Weingarten Realty Announces Solid Second Quarter 2008 Results

HOUSTON, July 31 /PRNewswire-FirstCall/ -- Weingarten Realty announced
today the results of its second quarter ended June 30, 2008.
-- Net income, on a diluted per-share basis, was $0.79 for the second
quarter of 2008, the same level of net income per share recorded in the second
quarter of 2007. A $1.0 million non-cash preferred share redemption charge
recorded in the second quarter of 2008 negatively impacted the comparison to
the prior year;
-- Funds from operations (FFO), a non-GAAP financial indicator considered
one of the most meaningful performance measurements within the REIT industry,
was $0.78 per share for the second quarter of 2008. Excluding the non-cash
preferred share redemption charge recorded in the second quarter, FFO per
share was $0.79, up 5% from the prior year;
-- Overall occupancy for the operating portfolio was 93.6% at the end of
the second quarter of 2008 compared to 93.7% in the previous quarter.
Occupancy for the retail properties was 94.2% compared to 94.8% in the first
quarter of 2008, while industrial occupancy increased to 91.9% compared to
90.7% in the first quarter;
-- Merchant development gains for the quarter totaled $5.7 million (net of
tax) or $0.07 of FFO per share resulting from the execution of ten separate
transactions;
-- During the quarter, the Company reopened its 6.50% Series F Preferred
Shares and issued an additional 6,000,000 shares at a discount raising $118.1
million. The effective cost of this capital is 8.25%. The proceeds were
ultimately used to repay approximately 60% of the outstanding variable rate
Series G preferred shares. As a result, a proportionate share of the original
issue costs for the Series G preferred shares was written off, resulting in a
non-cash redemption charge of $0.01 per share in the second quarter.
Subsequent to quarter end, the Company repaid the remainder of the Series G
preferred series utilizing its existing credit facilities, resulting in an
additional non-cash redemption charge of $0.01 per share.
"Our FFO per share, excluding the non-cash preferred redemption charge,
was $0.79 for the second quarter of 2008, up 5% from the prior year. Our
high-quality portfolio of properties continues to perform well in this
challenging economic environment with same property net operating income
growth of 2.0%, occupancy of 93.6%, and average GAAP rental rate increases of
17.2% for the quarter. Additionally, we recorded merchant build gains of $0.07
per share (net of tax) in the second quarter," stated Drew Alexander,
President and Chief Executive Officer.
Existing Portfolio
During the second quarter of 2008, the Company completed 320 new leases
and renewals, totaling 1.6 million square feet with an average rental rate
increase of 17.2% on a same space GAAP basis and 12.2% on a cash basis. The
primary driver for this strong rental rate increase was new retail leases
which increased 26.2% on a GAAP basis and 20.1% on a cash basis.
Same property net operating income (NOI), on a cash basis, grew 2.0% in
the second quarter, with growth of 2.0% from retail properties and 2.3% from
industrial properties. Retail occupancy ended the quarter at 94.2% versus
94.8% in the prior quarter. The decrease in occupancy was due primarily to
several mid-size tenant fallouts.
"I am optimistic we will see improved same property NOI through the
balance of 2008 as leases we signed in the first half of the year commence,"
said Johnny Hendrix, Executive Vice President/Asset Management. "Retail same
property NOI grew 2.0% in the second quarter. Most of the increase was
attributable to contractual rent steps offsetting a decline in occupancy.
Rental growth on leases commenced and renewals exceeded 17% on a same space
GAAP basis and the volume of leasing activity was up 15% from the prior year.
While there is no single tenant or category driving this increased leasing
activity, discount retailers, retailers that sell necessity based goods, and
health and fitness retailers were significant contributors to the increase."
New Development
The Company's new development pipeline at the end of the second quarter
2008 includes 35 properties at various stages of development. Weingarten has
invested $390 million in these projects to date and estimates its total
investment, at completion, to be $622 million. The Company also projected that
13 of our 35 projects currently under development will be stabilized by the
end of 2009 and these centers are currently 79% leased, including tenant-owned
square footage.
"We continue to make progress in new development, including our merchant
build activities," said Robert Smith, Senior Vice President and Director of
New Development. "We recently completed two outstanding grocery anchored
shopping centers that were part of our new development pipeline -- Raintree
Ranch Center in Phoenix and Sharyland Towne Crossing in Mission, Texas.
Raintree Ranch is a 140,000 square foot center anchored by Whole Foods and
Sharyland Towne Crossing is a 489,000 square foot center anchored by Target
and HEB Grocery. These two centers have a combined WRI investment of $56
million, a weighted average yield of 9.1%, and current occupancy levels in
excess of 97%. Additionally, our merchant build activities contributed $0.07
of FFO per share in the second quarter."
Portfolio Enhancements
Dispositions of non-core properties in Texas and Louisiana totaled $87
million in the second quarter, representing five properties and 750,000 square
feet. Year-to-date, dispositions totaled $106 million.
"Acquisition activity continues to be very slow. REIT's and pension fund
advisors are on the sidelines due to a lack of quality assets for sale and
concerns about pricing," said Candace DuFour, Senior Vice President and
Director of Acquisitions.
Dividends
The Board of Trust Managers declared a dividend of $0.525 for the second
quarter of 2008. On an annualized basis, this represents a dividend of $2.10
per common share. The dividend is payable on September 15, 2008 to
shareholders of record on September 5, 2008.
The Board of Trust Managers also declared dividends on the Company's
preferred shares. Dividends related to the 6.75% Series D Cumulative
Redeemable Preferred Shares (NYSE:WRIPrD) are $0.421875 per share for the
quarter. Dividends on the 6.95% Series E Cumulative Redeemable Preferred
Shares (NYSE:WRIPrE) are $0.434375 per share for the same period. Dividends on
the 6.50% Series F Cumulative Redeemable Preferred Shares (NYSE:WRIPrF) are
$0.40625 per share. All preferred share dividends are payable on September 15,
2008 to shareholders of record on September 5, 2008.
Outlook
"Certainly this economy is challenging and could get worse. To date, our
portfolio of properties continues to perform reasonably well. Over 70% of our
retail portfolio is anchored by supermarkets which provide the strength to
weather a slowing economy," said Alexander. "Transaction volume for
acquisitions and dispositions is down significantly from last year, although,
as we demonstrated this quarter, these markets are not totally closed. Our
outstanding team of associates successfully executed ten merchant build
transactions generating $0.07 of FFO per share this quarter and further
strengthened our existing portfolio through the disposition of five non-core
properties totaling $87 million.
Markets could deteriorate further and negatively affect our ability to do
sale transactions but at this time we are reaffirming our previously announced
full year 2008 guidance range of $3.21 to $3.27 for FFO per share, although,
as mentioned last quarter, it may be in the lower end of the range. We are
very well positioned for the future and I am confident we will create
long-term value for our investors."
Conference Call Information
The Company also announced that it will host a live webcast of its
quarterly conference call on August 1, 2008 at 10:00 a.m. Central Time. The
live webcast can be accessed via the Company's Web site at
http://www.weingarten.com. A replay is also available through the Company's
Web site starting approximately two hours following the live call or can be
heard by calling 800-642-1687, identification number 55445036 until 11:59 PM
Central Time on August 4, 2008.
About Weingarten Realty Investors
As one of the largest real estate investment trusts listed on the New York
Stock Exchange, Weingarten Realty (NYSE: WRI) is celebrating its 60th
anniversary as a commercial real estate owner, manager and developer, formed
in 1948. Focused on delivering solid returns to shareholders, Weingarten is
actively developing, acquiring, and intensively managing properties in 23
states that span the United States from coast-to-coast. The Company's
portfolio of 414 properties includes 334 neighborhood and community shopping
centers and 80 industrial properties. Including tenant-owned square footage,
the Company's portfolio currently totals approximately 74 million square feet
under management. Weingarten has one of the most diversified tenant bases of
any major REIT in its sector, with the largest of its 5,400 tenants comprising
less than 3% of its rental revenues. To learn more about the Company's
operations and growth strategies, please visit http://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.

Financial Statements
Weingarten Realty Investors
(in thousands, except per share amounts)

Three Months Ended Six Months Ended
June 30, June 30,
STATEMENTS OF CONSOLIDATED INCOME
AND FUNDS FROM OPERATIONS 2008 2007 2008 2007
(Unaudited) (Unaudited)

Rental Income $151,196 $139,053 $301,491 $277,709
Other Income 3,428 3,163 6,150 5,176
Total Revenues 154,624 142,216 307,641 282,885
Depreciation and Amortization 39,538 31,506 82,396 62,718
Operating Expense 26,666 24,479 53,105 47,214
Ad Valorem Taxes 17,622 16,305 35,544 32,174
General and Administrative Expense 7,104 6,504 13,958 13,113
Total Expenses 90,930 78,794 185,003 155,219
Operating Income 63,694 63,422 122,638 127,666
Interest Expense (38,474) (35,624) (73,954) (71,713)
Interest and Other Income 1,699 3,044 2,748 4,756
Equity in Earnings of Real Estate
Joint Ventures and Partnerships,
net 5,139 4,273 10,386 7,620
Income Allocated to Minority
Interests (2,627) (3,497) (4,453) (4,675)
Gain (Loss) on Sale of Properties 132 (65) 144 2,024
Gain on Land and Merchant
Development Sales 6,303 3,285 6,822 3,951
Provision for Income Taxes (1,543) (1,012) (2,290) (1,003)
Income From Continuing
Operations 34,323 33,826 62,041 68,626
Operating Income From Discontinued
Operations 683 1,407 1,989 5,136
Gain on Sale of Properties From
Discontinued Operations 41,093 40,544 49,463 53,400
Income from Discontinued
Operations 41,776 41,951 51,452 58,536
Net Income 76,099 75,777 113,493 127,162
Less: Preferred Share Dividends 8,110 5,775 16,728 10,503
Redemption Costs of
Preferred Shares 990 990
Net Income Available to Common
Shareholders -- Basic $66,999 $70,002 $95,775 $116,659
Net Income Per Common
Share -- Basic $0.80 $0.81 $1.14 $1.35
Net Income Available to Common
Shareholders -- Diluted $68,146 $71,105 $98,074 $118,868
Net Income Per Common Share --
Diluted $0.79 $0.79 $1.13 $1.32

Funds from Operations:
Net Income Available to Common
Shareholders $66,999 $70,002 $95,775 $116,659
Depreciation and Amortization 37,951 31,902 80,253 63,881
Depreciation and Amortization of
Unconsolidated Joint Ventures 3,021 2,536 5,561 4,593
Gain on Sale of Properties (41,231) (38,253) (48,967) (53,198)
Gain on Sale of Properties of
Unconsolidated Joint Ventures (14)
Funds from Operations -- Basic $66,740 $66,187 $132,608 $131,935
Funds from Operations Per Common
Share -- Basic $0.80 $0.77 $1.58 $1.53
Funds from Operations -- Diluted $67,887 $67,290 $134,907 $134,144
Funds from Operations Per Common
Share -- Diluted $0.78 $0.75 $1.56 $1.49
Weighted Average Shares
Outstanding -- Basic 83,742 86,274 83,710 86,140
Weighted Average Shares
Outstanding -- Diluted 86,766 89,735 86,668 89,768

June 30, December 31,
2008 2007
CONSOLIDATED BALANCE SHEETS (Unaudited) (Audited)

Property $5,007,361 $4,972,344
Accumulated Depreciation (791,929) (774,321)
Property Held for Sale, net 373
Investment in Real Estate Joint
Ventures and Partnerships 309,252 300,756
Notes Receivable from Real Estate
Joint Ventures and Partnerships 151,057 81,818
Unamortized Debt and Lease Costs 120,116 114,969
Accrued Rent and Accounts Receivable,
net 83,262 94,607
Cash and Cash Equivalents 40,427 65,777
Restricted Deposits and Mortgage
Escrows 34,018 38,884
Other 120,507 98,509
Total Assets $5,074,444 $4,993,343

Debt $3,187,622 $3,165,059
Accounts Payable and Accrued Expenses 160,223 155,137
Other 88,860 104,439
Total Liabilities 3,436,705 3,424,635

Minority Interest 158,489 96,885

Preferred Shares of Beneficial
Interest 9 8
Common Shares of Beneficial Interest 2,531 2,565
Treasury Shares of Beneficial Interest (41)
Accumulated Additional Paid-In Capital 1,448,162 1,442,027
Net Income in Excess of Accumulated
Dividends 50,363 42,739
Accumulated Other Comprehensive Loss (21,815) (15,475)
Total Shareholders' Equity 1,479,250 1,471,823
Total Liabilities and
Shareholders' Equity $5,074,444 $4,993,343

SOURCE Weingarten Realty

Richard Summers, VP/Director of Investor Relations of Weingarten Realty,
+1-713-866-6050