HOUSTON--(EON: Enhanced Online News)--Weingarten Realty (NYSE: WRI) announced today the results of its operations for the quarter ended September 30, 2013. The supplemental financial package with additional information can be found on the Company's website under the Investor Relations tab.
“We have continued the transformation of our portfolio through these acquisitions and dispositions. We continue to reduce the size of our non-core portfolio and recycle that capital into outstanding new properties, which has significantly contributed to the solid financial results we are experiencing”
Third Quarter Operating and Financial Highlights
- Recurring Funds from Operations ("FFO") for the third quarter totaled $63.3 million or $0.51 per diluted share, a 10.9% per share increase over the same quarter of 2012;
- Same Property Net Operating Income for the quarter increased a strong 4.7% over the prior year;
- Occupancy of the Company’s retail portfolio increased again this quarter by 0.5% to 94.4% from 93.9% a year earlier;
- Dispositions of $116 million were completed during the quarter, and;
- Ten-year notes totaling $250 million were sold subsequent to quarter-end at an attractive yield of 4.50%.
The Company reported net income attributable to common shareholders of $57.8 million or $0.47 per diluted share (hereinafter “per share”) for the third quarter of 2013, as compared to $31.4 million or $0.26 per share for the same period in 2012. Gains on sales of property totaled $38.4 million in 2013 compared to $15.2 million in 2012. The 2013 operating results also included non-cash impairment charges of $0.02 per share. Net income for the nine months ended September 30, 2013 was $136.9 million or $1.12 per share compared to $66.3 million or $0.54 per share for 2012. Year-to-date, gains on sales of property totaled $116.8 million in 2013 compared to $50.6 million in 2012.
Reported FFO was $60.5 million or $0.49 per share for the third quarter of 2013 compared to $55.5 million or $0.45 per share for 2012. Year-to-date, Reported FFO was $172.6 million or $1.39 per share for 2013 compared to $166.9 million or $1.35 per share for 2012.
Recurring FFO for the quarter ended September 30, 2013 was $0.51 per share or $63.3 million compared to $56.6 million or $0.46 per share for 2012, an increase of 10.9% on a per share basis. This significant increase in Recurring FFO over the prior year was primarily due to solid leasing demand resulting in an increase in occupancy and the savings from the redemption of preferred shares and refinancing of debt maturities offset by the impact of the successful disposition program. For the nine months, Recurring FFO was $183.6 million or $1.48 per share for 2013 compared to $170.9 million or $1.39 per share for 2012, a 6.5% increase on a per share basis.
A reconciliation between net income attributable to common shareholders to Reported FFO and Recurring FFO is listed on page 5 of the Company’s supplemental package.
Occupancy of the retail portfolio increased to 94.4% in the third quarter from 93.9% in the third quarter of 2012. Anchor spaces increased 0.7% to 97.9% and occupancy of small shop space (less than 10,000 square feet) increased 0.4% to 88.7% from the same quarter of the prior year.
Same Property Net Operating Income ("SPNOI") for retail properties increased a strong 4.7% for the quarter primarily due to continued strength in both renewals and new leases and the improvement in occupancy mentioned above. Year-to-date, SPNOI has increased 4.5%, which was ahead of the Company’s business plan.
The Company produced strong leasing results during the third quarter with 330 new leases and renewals, totaling about one million square feet. These transactions were comprised of 109 new leases and 221 renewals, which represent annualized revenues of $6.4 million and $11.4 million, respectively. The average rental rate increase on comparable new leases signed during the quarter was a solid 9.4%.
"The continued rise in occupancy and, to a lesser degree, strong rental rate increases has enabled us to post the excellent Same Property NOI growth for the quarter and the year. Our best in class operating platform and quality portfolio of properties has allowed us to sustain this improvement in operating results for seven consecutive quarters,” said Johnny Hendrix, Executive Vice President and Chief Operating Officer.
The Company reported significant progress in selling its non-core assets and redeploying that capital into higher quality properties in its target markets. Year-to-date, dispositions totaled $240 million. During the quarter, the Company sold eight shopping centers and two land parcels for $116 million. Disposition activity is expected to remain strong in the fourth quarter with full year results near the upper end of the Company’s guidance for property sales of $350 million.
Subsequent to quarter-end, the Company completed investments of $86 million with the purchase of an outstanding in-fill shopping center in Austin, Texas and the acquisition of a small building in Utah in connection with the dissolution of a joint venture. The acquired shopping center was Mueller Regional Retail Center, a 350,000 square foot power center anchored by national retailers such as Home Depot, Marshalls, Bed Bath & Beyond, and PetSmart. The property is part of the 700 acre Mueller master planned community that will include over four million square feet of commercial space and 4,600 residential units when completed. Year-to-date, the Company has invested $175 million in quality shopping centers in our targeted markets.
“We have continued the transformation of our portfolio through these acquisitions and dispositions. We continue to reduce the size of our non-core portfolio and recycle that capital into outstanding new properties, which has significantly contributed to the solid financial results we are experiencing,” said Drew Alexander, President and Chief Executive Officer.
On October 15, 2013, 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.
“With all the volatility and uncertainty in the marketplace caused by the talk of tapering the Fed’s bond purchases, the government shutdown and the debt ceiling negotiations, we felt this notes offering was effectively an insurance policy for the Company’s January 2014 maturities. We were extremely pleased with the execution, especially in light of the unusual market conditions,” said Steve Richter, Executive Vice President and Chief Financial Officer.
Recurring FFO Guidance
With respect to 2013 guidance, the Company once again raised its guidance for Recurring FFO from $1.89 to $1.93 per share to $1.93 to $1.95 per share. Recurring FFO guidance for 2014 is a range from $1.95 to $2.01 per share. The Company’s guidance for 2013 and 2014, and assumptions for 2013 are provided on page 9 of its supplemental package.
The Board of Trust Managers declared a quarterly cash dividend of $0.305 per common share payable on December 13, 2013 to shareholders of record on December 5, 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 December 13, 2013 to shareholders of record on December 5, 2013.
Conference Call Information
The Company also announced that it will host a live webcast of its quarterly conference call on November 1, 2013 at 11:00 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 # 32913555). 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 shopping center owner, manager and developer. At September 30, 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 273 properties which are located in 21 states spanning the country from coast to coast. These properties represent approximately 50.4 million square feet of which our interests in these properties aggregated approximately 30.1 million square feet of leasable area. To learn more about the Company’s operations and growth strategies, please visit www.weingarten.com.
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)|
|Three Months Ended||Nine Months Ended|
|September 30,||September 30,|
|CONDENSED CONSOLIDATED STATEMENTS OF INCOME||(Unaudited)||(Unaudited)|
|Depreciation and Amortization||37,122||34,591||112,347||97,845|
|Real Estate Taxes, net||15,624||14,499||45,242||41,306|
|General and Administrative Expense||5,966||6,417||18,818||21,101|
|Interest Expense, net||(27,660||)||(27,482||)||(73,689||)||(86,692||)|
|Interest and Other Income, net||1,864||1,818||5,788||4,786|
|Gain on Sale of Real Estate Joint Venture and Partnership Interests||7||-||11,599||5,562|
|Equity in Earnings (Losses) of Real Estate Joint Ventures and Partnerships, net||5,125||4,905||14,467||(6,715||)|
|Gain on Acquisition||-||1,869||-||1,869|
|Benefit (Provision) for Income Taxes||215||(722||)||214||(378||)|
|Income from Continuing Operations||23,618||21,812||88,932||30,400|
|Operating Income from Discontinued Operations||394||5,074||5,656||16,463|
|Gain on Sale of Property from Discontinued Operations||38,214||14,826||116,226||49,724|
|Income from Discontinued Operations||38,608||19,900||121,882||66,187|
|Gain on Sale of Property||163||335||570||859|
|Less:Net Income Attributable to Noncontrolling Interests||(1,847||)||(1,774||)||(41,056||)||(4,557||)|
|Net Income Adjusted for Noncontrolling Interests||60,542||40,273||170,328||92,889|
Less: Preferred Share Dividends
Less: Redemption Costs of Preferred Shares
|Net Income Attributable to Common Shareholders -- Basic||$||57,832||$||31,404||$||136,921||$||66,282|
|Net Income Attributable to Common Shareholders -- Diluted||$||57,832||$||31,404||$||136,921||$||66,282|
|FUNDS FROM OPERATIONS|
|Net Income Attributable to Common Shareholders||$||57,832||$||31,404||$||136,921||$||66,282|
|Depreciation and Amortization||36,088||35,611||112,270||106,551|
|Depreciation and Amortization of Unconsolidated Real Estate|
|Joint Ventures and Partnerships||4,443||5,254||13,370||16,261|
|Impairment of Operating Properties and Real Estate Equity Investments||-||177||457||15,007|
|Impairment of Operating Properties of Unconsolidated Real Estate|
|Joint Ventures and Partnerships||-||57||366||19,946|
|Gain on Acquisition||-||(1,869||)||-||(1,869||)|
|Gain on Sale of Property and Interests in Real Estate Equity Investments||(38,325||)||(15,140||)||(91,878||)||(56,047||)|
|Gain on Sale of Property of Unconsolidated Real Estate|
|Joint Ventures and Partnerships||(24||)||(435||)||(267||)||(558||)|
|Funds from Operations -- Basic||60,014||55,059||171,239||165,573|
|Adjustments for Recurring FFO:|
|Income Attributable to Operating Partnership Units||445||431||1,336||1,294|
|Other Impairment Loss, net of tax||2,387||159||2,387||403|
|Redemption Costs of Preferred Shares||-||-||18,131||-|
|Write-off of Debt Costs, net of tax||404||-||(9,263||)||-|
|Other, net of tax||-||-||(673||)||2,123|
|Recurring Funds from Operations -- Diluted||$||63,268||$||56,630||$||183,585||$||170,866|
|Weighted Average Shares Outstanding -- Basic||121,359||120,766||121,235||120,637|
|Weighted Average Shares Outstanding -- Diluted||122,531||121,844||122,441||121,653|
|Weighted Average Shares Outstanding -- Diluted (FFO)||124,086||123,426||123,996||123,236|
|PER SHARE DATA|
|Earnings Per Common Share -- Basic||$||0.48||$||0.26||$||1.13||$||0.55|
|Earnings Per Common Share -- Diluted||$||0.47||$||0.26||$||1.12||$||0.54|
|FFO -- Per Diluted Share||$||0.49||$||0.45||$||1.39||$||1.35|
|Recurring FFO -- Per Diluted Share||$||0.51||$||0.46||$||1.48||$||1.39|
|Weingarten Realty Investors|
|September 30,||December 31,|
|CONDENSED CONSOLIDATED BALANCE SHEETS||(Unaudited)||(Audited)|
|Investment in Real Estate Joint Ventures and Partnerships, net||281,203||289,049|
|Notes Receivable from Real Estate Joint Ventures and Partnerships||84,142||89,776|
|Unamortized Debt and Lease Costs, net||137,000||135,783|
|Accrued Rent and Accounts Receivable, net||76,828||79,540|
|Cash and Cash Equivalents||51,730||19,604|
|Restricted Deposits and Mortgage Escrows||57,468||44,096|
|LIABILITIES AND EQUITY|
|Accounts Payable and Accrued Expenses||116,985||119,699|
|Commitments and Contingencies|
|Preferred Shares of Beneficial Interest||2||7|
|Common Shares of Beneficial Interest||3,683||3,663|
|Additional Paid-In Capital||1,690,687||1,934,183|
|Net Income Less Than Accumulated Dividends||(310,568||)||(335,980||)|
|Accumulated Other Comprehensive Loss||(15,147||)||(24,743||)|
|Total Liabilities and Equity||$||4,118,547||$||4,184,784|