Kite Realty to engineer 1-for-4 reverse stock split

Back to TopCommentsE-mailPrintBookmark and Share

It’s not often a publicly traded company can predict with certainty when its share price will balloon.

Indianapolis-based Kite Realty Group Trust hopes such a surge will attract the interest of indifferent investors, although the value of Kite holdings will remain the same.

Kite is engineering a 1-for-4 reverse stock split—essentially converting every four of its 332.7 million outstanding shares into a single share. The reverse split is set to take place after market trading on Aug. 11.

Correspondingly, Kite’s share price will quadruple, although the value of investors’ holdings will remain the same.

For example, Kite shares on Tuesday morning were trading at $6.32 each. Four shares would be worth $25.28. After a 1-for-4 reverse split, an investor with four shares would have a single share, worth the same $25.28.

Shares for the Indianapolis-based real estate investment trust have languished in the $6 range the last 18 months, even through the stock market’s raging bull run in 2013.

Adam Basch, Kite’s chief investment officer, said the firm hopes that moving the stock price into double digits will give shares a more stable foundation and an image makeover of sorts.

“Shares under $10 in general have a lot more volatility, because they’re often targeted by high-frequency traders,” Basch said. “So, a higher price reduces volatility.

“It can also broaden the universe of potential investors. There are certain funds and institutional owners who don’t invest in single-digit stocks.”

The reverse split doesn’t change much for Kite, he said. “It’s more of an optical change that we think benefits our investors.”

The move will reduce the number of outstanding shares to 83.2 million, which puts Kite more in line with its peers, Basch said.

Kite officials also are hoping for a bump in share price due to the firm’s recent $1.2 billion acquisition of Illinois-based Inland Diversified Real Estate Trust Inc. The deal gives Kite $4 billion in assets and swells its roster of properties from 74 to more than 130.

“There are a lot of things affecting [the stock] because of this merger that have not yet cleared out," CEO John Kite said in an interview with IBJ last week. "We think there’s a lot of upside. We hope that the market will recognize it.”

“Especially after a merger where you’re doubling the size of your company, it takes some time for that to resonate,” he said. “But once we begin posting our numbers as a combined entity and investors can see what we’re doing, and the trajectory ahead of us, we feel like we should be awarded for that.”


Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. I never thought I'd see the day when a Republican Mayor would lead the charge in attempting to raise every tax we have to pay. Now it's income taxes and property taxes that Ballard wants to increase. And to pay for a pre-K program? Many studies have shown that pre-K offer no long-term educational benefits whatsoever. And Ballard is pitching it as a way of fighting crime? Who is he kidding? It's about government provided day care. It's a shame that we elected a Republican who has turned out to be a huge big spending, big taxing, big borrowing liberal Democrat.

  2. Why do we blame the unions? They did not create the 11 different school districts that are the root of the problem.

  3. I was just watching an AOW race from cleveland in 1997...in addition to the 65K for the race, there were more people in boats watching that race from the lake than were IndyCar fans watching the 2014 IndyCar season finale in the Fontana grandstands. Just sayin...That's some resurgence modern IndyCar has going. Almost profitable, nobody in the grandstands and TV ratings dropping 61% at some tracks in the series. Business model..."CRAZY" as said by a NASCAR track general manager. Yup, this thing is purring like a cat! Sponsors...send them your cash, pronto!!! LOL, not a chance.

  4. I'm sure Indiana is paradise for the wealthy and affluent, but what about the rest of us? Over the last 40 years, conservatives and the business elite have run this country (and state)into the ground. The pendulum will swing back as more moderate voters get tired of Reaganomics and regressive social policies. Add to that the wave of minority voters coming up in the next 10 to 15 years and things will get better. unfortunately we have to suffer through 10 more years of gerrymandered districts and dispropionate representation.

  5. Funny thing....rich people telling poor people how bad the other rich people are wanting to cut benefits/school etc and that they should vote for those rich people that just did it. Just saying..............