Kite Realty CEO Sees REITs Focusing on Redevelopment

John Kite, CEO of Kite Realty Group Trust (NYSE: KRG), joined REIT.com for a CEO Spotlight video interview at REITWorld 2015: NAREIT’s Annual Convention for All Things REIT at the Wynn Las Vegas.

Between late 2014 and early 2015, Kite Realty sold about $320 million of properties that it had acquired through the 2014 merger with Inland Diversified Real Estate Trust, Inc.  Kite noted that about $220 million of the proceeds went toward purchasing properties, while $100 million was earmarked to reduce leverage.

Asked whether REIT development pipelines will expand in 2016, Kite said he expects to see more redevelopment rather than ground-up development.

“Most of the REITs have pretty strong portfolios, but they are looking to improve them,” he said. Kite Realty, for example, has about $120 million of identified redevelopment projects that it is looking to start in the next 18 months. Kite pointed out that ground-up development is a little more difficult, since “returns are still a little more challenged.”

Meanwhile, Kite noted that new supply remains at a low level, a trend he expects to continue.

Kite also said he sees technology having a net positive impact on the demand for retail space.

All of the bricks and mortar retailers have embraced technology, Kite said. He added that most of the growth in online retail is a transfer from catalog retail, and that bricks and mortar retailers currently account for about 70 percent of online sales.

“There’s no question that people want convenience, and the bricks and mortar retailers are focused on that,” Kite said.