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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                  to
Commission File Number: 001-32268Kite Realty Group Trust
Commission File Number: 333-202666-01Kite Realty Group, L.P.
KITE REALTY GROUP TRUST
KITE REALTY GROUP, L.P.
(Exact name of registrant as specified in its charter)
MarylandKite Realty Group Trust 11-3715772
DelawareKite Realty Group, L.P.20-1453863
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
30 S. Meridian Street, Suite 1100, Indianapolis, Indiana 46204
(Address of principal executive offices) (Zip Code)
(317) 577-5600
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareKRGNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Kite Realty Group TrustYesNo  oKite Realty Group, L.P. YesNo  o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Kite Realty Group TrustYesNo  oKite Realty Group, L.P.YesNo  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Kite Realty Group Trust:
Large accelerated filerxAccelerated fileroNon-accelerated fileroSmaller reporting company
Emerging growth company
Kite Realty Group, L.P.:
Large accelerated fileroAccelerated fileroNon-accelerated filerxSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Kite Realty Group TrustoKite Realty Group, L.P.o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Kite Realty Group TrustYesNoxKite Realty Group, L.P. YesNox
The number of Common Shares outstanding as of May 4, 2022 was 219,040,481 ($0.01 par value).



EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the period ended March 31, 2022 of Kite Realty Group Trust, Kite Realty Group, L.P. and its subsidiaries. Unless stated otherwise or the context otherwise requires, references to “Kite Realty Group Trust” or the “Parent Company” mean Kite Realty Group Trust, and references to the “Operating Partnership” mean Kite Realty Group, L.P. and its consolidated subsidiaries. The terms “Company,” “we,” “us,” and “our” refer to the Parent Company and the Operating Partnership, collectively, and those entities owned or controlled by the Parent Company and/or the Operating Partnership.
The Operating Partnership is engaged in the ownership, operation, acquisition, development and redevelopment of high-quality, open-air shopping centers and mixed-use assets in select markets in the United States, and the Parent Company conducts substantially all of its activities through the Operating Partnership and its wholly owned subsidiaries. The Parent Company is the sole general partner of the Operating Partnership and as of March 31, 2022 owned approximately 98.9% of the common partnership interests in the Operating Partnership (“General Partner Units”). The remaining 1.1% of the common partnership interests (“Limited Partner Units” and, together with the General Partner Units, the “Common Units”) are owned by the limited partners.
We believe combining the quarterly reports on Form 10-Q of the Parent Company and the Operating Partnership into this single report benefits investors by:
enhancing investors’ understanding of the Parent Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
eliminating duplicative disclosure and providing a more streamlined and readable presentation of information as a substantial portion of the Company’s disclosure applies to both the Parent Company and the Operating Partnership; and
creating time and cost efficiencies through the preparation of one combined report instead of two separate reports.
We believe it is important to understand the few differences between the Parent Company and the Operating Partnership in the context of how we operate as an interrelated consolidated company. The Parent Company has no material assets or liabilities other than its investment in the Operating Partnership. The Parent Company issues public equity from time to time but does not have any indebtedness as all debt is incurred by the Operating Partnership. In addition, the Parent Company currently does not nor does it intend to guarantee any debt of the Operating Partnership. The Operating Partnership has numerous wholly owned subsidiaries, and it also owns interests in certain joint ventures. These subsidiaries and joint ventures own and operate retail shopping centers and other real estate assets. The Operating Partnership is structured as a partnership with no publicly traded equity. Except for net proceeds from equity issuances by the Parent Company, which are contributed to the Operating Partnership in exchange for General Partner Units, the Operating Partnership generates the capital required by the business through its operations, its incurrence of indebtedness and the issuance of Limited Partner Units to third parties.
Shareholders’ equity and partners’ capital are the main areas of difference between the consolidated financial statements of the Parent Company and those of the Operating Partnership. In order to highlight this and other differences between the Parent Company and the Operating Partnership, there are separate sections in this report, as applicable, that separately discuss the Parent Company and the Operating Partnership, including separate financial statements and separate Exhibit 31 and 32 certifications. In the sections that combine disclosure of the Parent Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the collective Company.



KITE REALTY GROUP TRUST AND KITE REALTY GROUP, L.P. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2022
TABLE OF CONTENTS
   
 
Kite Realty Group Trust:
 
 
 
 
Kite Realty Group, L.P. and subsidiaries:
  
Kite Realty Group Trust and Kite Realty Group, L.P. and subsidiaries:
 
   
  
 
   
  
 
 
 
 
 
 
  
3


PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
KITE REALTY GROUP TRUST
Consolidated Balance Sheets
(Unaudited)
($ in thousands, except share and per share data)
March 31,
2022
December 31,
2021
Assets:  
Investment properties at cost$7,627,581 $7,592,348 
Less: accumulated depreciation(950,737)(884,809)
Net investment properties6,676,844 6,707,539 
Cash and cash equivalents74,345 93,241 
Tenant and other receivables, including accrued straight-line rent of $32,125
and $28,071, respectively
69,135 68,444 
Restricted cash and escrow deposits7,845 7,122 
Deferred costs, net512,411 541,518 
Short-term deposits125,000 125,000 
Prepaid and other assets96,281 84,826 
Investments in unconsolidated subsidiaries11,833 11,885 
Total assets$7,573,694 $7,639,575 
Liabilities and Shareholders’ Equity:  
Mortgage and other indebtedness, net$3,179,118 $3,150,808 
Accounts payable and accrued expenses124,193 184,982 
Deferred revenue and other liabilities306,268 321,419 
Total liabilities3,609,579 3,657,209 
Commitments and contingencies
Limited Partners’ interests in Operating Partnership and other60,376 55,173 
Equity:  
Common shares, $0.01 par value, 490,000,000 shares authorized,
219,042,903 and 218,949,569 shares issued and outstanding at
March 31, 2022 and December 31, 2021, respectively
2,190 2,189 
Additional paid-in capital4,894,897 4,898,673 
Accumulated other comprehensive income (loss)22,811 (15,902)
Accumulated deficit(1,021,317)(962,913)
Total shareholders’ equity3,898,581 3,922,047 
Noncontrolling interests5,158 5,146 
Total equity3,903,739 3,927,193 
Total liabilities and shareholders’ equity$7,573,694 $7,639,575 
The accompanying notes are an integral part of these consolidated financial statements.
4


KITE REALTY GROUP TRUST
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
($ in thousands, except share and per share data)
 Three Months Ended March 31,
 20222021
Revenue:  
Rental income$189,858 $67,890 
Other property-related revenue2,224 1,051 
Fee income2,309 434 
Total revenue194,391 69,375 
Expenses:
Property operating25,928 10,269 
Real estate taxes26,859 9,400 
General, administrative and other13,309 7,276 
Merger and acquisition costs925  
Depreciation and amortization121,504 30,634 
Total expenses188,525 57,579 
Gain on sales of operating properties, net3,168 26,207 
Operating income9,034 38,003 
Other (expense) income:
Interest expense(25,514)(12,242)
Income tax benefit of taxable REIT subsidiary71 118 
Equity in loss of unconsolidated subsidiaries(314)(318)
Other expense, net(103)(206)
Net (loss) income(16,826)25,355 
Net loss (income) attributable to noncontrolling interests22 (778)
Net (loss) income attributable to common shareholders$(16,804)$24,577 
  
Net (loss) income per common share – basic & diluted$(0.08)$0.29 
Weighted average common shares outstanding – basic218,981,168 84,336,577 
Weighted average common shares outstanding – diluted218,981,168 84,446,989 
Dividends declared per common share$0.19 $0.15 
Net (loss) income$(16,826)$25,355 
Change in fair value of derivatives38,938 6,733 
Total comprehensive income22,112 32,088 
Comprehensive income attributable to noncontrolling interests(203)(974)
Comprehensive income attributable to Kite Realty Group Trust$21,909 $31,114 
The accompanying notes are an integral part of these consolidated financial statements.
5


KITE REALTY GROUP TRUST
Consolidated Statements of Shareholders’ Equity
(Unaudited)
(in thousands, except share data)
 Common SharesAdditional
Paid-in Capital
Accumulated
Other
Comprehensive
(Loss) Income
Accumulated
Deficit
Total
 SharesAmount
Balance at December 31, 2021218,949,569 $2,189 $4,898,673 $(15,902)$(962,913)$3,922,047 
Stock compensation activity93,334 1 1,821 — — 1,822 
Other comprehensive income attributable to Kite Realty Group Trust— — — 38,713 — 38,713 
Distributions declared to common shareholders— — — — (41,600)(41,600)
Net loss attributable to common shareholders— — — — (16,804)(16,804)
Adjustment to redeemable noncontrolling interests— — (5,597)— — (5,597)
Balance at March 31, 2022219,042,903 $2,190 $4,894,897 $22,811 $(1,021,317)$3,898,581 
Balance at December 31, 202084,187,999 $842 $2,085,003 $(30,885)$(824,306)$1,230,654 
Stock compensation activity182,486 2 1,464 — — 1,466 
Other comprehensive income attributable
to Kite Realty Group Trust
— — — 6,537 — 6,537 
Distributions declared to common shareholders— — — — (12,992)(12,992)
Net income attributable to common shareholders— — — — 24,577 24,577 
Purchase of capped calls— — (9,800)— — (9,800)
Exchange of redeemable noncontrolling interests for common shares115,697 1 2,061 — — 2,062 
Adjustment to redeemable noncontrolling interests— — (10,633)— — (10,633)
Balance at March 31, 202184,486,182 $845 $2,068,095 $(24,348)$(812,721)$1,231,871 
The accompanying notes are an integral part of these consolidated financial statements.
6


KITE REALTY GROUP TRUST
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
 Three Months Ended March 31,
 20222021
Cash flows from operating activities:  
Net (loss) income$(16,826)$25,355 
Adjustments to reconcile net (loss) income to net cash provided by operating activities: 
Depreciation and amortization123,289 31,212 
Gain on sales of operating properties, net(3,168)(26,207)
Straight-line rent(4,031)12 
Compensation expense for equity awards2,624 1,702 
Amortization of debt fair value adjustments(3,446)(111)
Amortization of in-place lease liabilities(583)(479)
Changes in assets and liabilities: 
Tenant receivables2,446 3,806 
Deferred costs and other assets95 (3,178)
Accounts payable, accrued expenses, deferred revenue and other liabilities(50,817)(807)
Net cash provided by operating activities49,583 31,305 
Cash flows from investing activities:  
Acquisition of interests in properties(44,262) 
Capital expenditures(23,752)(7,864)
Net proceeds from sales of land 39,933 
Net proceeds from sales of operating properties6,904 2,484 
Small business loan repayments226 212 
Change in construction payables(1,299)(883)
Net cash (used in) provided by investing activities(62,183)33,882 
Cash flows from financing activities:  
Proceeds from issuance of common shares, net14 17 
Repurchases of common shares upon the vesting of restricted shares(939)(452)
Purchase of capped calls (9,800)
Debt and equity issuance costs(263)(4,937)
Loan proceeds80,000 175,000 
Loan payments(42,201)(25,568)
Distributions paid – common shareholders(41,600)(12,992)
Distributions paid – redeemable noncontrolling interests(584)(511)
Net cash (used in) provided by financing activities(5,573)120,757 
Net change in cash, cash equivalents and restricted cash(18,173)185,944 
Cash, cash equivalents and restricted cash, beginning of period100,363 46,586 
Cash, cash equivalents and restricted cash, end of period$82,190 $232,530 
Non-cash investing and financing activities
Exchange of redeemable noncontrolling interests for common shares$ $2,062 
 The accompanying notes are an integral part of these consolidated financial statements.
7


KITE REALTY GROUP, L.P. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
(in thousands, except unit data)
March 31,
2022
December 31,
2021
Assets:
Investment properties at cost$7,627,581 $7,592,348 
Less: accumulated depreciation(950,737)(884,809)
Net investment properties6,676,844 6,707,539 
Cash and cash equivalents74,345 93,241 
Tenant and other receivables, including accrued straight-line rent of $32,125
and $28,071, respectively
69,135 68,444 
Restricted cash and escrow deposits7,845 7,122 
Deferred costs, net512,411 541,518 
Short-term deposits125,000 125,000 
Prepaid and other assets96,281 84,826 
Investments in unconsolidated subsidiaries11,833 11,885 
Total assets$7,573,694 $7,639,575 
Liabilities and Equity: 
Mortgage and other indebtedness, net$3,179,118 $3,150,808 
Accounts payable and accrued expenses124,193 184,982 
Deferred revenue and other liabilities306,268 321,419 
Total liabilities3,609,579 3,657,209 
Commitments and contingencies
Limited Partners’ interests in Operating Partnership and other60,376 55,173 
Partners’ Equity:
Common equity, 219,042,903 and 218,949,569 units issued and outstanding
at March 31, 2022 and December 31, 2021, respectively
3,875,770 3,937,949 
Accumulated other comprehensive income (loss)22,811 (15,902)
Total Partners’ equity3,898,581 3,922,047 
Noncontrolling interests5,158 5,146 
Total equity3,903,739 3,927,193 
Total liabilities and equity$7,573,694 $7,639,575 
The accompanying notes are an integral part of these consolidated financial statements.

8


KITE REALTY GROUP, L.P. AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
(in thousands, except unit and per unit data)
 Three Months Ended March 31,
 20222021
Revenue:  
Rental income$189,858 $67,890 
Other property-related revenue2,224 1,051 
Fee income2,309 434 
Total revenue194,391 69,375 
Expenses:  
Property operating25,928 10,269 
Real estate taxes26,859 9,400 
General, administrative and other13,309 7,276 
Merger and acquisition costs925  
Depreciation and amortization121,504 30,634 
Total expenses188,525 57,579 
Gain on sales of operating properties, net3,168 26,207 
Operating income9,034 38,003 
Other (expense) income:
Interest expense(25,514)(12,242)
Income tax benefit of taxable REIT subsidiary71 118 
Equity in loss of unconsolidated subsidiaries(314)(318)
Other expense, net(103)(206)
Net (loss) income(16,826)25,355 
Net income attributable to noncontrolling interests(144)(132)
Net (loss) income attributable to common unitholders$(16,970)$25,223 
Allocation of net (loss) income:
Limited Partners$(166)$646 
Parent Company(16,804)24,577 
$(16,970)$25,223 
Net (loss) income per common unit – basic & diluted$(0.08)$0.29 
Weighted average common units outstanding – basic221,428,198 86,862,153 
Weighted average common units outstanding – diluted221,428,198 86,972,566 
Distributions declared per common unit$0.19 $0.15 
Net (loss) income$(16,826)$25,355 
Change in fair value of derivatives38,938 6,733 
Total comprehensive income22,112 32,088 
Comprehensive income attributable to noncontrolling interests(144)(132)
Comprehensive income attributable to common unitholders$21,968 $31,956 
The accompanying notes are an integral part of these consolidated financial statements.
9


KITE REALTY GROUP, L.P. AND SUBSIDIARIES
Consolidated Statements of Partners’ Equity
(Unaudited)
(in thousands)
 General PartnerTotal
 Common
Equity
Accumulated
Other
Comprehensive
(Loss) Income
Balance at December 31, 2021$3,937,949 $(15,902)$3,922,047 
Stock compensation activity1,822 — 1,822 
Other comprehensive income attributable to Parent Company— 38,713 38,713 
Distributions declared to Parent Company(41,600)— (41,600)
Net loss attributable to Parent Company(16,804)— (16,804)
Adjustment to redeemable noncontrolling interests(5,597)— (5,597)
Balance at March 31, 2022$3,875,770 $22,811 $3,898,581 
Balance at December 31, 2020$1,261,539 $(30,885)$1,230,654 
Stock compensation activity1,466 — 1,466 
Other comprehensive income attributable to Parent Company— 6,537 6,537 
Distributions declared to Parent Company(12,992)— (12,992)
Net income attributable to Parent Company24,577 — 24,577 
Purchase of capped calls(9,800)— (9,800)
Conversion of Limited Partner Units to shares of the Parent Company2,062 — 2,062 
Adjustment to redeemable noncontrolling interests(10,633)— (10,633)
Balance at March 31, 2021$1,256,219 $(24,348)$1,231,871 
The accompanying notes are an integral part of these consolidated financial statements.



10


KITE REALTY GROUP, L.P. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
 Three Months Ended March 31,
 20222021
Cash flows from operating activities:  
Net (loss) income$(16,826)$25,355 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization123,289 31,212 
Gain on sales of operating properties, net(3,168)(26,207)
Straight-line rent(4,031)12 
Compensation expense for equity awards2,624 1,702 
Amortization of debt fair value adjustments(3,446)(111)
Amortization of in-place lease liabilities(583)(479)
Changes in assets and liabilities:
Tenant receivables2,446 3,806 
Deferred costs and other assets95 (3,178)
Accounts payable, accrued expenses, deferred revenue and other liabilities(50,817)(807)
Net cash provided by operating activities49,583 31,305 
Cash flows from investing activities:  
Acquisition of interests in properties(44,262) 
Capital expenditures(23,752)(7,864)
Net proceeds from sales of land 39,933 
Net proceeds from sales of operating properties6,904 2,484 
Small business loan repayments226 212 
Change in construction payables(1,299)(883)
Net cash (used in) provided by investing activities(62,183)33,882 
Cash flows from financing activities:  
Contributions from the General Partner14 17 
Repurchases of common shares upon the vesting of restricted shares(939)(452)
Purchase of capped calls (9,800)
Debt and equity issuance costs(263)(4,937)
Loan proceeds80,000 175,000 
Loan payments(42,201)(25,568)
Distributions paid – common unitholders(41,600)(12,992)
Distributions paid – redeemable noncontrolling interests(584)(511)
Net cash (used in) provided by financing activities(5,573)120,757 
Net change in cash, cash equivalents and restricted cash(18,173)185,944 
Cash, cash equivalents and restricted cash, beginning of period100,363 46,586 
Cash, cash equivalents and restricted cash, end of period$82,190 $232,530 
Non-cash investing and financing activities
Conversion of Limited Partner Units to shares of the Parent Company$ $2,062 
The accompanying notes are an integral part of these consolidated financial statements.
11


KITE REALTY GROUP TRUST AND KITE REALTY GROUP, L.P. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2022
(Unaudited)
($ in thousands, except share, per share, unit and per unit amounts and where indicated in millions or billions)
NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION
Kite Realty Group Trust (the “Parent Company”), through its majority-owned subsidiary, Kite Realty Group, L.P. (the “Operating Partnership”), owns interests in various operating subsidiaries and joint ventures engaged in the ownership, operation, acquisition, development and redevelopment of high-quality, open-air shopping centers and mixed-use assets in select markets in the United States. The terms “Company,” “we,” “us,” and “our” refer to the Parent Company and the Operating Partnership, collectively, and those entities owned or controlled by the Parent Company and/or the Operating Partnership.
The Operating Partnership was formed on August 16, 2004, when the Parent Company contributed properties and the net proceeds from an initial public offering of shares of its common stock to the Operating Partnership. The Parent Company was organized in Maryland in 2004 to succeed in the development, acquisition, construction and real estate businesses of its predecessor. We believe the Company qualifies as a real estate investment trust (“REIT”) under provisions of the Internal Revenue Code of 1986, as amended.
The Parent Company is the sole general partner of the Operating Partnership, and as of March 31, 2022 owned approximately 98.9% of the common partnership interests in the Operating Partnership (“General Partner Units”). The remaining 1.1% of the common partnership interests (“Limited Partner Units” and, together with the General Partner Units, the “Common Units”) were owned by the limited partners. As the sole general partner of the Operating Partnership, the Parent Company has full, exclusive and complete responsibility and discretion in the day-to-day management and control of the Operating Partnership. The Parent Company and the Operating Partnership are operated as one enterprise. The management of the Parent Company consists of the same members as the management of the Operating Partnership. As the sole general partner with control of the Operating Partnership, the Parent Company consolidates the Operating Partnership for financial reporting purposes, and the Parent Company does not have any significant assets other than its investment in the Operating Partnership.
The accompanying unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) may have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the presentation not misleading. The unaudited financial statements as of March 31, 2022 and for the three months ended March 31, 2022 and 2021 include all adjustments, consisting of normal recurring adjustments, necessary in the opinion of management to present fairly the financial information set forth therein. The consolidated financial statements in this Form 10-Q should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the combined Annual Report on Form 10-K of the Parent Company and the Operating Partnership for the year ended December 31, 2021.
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reported period. Actual results could differ from these estimates. The results of operations for the interim periods are not necessarily indicative of the results that may be expected on an annual basis.
On October 22, 2021, we completed a merger with Retail Properties of America, Inc. (“RPAI”) in accordance with the Agreement and Plan of Merger dated July 18, 2021 (the “Merger Agreement”), by and among the Company, its wholly owned subsidiary KRG Oak, LLC (“Merger Sub”) and RPAI, pursuant to which RPAI merged with and into Merger Sub (the “Merger”). Immediately following the closing of the Merger, Merger Sub merged with and into the Operating Partnership so that all of the assets and liabilities of the Company continue to be held at or below the Operating Partnership level. The transaction value was approximately $4.7 billion, including the assumption of approximately $1.8 billion of debt. We acquired 100 operating retail properties and five active development projects through the Merger along with multiple parcels of entitled land for future value creation.
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Pursuant to the terms of the Merger Agreement, each outstanding share of RPAI common stock converted into the right to receive 0.623 common shares of the Company plus cash in lieu of fractional Company shares. The aggregate value of the Merger consideration paid or payable to former holders of RPAI common stock was approximately $2.8 billion, excluding the value of RPAI restricted stock units that vested at closing and certain restricted share awards assumed by the Company at closing. In connection with the Merger, the Operating Partnership issued an equivalent amount of General Partner Units to the Parent Company.
As of March 31, 2022, we owned interests in 181 operating retail properties totaling approximately 28.8 million square feet and one office property with 0.3 million square feet. Of the 181 operating retail properties, 11 contain an office component. We also owned seven development projects under construction as of this date. Of the 181 operating retail properties, 178 are consolidated in these financial statements and the remaining three are accounted for under the equity method.
NOTE 2. CONSOLIDATION, INVESTMENTS IN JOINT VENTURES AND NONCONTROLLING INTERESTS
Components of Investment Properties
The following table summarizes the composition of the Company’s investment properties as of March 31, 2022 and December 31, 2021:
Balance as of
($ in thousands)March 31, 2022December 31, 2021
Land, buildings and improvements$7,581,145 $7,543,376 
Furniture, equipment and other7,674 7,612 
Construction in progress38,762 41,360 
Investment properties, at cost$7,627,581 $7,592,348 
Components of Rental Income including Allowance for Uncollectible Accounts
Rental income related to the Company’s operating leases is comprised of the following for the three months ended March 31, 2022 and 2021:
Three Months Ended March 31,
20222021
Fixed contractual lease payments – operating leases$148,790 $54,803 
Variable lease payments – operating leases37,025 13,929 
Bad debt reserve(571)(1,309)
Straight-line rent adjustments4,093 98 
Straight-line rent reserve for uncollectibility(62)(110)
Amortization of in-place lease liabilities, net583 479 
Rental income$189,858 $67,890 
The Company makes estimates as to the collectability of its accounts receivable. In making these estimates, the Company reviews a variety of qualitative and quantitative data and considers such facts as the credit quality of our customer, historical write-off experience and current economic trends, to make a subjective determination. An allowance for uncollectible accounts, including future credit losses of the accrued straight-line rent receivables, is maintained for estimated losses resulting from the inability of certain tenants to meet contractual obligations under their lease agreements.
Short-Term Deposits
As of March 31, 2022, the Company had a $125.0 million short-term deposit held in a custody account at Bank of New York Mellon to fund 2022 debt maturities or other borrowings. The deposit balance, which approximates fair value, earned interest at a rate of the Federal Funds Rate plus 43 basis points and matured on April 7, 2022, the proceeds of which were used to repay borrowings on the Company’s revolving line of credit. Interest income on the deposit is recorded within “Other expense, net” on the accompanying consolidated statements of operations and comprehensive income.
Consolidation and Investments in Joint Ventures
The accompanying financial statements are presented on a consolidated basis and include all accounts of the Parent Company, the Operating Partnership, the taxable REIT subsidiaries (“TRSs”) of the Operating Partnership, subsidiaries of the
13


Operating Partnership that are controlled and any variable interest entities (“VIEs”) in which the Operating Partnership is the primary beneficiary. As of March 31, 2022, we owned investments in three consolidated joint ventures that were VIEs in which the partners did not have substantive participating rights and we were the primary beneficiary. As of March 31, 2022, these consolidated VIEs had mortgage debt of $28.9 million, which were secured by assets of the VIEs totaling $116.6 million. The Operating Partnership guarantees the mortgage debt of these VIEs.
The Operating Partnership is considered a VIE as the limited partners do not hold kick-out rights or substantive participating rights. The Parent Company consolidates the Operating Partnership as it is the primary beneficiary.
Income Taxes and REIT Compliance
Parent Company
The Parent Company, which is considered a corporation for U.S. federal income tax purposes, has been organized and operated, and intends to continue to operate, in a manner that will enable it to maintain its qualification as a REIT for U.S. federal income tax purposes. As a result, it generally will not be subject to U.S. federal income tax on the earnings that it distributes to the extent it distributes its “REIT taxable income” (determined before the deduction for dividends paid and excluding net capital gains) to shareholders of the Parent Company and meets certain other requirements on a recurring basis. To the extent that it satisfies this distribution requirement, but distributes less than 100% of its taxable income, it will be subject to U.S. federal corporate income tax on its undistributed REIT taxable income. REITs are subject to a number of organizational and operational requirements. If the Parent Company fails to qualify as a REIT in any taxable year, it will be subject to U.S. federal income tax on its taxable income at regular corporate rates for a period of four years following the year in which qualification is lost. We may also be subject to certain U.S. federal, state and local taxes on our income and property and to U.S. federal income and excise taxes on our undistributed taxable income even if the Parent Company does qualify as a REIT. The Operating Partnership intends to continue to make distributions to the Parent Company in amounts sufficient to assist the Parent Company in adhering to REIT requirements and maintaining its REIT status.
We have elected to treat Kite Realty Holdings, LLC as a TRS of the Operating Partnership. In addition, in connection with the Merger, we assumed RPAI’s existing TRS, IWR Protective Corporation, as a TRS of the Operating Partnership and we may elect to treat other subsidiaries as TRSs in the future. This election enables us to receive income and provide services that would otherwise be impermissible for a REIT. Deferred tax assets and liabilities are established for temporary differences between the financial reporting bases and the tax bases of assets and liabilities at the tax rates expected to be in effect when the temporary differences reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized.
Operating Partnership
The allocated share of income and loss, other than the operations of our TRSs, is included in the income tax returns of the Operating Partnership’s partners. Accordingly, the only U.S. federal income taxes included in the accompanying consolidated financial statements are in connection with the TRSs.
Noncontrolling Interests
We report the non-redeemable noncontrolling interests in subsidiaries as equity, and the amount of consolidated net income attributable to these noncontrolling interests is set forth separately in the consolidated financial statements. The following table summarizes the non-redeemable noncontrolling interests in consolidated properties for the three months ended March 31, 2022 and 2021:
($ in thousands)20222021
Noncontrolling interests balance as of January 1,$5,146 $698 
Net loss allocable to noncontrolling interests, excluding redeemable noncontrolling interests12  
Noncontrolling interests balance as of March 31,$5,158 $698 
Noncontrolling Interests – Joint Venture
Prior to the Merger with RPAI, RPAI entered into a joint venture related to the development, ownership and operation of the multifamily rental portion of the expansion project at One Loudoun Downtown – Pads G & H. The Company owns 90% of the joint venture.
14


As of March 31, 2022, the Company has funded $0.7 million of the partner’s development costs related to One Loudoun Downtown – Pads G & H through a loan provided by the Company to the joint venture. The loan is secured by the joint venture project, is required to be repaid subsequent to the completion of construction and stabilization of the project and is eliminated upon consolidation. Under terms defined in the joint venture agreement, after construction completion and stabilization of the development project, the Company has the ability to call, and the joint venture partner has the ability to put to the Company, subject to certain conditions, the joint venture partner’s interest in the joint venture at fair value.
The joint venture is considered a VIE primarily because the Company’s joint venture partner does not have substantive kick-out rights or substantive participating rights. The Company is considered the primary beneficiary as it has a controlling financial interest in the joint venture. As such, the Company has consolidated this joint venture and presented the joint venture partners’ interests as noncontrolling interests.
Redeemable Noncontrolling Interests – Limited Partners
Limited Partner Units are redeemable noncontrolling interests in the Operating Partnership. We classify redeemable noncontrolling interests in the Operating Partnership in the accompanying consolidated balance sheets outside of permanent equity because we may be required to pay cash to holders of Limited Partner Units upon redemption of their interests in the Operating Partnership or deliver registered shares upon their conversion. The carrying amount of the redeemable noncontrolling interests in the Operating Partnership is reflected at the greater of historical book value or redemption value with a corresponding adjustment to additional paid-in capital. As of March 31, 2022 and December 31, 2021, the redemption value of the redeemable noncontrolling interests in the Operating Partnership exceeded the historical book value, and the balances were accordingly adjusted to redemption value.
We allocate net operating results of the Operating Partnership after noncontrolling interests in the consolidated properties based on the partners’ respective weighted average ownership interest. We adjust the redeemable noncontrolling interests in the Operating Partnership at the end of each reporting period to reflect their interests in the Operating Partnership or redemption value. This adjustment is reflected in our shareholders’ and Parent Company’s equity. For the three months ended March 31, 2022 and 2021, the weighted average interests of the Parent Company and the limited partners in the Operating Partnership were as follows:
Three Months Ended March 31,
 20222021
Parent Company’s weighted average interest in Operating Partnership98.9 %97.1 %
Limited partners’ weighted average interests in Operating Partnership 1.1 %2.9 %
At March 31, 2022 and December 31, 2021, the Parent Company’s interest and the limited partners’ redeemable noncontrolling ownership interests in the Operating Partnership were 98.9% and 1.1%.
Concurrent with the Parent Company’s initial public offering and related formation transactions, certain individuals received Limited Partner Units of the Operating Partnership in exchange for their interests in certain properties. The limited partners have the right to redeem Limited Partner Units for cash or, at the Parent Company’s election, common shares of the Parent Company in an amount equal to the market value of an equivalent number of common shares of the Parent Company at the time of redemption. Such common shares must be registered, which is not fully in the Parent Company’s control. Therefore, the limited partners’ interest is not reflected in permanent equity. The Parent Company also has the right to redeem the Limited Partner Units directly from the limited partner in exchange for either cash in the amount specified above or a number of its common shares equal to the number of Limited Partner Units being redeemed.
There were 2,516,282 and 2,377,777 Limited Partner Units outstanding as of March 31, 2022 and December 31, 2021, respectively. The increase in Limited Partner Units outstanding from December 31, 2021 is due to non-cash compensation awards made to our executive officers in the form of Limited Partner Units.
Redeemable Noncontrolling Interests – Subsidiaries
Prior to the merger with Inland Diversified Real Estate Trust, Inc. (“Inland Diversified”) in 2014, Inland Diversified formed joint ventures with the previous owners of certain properties and issued Class B units in three joint ventures that indirectly own those properties. The Class B units related to one of these three joint ventures remain outstanding and are accounted for as noncontrolling interests in the remaining venture. The remaining Class B units will become redeemable at the respective partner’s election in October 2022 and the fulfillment of certain redemption criteria. Beginning in November 2022, the Class B units can be redeemed at the election of either our partner or us for cash or Limited Partner Units in the Operating
15


Partnership. The Class B units do not have a maturity date, and none are mandatorily redeemable unless either party has elected for the units to be redeemed. We consolidate this joint venture because we control the decision-making and our joint venture partner has limited protective rights.
We classify the redeemable noncontrolling interests related to the remaining Class B units in the accompanying consolidated balance sheets outside of permanent equity because, under certain circumstances, we may be required to pay cash to Class B unitholders in this subsidiary upon redemption of their interests. The carrying amount of these redeemable noncontrolling interests is required to be reflected at the greater of initial book value or redemption value with a corresponding adjustment to additional paid-in capital. As of March 31, 2022 and December 31, 2021, the redemption amounts of these interests did not exceed their fair value nor did they exceed the initial book value.
The redeemable noncontrolling interests in the Operating Partnership and subsidiaries for the three months ended March 31, 2022 and 2021 were as follows:
($ in thousands)20222021
Redeemable noncontrolling interests balance as of January 1,$55,173 $43,275 
Net (loss) income allocable to redeemable noncontrolling interests(34)778 
Distributions declared to redeemable noncontrolling interests(584)(511)
Other, net including adjustments to redemption value5,821 8,463 
Total limited partners’ interests in Operating Partnership and other
redeemable noncontrolling interests balance as of March 31,
$60,376 $52,005 
Limited partners’ interests in Operating Partnership$50,306 $41,935 
Other redeemable noncontrolling interests in certain subsidiaries10,070 10,070 
Total limited partners’ interests in Operating Partnership and other
redeemable noncontrolling interests balance as of March 31,
$60,376 $52,005 
Fair Value Measurements
We follow the framework established under Financial Accounting Standards Board (“FASB”) ASC 820, Fair Value Measurements and Disclosures, for measuring fair value of non-financial assets and liabilities that are not required or permitted to be measured at fair value on a recurring basis but only in certain circumstances, such as a business combination or upon determination of an impairment.
Assets and liabilities recorded at fair value on the consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows:
Level 1 fair value inputs are quoted prices in active markets for identical instruments to which we have access.
Level 2 fair value inputs are inputs other than quoted prices included in Level 1 that are observable for similar instruments, either directly or indirectly, and appropriately consider counterparty creditworthiness in the valuations.
Level 3 fair value inputs reflect our best estimate of inputs and assumptions market participants would use in pricing an instrument at the measurement date. The inputs are unobservable in the market and significant to the valuation estimate.
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
Effects of Accounting Pronouncements
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), which contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. In March 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the
16


corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.
NOTE 3. ACQUISITIONS
RPAI Merger
On October 22, 2021, we completed a Merger with RPAI pursuant to which RPAI merged with and into Merger Sub, with the Company continuing as the surviving public company. Immediately following the closing of the Merger, Merger Sub merged with and into the Operating Partnership so that all of the assets and liabilities of the Company continue to be held at or below the Operating Partnership level. The aggregate value of the Merger consideration paid or payable to former holders of RPAI common stock was approximately $2.8 billion, excluding the value of RPAI restricted stock units that vested at closing and certain restricted share awards assumed by the Company at closing. The total purchase price was calculated based on the closing price of the Company’s common stock on October 21, 2021, the last business day prior to the effective time of the Merger, which was $21.18 per share. At the effective time of the Merger, each share of RPAI common stock issued and outstanding immediately prior to the effective time was converted into the right to receive 0.623 newly issued Company common shares plus cash in lieu of fractional Company shares. In addition, holders of (i) options to purchase shares of RPAI common stock, (ii) certain awards of restricted shares of RPAI common stock (as agreed in accordance with the Merger Agreement), and (iii) restricted stock units representing the right to vest in and be issued shares of RPAI common stock became entitled to receive cash and/or Company common shares in accordance with the terms of the Merger Agreement. The Company assumed certain existing awards of restricted shares of RPAI common stock, each of which were converted into 0.623 awards of restricted Company common shares plus cash in lieu of fractional Company shares in accordance with the Merger Agreement. In connection with the Merger, the Operating Partnership issued an equivalent amount of General Partner Units to the Parent Company. The number of RPAI common stock outstanding as of October 21, 2021 converted to shares of the Company’s common stock was determined as follows:
RPAI common stock outstanding as of October 21, 2021214,797,869 
Exchange ratio0.623 
Company common shares issued for outstanding RPAI common stock133,814,066 
Company common shares issued for RPAI restricted stock units1,117,399 
Total Company common shares issued134,931,465 
The following table presents the purchase price and total value of equity consideration paid by the Company at the close of the Merger:
(in thousands, except share price)Price of
Company
common shares
Equity
Consideration Given
(Company common shares issued)
Total Value
of Stock Consideration(1)
As of October 21, 2021$21.18 134,931 $2,847,369 
(1)The total value of stock consideration is the total of the common shares issued multiplied by the closing price of the Company’s common stock on October 21, 2021 excluding the value of certain RPAI restricted stock that vested at the closing of the Merger and share awards assumed by the Company at the closing of the Merger.
As a result of the Merger, the Company acquired 100 operating retail properties and five active development projects under construction along with multiple parcels of entitled land for future value creation. During the three months ended March 31, 2022, the Company incurred $0.9 million of merger and acquisition costs consisting primarily of professional fees and technology costs, which are recorded within “Merger and acquisition costs” in the accompanying consolidated statements of operations and comprehensive income. In addition, the Company assumed approximately $1.8 billion of debt in connection with the Merger.
“Rental income” and “Net income attributable to common shareholders” in the accompanying consolidated statements of operations and comprehensive income include revenues from the RPAI portfolio of $123.6 million and net loss of $20.9 million for the three months ended March 31, 2022, which includes $92.9 million of depreciation and amortization, as a result of the Merger.
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Purchase Price Allocation
In accordance with ASC 805-10, Business Combinations, the Company accounted for the Merger as a business combination using the acquisition method of accounting. Based on the value of the common shares issued, the total fair value of the assets acquired and liabilities assumed in the Merger was $2.8 billion as of October 22, 2021, the date of the Merger.
The Company used the following valuation methodologies, inputs and assumptions to estimate the fair value of the assets acquired and liabilities assumed:
Investment properties: The Company estimated the fair value of the buildings on an as-if-vacant basis using either a direct capitalization method or a discounted cash flow analysis. Comparable market data, real estate tax assessments and independent appraisals were used in estimating the fair value of the land acquired. These valuation methodologies are based on Level 2 and Level 3 inputs in the fair value hierarchy, such as estimates of future income growth, capitalization rates and cash flow projections at the respective properties.
Acquired lease intangible assets: The Company estimated the fair value of its above-market and below-market in-place leases based on the present value (using a discount rate that reflects the risk associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over the remaining non-cancelable term of the leases. Any below-market renewal options are also considered in the in-place lease values. This valuation methodology is based on Level 3 inputs in the fair value hierarchy.
In-place lease liabilities: The Company estimated the fair value of its in-place leases using independent and internal sources, which are methods similar to those used by independent appraisers. Factors we consider in our analysis include an estimate of costs to execute similar leases including tenant improvements, leasing commissions and foregone costs and rent received during the estimated lease-up period as if the space was vacant. This valuation methodology is based on Level 3 inputs in the fair value hierarchy.
Mortgage and other indebtedness: The Company estimated the fair value of the secured and unsecured debt assumed, including related derivative instruments, using third party and independent sources for our estimates. Any difference between the fair value and stated value of the assumed debt is recorded as a discount or premium and amortized over the remaining term of the loan using the interest method. This valuation methodology is based on Level 2 and Level 3 inputs in the fair value hierarchy.
The range of the most significant Level 3 assumptions utilized in determining the value of the real estate and related assets acquired through the Merger with RPAI are as follows:
Range of Assumptions
Net rental rate per square foot – Anchors
$4.00 to $45.00
Net rental rate per square foot – Small Shops
$7.00 to $