Weingarten Realty Increases Same Store Net Operating Income by 4.9%

Weingarten Realty Increases Same Store Net Operating Income by 4.9%

HOUSTON--(BUSINESS WIRE)-- Weingarten Realty (NYS: WRI) announced today the results of its operations for the quarter ended September 30, 2012. The supplemental financial package with additional information can be found on the Company's website under the Investor Relations tab.

Third Quarter Operating and Financial Highlights

  • Recurring Funds from Operations ("FFO") for the quarter totaled $56.2 million or $0.46 per diluted share;

  • Same Property Net Operating Income increased a strong 4.9% over the same quarter of the prior year;

  • Occupancy of the Company's retail portfolio increased again this quarter by 1.1% to 93.9% from 92.8% for the third quarter of 2011;

  • Acquisitions totaling $114 million and dispositions of $89 million were completed during the quarter, and;

  • Ten-year notes totaling $300 million were sold subsequent to quarter-end at an attractive yield of 3.42%.


Financial Results

The Company reported net income attributable to common shareholders of $31.4 million or $0.26 per diluted share (hereinafter "per share") for the third quarter of 2012, as compared to a net loss of $42.1 million or $0.35 per share for the same period in 2011. Included in the 2011 operating results were non-cash impairment charges of $0.44 per share. Net income for the nine months ended September 30, 2012 was $66.3 million or $0.54 per share compared to a net loss of $42.0 million or $0.35 per share for 2011. Included in the 2011 operating results were non-cash impairment charges of $0.63 per share.

Reported FFO was $55.1 million or $0.45 per share for the third quarter of 2012 compared to $30.7 million or $0.25 per share for 2011. Excluded from Reported FFO in 2011 were impairments of $0.25 per share as they related to operating properties. Year-to-date, Reported FFO was $165.6 million or $1.36 per share for 2012 compared to $115.2 million or $0.96 per share for 2011.

Recurring FFO for the quarter ended September 30, 2012 was $0.46 per share or $56.2 million. For the same quarter last year, Recurring FFO was $0.47 per share. The $0.01 per share decrease in Recurring FFO over the prior year was primarily due to dispositions totaling $627 million since September 30, 2011, which includes the sale of the Company's wholly-owned industrial assets in the second quarter of 2012 totaling $382 million. This reduction was offset by an improvement in operating income from increased occupancy in the existing portfolio, reduced interest expense resulting from refinanced debt maturities and acquisitions totaling $235 million. For the nine months, Recurring FFO was $169.6 million or $1.39 per share for 2012 compared to $159.2 million or $1.32 per share for 2011, a 5.3% 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.

Operating Results

Occupancy of the retail portfolio increased to 93.9% in the third quarter from 93.7% in the prior quarter and by a very strong 1.1% from 92.8% in the third quarter of 2011. Occupancy of small shop space increased by 0.5% from the prior quarter and by an impressive 1.6% from the same quarter of the prior year.

Same Property Net Operating Income ("SPNOI") for retail properties increased 4.9% primarily due to continued strength in both renewals and new leases and a reduction in merchant fallouts. Year-to-date, SPNOI has increased 4.1%, which ranks at the top of the Company's shopping center peer group.

The Company produced strong leasing results during the third quarter with 356 new retail leases and renewals, totaling over one million square feet. These transactions were comprised of 152 new leases and 204 renewals, which represent annualized revenues of $5.1 million and $9.8 million, respectively. Year-to-date, the average rental rate increase on retail leases signed was a solid 3.8%.

"Our continued rise in occupancy and excellent Same Property NOI growth is a clear reflection of our best in class operating platform. While economic activity remains sluggish, our local market expertise coupled with our quality portfolio of properties enables us to sustain this improvement in operating results," said Johnny Hendrix, Executive Vice President and Chief Operating Officer.

Capital Recycling

The Company continued its progress in selling its secondary assets and redeploying that capital into higher quality investments in its target markets. Year-to-date, dispositions have totaled $565 million. During the quarter, the Company sold ten retail assets for $66 million and continued the divestiture of its industrial assets by selling nine properties for $23 million from one of its remaining joint ventures. The Company expects to sell its interest in its other industrial joint venture by year-end. The Company redeployed $114 million with the purchase of two outstanding shopping centers and the opportunistic purchase of its venture partner's interest in another. The Company purchased Roswell Crossing, a 202,000 square foot shopping center in Roswell, Georgia, an affluent suburb of Atlanta. Anchored by Trader Joe's, Walgreens, OfficeMax and PetsMart, the trade area has average household incomes over $128,000 within a three-mile trade area and 66% of the residents are college graduates. The Company also purchased Pike Center, an 81,300 square foot community shopping center in affluent Rockville, Maryland. The center's demographics boast 145,000 people within three miles and average household incomes of $110,000. Year-to-date, the Company has invested $235 million in quality shopping centers in great markets.

"We have delivered on every facet of the five-year strategic plan we laid out back in 2011. We continue to reduce the size of our secondary portfolio and recycle that capital into outstanding new properties while using some of the proceeds to reduce our leverage. We are not finished repositioning our portfolio, but our progress has been substantial," said Drew Alexander, President and Chief Executive Officer.

Balance Sheet

On October 9, 2012, the Company closed on the sale of $300 million of 3.375% notes due in October 2022. The notes yield interest at 3.42% and were sold at a discount to par value. The proceeds from the transaction were used to pay down all amounts outstanding under the Company's $500 million revolving credit facility and to redeem $54 million of its 3.95% Convertible Notes.

Subsequent to this transaction, the Company also called for the redemption of $72.5 million of its 6.95% Series E Preferred Shares.

"The $300 million notes offering was exceptionally well received by the market as the transaction was more than six times over-subscribed with $1.2 billion of demand. The sale of these notes allowed us to lock in very favorable long-term rates for ten years and pay off our revolving credit facility to provide liquidity for future debt maturities and growth opportunities," said Steve Richter, Executive Vice President and Chief Financial Officer.

Recurring FFO Guidance

With respect to 2012 guidance, the Company once again raised the lower end of guidance for Recurring FFO from $1.78 to $1.84 per share to $1.80 to $1.84 per share and also improved its rental growth assumption from -1% to +2% to +2% to +4%. Recurring FFO guidance for 2013 is a range from $1.84 to $1.90 per share. The Company's guidance for 2012 and 2013 and assumptions for 2012 are provided in its supplemental package.

Dividends

The Board of Trust Managers declared a common dividend of $0.29 per share for the third quarter of 2012. The dividend is payable in cash on December 14, 2012 to shareholders of record on December 6, 2012.

The Board of Trust Managers also declared dividends on the Company's preferred shares. Dividends related to the 6.75% Series D Cumulative Redeemable Preferred Shares (NYS: WRIPRD) are $0.421875 per share for the quarter. Dividends on the 6.50% Series F Cumulative Redeemable Preferred Shares (NYS: WRIPRF) are $0.40625 per share for the quarter. All preferred dividends are payable on December 14, 2012 to shareholders of record on December 6, 2012.

Conference Call Information

The Company also announced that it will host a live webcast of its quarterly conference call on October 29, 2012 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 # 32594657). 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 (NYS: WRI) is a shopping center owner, manager and developer. At September 30, 2012, 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 301 developed income-producing properties and 11 properties under various stages of construction and development. The total number of properties includes 295 neighborhood and community shopping centers and 17 other operating properties located in 22 states spanning the country from coast to coast representing approximately 59.8 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

Nine Months Ended

September 30,

September 30,

2012

2011

2012

2011

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Unaudited)

Rentals, net

$

126,406

$

119,746

$

363,770

$

347,882

Other Income

3,139

3,123

8,444

11,123

Total Revenues

129,545

122,869

372,214

359,005

Depreciation and Amortization

36,623

33,487

103,909

98,489

Operating Expense

26,583

22,494

73,088

66,777

Real Estate Taxes, net

15,259

14,658

43,557

42,054

Impairment Loss

159

31,658

9,908

51,319

General and Administrative Expense

6,421

5,762

21,105

18,898

Total Expenses

85,045

108,059

251,567

277,537

Operating Income

44,500

14,810

120,647

81,468

Interest Expense, net

(28,109

)

(35,475

)

(88,587

)

(108,268

)

Interest and Other Income (Loss), net

1,818

(494

)

4,786

2,984

Gain on Sale of Real Estate Joint Venture and Partnership Interests

-

-

5,562

-

Equity in Earnings (Losses) of Real Estate Joint Ventures and Partnerships, net

4,905

(3,034

)

(6,715

)

3,942

Gain on Acquisition

1,869

-

1,869

-

(Provision) Benefit for Income Taxes

(733

)

(471

)

(462

)

67

Income (Loss) from Continuing Operations

24,250

(24,664

)

37,100

(19,807

)

Operating Income (Loss) from Discontinued Operations

2,636

(12,272

)

9,763

1,802

Gain on Sale of Property from Discontinued Operations

14,826

586

49,724

586

Income (Loss) from Discontinued Operations

17,462

(11,686

)

59,487

2,388

Gain on Sale of Property

335

392

859

1,588

Net Income (Loss)

42,047

(35,958

)

97,446

(15,831

)

Less: Net (Income) Loss Attributable to Noncontrolling Interests

(1,774

)

2,738

(4,557

)

410

Net Income (Loss) Adjusted for Noncontrolling Interests

40,273

(33,220

)

92,889

(15,421

)

Less: Preferred Share Dividends

(8,869

)

(8,869

)

(26,607

)

(26,607

)

Net Income (Loss) Attributable to Common Shareholders -- Basic

$

31,404

$

(42,089

)

$

66,282

$

(42,028

)

Net Income (Loss) Attributable to Common Shareholders -- Diluted

$

31,404

$

(42,089

)

$

66,282

$

(42,028

)

FUNDS FROM OPERATIONS

Numerator:

Net Income (Loss) Attributable to Common Shareholders

$

31,404

$

(42,089

)

$

66,282

$

(42,028

)

Depreciation and Amortization

35,611

38,470

106,551

113,397

Depreciation and Amortization of Unconsolidated Real Estate

Joint Ventures and Partnerships

5,254

5,689

16,261

17,282

Impairment of Operating Properties and Real Estate Equity Investments

177

24,341

15,007

27,576

Impairment of Operating Properties of Unconsolidated Real Estate

Joint Ventures and Partnerships

57

5,253

19,946

5,664

Gain on Acquisition

(1,869

)

-

(1,869

)

(4,559

)

Gain on Sale of Property and Interests in Real Estate Equity Investments

(15,140

)

(979

)

(56,047

)

(2,129

)

(Gain) Loss on Sale of Property of Unconsolidated Real Estate

Joint Ventures and Partnerships

(435

)

-

(558

)

10

Funds from Operations -- Basic

55,059

30,685

165,573

115,213

Funds from Operations Attributable to Operating Partnership Units

-

-

-

-

Funds from Operations -- Diluted

55,059

30,685

165,573

115,213

Adjustments for Recurring FFO:

Other Impairment Loss, net of tax

159

23,048

403

42,062

Severance Costs

-

-

2,123

-

Litigation Settlement, net of tax

-

-

-

(1,040

)

Extinguishment of Debt Costs, net of tax

-

2,429

-

2,679

Acquisition Costs

981

12

1,473

276

Recurring Funds from Operations -- Diluted

$

56,199

$

56,174

$

169,572

$

159,190

Denominator:

Weighted Average Shares Outstanding -- Basic

120,766

120,413

120,637

120,301

Weighted Average Shares Outstanding -- Diluted

121,844

120,413

121,653

120,301

PER SHARE DATA

Earnings Per Common Share -- Basic

$

0.26

$

(0.35

)

$