Exhibit 10.39

Option No.: SO-__

KITE REALTY GROUP TRUST
2004 EQUITY INCENTIVE PLAN

FORM OF NONQUALIFIED SHARE OPTION AGREEMENT

     Kite Realty Group Trust, a Maryland real estate investment trust (the
“Company”), grants an option to purchase common shares of beneficial interest,
$.01 par value, (the “Shares”) of the Company to the Optionee named below. The
terms and conditions of the option are set forth in this cover sheet, in the
attachment, and in the Company’s 2004 Equity Incentive Plan (the “Plan”).

Grant Date: _______________________

Name of Optionee: ____________________

Optionee’s Social Security Number: _____-____-_____

Number of Shares Covered by Option: ________________

Option Price per Share: $___________

          Vesting Start Date: ____________________

     By signing this cover sheet, you agree to all of the terms and conditions
described in the attached Agreement and in the Plan, a copy of which is also
attached. You acknowledge that you have carefully reviewed the Plan, and agree
that the Plan will control in the event any provision of this Agreement should
appear to be inconsistent.

     
Optionee:
     

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(Signature)  

   
Company:
     

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(Signature)  

   

Title:    

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Attachment

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     This is not a share certificate or a negotiable instrument.

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KITE REALTY GROUP TRUST
2004 EQUITY INCENTIVE PLAN

NONQUALIFIED SHARE OPTION AGREEMENT

      Nonqualified Share Option   This option is not intended to be an incentive
stock option under Section 422 of the Internal Revenue Code and will be
interpreted accordingly.     Vesting   This option is only exercisable before it
expires and then only with respect to the vested portion of the option. Subject
to the preceding sentence, you may exercise this option, in whole or in part, to
purchase a whole number of vested Shares not less than 100 Shares, unless the
number of Shares purchased is the total number available for purchase under the
option, by following the procedures set forth in the Plan and below in this
Agreement.

Except as otherwise provided in any employment agreement between you and the
Company, your right to purchase Shares under this option vests as to one-fifth
(1/5) of the total number of Shares covered by this option, as shown on the
cover sheet, on the one-year anniversary of the Vesting Start Date (“Anniversary
Date”), provided you then continue in Service. Thereafter, for each such vesting
date that you remain in Service, the number of Shares which you may purchase
under this option vests at the rate of one-sixtieth (1/60) per month as of the
first day of each month following the month of the Anniversary Date. The
resulting aggregate number of vested Shares will be rounded to the nearest whole
number, and you cannot vest in more than the number of Shares covered by this
option.

No additional Shares will vest after your Service has terminated for any reason.
    Term   Your option will expire in any event at the close of business at
Company headquarters on the day before the 10th anniversary of the Grant Date,
as shown on the cover sheet. Your option will expire earlier if your Service
terminates, as described below.     Regular Termination   If your Service
terminates for any reason, other than death, Disability, Cause or a voluntary
resignation without Good Reason, then your option expires at the close of
business at Company headquarters on the 90th day after your termination date.  
  Termination for Cause or Resignation without Good Reason   If your Service is
terminated for Cause or you voluntarily resign without Good Reason, then you
immediately forfeit all rights to your option and the option immediately
expires.

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      Death   If your Service terminates because of your death, then your option
shall become fully vested and will expire at the close of business at Company
headquarters on the date twelve (12) months after the date of death. During that
twelve month period, your estate or heirs may exercise your option.

In addition, if you die during the 90-day period described in connection with a
regular termination (i.e., a termination of your Service not on account of your
death, Disability or Cause), and a vested portion of your option has not yet
been exercised, then your option will instead expire on the date twelve (12)
months after your termination date. In such a case, during the period following
your death up to the date twelve (12) months after your termination date, your
estate or heirs may exercise the vested portion of your option.     Disability  
If your Service terminates because of your Disability, then your option shall
become fully vested and will expire at the close of business at Company
headquarters on the date twelve (12) months after your termination date.    
Leaves of Absence   For purposes of this option, your Service does not terminate
when you go on a bona fide employee leave of absence that was approved by the
Company in writing, if the terms of the leave provide for continued Service
crediting, or when continued Service crediting is required by applicable law.
However, your Service will be treated as terminating 90 days after you went on
employee leave, unless your right to return to active work is guaranteed by law
or by a contract. Your Service terminates in any event when the approved leave
ends unless you immediately return to active employee work.

The Company determines, in its sole discretion, which leaves count for this
purpose, and when your Service terminates for all purposes under the Plan.    
Notice of Exercise   When you wish to exercise this option, you must notify the
Company by filing the proper “Notice of Exercise” form at the address given on
the form. Your notice must specify how many Shares you wish to purchase (in a
parcel of at least 100 Shares generally). Your notice must also specify how your
Shares should be registered (in your name only or in your and your spouse’s
names as joint tenants with right of survivorship). The notice will be effective
when it is received by the Company.

If someone else wants to exercise this option after your death, that person must
prove to the Company’s satisfaction that he or she is entitled to do so.

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        Form of Payment   When you submit your notice of exercise, you must
include payment of the option price for the Shares you are purchasing. Payment
may be made in one (or a combination) of the following forms:         • Cash,
your personal check, a cashier’s check, a money order or another cash equivalent
acceptable to the Company.         • Shares which have already been owned by you
for more than six months and which are surrendered to the Company. The value of
the Shares, determined as of the effective date of the option exercise, will be
applied to the option price.         • By delivery (on a form prescribed by the
Company) of an irrevocable direction to a licensed securities broker acceptable
to the Company to sell Shares and to deliver all or part of the sale proceeds to
the Company in payment of the aggregate option price and any withholding taxes
(if approved in advance by the Compensation Committee of the Board if you are
either an executive officer or a director of the Company).       Withholding
Taxes   You will not be allowed to exercise this option unless you make
acceptable arrangements to pay any withholding or other taxes that may be due as
a result of the option exercise or sale of Shares acquired under this option. In
the event that the Company determines that any federal, state, local or foreign
tax or withholding payment is required relating to the exercise or sale of
Shares arising from this grant, the Company shall have the right to require such
payments from you, or withhold such amounts from other payments due to you from
the Company or any Affiliate.       Transfer of Option   During your lifetime,
only you (or, in the event of your legal incapacity or incompetency, your
guardian or legal representative) may exercise the option. You cannot transfer
or assign this option. For instance, you may not sell this option or use it as
security for a loan. If you attempt to do any of these things, this option will
immediately become invalid. You may, however, dispose of this option in your
will or it may be transferred upon your death by the laws of descent and
distribution.

Regardless of any marital property settlement agreement, the Company is not
obligated to honor a notice of exercise from your spouse, nor is the Company
obligated to recognize your spouse’s interest in your option in any other way.  
    Retention Rights   Neither your option nor this Agreement give you the right
to be retained by the Company (or any parent, Subsidiaries or Affiliates)

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        in any capacity. The Company (and any parent, Subsidiaries or
Affiliates) reserve the right to terminate your Service at any time and for any
reason.     Shareholder Rights   You, or your estate or heirs, have no rights as
a shareholder of the Company until a certificate for your option’s Shares has
been issued (or an appropriate book entry has been made). No adjustments are
made for dividends or other rights if the applicable record date occurs before
your share certificate is issued (or an appropriate book entry has been made),
except as described in the Plan.     Adjustments   In the event of a split, a
dividend or a similar change in the Shares, the number of Shares covered by this
option and the option price per Share shall be adjusted (and rounded down to the
nearest whole number) if required pursuant to the Plan. Your option shall be
subject to the terms of the agreement of merger, liquidation or reorganization
in the event the Company is subject to such corporate activity.     Applicable
Law   This Agreement will be interpreted and enforced under the laws of the
State of Maryland, other than any conflicts or choice of law rule or principle
that might otherwise refer construction or interpretation of this Agreement to
the substantive law of another jurisdiction.     The Plan   The text of the Plan
is incorporated in this Agreement by reference. Certain capitalized terms used
in this Agreement are defined in the Plan, and have the meaning set forth in the
Plan.

This Agreement and the Plan constitute the entire understanding between you and
the Company regarding this option. Any prior agreements, commitments or
negotiations concerning this option are superseded.     Data Privacy   In order
to administer the Plan, the Company may process personal data about you. Such
data includes but is not limited to the information provided in this Agreement
and any changes thereto, other appropriate personal and financial data about you
such as home address and business addresses and other contact information,
payroll information and any other information that might be deemed appropriate
by the Company to facilitate the administration of the Plan.

By accepting this option, you give explicit consent to the Company to process
any such personal data. You also give explicit consent to the Company to
transfer any such personal data outside the country in which you work or are
employed, including, with respect

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        to non-U.S. resident Optionees, to the United States, to transferees who
shall include the Company and other persons who are designated by the Company to
administer the Plan.     Consent to Electronic Delivery   The Company may choose
to deliver certain statutory materials relating to the Plan in electronic form.
By accepting this option grant you agree that the Company may deliver the Plan
prospectus and the Company’s annual report to you in an electronic format. If at
any time you would prefer to receive paper copies of these documents, as you are
entitled to, the Company would be pleased to provide copies. Please contact
Daniel R. Sink at (317) 577-5600 to request paper copies of these documents.

By signing the cover sheet of this Agreement, you agree to all of the terms and
conditions described above and in the Plan.

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