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SHARE-BASED COMPENSATION | 12 Months Ended
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Dec. 31, 2023
Share-Based Payment Arrangement [Abstract] |
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION Overview The Company’s 2013 Equity Incentive Plan was amended and restated as of May 11, 2022 (the “Equity Plan”) to, among other things, provide for the issuance of up to an additional 3,000,000 common share equivalents of the Company. The Equity Plan authorizes the issuance of share options, share appreciation rights, restricted shares and units, long-term incentive plan units (“LTIP Units”), “appreciation only” LTIP Units (“AO LTIP Units”), performance awards and other share-based awards to employees and trustees. As of December 31, 2023, there were 5,564,715 common share equivalents available for grant under the Equity Plan. The Company accounts for its share-based compensation in accordance with the fair value recognition provisions provided in ASC 718, Stock Compensation. During the years ended December 31, 2023, 2022 and 2021, the Company recognized $10.1 million, $10.3 million, and $7.2 million of share-based compensation expense, net of amounts capitalized, respectively, which is included within “General, administrative and other” expenses in the accompanying consolidated statements of operations and comprehensive income. During the years ended December 31, 2023, 2022 and 2021, the Company capitalized $1.4 million, $1.3 million, and $1.0 million of share-based compensation for development activities, respectively. The Company recognizes forfeitures as they occur. Share Options Pursuant to the Equity Plan, the Company may periodically grant options to purchase common shares at an exercise price equal to the grant date fair value of the Company’s common shares. Options granted typically vest over a five-year period and expire 10 years from the grant date. The Company issues new common shares upon the exercise of options. There was no option activity during the year ended December 31, 2023 as all outstanding options were exercised during 2022. In addition, no options were granted during the years ended December 31, 2023, 2022 or 2021. The aggregate intrinsic value of the 1,250 options exercised during each of the years ended December 31, 2022 and 2021 was $3,300 and $6,550, respectively. Restricted Shares The Equity Plan authorizes the grant of restricted common shares, which are considered outstanding shares from the date of grant and typically vest over a period ranging from three to five years. The Company pays dividends on restricted shares and such dividends are recorded within shareholders’ equity. The following table summarizes the activity for the restricted shares that were granted to the Company’s employees and Board of Trustees for the year ended December 31, 2023:
| Number of Restricted Shares |  | Weighted Average Grant Date Fair Value per Share
Restricted shares outstanding as of January 1, 2023 | 300,833 |  |  | $ | 19.98 |
Shares granted | 229,551 |  |  | 21.45 |
Shares forfeited | (9,238) |  |  | 21.64 |
Shares vested | (184,069) |  |  | 19.38 |
Restricted shares outstanding as of December 31, 2023 | 337,077 |  |  | $ | 21.28 |
The following table summarizes the restricted share grants and vestings during the years ended December 31, 2023, 2022 and 2021 (dollars in thousands, except share and per share data):
| Number of Restricted Shares Granted |  | Weighted Average Grant Date Fair Value per Share |  | Fair Value of Restricted Shares Vested
2023 | 229,551 |  |  | $ | 21.45 |  |  | $ | 3,936 |
2022 | 206,855 |  |  | $ | 21.15 |  |  | $ | 4,459 |
2021 | 194,411 |  |  | $ | 19.85 |  |  | $ | 3,763 |
As of December 31, 2023, there was $3.9 million of total unrecognized compensation expense related to restricted shares, which is expected to be recognized over a weighted average period of one year. We expect to incur $2.3 million of this expense in 2024, $1.4 million in 2025, and the remainder in 2026. Restricted Units Time-based restricted unit awards were granted on a discretionary basis to the Company’s named executive officers in 2023, 2022 and 2021 based on a review of the prior year’s performance. The following table summarizes the activity for the restricted unit awards for the year ended December 31, 2023:
| Number of Restricted Units |  | Weighted Average Grant Date Fair Value per Unit
Restricted units outstanding as of January 1, 2023 | 407,138 |  |  | $ | 14.41 |
Restricted units granted | 163,515 |  |  | 17.45 |
Restricted units vested | (167,783) |  |  | 14.48 |
Restricted units outstanding as of December 31, 2023 | 402,870 |  |  | $ | 15.61 |
The following table summarizes the restricted unit grants and vestings during the years ended December 31, 2023, 2022 and 2021 (dollars in thousands, except unit and per unit data):
| Number of Restricted Units Granted |  | Weighted Average Grant Date Fair Value per Unit |  | Fair Value of Restricted Units Vested
2023 | 163,515 |  |  | $ | 17.45 |  |  | $ | 3,740 |
2022 | 138,505 |  |  | $ | 17.07 |  |  | $ | 3,173 |
2021 | 72,689 |  |  | $ | 14.26 |  |  | $ | 2,956 |
As of December 31, 2023, there was $4.6 million of total unrecognized compensation expense related to restricted units, which is expected to be recognized over a weighted average period of 1.1 years. We expect to incur $2.6 million of this expense in 2024, $1.8 million in 2025, and the remainder in 2026. AO LTIP Units – 2021 Awards During the year ended December 31, 2021, in connection with its annual review of executive compensation and as described in the table below, the Compensation Committee approved an aggregate grant of AO LTIP Units to the Company’s executive officers under the Equity Plan.
| Number of AO LTIP Units |  | Participation Threshold per AO LTIP Unit
John A. Kite | 477,612 |  |  | $ | 16.69 |
Thomas K. McGowan | 149,254 |  |  | $ | 16.69 |
Heath R. Fear | 119,403 |  |  | $ | 16.69 |
The Company entered into award agreements with each executive officer with respect to his awards, which provide terms of vesting, conversion, distribution, and other terms. AO LTIP Units are designed to have economics similar to stock options and allow the recipient, subject to vesting requirements, to realize value above a threshold level set as of the grant date of the award (the “Participation Threshold”). The value of vested AO LTIP Units is realized through conversion into a number of vested Long-Term Incentive Plan (“LTIP”) Units in the Operating Partnership determined on the basis of how much the value of a common share of the Company has increased over the Participation Threshold. The AO LTIP Units are only exercisable and convertible into vested LTIP Units of the Operating Partnership to the extent that they become vested AO LTIP Units. The awards of AO LTIP Units are subject to both time-based and stock price performance-based vesting requirements. Subject to the terms of the award agreement, the AO LTIP Units shall vest and become fully exercisable as of the date that both of the following requirements have been met: (i) the grantee remains in continuous service from the grant date through the third anniversary of the grant date; and (ii) at any time during the period beginning in the second year and ending at the end of the fifth year following the grant date, the reported closing price per common share of the Company appreciates at least 15% over the applicable Participation Threshold per AO LTIP Unit (as set forth in the table above) for a minimum of 20 consecutive trading days. Any AO LTIP Units that do not become vested will be forfeited and become null and void as of the fifth anniversary of the grant date, but AO LTIP Units may also be forfeited earlier in connection with a corporate transaction or with the executive’s termination of service. The AO LTIP Units were valued using a Monte Carlo simulation and the resulting compensation expense is being amortized over three years awards. Compensation expense for the awards granted in 2021 totaled $3.0 million, of which we recognized $0.9 million, $1.0 million and $1.0 million of compensation expense during the years ended December 31, 2021, 2022 and 2023, respectively, and expect to incur the remainder in 2024. Special Long-Term Equity Award In January 2022, the Compensation Committee of the Company’s Board of Trustees granted a total of 363,883 LTIP Units to the Company’s named executive officers as a special long-term equity award related to the October 2021 merger with RPAI, which are subject to both performance and service conditions. The LTIP Units granted are subject to an approximate three-year performance and service period, from October 23, 2021 through December 31, 2024, and the performance components are as follows: (i) cumulative annualized net operating income for executed new leases from October 1, 2021 to December 31, 2024, which will be weighted at 60%; (ii) post-merger cash general and administrative expense synergies achieved as of the end of the performance period, which will be weighted at 20%; and (iii) same property net operating income margin improvement over the performance period, which will be weighted at 20%. Overall performance is further subject to an absolute total shareholder return modifier that has the ability to increase (or decrease) the total number of LTIP Units eligible to vest by 25% (not to exceed the maximum number of LTIP Units). Distributions will accrue during the performance period and be paid only on LTIP Units that vest at the conclusion of the performance period, and any accrued distributions on vested LTIP Units will be settled in cash at such time.

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