Kite Realty Group Trust to Commence Construction on Parkside Town Commons in Early 2013
INDIANAPOLIS--(BUSINESS WIRE)-- Kite Realty Group Trust (NYSE: KRG ) (the “Company”) is providing a leasing and joint venture update for its planned Parkside Town Commons development project in Raleigh, North Carolina.
Overview of the Project
Parkside Town Commons is a planned multi-phased 580,000 square foot retail development located in Raleigh, North Carolina. Phase I will be anchored by a Harris Teeter grocery store and a non-owned Target. Phase II will be anchored by Golf Galaxy, Frank Theatres CineBowl & Grille, and a new concept owned by a national credit tenant focused on outdoor activities such as hunting, fishing, and camping. The retail site is directly adjacent to Research Triangle Park, which serves as the home to a work force of 52,000 people and more than 170 companies, including IBM, Cisco Systems, GlaxoSmithKline, Fidelity Investments, and RTI International. The demographics within the trade area of the project are attractive, with a population density of nearly 86,000 and an average household income in excess of $113,000.
Leasing Update – Phase I
The development’s primary anchor, Target Corporation, has acquired 10.7 acres of land for the construction of a 135,000 square foot store in the project’s first phase. In addition, Harris Teeter-Neighborhood Food and Pharmacy has signed a ground lease and will construct a 53,000 square foot grocery store. Phase I of the development is expected to contain approximately 250,000 total square feet with an estimated project cost of approximately $39 million. Construction is anticipated to commence in early 2013 with an estimated opening in the Spring of 2014.
Leasing Update – Phase II
The second phase of the development is expected to contain a total of approximately 330,000 square feet which includes square footage attributable to non-owned outlots. Leases have been executed with three of the primary anchor tenants in Phase II of the development: a 35,000 square foot Golf Galaxy; a 56,000 square foot Frank Theatres CineBowl & Grille which will include 12 screens, 16 bowling lanes, and a full-service restaurant; as well as a 50,000 square foot new concept owned by a national credit tenant focused on outdoor activities such as hunting, fishing, and camping. Phase II construction is anticipated to commence in late 2013 or early 2014 with an estimated project cost of approximately $66 million.
Joint Venture Update
On December 31, 2012, in advance of construction commencement on the development, the Company acquired its partner’s 60% interest in the project for $13.3 million, including assumption of the partner’s $8.7 million share of indebtedness on the project. The acquisition of the partner’s interest is at a significant discount to book cost which enhances the Company’s overall project return and enables the Company to receive 100% of the future cash flow from this project. As a result of this opportunistic buyout, the Company is required under generally accepted accounting principles to re-measure its original equity method investment in the development. The Company anticipates recognizing a net loss of approximately $7.8 - $8.1 million for the fourth quarter of 2012. This is a non-cash charge that will not impact the Company’s liquidity or its funds from operations for 2012.
“The Parkside Town Commons development is very well located real estate adjacent to the Research Triangle Park,” said John A. Kite, the Company’s Chairman and Chief Executive Officer. “We have secured the primary anchors and will begin site work on the project in early 2013 with an estimated opening for Phase I in the Spring of 2014. The opportunistic buyout of our partner’s interest has enabled us to increase our overall projected return and gain control of an exciting project in a high-growth area of North Carolina. The timing of construction of the Parkside development throughout 2013 and 2014 will enable us to maximize the use of our development platform on an outstanding project as a number of our current development projects reach substantial completion in 2013.”
About Kite Realty Group Trust
Kite Realty Group Trust is a full-service, vertically integrated real estate investment trust engaged in the ownership, operation, management, leasing, acquisition, construction, redevelopment and development of neighborhood and community shopping centers in selected markets in the United States. At September 30, 2012, the Company owned interests in a portfolio of 60 operating and redevelopment properties totaling approximately 8.9 million square feet and an additional two properties currently under development totaling 0.6 million square feet.
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are based on assumptions and expectations that may not be realized and are inherently subject to risks, uncertainties and other factors, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, performance, transactions or achievements, financial or otherwise, may differ materially from the results, performance, transactions or achievements expressed or implied by the forward-looking statements. Risks, uncertainties and other factors that might cause such differences, some of which could be material, include, but are not limited to: national and local economic, business, real estate and other market conditions, particularly in light of the recent slowing of growth in the U.S. economy; financing risks, including the availability of and costs associated with sources of liquidity; the Company’s ability to refinance, or extend the maturity dates of, its indebtedness; the level and volatility of interest rates; the financial stability of tenants, including their ability to pay rent and the risk of tenant bankruptcies; the competitive environment in which the Company operates; acquisition, disposition, development and joint venture risks; property ownership and management risks; the Company’s ability to maintain its status as a real estate investment trust (“REIT”) for federal income tax purposes; potential environmental and other liabilities; impairment in the value of real estate property the Company owns; risks related to the geographical concentration of our properties in Indiana, Florida and Texas; and other factors affecting the real estate industry generally. The Company refers you to the documents filed by the Company from time to time with the Securities and Exchange Commission, specifically the section titled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, which discuss these and other factors that could adversely affect the Company’s results. The Company undertakes no obligation to publicly update or revise these forward-looking statements (including the FFO and net income estimates), whether as a result of new information, future events or otherwise.
KEYWORDS: United States North America Indiana North Carolina