Weingarten Realty Announces Strong Third Quarter 2007 Results and Excellent Progress on Strategic Growth Plan 
"We had very strong third quarter results with funds from operations, on a diluted per share basis, of $0.79, up 10% from the prior year. Additionally, we continued to make excellent progress on our strategic growth plan objectives. We ended the quarter with a new development pipeline of $1.2 billion, recorded merchant development gains of $3.3 million (net of tax), achieved a strong occupancy level of more than 95% in our existing portfolio, and closed on an additional new retail joint venture," stated Drew Alexander, President and Chief Executive Officer.
The highlights for the quarter included:
-- Funds from operations (FFO), a non-GAAP financial indicator considered
one of the most meaningful performance measurements within the REIT
industry, on a diluted per share basis, was $0.79 for the third quarter
of 2007 compared to $0.72 for the same quarter of the previous year, a
10% increase;
-- Net income, on a diluted per share basis, for the third quarter of 2007
was $0.44, as compared to $1.15 per share for the third quarter of
2006. The decline from the prior year was due to a reduction in this
quarter's property sale gains;
-- Merchant development activities for the quarter provided $3.3 million
(net of tax) or $0.04 of FFO per share and $6.2 million (net of tax)
or $0.07 of FFO per share year-to-date;
-- Overall occupancy at the end of the third quarter of 2007 was 95.1%, up
from 94.0% in the prior year as both retail and industrial occupancy
increased from the prior year;
-- The Company acquired eight retail centers and one industrial
distribution center in the third quarter, adding 2.2 million square
feet to our portfolio under management and representing a gross
investment of $379 million. Three of the retail centers were acquired
through a new retail joint venture with PNC Realty Investors on behalf
of its institutional client the AFL-CIO Building Investment Trust
("BIT). The Company owns 20% of this joint venture with BIT owning 80%.
This is the Company's second joint venture with PNC Realty and BIT;
-- Subsequent to quarter end, the Company acquired a shopping center and
two industrial buildings, adding 661,000 square feet to our portfolio
under management and representing a gross investment of $75 million.
The additional shopping center was acquired by WRI and a private
investor with WRI owning 10% and the private investor owning 90%. The
two industrial buildings were acquired by the company for its own
account;
-- Dispositions of non-core properties totaled $26 million in the third
quarter, representing five properties and 393,000 square feet. These
properties were sold at an average cap rate of 6.9%. Year-to-date
dispositions totaled $202 million, representing 1.5 million square feet
at an average cap rate of 6.7%;
-- During the third quarter, the Company, under its common share
repurchase program authorized by the Board of Trust Managers,
repurchased 1.4 million common shares in the open market at an average
share price of $37.75;
-- The Company issued, during the third quarter, 8,000,000 Series G
Depositary Shares, each representing a one-one hundredth (1/100)
fractional interest in a share of the Company's floating rate Series G
Cumulative Redeemable Preferred Shares. The Series G Depositary Shares
were issued through a private placement for an aggregate price of $200
million. Proceeds from this issuance were used to repay amounts
outstanding under the Company's credit facilities;
-- The Board of Trust Managers declared a dividend of $0.495 per common
share for the third quarter of 2007, up from $0.465 per common share
for the third quarter of 2006. On an annualized basis, this represents
a dividend of $1.98 per common share as compared to $1.86 per common
share for the prior year, a 6.5% increase. The dividend is payable on
December 17, 2007 to shareholders of record on December 7, 2007; and
-- 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 6.95% Series E Cumulative Redeemable
Preferred Shares (NYSE: WRIPrE) are $0.434375 per share for the same
period. Dividends on the 6.50% Series F Cumulative Redeemable Preferred
Shares (NYSE: WRIPrF) are $0.40625 per share for the quarter. Dividends
on the newly issued floating rate Series G Cumulative Redeemable
Preferred Shares are $0.348750 per share, prorated based on the
settlement date of September 25, 2007. All preferred share dividends
are payable on December 17, 2007 to shareholders of record on
December 7, 2007.
Existing Portfolio Strength
During the third quarter of 2007, the Company completed 329 new leases and renewals, totaling 1.9 million square feet with an average rental rate increase of 14.1% on a same space GAAP basis and 9.2% on a cash basis.
In total, same property net operating income grew 2.4% in the third quarter. The retail properties grew 2.0% while the industrial properties were up 7.3%. The primary driver for the industrial increase was a strong increase in occupancy due in part to particularly strong demand for space in Texas. On a year-to-date basis, same property net operating income was up 3.1% from the prior year.
Occupancy for the retail properties at the end of the third quarter of 2007 was 95.2%, up from 95.0% a year ago and industrial occupancy increased to 94.5%, up from 90.4% a year ago.
"The high occupancy levels and strong same-space rental rate increases result from the exceptional quality of our portfolio of properties, strategically located in major U.S. metropolitan markets from coast-to-coast," stated Johnny Hendrix, Executive Vice President/Asset Management.
New Development
The Company currently has 37 properties in various stages of development, up from 21 properties a year ago. We have invested $386 million to date on these projects and, at completion, we estimate our total investment to be $820 million. The Company also reported that it has 18 development sites under contract that have a projected final investment of $370 million.
Merchant build activities for the quarter generated FFO of $3.3 million (net of tax) or $0.04 of FFO per share. For the year-to-date, merchant build activities have contributed $0.07 of FFO per share.
"We are making excellent progress in new development, including our merchant build activities, and now have a total pipeline (properties under development and under contract) totaling $1.2 billion. We anticipate that 13 of our 37 projects currently under development will be substantially complete by the end of 2008 and these centers are currently 87% leased. By the end of 2009, we are projecting that 23 of the 37 projects currently under development will be substantially complete and these projects are currently 69% leased. All of these projects have a projected return on investment at completion in excess of 9%," stated Robert Smith, Senior Vice President and Director of New Development.
Portfolio Enhancements
"Acquisitions totaled $379 million in the third quarter and we closed on an additional $75 million in acquisitions subsequent to quarter end. This brings our total year-to-date acquisitions to $851 million, of which $377 million were acquired through joint ventures. These additions bring our assets under management to a total of $2.0 billion. Most of the current quarter's transactions occurred prior to the disruption in the credit markets in late summer. Although we are beginning to see deal flow again, we anticipate reduced acquisition volume for the remainder of the year," stated Candace DuFour, Senior Vice President and Director of Acquisitions.
Third quarter and subsequent acquisitions included:
-- A portfolio of five retail power centers, adding 1.4 million square
feet under management and representing a gross investment of $267
million. Three of the centers, located in suburban Atlanta, Dallas, and
rapidly growing Stuart, Florida, were acquired through a new retail
joint venture with PNC Realty Investors and the BIT. The Company owns
20% of this joint venture with the BIT owning 80%. The remaining two
centers, one in Atlanta and the other in Chicago, were acquired by the
Company for its own account.
-- Countryside Centre is a 243,000 square foot community center located in
the St. Petersburg/Clearwater Area of Florida. The center, anchored by
Albertson's, TJ Maxx, Home Goods, and Shoe Carnival, has very strong
demographics with more than 100,000 people living within a three mile
radius.
-- Riverside Distribution Center is a 265,000 square foot front loading
state of the art industrial building in an outstanding location in
Fulton County, Georgia. The Fulton County Industrial market is the most
established submarket in Atlanta providing ease of access to I-20,
Hartsfield Jackson International Airport, and metropolitan Atlanta.
-- The Shoppes at South Semoran is a 102,000 square foot shopping center
located in suburban Orlando, Florida. It is anchored by a 57,000 square
foot Winn Dixie with sales of approximately $400 per square foot. The
property is 100% leased with below market rents providing the
opportunity for strong future rental income growth.
-- Tully Corners is a 116,000 square foot grocery anchored shopping center
in San Jose, CA. Located in an infill pocket on the east side of the
city, this asset boasts the dominant grocer in the trade area and below
market rents providing the opportunity for strong future rent growth.
Tully Corners was acquired by WRI and a private investor with WRI
owning 10% and the private investor owning 90%.
-- SouthPark 3075 and Westlake 125 are state of the art industrial
buildings totaling 235,000 and 154,000 square feet, respectively. Both
buildings are in great locations in metropolitan Atlanta near the
Hartsfield Jackson International Airport. Occupancy at these two
buildings is below 65%, providing a strong value add opportunity, and
the buildings may be joint-ventured in the future.
-- Paradise Key is a 272,000 square foot grocery anchored shopping center
in Destin, Florida. Located at the main retail intersection in Destin,
this stable asset is anchored by Publix, the dominant grocer in the
trade area. Ross, Steinmart and Old Navy are additional anchors with
very strong sales per square foot. Other very favorable aspects of this
acquisition include the property's superior access and annual rent
bumps for the majority of the small shop tenants. Paradise Key was
acquired by WRI and a private investor with WRI owning 10% and the
private investor owning 90%.
Consent Solicitation to Amend Public Debt Covenants
During the third quarter, the Company solicited consents from the holders of the Company's outstanding notes to modify certain financial covenants applicable to these securities. The consent solicitation expired on October 26, 2007 without modification to the covenants.
"It was our intention to update our covenants that were put in place thirteen years ago. This effort was not undertaken due to any potential violation but rather to provide the Company with even greater flexibility to pursue attractive opportunities as they arise in these changing markets. Our existing debt covenants provide us more than enough capacity to fully execute our strategic growth plan. The additional flexibility that we were able to negotiate with our bond investors was not significant enough to justify the cost of amending the covenants. Accordingly, we have decided to keep our existing covenant package in place. As conditions warrant, however, we may revisit this issue in the future," stated Steve Richter, Executive Vice President and Chief Financial Officer.
Outlook
"We are making excellent progress in the implementation of our strategic plan. We had a strong third quarter, with FFO of $0.79 per share, up 10% from the prior year. With the excellent results through three quarters of the year, we are optimistic that we can achieve 2007 FFO at the top end of our guidance range of $2.98 to $3.04 per share. Additionally, I am confident in our ability to fully implement our strategic growth plan," stated Drew Alexander, President and Chief Executive Officer.
Conference Call Information
The Company also announced that it will host a live webcast of its quarterly conference call on Friday, November 2, 2007 at 10:00 a.m. Central Time. The live webcast can be accessed via the Company's Web site at http://www.weingarten.com. A replay is also available through the Company's Web site starting approximately two hours following the live call or can be heard by calling 877-519-4471, identification number 9308418 until 11:59 PM Central Time on November 3, 2007.
About Weingarten Realty Investors
As one of the largest real estate investment trusts listed on the New York Stock Exchange, Weingarten Realty Investors (NYSE: WRI) is focused on delivering solid returns to shareholders by actively developing, acquiring, and intensively managing properties in 23 states that span the United States from coast-to-coast. The Company's portfolio of 420 properties includes 342 neighborhood and community shopping centers and 78 industrial properties. Including tenant-owned square footage, the Company's portfolio under management totals more than 70 million square feet. Weingarten has one of the most diversified tenant bases of any major REIT in its sector, with the largest of its 5,600 tenants comprising less than 3% of its rental revenues. To learn more about the Company's operations and growth strategies, please visit http://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.
Financial Statements
Weingarten Realty Investors
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
STATEMENTS OF CONSOLIDATED INCOME 2007 2006 2007 2006
AND FUNDS FROM OPERATIONS (Unaudited) (Unaudited)
Rental Income $152,045 $137,749 $436,353 $394,277
Other Income 4,565 1,294 9,766 4,719
Total Revenues 156,610 139,043 446,119 398,996
Depreciation and Amortization 33,882 30,886 98,042 89,834
Operating Expense 28,156 23,000 76,534 61,636
Ad Valorem Taxes 20,163 18,857 53,195 49,319
General and Administrative Expense 6,537 5,497 19,650 16,500
Total Expenses 88,738 78,240 247,421 217,289
Operating Income 67,872 60,803 198,698 181,707
Interest Expense (38,536) (37,384) (110,384) (105,920)
Interest and Other Income 2,082 2,787 6,838 4,818
Equity in Earnings of Joint
Ventures, net 4,893 2,253 12,513 10,866
Income Allocated to Minority
Interests (3,003) (1,676) (7,678) (4,977)
Gain on Sale of Properties 986 26,871 3,010 26,974
Gain on Land and Merchant
Development Sales 4,199 4,504 8,150 6,180
Provision for Income Taxes (930) (1,253) (1,933) (1,401)
Income From Continuing
Operations 37,563 56,905 109,214 118,247
Operating Income From Discontinued
Operations 416 3,456 2,527 13,796
Gain on Sale of Properties From
Discontinued Operations 6,284 45,388 59,684 118,581
Income from Discontinued
Operations 6,700 48,844 62,211 132,377
Net Income 44,263 105,749 171,425 250,624
Less: Preferred Share Dividends 5,982 2,526 16,485 7,576
Net Income Available to Common
Shareholders--Basic $38,281 $103,223 $154,940 $243,048
Net Income Per Common Share--Basic $0.45 $1.19 $1.80 $2.75
Net Income Available to Common
Shareholders--Diluted $38,281 $104,578 $158,251 $247,171
Net Income Per Common Share--
Diluted $0.44 $1.15 $1.77 $2.67
Funds from Operations:
Net Income Available to Common
Shareholders $38,281 $103,223 $154,940 $243,048
Depreciation and Amortization 33,142 31,475 97,023 94,510
Depreciation and Amortization of
Unconsolidated Joint Ventures 2,846 1,204 7,439 3,328
Gain on Sale of Properties (5,644) (72,260) (58,842) (145,559)
(Gain) Loss on Sale of Properties
of Unconsolidated Joint Ventures 2 2 (4,054)
Funds from Operations--Basic $68,627 $63,642 $200,562 $191,273
Funds from Operations Per Common
Share--Basic $0.80 $0.74 $2.33 $2.16
Funds from Operations--Diluted $68,627 $64,997 $203,873 $195,396
Funds from Operations Per Common
Share--Diluted $0.79 $0.72 $2.28 $2.11
Weighted Average Shares
Outstanding--Basic 85,470 86,567 85,914 88,476
Weighted Average Shares
Outstanding--Diluted 86,464 90,610 89,410 92,528
September 30, December 31,
2007 2006
CONSOLIDATED BALANCE SHEETS (Unaudited) (Audited)
Property $4,852,683 $4,445,888
Accumulated Depreciation (750,676) (707,005)
Property Held for Sale, net 6,012
Investment in Real Estate Joint
Ventures 297,397 203,839
Notes Receivable from Real Estate
Joint Ventures and Partnerships 61,537 3,971
Unamortized Debt and Lease Costs 115,208 112,873
Accrued Rent and Accounts Receivable,
net 77,811 78,893
Cash and Cash Equivalents 59,815 71,003
Restricted Deposits and Mortgage
Escrows 28,991 94,466
Other 135,644 71,612
Total Assets $4,884,422 $4,375,540
Debt $3,055,545 $2,942,692
Accounts Payable and Accrued Expenses 139,496 132,821
Other 85,906 86,566
Total Liabilities 3,280,947 3,162,079
Minority Interest 96,710 87,680
Preferred Shares of Beneficial
Interest 8 4
Common Shares of Beneficial Interest 2,563 2,582
Accumulated Additional Paid in Capital 1,489,303 1,136,481
Net Income in Excess of (Less Than)
Accumulated Dividends 26,479 (786)
Accumulated Other Comprehensive Loss (11,588) (12,500)
Total Shareholders' Equity 1,506,765 1,125,781
Total Liabilities and
Shareholders' Equity $4,884,422 $4,375,540
Source: Weingarten Realty Investors
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Nov.01.2007. 17:08
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