Weingarten Realty Produces Same Property NOI Increase of 4.1% and New Lease Rent Increases of 16.8%

HOUSTON--(BUSINESS WIRE)-- Weingarten Realty (NYSE: WRI) announced today the results of its operations for the quarter ended June 30, 2015. The supplemental financial package with additional information can be found on the Company's website under the Investor Relations tab.

Second Quarter Operating and Financial Highlights

• Recurring Funds from Operations Attributable to Common Shareholders ("FFO") for the quarter increased to $0.54 per diluted share from $0.51 per diluted share a year ago;
• Same Property Net Operating Income increased 4.1% over the same quarter of the prior year;
• Occupancy increased 0.7% over the same quarter of the prior year to 95.5%;
• Rental rates on new leases and renewals were up 16.8% and 10.9%, respectively;
• Senior unsecured bonds totaling $250 million were issued at an all-in cost of 3.77%; and
• Acquisitions totaling $81 million were completed during the quarter.

Financial Results

The Company reported net income attributable to common shareholders of $25.2 million or $0.20 per diluted share (hereinafter “per share”) for the second quarter of 2015, as compared to $32.7 million or $0.27 per share for the same period in 2014. The decrease is due primarily to the write-off of unamortized preferred redemption costs totaling $0.08 per share in the current quarter.

Reported FFO was $58.4 million or $0.46 per share for the second quarter of 2015 compared to $65.5 million or $0.53 per share for 2014. The 2015 amount is lower as it includes the non-cash write-off of preferred redemption costs of $0.08 per share. Year-to-date, Reported FFO was $118.7 million or $0.95 per share for 2015 compared to $128.6 million or $1.04 per share for 2014.

Recurring FFO for the quarter ended June 30, 2015 was $0.54 per share or $68.3 million, an increase of 5.9% on a per share basis over $0.51 per share or $63.9 million for the same quarter of last year. The increase in Recurring FFO over the prior year was primarily due to increases in net operating income from our existing portfolio resulting from increases in occupancy and rental rates, incremental income from our new developments and redevelopments, reduced interest expense from favorable debt refinancings and reduced preferred share dividends due to redemptions. These increases were partially offset by the impact of the Company’s disposition program, which reduced Recurring FFO by $0.07 per share year-over-year. For the six months, Recurring FFO was $133.7 million or $1.07 per share for 2015 compared to $125.1 million or $1.01 per share for 2014.

A reconciliation between net income attributable to common shareholders to Reported FFO and Recurring FFO attributable to common shareholders is listed on page 5 of the Company’s supplemental package.

Operating Results

Same Property Net Operating Income ("SPNOI") increased by a strong 4.1% for the quarter primarily due to increased occupancy, increased rental rates and a reduction in merchant fallouts. Year-to-date, SPNOI has also increased 4.1%.

Occupancy increased to 95.5% in the second quarter, up 0.7% from 94.8% in the same quarter of 2014 and unchanged from the prior quarter. Occupancy of small shop space increased to 90.3%, up 1.7% from the same quarter of 2014. The occupancy of the Company’s Same Property portfolio increased to 96.4% from 95.9% in 2014. Year-to-date, only 152 merchants ceased operations at the Company’s properties, the lowest such total since 2003.

The Company produced steady leasing results during the second quarter with 261 new leases and renewals. These transactions were comprised of 102 new leases and 159 renewals, which represent annualized revenues of $5.0 million and $9.5 million, respectively. The average rental rate increase on new leases and renewals signed during the quarter was 16.8% and 10.9%, respectively.

“Our operating metrics for the quarter were outstanding, continuing what has been an impressive string of quarterly results demonstrating the impact of the portfolio transformation we began five years ago. Over the last fourteen quarters, we have averaged Same Property NOI increases of over 4%, increasing our occupancy by 3.4% over the same period. Since January 2012, we increased our Average Base Rent by 14.6%, from $14.51 per square foot to $16.63 at the end of the current quarter. This clearly validates the improvements we have made to our portfolio through our transformation efforts,” said Johnny Hendrix, Executive Vice President and Chief Operating Officer.

Portfolio Activity

The Company acquired two supermarket-anchored properties during the quarter, investing $81.1 million. First, Wellington Green Commons in Florida is a great core center anchored by a high-volume Whole Foods and has household incomes in its trade area of around $100,000 per year and around 50% of the population is college graduates.

Second, at the end of the second quarter, the Company purchased The Summit at Scottsdale in the greater Phoenix metro. The 190,000 square foot property is anchored by Target, Safeway supermarket, PetSmart, and CVS Pharmacy. The 3-mile trade area is very strong with household incomes of $132,000 and over 65% of the population is college graduates. The Company co-invested with its Dutch partner, Bouwinvest, on this asset. Year-to-date, the Company has purchased four shopping centers, investing $173.2 million.

The Company continues to make significant progress on its new development and redevelopment projects. At Hilltop Village Center, its 249,000 square foot development in Alexandria, Virginia, Wegmans had a tremendous grand opening in June. With minimal investment remaining, the center is 97% leased and is expected to yield around 8% at completion on an estimated final investment of about $65 million. The Company’s four developments progressed nicely during the quarter with occupancy increasing 4.5% in the quarter. The Company also reported ten redevelopment projects underway where it will invest about $62 million at a return of over 10%. To date, the Company has invested nearly $27 million in these redevelopment projects.

During the second quarter, dispositions totaling $28.2 million were completed, bringing the year-to-date total to $63.8 million. The Company believes it will end the year in its guidance range of $125 to $175 million.

“I am extremely pleased with the results of our portfolio activity this quarter, as we have been successful in all aspects of this important facet of our Company. We have made quality acquisitions, made great progress on our new developments and redevelopments and have disposed of some properties on the lower end of our portfolio. Continually improving the quality of our portfolio is an important goal of the Company, and we have been very successful this quarter,” said Drew Alexander, President and Chief Executive Officer.

Balance Sheet

The Company continues to improve its balance sheet. The remaining $150 million of its outstanding preferred shares were called for redemption during the quarter. Immediately following this redemption, the Company issued $250 million of 3.85% ten-year unsecured notes. The yield to maturity on the notes was 3.94%; however, the Company locked interest rates back in April upon giving notice to redeem the preferred shareholders, so including the benefit from the settlement of this hedge, the all-in cost on this financing was an attractive 3.77%. With minimal maturities in 2025, these bonds fit nicely into the Company’s laddered maturity schedule and allowed the Company to completely pay off its revolving credit facility. As previously announced, the Company raised gross proceeds of $11.5 million for the quarter and $40.8 million year-to-date under its at-the-market (“ATM”) facility to partially fund the redemption of the preferred shares. No equity has been issued since the previous earning release. The Company’s credit metrics remain very strong with net debt to recurring EBITDA at 5.90 times and debt to total market capitalization of 33.7%.

“The Company’s balance sheet remains very strong with reduced leverage driving our strong credit metrics. Our recently completed five-year-term loan, the latest $250 million bond offering along with other financings, have reduced our weighted average interest rate on total debt to a very attractive 4.11%,” said Steve Richter, Executive Vice President and Chief Financial Officer.

2015 Guidance

Given the strength of the first half of the year and the outlook for the balance of 2015, the Company has increased its guidance for Recurring FFO to a range of $2.14 to $2.18 per share from $2.12 to $2.17 and for Reported FFO to a range of $2.02 to $2.06 per share from $2.00 to $2.05. Guidance for SPNOI for the full year has also been increased to a range of 3% to 4% from 2.5% to 3.5%. All other details of guidance remain unchanged and are included on page 9 of the Company’s supplemental package.

Dividends

The Board of Trust Managers declared a quarterly cash dividend of $0.345 per common share payable on September 15, 2015 to shareholders of record on September 8, 2015.

Conference Call Information

The Company also announced that it will host a live webcast of its quarterly conference call on July 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 # 37563663). 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 shopping center owner, manager and developer. At June 30, 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 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 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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150728006825/en/

Weingarten Realty
Michelle Wiggs, (713) 866-6050

Source: Weingarten Realty

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