Retail center owner Kite reports 92% rent collection for third quarter

Indianapolis-based Kite Realty Group Trust reported losses of $4.6 million in the third quarter and saw revenue drop 13% year-over-year, despite collecting rent for most of its properties over the past three months.

The Indianapolis-based real estate investment trust on Wednesday reported $65.1 million in revenue from June to August—an uptick of about $2 million from the previous quarter, but a drastic drop from the $75 million earned during the same period in 2019.

So far this year, Kite has brought in about $198.3 million in revenue, a drop of 17% from this point last year, when it brought in about $240 million.

Kite said it had funds from operations of $26.3 million, or 30 cents per share, in the quarter. Funds from operations, or FFO, is a closely watched measure in the REIT industry. It takes profit and adds back items such as depreciation and amortization.

The company took a loss of $4.6 million, or five cents per share, compared with a loss of $20 million one year ago.

CEO John Kite said the company collected 92% of base rent from tenants in the third quarter despite the pandemic, while deferring 2% of total rent. In the second quarter, the company collected 80% of rent and deferred another 9%. About 91% of rent for October has been collected.

“The KRG team continues to diligently address dislocation caused by the pandemic,” he said in a statement. “We are now shifting our focus to the path forward by replacing dislocated tenants and prudently allocating capital to add value to our current portfolio.”

Stein Mart, which has six locations across Kite’s portfolio, is expected to close all its stores in the coming months due to bankruptcy. Kite said during a Thursday earnings call the company added little value to the portfolio, with price-per-square-foot leases around $8. But the stores also occupied a large amount of space at the firm’s centers.

About 97% of Kite’s tenants were open for business and operating in some capacity as of Oct. 26, the company said.

The company signed and renewed 78 leases, representing over 457,000 square feet. Of those, 22 were for big box users—19 of which are now open and paying rent.

The company sold one non-operating property, Courthouse Shadows in Naples, Florida, for about $14 million.

Kite shares dropped 3% on Wednesday, before earnings were announced, to $10.04 per share. They are down 49% since the beginning of the year.

“We’ve gone through a huge shock to the system, and we’re recovering from it,” said Kite, referring to the pandemic. “We are recovering … but it takes some time to do that. We’re not afraid of this thing—we’re dealing with this thing.”