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SECTOR: Real Estate COMPANY: Kite Realty Group (KRG)

Sr. Analysts: Keshav Agnihotri and Stefan Bell Sector Head: Ashwin Telekuntla Jr. Analysts: Mariam Avila, Spencer Morris, Anand Pariikh , Austen Rabbie , Dejvi Shehu Inna Shulman, Alex Staikos. SECTOR: Real Estate COMPANY: Kite Realty Group (KRG). Investment Recommendation.

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SECTOR: Real Estate COMPANY: Kite Realty Group (KRG)

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  1. Sr. Analysts:KeshavAgnihotri and Stefan Bell Sector Head: AshwinTelekuntla Jr. Analysts: Mariam Avila, Spencer Morris, AnandPariikh, Austen Rabbie, DejviShehuInna Shulman,Alex Staikos SECTOR: Real EstateCOMPANY: Kite Realty Group (KRG)

  2. Investment Recommendation • Key investment drivers • 1. Strategic Land Holdings • 2. Advantageous Regional Spread • 3. Rebounding Consumer Spending

  3. Industry Definition • Retail Real Estate Investment Trusts that engage in the acquisition, development and operation of shopping centers. These REITS have their primary operations in the continental United States and manage investment funds that own and operate numerous retail properties such as regional shopping centers, megaplex theaters, and restaurants. Revenue generation stems from leasing properties and earning management fees.

  4. Industry Breakdown By Market Capitalization

  5. Revenue Generation Long Term Contracts

  6. Kite Realty Group (KRG) Trends and Opportunities

  7. Company Snapshot

  8. Trends: Consumer Spending • Purchases up 4.1% in the last 12 months • 1% increase through Jan. and Feb. 2011 alone • Consumer Debt has fallen for 7 straight quarters • Down 7% from peak in 2008 • Holiday Season Sales up 5% in 2010 • U.S. Unemployment at lowest since April 2009

  9. Trends: Diversified Big Box Anchors • Top performers in recessionary periods • Big box stores (e.g. Wal-Mart, Target) provide long-term stability • Brand recognition lures customers to smaller adjacent stores U.S. Census Bureau Ibisworld.com

  10. Opportunities: Land Holdings Portfolio Expansion of 17.4% • Depressed property values have lowered development costs • 2007: $126/sq. ft. • 2010: $71/sq. ft. • Occupancy rate consistent at 92.5% • Retail Stability rate: 90% • Industry average: 87% • Majority of ongoing developments are preleased • 2010: 92.1% Preleased • 2009: 73.1% Preleased

  11. Opportunities: Regional Breakdown (1)

  12. Opportunities: Regional Breakdown (2)

  13. Potential Risk: Leverage • Total Debt: $670mm • KRG EV/EBITDA at 13.9x • CBL: 11.2x, AKR: 16.2x, RPT: 16.9x • Q4 2010: Issuance of 28M common shares • Proceeds of $67.5M used to pay off unsecured loans of $55M and $11M • $75M of debt maturity in 2011 • $37M has already been refinanced

  14. Valuation 40% Weight 60% Weight

  15. Risks & Sensitivities

  16. Recommendation • Key investment drivers • 1. Land Holdings • 2. Regional Spread • 3. Consumer Spending

  17. Questions?

  18. Competitive Environment

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