Weingarten Realty Increases Same Property Net Operating Income by 3.9%

Tue Apr 30, 2013 4:33pm EDT

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Weingarten Realty Increases Same Property Net Operating Income by 3.9%

Weingarten Realty (NYSE: WRI) announced today the results of its operations for the first quarter ended March 31, 2013. The supplemental financial package can be found on the Company’s website under the Investor Relations tab.

First Quarter Operating and Financial Highlights

  • Net income attributable to common shareholders increased to $0.28 per diluted share compared to $0.10 per diluted share in the same quarter last year;
  • Recurring Funds from Operations (“FFO”) increased to $0.48 per diluted share compared to $0.46 per diluted share in the same quarter of last year;
  • Same Property Net Operating Income (“Same Property NOI”) for our portfolio increased by 3.9% over the prior year; and,
  • Occupancy improved to 93.7% during the quarter, up from 93.6% for the prior quarter.

Financial Results

The Company reported net income attributable to common shareholders of $33.7 million or $0.28 per diluted share (hereinafter “per share”) for the first quarter of 2013, as compared to $12.3 million or $0.10 per share for the same period in 2012. Included in net income for 2013 was a write-off of an above-market mortgage intangible from the early pay off of debt of $0.08 per share, offset by non-cash redemption costs of preferred shares of $0.02 per share. Included in 2012 were non-cash impairments of $0.08 per share.

For the current quarter, Reported FFO was $66.0 million or $0.53 per share compared to $56.2 million or $0.46 per share for 2012. Reported FFO for 2012 excludes non-cash impairments of operating properties of $0.08 per share. Recurring FFO for the first quarter of 2013 was $0.48 per share or $58.9 million. For the same quarter last year, Recurring FFO was $0.46 per share or $56.8 million. This increase in Recurring FFO was due to improved operations of the Company’s existing portfolio, reduced interest expense due to favorable refinancing transactions and the impact of our 2012 and 2013 acquisitions offset by the significant decrease resulting from the $700 million of dispositions completed in 2012.

A reconciliation of net income to both Reported and Recurring FFO is shown on the attached financial statement and is also shown on page 5 of the supplemental package.

Operating Results

Same Property NOI for the quarter increased 3.9% versus a year ago. Bad debt recoveries, higher than expected percentage rent revenue and a delay in the timing of tenant fallouts all contributed to this solid performance. Increases in occupancy and rental rates resulting from continued strength in leasing operations also contributed to the increase.

The Company produced strong leasing results again during the first quarter with 381 new leases and renewals totaling 1.4 million square feet and representing $22.0 million of annual revenue. The 381 transactions were comprised of 142 new leases and 239 renewals, representing annual revenues of $6.8 million and $15.2 million, respectively. On a cash basis, rental rates for new leases and renewals both increased by 3.9%.

Occupancy increased to 93.7% in the first quarter from 91.7% in the first quarter of 2012 due primarily to the disposition of the industrial portfolio. Occupancy of spaces less than 10,000 square feet increased to 88.2% from 86.8% in the first quarter of 2012.

“This was an outstanding quarter by almost every operational measure. Occupancy and rental rate increases continue to drive Same Property NOI, with a strong increase of 3.9% for the quarter. This performance is a testament to the strength of our operating platform as well as the continued transformation of our outstanding portfolio of properties,” said Johnny Hendrix, Executive Vice President and Chief Operating Officer.

Capital Recycling

The Company purchased Sea Ranch Centre, a 99,000 square foot shopping center located near Ft. Lauderdale, Florida, during the quarter. This center is anchored by a high-volume Publix supermarket and CVS. Located on a barrier island, the center has very strong density and limited competition. Combined with the dominant grocer, the Company expects to see significant rent growth as new leases are signed.

Disposition activity continued during the quarter with the sale of one center and four real estate assets owned in unconsolidated joint ventures comprising approximately 860,000 square feet of building area. Our share of gross proceeds totaled $15.7 million.

“We continue to remain focused on our capital recycling program. Our acquisition and disposition pipelines remain active and we believe we will achieve our capital recycling targets as we continue to further improve our already strong portfolio,” said Drew Alexander, President and Chief Executive Officer.

Financing Transactions

The Company continues to improve its balance sheet and liquidity. In March, the Company completed the issuance of $300 million of 3.5% ten year notes. With these proceeds, the Company’s $500 million revolving credit facility was completely paid down and the entire $75 million of its 6.75% Series D preferred shares were redeemed.

Subsequent to quarter end, the Company finalized an amendment to its revolving credit facility that allowed it to reduce its credit spread and facility fees by 10 basis points and 5 basis points, respectively. More importantly, the maturity was extended to 2017 with two six month extensions at the Company’s option.

The Company’s credit metrics remain very strong with Net Debt to Recurring EBITDA at 6.18 times and debt to total market capitalization of 35.4% compared to 6.62 times and 40.0% at March 31, 2012.

“These events provide additional liquidity that will allow us to take advantage of growth opportunities as they arise, maintain our strong overall credit metrics and better position us for future debt maturities,” said Steve Richter, Executive Vice President and Chief Financial Officer.

Dividend

The Board of Trust Managers declared a quarterly cash dividend of $0.305 per common share payable on June 14, 2013 to shareholders of record on June 6, 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 June 14, 2013 to shareholders of record on June 6, 2013.

FFO Guidance

The Company affirms its previous guidance for Recurring FFO of $1.84 to $1.90 per share. It also remains comfortable with its Same Property NOI range of 2-3%, however it is likely the full year results will be towards the top end of that range.

This guidance and the related assumptions are included on page 9 of the supplemental package.

Conference Call Information

The Company also announced that it will host a live webcast of its quarterly conference call on May 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 # 32913545). 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 (NYSE: WRI) is a commercial real estate owner, manager and developer. At March 31, 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 288 developed income-producing properties and two properties under various stages of construction and development. The total number of properties includes 286 neighborhood and community shopping centers and four other operating properties located in 21 states spanning the country from coast to coast. At March 31, 2013, the Company’s portfolio of properties was approximately 53.0 million square feet. 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
March 31,
2013 2012
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Rentals, net $ 129,023 $ 116,103
Other Income   2,658     2,699  
Total Revenues   131,681     118,802  
Depreciation and Amortization 39,719 33,231
Operating Expense 25,356 22,419
Real Estate Taxes, net 15,202 13,810
Impairment Loss 56 6,852
General and Administrative Expense   6,667     8,307  
Total Expenses   87,000     84,619  
Operating Income 44,681 34,183
Interest Expense, net (17,952 ) (31,297 )
Interest and Other Income, net 1,826 2,386
Gain on Sale of Real Estate Joint Venture and Partnership Interests 11,509 5,562
Equity in Earnings of Real Estate Joint Ventures and Partnerships, net 4,613 4,075
Benefit for Income Taxes   153     22  
Income from Continuing Operations   44,830     14,931  
Operating (Loss) Income from Discontinued Operations (155 ) 3,633
Gain on Sale of Property from Discontinued Operations   -     3,634  
(Loss) Income from Discontinued Operations (155 ) 7,267
Gain on Sale of Property   142     440  
Net Income 44,817 22,638
Less: Net Income Attributable to Noncontrolling Interests   (1,467 )   (1,441 )
Net Income Adjusted for Noncontrolling Interests 43,350 21,197
Less: Preferred Share Dividends (7,440 ) (8,869 )
Less: Redemption Costs of Preferred Shares   (2,242 )   -  
Net Income Attributable to Common Shareholders -- Basic $ 33,668   $ 12,328  
Net Income Attributable to Common Shareholders -- Diluted $ 33,668   $ 12,328  
 
FUNDS FROM OPERATIONS
Numerator:
Net Income Attributable to Common Shareholders $ 33,668 $ 12,328
Depreciation and Amortization 38,671 37,619
Depreciation and Amortization of Unconsolidated Real Estate
Joint Ventures and Partnerships 4,493 5,644
Impairment of Operating Properties and Real Estate Equity Investments 292 9,779
Impairment of Operating Properties of Unconsolidated Real Estate
Joint Ventures and Partnerships 363 -
Gain on Sale of Property and Interests in Real Estate Equity Investments (11,647 ) (9,573 )
Gain on Sale of Property of Unconsolidated Real Estate
Joint Ventures and Partnerships   (243 )   -  
Funds from Operations -- Basic 65,597 55,797
Adjustments for Recurring FFO:
Income Attributable to Operating Partnership Units 445 431
Other Impairment Loss, net of tax - 244
Redemption Costs of Preferred Shares 2,242 -
Write-off of Debt Costs, net of tax (9,667 ) -
Acquisition Costs   285     336  
Recurring Funds from Operations -- Diluted $ 58,902   $ 56,808  
 
Denominator:
Weighted Average Shares Outstanding -- Basic   121,058     120,481  
Weighted Average Shares Outstanding -- Diluted   122,223     121,441  
Weighted Average Shares Outstanding -- Diluted (FFO)   123,779     123,025  
 
PER SHARE DATA
Earnings Per Common Share -- Basic $ 0.28   $ 0.10  
Earnings Per Common Share -- Diluted $ 0.28   $ 0.10  
FFO -- Per Diluted Share $ 0.53   $ 0.46  
Recurring FFO -- Per Diluted Share $ 0.48   $ 0.46  
 
Weingarten Realty Investors
(in thousands)
Financial Statements
                 
March 31, December 31,
2013 2012
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Audited)
ASSETS
 
Property $ 4,425,127 $ 4,399,850
Accumulated Depreciation (1,073,361 ) (1,040,839 )
Investment in Real Estate Joint Ventures and Partnerships, net 279,384 289,049
Notes Receivable from Real Estate Joint Ventures and Partnerships 89,013 89,776
Unamortized Debt and Lease Costs, net 137,646 135,783
Accrued Rent and Accounts Receivable, net 70,428 79,540
Cash and Cash Equivalents 54,800 19,604
Restricted Deposits and Mortgage Escrows 43,535 44,096
Other, net   164,396     167,925  
Total Assets $ 4,190,968   $ 4,184,784  
 
LIABILITIES AND EQUITY
 
Debt, net $ 2,323,620 $ 2,204,030
Accounts Payable and Accrued Expenses 87,947 119,699
Other, net   111,661     120,900  
Total Liabilities   2,523,228     2,444,629  
 
Commitments and Contingencies
 
EQUITY
 
Preferred Shares of Beneficial Interest 4 7
Common Shares of Beneficial Interest 3,671 3,663
Additional Paid-In Capital 1,868,215 1,934,183
Net Income Less Than Accumulated Dividends (339,439 ) (335,980 )
Accumulated Other Comprehensive Loss   (25,829 )   (24,743 )
Shareholders' Equity   1,506,622     1,577,130  
Noncontrolling Interests   161,118     163,025  
Total Liabilities and Equity $ 4,190,968   $ 4,184,784  

Weingarten Realty
Michelle Wiggs, 713-866-6050