Weingarten Realty (WRI) announced today the results of its operations for the quarter ended June 30, 2013. The supplemental financial package with additional information can be found on the Company's website under the Investor Relations tab.
Second Quarter Operating and Financial Highlights
- Recurring Funds from Operations ("FFO") for the quarter increased to $0.49 per diluted share from $0.47 per diluted share a year ago;
- Same Property Net Operating Income increased 5.0% over the same quarter of the prior year;
- Occupancy increased 0.5% over the prior quarter to 94.2% and 0.4% over the prior quarter to 88.6% for spaces less than 10,000 square feet (referred to as “small shop space”);
- Acquisitions totaling $71 million and dispositions totaling $108 million were completed since the end of the first quarter; and,
- 6.50% Series F Cumulative Redeemable Preferred Shares totaling $200 million were redeemed.
Financial Results and Preferred Redemption
The Company reported net income attributable to common shareholders of $45.4 million or $0.37 per diluted share (hereinafter “per share”) for the second quarter of 2013, as compared to $22.6 million or $0.19 per share for the same period in 2012. Included in these operating results for 2013 was a non-cash write-off of preferred redemption costs of $0.13 per share related to the redemption of a portion of the Company’s Series F preferred shares. Included in 2012 were non-cash impairment charges of $0.21 per share. Net income for the six months ended June 30, 2013 was $79.1 million or $0.65 per share compared to $34.9 million or $0.29 per share for 2012.
Reported FFO was $46.1 million or $0.37 per share for the second quarter of 2013, compared to $55.1 million or $0.45 per share for 2012. Included in the 2013 amount was the write-off of preferred redemption costs of $0.13 per share and excluded from 2012 amount are impairments of $0.20 per share, as they relate to operating properties. Year-to-date, Reported FFO was $112.1 million or $0.90 per share for 2013 compared to $111.4 million or $0.90 per share for 2012.
Recurring FFO for the quarter ended June 30, 2013 was $0.49 per share or $61.4 million. For the same quarter last year, Recurring FFO was $0.47 per share or $57.4 million. The increase in Recurring FFO over the prior year was primarily due to increases in net operating income from our existing portfolio, reduced interest expense from favorable debt refinancings and reduced preferred share dividends due to redemptions. These increases were partially offset by the impact of the Company’s disposition program. For the six months, Recurring FFO was $120.3 million or $0.97 per share for 2013 compared to $114.2 million or $0.93 per share for 2012.
A reconciliation between net income attributable to common shareholders to Reported FFO and Recurring FFO is listed on page 5 of the Company’s supplemental package.
On June 5, 2013, the Company completed the redemption of $200 million of its 6.50% Series F Cumulative Redeemable Preferred Shares, leaving $150 million of these Series F shares outstanding. As a result of the transaction, preferred redemption costs totaling $15.9 million were expensed.
Same Property Net Operating Income ("SPNOI") increased by a strong 5.0% for the quarter primarily due to increased occupancy and a reduction in merchant fallouts. Year-to-date, SPNOI increased 4.4%.
Occupancy increased to 94.2% in the second quarter from 93.7% in the prior quarter and by 0.8% from 93.4% in the second quarter of 2012. Occupancy of small shop space increased by 0.4% from the prior quarter and 0.8% from the same quarter of the prior year to 88.6%.
The Company produced strong leasing results during the second quarter with 377 new leases and renewals, totaling 1.4 million square feet. These transactions were comprised of 156 new leases and 221 renewals, which represent annualized revenues of $9.3 million and $11.3 million, respectively. The average rental rate increase on new leases signed during the quarter was an exceptional 19.3%.
“This was a truly outstanding quarter for operations. Both the 5.0% increase in Same Property NOI and the jump in occupancy up to 94.2% are clear reflections of our high quality portfolio and the benefits of a best-in-class operating platform manned by a great team of associates,” said Johnny Hendrix, Executive Vice President and Chief Operating Officer.
During the quarter, the Company sold eleven non-core properties, five of which were owned in various joint ventures, and three land parcels for $108.2 million. As communicated previously, the Company is focused on selling assets which do not meet its current investment requirements and redeploying that capital into higher quality assets in its target markets. Year-to-date, the Company has sold $123.9 million in assets.
During the quarter, the Company completed the acquisition of two outstanding shopping centers. Queen Anne Marketplace in Seattle, Washington is a 66,000 square foot shopping center anchored by Metropolitan Market, an upscale neighborhood grocer operating in a densely populated, high barrier-to-entry urban infill location. The three-mile trade area enjoys a population of over 200,000 people with over 68% holding college degrees. This was the first property purchased in a joint venture between the Company and Bouwinvest in which Weingarten will hold a 51% interest. The Company also acquired Independence Plaza, a 324,000 square foot center in Laredo, Texas. This shopping center features a top performing H-E-B, T.J. Maxx, Ross, Hobby Lobby, Petco and Ulta Beauty. Independence Plaza is 97% leased and generates approximately 80% of its income from these national retailers. The Laredo MSA has the largest job growth forecast in the nation over the next 10 years and is influenced by the Eagle Ford Shale and an incredible pent up demand from millions of people in Northern Mexico who have very limited shopping opportunities. Year-to-date, the Company has invested $89.3 million in quality shopping centers in great markets.
“I am extremely pleased with the results of our capital recycling program this quarter. Our very active disposition program generated more than sufficient capital to complete these high quality investments, which are great additions to our already strong portfolio,” said Drew Alexander, President and Chief Executive Officer.
The Company is increasing Recurring FFO guidance and revising certain other guidance metrics as follows:
|Recurring FFO Per Diluted Share||$1.84 - $1.90||$1.89 - $1.93|
|Same Property NOI||+2% to +3%||+3% to +3.5%|
|Acquisitions||$175-$225 million||$100-$150 million|
|New Development||$25-$75 million||$15-$50 million|
|Dispositions||$200 - $300 million||$250 - $350 million|
The Board of Trust Managers declared a quarterly cash dividend of $0.305 per common share payable on September 13, 2013 to shareholders of record on September 5, 2013.
The Board of Trust Managers also declared dividends on the Company’s 6.50% Series F Cumulative Redeemable Preferred Shares (NYSE:WRIPrF) of $0.40625 per share for the quarter payable on September 13, 2013 to shareholders of record on September 5, 2013.
Conference Call Information
The Company also announced that it will host a live webcast of its quarterly conference call on August 1, 2013 at 10:00 a.m. Central Time. The live webcast can be accessed via the Company’s website at www.weingarten.com. Alternatively, if you are not able to access the call on the web, you can listen live by phone by calling (888) 771-4371 (conference ID # 32913549). A replay will be available through the Company’s website starting approximately two hours following the live call.
About Weingarten Realty Investors
Weingarten Realty Investors (WRI) is a shopping center owner, manager and developer. At June 30, 2013, the Company owned or operated under long-term leases, either directly or through its interest in real estate joint ventures or partnerships, a total of 281 properties which are located in 21 states spanning the country from coast to coast. These properties represent approximately 51.5 million square feet of which our interests in these properties aggregated approximately 30.8 million square feet of leasable area. To learn more about the Company’s operations and growth strategies, please visit www.weingarten.com.
Statements included herein that state the Company’s or Management’s intentions, hopes, beliefs, expectations or predictions of the future are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 which by their nature, involve known and unknown risks and uncertainties. The Company’s actual results, performance or achievements could differ materially from those expressed or implied by such statements. Reference is made to the Company’s regulatory filings with the Securities and Exchange Commission for information or factors that may impact the Company’s performance.
|Weingarten Realty Investors|
|(in thousands, except per share amounts)|
|Three Months Ended||Six Months Ended|
|CONDENSED CONSOLIDATED STATEMENTS OF INCOME||(Unaudited)||(Unaudited)|
|Depreciation and Amortization||38,190||32,465||76,895||64,731|
|Real Estate Taxes, net||15,444||13,976||30,104||27,268|
|General and Administrative Expense||6,194||6,378||12,861||14,685|
|Interest Expense, net||(28,772||)||(28,628||)||(46,175||)||(59,359||)|
|Interest and Other Income, net||2,098||582||3,924||2,968|
|Gain on Sale of Real Estate Joint Venture and Partnership Interests||83||-||11,592||5,562|
|Equity in Earnings (Losses) of Real Estate Joint Ventures and Partnerships, net||4,729||(15,695||)||9,342||(11,620||)|
|(Provision) Benefit for Income Taxes||(197||)||279||(33||)||313|
|Income (Loss) from Continuing Operations||24,522||(3,126||)||67,396||10,485|
|Operating Income from Discontinued Operations||1,379||4,539||3,180||9,492|
|Gain on Sale of Property from Discontinued Operations||78,012||31,264||78,012||34,898|
|Income from Discontinued Operations||79,391||35,803||81,192||44,390|
|Gain on Sale of Property||265||84||407||524|
Less: Net Income Attributable to Noncontrolling Interests
|Net Income Adjusted for Noncontrolling Interests||66,436||31,419||109,786||52,616|
Less: Preferred Share Dividends
Less: Redemption Costs of Preferred Shares
|Net Income Attributable to Common Shareholders -- Basic||$||45,421||$||22,550||$||79,089||$||34,878|
Net Income Attributable to Common Shareholders -- Diluted
|FUNDS FROM OPERATIONS|
|Net Income Attributable to Common Shareholders||$||45,421||$||22,550||$||79,089||$||34,878|
|Depreciation and Amortization||37,511||33,321||76,182||70,940|
|Depreciation and Amortization of Unconsolidated Real Estate|
|Joint Ventures and Partnerships||4,434||5,363||8,927||11,007|
|Impairment of Operating Properties and Real Estate Equity Investments||165||5,051||457||14,830|
|Impairment of Operating Properties of Unconsolidated Real Estate|
|Joint Ventures and Partnerships||3||19,889||366||19,889|
|Gain on Sale of Property and Interests in Real Estate Equity Investments||(41,906||)||(31,334||)||(53,553||)||(40,907||)|
|Gain on Sale of Property of Unconsolidated Real Estate|
|Joint Ventures and Partnerships||-||(123||)||(243||)||(123||)|
|Funds from Operations -- Basic||45,628||54,717||111,225||110,514|
|Adjustments for Recurring FFO:|
|Income Attributable to Operating Partnership Units||446||432||891||863|
|Other Impairment Loss, net of tax||-||-||-||244|
|Redemption Costs of Preferred Shares||15,889||-||18,131||-|
|Write-off of Debt Costs, net of tax||-||-||(9,667||)||-|
|Other, net of tax||(673||)||2,123||(673||)||2,123|
|Recurring Funds from Operations -- Diluted||$||61,415||$||57,428||$||120,317||$||114,236|
|Weighted Average Shares Outstanding -- Basic||121,286||120,661||121,172||120,571|
|Weighted Average Shares Outstanding -- Diluted||122,574||120,661||122,395||120,571|
|Weighted Average Shares Outstanding -- Diluted (FFO)||124,129||123,277||123,951||123,145|
|PER SHARE DATA|
|Earnings Per Common Share -- Basic||$||0.37||$||0.19||$||0.65||$||0.29|
|Earnings Per Common Share -- Diluted||$||0.37||$||0.19||$||0.65||$||0.29|
|FFO -- Per Diluted Share||$||0.37||$||0.45||$||0.90||$||0.90|
|Recurring FFO -- Per Diluted Share||$||0.49||$||0.47||$||0.97||$||0.93|
|Weingarten Realty Investors|
|June 30,||December 31,|
|CONDENSED CONSOLIDATED BALANCE SHEETS||(Unaudited)||(Audited)|
|Property Held for Sale, net||8,698||-|
|Investment in Real Estate Joint Ventures and Partnerships, net||285,666||289,049|
|Notes Receivable from Real Estate Joint Ventures and Partnerships||85,004||89,776|
|Unamortized Debt and Lease Costs, net||140,938||135,783|
|Accrued Rent and Accounts Receivable, net||70,572||79,540|
|Cash and Cash Equivalents||23,374||19,604|
|Restricted Deposits and Mortgage Escrows||9,490||44,096|
|LIABILITIES AND EQUITY|
|Accounts Payable and Accrued Expenses||107,173||119,699|
|Commitments and Contingencies|
|Preferred Shares of Beneficial Interest||2||7|
|Common Shares of Beneficial Interest||3,683||3,663|
|Additional Paid-In Capital||1,689,278||1,934,183|
|Net Income Less Than Accumulated Dividends||(331,208||)||(335,980||)|
|Accumulated Other Comprehensive Loss||(15,664||)||(24,743||)|
|Total Liabilities and Equity||$||4,119,314||$||4,184,784|
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Michelle Wiggs, 713-866-6050