Kite Realty Eyes $400M Pipeline

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INDIANAPOLIS-With 11 retail projects aggregating 1.6 million sf in its current development pipeline, Kite Realty Group Trust unveils a “visible shadow pipeline” of four additional projects with a total of more than 1.2 million sf. The estimated cost for all 15 is approximately $400 million.

Of the 11 underway, all scheduled to open by next year’s first quarter, locally based Kite expects to own about 588,000 sf, with the remaining owned by anchors. During a third-quarter conference call, Tom McGowan, EVP of development and COO, said approximately 70% of the Kite-owned portion of these properties is leased or in various stages of lease negotiations.

Projects in the shadow pipeline are in the final phases of entitlements, but no date is set for ground breaking. During the third quarter, Bayport Commons, a 281,100-sf center in a suburb of Tampa, moved out of the shadow and onto the development list as Target purchased one pad for a Super Target anchor. Nearly 50% of the Kite-owned 92,300 sf of this project is pre-leased, according to McGowan.

Parkside Town Commons near Raleigh, NC, the largest development in the shadow pipeline and the first Kite intends to pursue in its previously announced joint venture with Prudential Real Estate Investors. The mixed-use development is expected to include 750,000 sf of retail space, and is estimated to cost $118 million.

“Our development pipeline is robust and expanding as we continue to add new development projects,” John Kite, president and CEO, said during the call. “Our new partnership with PREI will provide us with an opportunity to grow our development activities while deferring the need for significant equity contributions until projects become operational.”

For the quarter ended Sept. 30, Kite’s total revenues reached $33.1 million, up 38% from $24 million for the same quarter a year ago. Net income was $3.2 million, up from $2 million in the prior-year third quarter, and funds from operations rose 35% to $11.4 million, versus $8.4 million for third quarter 2005.

KRG stock closed at $18.09 a share on the NYSE on Nov. 6, relatively unchanged for the day and just slightly below the 52-week high of $18.44, which occurred this Oct. 31. The 52-week low of $14.04 a share occurred nearly a year ago on Nov. 16, 2005.