Weingarten Realty (NYSE: WRI) announced today the results of its operations for the fourth quarter and full year ended December 31, 2012.
Fourth Quarter Operating and Financial Highlights
- Recurring Funds from Operations (“FFO”) was $0.47 per diluted share;
- Same Property Net Operating Income (“NOI”) for retail properties increased by 5.1% over the fourth quarter of the prior year which is the highest reported increase since the fourth quarter of 2005;
- Retail occupancy improved to 93.7% during the fourth quarter, up from 93.0% in the fourth quarter of last year; and
- The Board of Trust Managers increased the common dividend per share 5.2% to $0.305 per quarter or $1.22 on an annualized basis.
The Company reported net income attributable to common shareholders of $42.9 million or $0.35 per diluted share (hereinafter “per share”) for the fourth quarter of 2012, as compared to $22.2 million or $0.18 per share for the same period in 2011. For the full year 2012, the Company reported net income of $109.2 million or $0.90 per share compared to a net loss of $19.9 million or ($0.17) per share for the full year 2011. Included in net income for both 2012 and 2011 were gains on the sale of properties and partnership interests of $0.69 and $0.10 per share, respectively. Included in 2012 and 2011 were non-cash impairments of $0.29 and $0.65, respectively.
For the current quarter, Reported FFO was $57.0 million or $0.46 per share compared to $58.1 million or $0.48 per share for 2011. Reported FFO for 2011 excludes impairments of operating properties of $0.02 per share. Recurring FFO for the fourth quarter of 2012 was $0.47 per share or $58.6 million. For the same quarter last year, Recurring FFO was $0.48 per share or $58.5 million. This decrease in Recurring FFO per share over the prior year was primarily due to the sale of $706.7 million of non-core assets during the year, offset by the Company’s acquisition and new development programs, increased operating income from the existing portfolio and reduced interest expense due to favorable refinancing transactions.
For the full year ended December 31, 2012, Reported FFO was $222.1 million or $1.83 per share compared to $173.3 million or $1.44 per share for 2011. Reported FFO excludes impairments of operating properties of $0.29 per share in both 2012 and 2011. Recurring FFO for 2012 was $227.7 million or $1.87 per share compared to $217.7 million or $1.81 per share for 2011. Recurring FFO excludes additional impairments of non-operating assets of $0.36 per share in 2011. The increase in Recurring FFO, consistent with the quarter, was primarily due to the Company’s acquisition, disposition and new development programs, improvements in the existing portfolio and reduced interest expense.
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. The Company has also introduced enhanced disclosure in the supplemental package of Net Debt to Adjusted EBITDA on page 8 and portfolio information found on pages 24-41.
Same Property NOI during the fourth quarter increased by 5.1% versus a year ago. These results are primarily driven by leases that were previously signed but commenced during the quarter. Retail occupancy increased to 93.7% in the fourth quarter from 93.0% in the same quarter of 2011. This increase was slightly muted by the early stabilization of nine new development properties during the quarter. Excluding those nine assets, retail occupancy would have been 93.9%.
The Company produced solid leasing results again during the fourth quarter with 350 new leases and renewals totaling 1.1 million square feet and representing $17 million of annual revenue. The 350 transactions were comprised of 148 new leases and 202 renewals, representing annual revenues of $6.2 million and $10.8 million, respectively. The average rental rate increase on new leases and renewals signed during the quarter was a solid 7.1%.
“We are proud of the results our team achieved not only this quarter but throughout the year. The 5.1% increase in Same Property NOI for the quarter was truly outstanding and is 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.
During the quarter, the Company sold seven retail shopping centers, two industrial properties, its interest in an industrial partnership and a land parcel for a total of $141.6 million. For the year, dispositions totaled $706.7 million, which included the sale of the Company’s industrial portfolio as well as the exit from seven non-strategic markets in the retail portfolio. Over the year, the Company redeployed this capital into outstanding new investments. Acquisitions for the year totaled $235.3 million and spending on existing new development projects was an additional $30.2 million for the year.
“With dispositions for the year exceeding $700 million, we generated a significant amount of capital to recycle into higher quality investments in our target markets, and to also materially deleverage our balance sheet,” said Drew Alexander, President and Chief Executive Officer.
In October, the Company closed on the sale of $300 million of 3.375% ten-year notes. The notes were sold at a discount to par to yield interest at 3.42%. 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 $54.1 million of its 3.95% Convertible Notes and $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.
On February 14, 2013, the Board of Trust Managers declared an increase in the common dividend to $0.305 per share for the first quarter of 2013. This represents a 5.2% increase resulting in an annualized dividend of $1.22 per share. The dividend is payable in cash on March 15, 2013 to shareholders of record on March 7, 2013.
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 (NYSE:WRIPrD) are $0.421875 per share for the quarter. Dividends on the 6.50% Series F Cumulative Redeemable Preferred Shares (NYSE:WRIPrF) are $0.40625 per share for the quarter. All preferred dividends are also payable on March 15, 2013 to shareholders of record on March 7, 2013.
Recurring FFO Guidance
The Company’s full year Recurring FFO guidance remains in the range of $1.84 to $1.90 per share. This guidance assumes the following estimates:
|Dispositions||$200 million to $300 million|
|Acquisitions||$175 million to $225 million|
|Incremental new development investment||$25 million to $75 million|
|Same Property NOI||+2% to +3%|
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 15, 2013 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 # 32913536). 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 commercial real estate owner, manager and developer. At December 31, 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 292 developed income-producing properties and 2 properties under various stages of construction and development. The total number of properties includes 288 neighborhood and community shopping centers and 6 other operating properties located in 21 states spanning the country from coast to coast representing approximately 53.7 million square feet. 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||Twelve Months Ended|
|December 31,||December 31,|
|CONDENSED CONSOLIDATED STATEMENTS OF INCOME||(Unaudited)||(Unaudited)|
|Depreciation and Amortization||37,851||32,844||140,983||131,350|
|Real Estate Taxes, net||14,363||13,353||58,077||55,522|
|General and Administrative Expense||7,448||6,579||28,554||25,477|
|Interest Expense, net||(27,224||)||(31,449||)||(115,812||)||(139,717||)|
|Interest and Other Income, net||1,262||2,078||6,048||5,062|
|Gain on Sale of Real Estate Joint Venture and Partnership Interests||8,641||-||14,203||-|
|Equity in Earnings (Losses) of Real Estate Joint Ventures and Partnerships, net||5,157||3,892||(1,558||)||7,834|
|Gain on Acquisition||-||-||1,869||-|
|Benefit (Provision) for Income Taxes||393||(202||)||(79||)||(146||)|
|Income (Loss) from Continuing Operations||35,045||14,735||72,187||(6,531||)|
|Operating Income from Discontinued Operations||890||8,057||10,611||11,318|
|Gain on Sale of Property from Discontinued Operations||18,865||9,687||68,589||10,273|
|Income from Discontinued Operations||19,755||17,744||79,200||21,591|
|Gain on Sale of Property||175||91||1,034||1,679|
|Less:||Net Income Attributable to Noncontrolling Interests||(1,224||)||(1,528||)||(5,781||)||(1,118||)|
|Net Income Adjusted for Noncontrolling Interests||53,751||31,042||146,640||15,621|
|Less:||Preferred Share Dividends||(8,323||)||(8,869||)||(34,930||)||(35,476||)|
|Less:||Redemption Costs of Preferred Shares||(2,500||)||-||(2,500||)||-|
|Net Income (Loss) Attributable to Common Shareholders -- Basic||$||42,928||$||22,173||$||109,210||$||(19,855||)|
|Net Income (Loss) Attributable to Common Shareholders -- Diluted||$||43,355||$||22,173||$||109,210||$||(19,855||)|
|FUNDS FROM OPERATIONS|
|Net Income (Loss) Attributable to Common Shareholders||$||42,928||$||22,173||$||109,210||$||(19,855||)|
|Depreciation and Amortization||37,232||37,271||143,783||150,668|
|Depreciation and Amortization of Unconsolidated Real Estate|
|Joint Ventures and Partnerships||4,694||5,605||20,955||22,887|
|Impairment of Operating Properties and Real Estate Equity Investments||26||2,780||15,033||28,995|
|Impairment of Operating Properties of Unconsolidated Real Estate|
|Joint Ventures and Partnerships||-||-||19,946||7,025|
|Gain on Acquisition||-||-||(1,869||)||(4,559||)|
|Gain on Sale of Property and Interests in Real Estate Equity Investments||(27,636||)||(9,717||)||(83,683||)||(11,846||)|
|(Gain) Loss on Sale of Property of Unconsolidated Real Estate|
|Joint Ventures and Partnerships||(689||)||-||(1,247||)||10|
|Funds from Operations -- Basic||56,555||58,112||222,128||173,325|
|Funds from Operations Attributable to Operating Partnership Units||427||-||-||-|
|Funds from Operations -- Diluted||56,982||58,112||222,128||173,325|
|Adjustments for Recurring FFO:|
|Other Impairment Loss, net of tax||-||355||403||42,417|
|Litigation Settlement, net of tax||-||-||-||(1,040||)|
|Redemption Costs of Preferred Shares||2,500||-||2,500||-|
|Extinguishment of Debt Costs, net of tax||(1,650||)||-||(1,650||)||2,679|
|Recurring Funds from Operations -- Diluted||$||58,555||$||58,486||$||227,700||$||217,676|
|Weighted Average Shares Outstanding -- Basic||120,871||120,422||120,696||120,331|
|Weighted Average Shares Outstanding -- Diluted||123,471||121,237||121,705||120,331|
|PER SHARE DATA|
|Earnings Per Common Share -- Basic||$||0.36||$||0.18||$||0.90||$||(0.17||)|
|Earnings Per Common Share -- Diluted||$||0.35||$||0.18||$||0.90||$||(0.17||)|
|FFO -- Per Diluted Share|
|Net Income (Loss) Attributable to Common Shareholders per Share||$||0.35||$||0.18||$||0.90||$||(0.17||)|
|Adjustments for Reported FFO:|
|Impairment of Operating Properties||0.00||0.02||0.29||0.30|
|Depreciation, Amortization and Other Adjustments||0.11||0.28||0.64||1.31|
|Reported Funds from Operations -- Diluted per Share||$||0.46||$||0.48||$||1.83||$||1.44|
|Adjustments for Recurring FFO:|
|Other Impairment Loss, net of tax||0.00||0.00||0.00||0.36|
|All Other Adjustments||0.01||0.00||0.04||0.01|
|Recurring Funds from Operations -- Diluted per Share||$||0.47||$||0.48||$||1.87||$||1.81|
|Weingarten Realty Investors|
|December 31,||December 31,|
|CONDENSED CONSOLIDATED BALANCE SHEETS||(Unaudited)||(Audited)|
|Property Held for Sale, net||-||73,241|
|Investment in Real Estate Joint Ventures and Partnerships, net||289,049||341,608|
|Notes Receivable from Real Estate Joint Ventures and Partnerships||89,776||149,204|
|Unamortized Debt and Lease Costs, net||135,783||115,191|
|Accrued Rent and Accounts Receivable, net||79,540||86,530|
|Cash and Cash Equivalents||19,604||13,642|
|Restricted Deposits and Mortgage Escrows||44,096||11,144|
|LIABILITIES AND EQUITY|
|Accounts Payable and Accrued Expenses||119,699||124,888|
|Commitments and Contingencies|
|Preferred Shares of Beneficial Interest||7||8|
|Common Shares of Beneficial Interest||3,663||3,641|
|Additional Paid-In Capital||1,934,183||1,983,978|
|Net Income Less Than Accumulated Dividends||(335,980||)||(304,504||)|
|Accumulated Other Comprehensive Loss||(24,743||)||(27,743||)|
|Total Liabilities and Equity||$||4,184,784||$||4,588,226|