Weingarten Realty Increases Recurring Funds from Operations Per Share by 9.8% and Announces Dividend Increase of 5.8%

HOUSTON--()--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  

Contacts

Weingarten Realty
Michelle Wiggs, (713) 866-6050

Release Summary

Houston, February 16, 2016 --- Weingarten Realty (NYSE: WRI) announced today the results of its operations for the fourth quarter and full year ended December 31, 2015.

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Contacts

Weingarten Realty
Michelle Wiggs, (713) 866-6050