HOUSTON--(BUSINESS WIRE)--Weingarten Realty (NYSE: WRI) announced today the results of its operations for the first quarter ended March 31, 2014. The supplemental financial package can be found on the Company’s website under the Investor Relations tab.
First Quarter Operating and Financial Highlights
- Net income attributable to common shareholders increased to $0.49 per diluted share compared to $0.28 per diluted share in the same quarter last year;
- Recurring Funds from Operations (“FFO”) increased to $0.49 per diluted share compared to $0.48 per diluted share in the same quarter of last year;
- Same Property Net Operating Income (“Same Property NOI”) for our portfolio increased by 3.3% over the prior year; and,
- Dispositions of non-core properties totaling $79.1 million were completed during the quarter.
Financial Results
The Company reported net income attributable to common shareholders of $60.6 million or $0.49 per diluted share (hereinafter “per share”) for the first quarter of 2014, as compared to $33.7 million or $0.28 per share for the same period in 2013. The increase is due primarily to increased gains on sales of properties and partnership interests in 2014.
For the current quarter, Reported FFO was $63.1 million or $0.51 per share compared to $66.0 million or $0.53 per share for 2013. Included in Reported FFO for 2013 was a write-off of an above-market mortgage intangible from the early pay off of debt of $0.07 per share, offset by non-cash redemption costs of preferred shares of $0.02 per share. Recurring FFO for the first quarter of 2014 was $0.49 per share or $61.2 million. For the same quarter last year, Recurring FFO was $0.48 per share or $58.9 million. Recurring FFO increased due to improved operations of the Company’s existing portfolio, reduced interest expense due to favorable refinancing transactions and the impact of our 2013 acquisitions. These increases were offset by the significant decrease resulting from the $357 million of dispositions completed in 2013 and 2014 that reduced first quarter 2014 Recurring FFO by $0.03 per share. The Company noted these improved results were driven by its ongoing transformation program, which results in a higher quality portfolio of properties and a stronger, less leveraged balance sheet.
A reconciliation of net income to both Reported and Recurring FFO is shown on the attached financial statement and is also shown on page 5 of the supplemental package.
Operating Results
Same Property NOI for the quarter increased 3.3% versus a year ago. This increase results from an increase in occupancy of spaces where rental payments have commenced, contractual rental rate increases on existing leases, and rental rate increases on new leases and renewals.
During the first quarter, the Company completed 306 new leases and renewals totaling 1.2 million square feet and representing $19.0 million of annual revenue. The 306 transactions were comprised of 102 new leases and 204 renewals, representing annual revenues of $5.6 million and $13.4 million, respectively. On a cash basis, rental rates for new leases and renewals increased by 7.5%.
Occupancy of spaces where leases have been signed increased to 94.5% in the first quarter from 93.7% in the first quarter of 2013 and occupancy of spaces where rent has commenced increased to 92.8% from 91.2%.
“Our increases in Same Property NOI, rental rates and occupancy are all a testament to the strength of our best-in-class operating platform and the improved portfolio quality resulting from of our capital recycling, which is part of the transformation program,” said Johnny Hendrix, Executive Vice President and Chief Operating Officer.
Portfolio Activity
In January 2014, the Company completed the dissolution of its consolidated joint venture with the Hines Retail REIT (“Hines”), where the Company owned a 30% interest in 13 properties. The transaction was completed through the distribution of five properties to the Company and eight properties to Hines. The Company will continue to lease and manage the properties owned by Hines.
Disposition activity, other than the Hines transaction mentioned above, continued during the quarter with the sale of two land parcels and three shopping centers comprising approximately 564,000 square feet of building area. Our share of gross proceeds totaled $79.1 million.
“We made great progress in the continued transformation of our portfolio with nearly $80 million of dispositions in the quarter. While this produces a temporary drag on FFO growth, it results in further improvement to our already strong portfolio,” said Drew Alexander, President and Chief Executive Officer.
Balance Sheet
The Company continues to improve its balance sheet and liquidity. During the first quarter, the Company retired $315 million of unsecured debt which matured. For the remainder of the year, the Company has only $48.7 million of additional debt maturities, and future debt maturities are very manageable amounts with no individual year having more than $305 million, excluding the maturity of the revolving credit facility in 2017.
The Company’s credit metrics remain very strong with Net Debt to Recurring EBITDA at 5.81 times and debt to total market capitalization of 35.2%, which was down from 39.4% at December 31, 2013.
“Our balance sheet remains very strong with reduced leverage driving our strong credit metrics. With the debt repayments in the first quarter, our debt maturity schedule is in great shape,” said Steve Richter, Executive Vice President and Chief Financial Officer.
Dividend
The Board of Trust Managers declared a quarterly cash dividend of $0.325 per common share payable on June 13, 2014 to shareholders of record on June 5, 2014 and dividends on the Company’s 6.50% Series F Cumulative Redeemable Preferred Shares (NYSE:WRIPrF) of $0.40625 per share for the quarter payable on June 13, 2014 to shareholders of record on June 5, 2014.
FFO Guidance
The Company affirms its previous guidance for Recurring FFO of $1.95 to $2.01 per share. This guidance and the related assumptions are included 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 25, 2014 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 # 35533140). A replay will be available through the Company’s website 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 March 31, 2014, 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 260 properties which are located in 21 states spanning the country from coast to coast. These properties represent approximately 48.4 million square feet of which our interests in these properties aggregated approximately 29.9 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, | |||||||||||||
| 2014 | 2013 | ||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | (Unaudited) | ||||||||||||
| Rentals, net | $ | 124,633 | $ | 115,227 | |||||||||
| Other Income | 2,959 | 2,600 | |||||||||||
| Total Revenues | 127,592 | 117,827 | |||||||||||
| Depreciation and Amortization | 40,624 | 36,178 | |||||||||||
| Operating Expense | 24,615 | 23,034 | |||||||||||
| Real Estate Taxes, net | 14,649 | 13,603 | |||||||||||
| Impairment Loss | - | 56 | |||||||||||
| General and Administrative Expense | 5,913 | 6,664 | |||||||||||
| Total Expenses | 85,801 | 79,535 | |||||||||||
| Operating Income | 41,791 | 38,292 | |||||||||||
| Interest Expense, net | (24,580 | ) | (15,439 | ) | |||||||||
| Interest and Other Income, net | 1,994 | 1,826 | |||||||||||
| Gain on Sale and Acquisition of Real Estate Joint Venture and Partnership Interests | - | 11,509 | |||||||||||
| Equity in Earnings of Real Estate Joint Ventures and Partnerships, net | 4,402 | 4,613 | |||||||||||
| (Provision) Benefit for Income Taxes | (480 | ) | 177 | ||||||||||
| Income from Continuing Operations | 23,127 | 40,978 | |||||||||||
| Operating Income from Discontinued Operations | 279 | 3,697 | |||||||||||
| Gain on Sale of Property from Discontinued Operations | 41,212 | - | |||||||||||
| Income from Discontinued Operations | 41,491 | 3,697 | |||||||||||
| Gain on Sale of Property | 163 | 142 | |||||||||||
| Net Income | 64,781 | 44,817 | |||||||||||
| Less: Net Income Attributable to Noncontrolling Interests | (1,478 | ) | (1,467 | ) | |||||||||
| Net Income Adjusted for Noncontrolling Interests | 63,303 | 43,350 | |||||||||||
| Less: Preferred Share Dividends | (2,710 | ) | (7,440 | ) | |||||||||
| Less: Redemption Costs of Preferred Shares | - | (2,242 | ) | ||||||||||
| Net Income Attributable to Common Shareholders -- Basic | $ | 60,593 | $ | 33,668 | |||||||||
| Net Income Attributable to Common Shareholders -- Diluted | $ | 60,593 | $ | 33,668 | |||||||||
|
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| FUNDS FROM OPERATIONS | |||||||||||||
| Numerator: | |||||||||||||
| Net Income Attributable to Common Shareholders | $ | 60,593 | $ | 33,668 | |||||||||
| Depreciation and Amortization | 39,720 | 38,671 | |||||||||||
| Depreciation and Amortization of Unconsolidated Real Estate | |||||||||||||
| Joint Ventures and Partnerships | 3,700 | 4,493 | |||||||||||
| Impairment of Operating Properties and Real Estate Equity Investments | - | 292 | |||||||||||
| Impairment of Operating Properties of Unconsolidated Real Estate | |||||||||||||
| Joint Ventures and Partnerships | - | 363 | |||||||||||
| Gain on Sale of Property and Interests in Real Estate Equity Investments | (41,371 | ) | (11,647 | ) | |||||||||
| Gain on Sale of Property of Unconsolidated Real Estate | |||||||||||||
| Joint Ventures and Partnerships | (9 | ) | (243 | ) | |||||||||
| Funds from Operations -- Basic | 62,633 | 65,597 | |||||||||||
| Adjustments for Recurring FFO: | |||||||||||||
| Income Attributable to Operating Partnership Units | 456 | 445 | |||||||||||
| Redemption Costs of Preferred Shares | - | 2,242 | |||||||||||
| Write-off of Debt Costs, net of tax | - | (9,667 | ) | ||||||||||
| Acquisition Costs | 17 | 285 | |||||||||||
| Other, net of tax | (1,862 | ) | - | ||||||||||
| Recurring Funds from Operations -- Diluted | $ | 61,244 | $ | 58,902 | |||||||||
| Denominator: | |||||||||||||
| Weighted Average Shares Outstanding -- Basic | 121,401 | 121,058 | |||||||||||
| Weighted Average Shares Outstanding -- Diluted | 122,645 | 122,223 | |||||||||||
| Weighted Average Shares Outstanding -- Diluted (FFO) | 124,145 | 123,779 | |||||||||||
| PER SHARE DATA | |||||||||||||
| Earnings Per Common Share -- Basic | $ | 0.50 | $ | 0.28 | |||||||||
| Earnings Per Common Share -- Diluted | $ | 0.49 | $ | 0.28 | |||||||||
| FFO -- Per Diluted Share | $ | 0.51 | $ | 0.53 | |||||||||
| Recurring FFO -- Per Diluted Share | $ | 0.49 | $ | 0.48 | |||||||||
| Weingarten Realty Investors | |||||||||||||
| (in thousands) | |||||||||||||
| Financial Statements | |||||||||||||
| March 31, | December 31, | ||||||||||||
| 2014 | 2013 | ||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | (Unaudited) | (Audited) | |||||||||||
| ASSETS | |||||||||||||
| Property | $ | 4,229,249 | $ | 4,289,276 | |||||||||
| Accumulated Depreciation | (1,068,733 | ) | (1,058,040 | ) | |||||||||
| Property Held for Sale, net | 1,536 | 122,614 | |||||||||||
| Investment in Real Estate Joint Ventures and Partnerships, net | 264,605 | 266,158 | |||||||||||
| Notes Receivable from Real Estate Joint Ventures and Partnerships | 12,834 | 13,330 | |||||||||||
| Unamortized Debt and Lease Costs, net | 147,191 | 164,828 | |||||||||||
| Accrued Rent and Accounts Receivable, net | 73,656 | 82,351 | |||||||||||
| Cash and Cash Equivalents | 9,199 | 91,576 | |||||||||||
| Restricted Deposits and Mortgage Escrows | 3,500 | 4,502 | |||||||||||
| Other, net | 196,135 | 247,334 | |||||||||||
| Total Assets | $ | 3,869,172 | $ | 4,223,929 | |||||||||
| LIABILITIES AND EQUITY | |||||||||||||
| Debt, net | $ | 2,096,067 | $ | 2,299,844 | |||||||||
| Accounts Payable and Accrued Expenses | 82,385 | 108,535 | |||||||||||
| Other, net | 120,789 | 127,572 | |||||||||||
| Total Liabilities | 2,299,241 | 2,535,951 | |||||||||||
| Commitments and Contingencies | |||||||||||||
| EQUITY | |||||||||||||
| Preferred Shares of Beneficial Interest | 2 | 2 | |||||||||||
| Common Shares of Beneficial Interest | 3,690 | 3,683 | |||||||||||
| Additional Paid-In Capital | 1,695,835 | 1,679,229 | |||||||||||
| Net Income Less Than Accumulated Dividends | (279,647 | ) | (300,537 | ) | |||||||||
| Accumulated Other Comprehensive Loss | (3,621 | ) | (4,202 | ) | |||||||||
| Shareholders' Equity | 1,416,259 | 1,378,175 | |||||||||||
| Noncontrolling Interests | 153,672 | 309,803 | |||||||||||
| Total Liabilities and Equity | $ | 3,869,172 | $ | 4,223,929 | |||||||||
