Weingarten Realty (NYSE: WRI) announced today the results of its operations for the fourth quarter and full year ended December 31, 2015.
Operating and Financial Highlights
- Recurring Funds from Operations (“FFO”) increased 9.8% for the fourth quarter and 6.3% for the full year 2015 compared to comparable 2014 periods;
- Same Property Net Operating Income (“SPNOI”) increased by 3.3% over the full year 2014;
- Rental rates on new leases and renewals completed during the quarter were up 37% and 11%, respectively;
- Acquisitions totaled $268 million for the year;
- Dispositions totaled $126 million for the year; and
- Common dividend per share increased 5.8% to $0.365 per quarter or $1.46 on an annualized basis.
Financial Results
The Company reported net income attributable to common shareholders of $47.3 million or $0.38 per diluted share (hereinafter “per share”) for the fourth quarter of 2015, as compared to $86.3 million or $0.70 per share for the same period in 2014. For the full year 2015, the Company reported net income of $160.8 million or $1.29 per share compared to $277.2 million or $2.25 per share for the full year 2014. Included in net income for 2015, were gains on the sale of property and partnership interests of $0.49 per share compared to $1.55 per share in 2014.
For the current quarter, Reported FFO was $71.4 million or $0.57 per share compared to $62.5 million or $0.51 per share for 2014. Recurring FFO for the fourth quarter of 2015 was $0.56 per share or $70.7 million compared to $0.51 per share or $63.1 million in 2014, an increase of 9.8% on a per share basis. 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 redevelopments and reduced interest expense due to favorable refinancing transactions. These increases were partially offset by the impact of the Company’s disposition program.
For the full year ended December 31, 2015, Reported FFO was $260.0 million or $2.07 per share compared to $256.7 million or $2.06 per share for 2014. Recurring FFO for 2015 was $274.8 million or $2.18 per share compared to $255.3 million or $2.05 per share for 2014, an increase of 6.3% year-over-year on a per share basis. The increase in Recurring FFO was primarily due to the Company’s acquisition and new development programs, improvements in the existing portfolio and reduced interest expense, offset by the impact of dispositions.
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 during the fourth quarter increased by 2.1% versus a year ago driven by the base minimum rental increase of 2.5%. For the full year 2015, Same Property NOI increased 3.3%. Occupancy was 95.1% for the year ended 2015, unchanged from the third quarter and down 30 basis points from 2014. Occupancy of spaces less than 10,000 square feet, often referred to as shop occupancy, increased to 90.1% from 89.8% in the prior year.
The Company produced solid leasing results during the fourth quarter with 249 new leases and renewals totaling 833,000 square feet and representing $17.3 million of annual revenue. The 249 transactions were comprised of 97 new leases and 152 renewals, representing annual revenues of $7.3 million and $10.0 million, respectively. The average rental rate increase on new leases and renewals signed during the quarter was 17.9%, which includes rental rates on new leases up 36.5%. For the year, the average rental rate increase on new leases and renewals was 12.5%, which includes rental rates on new leases up a very strong 21.2%.
“The rental rate increases we posted for both the quarter as well as the full year are among the best our Company has ever produced. A lack of new space coming on the market combined with our high quality, transformed portfolio has enabled us to really push rents on nearly every space that comes available,” said Johnny Hendrix, Executive Vice President and Chief Operating Officer.
Portfolio Activity
During the fourth quarter, Weingarten Realty acquired two properties for $33.5 million. The Company acquired Westside Center located in Los Angeles, California, which has incredibly strong demographics including a 3-mile trade area boasting over 320,000 people, average household incomes over $112,000, and over 65% of the population with college degrees. The center is a future redevelopment opportunity directly across from Macerich’s Westside Pavilion. In addition, the Company acquired a property adjacent to its flagship River Oaks shopping center in Houston, Texas, which has average household incomes over $135,000 in a 3-mile trade area. This property will be part of the future redevelopment of the River Oaks shopping center.
During the fourth quarter, the Company sold four properties and other real estate for $33.5 million including Fresh Market Shoppes and Town and Country Center located in South Carolina and Oklahoma, respectively. These sales complete the Company’s exit from each of these states.
For the full year 2015, WRI acquired eight properties and other real estate for $267.8 million and sold 15 income producing properties and other real estate for $126.4 million.
Subsequent to year-end, the Company sold Rainbow Plaza in Las Vegas for $65.5 million.
The Company has four active new development projects. Hilltop Village Center in Alexandria, Virginia was completed as of year-end with occupancy of 100% and an estimated return of about 8%. Wake Forest Crossing in Raleigh, North Carolina is 86% leased. Construction is completed and the anchors have commenced. At Nottingham Commons in White Marsh, Maryland, signed occupancy already stands at nearly 80% with the last anchor space lease signed with DSW during the quarter. The Whittaker in West Seattle, is a six-story mixed-use project being co-developed with Lennar. The 65,000 square foot retail portion is anchored by a 41,000 square foot Whole Foods.
The Company also reported 18 active and completed redevelopment projects where it will invest about $80 million at a return of around 14%. To date, the Company has invested over $48 million in these redevelopment projects.
“This was a very strong year of capital allocation for the Company. We acquired some great redevelopment properties, further strengthened our portfolio with other solid operating properties, and made great progress on each of our new development and redevelopment projects. Together with about $190 million of dispositions both during the year and subsequent to year-end, this marked a very strong year for the Company on the transaction front,” said Drew Alexander, President and Chief Executive Officer.
Dividends
On February 16, 2016, the Board of Trust Managers declared an increase in the common dividend to $0.365 per share for the first quarter of 2016. This represents a 5.8% increase, resulting in an annualized dividend of $1.46 per share. The dividend is payable in cash on March 15, 2016 to shareholders of record on March 8, 2016.
FFO Guidance
The Company’s full year Recurring FFO guidance for 2016 is in the range of $2.27 to $2.31 per share, which includes acquisition costs of approximately $0.01 per share that the Company expects to incur during 2016. Full year guidance for Reported FFO is in the range of $2.26 to $2.31 per share. Acquisitions are expected to be in the range of $125 to $225 million with dispositions also in the range of $125 to $225 million. New development and redevelopment spending is estimated at $50 to $100 million. 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 17, 2016 at 9:00 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 # 40193462). A replay 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 December 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 232 properties which are located in 18 states spanning the country from coast to coast. These properties represent approximately 45.6 million square feet of which our interests in these properties aggregated approximately 28.0 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 | Twelve Months Ended | ||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | (Unaudited) | (Unaudited) | |||||||||||||||||||
| Rentals, net | $ | 127,242 | $ | 122,730 | $ | 502,464 | $ | 503,128 | |||||||||||||
| Other Income | 2,412 | 3,372 | 10,380 | 11,278 | |||||||||||||||||
| Total Revenues | 129,654 | 126,102 | 512,844 | 514,406 | |||||||||||||||||
| Depreciation and Amortization | 37,011 | 36,408 | 145,940 | 150,356 | |||||||||||||||||
| Operating Expense | 25,168 | 23,329 | 94,244 | 95,318 | |||||||||||||||||
| Real Estate Taxes, net | 14,394 | 14,349 | 60,289 | 60,768 | |||||||||||||||||
| Impairment Loss | - | 1,024 | 153 | 1,024 | |||||||||||||||||
| General and Administrative Expense | 7,503 | 7,023 | 27,524 | 24,902 | |||||||||||||||||
| Total Expenses | 84,076 | 82,133 | 328,150 | 332,368 | |||||||||||||||||
| Operating Income | 45,578 | 43,969 | 184,694 | 182,038 | |||||||||||||||||
| Interest Expense, net | (20,426 | ) | (21,462 | ) | (87,783 | ) | (94,725 | ) | |||||||||||||
| Interest and Other (Expense) Income, net | 2,311 | 863 | 4,563 | 3,756 | |||||||||||||||||
| Gain on Sale and Acquisition of Real Estate Joint Venture and Partnership Interests | - | - | 879 | 1,718 | |||||||||||||||||
| Equity in Earnings of Real Estate Joint Ventures and Partnerships, net | 5,620 | 5,986 | 19,300 | 22,317 | |||||||||||||||||
| Benefit (Provision) for Income Taxes | 239 | (624 | ) | (52 | ) | 1,261 | |||||||||||||||
| Income from Continuing Operations | 33,322 | 28,732 | 121,601 | 116,365 | |||||||||||||||||
| Operating Income from Discontinued Operations | - | - | - | 342 | |||||||||||||||||
| Gain on Sale of Property from Discontinued Operations | - | - | - | 44,582 | |||||||||||||||||
| Income from Discontinued Operations | - | - | - | 44,924 | |||||||||||||||||
| Gain on Sale of Property | 15,704 | 74,883 | 59,621 | 146,290 | |||||||||||||||||
| Net Income | 49,026 | 103,615 | 181,222 | 307,579 | |||||||||||||||||
| Less: | Net Income Attributable to Noncontrolling Interests | (1,751 | ) | (14,635 | ) | (6,870 | ) | (19,571 | ) | ||||||||||||
| Net Income Adjusted for Noncontrolling Interests | 47,275 | 88,980 | 174,352 | 288,008 | |||||||||||||||||
| Less: | Preferred Share Dividends | - | (2,710 | ) | (3,830 | ) | (10,840 | ) | |||||||||||||
| Less: | Redemption Costs of Preferred Shares | - | - | (9,687 | ) | - | |||||||||||||||
| Net Income Attributable to Common Shareholders -- Basic | $ | 47,275 | $ | 86,270 | $ | 160,835 | $ | 277,168 | |||||||||||||
| Net Income Attributable to Common Shareholders -- Diluted | $ | 47,746 | $ | 87,073 | $ | 160,835 | $ | 279,339 | |||||||||||||
| FUNDS FROM OPERATIONS ATTRIBUTABLE TO COMMON SHAREHOLDERS (FFO) | |||||||||||||||||||||
| Numerator: | |||||||||||||||||||||
| Net Income Attributable to Common Shareholders | $ | 47,275 | $ | 86,270 | $ | 160,835 | $ | 277,168 | |||||||||||||
| Depreciation and Amortization | 36,350 | 35,118 | 143,067 | 145,660 | |||||||||||||||||
| Depreciation and Amortization of Unconsolidated Real Estate | |||||||||||||||||||||
| Joint Ventures and Partnerships | 3,849 | 3,504 | 14,451 | 14,793 | |||||||||||||||||
| Impairment of Operating Properties and Real Estate Equity Investments | - | 895 | 153 | 895 | |||||||||||||||||
| Impairment of Operating Properties of Unconsolidated Real Estate | |||||||||||||||||||||
| Joint Ventures and Partnerships | - | 305 | 1,497 | 305 | |||||||||||||||||
| Gain on Sale of Property and Interests in Real Estate Equity Investments | (15,625 | ) | (61,733 | ) | (60,309 | ) | (179,376 | ) | |||||||||||||
| Gain on Dispositions of Unconsolidated Real Estate Joint Ventures | |||||||||||||||||||||
| and Partnerships | (943 | ) | (1,895 | ) | (1,558 | ) | (4,919 | ) | |||||||||||||
| Other | (6 | ) | (4 | ) | (10 | ) | (8 | ) | |||||||||||||
| FFO -- Basic | 70,900 | 62,460 | 258,126 | 254,518 | |||||||||||||||||
| Adjustments for Recurring FFO: | |||||||||||||||||||||
| Income Attributable to Operating Partnership Units | 471 | - | 1,903 | 2,171 | |||||||||||||||||
| Redemption Costs of Preferred Shares | - | - | 9,749 | - | |||||||||||||||||
| Write-off of Debt Costs, net | - | 323 | 6,100 | 2,173 | |||||||||||||||||
| Acquisition Costs | 305 | 185 | 1,007 | 253 | |||||||||||||||||
| Deferred Tax Benefit, net | - | - | - | (2,097 | ) | ||||||||||||||||
| Other Impairment Loss, net | - | 129 | - | 129 | |||||||||||||||||
| Other, net of tax | (952 | ) | - | (2,113 | ) | (1,862 | ) | ||||||||||||||
| Recurring FFO -- Diluted | $ | 70,724 | $ | 63,097 | $ | 274,772 | $ | 255,285 | |||||||||||||
| Denominator: | |||||||||||||||||||||
| Weighted Average Shares Outstanding -- Basic | 123,357 | 121,706 | 123,037 | 121,542 | |||||||||||||||||
| Weighted Average Shares Outstanding -- Diluted | 126,077 | 124,611 | 124,329 | 124,370 | |||||||||||||||||
| Weighted Average Shares Outstanding -- Diluted (FFO) | 126,077 | 123,118 | 125,801 | 124,370 | |||||||||||||||||
| PER SHARE DATA | |||||||||||||||||||||
| Earnings Per Common Share -- Basic | $ | 0.38 | $ | 0.71 | $ | 1.31 | $ | 2.28 | |||||||||||||
| Earnings Per Common Share -- Diluted | $ | 0.38 | $ | 0.70 | $ | 1.29 | $ | 2.25 | |||||||||||||
| FFO Per Common Share -- Diluted | $ | 0.57 | $ | 0.51 | $ | 2.07 | $ | 2.06 | |||||||||||||
| Recurring FFO Per Common Share -- Diluted | $ | 0.56 | $ | 0.51 | $ | 2.18 | $ | 2.05 | |||||||||||||
| Weingarten Realty Investors | ||||||||||
| (in thousands) | ||||||||||
| Financial Statements | ||||||||||
| December 31, | December 31, | |||||||||
| 2015 | 2014 | |||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | (Unaudited) | (Audited) | ||||||||
| ASSETS | ||||||||||
| Property | $ | 4,262,959 | $ | 4,076,094 | ||||||
| Accumulated Depreciation | (1,087,642 | ) | (1,028,619 | ) | ||||||
| Property Held for Sale, net | 34,363 | 3,670 | ||||||||
| Investment in Real Estate Joint Ventures and Partnerships, net | 267,041 | 257,156 | ||||||||
| Unamortized Lease Costs, net | 137,609 | 130,649 | ||||||||
| Accrued Rent and Accounts Receivable, net | 84,782 | 77,781 | ||||||||
| Cash and Cash Equivalents | 22,168 | 23,189 | ||||||||
| Restricted Deposits and Mortgage Escrows | 3,074 | 79,998 | ||||||||
| Other, net | 177,591 | 185,997 | ||||||||
| Total Assets | $ | 3,901,945 | $ | 3,805,915 | ||||||
| LIABILITIES AND EQUITY | ||||||||||
| Debt, net | $ | 2,113,277 | $ | 1,930,009 | ||||||
| Accounts Payable and Accrued Expenses | 112,205 | 112,479 | ||||||||
| Other, net | 131,453 | 124,484 | ||||||||
| Total Liabilities | 2,356,935 | 2,166,972 | ||||||||
| Commitments and Contingencies | ||||||||||
| EQUITY | ||||||||||
| Preferred Shares of Beneficial Interest | - | 2 | ||||||||
| Common Shares of Beneficial Interest | 3,744 | 3,700 | ||||||||
| Additional Paid-In Capital | 1,616,242 | 1,706,880 | ||||||||
| Net Income Less Than Accumulated Dividends | (222,880 | ) | (212,960 | ) | ||||||
| Accumulated Other Comprehensive Loss | (7,644 | ) | (12,436 | ) | ||||||
| Shareholders' Equity | 1,389,462 | 1,485,186 | ||||||||
| Noncontrolling Interests | 155,548 | 153,757 | ||||||||
| Total Liabilities and Equity | $ | 3,901,945 | $ | 3,805,915 | ||||||
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Contacts:
Michelle Wiggs, (713) 866-6050
