Kite Realty Group Trust (NYSE:KRG) Q3 2019 Earnings Conference Call Transcript

Nov 06, 2019 • 10:00 am ET

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Kite Realty Group Trust (NYSE:KRG) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Ladies and gentlemen thank you for standing by and welcome to the Third Quarter 2019 Kite Realty Group Trust Earnings Conference Call.

[Operator Instructions] I would now like to hand the conference over to your speaker today Bryan McCarthy Senior Vice President Marketing and Communications. Please go ahead sir.

Executive
Bryan McCarthy

Thank you and good morning everyone. Welcome to Kite Realty Group's third quarter earnings call. Some of today's comments contain forward-looking statements that are based on assumptions of future events and are subject to inherent risks and uncertainties. Actual results may differ materially from these statements. For more information about the factors that can adversely affect the company's results please see our SEC filings including our most recent 10-K. Today's remarks also include certain non-GAAP financial measures. Please refer to yesterday's earnings press release available on our website for reconciliation of these non-GAAP performance measures to our GAAP financial results. On the call with me today from Kite Realty Group our Chairman and Chief Executive Officer John Kite; President and Chief Operating Officer Tom McGowan; Executive Vice President and Chief Financial Officer; Heath Fear; Executive Vice President Portfolio Management Wade Achenbach; Senior Vice President and Chief Accounting Officer Dave Buell; and Senior Vice President Capital Markets and Investor Relations Jason Colton.

I will now turn the call over to John.

Executive
John A. Kite

Thanks Bryan. Good morning everybody. Before reviewing our results I wanted to take a minute to discuss Project Focus. In February we announced a bold plan to sell up to $0.5 billion of noncore assets and deleverage the balance sheet. Here we are just eight months later and we've sold 20 assets for $502 million in gross proceeds. I'm incredibly grateful and proud of the team for executing so flawlessly. Some interesting facts about Project Focus. Pricing was exactly as expected resulting in a blended cap rate on these noncore assets of approximately 8%. We transacted with 16 different buyers across the spectrum of investor profiles. The average weighted closing date was late June versus our original expectation of late August. After we announced our plan we were often asked why now? I don't think we could have picked a better time.

Not only did we deliver on the total gross proceeds the resulting impacts are in line with that that we expected. The lower growth noncore assets we sold had an ABR of $14.66 and this compares to our pro forma portfolio ABR of $17.70. We've got a more focused portfolio with approximately 76% of KRG's ABR now located in the Southern and Western United States. And these are markets that stand to benefit from migration and demographic trends that are undeniably accelerating. As of today we've got 0 drawn on our $600 million line of credit which allows us to satisfy all debt maturities through 2025. Taking into account the 3 sales after the end of the quarter our net debt-to-EBITDA is 5.9x. We started the year with net debt-to-EBITDA of 6.7x. And as a reminder we have no outstanding