In the Income Statement table, an extraneous row above the row entitled FUNDS FROM OPERATIONS has been removed.
The corrected release reads:
WEINGARTEN REALTY INCREASES SAME PROPERTY NOI BY 4.2% AND FUNDS FROM OPERATIONS BY 6.1%
Weingarten Realty (NYSE: WRI) announced today the results of its operations for the first quarter ended March 31, 2015.
Operating and Financial Highlights
- Recurring Funds from Operations (“FFO”) was $0.52 per diluted share, up 6.1% from the prior year;
- Same Property Net Operating Income (“SPNOI”) increased by 4.2% over the first quarter of the prior year;
- Occupancy improved to 95.5% during the first quarter, up from 94.5% in the first quarter of last year;
- Acquisitions totaled $92 million; and,
- Dispositions totaled $36 million
Financial Results
The Company reported net income attributable to common shareholders of $44.9 million or $0.36 per diluted share (hereinafter “per share”) for the first quarter of 2015, as compared to $60.6 million or $0.49 per share for the same period in 2014. Included in net income for 2015 were gains on the sale of properties and partnership interests of $0.19 per share compared to $0.34 per share in 2014.
For the current quarter Reported FFO was $60.3 million or $0.48 per share compared to $63.1 million or $0.51 per share for 2014. Included in Reported FFO were debt extinguishment costs of $.05 per share offset by a gain on the settlement of a lawsuit of $.01 per share.
Recurring FFO for the first quarter of 2015 was $0.52 per share or $65.4 million. For the same quarter last year, Recurring FFO was $0.49 per share or $61.2 million. This increase in Recurring FFO per share over the prior year was primarily due to the Company’s acquisition and new development programs, increased operating income from the existing portfolio and reduced interest expense due to favorable refinancing transactions. These increases were partially offset by the impact of the Company’s disposition program, which reduced Recurring FFO by $0.06 per share for the quarter compared to last year.
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.
Operating Results
Same Property NOI for the first quarter increased by 4.2% versus a year ago. These results are primarily driven by increased occupancy, rental rate increases and reduced tenant fallouts. Occupancy increased to 95.5% in the first quarter, an increase of 100 basis points over the same quarter of 2014. Occupancy of spaces less than 10,000 square feet, often referred to as shop occupancy, increased to 90.3% from 88.3% in the prior year, an increase of 200 basis points.
The Company produced solid leasing results again during the first quarter with 271 new leases and renewals totaling 1.4 million square feet and representing $20.7 million of annual revenue. These 271 transactions were comprised of 104 new leases and 167 renewals, representing annual revenues of $6.3 million and $14.4 million, respectively. The average rental rate increase on new leases and renewals signed during the quarter was 8.9% with rental rates on just new leases up 9.2%.
“Same Property NOI was up 4.2%, average base rent across the entire portfolio increased by 4% to $16.45 per square foot and tenant fallouts were down 24% from the prior year. These are just a few of the statistics that exemplify the outstanding performance of our quality portfolio of properties and further proof of the success of our portfolio transformation,” said Johnny Hendrix, Executive Vice President and Chief Operating Officer.
Portfolio Activity
The Company purchased two shopping centers during the quarter and one subsequent to quarter end totaling $146 million. Baybrook Gateway is a 237,000 square foot shopping center located across from the very successful Baybrook Mall in Houston. Currently anchored by Michaels, Ashley Furniture and Barnes and Noble, this property had been held by a special servicer for several years and was only 65% occupied when purchased. The Company has several alternatives for remerchandising the property over the next several months. The second acquisition was Cambrian Park Plaza, a 171,000 square foot in-fill shopping center serving the affluent California cities of San Jose, Los Gatos, Campbell and Saratoga. The center’s demographics boast 183,000 people within three miles, average household incomes of $122,000 and 56% of the residents with a college degree. This center has tremendous future redevelopment potential. Subsequent to quarter end, the Company purchased Wellington Green Commons in Wellington, Florida, near West Palm Beach. This 112,000 square foot shopping center is anchored by a high volume Whole Foods and has average household incomes in excess of $99,000 per year.
The Company also continued to selectively dispose of assets that no longer met the Company’s criteria for long-term ownership. The Company was successful in selling six properties, including those closed subsequent to quarter-end, for about $45 million. These assets are located in Louisiana, Missouri, Utah and a small town in Texas, none of which are target growth markets for the Company. The sale of the property in Missouri marks the Company’s exit from that state.
The Company continues to make progress on its four active new development properties and its various redevelopment projects, spending a total of $11.6 million during the quarter. On the new development properties, the total spent to-date is $89.5 million, the estimated final investment is $156 million and the estimated final return is 7.8%. For the redevelopment projects, the total spent to-date is $30.3 million, the estimated final investment is $68 million and the estimated final returns are in the range of 10% to 15%.
“We had a very successful quarter regarding acquisitions. We were able to close on two strategic redevelopment projects, Baybrook Gateway and Cambrian Park Plaza during the quarter and a great core center, Wellington Green Commons, after quarter-end. We are making excellent progress on our new development properties and operations have been very solid. We are confident that these activities will result in strong sustained growth in FFO and NAV which will greatly benefit our shareholders,” said Drew Alexander, President and Chief Executive Officer.
Balance Sheet
The Company has continued to strengthen its balance sheet through various capital transactions. As previously announced, the Company closed on a five-year, $200 million term loan that was swapped to a fixed rate of 2.64%. The Company also negotiated an amendment to a $66 million secured loan with an insurance company that extended the maturity eight years to 2025 and reduced the interest rate to 3.5%. During the quarter, the Company commenced selling common shares under its at-the-market (“ATM”) facility to partially fund the refinancing of $150 million of the Company’s Series F Preferred Shares which were called for redemption subsequent to quarter-end. Through quarter end, the Company raised gross proceeds of $29.4 million. Year-to-date, the Company has raised gross proceeds totaling $40.8 million at an average price of $36.18 per share. The Company’s debt ratios remain very strong at quarter end with Net Debt to EBITDA at 5.35 times, Net Debt plus Preferreds to EBITDA at 5.77 times and Debt to Total Market Cap at 29.4%.
“The capital transactions this quarter continued our strategy of strengthening our balance sheet and lowering our cost of capital where possible. We extended maturities and lowered the interest rates on a couple of debt refinancings. We also called for the redemption of the preferred shares, as we believe that the 6.5% coupon is comparably expensive in today’s interest rate environment,” said Steve Richter, Executive Vice President and Chief Financial Officer.
Dividend
The Board of Trust Managers declared a quarterly cash dividend of $0.345 per common share payable on June 15, 2015 to shareholders of record on June 8, 2015.
FFO Guidance
The Company affirms its full year Recurring FFO guidance in the range of $2.12 to $2.17 per share. Including debt extinguishment costs of approximately $0.05 per share the Company incurred during the first quarter of 2015, full year guidance for Reported FFO remains in the range of $2.07 to $2.12 per share. 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 April 29, 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 (888)-771-4371 (conference ID # 37563661). 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 shopping center owner, manager and developer. At March 31, 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 235 properties which are located in 20 states spanning the country from coast to coast. These properties represent approximately 45.3 million square feet of which our interests in these properties aggregated approximately 27.9 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 | ||||||||||
| March 31, | ||||||||||
| 2015 | 2014 | |||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | (Unaudited) | |||||||||
| Rentals, net | $ | 122,658 | $ | 124,633 | ||||||
| Other Income | 2,941 | 2,959 | ||||||||
| Total Revenues | 125,599 | 127,592 | ||||||||
| Depreciation and Amortization | 36,151 | 40,624 | ||||||||
| Operating Expense | 22,585 | 24,615 | ||||||||
| Real Estate Taxes, net | 14,627 | 14,649 | ||||||||
| General and Administrative Expense | 7,372 | 5,913 | ||||||||
| Total Expenses | 80,735 | 85,801 | ||||||||
| Operating Income | 44,864 | 41,791 | ||||||||
| Interest Expense, net | (26,458 | ) | (24,580 | ) | ||||||
| Interest and Other Income, net | 2,722 | 1,994 | ||||||||
| Gain on Sale and Acquisition of Real Estate Joint Venture and Partnership Interests | 861 | - | ||||||||
| Equity in Earnings of Real Estate Joint Ventures and Partnerships, net | 5,372 | 4,402 | ||||||||
| Provision for Income Taxes | (661 | ) | (480 | ) | ||||||
| Income from Continuing Operations | 26,700 | 23,127 | ||||||||
| Operating Income from Discontinued Operations | - | 279 | ||||||||
| Gain on Sale of Property from Discontinued Operations | - | 41,212 | ||||||||
| Income from Discontinued Operations | - | 41,491 | ||||||||
| Gain on Sale of Property | 22,522 | 163 | ||||||||
| Net Income | 49,222 | 64,781 | ||||||||
| Less: | Net Income Attributable to Noncontrolling Interests | (1,575 | ) | (1,478 | ) | |||||
| Net Income Adjusted for Noncontrolling Interests | 47,647 | 63,303 | ||||||||
| Less: | Preferred Share Dividends | (2,710 | ) | (2,710 | ) | |||||
| Net Income Attributable to Common Shareholders -- Basic | $ | 44,937 | $ | 60,593 | ||||||
Net Income Attributable to Common Shareholders -- Diluted | $ | 45,418 | $ | 60,593 | ||||||
| FUNDS FROM OPERATIONS | ||||||||||
| Numerator: | ||||||||||
| Net Income Attributable to Common Shareholders | $ | 44,937 | $ | 60,593 | ||||||
| Depreciation and Amortization | 35,263 | 39,720 | ||||||||
| Depreciation and Amortization of Unconsolidated Real Estate | ||||||||||
| Joint Ventures and Partnerships | 3,510 | 3,700 | ||||||||
| Gain on Sale of Property and Interests in Real Estate Equity Investments | (23,333 | ) | (41,371 | ) | ||||||
| Gain on Dispositions of Unconsolidated Real Estate Joint Ventures | ||||||||||
| and Partnerships | (562 | ) | (9 | ) | ||||||
| Funds from Operations -- Basic | 59,815 | 62,633 | ||||||||
| Adjustments for Recurring FFO: | ||||||||||
| Income Attributable to Operating Partnership Units | 481 | 456 | ||||||||
| Write-off of Debt Costs, net | 6,100 | - | ||||||||
| Acquisition Costs | 204 | 17 | ||||||||
| Other, net of tax | (1,161 | ) | (1,862 | ) | ||||||
| Recurring Funds from Operations -- Diluted | $ | 65,439 | $ | 61,244 | ||||||
| Denominator: | ||||||||||
| Weighted Average Shares Outstanding -- Basic | 122,126 | 121,401 | ||||||||
| Weighted Average Shares Outstanding -- Diluted | 125,043 | 122,645 | ||||||||
| Weighted Average Shares Outstanding -- Diluted (FFO) | 125,043 | 124,145 | ||||||||
| PER SHARE DATA | ||||||||||
| Earnings Per Common Share -- Basic | $ | 0.37 | $ | 0.50 | ||||||
| Earnings Per Common Share -- Diluted | $ | 0.36 | $ | 0.49 | ||||||
| FFO -- Per Diluted Share | $ | 0.48 | $ | 0.51 | ||||||
Recurring FFO -- Per Diluted Share | $ | 0.52 | $ | 0.49 | ||||||
| Weingarten Realty Investors | ||||||||
| (in thousands) | ||||||||
| Financial Statements | ||||||||
| March 31, | December 31, | |||||||
| 2015 | 2014 | |||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | (Unaudited) | (Audited) | ||||||
| ASSETS | ||||||||
| Property | $ | 4,163,531 | $ | 4,076,094 | ||||
| Accumulated Depreciation | (1,045,495 | ) | (1,028,619 | ) | ||||
| Property Held for Sale, net | 1,775 | 3,670 | ||||||
| Investment in Real Estate Joint Ventures and Partnerships, net | 255,890 | 257,156 | ||||||
| Unamortized Debt and Lease Costs, net | 141,726 | 141,122 | ||||||
| Accrued Rent and Accounts Receivable, net | 68,810 | 77,781 | ||||||
| Cash and Cash Equivalents | 40,168 | 23,189 | ||||||
| Restricted Deposits and Mortgage Escrows | 28,641 | 79,998 | ||||||
| Other, net | 181,963 | 183,703 | ||||||
| Total Assets | $ | 3,837,009 | $ | 3,814,094 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Debt, net | $ | 1,940,897 | $ | 1,938,188 | ||||
| Accounts Payable and Accrued Expenses | 88,474 | 112,479 | ||||||
| Other, net | 132,110 | 124,484 | ||||||
| Total Liabilities | 2,161,481 | 2,175,151 | ||||||
| Commitments and Contingencies | ||||||||
| EQUITY | ||||||||
| Preferred Shares of Beneficial Interest | 2 | 2 | ||||||
| Common Shares of Beneficial Interest | 3,733 | 3,700 | ||||||
| Additional Paid-In Capital | 1,741,804 | 1,706,880 | ||||||
| Net Income Less Than Accumulated Dividends | (210,499 | ) | (212,960 | ) | ||||
| Accumulated Other Comprehensive Loss | (12,959 | ) | (12,436 | ) | ||||
| Shareholders' Equity | 1,522,081 | 1,485,186 | ||||||
| Noncontrolling Interests | 153,447 | 153,757 | ||||||
| Total Liabilities and Equity | $ | 3,837,009 | $ | 3,814,094 | ||||
Contacts:
Michelle Wiggs, 713-866-6050
