HOUSTON--(BUSINESS WIRE)--Weingarten Realty (NYSE: WRI) announced today the results of its operations for the quarter ended September 30, 2015. 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 Attributable to Common Shareholders ("FFO") for the quarter increased to $0.56 per diluted share from $0.53 per diluted share a year ago, a 5.7% increase;
- Same Property Net Operating Income ("SPNOI") increased 3.0% over the same quarter of the prior year. Including all redevelopments, SPNOI increased 5.7%;
- Rental rates on new leases and renewals were up 19% and 9%, respectively; and
- Acquisitions totaling $61.0 million and dispositions totaling $43.5 million were completed during the quarter or subsequent to quarter-end.
Financial Results
The Company reported net income attributable to common shareholders of $43.4 million or $0.35 per diluted share (hereinafter “per share”) for the third quarter of 2015, as compared to $97.6 million or $0.79 per share for the same period in 2014. The decrease is due primarily to gains on sales of property totaling $0.56 per share in the third quarter of 2014 compared to $0.10 per share in the current quarter.
Reported FFO, calculated in accordance with the National Association of Real Estate Investment Trust’s definition, was $70.0 million or $0.56 per share for the third quarter of 2015 compared to $64.8 million or $0.52 per share for 2014. Year-to-date, Reported FFO was $188.7 million or $1.50 per share for 2015 compared to $193.4 million or $1.56 per share for 2014. Year-to-date 2015 results include redemption costs for preferred shares and the write-off of debt costs of $15.8 million or $0.13 per share.
Recurring FFO for the quarter ended September 30, 2015 was $0.56 per share or $70.3 million, an increase of 5.7% on a per share basis over $0.53 per share or $66.2 million for the same quarter of last year. The increase in Recurring FFO over the prior year was primarily due to increases in net operating income from our existing portfolio resulting from increases in occupancy and rental rates, incremental income from our new developments and redevelopments, reduced interest expense from favorable debt refinancings and reduced preferred share dividends due to redemptions. These increases were partially offset by the impact of the Company’s disposition program, which reduced Recurring FFO by $0.03 per share year-over-year. For the nine months, Recurring FFO was $204.0 million or $1.62 per share for 2015 compared to $191.4 million or $1.54 per share for 2014.
Reconciliation between net income attributable to common shareholders to Reported FFO and Recurring FFO attributable to common shareholders is listed on page 5 of the Company’s supplemental package.
Operating Results
Same Property Net Operating Income increased 3.0% for the quarter primarily due to increased occupancy and rental rates. Year-to-date, SPNOI increased a strong 3.7%. Including all redevelopments, SPNOI for the quarter would be 5.7% and year-to-date 4.7%.
Occupancy increased to 95.1% in the third quarter from 94.9% in the same quarter of 2014. Occupancy of small shop space increased to 90.2%, up 1.1% from the same quarter of 2014. Year-to-date, only 235 merchants ceased operations at the Company’s properties, the lowest such total since 2003.
The Company produced steady leasing results during the third quarter with 291 new leases and renewals which represent annualized revenues of $8.0 million and $10.9 million, respectively. The average rental rate increase on new leases and renewals signed during the third quarter was 18.6% and 9.1%, respectively.
“Demand for quality retail space has been consistent all across our footprint. Especially notable is the performance of our Houston portfolio where the decline in oil prices has not caused a significant impact on merchant sales or a decrease in demand for the little space we have available. Year-to-date rental rates increased 17%, a testament to the strength of our Houston portfolio, which primarily serves superzips,” said Johnny Hendrix, Executive Vice President and Chief Operating Officer.
Portfolio Activity
The Company acquired two shopping centers and two outparcels during the quarter, investing $61.0 million. First, Trenton Crossing is a 266,000 square foot Target anchored center in McAllen, Texas with Marshalls, Ross Dress for Less, Hobby Lobby, PetSmart, and Bealls. This is a quality addition to the Company’s highly successful South Texas portfolio that benefits from the steady flow of shoppers from across the border. Second, at the end of the quarter, the Company purchased Wake Forest Crossing I in the greater Raleigh metro. This 88,000 square foot property is anchored by a Lowes Foods supermarket and is adjacent to the Company’s Wake Forest Crossing II new development that will be completed later this year. This addition of a grocery anchor to the development project will increase the value of the combined projects. Year-to-date, the Company has purchased eight properties, investing $234.2 million.
The Company continues to make significant progress on its new development and redevelopment projects. Hilltop Village Center, a 249,000 square foot development in Alexandria, Virginia, anchored by Wegmans and LA Fitness, is 99% leased and will yield around 8% upon completion. At Nottingham Commons, a 176,000 square foot grocery anchored development in White Marsh, Maryland, signed occupancy already stands at over 80% with construction commencing next month.
During the quarter, the Company was selected as the master developer for the redevelopment of the Atlanta Civic Center. The Company won the competitive process to control this 19 acre infill mixed use development which will have up to 200,000 square feet of retail as well as residential and office components. Planning and underwriting is still in progress including what portion of the project the Company would develop and own, however the investment in the retail portion is currently estimated to be around $70 million with the total project cost around $300 million. It is early in the process and we expect to open in late 2018 or 2019.
The Company also reported 14 active and completed redevelopment projects where it will invest about $76.0 million at a return of around 12%. To date, the Company has invested nearly $41 million in these redevelopment projects.
During the third quarter, the Company completed about $29.2 million of dispositions. Subsequent to quarter end, the Company sold an additional property and a land parcel for $14.3 million, bringing the year-to-date sales to $107.2 million.
“I am extremely pleased with the results of our portfolio activity this quarter, especially in light of the highly competitive environment in which we operate. We were able to complete some unique acquisitions of quality properties and continue to make great progress on our new developments and redevelopments. We are especially excited about the development opportunity in Atlanta that we secured this quarter as it highlights the expertise of our development team,” said Drew Alexander, President and Chief Executive Officer.
2015 Guidance
The Company has updated its guidance as follows:
Previous Guidance | Revised Guidance | |||||
Recurring FFO per Common Share – Diluted | $2.14 - $2.18 | $2.16 - $2.18 | ||||
Reported FFO per Common Share – Diluted | $2.02 - $2.06 | $2.04 - $2.06 | ||||
Portfolio Activity ($ in millions) | ||||||
Acquisitions | $200 - $250 | $200 - $250 | ||||
New Development | $50 - $100 | $50 - $100 | ||||
Dispositions | $125 - $175 | $125 - $175 | ||||
Operating Information | ||||||
Same Property Net Operating Income | +3.0% to +4.0% | +3.0% to +4.0% |
Steve Richter, Executive Vice President and Chief Financial Officer added, “The competitive landscape for acquisitions in our targeted markets, the volatility in the capital markets and the continued sluggishness of the overall economy causes us to be cautious on investing new capital as we complete 2015 and enter 2016. This could result in an acceleration of 2016 dispositions in order to take advantage of the strong market today.” Guidance information is included on page 9 of the Company’s supplemental package.
Dividends
The Board of Trust Managers declared a quarterly cash dividend of $0.345 per common share payable on December 15, 2015 to shareholders of record on December 8, 2015.
Share Repurchase Program
Volatility in the stock market has produced swings in the Company’s share price in excess of 15% in the last sixty days. Given the continued uncertainties surrounding interest rates and the overall economy, the Company’s Board of Trust Managers approved a share repurchase program authorizing up to $200 million in common share repurchases. There is no fixed termination date for this repurchase program. Purchases may be made in open-market transactions, block transactions on or off an exchange, or in privately negotiated transactions.
The timing and amount of any shares repurchased will be determined by the Company based on its evaluation of market conditions and other factors. The repurchase program may be suspended or discontinued at any time, and the Company has no obligation to repurchase any amount of its common shares under the program.
Conference Call Information
The Company also announced that it will host a live webcast of its quarterly conference call on October 30, 2015 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 (800) 886-4674 (conference ID # 37563665). 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, 2015, 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 232 properties which are located in 20 states spanning the country from coast to coast. These properties represent approximately 45.9 million square feet of which our interests in these properties aggregated approximately 28.3 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 | Nine Months Ended | |||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | (Unaudited) | (Unaudited) | ||||||||||||||||||
Rentals, net | $ | 128,254 | $ | 127,974 | $ | 375,222 | $ | 380,398 | ||||||||||||
Other Income | 2,533 | 2,547 | 7,968 | 7,906 | ||||||||||||||||
Total Revenues | 130,787 | 130,521 | 383,190 | 388,304 | ||||||||||||||||
Depreciation and Amortization | 36,327 | 36,694 | 108,929 | 113,948 | ||||||||||||||||
Operating Expense | 24,291 | 23,454 | 69,076 | 71,989 | ||||||||||||||||
Real Estate Taxes, net | 15,770 | 15,412 | 45,895 | 46,419 | ||||||||||||||||
Impairment Loss | - | - | 153 | - | ||||||||||||||||
General and Administrative Expense | 6,188 | 6,146 | 20,021 | 17,879 | ||||||||||||||||
Total Expenses | 82,576 | 81,706 | 244,074 | 250,235 | ||||||||||||||||
Operating Income | 48,211 | 48,815 | 139,116 | 138,069 | ||||||||||||||||
Interest Expense, net | (20,607 | ) | (24,373 | ) | (67,357 | ) | (73,263 | ) | ||||||||||||
Interest and Other (Expense) Income, net | (888 | ) | 96 | 2,252 | 2,893 | |||||||||||||||
Gain on Sale and Acquisition of Real Estate Joint Venture and Partnership Interests | - | - | 879 | 1,718 | ||||||||||||||||
Equity in Earnings of Real Estate Joint Ventures and Partnerships, net | 5,096 | 7,881 | 13,680 | 16,331 | ||||||||||||||||
Benefit (Provision) for Income Taxes | 144 | 284 | (291 | ) | 1,885 | |||||||||||||||
Income from Continuing Operations | 31,956 | 32,703 | 88,279 | 87,633 | ||||||||||||||||
Operating Income from Discontinued Operations | - | - | - | 342 | ||||||||||||||||
Gain on Sale of Property from Discontinued Operations | - | - | - | 44,582 | ||||||||||||||||
Income from Discontinued Operations | - | - | - | 44,924 | ||||||||||||||||
Gain on Sale of Property | 13,232 | 69,496 | 43,917 | 71,407 | ||||||||||||||||
Net Income | 45,188 | 102,199 | 132,196 | 203,964 | ||||||||||||||||
Less: Net Income Attributable to Noncontrolling Interests |
(1,787 | ) | (1,870 | ) | (5,119 | ) | (4,936 | ) | ||||||||||||
Net Income Adjusted for Noncontrolling Interests | 43,401 | 100,329 | 127,077 | 199,028 | ||||||||||||||||
Less: Preferred Share Dividends |
- | (2,710 | ) | (3,830 | ) | (8,130 | ) | |||||||||||||
Less: Redemption Costs of Preferred Shares |
- | - | (9,687 | ) | - | |||||||||||||||
Net Income Attributable to Common Shareholders -- Basic | $ | 43,401 | $ | 97,619 | $ | 113,560 | $ | 190,898 | ||||||||||||
Net Income Attributable to Common Shareholders -- Diluted | $ | 43,873 | $ | 98,074 | $ | 113,560 | $ | 192,266 | ||||||||||||
FUNDS FROM OPERATIONS ATTRIBUTABLE TO COMMON SHAREHOLDERS (FFO) | ||||||||||||||||||||
Numerator: | ||||||||||||||||||||
Net Income Attributable to Common Shareholders | $ | 43,401 | $ | 97,619 | $ | 113,560 | $ | 190,898 | ||||||||||||
Depreciation and Amortization | 35,687 | 35,402 | 106,717 | 110,542 | ||||||||||||||||
Depreciation and Amortization of Unconsolidated Real Estate | ||||||||||||||||||||
Joint Ventures and Partnerships | 3,624 | 3,666 | 10,602 | 11,289 | ||||||||||||||||
Impairment of Operating Properties and Real Estate Equity Investments | - | - | 153 | - | ||||||||||||||||
Impairment of Operating Properties of Unconsolidated Real Estate | ||||||||||||||||||||
Joint Ventures and Partnerships | - | - | 1,497 | - | ||||||||||||||||
Gain on Sale of Property and Interests in Real Estate Equity Investments | (13,214 | ) | (69,468 | ) | (44,684 | ) | (117,643 | ) | ||||||||||||
Gain on Dispositions of Unconsolidated Real Estate Joint Ventures | ||||||||||||||||||||
and Partnerships | - | (2,856 | ) | (615 | ) | (3,024 | ) | |||||||||||||
Other | - | - | (4 | ) | (4 | ) | ||||||||||||||
FFO -- Basic | 69,498 | 64,363 | 187,226 | 192,058 | ||||||||||||||||
Adjustments for Recurring FFO: | ||||||||||||||||||||
Income Attributable to Operating Partnership Units | 472 | 455 | 1,432 | 1,368 | ||||||||||||||||
Redemption Costs of Preferred Shares | - | - | 9,749 | - | ||||||||||||||||
Write-off of Debt Costs, net | - | 1,376 | 6,100 | 1,850 | ||||||||||||||||
Acquisition Costs | 356 | 50 | 702 | 68 | ||||||||||||||||
Deferred Tax Benefit, net | - | - | - | (2,097 | ) | |||||||||||||||
Other, net of tax | - | - | (1,161 | ) | (1,862 | ) | ||||||||||||||
Recurring FFO -- Diluted | $ | 70,326 | $ | 66,244 | $ | 204,048 | $ | 191,385 | ||||||||||||
Denominator: | ||||||||||||||||||||
Weighted Average Shares Outstanding -- Basic | 123,349 | 121,560 | 122,929 | 121,487 | ||||||||||||||||
Weighted Average Shares Outstanding -- Diluted | 126,033 | 124,440 | 124,232 | 124,301 | ||||||||||||||||
Weighted Average Shares Outstanding -- Diluted (FFO) | 126,033 | 124,440 | 125,708 | 124,301 | ||||||||||||||||
PER SHARE DATA | ||||||||||||||||||||
Earnings Per Common Share -- Basic | $ | 0.35 | $ | 0.80 | $ | 0.92 | $ | 1.57 | ||||||||||||
Earnings Per Common Share -- Diluted | $ | 0.35 | $ | 0.79 | $ | 0.91 | $ | 1.55 | ||||||||||||
FFO Per Common Share -- Diluted | $ | 0.56 | $ | 0.52 | $ | 1.50 | $ | 1.56 | ||||||||||||
Recurring FFO Per Common Share -- Diluted | $ | 0.56 | $ | 0.53 | $ | 1.62 | $ | 1.54 |
Weingarten Realty Investors (in thousands) Financial Statements |
|||||||||||
September 30, | December 31, | ||||||||||
2015 | 2014 | ||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | (Unaudited) | (Audited) | |||||||||
ASSETS | |||||||||||
Property | $ | 4,277,134 | $ | 4,076,094 | |||||||
Accumulated Depreciation | (1,088,821 | ) | (1,028,619 | ) | |||||||
Property Held for Sale, net | 2,497 | 3,670 | |||||||||
Investment in Real Estate Joint Ventures and Partnerships, net | 267,999 | 257,156 | |||||||||
Unamortized Debt and Lease Costs, net | 151,476 | 141,122 | |||||||||
Accrued Rent and Accounts Receivable, net | 82,686 | 77,781 | |||||||||
Cash and Cash Equivalents | 12,267 | 23,189 | |||||||||
Restricted Deposits and Mortgage Escrows | 10,252 | 79,998 | |||||||||
Other, net | 179,847 | 183,703 | |||||||||
Total Assets | $ | 3,895,337 | $ | 3,814,094 | |||||||
LIABILITIES AND EQUITY | |||||||||||
Debt, net | $ | 2,114,145 | $ | 1,938,188 | |||||||
Accounts Payable and Accrued Expenses | 112,532 | 112,479 | |||||||||
Other, net | 131,296 | 124,484 | |||||||||
Total Liabilities | 2,357,973 | 2,175,151 | |||||||||
Commitments and Contingencies | |||||||||||
EQUITY | |||||||||||
Preferred Shares of Beneficial Interest | - | 2 | |||||||||
Common Shares of Beneficial Interest | 3,744 | 3,700 | |||||||||
Additional Paid-In Capital | 1,615,308 | 1,706,880 | |||||||||
Net Income Less Than Accumulated Dividends | (227,393 | ) | (212,960 | ) | |||||||
Accumulated Other Comprehensive Loss | (9,029 | ) | (12,436 | ) | |||||||
Shareholders' Equity | 1,382,630 | 1,485,186 | |||||||||
Noncontrolling Interests | 154,734 | 153,757 | |||||||||
Total Liabilities and Equity | $ | 3,895,337 | $ | 3,814,094 |