What changed in this filing

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Item 1. Financial Statements

2024-05-07 compared with 2023-11-02 · 192 added, 332 removed, 541 unchanged (49% of the section changed)

3 unchanged sentences

($ in thousands, except share and per share data)

September 30,

2024 December 31,

8 unchanged sentences

Deferred costs, net 285,452 304,171

Short-term deposits 265,000 —

Prepaid and other assets 131,765 117,834

Investments in unconsolidated subsidiaries 9,599 9,062

Assets associated with investment property held for sale 14,309 —

Total assets $ 7,204,494 $ 6,944,078

3 unchanged sentences

Deferred revenue and other liabilities 258,985 272,942

Liabilities associated with investment property held for sale 586 —

Total liabilities 3,598,072 3,300,223

3 unchanged sentences

219,603,862 and 219,448,429 shares issued and outstanding at

September 30, 2023 and December 31, 2022, respectively

March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 4,887,573 4,886,592

9 unchanged sentences

($ in thousands, except share and per share data)

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Rental income $ 205,813 $ 203,063

5 unchanged sentences

General, administrative and other 12,784 13,384

Merger and acquisition costs — 108 — 1,006

Depreciation and amortization 100,379 108,071

Impairment charges 477 — 477 —

Total expenses 167,778 175,952

(Loss) gain on sales of operating properties, net ( 5,972 ) — 22,468 27,126

Loss on sales of operating properties, net ( 236 ) —

Operating income 39,425 30,798

1 unchanged sentence

Interest expense ( 30,364 ) ( 25,425 )

Income tax (expense) benefit of taxable REIT subsidiary ( 68 ) — ( 84 ) 259

Equity in (loss) earnings of unconsolidated subsidiaries ( 47 ) 144 ( 173 ) ( 56 )

Other income (expense), net 950 58 1,657 ( 207 )

Net income (loss) 2,177 ( 7,721 ) 40,219 ( 11,102 )

Income tax (expense) benefit of taxable REIT subsidiaries ( 158 ) 29

Equity in loss of unconsolidated subsidiaries ( 420 ) ( 244 )

Gain on sale of unconsolidated property, net 2,325 —

Other income, net 3,628 403

Net income 14,436 5,561

Net income attributable to noncontrolling interests ( 280 ) ( 170 )

Net income (loss) attributable to common shareholders $ 2,070 $ ( 7,837 ) $ 39,519 $ ( 11,510 )

Net income (loss) per common share – basic and diluted $ 0.01 $ ( 0.04 ) $ 0.18 $ ( 0.05 )

Net income attributable to common shareholders $ 14,156 $ 5,391

Net income per common share – basic and diluted $ 0.06 $ 0.02

Weighted average common shares outstanding – basic 219,501,114 219,233,569

Weighted average common shares outstanding – diluted 219,900,306 219,965,061

Net income (loss) $ 2,177 $ ( 7,721 ) $ 40,219 $ ( 11,102 )

Net income $ 14,436 $ 5,561

Change in fair value of derivatives 2,542 ( 11,645 )

Total comprehensive (loss) income ( 863 ) 25,410 34,176 78,526

Comprehensive income attributable to noncontrolling

( 195 ) ( 511 ) ( 806 ) ( 1,441 )

Comprehensive (loss) income attributable to the Company $ ( 1,058 ) $ 24,899 $ 33,370 $ 77,085

Total comprehensive income (loss) 16,978 ( 6,084 )

Comprehensive income attributable to noncontrolling interests ( 365 ) ( 82 )

Comprehensive income (loss) attributable to the Company $ 16,613 $ ( 6,166 )

The accompanying notes are an integral part of these consolidated financial statements.

10 unchanged sentences

Stock compensation activity 155,433 2 1,991 — — 1,993

Other comprehensive loss — — — ( 11,557 ) — ( 11,557 )

Distributions to common shareholders — — — — ( 52,659 ) ( 52,659 )

Net income attributable to common shareholders — — — — 5,391 5,391

Adjustment to redeemable noncontrolling interests — — ( 3,821 ) — — ( 3,821 )

Balance at March 31, 2023 219,325,898 $ 2,193 $ 4,896,049 $ 62,787 $ ( 1,255,025 ) $ 3,706,004

Stock compensation activity 48,377 1 2,959 — — 2,960

Other comprehensive income — — — 2,456 — 2,456

2 unchanged sentences

Adjustment to redeemable noncontrolling interests — — ( 1,010 ) — — ( 1,010 )

Balance at June 30, 2023 219,374,275 $ 2,194 $ 4,894,907 $ 71,323 $ ( 1,275,617 ) $ 3,692,807

Balance at March 31, 2024 219,603,862 $ 2,196 $ 4,887,573 $ 54,891 $ ( 1,413,828 ) $ 3,530,832

Balance at December 31, 2022 219,185,658 $ 2,192 $ 4,897,736 $ 74,344 $ ( 1,207,757 ) $ 3,766,515

Stock compensation activity 140,240 1 2,134 — — 2,135

2 unchanged sentences

Net income attributable to common shareholders — — — — 5,391 5,391

Exchange of redeemable noncontrolling interests for common shares 13,161 — 301 — — 301

Adjustment to redeemable noncontrolling interests — — ( 3,821 ) — — ( 3,821 )

Balance at September 30, 2023 219,387,345 $ 2,194 $ 4,891,105 $ 68,195 $ ( 1,326,200 ) $ 3,635,294

Balance at December 31, 2021 218,949,569 $ 2,189 $ 4,898,673 $ ( 15,902 ) $ ( 962,913 ) $ 3,922,047

Stock compensation activity 93,334 1 1,821 — — 1,822

Other comprehensive income — — — 38,713 — 38,713

Distributions 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, 2023 219,325,898 $ 2,193 $ 4,896,049 $ 62,787 $ ( 1,255,025 ) $ 3,706,004

Stock compensation activity 58,095 1 2,850 — — 2,851

Other comprehensive income — — — 17,146 — 17,146

Distributions to common shareholders — — — — ( 43,808 ) ( 43,808 )

Net income attributable to common shareholders — — — — 13,131 13,131

Adjustment to redeemable noncontrolling interests — — 3,239 — — 3,239

Balance at June 30, 2022 219,100,998 $ 2,191 $ 4,900,986 $ 39,957 $ ( 1,051,994 ) $ 3,891,140

Stock compensation activity ( 2,604 ) — 2,881 — — 2,881

Other comprehensive income — — — 32,736 — 32,736

Distributions to common shareholders — — — — ( 46,014 ) ( 46,014 )

Net loss attributable to common shareholders — — — — ( 7,837 ) ( 7,837 )

Adjustment to redeemable noncontrolling interests — — ( 94 ) — — ( 94 )

Balance at September 30, 2022 219,098,394 $ 2,191 $ 4,903,773 $ 72,693 $ ( 1,105,845 ) $ 3,872,812

The accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

Net income (loss) $ 40,219 $ ( 11,102 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net income $ 14,436 $ 5,561

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 101,309 108,959

Gain on sales of operating properties, net ( 22,468 ) ( 27,126 )

Impairment charges 477 —

Loss on sales of operating properties, net 236 —

Gain on sale of unconsolidated property, net ( 2,325 ) —

Straight-line rent ( 3,126 ) ( 3,545 )

8 unchanged sentences

Cash flows from investing activities:

Acquisitions of interests in properties ( 78,273 ) ( 100,142 )

Capital expenditures ( 28,200 ) ( 39,121 )

Net proceeds from sales of land 1,759 —

Net proceeds from sales of operating properties 123,944 65,408

Investment in short-term deposits ( 265,000 ) —

2 unchanged sentences

Distribution from unconsolidated joint venture 1,618 13

Capital contribution to unconsolidated joint venture — ( 125 )

Net cash used in investing activities ( 289,338 ) ( 41,514 )

8 unchanged sentences

Distributions to noncontrolling interests ( 620 ) —

Net cash used in financing activities ( 299,350 ) ( 252,591 )

Net cash provided by (used in) financing activities 283,291 ( 91,364 )

Net change in cash, cash equivalents and restricted cash 47,534 ( 69,275 )

1 unchanged sentence

Cash, cash equivalents and restricted cash, end of period $ 88,964 $ 52,695

Non-cash investing and financing activities

Exchange of redeemable noncontrolling interests for common shares $ 301 $ —

The accompanying notes are an integral part of these consolidated financial statements.

3 unchanged sentences

(in thousands, except unit data)

September 30,

2024 December 31,

8 unchanged sentences

Deferred costs, net 285,452 304,171

Short-term deposits 265,000 —

Prepaid and other assets 131,765 117,834

Investments in unconsolidated subsidiaries 9,599 9,062

Assets associated with investment property held for sale 14,309 —

Total assets $ 7,204,494 $ 6,944,078

3 unchanged sentences

Deferred revenue and other liabilities 258,985 272,942

Liabilities associated with investment property held for sale 586 —

Total liabilities 3,598,072 3,300,223

3 unchanged sentences

Common equity, 219,603,862 and 219,448,429 units issued and outstanding

at September 30, 2023 and December 31, 2022, respectively

at March 31, 2024 and December 31, 2023, respectively

3,475,941 3,515,703

9 unchanged sentences

(in thousands, except unit and per unit data)

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Rental income $ 205,813 $ 203,063

5 unchanged sentences

General, administrative and other 12,784 13,384

Merger and acquisition costs — 108 — 1,006

Depreciation and amortization 100,379 108,071

Impairment charges 477 — 477 —

Total expenses 167,778 175,952

(Loss) gain on sales of operating properties, net ( 5,972 ) — 22,468 27,126

Loss on sales of operating properties, net ( 236 ) —

Operating income 39,425 30,798

1 unchanged sentence

Interest expense ( 30,364 ) ( 25,425 )

Income tax (expense) benefit of taxable REIT subsidiary ( 68 ) — ( 84 ) 259

Equity in (loss) earnings of unconsolidated subsidiaries ( 47 ) 144 ( 173 ) ( 56 )

Other income (expense), net 950 58 1,657 ( 207 )

Net income (loss) 2,177 ( 7,721 ) 40,219 ( 11,102 )

Income tax (expense) benefit of taxable REIT subsidiaries ( 158 ) 29

Equity in loss of unconsolidated subsidiaries ( 420 ) ( 244 )

Gain on sale of unconsolidated property, net 2,325 —

Other income, net 3,628 403

Net income 14,436 5,561

Net income attributable to noncontrolling interests ( 67 ) ( 104 )

Net income (loss) attributable to common unitholders $ 2,110 $ ( 7,930 ) $ 40,018 $ ( 11,637 )

Allocation of net income (loss):

Net income attributable to common unitholders $ 14,369 $ 5,457

Allocation of net income:

Limited Partners $ 213 $ 66

1 unchanged sentence

$ 14,369 $ 5,457

Net income (loss) per common unit – basic and diluted $ 0.01 $ ( 0.04 ) $ 0.18 $ ( 0.05 )

Net income per common unit – basic and diluted $ 0.06 $ 0.02

Weighted average common units outstanding – basic 223,109,983 222,186,023

Weighted average common units outstanding – diluted 223,509,175 222,917,515

Net income (loss) $ 2,177 $ ( 7,721 ) $ 40,219 $ ( 11,102 )

Net income $ 14,436 $ 5,561

Change in fair value of derivatives 2,542 ( 11,645 )

Total comprehensive (loss) income ( 863 ) 25,410 34,176 78,526

Comprehensive income attributable to noncontrolling

( 67 ) ( 209 ) ( 201 ) ( 535 )

Comprehensive (loss) income attributable to common

$ ( 930 ) $ 25,201 $ 33,975 $ 77,991

Total comprehensive income (loss) 16,978 ( 6,084 )

Comprehensive income attributable to noncontrolling interests ( 67 ) ( 104 )

Comprehensive income (loss) attributable to common unitholders $ 16,911 $ ( 6,188 )

The accompanying notes are an integral part of these consolidated financial statements.

9 unchanged sentences

Stock compensation activity 1,993 — 1,993

Other comprehensive loss attributable to Parent Company — ( 11,557 ) ( 11,557 )

Distributions to Parent Company ( 52,659 ) — ( 52,659 )

Net income attributable to Parent Company 5,391 — 5,391

Adjustment to redeemable noncontrolling interests ( 3,821 ) — ( 3,821 )

Balance at March 31, 2023 $ 3,643,217 $ 62,787 $ 3,706,004

Stock compensation activity 2,960 — 2,960

Other comprehensive income attributable to Parent Company — 2,456 2,456

2 unchanged sentences

Adjustment to redeemable noncontrolling interests ( 1,010 ) — ( 1,010 )

Balance at June 30, 2023 $ 3,621,484 $ 71,323 $ 3,692,807

Balance at March 31, 2024 $ 3,475,941 $ 54,891 $ 3,530,832

Balance at December 31, 2022 $ 3,692,171 $ 74,344 $ 3,766,515

Stock compensation activity 2,135 — 2,135

2 unchanged sentences

Net income attributable to Parent Company 5,391 — 5,391

Conversion of Limited Partner Units to shares of the Parent Company 301 — 301

Adjustment to redeemable noncontrolling interests ( 3,821 ) — ( 3,821 )

Balance at September 30, 2023 $ 3,567,099 $ 68,195 $ 3,635,294

Balance at December 31, 2021 $ 3,937,949 $ ( 15,902 ) $ 3,922,047

Stock compensation activity 1,822 — 1,822

Other comprehensive income attributable to Parent Company — 38,713 38,713

Distributions 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, 2023 $ 3,643,217 $ 62,787 $ 3,706,004

Stock compensation activity 2,851 — 2,851

Other comprehensive income attributable to Parent Company — 17,146 17,146

Distributions to Parent Company ( 43,808 ) — ( 43,808 )

Net income attributable to Parent Company 13,131 — 13,131

Adjustment to redeemable noncontrolling interests 3,239 — 3,239

Balance at June 30, 2022 $ 3,851,183 $ 39,957 $ 3,891,140

Stock compensation activity 2,881 — 2,881

Other comprehensive income attributable to Parent Company — 32,736 32,736

Distributions to Parent Company ( 46,014 ) — ( 46,014 )

Net loss attributable to Parent Company ( 7,837 ) — ( 7,837 )

Adjustment to redeemable noncontrolling interests ( 94 ) — ( 94 )

Balance at September 30, 2022 $ 3,800,119 $ 72,693 $ 3,872,812

The accompanying notes are an integral part of these consolidated financial statements.

3 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

Net income (loss) $ 40,219 $ ( 11,102 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net income $ 14,436 $ 5,561

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 101,309 108,959

Gain on sales of operating properties, net ( 22,468 ) ( 27,126 )

Impairment charges 477 —

Loss on sales of operating properties, net 236 —

Gain on sale of unconsolidated property, net ( 2,325 ) —

Straight-line rent ( 3,126 ) ( 3,545 )

8 unchanged sentences

Cash flows from investing activities:

Acquisition of interests in properties ( 78,273 ) ( 100,142 )

Capital expenditures ( 28,200 ) ( 39,121 )

Net proceeds from sales of land 1,759 —

Net proceeds from sales of operating properties 123,944 65,408

Investment in short-term deposits ( 265,000 ) —

2 unchanged sentences

Distribution from unconsolidated joint venture 1,618 13

Capital contribution to unconsolidated joint venture — ( 125 )

Net cash used in investing activities ( 289,338 ) ( 41,514 )

8 unchanged sentences

Distributions to noncontrolling interests ( 620 ) —

Net cash used in financing activities ( 299,350 ) ( 252,591 )

Net cash provided by (used in) financing activities 283,291 ( 91,364 )

Net change in cash, cash equivalents and restricted cash 47,534 ( 69,275 )

1 unchanged sentence

Cash, cash equivalents and restricted cash, end of period $ 88,964 $ 52,695

Non-cash investing and financing activities

Conversion of Limited Partner Units to shares of the Parent Company $ 301 $ —

The accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

Notes to Consolidated Financial Statements

September 30, 2023

March 31, 2024

($ in thousands, except share, per share, unit and per unit amounts and where indicated in millions or billions)

1 unchanged sentence

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 Operating Partnership was formed on August 16, 2004, when the Parent Company contributed properties and the net proceeds from an initial public offering (“IPO”) 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 September 30, 2023 owned approximately 98.5 % of the common partnership interests in the Operating Partnership (“General Partner Units”).

We believe the Company qualifies as a real estate investment trust (“REIT”) under sections 856-860 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, 2024, owned approximately 98.3 % of the common partnership interests in the Operating Partnership (“General Partner Units”).

The remaining 1.7 % of the common partnership interests (“Limited Partner Units” and, together with the General Partner Units, the “Common Units”) were owned by the limited partners.

5 unchanged sentences

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 consolidated financial statements as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 include all adjustments, consisting of normal recurring adjustments, necessary in the opinion of management to present fairly the financial information set forth therein.

The unaudited consolidated financial statements as of March 31, 2024 and for the three months ended March 31, 2024 and 2023 include all adjustments, consisting of normal recurring adjustments, necessary in the opinion of management to present fairly the financial information set forth therein.

The unaudited 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, 2023.

2 unchanged sentences

The results of operations for the interim periods are not necessarily indicative of the results that may be expected on an annual basis.

As of September 30, 2023, the Company’s portfolio consisted of the following:

As of March 31, 2024, the Company’s portfolio consisted of the following:

Properties Square Footage

8 unchanged sentences

(1) Included within operating retail properties are 10 properties that contain an office component.

Excludes one operating retail property classified as held for sale as of September 30, 2023.

Of the 180 operating retail properties, 177 are consolidated in these financial statements and the remaining three are accounted for under the equity method.

Of the 180 operating retail properties, 177 are consolidated within these financial statements and the remaining three are accounted for under the equity method.

(2) This property is held in an unconsolidated joint venture in which the Company has a 50 % ownership interest.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Components of Investment Properties

The following table summarizes the composition of the Company’s investment properties as of September 30, 2023 and December 31, 2022 (in thousands) :

The following table summarizes the composition of the Company’s investment properties as of March 31, 2024 and December 31, 2023 (in thousands) :

Balance as of

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Land, buildings and improvements $ 7,696,890 $ 7,684,066

2 unchanged sentences

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 and nine months ended September 30, 2023 and 2022 (in thousands) :

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Rental income related to the Company’s operating leases is comprised of the following for the three months ended March 31, 2024 and 2023 (in thousands) :

Three Months Ended March 31,

Fixed contractual lease payments – operating leases $ 160,540 $ 158,590

6 unchanged sentences

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.

In making these estimates, the Company reviews a variety of qualitative and quantitative data and considers such factors 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, 2024, the Company has $ 265.0 million in short-term deposits invested at Goldman Sachs Bank USA and KeyBank National Association, which will be used to satisfy all 2024 debt maturities.

The deposit balance approximates fair value and earns interest at a weighted average rate of 5.34 % with a final maturity date of July 22, 2024.

During the three months ended March 31, 2024, the Company earned $ 2.9 million of interest income on the deposits, which is recorded within “Other income, net” in 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 Operating Partnership that are controlled and any variable interest entities (“VIEs”) in which the Operating Partnership is the primary beneficiary.

As of September 30, 2023, we owned investments in two consolidated joint ventures that were VIEs in which the partners did not have substantive participating rights and we were the primary beneficiary.

As of September 30, 2023,

these consolidated VIEs had mortgage debt of $ 112.7 million, which were secured by assets of the VIEs totaling $ 217.6 million.

As of March 31, 2024, we owned investments in two 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, 2024, these consolidated VIEs had mortgage debt totaling $ 111.5 million, which was secured by assets of the VIEs totaling $ 218.1 million.

The Operating Partnership guarantees the mortgage debt of these VIEs.

1 unchanged sentence

The Parent Company consolidates the Operating Partnership as it is the primary beneficiary.

As of March 31, 2024, the Company also owned investments in four unconsolidated joint ventures accounted for under the equity method, which are not considered VIEs.

On January 31, 2024, the joint venture that owned Glendale Center Apartments, of which we have an 11.5 % ownership interest, sold the 267 -unit property to a third party, resulting in a gain on sale of $ 20.2 million.

The Company recognized its share of the gain on sale of unconsolidated property of $ 2.3 million during the three months ended March 31, 2024.

In addition, the Company received a $ 1.6 million distribution upon the disposition of the property.

The Company maintains an investment in the joint venture, which is in the process of winding up its activities and distributing remaining net assets.

Glendale Center Apartments is adjacent to our Glendale Town Center operating retail property in the Indianapolis MSA.

Income Taxes and REIT Compliance

14 unchanged sentences

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 with Retail Properties of America, Inc.

(“RPAI”) in October 2021, 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.

We have elected to treat Kite Realty Holdings, LLC and IWR Protective Corporation as TRSs with respect to the REIT, 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.

6 unchanged sentences

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 nine months ended September 30, 2023 and 2022 (in thousands) :

Nine Months Ended September 30,

The following table summarizes the non-redeemable noncontrolling interests in consolidated properties for the three months ended March 31, 2024 and 2023 (in thousands) :

Three Months Ended March 31,

Noncontrolling interests balance as of January 1, $ 2,430 $ 5,370

1 unchanged sentence

Distributions to noncontrolling interests ( 620 ) —

Noncontrolling interests balance as of September 30,

Noncontrolling interests balance as of March 31,

$ 1,877 $ 5,474

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.

Prior to the October 2021 merger with Retail Properties of America, Inc.

(“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.

During the nine months ended September 30, 2023, the Company originated a 10-year $ 95.1 million mortgage payable at a fixed interest rate of 5.36 % secured by the joint venture project.

In conjunction with the loan origination, the joint venture’s construction loan was repaid.

Under terms defined in the joint venture agreement, after construction completion and stabilization of the development project (as defined in the joint venture agreement), 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.

As of September 30, 2023, these conditions for exercising the put and call options have been met but neither the Company nor the joint venture partner has exercised their respective options.

As of March 31, 2024, these conditions for exercising the put and call options have been met but neither the Company nor the joint venture partner has exercised their respective options.

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.

5 unchanged sentences

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 September 30, 2023 and December 31, 2022, 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.

As of March 31, 2024 and December 31, 2023, 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.

1 unchanged sentence

This adjustment is reflected in our shareholders’ and Parent Company’s equity.

For the three and nine months ended September 30, 2023 and 2022, the weighted average interests of the Parent Company and the limited partners in the Operating Partnership were as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Parent Company’s weighted average interest in Operating Partnership 98.5 % 98.7 % 98.6 % 98.8 %

Limited partners’ weighted average interests in Operating Partnership 1.5 % 1.3 % 1.4 % 1.2 %

As of September 30, 2023, the Parent Company’s interest and the limited partners’ redeemable noncontrolling ownership interests in the Operating Partnership were 98.5 % and 1.5 %.

For the three months ended March 31, 2024 and 2023, the weighted average interests of the Parent Company and the limited partners in the Operating Partnership were as follows:

Three Months Ended March 31,

Parent Company’s weighted average interest in the Operating Partnership 98.4 % 98.7 %

Limited partners’ weighted average interests in the Operating Partnership 1.6 % 1.3 %

As of March 31, 2024, the Parent Company’s interest and the limited partners’ redeemable noncontrolling ownership interests in the Operating Partnership were 98.3 % and 1.7 %.

As of December 31, 2023, the Parent Company’s interest and the limited partners’ redeemable noncontrolling ownership interests in the Operating Partnership were 98.4 % and 1.6 %.

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.

Concurrent with the Parent Company’s IPO 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.

Therefore, the limited partners’ interest is not reflected within 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 3,434,881 and 2,870,697 Limited Partner Units outstanding as of September 30, 2023 and December 31, 2022, respectively.

The increase in Limited Partner Units outstanding from December 31, 2022 is due to non-cash compensation

awards granted to our executive officers in the form of Limited Partner Units and the exercise of previously granted Appreciation Only Long-Term Incentive Plan (“AO LTIP”) Units in exchange for 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.

As of September 30, 2022, the Class B units related to one of these joint ventures that owned Crossing at Killingly Commons, our multi-tenant retail property in Dayville, Connecticut, were outstanding and accounted for as noncontrolling interests in the remaining venture.

In October 2022, the remaining Class B units became redeemable at the partner’s election and the fulfillment of certain redemption criteria for cash or Limited Partner Units in the Operating Partnership.

In October 2022, we received notice from our joint venture partner of its exercise of their right to redeem the remaining Class B units for cash in the amount of $ 9.7 million, which redemption was funded using cash on October 3, 2022.

Prior to the redemption, the Class B units did not have a maturity date and were not mandatorily redeemable unless either party had elected for the units to be redeemed.

Prior to the redemption, we consolidated this joint venture because we controlled the decision-making and our joint venture partner had limited protective rights.

Prior to the redemption, we classified 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 could have been required to pay cash to the 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 September 30, 2022, 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 nine months ended September 30, 2023 and 2022 were as follows (in thousands) :

Nine Months Ended September 30,

There were 3,707,004 and 3,512,868 Limited Partner Units outstanding as of March 31, 2024 and December 31, 2023, respectively.

The increase in Limited Partner Units outstanding from December 31, 2023 is due to non-cash compensation awards granted to our executive officers in the form of Limited Partner Units.

The redeemable noncontrolling interests in the Operating Partnership for the three months ended March 31, 2024 and 2023 were as follows (in thousands) :

Three Months Ended March 31,

Redeemable noncontrolling interests balance as of January 1, $ 73,287 $ 53,967

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Other, net including adjustments to redemption value 1,095 3,750

Total limited partners’ interests in the Operating Partnership and other

redeemable noncontrolling interests balance as of September 30,

$ 67,000 $ 56,954

Limited partners’ interests in the Operating Partnership $ 67,000 $ 46,884

Other redeemable noncontrolling interests in certain subsidiaries — 10,070

Total limited partners’ interests in the Operating Partnership and other

redeemable noncontrolling interests balance as of September 30,

Total limited partners’ interests in the Operating Partnership balance as of March 31,

$ 73,713 $ 57,054

Fair Value Measurements

We follow the framework established under Financial Accounting Standards Board 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:

We follow the framework established under Financial Accounting Standards Board Accounting Standards Codification (“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 in the accompanying 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.

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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.

In instances where the determination of the fair value measurement is based upon 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

Any recently issued accounting standards or pronouncements have been excluded as they are either not relevant to the Company or are not expected to have a material impact on the Company’s consolidated financial statements.

The Company closed on the following asset acquisition during the nine months ended September 30, 2023 (dollars in thousands) :

Date Property Name Metropolitan

Statistical Area (“MSA”) Property Type Square

Footage Acquisition

September 22, 2023 Prestonwood Place Dallas Multi-tenant retail 155,975 $ 81,000

The Company closed on the following asset acquisitions during the nine months ended September 30, 2022 (dollars in thousands) :

Date Property Name MSA Property Type Square

Footage Acquisition

February 16, 2022 Pebble Marketplace Las Vegas Multi-tenant retail 85,796 $ 44,100

April 13, 2022 MacArthur Crossing Dallas Two-tenant building 56,077 21,920

July 15, 2022 Palms Plaza Miami Multi-tenant retail 68,976 35,750

210,849 $ 101,770

The above acquisitions were funded using a combination of available cash on hand and proceeds from the Company’s unsecured revolving line of credit.

Substantially all of the purchase price was allocated to investment properties.

DISPOSITIONS AND IMPAIRMENT CHARGES

The Company closed on the following dispositions during the nine months ended September 30, 2023 (dollars in thousands) :

Date Property Name MSA Property Type Square

Footage Sales Price Gain (Loss)

May 8, 2023 Kingwood Commons Houston Multi-tenant retail 158,172 $ 27,350 $ 4,736

June 8, 2023 Pan Am Plaza & Garage Indianapolis Land & garage — 52,025 23,635

September 11, 2023 Reisterstown Road Plaza Dallas Multi-tenant retail 376,683 48,250 ( 5,903 )

534,855 $ 127,625 $ 22,468

The Company closed on the following dispositions during the nine months ended September 30, 2022 (dollars in thousands) :

Date Property Name MSA Property Type Square

Footage Sales Price Gain

January 26, 2022 Hamilton Crossing Centre Indianapolis Redevelopment (1)

— $ 6,900 $ 3,168

June 16, 2022 Plaza Del Lago Chicago Multi-tenant retail (2)

100,016 58,650 23,958

100,016 $ 65,550 $ 27,126

(1) We sold a portion of the redevelopment at Hamilton Crossing Centre.

(2) Plaza Del Lago also contains 8,800 square feet of residential space comprised of 18 multifamily rental units.

As of September 30, 2023, the Company had entered into a contract to sell Eastside, a 43,640 square foot multi-tenant retail property located in the Dallas MSA.

This property qualified for held-for-sale accounting treatment upon meeting all applicable GAAP criteria during the quarter ended September 30, 2023, at which time depreciation and amortization ceased.

In addition, the assets and liabilities associated with this property are separately classified as held for sale in the accompanying consolidated balance sheet as of September 30, 2023.

No properties qualified for held-for-sale accounting treatment as of December 31, 2022.

As of September 30, 2023, in conjunction with classifying Eastside as held for sale, the Company recorded the asset at the lower of cost or fair value less estimated costs to sell, which was approximately $ 14.1 million.

The estimated fair value of Eastside was based upon the expected sales price from an executed sales contract and determined to be a Level 3 input within the fair value hierarchy.

As a result, we recorded a $ 0.5 million impairment charge during the three months ended September 30, 2023.

Eastside was sold on October 24, 2023 for a gross sales price of $ 14.4 million.

The following table presents the assets and liabilities associated with the investment property, Eastside, classified as held for sale as of September 30, 2023 (in thousands) :

September 30, 2023

Investment properties, at cost $ 15,016

accumulated depreciation ( 1,218 )

Net investment properties 13,798

Tenant and other receivables 100

Deferred costs, net 411

Assets associated with investment property held for sale $ 14,309

Accounts payable and accrued expenses $ 398

Deferred revenue and other liabilities 188

Liabilities associated with investment property held for sale $ 586

There were no discontinued operations for the nine months ended September 30, 2023 and 2022 as none of the dispositions represented a strategic shift that has had, or will have, a material effect on our operations or financial results.

In March 2024, the SEC issued a final rule, The Enhancement and Standardization of Climate-Related Disclosures for Investors.

This final rule is effective for the Company for the fiscal year beginning in 2025 and requires companies to annually disclose, among other things, (i) climate-related risks that have had or are reasonably likely to have a material impact on the Company, including on its strategy, results of operations, or financial condition, (ii) activities to mitigate or adapt to such risks, including a quantitative and qualitative description of material expenditures incurred and impacts on estimates and assumptions, (iii) information about oversight by a company’s board of directors of climate-related risks and management’s role in managing material climate-related risks;

and (iv) information on any climate-related targets or goals that are material to the company’s business, results of operations, or financial condition.

In addition, the final rule requires (i) disclosure of Scope 1 and/or Scope 2 greenhouse gas (“GHG”) emissions on a phased-in basis when those emissions are material, (ii) the filing of an attestation

report covering the disclosure of the Scope 1 and/or Scope 2 emissions on a phased-in basis, and (iii) disclosure of the financial statement effects of severe weather events and other natural conditions.

In April 2024, the SEC announced a stay of these climate disclosure rules pending judicial review.

The Company will continue to evaluate the impact of this final rule until it becomes effective.

DEFERRED COSTS AND INTANGIBLES, NET

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Deferred leasing costs, lease intangibles and similar costs are amortized on a straight-line basis over the terms of the related leases.

As of September 30, 2023 and December 31, 2022, deferred costs consisted of the following (in thousands) :

September 30, 2023 December 31, 2022

As of March 31, 2024 and December 31, 2023, deferred costs consisted of the following (in thousands) :

March 31, 2024 December 31, 2023

Acquired lease intangible assets $ 405,513 $ 433,771

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accumulated amortization ( 198,919 ) ( 204,262 )

$ 325,060 $ 409,828

deferred costs associated with investment property held for sale ( 411 ) —

Total $ 324,649 $ 409,828

Amortization of deferred leasing costs, lease intangibles and other is included within “Depreciation and amortization” in the accompanying consolidated statements of operations and comprehensive income.

Deferred costs, net $ 285,452 $ 304,171

The amortization of deferred leasing costs, lease intangibles and other is included within “Depreciation and amortization” in the accompanying consolidated statements of operations and comprehensive income.

The amortization of above-market lease intangibles is included as a reduction to “Rental income” in the accompanying consolidated statements of operations and comprehensive income.

The amounts of such amortization included in the accompanying consolidated statements of operations and comprehensive income are as follows (in thousands) :

Nine Months Ended September 30,

Three Months Ended March 31,

Amortization of deferred leasing costs, lease intangibles and other $ 21,278 $ 28,481

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Tenant rent payments received in advance are recognized as revenue in the period to which they apply, which is typically the month following their receipt.

As of September 30, 2023 and December 31, 2022, deferred revenue, intangibles, net and other liabilities consisted of the following (in thousands) :

September 30, 2023 December 31, 2022

As of March 31, 2024 and December 31, 2023, deferred revenue, intangibles, net and other liabilities consisted of the following (in thousands) :

March 31, 2024 December 31, 2023

Unamortized in-place lease liabilities $ 154,478 $ 159,449

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Lease liabilities 68,484 68,925

$ 280,148 $ 298,039

deferred revenue associated with investment property held for sale ( 188 ) —

Total $ 279,960 $ 298,039

The amortization of below-market lease intangibles is included as a component of “Rental income” in the accompanying consolidated statements of operations and comprehensive income and totaled $ 18.5 million and $ 13.3 million for the nine months ended September 30, 2023 and 2022, respectively.

Deferred revenue and other liabilities $ 258,985 $ 272,942

The amortization of below-market lease intangibles is included as a component of “Rental income” in the accompanying consolidated statements of operations and comprehensive income and totaled $ 5.0 million and $ 5.9 million for the three months ended March 31, 2024 and 2023, respectively.

MORTGAGE AND OTHER INDEBTEDNESS

The following table summarizes the Company’s indebtedness as of September 30, 2023 and December 31, 2022 (in thousands) :

September 30, 2023 December 31, 2022

The following table summarizes the Company’s indebtedness as of March 31, 2024 and December 31, 2023 (in thousands) :

March 31, 2024 December 31, 2023

Mortgages payable $ 152,038 $ 153,306

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Total mortgage and other indebtedness, net $ 3,167,513 $ 2,829,202

Consolidated indebtedness, including weighted average interest rates and weighted average maturities as of September 30, 2023, considering the impact of interest rate swaps, is summarized below (dollars in thousands) :

Consolidated indebtedness, including weighted average interest rates and weighted average maturities as of March 31, 2024, considering the impact of interest rate swaps, is summarized below (dollars in thousands) :

Outstanding Ratio Weighted Average

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Debt discounts, premiums and issuance costs, net 15,840 N/A N/A N/A

Total $ 2,868,828 100 % 4.35 % 4.1

Mortgage and other indebtedness, net $ 3,167,513 100 % 4.33 % 4.1

(1) Fixed rate debt includes the portion of variable rate debt that has been hedged by interest rate swaps.

As of September 30, 2023, $ 820.0 million in variable rate debt is hedged to a fixed rate for a weighted average of 1.9 years.

As of March 31, 2024, $ 820.0 million in variable rate debt is hedged to a fixed rate for a weighted average of 1.4 years.

(2) Variable rate debt includes the portion of fixed rate debt that has been hedged by interest rate swaps.

As of September 30, 2023, $ 155.0 million in fixed rate debt is hedged to a floating rate for a weighted average of 1.9 years.

As of March 31, 2024, $ 155.0 million in fixed rate debt is hedged to a floating rate for a weighted average of 1.4 years.

Mortgages Payable

The following table summarizes the Company’s mortgages payable (dollars in thousands) :

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Balance Weighted Average

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Total mortgages payable $ 152,038 $ 153,306

(1) The fixed rate mortgages had interest rates ranging from 3.75 % to 5.73 % as of September 30, 2023 and December 31, 2022.

(2) During the three months ended September 30, 2023, the interest rate on the variable rate mortgage increased to Bloomberg Short Term Bank Yield Index (“BSBY”) plus 215 basis points from BSBY plus 160 basis points in conjunction with the July 2023 amendment of the loan agreement.

The one-month BSBY rate was 5.39 % and 4.36 % as of September 30, 2023 and December 31, 2022, respectively.

(1) The fixed rate mortgages had interest rates ranging from 3.75 % to 5.73 % as of March 31, 2024 and December 31, 2023.

(2) The interest rate on the variable rate mortgage is based on Bloomberg Short Term Bank Yield Index (“BSBY”) plus 215 basis points.

The one-month BSBY rate was 5.35 % and 5.44 % as of March 31, 2024 and December 31, 2023, respectively.

Mortgages payable, which are secured by certain real estate and, in some cases, by guarantees from the Operating Partnership, are generally due in monthly installments of principal and interest and mature over various terms through 2033.

During the nine months ended September 30, 2023, we (i) originated a 10-year $ 95.1 million mortgage payable at a fixed interest rate of 5.36 % secured by the multifamily rental portion of the expansion project at One Loudoun Downtown – Pads G & H, (ii) amended the loan agreement on the variable rate mortgage secured by Delray Marketplace to extend the maturity date to August 4, 2026, with a one-year extension option, and made a $ 9.9 million paydown of the principal balance using available cash on hand, (iii) repaid mortgages payable totaling $ 161.5 million that had a weighted average fixed interest rate of 3.85 %, and (iv) made scheduled principal payments of $ 2.7 million related to amortizing loans.

During the three months ended March 31, 2024, we made scheduled principal payments of $ 1.3 million related to amortizing loans.

Unsecured Notes

The following table summarizes the Company’s senior unsecured notes and exchangeable senior notes (dollars in thousands) :

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Maturity Date Balance Interest Rate Balance Interest Rate

Senior notes – 4.58 % due 2024

September 10, 2023 $ — — % $ 95,000 4.23 %

Senior notes – 4.58 % due 2024

June 30, 2024 $ 149,635 4.58 % $ 149,635 4.58 %

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September 15, 2030 400,000 4.75 % 400,000 4.75 %

Senior notes – 5.50 % due 2034 (3)

March 1, 2034 350,000 4.60 % — — %

Total senior unsecured notes $ 2,179,635 $ 1,829,635

(1) On July 1, 2023, the fallback rate in the derivative agreement went into effect.

As of September 30, 2023, $ 80,000 of 4.47 % senior unsecured notes has been swapped to a variable rate of three-month Secured Overnight Financing Rate (“SOFR”) plus 3.65 % through September 10, 2025.

As of December 31, 2022, $ 80,000 of 4.47 % senior unsecured notes had been swapped to a variable rate of three-month London Interbank Offered Rate (“LIBOR”) plus 3.65 %.

(2) On July 1, 2023, the fallback rate in the derivative agreement went into effect.

As of September 30, 2023, $ 75,000 of 4.57 % senior unsecured notes has been swapped to a variable rate of three-month SOFR plus 3.75 % through September 10, 2025.

As of December 31, 2022, $ 75,000 of 4.57 % senior unsecured notes had been swapped to a variable rate of three-month LIBOR plus 3.75 %.

During the three months ended September 30, 2023, the Company repaid the $ 95.0 million principal balance of the 4.23 % senior unsecured notes due 2023 using available cash on hand.

(1) $ 80,000 of 4.47 % senior unsecured notes due 2025 has been swapped to a variable rate of three-month Secured Overnight Financing Rate (“SOFR”) plus 3.65 % through September 10, 2025.

(2) $ 75,000 of 4.57 % senior unsecured notes due 2027 has been swapped to a variable rate of three-month SOFR plus 3.75 % through September 10, 2025.

(3) The coupon rate of the Notes Due 2034 (defined below) is 5.50 %;

however, due to hedging activities, the Company’s interest rate is 4.60 %.

During the three months ended March 31, 2024, the Company completed a public offering of $ 350.0 million in aggregate principal amount of 5.50 % senior unsecured notes due 2034 (“Notes Due 2034”).

The Notes Due 2034 were priced at 98.670 % of the principal amount to yield 5.673 % to maturity and will mature on March 1, 2034, unless earlier redeemed.

The proceeds will be used to satisfy the $ 269.6 million of debt maturities due in 2024 and for general corporate purposes.

Unsecured Term Loans and Revolving Line of Credit

The following table summarizes the Company’s term loans and revolving line of credit (dollars in thousands) :

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Maturity Date Balance Interest Rate Balance Interest Rate

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(1) $ 120,000 of SOFR-based variable rate debt has been swapped to a fixed rate of 1.58 % plus a credit spread based on a ratings grid ranging from 0.80 % to 1.65 % through July 17, 2024.

The applicable credit spread was 1.10 % as of September 30, 2023 and December 31, 2022.

The applicable credit spread was 1.10 % as of March 31, 2024 and December 31, 2023.

(2) $ 250,000 of SOFR-based variable rate debt has been swapped to a fixed rate of 5.09 % through October 24, 2025.

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(3) $ 150,000 of SOFR-based variable rate debt has been swapped to a fixed rate of 1.68 % plus a credit spread based on a ratings grid ranging from 0.75 % to 1.60 % through July 17, 2026.

The applicable credit spread was 1.05 % as of September 30, 2023 and December 31, 2022.

(4) $ 300,000 of SOFR-based variable rate debt has been swapped to a fixed rate of 2.70 % plus a credit spread based on a ratings grid ranging from 1.15 % to 2.20 % through November 22, 2023.

The applicable credit spread was 1.35 % as of September 30, 2023 and December 31, 2022.

The applicable credit spread was 1.05 % as of March 31, 2024 and December 31, 2023.

(4) $ 300,000 of SOFR-based variable rate debt has been swapped to a fixed rate of 2.47 % plus a credit spread based on a ratings grid ranging from 1.15 % to 2.20 % through August 1, 2025.

The applicable credit spread was 1.35 % as of March 31, 2024 and December 31, 2023.

(5) The revolving line of credit has two six-month extension options that the Company can exercise, at its election, subject to (i) customary representations and warranties, including, but not limited to, the absence of an event of default as defined in the unsecured credit agreement and (ii) payment of an extension fee equal to 0.075 % of the revolving line of credit capacity.

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The Company may irrevocably elect to convert to the ratings-based pricing grid at any time.

As of September 30, 2023, making such an election would have resulted in a lower interest rate;

As of March 31, 2024, making such an election would have resulted in a lower interest rate;

however, the Company had not made the election to convert to the ratings-based pricing grid.

The Credit Agreement includes a sustainability metric based on targeted greenhouse gas emission reductions, which results in a reduction of the otherwise applicable interest rate margin by one basis point upon achievement of targets set forth therein.

The following table summarizes the key terms of the Revolving Facility as of September 30, 2023 (dollars in thousands) :

The following table summarizes the key terms of the Revolving Facility as of March 31, 2024 (dollars in thousands) :

Leverage-Based Pricing Investment Grade Pricing

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and (v) a minimum unencumbered interest coverage ratio.

As of September 30, 2023, we were in compliance with all such covenants.

As of September 30, 2023, we had letters of credit outstanding totaling $ 0.3 million, against which no amounts were advanced as of September 30, 2023.

As of March 31, 2024, we were in compliance with all such covenants.

Unsecured Term Loans

As of September 30, 2023, the Operating Partnership has the following unsecured term loans:

As of March 31, 2024, the Operating Partnership has the following unsecured term loans:

(i) a $ 120.0 million unsecured term loan due July 2024 (the “$ 120 M Term Loan”), (ii) a $ 250.0 million unsecured term loan due October 2025 (the “$ 250 M Term Loan”), (iii) a $ 150.0 million unsecured term loan due July 2026 (the “$ 150 M Term Loan”), and (iv) the $ 300 M Term Loan that matures in July 2029, each of which bears interest at a rate of SOFR plus a credit spread.

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The agreements related to the $ 150 M Term Loan and $ 300 M Term Loan include a sustainability metric based on targeted greenhouse gas emission reductions, which results in a reduction of the otherwise applicable interest rate margin by one basis point upon achievement of targets set forth in each agreement.

The following table summarizes the key terms of the unsecured term loans as of September 30, 2023 (dollars in thousands) :

The following table summarizes the key terms of the unsecured term loans as of March 31, 2024 (dollars in thousands) :

Unsecured Term Loans

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The following amounts of amortization of debt issuance costs are included as a component of “Interest expense” in the accompanying consolidated statements of operations and comprehensive income (in thousands) :

Nine Months Ended September 30,

Three Months Ended March 31,

Amortization of debt issuance costs $ 929 $ 888

Debt Discounts and Premiums

Debt discounts and premiums, including the related value of interest rate swaps that were assumed in the October 2021 merger with RPAI, are amortized over the terms of the respective loan agreements.

The following amounts of amortization are included as a component of “Interest expense” in the accompanying consolidated statements of operations and comprehensive income (in thousands) :

Three Months Ended March 31,

Amortization of debt discounts, premiums and hedge instruments $ 3,756 $ 5,003

In addition, the estimated amounts of reduction to interest expense as of March 31, 2024 for each of the next five years and thereafter related to the amortization of debt discounts, premiums and assumed hedge instruments, assuming these instruments are held to maturity, are as follows (in thousands) :

April 2024 through December 2024 $ 9,955

Thereafter 5,411

Total unamortized debt discounts, premiums and hedge instruments $ 39,785

The following table reconciles total unamortized debt discounts, premiums and hedge instruments as of March 31, 2024 to the balance of unamortized discounts and premiums, net (in thousands) :

Unamortized discounts and premiums on mortgages payable, senior unsecured notes and unsecured term loans $ 37,274

Unamortized hedge instruments 2,511

Total unamortized debt discounts, premiums and hedge instruments 39,785

Unamortized hedge instruments (included in accumulated other comprehensive income) ( 2,511 )

Fair value of variable interest rate swaps ( 9,207 )

Unamortized discounts and premiums, net $ 28,067

Fair Value of Fixed and Variable Rate Debt

As of September 30, 2023, the estimated fair value of fixed rate debt was $ 1.8 billion compared to the book value of $ 2.0 billion.

As of March 31, 2024, the estimated fair value of fixed rate debt was $ 2.2 billion compared to the book value of $ 2.3 billion.

The fair value was estimated using Level 2 and 3 inputs with cash flows discounted at current borrowing rates for similar instruments, which ranged from 5.75 % to 7.11 %.

As of September 30, 2023, the estimated fair value of variable rate debt was $ 880.2 million compared to the book value of $ 876.6 million.

As of March 31, 2024, the estimated fair value of variable rate debt was $ 839.9 million compared to the book value of $ 836.4 million.

The fair value was estimated using Level 2 and 3 inputs with cash flows discounted at current borrowing rates for similar instruments, which ranged from 6.48 % to 7.33 %.

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The agreements with each of our derivative counterparties provide that in the event of default on any of our indebtedness, we could also be declared in default on our derivative obligations.

The following table summarizes the terms and fair values of the Company’s derivative financial instruments that were designated and qualified as part of a hedging relationship as of September 30, 2023 and December 31, 2022 (dollars in thousands) :

The following table summarizes the terms and fair values of the Company’s derivative financial instruments that were designated and qualified as part of a hedging relationship as of March 31, 2024 and December 31, 2023 (dollars in thousands) :

Fair Value Assets (Liabilities) (1)

Type of Hedge Number of Instruments Aggregate Notional Reference Rate Interest Rate Effective Date Maturity Date September 30, 2023 December 31, 2022

Type of Hedge Number of Instruments Aggregate Notional Reference Rate Interest Rate Effective Date Maturity Date March 31, 2024 December 31, 2023

Cash Flow Four $ 250,000 SOFR 2.99 % 12/1/2022 10/24/2025 $ 6,287 $ 4,952

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Forward-Starting

Two $ 200,000 SOFR 2.37 % 11/22/2023 8/1/2025 $ 8,187 $ 4,370

Cash Flow (3)

Three $ 150,000 SOFR 3.44 % 6/28/2024 6/28/2034 $ — $ ( 700 )

(1) Derivatives in an asset position are included within “Prepaid and other assets” and derivatives in a liability position are included within “Accounts payable and accrued expenses” in the accompanying consolidated balance sheets.

(2) On July 1, 2023, the fallback rate in the derivative agreements went into effect.

The derivative agreements swap a blended fixed rate of 4.52 % for a blended floating rate of three-month SOFR plus 3.70 % as of September 30, 2023 and three-month LIBOR plus 3.70 % as of December 31, 2022.

(2) The derivative agreements swap a blended fixed rate of 4.52 % for a blended floating rate of three-month SOFR plus 3.70 %.

(3) The forward-starting interest rate swaps were terminated in conjunction with the issuance of the Notes Due 2034.

In December 2023, we entered into three forward-starting interest rate swap agreements with notional amounts totaling $ 150.0 million that swap a floating rate of compound SOFR for a fixed rate of 3.44 % with an effective date of June 28, 2024 and a maturity date of June 28, 2034.

These interest rate swaps fixed the interest rate on a portion of the Notes Due 2034, which were issued in January 2024, and were subsequently terminated upon issuance of the Notes Due 2034.

We received $ 0.7 million upon termination, which is included as a component of “Accumulated other comprehensive income” in the accompanying consolidated balance sheets and is being reclassified as a reduction to interest expense over the term of the debt.

In October 2022, we terminated two forward-starting interest rate swaps with notional amounts totaling $ 150.0 million and a maturity date of June 1, 2032 and received $ 30.9 million upon termination.

This settlement is included as a component of “Accumulated other comprehensive income” in the accompanying consolidated balance sheets and is being reclassified to earnings over time as the hedged items are recognized in earnings.

During the nine months ended September 30, 2023, we accelerated the reclassification of $ 3.1 million in accumulated other comprehensive income as a reduction to interest expense as a result of a portion of the hedged forecasted transaction becoming probable not to occur.

We currently expect that the debt issuance will occur during 2023.

During the year ended December 31, 2023, we accelerated the reclassification of $ 3.1 million in accumulated other comprehensive income as a reduction to interest expense as a result of a portion of the hedged forecasted transaction becoming probable not to occur.

In January 2024, we completed a public offering of the Notes Due 2034.

The remaining balance in accumulated other comprehensive income is being reclassified as a reduction to interest expense over the term of the debt.

These interest rate derivative agreements are the only assets or liabilities that we record at fair value on a recurring basis.

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We also incorporate credit valuation adjustments into the fair value measurements to reflect nonperformance risk on both our part and that of the respective counterparties.

We determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, although the credit valuation adjustments associated with our derivatives use Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties.

As of September 30, 2023 and December 31, 2022, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and determined the credit valuation adjustments were not significant to the overall valuation of our derivatives.

As a result, we determined our derivative valuations were classified within Level 2 of the fair value hierarchy.

We have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, although the credit valuation adjustments associated with our derivatives use Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties.

As of March 31, 2024 and December 31, 2023, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and determined that the credit valuation adjustments were not significant to the overall valuation of our derivatives.

As a result, we have determined that our derivative valuations were classified within Level 2 of the fair value hierarchy.

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to earnings over time as the hedged items are recognized in earnings.

Approximately $ 5.5 million and $ 13.2 million was reclassified as an increase to earnings during the three and nine months ended September 30, 2023, respectively.

Approximately $ 1.2 million and $ 8.6 million was reclassified as a decrease to earnings during the three and nine months ended September 30, 2022, respectively.

Approximately $ 4.9 million and $ 4.2 million was reclassified as a reduction to interest expense during the three months ended March 31, 2024 and 2023, respectively.

As interest payments on our derivatives are made over the next 12 months, we estimate the decrease to interest expense to be approximately $ 22.5 million, assuming the current SOFR curve.

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Distributions

Our Board of Trustees declared a cash distribution of $ 0.24 per common share and Common Unit for the third quarter of 2023.

This distribution was paid on October 13, 2023 to common shareholders and Common Unit holders of record as of October 6, 2023.

For the nine months ended September 30, 2023, we declared cash distributions totaling $ 0.72 per common share and Common Unit.

For the three and nine months ended September 30, 2022, we declared cash distributions of $ 0.22 and $ 0.63 , respectively, per common share and Common Unit.

Our Board of Trustees declared a cash distribution of $ 0.25 per common share and Common Unit for the first quarter of 2024.

This distribution was paid on April 12, 2024 to common shareholders and common unitholders of record as of April 5, 2024.

For the three months ended March 31, 2023, we declared a cash distribution of $ 0.24 per common share and Common Unit.

At-The-Market Offering Program

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The Operating Partnership may also use the net proceeds for acquisitions of operating properties and the development or redevelopment of properties, although there are currently no understandings, commitments or agreements to do so.

As of September 30, 2023, the Company has no t sold any common shares under the ATM Program.

As of March 31, 2024, the Company has no t sold any common shares under the ATM Program.

Share Repurchase Program

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The timing of share repurchases and the number of common shares to be repurchased under the Share Repurchase Program will depend upon prevailing market conditions, regulatory requirements and other factors.

In February 2023, the Company extended the Share Repurchase Program for an additional year so it will now terminate on February 28, 2024, if not terminated or extended prior to that date.

As of September 30, 2023, the Company has no t repurchased any shares under the Share Repurchase Program.

In February 2024, the Company extended the Share Repurchase Program for an additional year to February 28, 2025, if not terminated or extended prior to that date.

As of March 31, 2024, the Company has no t repurchased any shares under the Share Repurchase Program.

EARNINGS PER SHARE OR UNIT

Basic earnings per share or unit is calculated based on the weighted average number of common shares or units outstanding during the period.

Diluted earnings per share or unit is calculated based on the weighted average number of common shares or units outstanding during the period combined with the incremental average common shares or units that would have been outstanding assuming the conversion of all potentially dilutive common shares or units into common shares or units as of the earliest date possible.

Basic earnings per share or unit is calculated based on the weighted average number of common shares/units outstanding during the period.

Diluted earnings per share/unit is calculated based on the weighted average number of common shares/units outstanding during the period combined with the incremental average common shares/units that would have been outstanding assuming the conversion of all potentially dilutive common shares/units into common shares/units as of the earliest date possible.

Potentially dilutive securities include (i) outstanding options to acquire common shares;

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Limited Partner Units have been omitted from the Parent Company’s denominator for the purpose of computing diluted earnings per share since the effect of including those amounts in the denominator would have no dilutive impact.

Weighted average Limited Partner Units outstanding were 3.3 million and 3.1 million for the three and nine months ended September 30, 2023, and 3.0 million and 2.7 million for the three and nine months ended September 30, 2022, respectively.

Due to the net loss allocable to common shareholders and Common Unit holders for the three and nine months ended September 30, 2022, no securities had a dilutive impact for those periods.

Weighted average Limited Partner Units outstanding were 3.6 million and 3.0 million for the three months ended March 31, 2024 and 2023, respectively.

COMMITMENTS AND CONTINGENCIES

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Our portion of the repayment guaranty is limited to $ 5.9 million, and the guaranty’s term is through July 1, 2024, the maturity date of the construction loan.

As of September 30, 2023, the outstanding loan balance was $ 32.9 million, of which our share was $ 11.5 million.

As of March 31, 2024, the outstanding loan balance was $ 32.5 million, of which our share was $ 11.4 million.

The loan is secured by the hotel.

In 2021, we provided repayment and completion guaranties on loans totaling $ 66.2 million associated with the development of The Corner mixed-use project in the Indianapolis MSA.

As of September 30, 2023, the outstanding balance of the loans was $ 52.4 million, of which our share was $ 26.2 million.

As of September 30, 2023, we had outstanding letters of credit totaling $ 0.3 million with no amounts advanced against these instruments.

As of March 31, 2024, the outstanding balance of the loans was $ 65.6 million, of which our share was $ 32.8 million.

Legal Proceedings

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Management believes that such matters will not have a material adverse impact on our consolidated financial condition, results of operations or cash flows taken as a whole.

RELATED PARTY TRANSACTIONS

On August 7, 2023, a wholly owned subsidiary of the Company (“KRG Development”) assigned to Pan Am Development Partners, LLC (“Assignee”) certain rights and obligations related to the development of a hotel on the Pan Am Plaza site across from the Indiana Convention Center in Indianapolis, IN, including certain future development rights and a right of first offer involving the project (collectively, the “Project Rights and Obligations”).

Assignee is a wholly owned subsidiary of Circle Block Investors, LLC, the parent company that owns the Conrad Indianapolis hotel, of which Mr.

Kite, our Chairman Emeritus and the father of Mr.

Kite, is the majority owner, and Mr.

Kite, our Chief Executive Officer and Chairman of the Board, and Mr.

McGowan, our President and Chief Operating Officer, are minority owners.

In connection with the transaction, Assignee assumed all Project Rights and Obligations from and after August 7, 2023 and agreed to pay KRG Development an assignment fee of up to $ 3.5 million (the “Assignment Fee”), which is due and payable upon the completion of certain development activities that are expected to occur in 2024.

In connection with the transactions, Mr.

McGowan expressly acknowledged and agreed that they remain subject to their executive employment agreements with the Company, including, without limitation, the obligation of each executive to devote substantially all his business time and effort to the performance of his duties for the Company.

Assignee will engage a team of full-time professionals to perform the Project Rights and Obligations.

The transaction was approved by a special transaction committee of the independent trustees of the Company (the “Transaction Committee”) as well as the Company’s independent trustees.

The Transaction Committee engaged a third-party financial advisor to assist it in determining the net value of the Project Rights and Obligations and establishing the Assignment Fee.

SUBSEQUENT EVENTS

Subsequent to September 30, 2023, we closed on the disposition of Eastside, a 43,640 square foot multi-tenant retail property in the Dallas MSA, which was classified as held for sale as of September 30, 2023, for a gross sales price of $ 14.4 million and no gain or loss on sale due to previously recognized impairment charges.

A portion of the proceeds was used to repay amounts outstanding on the Revolving Facility.

In connection with the preparation of our financial statements, we have evaluated events and transactions that occurred subsequent to March 31, 2024 for recognition and/or disclosure purposes.

Based on this evaluation, there were no subsequent events from March 31, 2024 through the date the financial statements were issued.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements