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ORLANDO-Speaking at the Raymond James 27th Annual Institutional Investors Conference here Monday, John A. Kite, president and chief executive officer with Indianapolis-based Kite Realty Group Trust, revealed that his company has placed greater emphasis on development rather than acquisitions. During the past year, Kite has added 10 new projects to its development pipeline for a total of 14.
"The yield seeing in development is so compelling in the development business that we are putting capital in development at a much greater impact than in acquisitions," Kite told investors. "The yields of high-quality shopping centers have significantly decreased in the last couple of years."
The current pipeline now stands at $176 million, with project completion dates slated for this year and 2007. While the company's target markets include Indiana, Florida and Texas, with 80% of the company's base rents coming from those markets, Kite said a greater priority has been placed on Florida. Recently, the company acquired 55 acres in the Sunshine State for future development.
During the fourth quarter of 2005, Kite added two new projects to the development pipeline and acquired undeveloped land for future projects. Located in Noblesville, IN, Stoney Creek Commons II will be a 49,330-sf shopping center located adjacent to a Lowe's and outlots developed by the company in 2000. Kite also acquired approximately 12 acres in Westfield, IN. In the fourth quarter, the company added Bridgewater Marketplace, Phase I, an approximately 51,000-sf neighborhood shopping center to be constructed on the 12-acre parcel, to the development pipeline at an anticipated total project cost of $15.3 million.
In October, Kite contributed $16.7 million for a 50% interest in a joint venture that owns 32.5 acres of vacant land in Delray Beach, FL. Delray Beach Marketplace is a planned mixed-use development that is zoned to support up to 322,000 sf and is anticipated to include two anchors, junior boxes, small shops, restaurants and residential units.
Finally, in November the company contributed $11 million for a 50% interest in a joint venture that acquired 22.2 acres of undeveloped land at the intersection of Interstate 75 and Pines Boulevard in Pembroke Pines, FL. The company plans to develop an approximately 145,000-sf community shopping center anchored by Whole Foods.
Kite's CEO also noted that during the fourth quarter the company offered a second round of 9.4 million common shares at a price of $15.01 per share receiving gross proceeds of approximately $141 million. The company received net proceeds of approximately $133.6 million.
At the end of the year the company owned interests in 40 retail operating properties and in 14 retail developments, totaling approximately 6.2 million sf and 1.8 million sf, respectively. The percentage leased of owned gross leasable area of the retail operating portfolio was 95.3% at year-end, which includes 94 leases executed in 2005 for nearly 500,000 sf.
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