Weingarten Realty Increases Same Property NOI by 5.1% and Increases Dividend by 5.2%

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.

Financial Results

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.

Operating Results

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.

Capital Recycling

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.

Balance Sheet

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.

Dividend

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.

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 EndedTwelve Months Ended
December 31,December 31,
2012201120122011
CONDENSED CONSOLIDATED STATEMENTS OF INCOME(Unaudited)(Unaudited)
Rentals, net $ 128,191 $ 116,752 $ 491,369 $ 464,234
Other Income 3,727 2,977 12,169 14,123
Total Revenues 131,918 119,729 503,538 478,357
Depreciation and Amortization 37,851 32,844 140,983 131,350
Operating Expense 25,440 23,436 98,426 89,998
Real Estate Taxes, net 14,363 13,353 58,077 55,522
Impairment Loss - 3,101 9,982 55,574
General and Administrative Expense 7,448 6,579 28,554 25,477
Total Expenses 85,102 79,313 336,022 357,921
Operating Income 46,816 40,416 167,516 120,436
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
Net Income 54,975 32,570 152,421 16,739
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
Numerator:
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
Severance Costs 702 - 2,825 -
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
Acquisition Costs 21 19 1,494 295
Recurring Funds from Operations -- Diluted $ 58,555 $ 58,486 $ 227,700 $ 217,676
Denominator:
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
(in thousands)
Financial Statements
December 31,December 31,
20122011
CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)(Audited)
ASSETS
Property $ 4,399,850 $ 4,688,526
Accumulated Depreciation (1,040,839 ) (1,059,531 )
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
Other, net 167,925 168,671
Total Assets $ 4,184,784 $ 4,588,226
LIABILITIES AND EQUITY
Debt, net $ 2,204,030 $ 2,531,837
Accounts Payable and Accrued Expenses 119,699 124,888
Other, net 120,900 107,919
Total Liabilities 2,444,629 2,764,644
Commitments and Contingencies
EQUITY
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 )
Shareholders' Equity 1,577,130 1,655,380
Noncontrolling Interests 163,025 168,202
Total Liabilities and Equity $ 4,184,784 $ 4,588,226

Contacts:

Weingarten Realty
Michelle Wiggs, 713-866-6050
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