Weingarten Realty Investors (WRI) Tops Q1 EPS by 19c, Revenues Miss

Weingarten Realty Investors (NYSE: WRI) reported Q1 EPS of $0.41, $0.19 better than the analyst estimate of $0.22. Revenue for the quarter came in at $108.05 million versus the consensus estimate of $117.38 million.

“We had a really solid first quarter from operations, but obviously all of our attention is on the future. Our first priority is the safety and well-being of our associates, tenants, stakeholders and the broader community during these challenging times. We are also very focused on communicating and working with our tenants to get those that are closed safely open at the appropriate time. Getting all of our tenants open and operating in our centers is in everyone’s best interest – the tenant’s, WRI’s and the communities they serve. With a portfolio of primarily grocery-anchored centers providing goods and services to the public, supported by a resilient balance sheet and strong liquidity, we are optimistic our centers will be on the front-end of the recovery curve. Navigating the challenges of this recovery will undoubtedly be a significant task but with a team of talented associates and a great portfolio of properties, we will succeed,” said Drew Alexander, Chairman, President and Chief Executive Officer.

COVID-19 Update as of May 5, 2020

• 64% of total April 2020 Annualized Base Rent (“ABR”) and recoveries has been paid to date
• 62% of tenants, based on ABR, are designated “essential businesses”
• $501 million cash & cash equivalents currently on balance sheet

The temporary closing of non-essential businesses and the shelter-at-home mandates caused extreme operational and financial hardship for many tenants. The Company’s operations were strong in the first quarter, however, at quarter-end it was clear the severity of the COVID-19 impact was going to cause operational and liquidity issues for many of its tenants. Accordingly, the Company evaluated the collectability of its receivables given these conditions resulting in $9.0 million of bad debt/uncollectible revenue. This additional write-off included straight-line rent receivables of $7.0 million

With respect to April rents, cash collections totaled $24.8 million which is over 60% of the total due. As to May rent collections, several tenants who paid in April have negotiated rent deferrals going forward which will likely temporarily reduce the cash collections over the next couple of months. With several markets within the Company’s geographic footprint beginning to reopen retail operations, the current expectation is that rent collections will trend upward over the final two quarters of 2020 and throughout 2021. As previously announced, the Company has withdrawn its 2020 guidance.

“As to rents still outstanding, our associates are working very hard to obtain commitments from our tenants. Primarily, we are negotiating deferrals only that will generally be payable in the latter half of 2020 and in some cases into 2021. Our results demonstrate the significance of our portfolio transformation which resulted in a substantial upgrade in the credit quality of our tenancy,” said Johnny Hendrix, Executive Vice President and Chief Operating Officer.

For earnings history and earnings-related data on Weingarten Realty Investors (WRI) click here.

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