501 | 3,891 |
September 30,
2014
|
December 31,
2013
|
|||||||
Unamortized in-place lease liabilities
|
$ | 140,830 | $ | 36,173 | ||||
Retainages payable and other
|
4,261 | 2,982 | ||||||
Seller earnout (Note 9)
|
14,973 |
─
|
||||||
Tenant rents received in advance
|
10,364 | 5,158 | ||||||
Total
|
170,428 | 44,313 | ||||||
Deferred revenue and other liabilities – liabilities held for sale
|
28,563 |
─
|
||||||
Total
|
$ | 141,865 | $ | 44,313 |
Three Months Ended September 30, 2014
|
||||
Earnout liability – beginning of period
|
$ | 16,593 | ||
Decreases:
|
||||
Payments to settle earnouts
|
(1,620 | ) | ||
Earnout liability – end of period
|
$ | 14,973 |
Transaction
|
Sale Date
|
Number of Properties
|
Aggregate Purchase Price | ||||
Tranche I
|
December 15, 2014
|
9
|
$ |
163,054
|
|||
Tranche II
|
March 15, 2015
|
6
|
155,076
|
||||
$ |
318,130
|
Property Name
|
MSA
|
|
Tranche I:
|
||
Copps Grocery
|
Stevens Point, WI
|
|
Eastside Junction1
|
Athens, AL
|
|
Fox Point
|
Neenah, WI
|
|
Harvest Square
|
Harvest, AL
|
|
Landing at Ocean Isle Beach
|
Ocean Isle Beach, NC
|
|
Branson Hills Plaza
|
Branson, MO
|
|
Shoppes at Branson Hills
|
Branson, MO
|
|
Shoppes at Prairie Ridge
|
Pleasant Prairie, WI
|
|
Heritage Square
|
Conyers, GA
|
|
Tranche II:
|
||
Fairgrounds Crossing
|
Hot Springs, AR
|
|
Hawk Ridge
|
Saint Louis, MO
|
|
Prattville Town Center
|
Prattville, AL
|
|
Regal Court
|
Shreveport, LA
|
|
Whispering Ridge
|
Omaha, NE
|
|
Walgreens Plaza
|
Jacksonville, NC
|
____________________
|
|
1
|
Subsequent to the signing of the Purchase and Sale Agreement with Inland Real Estate, Publix exercised its right of first offer to purchase the property. The sale of this property may be delayed from the December 15 closing date.
|
September 30,
|
||||
2014
|
||||
Assets:
|
||||
Investment properties, at cost
|
$ | 323,571 | ||
Less: accumulated depreciation
|
(3,050 | ) | ||
320,521 | ||||
Accounts receivable, prepaids and other assets
|
1,989 | |||
Deferred costs, net
|
21,956 | |||
Total assets held for sale
|
$ | 344,466 | ||
Liabilities:
|
||||
Mortgage and other indebtedness
|
$ | 144,316 | ||
Accounts payable and accrued expenses
|
3,757 | |||
Deferred revenue and other liabilities
|
28,563 | |||
Total liabilities held for sale
|
$ | 176,636 |
Three Months Ended
September 30, 2014
|
||||
Revenue:
|
||||
Minimum rent1
|
$ | 5,867 | ||
Tenant reimbursements
|
1,190 | |||
Total revenue
|
7,057 | |||
Expenses:
|
||||
Property operating
|
922 | |||
Real estate taxes
|
746 | |||
Depreciation and amortization
|
3,520 | |||
Total expenses
|
5,188 | |||
Operating income
|
1,869 | |||
Interest expense
|
(1,428 | ) | ||
Income from continuing operations
|
$ | 441 |
____________________ | |
1
|
Minimum rent includes $175,000 of non-cash straight-line and market rent revenue.
|
·
|
the fair value of the building on an as-if-vacant basis and to land determined either by comparable market data, real estate tax assessments, independent appraisals or other relevant data;
|
·
|
above-market and below-market in-place lease values for acquired properties based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over the remaining non-cancelable term of the leases. Any below-market renewal options are also considered in the in-place lease values. The capitalized above-market and below-market lease values are amortized as a reduction of or addition to rental income over the remaining non-cancelable terms of the respective leases. Should a tenant vacate, terminate its lease, or otherwise notify us of its intent to do so, the unamortized portion of the lease intangibles would be charged or credited to income; and
|
·
|
the value of leases acquired. We utilize independent sources for our estimates to determine the respective in-place lease values. Our estimates of value are made using methods similar to those used by independent appraisers. Factors we consider in our analysis include an estimate of costs to execute similar leases including tenant improvements, leasing commissions and foregone costs and rent received during the estimated lease-up period as if the space was vacant. The value of in-place leases is amortized to expense over the remaining initial terms of the respective leases.
|
Property Name
|
MSA
|
Acquisition Date
|
Acquisition Cost (millions)
|
|||||
Shoppes of Eastwood
|
Orlando, FL
|
January 2013
|
$ | 11.6 | ||||
Cool Springs Market
|
Nashville, TN
|
April 2013
|
37.6 | |||||
Castleton Crossing
|
Indianapolis, IN
|
May 2013
|
39.0 | |||||
Toringdon Market
|
Charlotte, NC
|
August 2013
|
15.9 | |||||
Nine Property Portfolio
|
November 2013
|
304.0 | ||||||
Merger with Inland Diversified
|
July 2014
|
2,128.6 |
Nine Months Ended
September 30,
(unaudited)
|
||||||||
2014 | 2013 | |||||||
Total Revenue
|
$ | 266,044 | $ | 265,637 | ||||
Consolidated net income
|
16,009 | 1,330 |
Low
|
High
|
|||||||
Lease-up period (months)
|
6 | 18 | ||||||
Net rental rate per square foot – Anchor (greater than 10,000 square feet)
|
$ | 5.00 | $ | 30.00 | ||||
Net rental rate per square foot – Small Shops
|
$ | 11.00 | $ | 53.00 | ||||
Discount rate
|
5.75 | % | 9.25 | % |
Assets:
|
||||
Investment properties, net
|
$ | 2,095,567 | ||
Deferred costs, net
|
143,210 | |||
Investments in marketable securities
|
18,602 | |||
Cash and cash equivalents
|
108,666 | |||
Accounts receivable, prepaid expenses, and other
|
20,157 | |||
Total assets
|
$ | 2,386,202 | ||
Liabilities:
|
||||
Mortgage and other indebtedness, including debt premium of $33,300
|
$ | 892,909 | ||
Deferred revenue and other liabilities
|
129,935 | |||
Accounts payable and accrued expenses
|
59,314 | |||
Total Liabilities
|
1,082,158 | |||
Noncontrolling interests
|
69,356 | |||
Common stock issued
|
1,234,688 | |||
Total purchase price
|
$ | 2,386,202 |
·
|
national and local economic, business, real estate and other market conditions, particularly in light of low growth in the U.S. economy;
|
·
|
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, its 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 the Company operates;
|
·
|
acquisition, disposition, development and joint venture risks, including the merger transaction with Inland Diversified;
|
·
|
property ownership and management risks;
|
·
|
the Company’s ability to maintain its status as a real estate investment trust (“REIT”) for federal income tax purposes;
|
·
|
potential environmental and other liabilities;
|
·
|
impairment in the value of real estate property the Company owns;
|
·
|
risks related to the geographical concentration of our properties in Indiana, Florida and Texas;
|
·
|
other factors affecting the real estate industry generally; and
|
·
|
other uncertainties and factors identified in this Quarterly Report on Form 10-Q and, from time to time, in other reports we file with 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, 2013.
|
Property Name
|
MSA
|
Acquisition Date
|
Acquisition Cost
(millions)
|
Owned GLA
|
||||||
Shoppes of Eastwood
|
Orlando, FL
|
January 2013
|
$ | 11.6 | 69,037 | |||||
Cool Springs Market
|
Nashville, TN
|
April 2013
|
37.6 | 223,912 | ||||||
Castleton Crossing
|
Indianapolis, IN
|
May 2013
|
39.0 | 277,812 | ||||||
Toringdon Market
|
Charlotte, NC
|
August 2013
|
15.9 | 60,464 | ||||||
Nine Property Portfolio
|
November 2013
|
304.0 | 1,977,711 | |||||||
Merger with Inland Diversified
|
July 2014
|
2,128.6 | 10,719,471 |
·
|
50th and 12th (Walgreens), Seattle, Washington in January 2014, which was held for sale at December 31, 2013 and reflected in discontinued operations for the three and nine months ended September 30, 2014 and 2013;
|
·
|
Red Bank Commons, Evansville, Indiana in March 2014; and
|
·
|
Ridge Plaza, Oak Ridge, New Jersey in March 2014; and
|
·
|
Zionsville Walgreens, Zionsville, Indiana in September 2014
|
Property Name
|
MSA
|
Economic Occupancy Date1
|
Owned GLA
|
|||
Delray Marketplace
|
Delray Beach, FL
|
January 2013
|
260,153
|
|||
Holly Springs Towne Center – Phase I
|
Raleigh, NC
|
March 2013
|
207,589
|
|||
Parkside Town Commons – Phase I
|
Raleigh, NC
|
March 2014
|
104,978
|
|||
Parkside Town Commons – Phase II
|
Raleigh, NC
|
September 2014
|
275,432
|
____________________ |
1
|
Represents the date on which we started receiving rental payments under tenant leases or ground leases at the property or the tenant took possession of the property, whichever was earlier.
|
Property Name
|
MSA
|
Transition to
Redevelopment1
|
Transition to Operations
|
Owned GLA
|
|||||
Four Corner Square
|
Maple Valley, Washington
|
September 2008
|
December 2013
|
107,998 | |||||
Bolton Plaza2
|
Jacksonville, Florida
|
June 2008
|
September 2014
|
155,637 | |||||
Rangeline Crossing
|
Carmel, Indiana
|
June 2012
|
June 2013
|
97,511 | |||||
Gainesville Plaza3
|
Gainesville, Florida
|
June 2013
|
Pending
|
162,693 | |||||
King’s Lake Square4
|
Naples, Florida
|
July 2013
|
April 2014
|
88,153 | |||||
Hamilton Crossing
|
Carmel, Indiana
|
July 2014
|
Pending
|
69,596 |
____________________
|
|
1
|
Transition date represents the date the property was transferred from our operating portfolio into redevelopment status.
|
2
|
Panera Bread opened in June 2014 to join Academy Sports & Outdoors and LA Fitness and the project was transitioned back to the operating portfolio. The project is currently 85.4% leased.
|
3
|
In March 2014, we signed leases with Ross Dress and Burlington Coat Factory to anchor the project. Burlington Coat Factory opened in September 2014 and Ross Dress is expected to open in the first half of 2015. The project is currently 81.6% leased or committed.
|
4
|
The new Publix grocery store opened in April 2014 and the project was transitioned back to the operating portfolio. The project is currently 88.8% leased.
|
Tenant Name
|
Property Name
|
MSA
|
Owned GLA
|
||||
LA Fitness
|
Bolton Plaza
|
Jacksonville, FL
|
38,000 | ||||
Sprouts Farmers Market
|
Sunland Towne Center
|
El Paso, TX
|
31,541 | ||||
Fresh Market
|
Lithia Crossing
|
Tampa Bay, FL
|
18,091 | ||||
Walgreens
|
Rangeline Crossing
|
Indianapolis, IN
|
15,300 | ||||
Publix
|
King’s Lake Square
|
Naples, FL
|
88,153 | ||||
Target1
|
Parkside Town Commons – Phase I
|
Raleigh, NC
|
─
|
||||
Harris Teeter2
|
Parkside Town Commons – Phase I
|
Raleigh, NC
|
53,000 | ||||
Total Wine and More
|
International Speedway Square
|
Daytona, FL
|
23,942 | ||||
Walgreens
|
Four Corner Square
|
Maple Valley, WA
|
14,820 | ||||
Petco
|
Parkside Town Commons – Phase I
|
Raleigh, NC
|
12,500 | ||||
Field and Stream
|
Parkside Town Commons – Phase II
|
Raleigh, NC
|
50,000 | ||||
Golf Galaxy
|
Parkside Town Commons – Phase II
|
Raleigh, NC
|
35,000 | ||||
Burlington Coat Factory
|
Gainesville Plaza
|
Gainesville, FL
|
65,000 |
____________________
|
|
1
|
Target is an anchor that owns its 135,300 square foot store.
|
2
|
Owned GLA includes a 53,000 square foot ground lease with Harris Teeter.
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||||||||||
($ in thousands)
|
2014
|
2013
|
% Change
|
2014
|
2013
|
% Change
|
||||||||||||||||||
Number of properties at period end1
|
50 | 50 | 50 | 50 | ||||||||||||||||||||
Leased percentage at period-end
|
96.4 | % | 96.1 | % | 96.4 | % | 96.1 | % | ||||||||||||||||
Economic occupancy percentage at period end2
|
94.9 | % | 92.8 | % | 94.9 | % | 92.8 | % | ||||||||||||||||
Net operating income – same properties (50 properties)3
|
$ | 17,561 | $ | 16,779 | 4.7 | % | $ | 49,789 | $ | 47,601 | 4.6 | % | ||||||||||||
Reconciliation to Most Directly Comparable GAAP Measure:
|
||||||||||||||||||||||||
Net operating income – same properties
|
$ | 17,561 | $ | 16,779 | $ | 49,789 | $ | 47,601 | ||||||||||||||||
Net operating income – non-same activity
|
48,533 | 6,601 | 76,187 | 19,642 | ||||||||||||||||||||
Other expense
|
(27 | ) | (78 | ) |