KITE REALTY GROUP TRUST Q3 FY2024 earnings call

• KRG delivered strong third quarter with 1.7 million sq ft leased, highest quarterly volume. Portfolio at 95% leased, 160 basis point year-over-year increase. - Executed 17 anchor leases at 38% cash spreads and 33% returns, small shop lease rate up 100 basis points with 180+ new leases (57% return on capital). - Signed-not-open pipeline at $33M, average ABR over $26. - Development at One Loudoun includes 86k sq ft retail and 33k sq ft office, with late-stage negotiations for hotel and multifamily. - Acquired Parkside West Cobb for $40M, locked in before cap rate compression. - Dividend increased to $0.27 per share, 3.8% sequential and 8% year-over-year. - Southeast team's efforts during hurricanes led to minimal asset damage/downtime.

For the third quarter of 2024, KRG earned $0.51 of NAREIT FFO per share and generated same-property NOI growth of 3%. Same property NOI was bolstered by a 280 basis point increase in minimum rent and 120 basis point increase in net recoveries, offset by 80 basis points of bad debt. The portfolio sits at 95% leased, a 160 basis point year-over-year increase. Year-to-date, 17 anchor leases were executed at 38% comparable cash spreads and 33% returns on capital, and small shop lease rate was up 100 basis points with over 180 new leases, generating a 57% return on capital. The signed-not-open pipeline is elevated at $33 million with an average ABR over $26, nearly 25% above current portfolio ABR.

• Increased 2024 FFO guidance to midpoint $2.06-$2.08, driven by better same-property NOI growth. - Full-year same-property NOI growth assumption 2.75%, full-year bad debt assumption 70 basis points. - Anticipate acceleration in same-property growth for Q4 due to signed-not-open pipeline. - Issued $350 million seven-year bond at 4.95%, extended $1.1 billion revolving credit facility to 2029 with availability to satisfy maturing debt through Q3 2028.

• Monitoring of tenant credit, particularly Container Store, though no immediate concerns. - Competitive acquisition environment with compressed cap rates. - Potential impact of market conditions on leverage and capital allocation decisions.

Q: Dori Kesten asked about assets for sale.

A: Heath Fear said assets are expected to close within a year, hitting market soon.

Q: Dori Kesten asked about small shop new leases and rent bumps.

A: John Kite said leasing environment supports growth without foregoing lease terms, and Tom McGowan added focus on exclusives and long-term flexibility in leases.

Q: Michael Mueller asked about capital allocation to developments.

A: John Kite said cash flow can be deployed into development/redevelopment at good yields, and retail-only developments are possible.

Q: Unidentified Analyst asked about retail categories.

A: Tom McGowan said grocery and various categories are aggressive for new space, and John Kite added strong relationships with diverse retailers.

Q: Linda Tsai asked about Container Store and mark-to-market disclosures.

A: John Kite said Container Store locations are strong, and Heath Fear said mark-to-market disclosures on GAAP spreads are under consideration.