Weingarten Realty Increases Same Property NOI by 4.7% and Recurring FFO by 10.9%

Business Wire

HOUSTON--(BUSINESS WIRE)--

Weingarten Realty (WRI) announced today the results of its operations for the quarter ended September 30, 2013. The supplemental financial package with additional information can be found on the Company's website under the Investor Relations tab.

Third Quarter Operating and Financial Highlights

  • Recurring Funds from Operations ("FFO") for the third quarter totaled $63.3 million or $0.51 per diluted share, a 10.9% per share increase over the same quarter of 2012;
  • Same Property Net Operating Income for the quarter increased a strong 4.7% over the prior year;
  • Occupancy of the Company’s retail portfolio increased again this quarter by 0.5% to 94.4% from 93.9% a year earlier;
  • Dispositions of $116 million were completed during the quarter, and;
  • Ten-year notes totaling $250 million were sold subsequent to quarter-end at an attractive yield of 4.50%.

Financial Results

The Company reported net income attributable to common shareholders of $57.8 million or $0.47 per diluted share (hereinafter “per share”) for the third quarter of 2013, as compared to $31.4 million or $0.26 per share for the same period in 2012. Gains on sales of property totaled $38.4 million in 2013 compared to $15.2 million in 2012. The 2013 operating results also included non-cash impairment charges of $0.02 per share. Net income for the nine months ended September 30, 2013 was $136.9 million or $1.12 per share compared to $66.3 million or $0.54 per share for 2012. Year-to-date, gains on sales of property totaled $116.8 million in 2013 compared to $50.6 million in 2012.

Reported FFO was $60.5 million or $0.49 per share for the third quarter of 2013 compared to $55.5 million or $0.45 per share for 2012. Year-to-date, Reported FFO was $172.6 million or $1.39 per share for 2013 compared to $166.9 million or $1.35 per share for 2012.

Recurring FFO for the quarter ended September 30, 2013 was $0.51 per share or $63.3 million compared to $56.6 million or $0.46 per share for 2012, an increase of 10.9% on a per share basis. This significant increase in Recurring FFO over the prior year was primarily due to solid leasing demand resulting in an increase in occupancy and the savings from the redemption of preferred shares and refinancing of debt maturities offset by the impact of the successful disposition program. For the nine months, Recurring FFO was $183.6 million or $1.48 per share for 2013 compared to $170.9 million or $1.39 per share for 2012, a 6.5% increase on a per share basis.

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.

Operating Results

Occupancy of the retail portfolio increased to 94.4% in the third quarter from 93.9% in the third quarter of 2012. Anchor spaces increased 0.7% to 97.9% and occupancy of small shop space (less than 10,000 square feet) increased 0.4% to 88.7% from the same quarter of the prior year.

Same Property Net Operating Income ("SPNOI") for retail properties increased a strong 4.7% for the quarter primarily due to continued strength in both renewals and new leases and the improvement in occupancy mentioned above. Year-to-date, SPNOI has increased 4.5%, which was ahead of the Company’s business plan.

The Company produced strong leasing results during the third quarter with 330 new leases and renewals, totaling about one million square feet. These transactions were comprised of 109 new leases and 221 renewals, which represent annualized revenues of $6.4 million and $11.4 million, respectively. The average rental rate increase on comparable new leases signed during the quarter was a solid 9.4%.

"The continued rise in occupancy and, to a lesser degree, strong rental rate increases has enabled us to post the excellent Same Property NOI growth for the quarter and the year. Our best in class operating platform and quality portfolio of properties has allowed us to sustain this improvement in operating results for seven consecutive quarters,” said Johnny Hendrix, Executive Vice President and Chief Operating Officer.

Capital Recycling

The Company reported significant progress in selling its non-core assets and redeploying that capital into higher quality properties in its target markets. Year-to-date, dispositions totaled $240 million. During the quarter, the Company sold eight shopping centers and two land parcels for $116 million. Disposition activity is expected to remain strong in the fourth quarter with full year results near the upper end of the Company’s guidance for property sales of $350 million.

Subsequent to quarter-end, the Company completed investments of $86 million with the purchase of an outstanding in-fill shopping center in Austin, Texas and the acquisition of a small building in Utah in connection with the dissolution of a joint venture. The acquired shopping center was Mueller Regional Retail Center, a 350,000 square foot power center anchored by national retailers such as Home Depot, Marshalls, Bed Bath & Beyond, and PetSmart. The property is part of the 700 acre Mueller master planned community that will include over four million square feet of commercial space and 4,600 residential units when completed. Year-to-date, the Company has invested $175 million in quality shopping centers in our targeted markets.

“We have continued the transformation of our portfolio through these acquisitions and dispositions. We continue to reduce the size of our non-core portfolio and recycle that capital into outstanding new properties, which has significantly contributed to the solid financial results we are experiencing,” said Drew Alexander, President and Chief Executive Officer.

Balance Sheet

On October 15, 2013, the Company closed on the sale of $250 million of 4.45% notes due in January 2024. The notes were priced at a slight discount yielding 4.50%. The proceeds from the transaction were used to pay down all amounts outstanding under the Company’s $500 million revolving credit facility with the remainder invested in short-term instruments. This transaction effectively pre-funded the majority of the Company’s $285 million of January 2014 debt maturities.

“With all the volatility and uncertainty in the marketplace caused by the talk of tapering the Fed’s bond purchases, the government shutdown and the debt ceiling negotiations, we felt this notes offering was effectively an insurance policy for the Company’s January 2014 maturities. We were extremely pleased with the execution, especially in light of the unusual market conditions,” said Steve Richter, Executive Vice President and Chief Financial Officer.

Recurring FFO Guidance

With respect to 2013 guidance, the Company once again raised its guidance for Recurring FFO from $1.89 to $1.93 per share to $1.93 to $1.95 per share. Recurring FFO guidance for 2014 is a range from $1.95 to $2.01 per share. The Company’s guidance for 2013 and 2014, and assumptions for 2013 are provided on page 9 of its supplemental package.

Dividends

The Board of Trust Managers declared a quarterly cash dividend of $0.305 per common share payable on December 13, 2013 to shareholders of record on December 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 December 13, 2013 to shareholders of record on December 5, 2013.

Conference Call Information

The Company also announced that it will host a live webcast of its quarterly conference call on November 1, 2013 at 11:00 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 # 32913555). 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 September 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 273 properties which are located in 21 states spanning the country from coast to coast. These properties represent approximately 50.4 million square feet of which our interests in these properties aggregated approximately 30.1 million square feet of leasable area. To learn more about the Company’s operations and growth strategies, please visit www.weingarten.com.

Forward-Looking Statements

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)
Financial Statements
         
Three Months Ended Nine Months Ended
September 30, September 30,
2013 2012 2013 2012
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Unaudited)
Rentals, net $ 127,548 $ 119,211 $ 374,266 $ 342,507
Other Income   3,119     3,108     9,486     8,346  
Total Revenues   130,667     122,319     383,752     350,853  
Depreciation and Amortization 37,122 34,591 112,347 97,845
Operating Expense 25,530 25,191 74,213 69,048
Real Estate Taxes, net 15,624 14,499 45,242 41,306
Impairment Loss 2,358 197 2,579 9,585
General and Administrative Expense   5,966     6,417     18,818     21,101  
Total Expenses   86,600     80,895     253,199     238,885  
Operating Income 44,067 41,424 130,553 111,968
Interest Expense, net (27,660 ) (27,482 ) (73,689 ) (86,692 )
Interest and Other Income, net 1,864 1,818 5,788 4,786
Gain on Sale of Real Estate Joint Venture and Partnership Interests 7 - 11,599 5,562
Equity in Earnings (Losses) of Real Estate Joint Ventures and Partnerships, net 5,125 4,905 14,467 (6,715 )
Gain on Acquisition - 1,869 - 1,869
Benefit (Provision) for Income Taxes   215     (722 )   214     (378 )
Income from Continuing Operations   23,618     21,812     88,932     30,400  
Operating Income from Discontinued Operations 394 5,074 5,656 16,463
Gain on Sale of Property from Discontinued Operations   38,214     14,826     116,226     49,724  
Income from Discontinued Operations 38,608 19,900 121,882 66,187
Gain on Sale of Property   163     335     570     859  
Net Income 62,389 42,047 211,384 97,446
Less:Net Income Attributable to Noncontrolling Interests   (1,847 )   (1,774 )   (41,056 )   (4,557 )
Net Income Adjusted for Noncontrolling Interests 60,542 40,273 170,328 92,889

Less: Preferred Share Dividends

(2,710 ) (8,869 ) (15,463 ) (26,607 )

Less: Redemption Costs of Preferred Shares

  -     -     (17,944 )   -  
Net Income Attributable to Common Shareholders -- Basic $ 57,832   $ 31,404   $ 136,921   $ 66,282  
 
Net Income Attributable to Common Shareholders -- Diluted $ 57,832   $ 31,404   $ 136,921   $ 66,282  
58247
FUNDS FROM OPERATIONS
Numerator:
Net Income Attributable to Common Shareholders $ 57,832 $ 31,404 $ 136,921 $ 66,282
Depreciation and Amortization 36,088 35,611 112,270 106,551
Depreciation and Amortization of Unconsolidated Real Estate
Joint Ventures and Partnerships 4,443 5,254 13,370 16,261
Impairment of Operating Properties and Real Estate Equity Investments - 177 457 15,007
Impairment of Operating Properties of Unconsolidated Real Estate
Joint Ventures and Partnerships - 57 366 19,946
Gain on Acquisition - (1,869 ) - (1,869 )
Gain on Sale of Property and Interests in Real Estate Equity Investments (38,325 ) (15,140 ) (91,878 ) (56,047 )
Gain on Sale of Property of Unconsolidated Real Estate
Joint Ventures and Partnerships   (24 )   (435 )   (267 )   (558 )
Funds from Operations -- Basic 60,014 55,059 171,239 165,573
Adjustments for Recurring FFO:
Income Attributable to Operating Partnership Units 445 431 1,336 1,294
Other Impairment Loss, net of tax 2,387 159 2,387 403
Redemption Costs of Preferred Shares - - 18,131 -
Write-off of Debt Costs, net of tax 404 - (9,263 ) -
Acquisition Costs 18 981 428 1,473
Other, net of tax   -     -     (673 )   2,123  
Recurring Funds from Operations -- Diluted $ 63,268   $ 56,630   $ 183,585   $ 170,866  
 
Denominator:
Weighted Average Shares Outstanding -- Basic   121,359     120,766     121,235     120,637  
 
Weighted Average Shares Outstanding -- Diluted   122,531     121,844     122,441     121,653  
 
Weighted Average Shares Outstanding -- Diluted (FFO)   124,086     123,426     123,996     123,236  
 
PER SHARE DATA
Earnings Per Common Share -- Basic $ 0.48   $ 0.26   $ 1.13   $ 0.55  
 
Earnings Per Common Share -- Diluted $ 0.47   $ 0.26   $ 1.12   $ 0.54  
 
FFO -- Per Diluted Share $ 0.49   $ 0.45   $ 1.39   $ 1.35  
 
Recurring FFO -- Per Diluted Share $ 0.51   $ 0.46   $ 1.48   $ 1.39  
Weingarten Realty Investors
(in thousands)
Financial Statements
   
 
September 30, December 31,
2013 2012
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Audited)
ASSETS
 
Property $ 4,308,849 $ 4,399,850
Accumulated Depreciation (1,060,419 ) (1,040,839 )
Investment in Real Estate Joint Ventures and Partnerships, net 281,203 289,049
Notes Receivable from Real Estate Joint Ventures and Partnerships 84,142 89,776
Unamortized Debt and Lease Costs, net 137,000 135,783
Accrued Rent and Accounts Receivable, net 76,828 79,540
Cash and Cash Equivalents 51,730 19,604
Restricted Deposits and Mortgage Escrows 57,468 44,096
Other, net   181,746     167,925  
Total Assets $ 4,118,547   $ 4,184,784  
 
LIABILITIES AND EQUITY
 
Debt, net $ 2,293,898 $ 2,204,030
Accounts Payable and Accrued Expenses 116,985 119,699
Other, net   113,375     120,900  
Total Liabilities   2,524,258     2,444,629  
 
Commitments and Contingencies
 
EQUITY
 
Preferred Shares of Beneficial Interest 2 7
Common Shares of Beneficial Interest 3,683 3,663
Additional Paid-In Capital 1,690,687 1,934,183
Net Income Less Than Accumulated Dividends (310,568 ) (335,980 )
Accumulated Other Comprehensive Loss   (15,147 )   (24,743 )
Shareholders' Equity   1,368,657     1,577,130  
Noncontrolling Interests   225,632     163,025  
Total Liabilities and Equity $ 4,118,547   $ 4,184,784  

Contact:
Weingarten Realty
Michelle Wiggs, 713-866-6050

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