Weingarten Realty Investors Q2 2010 Earnings Call Transcript

Weingarten Realty Investors Q2 2010 Earnings Call Transcript
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Weingarten Realty Investors (WRI)

Q2 2010 Earnings Conference Call

August 6, 2010 11:00 AM ET

Executives

Kristin Gandy – Director, IR

Drew Alexander – President, CEO and Trust Manager

Steve Richter – EVP and CFO

Johnny Hendrix – EVP and COO

Analysts

Greg Schweitzer (ph) – Citigroup

Lindsay Schroll – BoA

Jay Habermann – Goldman Sachs

Nathan Isbee – Stifel Nicolaus

Ross Nussbaum – UBS

Vincent Chao – Deutsche Bank

Michael Mueller – JP Morgan

Chris Lucas – Robert Baird

Laura Clark – Green Street Advisors

Jeffrey Donnelly – Wells Fargo

Rich Moore – RBC Capital Markets

Presentation

Operator

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Previous Statements by WRI
» Weingarten Realty Investors Q1 2010 Earnings Call Transcript
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» Weingarten Realty Investors Q3 2009 Earnings Call Transcript

Good morning. My name is (Liz Vindett), and I will be your conference operator today. At this time, I would like to welcome everyone to the Weingarten Realty second quarter earnings conference call. (Operator Instructions)

Thank you. Ms. Gandy, you may begin your conference.

Kristin Gandy

Good morning and welcome to our second 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; Joe Shafer, Senior Vice President and Chief Account 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 helps analysts and investors to better understand Weingarten’s operating results. Reconciliation to this non-GAAP financial measure is available in our supplemental information packet located under the investors’ 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.

Drew Alexander

Thanks Kristin. Good morning everybody and thank you so much for joining us. This quarter’s operating results are much like last quarter and that they’re relative straight forward and predictable.

Our overall quarterly results are ahead of consensus estimates excluding the impairment related to our new development in Sheridan, Colorado. Steve will provide some additional information on Sheridan later in the call. As we’ve been saying for a couple of quarters now, Weingarten’s operations have stabilized and tenant fallout has slowed from a high level scene just a year ago.

As Johnny will discuss in greater detail, leasing velocity is relatively strong but at the same time, there is still a decent amount of economic uncertainty. Overall given our leasing velocity, we expect modest occupancy improvements. Generally we are pleased with the results we have generated in 2010 and at this point are comfortable with our forecast for the remainder of the year.

We started 2010 with cash in our balance sheet and our line of credit totally available. While we never thought the growth opportunities would be large as some discussed last fall, we did feel the deal flow would be greater than it has been to-date. The volume of good quality supermarket-anchored centers coming to market has been far below historic levels.

Real estate transactional volume has increased from the full-year 2009 lows of $5.1 billion to an estimated $6.5 billion for 2010 according to real capital analytics. However these levels are still way below the average of $27.5 billion for the years we saw in the prior five years. Good quality assets are limited. We remained focus on the ten markets we have targeted for growth and we’ve looked at virtually every asset that has traded in those markets.

Many of these assets we quickly passed on as they didn’t meet our criterion, on others we passed the pricing differences, usually because of differences in the net operating income often caused by our expectations of rent roll event. There is a lot of industry discussion about cap rates, of interest to us are the very wide differences in underwritten net operating income.

As we have mentioned before, we are using our experienced leasing and asset management people who know their markets. We’ll use a detailed space-by-space methodology to underwrite retail centers. We’re prudent in our approach using our experience to be a realistic as we’re looking to make money and create shareholder value versus growing for growth sake.

Johnny will review the acquisition market in further detail. But in summary we are working on a number of deals and believe we will meet our guidance range of $75 million to $125 million of acquisitions for the year. Steve, would you please take us through the financials.

Steve Richter

Thank you Drew. This quarter was relatively quiet on the capital side as Weingarten continues to look for uses of our excess cash. During the quarter, we were able to repurchase $19.8 million of our near-term debt. These slightly above par purchases created a small loss on the retirement of that debt, however it was a great use of our excess cash.

Excluding the non-cash impairment on Sheridan that I will review in a moment. During the second quarter, Weingarten reported funds from operation or FFO per diluted share of $0.42 versus $0.61 during the same time period in 2009. Including the non-cash impairment FFO for the second quarter was $0.29 per share.

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