Weingarten Realty Continues Portfolio Transformation And Increases Dividend By 6.6%

Weingarten Realty (NYSE: WRI) announced today the results of its operations for the fourth quarter and full year ended December 31, 2013.

Fourth Quarter Operating and Financial Highlights
  • Recurring Funds from Operations (“FFO”) was $0.48 per diluted share;
  • Continued progress of the portfolio transformation with $85.3 million of high quality acquisitions and $38.6 million of non-core dispositions;
  • Same Property Net Operating Income (“NOI”) increased by 3.0% over the fourth quarter of the prior year and 4.2% over the full year 2012;
  • Occupancy improved to 94.8% during the fourth quarter, up from 93.6% in the fourth quarter of last year; and
  • The Board of Trust Managers increased the common dividend per share 6.6% to $0.325 per quarter or $1.30 on an annualized basis.

Financial Results

The Company reported net income attributable to common shareholders of $47.2 million or $0.38 per diluted share (hereinafter “per share”) for the fourth quarter of 2013, as compared to $42.9 million or $0.35 per share for the same period in 2012. For the full year 2013, the Company reported net income of $184.1 million or $1.50 per share compared to $109.2 million or $0.90 per share for the full year 2012. Included in net income for 2013 were, on a per share basis, gains on the sale of properties and partnership interests of $0.90, a gain on acquisition of $0.16 and the write off of an above market debt intangible of $.07. Offsetting these amounts were redemption costs on preferred shares of $0.15 and a non-cash deferred tax provision of $0.06 related to the gain on acquisition. Included in 2012 were gains on the sale of properties and partnership interests of $0.69 per share, offset by non-cash impairments of $0.28 per share.

Recurring FFO for the fourth quarter of 2013 was $0.48 per share or $59.5 million. For the same quarter last year, Recurring FFO was $0.47 per share or $58.6 million. This increase in Recurring FFO per share over the prior year was primarily due to the Company’s acquisition and new development programs, increased operating income from the existing portfolio and reduced interest expense due to favorable refinancing transactions offset by the cost of the sale of non-core assets of $0.03 per share. Recurring FFO for the full year 2013 was $243.1 million or $1.96 per share compared to $229.4 million or $1.86 per share for 2012. This increase in Recurring FFO was also primarily due to the Company’s acquisitions, new development programs, improvements in the existing portfolio and reduced interest expense offset by the cost of repositioning the portfolio through non-core asset sales of $0.17 per share.

For the current quarter, Reported FFO was $51.9 million or $0.42 per share compared to $57.0 million or $0.46 per share for 2012. Included in Reported FFO for the fourth quarter of 2013 was a non-cash deferred tax provision of $0.06 related to a gain on acquisition. For the full year ended December 31, 2013, Reported FFO was $224.5 million or $1.81 per share compared to $223.8 million or $1.82 per share for 2012.

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

Operating Results

Same Property NOI during the fourth quarter increased by 3.0% versus a year ago. These results are primarily driven by leases that were previously signed but commenced during the quarter. Occupancy increased to 94.8% in the fourth quarter, an increase of 40 basis points over the prior quarter and 120 basis points over the same quarter of 2012. Occupancy of spaces less than 10,000 square feet increased to 89.0% from 88.2% in the prior year.

The Company produced solid leasing results again during the fourth quarter with 331 new leases and renewals totaling 1.1 million square feet and representing $20.3 million of annual revenue. The 331 transactions were comprised of 119 new leases and 212 renewals, representing annual revenues of $8.4 million and $11.9 million, respectively. The average rental rate increase on new leases and renewals signed during the quarter was 6.8% with rental rates on just new leases up a solid 13.1%.

“With two consecutive years of 4.2% increases in Same Property NOI, rental rates on new leases up 12.7% for the year and occupancy nearing 95%, it is clear that the transformation of our portfolio is paying dividends. These accomplishments are a testament to the strength of our quality portfolio and the exceptional efforts of our associates,” said Johnny Hendrix, Executive Vice President and Chief Operating Officer.

Portfolio Transformation Through Capital Recycling

As previously announced, the Company sold $38.6 million of assets during the fourth quarter. This consisted of two shopping centers, the Company’s share of a center held in a partnership and a land parcel. For the full year 2013, the Company sold 33 assets, including 24 non-core shopping centers, three industrial buildings and six land parcels, comprising 3.9 million square feet for $278.3 million. Subsequent to quarter-end the Company sold two additional shopping centers for $55.6 million and received notice from the holder of the ground leases at The Village Arcade in Houston, Texas of their intent to exercise their purchase option under the ground lease. This transaction is expected to close in the second half of 2014. Since 2008, the Company has completed $2.3 billion in dispositions.

During the fourth quarter the Company acquired Mueller Regional Retail Center in Austin, Texas. Mueller is a 350,000 square foot power center anchored by Home Depot, Marshalls, Bed Bath & Beyond and PetSmart. Additionally, the Company added to its investment at Queen Ann Marketplace in Seattle, Washington by purchasing the 15,034 square foot condominium interest for the Bartell Drugs store. This property is owned in a joint venture with Bouwinvest, where the Company owns 51%. The Company’s share of acquisition activity for the fourth quarter and full year totaled $85.3 million and $174.6 million, respectively.

In addition to the ongoing acquisition and disposition activity described above, the Company completed two transactions with joint venture partners in the fourth quarter and an additional joint venture transaction subsequent to year-end. These transactions will have an immaterial impact on future earnings, but will simplify our financial structure, creating better balance sheet clarity.

First, the Company reported that it closed on a multi-property transaction with affiliates of Miller Real Estate Investments in Denver, Colorado, essentially completing the dissolution of this relationship. The Company reported that it received the remaining 50% interest in River Point at Sheridan (two consolidated joint ventures), cash, the repayment of a note receivable and a small building in Salt Lake City, Utah in exchange for the Company’s interest in two unconsolidated venture properties, Alpine Valley Center and 300 West, both in Salt Lake City. River Point is a 519,000 square foot power center anchored by Target and Costco who own their own facilities. The center is also anchored by Regal Cinema, Michaels and Tuesday Morning. This project includes 16.4 acres available for future development.

In the second transaction, the Company purchased control of both phases of a grocery anchored shopping center in Apple Valley, California (Jess Ranch Marketplace and Jess Ranch Phase III). The center totals over 502,000 square feet and is anchored by Winco Foods, who owns their own facility, 24 Hour Fitness, Cinemark Theaters, Bed Bath & Beyond, Ulta Salon, PetSmart and others.

In January of 2014, the Company completed the dissolution of its consolidated joint venture with the Hines Retail REIT (“Hines”), where the Company owned a 30% interest in 13 properties. The transaction was completed through the distribution of five properties to the Company and eight properties to Hines. The Company will continue to lease and manage the properties owned by Hines.

These three joint venture transactions will not materially change the Company’s 2014 Funds from Operations, but clarifies and simplifies its balance sheet.

During the year, the Company also redeployed capital into existing new development projects, investing $13.2 million for the year.

Additional disclosure on specific properties impacted by the transactions noted above and ground lease commitments are detailed on page 13 and 40 of the supplemental package, respectively.

“We are extremely pleased with the continued transformation of the portfolio that occurred during the fourth quarter and its contribution to our outstanding operating metrics. While our growth in Recurring Funds from Operations was a reasonable 5.4% year over year, it was clearly muted by the $0.17 per share decrease due to our disposition program,” said Drew Alexander, President and Chief Executive Officer.

Balance Sheet

In October, 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, which were repaid subsequent to year-end.

“With the repayment of the $285 million in January, we now have less than $100 million of debt maturing in the remainder of 2014. We also expect to exercise our option to call $100 million of 8.1% bonds that would otherwise mature in 2019. With these transactions, our maturity schedule is in excellent shape,” said Steve Richter, Executive Vice President and Chief Financial Officer.

Dividend

On February 13, 2014, the Board of Trust Managers declared an increase in the common dividend to $0.325 per share for the first quarter of 2014. This represents a 6.6% increase resulting in an annualized dividend of $1.30 per share. The dividend is payable in cash on March 14, 2014 to shareholders of record on March 6, 2014.

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 March 14, 2014 to shareholders of record on March 6, 2014.

Recurring FFO Guidance

The Company’s full year Recurring FFO guidance remains in the range of $1.95 to $2.01 per share. Our specific guidance on dispositions did not include the two properties that closed subsequent to year-end or the pending Village Arcade ground lease transaction. Accordingly, we are raising our disposition guidance from a range of $200 million to $300 million to a range of $300 million to $400 million. All other guidance remains unchanged. Please refer to the full list of guidance information found 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 February 14, 2014 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 # 35533138). A replay and will be available through the Company’s web site starting approximately two hours following the live call.

About Weingarten Realty Investors

Weingarten Realty Investors (NYSE: WRI) is a shopping center owner, manager and developer. At December 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 270 properties which are located in 21 states spanning the country from coast to coast. These properties represent approximately 49.9 million square feet of which our interests in these properties aggregated approximately 30.4 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 Twelve Months Ended
December 31, December 31,
2013 2012 2013 2012
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Unaudited)
Rentals, net $ 125,568 $ 116,578 $ 485,829 $ 445,696
Other Income   2,615     2,969     11,896     11,208  
Total Revenues   128,183     119,547     497,725     456,904  
Depreciation and Amortization 40,411 34,968 149,493 129,500
Operating Expense 26,470 23,129 98,380 89,902
Real Estate Taxes, net 15,049 13,094 58,502 52,699
Impairment Loss - - 2,579 9,585
General and Administrative Expense   6,559     7,444     25,371     28,538  
Total Expenses   88,489     78,635     334,325     310,224  
Operating Income 39,694 40,912 163,400 146,680
Interest Expense, net (28,122 ) (24,974 ) (97,444 ) (106,800 )
Interest and Other Income, net 1,898 1,262 7,685 6,047
Gain on Sale and Acquisition of Real Estate Joint Venture and Partnership Interests 22,071 8,641 33,670 14,203
Equity in Earnings (Losses) of Real Estate Joint Ventures and Partnerships, net 20,645 5,157 35,112 (1,558 )
Gain on Acquisition - - - 1,869
(Provision) Benefit for Income Taxes   (7,302 )   412     (7,051 )   70  
Income from Continuing Operations   48,884     31,410     135,372     60,511  
Operating Income from Discontinued Operations 1,719 4,525 9,819 22,287
Gain on Sale of Property from Discontinued Operations   2,977     18,865     119,203     68,619  
Income from Discontinued Operations 4,696 23,390 129,022 90,906
Gain on Sale of Property   192     175     762     1,004  
Net Income 53,772 54,975 265,156 152,421

Less: Net Income Attributable to Noncontrolling Interests
  (3,838 )   (1,224 )   (44,894 )   (5,781 )
Net Income Adjusted for Noncontrolling Interests 49,934 53,751 220,262 146,640

Less: Preferred Share Dividends
(2,710 ) (8,323 ) (18,173 ) (34,930 )

Less: Redemption Costs of Preferred Shares
  -     (2,500 )   (17,944 )   (2,500 )
Net Income Attributable to Common Shareholders -- Basic $ 47,224   $ 42,928   $ 184,145   $ 109,210  
Net Income Attributable to Common Shareholders -- Diluted $ 47,668   $ 42,928   $ 184,145   $ 109,210  
FUNDS FROM OPERATIONS
Numerator:
Net Income Attributable to Common Shareholders $ 47,224 $ 42,928 $ 184,145 $ 109,210
Depreciation and Amortization 39,805 37,232 152,075 143,783
Depreciation and Amortization of Unconsolidated Real Estate
Joint Ventures and Partnerships 4,180 4,694 17,550 20,955
Impairment of Operating Properties and Real Estate Equity Investments - 26 457 15,033
Impairment of Operating Properties of Unconsolidated Real Estate
Joint Ventures and Partnerships - - 366 19,946
Gain on Acquisition Including Associated Real Estate Equity Investment (20,234 ) - (20,234 ) (1,869 )
Gain on Sale of Property and Interests in Real Estate Equity Investments (3,797 ) (27,636 ) (95,675 ) (83,683 )
Gain on Sale of Property of Unconsolidated Real Estate
Joint Ventures and Partnerships (15,684 ) (689 ) (15,951 ) (1,247 )
Other   (1 )   -     (1 )   -  
Funds from Operations -- Basic 51,493 56,555 222,732 222,128
Adjustments for Recurring FFO:
Income Attributable to Operating Partnership Units 444 427 1,780 1,721
Other Impairment Loss, net of tax - - 2,387 403
Redemption Costs of Preferred Shares - 2,500 18,131 2,500
Write-off of Debt Costs, net of tax - (1,650 ) (9,263 ) (1,650 )
Acquisition Costs 128 21 556 1,494
Other, net of tax   7,423     702     6,750     2,825  
Recurring Funds from Operations -- Diluted $ 59,488   $ 58,555   $ 243,073   $ 229,421  
Denominator:
Weighted Average Shares Outstanding -- Basic   121,370     120,871     121,269     120,696  
Weighted Average Shares Outstanding -- Diluted   124,069     121,906     122,460     121,705  
Weighted Average Shares Outstanding -- Diluted (FFO)   124,069     123,471     124,014     123,283  
PER SHARE DATA
Earnings Per Common Share -- Basic $ 0.39   $ 0.36   $ 1.52   $ 0.90  
Earnings Per Common Share -- Diluted $ 0.38   $ 0.35   $ 1.50   $ 0.90  
FFO -- Per Diluted Share $ 0.42   $ 0.46   $ 1.81   $ 1.82  
Recurring FFO -- Per Diluted Share $ 0.48   $ 0.47   $ 1.96   $ 1.86  
 
 
Weingarten Realty Investors
(in thousands)
Financial Statements
               
 
December 31, December 31,
2013 2012
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Audited)
ASSETS
 
Property $ 4,289,276 $ 4,399,850
Accumulated Depreciation (1,058,040 ) (1,040,839 )
Property Held for Sale, net 122,614 -
Investment in Real Estate Joint Ventures and Partnerships, net 266,158 289,049
Notes Receivable from Real Estate Joint Ventures and Partnerships 13,330 89,776
Unamortized Debt and Lease Costs, net 164,828 135,783
Accrued Rent and Accounts Receivable, net 82,351 79,540
Cash and Cash Equivalents 91,576 19,604
Restricted Deposits and Mortgage Escrows 4,502 44,096
Other, net   247,334     167,925  
Total Assets $ 4,223,929   $ 4,184,784  
 
LIABILITIES AND EQUITY
 
Debt, net $ 2,299,844 $ 2,204,030
Accounts Payable and Accrued Expenses 108,535 119,699
Other, net   127,572     120,900  
Total Liabilities   2,535,951     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 1,679,229 1,934,183
Net Income Less Than Accumulated Dividends (300,537 ) (335,980 )
Accumulated Other Comprehensive Loss   (4,202 )   (24,743 )
Shareholders' Equity   1,378,175     1,577,130  
Noncontrolling Interests   309,803     163,025  
Total Liabilities and Equity $ 4,223,929   $ 4,184,784  
 

Copyright Business Wire 2010

More from Press Releases

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

21st Century Fox Scoops Up Local News Stations

21st Century Fox Scoops Up Local News Stations

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Three-Part FREE Webinar Series

Three-Part FREE Webinar Series

March 24 Full-Day Course Offering: Professional Approach to Trading SPX

March 24 Full-Day Course Offering: Professional Approach to Trading SPX