Kite Realty Group Trust Upgraded by Moody’s to Baa2 with Stable Outlook
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Insights
The upgrade of Kite Realty Group Trust's corporate credit rating from Baa3 to Baa2 by Moody's Investors Service is a significant indicator of the company's financial health and stability. This upgrade reflects a positive assessment of the company's creditworthiness, implying that Kite Realty has a lower risk of default and may enjoy more favorable borrowing terms in the future. The stable rating outlook further suggests that Moody's does not anticipate significant changes in the company's financial status in the near term.
From a financial perspective, the upgrade should be seen as a vote of confidence in Kite Realty's diversified portfolio and its ability to generate steady operating cash flows, particularly from its grocery-anchored centers. These types of retail properties tend to be more recession-resistant, which could explain the resilience of the company's cash flows. Additionally, the moderate leverage metrics and strong fixed charge coverage ratio are indicative of responsible financial management and a conservative capital structure, which are qualities that investors and creditors typically view favorably.
Overall, this upgrade could potentially lead to a reduction in the cost of capital for Kite Realty, which can be reinvested in the business or returned to shareholders. However, it's important to note that while a credit rating upgrade is positive, it is just one factor among many that investors should consider when evaluating the company's overall financial health and growth prospects.
The credit rating upgrade of Kite Realty Group Trust may have implications for the broader retail real estate investment trust (REIT) sector. Kite Realty's focus on open-air retail properties, especially those anchored by grocery stores, suggests a strategic positioning that capitalizes on consumer trends favoring convenience and essential services. This positioning could serve as a benchmark for other REITs with similar portfolios.
Furthermore, the mention of 'sound liquidity' by Moody's underscores the importance of liquidity management in the REIT industry, which can be particularly vulnerable to market downturns due to the capital-intensive nature of real estate investments. Kite Realty's prudent capital strategy, characterized by modest total leverage and low secured leverage, could set a precedent for financial prudence that other REITs may follow, especially in an environment where interest rates and economic uncertainty may affect the sector.
It is also worth noting that the credit rating upgrade aligns with the industry's ongoing efforts to strengthen balance sheets and enhance financial flexibility. As such, Kite Realty's upgrade may reflect not only the company's individual performance but also the REIT sector's resilience and adaptability in the face of changing market conditions.
INDIANAPOLIS, Feb. 26, 2024 (GLOBE NEWSWIRE) -- Kite Realty Group Trust (NYSE: KRG) announced today that Moody’s Investors Service (“Moody’s”) upgraded the Company’s corporate credit rating to Baa2 from Baa3 and maintained a stable rating outlook.
In its public announcement on the matter, Moody’s cited “Kite Realty’s Baa2 ratings reflect its diversified portfolio of open-air retail properties, resilient operating cash flows from its grocery-anchored centers, moderate leverage metrics, strong fixed charge coverage, and sound liquidity” and noted “the REIT’s capital strategy is prudent with modest total leverage, low secured leverage, and a strong coverage ratio.”
About Kite Realty Group Trust
Kite Realty Group Trust (NYSE: KRG) is a real estate investment trust (REIT) headquartered in Indianapolis, IN that is one of the largest publicly traded owners and operators of open-air shopping centers and mixed-use assets. The Company’s primarily grocery-anchored portfolio is located in high-growth Sun Belt and select strategic gateway markets. The combination of necessity-based grocery-anchored neighborhood and community centers, along with vibrant mixed-use assets makes the KRG portfolio an ideal mix for both retailers and consumers. Publicly listed since 2004, KRG has nearly 60 years of experience in developing, constructing and operating real estate. Using operational, investment, development, and redevelopment expertise, KRG continuously optimizes its portfolio to maximize value and return to shareholders. As of December 31, 2023, the Company owned interests in 180 U.S. open-air shopping centers and mixed-use assets, comprising approximately 28.1 million square feet of gross leasable space. For more information, please visit kiterealty.com.
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Safe Harbor
This release, together with other statements and information publicly disseminated by us, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) 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, financial or otherwise, 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: our ability to deliver continued outperformance and maintain a best-in-class balance sheet; national and local economic, business, banking, real estate and other market conditions, particularly in connection with low or negative growth in the U.S. economy as well as economic uncertainty (including a potential economic slowdown or recession, rising interest rates, inflation, unemployment, or limited growth in consumer income or spending); 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, the Company’s indebtedness; the level and volatility of interest rates; the financial stability of tenants; the competitive environment in which the Company operates, including potential oversupplies of and reduction in demand for rental space; acquisition, disposition, development and joint venture risks; property ownership and management risks, including the relative illiquidity of real estate investments, and expenses, vacancies or the inability to rent space on favorable terms or at all; the Company’s ability to maintain the Company’s status as a real estate investment trust for U.S. federal income tax purposes; potential environmental and other liabilities; impairment in the value of real estate property the Company owns; the attractiveness of our properties to tenants, the actual and perceived impact of e-commerce on the value of shopping center assets and changing demographics and customer traffic patterns; business continuity disruptions and a deterioration in our tenant’s ability to operate in affected areas or delays in the supply of products or services to us or our tenants from vendors that are needed to operate efficiently, causing costs to rise sharply and inventory to fall; risks related to our current geographical concentration of the Company’s properties in the states of Texas, Florida, and North Carolina and the metropolitan statistical areas of New York, Atlanta, Seattle, Chicago, and Washington, D.C.; civil unrest, acts of violence, terrorism or war, acts of God, climate change, epidemics, pandemics (including COVID-19), natural disasters and severe weather conditions, including such events that may result in underinsured or uninsured losses or other increased costs and expenses; changes in laws and government regulations including governmental orders affecting the use of the Company’s properties or the ability of its tenants to operate, and the costs of complying with such changed laws and government regulations; possible short-term or long-term changes in consumer behavior due to COVID-19 and the fear of future pandemics; our ability to satisfy environmental, social or governance standards set by various constituencies; insurance costs and coverage, especially in Florida and Texas coastal areas; risks associated with cybersecurity attacks and the loss of confidential information and other business disruptions; other factors affecting the real estate industry generally; and other risks identified in reports the Company files with the Securities and Exchange Commission (“the SEC”) or in other documents that it publicly disseminates, including, in particular, the section titled “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and in the Company’s quarterly reports on Form 10-Q. The Company undertakes no obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.
Contact Information: Kite Realty Group Trust
Tyler Henshaw
SVP, Capital Markets & Investor Relations
317.713.7780
thenshaw@kiterealty.com
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