Kite Realty CEO Describes Merger as “Transformational”
12/16/2014 | by Sarah Borchersen-Keto

John Kite, chairman and CEO of Kite Realty Group Trust (NYSE: KRG,) joined REIT.com for a CEO Spotlight video interview at REITWorld 2014: NAREIT’s Annual Convention for All Things REIT at the Atlanta Marriott Marquis.

Kite Realty is active in the ownership, operation, management, leasing, development and redevelopment of neighborhood and community shopping centers. In July, the company completed its merger with Inland Diversified Real Estate Trust, Inc., a deal valued at approximately $2.1 billion. Kite described the merger as a “transformational transaction.”

“What drove it is that we loved the real estate. It met what we were looking for at the time in terms of expanding,” he said.

Since the deal’s completion, Kite has grown from a $2 billion enterprise to a $4 billion one, Kite added. Free cash flow is also significantly higher, according to Kite.

“It really met every metric,” Kite stressed.

Kite also discussed the property types and locations that are most attractive to the company in the near term. Currently, the company is in the process of selling 15 of the 60 properties it acquired as a result of the merger with Inland. Kite explained that the properties are located in non-core geographic markets. Kite is currently focusing its attention more on geographic regions such as Nevada, Arizona, Texas, the Midwest and the Northeast.

In terms of property types, Kite said the company is concentrating on power centers, particularly those with grocery components. “Those are really good performers for us,” noted Kite, adding that the company’s significant outperformance in same-store net operating income growth in the last two years is due in large part to  the mixture of shopping centers in the portfolio.

Kite also noted that the supply-and-demand balance still tilts in the company’s favor.

“There’s been no new construction for the past six or seven years,” he observed. “We’re in a good place. Retailers want our spaces.”