Kite Realty to Buy $307 Million Shopping Center Portfolio

by Nate Hunter

Indianapolis — The nine retail properties total approximately 2 million square feet.

Indianapolis — Kite Realty Group Trust (NYSE: KRG) has reached an agreement to acquire a portfolio of nine retail properties that total approximately 2 million square feet for $307 million in cash.

Seven of the properties to be purchased are situated in the firm’s existing markets of Florida, Georgia and Texas, while two are in a new market, Birmingham, Ala. Indianapolis-based Kite Realty says expansion in these markets enables it to build on its presence and operating experience. As of Sept. 30, the portfolio was 93.2 percent leased.

“These properties will complement those in our existing portfolio and provide us with an opportunity to strategically increase our footprint in our targeted markets,” says John Kite, chairman and CEO of Kite Realty. “We believe there are significant value creation opportunities through the lease-up of vacant space, rollover of below market rents and the pursuit of redevelopment opportunities.”

Approximately 1.5 million square feet, or 74 percent of the portfolio, is located in Florida, Georgia and Texas. Two of the properties, which include the 446,484-square-foot Trusville I & II property and the 66,165-square-foot Colonial Shoppes at Clay, are located in the Birmingham, Ala area.

Major tenants at the properties include Winn Dixie, Stein Mart, Chase Bank, TJ Maxx, Publix, Sports Authority, Michael’s, Old Navy, PetSmart, Petco, The Children’s Place, Ann Taylor, Walmart, Regal Cinema, Kohl’s, The Fresh Marke and Jos A. Bank.

“This transaction and the method by which we intend to fund it continue the company’s strategic plan to reduce our leverage through the acquisition of high-quality retail properties at below replacement cost,” says Daniel Sink, CFO of Kite Realty.

“The transaction and related financing will increase our unencumbered property pool and provide increased financial flexibility and liquidity to fund future growth.”

The transaction is slated to close later this year or early 2014. Kite Realty Group plans to fund the purchase price via the net proceeds from a common share offering, cash on hand including from the dispositions of two retail properties the company is currently marketing for sale and borrowings under its unsecured revolving credit facility.

Earlier this week Kite Realty Group announced that it has begun an underwritten public offering of 32 million shares of beneficial interest. BofA Merrill Lynch, KeyBanc Capital Markets, Barclays and Wells Fargo Securities will be serving as the joint book-running managers for the offering. The underwriters would be granted a 30-day option to buy up to an additional 4.8 million shares of beneficial interest.

Kite Realty Group Trust is a full-service REIT engaged in the ownership, operation, management, leasing, acquisition, construction, redevelopment and development of neighborhood and community shopping centers in selected markets in the U.S. The REIT owns interests in a portfolio of 62 properties totaling approximately 9.5 million square feet and three properties currently under development totaling 1.2 million square feet.

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