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Weingarten Realty Investors (WRI)

Q4 2010 Earnings Call

February 28, 2011 11:00 am ET

Executives

Johnny Hendrix - Chief Operating Officer and Executive Vice President

Stephen Richter - Chief Financial Officer and Executive Vice President

Kristin Horn -

Robert Smith - Senior Vice President of Development

Andrew Alexander - Chief Executive Officer, President, Trust Manager, Chairman of Executive Committee and Chairman of Pricing Committee

Analysts

Laura Clark - Greenstreet Advisors

David Wigginton - Merrill Lynch

Jonathan Habermann - Goldman Sachs Group Inc.

Omotayo Okusanya - Jefferies & Company, Inc.

James Sullivan - Cowen and Company, LLC

Carol Kemple - Hilliard Lyons

TheStreet Recommends

Jeffrey Donnelly - Wells Fargo Securities, LLC

Christopher Lucas - Robert W. Baird & Co. Incorporated

Richard Moore - RBC Capital Markets, LLC

Quentin Velleley - Citigroup Inc

Ki Bin Kim - Macquarie Research

Vincent Chao - Deutsche Bank AG

Michael Mueller - JP Morgan Chase & Co

Craig Schmidt - BofA Merrill Lynch

Presentation

Operator

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Good morning. My name is Steve, and I will be your conference operator today. At this time, I would like to welcome everyone to the Weingarten Fourth Quarter 2010 Earnings Call. [Operator Instructions] Ms. Kristin Horn, Director of Investor Relations, you may begin your conference.

Kristin Horn

Good morning, and welcome to our fourth quarter 2010 conference call. Joining me today are Drew Alexander, President and CEO; Stanford Alexander, Chairman; Johnny Hendrix, Executive Vice President and COO; Steve Richter, Executive Vice President and CFO; Robert Smith, Senior Vice President; and Joe Shafer, Senior Vice President and Chief Accounting Officer.

As a reminder, certain statements made during the course of this call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results could differ materially from those projected in such forward-looking statements due to a variety of factors. More information about these factors is contained in the company's SEC filings.

Also during this conference call, management may make reference to certain non-GAAP financial measures such as funds from operations or FFO, which we believe help analysts and investors to better understand Weingarten's operating results. Reconciliations to this non-GAAP financial measure is available in our supplemental information packet located under the Investor Relations tab of our website.

I would also like to request that callers observe a two-question limit during the Q&A portion of our call in order to give everyone a chance to participate. If you have additional questions, please rejoin the queue.

I will now turn the call over to Drew Alexander.

Andrew Alexander

Thanks, Kristin, and good morning, everyone. Our operating metrics improved dramatically in 2010. We produced three straight quarters of positive Same Property NOI. We dramatically increased occupancy. We invested $200 million in very good assets. I attribute our strong performance to, number one, our people; and number two, the quality of our portfolio. We have great local expertise with experience in motivated associates closed to our properties, what we call our boots on the ground approach. This proved highly productive as our results show.

To further demonstrate my point, we're currently averaging 24 days from the days from the day the retailer signs the letter of intent to the date we execute a lease. Working together, our leasing and in-house legal associates are pushing to get leases signed and tenants open for business. Our shopping centers average 1,361 households per square mile. These strong densities are among the highest of our peers when combined with great anchors and excellent adjusted household incomes, our centers have proved to be quite resilient through these tough times.

We continue to see improvement in the negotiating balance between landlord and tenants. For example, base rents on new retail leases during the fourth quarter 2010 increased 3.4% compared to a decline of 5.8% during the first quarter of 2010. This demonstrates how owners of high-quality centers located in dense areas are able to push rents even in challenging times.

To give you some detail on acquisitions in 2010, we invested close to $200 million with an average return of around 7%. During the fourth quarter, we closed on five shopping centers, investing $168 million. The average household income within three miles of these properties is $95,000, which is 32% over the national average. Four of the five centers are anchored by supermarkets, and the fifth is anchored by Target and Kohl's. These acquisitions are great additions to our existing high-quality portfolio. So far this year, we've seen a bit of a lull in the quality product we want to acquire. We currently have about $59 million under contract, with just a little more in the pipeline behind that.

We will remain disciplined buying good quality properties at returns which are accretive to our shareholders.

In New Development, Weingarten stabilized three properties during 2010, and our future stabilizations remain generally on track as shown on Page 10 of our supplemental. There was some modest deterioration in returns, which is mostly a result of slower leasing. These are well-located properties, detail on our website, and over time, we will see upside from these. Our balance sheet remains strong, and the company has ample liquidity to fund operations, pay dividends and fund growth opportunities. 2010 was challenging, but showed many positive signs towards more normalized operations. We are well positioned to move into 2011 and grow the company. This growth will primarily come from continuing to improve occupancy, but also from acquisitions, redevelopment and new development.

And now I'd like to turn the call over to Steve Richter to go over our financial results. Steve?

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