HOUSTON--(BUSINESS WIRE)--Weingarten Realty (NYSE: WRI) announced today the results of its operations for the quarter ended September 30, 2014. 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 increased to $0.53 per diluted share from $0.51 per diluted share a year ago;
- Same Property Net Operating Income increased 3.8% over the same quarter of the prior year;
- Occupancy increased 0.5% over the same quarter of the prior year to 94.9%;
- Rental rates on new leases and renewals were up 20.3% and 9.5%, respectively; and
- Eleven properties and two land parcels were sold for $120.7 million.
Financial Results
The Company reported net income attributable to common shareholders of $97.6 million or $0.79 per diluted share (hereinafter “per share”) for the third quarter of 2014, as compared to $57.8 million or $0.47 per share for the same period in 2013. The increase is due primarily to significant gains on sales of properties in 2014.
Reported FFO was $64.8 million or $0.52 per share for the third quarter of 2014 compared to $60.5 million or $0.49 per share for 2013. Year-to-date, Reported FFO was $193.4 million or $1.56 per share for 2014 compared to $172.6 million or $1.39 per share for 2013.
Recurring FFO for the quarter ended September 30, 2014 was $0.53 per share or $66.2 million. For the same quarter last year, Recurring FFO was $0.51 per share or $63.3 million. The increase in Recurring FFO over the prior year was primarily due to increases in net operating income from our existing portfolio, 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 $191.4 million or $1.54 per share for 2014 compared to $183.6 million or $1.48 per share for 2013.
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
Same Property Net Operating Income ("SPNOI") increased by a strong 3.8% for the quarter primarily due to increased occupancy and a reduction in merchant fallouts. Year-to-date, SPNOI has increased 3.7%. SPNOI represents over 90% of the total portfolio net operating income.
Occupancy increased to 94.9% in the third quarter, up 0.5% from 94.4% in the same quarter of 2013. Occupancy of small shop space increased to 89.1%, up 0.5% from the prior quarter and 0.4% from the same quarter of 2013. The occupancy of the Company’s Same Property portfolio increased to 95.2%. During the quarter, only 69 merchants ceased operations at the Company’s properties, the lowest such total since the downturn and 27% lower than the third quarter of 2013.
The Company produced strong leasing results during the third quarter with 293 new leases and renewals, totaling 1.1 million square feet. These transactions were comprised of 126 new leases and 167 renewals, which represent annualized revenues of $8.5 million and $9.6 million, respectively. The average rental rate increase on new leases and renewals signed year-to-date was 13.7% and 8.6%, respectively.
“The dramatic improvements in our portfolio resulting from our sustained transformation program are once again clearly reflected in our operating results. Great Same Property NOI growth, increased occupancy, reduced merchant fallout and very solid rental rate increases are all indicative of a quality portfolio of properties and the benefits of a best-in-class operating platform and a great team of associates,” said Johnny Hendrix, Executive Vice President and Chief Operating Officer.
Portfolio Activity
The Company continues to move toward the year-end 2014 conclusion of its highly successful portfolio transformation program. During the quarter, the Company sold eleven properties, three of which were owned in joint ventures, and two land parcels for $120.7 million. Subsequent to quarter-end, the Company sold six additional properties for $56.7 million bringing year-to-date dispositions to $277.7 million. The Company has approximately $192 million of property currently under contract or letter of intent. While there is no assurance that all of these transactions will close, the Company is confident that dispositions will be within the revised guidance of $350 to $450 million.
During the quarter, the Company acquired 18.4 acres of land at Nottingham Commons in White Marsh (Baltimore), Maryland for $21.8 million. Upon completion, the 133,000 square foot development is expected to have an approximate investment of $45.2 million and generate a 7.2% proforma return. This property is well-located in the dense core of White Marsh, Maryland in close proximity to White Marsh Mall. The property is fully entitled and most site work is completed. Leases are in place for four of the ground leases and the Company is far along in lease negotiations on over 75% of the proposed square footage with key value-priced national retailers. Ground leases signed represent an in-place return of 2.7%. The project is projected to reach stabilization in about two years.
“We feel very fortunate to have closed on the Nottingham Commons development property. With all entitlements and site work completed and several leases already signed prior to closing, the majority of the development risk on this project has already been eliminated. As we approach the conclusion of this transformation, we can be proud of the immense positive changes we have made to our portfolio,” said Drew Alexander, President and Chief Executive Officer.
Balance Sheet
The Company continues to improve its balance sheet. On September 15th the Company called for the redemption of its $90 million of 8.1% bonds. Additionally, the net proceeds from the Company’s capital recycling have been used to reduce indebtedness, resulting in further improved credit metrics with Net Debt to Recurring EBITDA at 5.52 times and debt to total market capitalization of 33.2%.
“Our balance sheet remains very strong with reduced leverage driving our strong credit metrics. This deleveraging of our balance sheet through our disposition program has provided us with significant capacity to pursue investment opportunities as they arise,” said Steve Richter, Executive Vice President and Chief Financial Officer.
2014 Guidance
The Company raised its previous guidance for Recurring FFO from a range $1.95 to $2.01 per share to a range of $2.01 to $2.03 per share and increased the range for dispositions from a range of $300 to $400 million to a range of $350 to $450 million. This guidance and the related assumptions are included on page 9 of the supplemental package.
Dividends
The Board of Trust Managers declared a quarterly cash dividend of $0.325 per common share payable on December 15, 2014 to shareholders of record on December 8, 2014 and 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 15, 2014 to shareholders of record on December 8, 2014.
Conference Call Information
The Company also announced that it will host a live webcast of its quarterly conference call on October 24, 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 # 35533143). 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, 2014, 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 251 properties which are located in 21 states spanning the country from coast to coast. These properties represent approximately 47.4 million square feet of which our interests in these properties aggregated approximately 29.0 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, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | (Unaudited) | (Unaudited) | ||||||||||||||
Rentals, net | $ | 127,974 | $ | 120,361 | $ | 380,398 | $ | 353,880 | ||||||||
Other Income | 2,547 | 2,941 | 7,906 | 9,244 | ||||||||||||
Total Revenues | 130,521 | 123,302 | 388,304 | 363,124 | ||||||||||||
Depreciation and Amortization | 36,694 | 35,348 | 113,948 | 107,039 | ||||||||||||
Operating Expense | 23,454 | 24,430 | 71,989 | 70,962 | ||||||||||||
Real Estate Taxes, net | 15,412 | 14,717 | 46,419 | 42,696 | ||||||||||||
Impairment Loss | - | 2,358 | - | 2,579 | ||||||||||||
General and Administrative Expense | 6,146 | 5,964 | 17,879 | 18,812 | ||||||||||||
Total Expenses | 81,706 | 82,817 | 250,235 | 242,088 | ||||||||||||
Operating Income | 48,815 | 40,485 | 138,069 | 121,036 | ||||||||||||
Interest Expense, net | (24,373 | ) | (26,018 | ) | (73,263 | ) | (68,482 | ) | ||||||||
Interest and Other Income, net | 96 | 1,864 | 2,893 | 5,787 | ||||||||||||
Gain on Sale and Acquisition of Real Estate Joint Venture and Partnership Interests | - | 7 | 1,718 | 11,599 | ||||||||||||
Equity in Earnings of Real Estate Joint Ventures and Partnerships, net | 7,881 | 5,125 | 16,331 | 14,467 | ||||||||||||
Benefit for Income Taxes | 284 | 226 | 1,885 | 256 | ||||||||||||
Income from Continuing Operations | 32,703 | 21,689 | 87,633 | 84,663 | ||||||||||||
Operating Income from Discontinued Operations | - | 2,323 | 342 | 9,925 | ||||||||||||
Gain on Sale of Property from Discontinued Operations | - | 38,214 | 44,582 | 116,226 | ||||||||||||
Income from Discontinued Operations | - | 40,537 | 44,924 | 126,151 | ||||||||||||
Gain on Sale of Property | 69,496 | 163 | 71,407 | 570 | ||||||||||||
Net Income | 102,199 | 62,389 | 203,964 | 211,384 | ||||||||||||
Less: Net Income Attributable to Noncontrolling Interests |
(1,870 | ) | (1,847 | ) | (4,936 | ) | (41,056 | ) | ||||||||
Net Income Adjusted for Noncontrolling Interests | 100,329 | 60,542 | 199,028 | 170,328 | ||||||||||||
Less: Preferred Share Dividends |
(2,710 | ) | (2,710 | ) | (8,130 | ) | (15,463 | ) | ||||||||
Less: Redemption Costs of Preferred Shares |
- | - | - | (17,944 | ) | |||||||||||
Net Income Attributable to Common Shareholders -- Basic | $ | 97,619 | $ | 57,832 | $ | 190,898 | $ | 136,921 | ||||||||
Net Income Attributable to Common Shareholders -- Diluted | $ | 98,074 | $ | 57,832 | $ | 192,266 | $ | 136,921 | ||||||||
|
|
|||||||||||||||
FUNDS FROM OPERATIONS | ||||||||||||||||
Numerator: | ||||||||||||||||
Net Income Attributable to Common Shareholders | $ | 97,619 | $ | 57,832 | $ | 190,898 | $ | 136,921 | ||||||||
Depreciation and Amortization | 35,402 | 36,088 | 110,542 | 112,270 | ||||||||||||
Depreciation and Amortization of Unconsolidated Real Estate | ||||||||||||||||
Joint Ventures and Partnerships | 3,666 | 4,443 | 11,289 | 13,370 | ||||||||||||
Impairment of Operating Properties and Real Estate Equity Investments | - | - | - | 457 | ||||||||||||
Impairment of Operating Properties of Unconsolidated Real Estate | ||||||||||||||||
Joint Ventures and Partnerships | - | - | - | 366 | ||||||||||||
Gain on Sale of Property and Interests in Real Estate Equity Investments | (69,468 | ) | (38,325 | ) | (117,643 | ) | (91,878 | ) | ||||||||
Gain on Dispositions of Unconsolidated Real Estate Joint Ventures | ||||||||||||||||
and Partnerships | (2,856 | ) | (24 | ) | (3,024 | ) | (267 | ) | ||||||||
Other | - | - | (4 | ) | - | |||||||||||
Funds from Operations -- Basic | 64,363 | 60,014 | 192,058 | 171,239 | ||||||||||||
Adjustments for Recurring FFO: | ||||||||||||||||
Income Attributable to Operating Partnership Units | 455 | 445 | 1,368 | 1,336 | ||||||||||||
Other Impairment Loss, net of tax | - | 2,387 | - | 2,387 | ||||||||||||
Redemption Costs of Preferred Shares | - | - | - | 18,131 | ||||||||||||
Write-off of Debt Costs, net | 1,376 | 404 | 1,850 | (9,263 | ) | |||||||||||
Acquisition Costs | 50 | 18 | 68 | 428 | ||||||||||||
Deferred Tax Benefit, net | - | - | (2,097 | ) | - | |||||||||||
Other, net of tax | - | - | (1,862 | ) | (673 | ) | ||||||||||
Recurring Funds from Operations -- Diluted | $ | 66,244 | $ | 63,268 | $ | 191,385 | $ | 183,585 | ||||||||
Denominator: | ||||||||||||||||
Weighted Average Shares Outstanding -- Basic | 121,560 | 121,359 | 121,487 | 121,235 | ||||||||||||
Weighted Average Shares Outstanding -- Diluted | 124,440 | 122,531 | 124,301 | 122,441 | ||||||||||||
Weighted Average Shares Outstanding -- Diluted (FFO) | 124,440 | 124,086 | 124,301 | 123,996 | ||||||||||||
PER SHARE DATA | ||||||||||||||||
Earnings Per Common Share -- Basic | $ | 0.80 | $ | 0.48 | $ | 1.57 | $ | 1.13 | ||||||||
Earnings Per Common Share -- Diluted | $ | 0.79 | $ | 0.47 | $ | 1.55 | $ | 1.12 | ||||||||
FFO -- Per Diluted Share | $ | 0.52 | $ | 0.49 | $ | 1.56 | $ | 1.39 | ||||||||
Recurring FFO -- Per Diluted Share | $ | 0.53 | $ | 0.51 | $ | 1.54 | $ | 1.48 |
Weingarten Realty Investors | ||||||||
(in thousands) | ||||||||
Financial Statements | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | (Unaudited) | (Audited) | ||||||
ASSETS | ||||||||
Property | $ | 4,140,817 | $ | 4,289,276 | ||||
Accumulated Depreciation | (1,050,027 | ) | (1,058,040 | ) | ||||
Property Held for Sale, net | 30,129 | 122,614 | ||||||
Investment in Real Estate Joint Ventures and Partnerships, net | 266,720 | 266,158 | ||||||
Notes Receivable from Real Estate Joint Ventures and Partnerships | - | 13,330 | ||||||
Unamortized Debt and Lease Costs, net | 139,754 | 164,828 | ||||||
Accrued Rent and Accounts Receivable, net | 80,714 | 82,351 | ||||||
Cash and Cash Equivalents | 12,975 | 91,576 | ||||||
Restricted Deposits and Mortgage Escrows | 36,230 | 4,502 | ||||||
Other, net | 203,912 | 247,334 | ||||||
Total Assets | $ | 3,861,224 | $ | 4,223,929 | ||||
LIABILITIES AND EQUITY | ||||||||
Debt, net | $ | 2,007,755 | $ | 2,299,844 | ||||
Accounts Payable and Accrued Expenses | 102,692 | 108,535 | ||||||
Other, net | 123,529 | 127,572 | ||||||
Total Liabilities | 2,233,976 | 2,535,951 | ||||||
Commitments and Contingencies | ||||||||
EQUITY | ||||||||
Preferred Shares of Beneficial Interest | 2 | 2 | ||||||
Common Shares of Beneficial Interest | 3,693 | 3,683 | ||||||
Additional Paid-In Capital | 1,700,420 | 1,679,229 | ||||||
Net Income Less Than Accumulated Dividends | (228,802 | ) | (300,537 | ) | ||||
Accumulated Other Comprehensive Loss | (2,378 | ) | (4,202 | ) | ||||
Shareholders' Equity | 1,472,935 | 1,378,175 | ||||||
Noncontrolling Interests | 154,313 | 309,803 | ||||||
Total Liabilities and Equity | $ | 3,861,224 | $ | 4,223,929 |