Kite Paves Way for $22M Tarpon Springs Plaza

NAPLES, FL-Kite Realty Group Trust moves forward with its plans for the $21.5-million development of Tarpon Springs Plaza at the southeast corner of Interstate 75 and Immokalee Road. It will be the Indianapolis-based retail REIT's third shopping center in Naples and its seventh in Florida.

In order to break ground, Kite acquired the 15-acre property from four of its principals, Alvin, John and Paul Kite, chairman, CEO and president, respectively, and Thomas McGowan, EVP and COO. "Because of unresolved zoning issues, the principals land-banked the property in August 2004 in connection with the company's initial public offering until the zoning issues were cleared," Dan Sink, CFO, tells GlobeSt.com.

The principals' 100% interest in the development property was approximately $7.2 million, which included the assumption and repayment of debt. A portion of the purchase price, approximately $3.1 million, equaled the principals' cost in the project with no profit. It was paid by the issue of 214,049 units of limited partnership interest in the company's operating partnership, Kite Realty Group LP. The partnership assumed about $220,000 in third-party accounts payable and repaid approximate $3.9 million in existing indebtedness on the development property. No similar agreements between Kite and the principals remain, Sink says, and the buyback paves the way for construction of the center to begin this summer.

Tarpon Springs Plaza will contain 70,000 sf of retail junior box tenants, 25,000 sf of retail shops and up to four outparcels. In addition, Target acquired an 18-acre adjacent parcel to the principal's when the land was originally acquired in November 2003, prior to Kite's IPO. Target will construct a 173,800-sf Super Target, which will shadow anchor Tarpon Springs.

Of the four outparcels, Sink says, "typically, we would ground lease them." He anticipates negotiating three junior box leases, and discussions are under way, he says, with prospects for both the outparcels and the junior box space, "but there is nothing specific to report now." Rental rate for the retail shops, he says, "will be in the mid-$20s per sf."

Kite's other Naples centers are Kingslake Square and Shops at Eagle Creek, which aggregate 161,441 sf. "We like Naples," Sinks says. "It's a fast-growing area and has good household income levels." Other Kite Florida centers are in Coral Springs, Daytona Beach, Orlando and Gainesville. In all, it owns interests in 37 properties aggregating 5.3 million sf and in 10 properties under development, which total 1.3 million sf.