KITE REALTY AND GIC PARTNERSHIP

076 - Industry Insight IB (CRE)

COMMERCIAL REAL ESTATE MARKET OVERVIEW

The commercial real estate market this week demonstrated strong investor confidence in strategic asset classes with long-term relevance and consumer connectivity. Major transactions in both retail and logistics sectors highlight this trend:

• Retail Sector Highlight: Kite Realty Group partnered with Singapore's GIC to acquire Legacy West—a $785 million mixed-use luxury lifestyle center in Plano, Texas, representing one of 2025's largest retail transactions to date.

• Logistics Sector Highlight: Amazon announced a $4 billion investment to triple its rural delivery network across the United States by the end of 2025.

MAJOR TRANSACTIONS

RETAIL SECTOR: KITE REALTY AND GIC PARTNERSHIP

Transaction Overview: $785M acquisition of Legacy West in Plano, Texas

Partnership Structure:

• Kite Realty Group: 52% stake with operational control

• GIC (Singapore sovereign wealth fund): 48% stake

• Plans for a second joint venture targeting additional open-air retail and mixed-use properties

Property Details:

• 344,076 square foot mixed-use lifestyle center

• Features luxury retailers including Louis Vuitton and Gucci

• Includes 444K SF of office space

• Contains 782 residential units

Strategic Significance:

• Represents a "rare opportunity" for Kite to strengthen its Dallas-Fort Worth market presence

• Aligns with Kite's long-term strategy of investing in premier retail assets

• Enhances relationships with luxury brands such as LVMH and Kering

• Demonstrates renewed confidence in open-air and experiential retail formats

• Second joint venture planned focusing on larger-format shopping centers in Florida and Texas

LOGISTICS SECTOR: AMAZON RURAL EXPANSION

Investment Overview: $4B to expand rural delivery network

Project Scope:

• Triple rural delivery stations from 70 (end of 2023) to 210 (end of 2025)

• Create approximately 100,000 new jobs across warehouse staff and contracted delivery drivers

• Reduce dependence on third-party carriers like USPS and UPS

• Gain greater control over logistics in traditionally underserved areas

Broader Context:

• Occurs as UPS announces 20,000 job cuts and facility closures

• UPS's retrenchment partly attributed to loss of Amazon shipment volume

• Amazon reportedly exploring additional $15B warehouse expansion

• Signals potential reversal of post-pandemic construction slowdown

MARKET IMPLICATIONS

Retail Sector Trends:

• Strong investor confidence in high-performing retail and mixed-use assets

• Premium valuation for open-air formats with luxury tenants

• Particular interest in high-growth Sun Belt metropolitan areas

• Global institutional capital seeking co-investment opportunities in U.S. retail real estate

• Luxury tenant anchoring emerging as a value-enhancing strategy

Logistics Sector Trends:

• Major shift in delivery infrastructure control

• Traditional carriers retrenching as Amazon builds proprietary network

• Rebalancing of commercial real estate demand across warehouse formats

• Secondary and tertiary markets likely to see increased real estate activity

• Growth in complementary developments (housing, supporting retail, distribution centers)

Overall Market Direction:

• Strategic infrastructure development driving investment patterns

• Both sectors shaped by key players' control of critical infrastructure components

• Job creation functioning as a significant commercial real estate demand driver