WRI Weingarten Realty Investors

HOUSTON, July 26 /PRNewswire-FirstCall/ -- Weingarten Realty Investors (NYSE:WRI) announced today the results of its second quarter ended June 30, 2006. * Net income available to common shareholders, on a diluted basis, increased to a record $89.1 million, compared to $69.0 million in the second quarter of 2005, an increase of 29%. Dispositions of non-core properties for the quarter totaled 1.2 million square feet, provided proceeds of $136.9 million, and generated strong gains of $58.7 million; * Funds from operations (FFO), a non-GAAP financial indicator and considered one of the most meaningful performance measurements within the REIT industry, on a diluted per share basis, was $.68 per share compared to $.69 per share for the same quarter of the previous year. FFO for 2005 benefited from unusual lease cancellation payments of $1.8 million or $.02 per share. Additionally, FFO for the current quarter was reduced approximately $.015 per share when compared to the prior year from the successful disposition of non-core properties over the past year; * Rental revenues for the second quarter of 2006 were $138.3 million, up from $127.9 million for the second quarter of 2005, an 8% increase; * Occupancy for the retail properties at the end of the second quarter of 2006 was 95.2%, up from 94.8% a year ago, and representing the highest occupancy level in the past twenty years. The industrial portfolio closed the quarter at 89.5%. In the second quarter, the industrial division acquired, at below replacement cost, two vacant buildings aggregating 317,000 square feet in San Diego, California, which reduced industrial reported occupancy from 92.1% to a reported 89.5%. Occupancy of the overall portfolio was 93.7% at the end of the quarter. Adjusting for the vacant industrial buildings acquired in San Diego, overall occupancy was 94.4%, up from the prior year level. * During the second quarter of 2006, the Company completed 333 new leases or renewals, totaling 1.4 million square feet with an average rental rate increase of 10.2% on a same-space GAAP basis or 5.1% on a cash basis. * Acquisitions in the second quarter added 781,000 square feet to Weingarten's current portfolio, representing a total investment of $97 million; * The Board of Trust Managers declared a dividend of $0.465 per common share for the second quarter of 2006, up from $0.44 per common share in 2005. On an annualized basis, this represents a dividend of $1.86 per common share as compared to $1.76 per common share for the prior year, a 5.7% increase. The dividend is payable on September 15, 2006 to shareholders of record on September 8, 2006; * The Board of Trust Managers also declared dividends on the Company's preferred shares. Dividends related to the 6.75% Series D Cumulative Redeemable Preferred Shares (NYSE:WRIPrD) are $0.421875 per share for the quarter. Dividends on the 6.95% Series E Cumulative Redeemable Preferred Shares (NYSE:WRIPrE) are $0.434375 per share for the same period. Both preferred share dividends are payable on September 15, 2006 to shareholders of record on September 8, 2006. Portfolio Enhancements During the second quarter, in addition to the two industrial properties, we acquired five shopping centers. "We are very pleased to have acquired the following outstanding properties in high growth and high barrier to entry markets. Additionally, we have over $700 million of potential acquisitions in various stages of due diligence. We expect a large portion of this acquisition pipeline will be acquired through joint ventures, which provide the opportunity to further increase our return on investment," stated Drew Alexander, President and Chief Executive Officer. Acquisitions in the second quarter included: * Valley Shopping Center, a 98,000 square foot shopping center anchored by Raley's Supermarket. Raley's is the top ranked supermarket chain in Sacramento, California. The center has below market rents providing strong growth opportunities and is in close proximity to the Company's regional office in Sacramento. * Freedom Centre is a 151,000 square foot shopping center located in Freedom, California. It is anchored by Ralph's and Rite Aid and together with Valley Shopping Center increases our total net operating income in California to over 14% of the Company's total net operating income at the close of the second quarter. * Brownsville Commons, an 82,000 square foot shopping center including a 54,000 square foot (corporately owned) Kroger supermarket, is located in Powder Springs, Georgia, a suburb of Atlanta. This is part of a three center portfolio, all Kroger anchored, the Company is acquiring over the next six months. * Indian Harbour Place is a 164,000 square foot shopping center located in Melbourne, Florida and was purchased through a joint venture with AEW where Weingarten owns 25%. This center is anchored by Publix and represents our third acquisition in Melbourne. * The Shoppes of Parkland is a 146,000 square foot shopping center located in Parkland, Florida and is anchored by BJ's Wholesale. This center services two upper income neighborhoods, Parkland and Boca Raton and together with Indian Harbour Place brings our portfolio in Florida to a total of 30 properties. At the end of the second quarter 2006, net operating income from properties in Florida also represented over 14% of the total net operating income for the Company. * 1725 & 1855 Dornoch Court are two vacant industrial warehouse buildings aggregating 317,000 square feet in San Diego, California. These are state-of-the-art buildings located within one and a half miles of our Siempre Viva Business Park. The Company's Siempre Viva Business Park contains 727,000 square feet and is 99% occupied by grade A tenants. "Based on the high demand for quality space in San Diego, we expect to lease these industrial buildings soon and we are excited about this entrepreneurial opportunity and our ability to create shareholder value," stated Alexander. New Development The Company currently has sixteen properties in various stages of development. We have invested $103 million to-date on these projects and, at completion, we estimate our total investment to be $279 million. These properties are slated to open during the remainder of 2006 and 2007 and will add 2.0 million square feet to the portfolio with a projected return on investment of 9%. In addition to these projects, the Company has significantly increased the development pipeline. The Company currently has 21 development sites under contract, which will add 1.8 million square feet with an investment value of approximately $308 million. In addition to the 21 development sites under contract, we have another 35 development sites under preliminary pursuit. "Our development pipeline includes properties that are in the early stages and, for a variety of reasons, we will not proceed with the purchase of all of these land sites. However, we are very pleased with our progress in significantly increasing our pipeline. Our current pursuit level is representative of the level required to produce completed developments in the range of $250 - $300 million annually," stated Alexander. Disposition of Non-Core Properties The Company sold seven shopping centers and two industrial properties at an average cap rate of around 7.5% during the second quarter, representing 1.2 million square feet. These properties were located in Arkansas, Kansas, Missouri, and Texas. Sale proceeds from these dispositions totaled $136.9 million and generated record gains of $58.7 million. Year-to-date property sales, including two additional sales in July, totaled $188 million. "We sold a record volume of non-core properties in the second quarter at very attractive prices. The proceeds from these sales provide us the opportunity to recycle capital into high growth and high barrier to entry markets," stated Alexander. Outlook "In February 2006, we announced our new strategy which includes increased dispositions, especially of non-core properties, increased new developments, including merchant development, and the increased use of joint ventures for acquiring existing assets. Given that was less than six months ago, these results show great progress. We are pleased with these efforts and very optimistic about the future, given our pipelines in development, acquisitions, and dispositions, combined with the number of joint ventures that we have working. Our existing operations remain quite strong with good occupancy, rent growth, and demand from new tenants. As we migrate the portfolio to markets with greater barriers to entry and retain those irreplaceable properties in our legacy markets with good growth potential, we are very encouraged about the future, near term, and especially long-term. Based on the results achieved for the first half of the year, the Company is narrowing previous FFO per share guidance to $2.81 to $2.87. The Weingarten team is fully focused on executing our new development, acquisition, joint venture and disposition programs, all of which are designed to contribute substantially to the Company's future growth," stated Alexander. Conference Call Information The Company also announced that it will host a live webcast of its quarterly conference call on Thursday, July 27, 2006 at 10:00 a.m. Central Time. The live webcast can be accessed via the Company's Web site at http://www.weingarten.com/. A replay is also available through the Company's Web site starting approximately two hours following the live call or can be heard by calling 877-519-4471, identification number 7199176 for the following 24 hours. About Weingarten Realty Investors As one of the largest real estate investment trusts listed on the New York Stock Exchange, Weingarten Realty Investors (NYSE:WRI) is focused on delivering solid returns to shareholders by actively developing, acquiring, and intensively managing properties in 21 states that span the southern portion of the United States from coast to coast. The Company's portfolio of 360 properties includes 295 neighborhood and community shopping centers and 65 industrial properties, aggregating over 48.3 million square feet. Weingarten has one of the most diversified tenant bases of any major REIT in its sector, with the largest of its 5,200 tenants comprising approximately 3% of its rental revenues. To learn more about the Company's operations and growth strategies, please visit http://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. Contact: Stephen C. Richter 713-866-6054 Financial Statements Weingarten Realty Investors (in thousands, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, STATEMENTS OF CONSOLIDATED INCOME 2006 2005 2006 2005 AND FUNDS FROM OPERATIONS (Unaudited) (Unaudited) Rental Income $138,265 $127,855 $273,204 $252,945 Other Income 1,336 2,933 3,545 3,708 Total Revenues 139,601 130,788 276,749 256,653 Depreciation and Amortization 32,045 29,714 63,677 58,382 Operating Expense 21,919 18,474 41,201 36,829 Ad Valorem Taxes 16,331 15,056 32,363 30,016 General and Administrative Expense 5,648 4,522 11,003 8,769 Total Expenses 75,943 67,766 148,244 133,996 Operating Income 63,658 63,022 128,505 122,657 Interest Expense (34,741) (32,287) (69,178) (63,323) Interest Income 579 109 2,046 428 Equity in Earnings of Joint Ventures, net 4,547 1,619 8,613 2,893 Income Allocated to Minority Interests (1,644) (1,745) (3,301) (3,145) Gain on Sale of Properties 47 22,006 137 21,979 Gain on Land and Merchant Development Sales --- --- 1,676 --- Provision for Income Taxes 371 --- (148) --- Income From Continuing Operations 32,817 52,724 68,350 81,489 Operating Income From Discontinued Operations 1,339 3,654 3,367 7,336 Gain on Sale of Properties From Discontinued Operations 56,110 13,827 73,158 17,942 Income from Discontinued Operations 57,449 17,481 76,525 25,278 Net Income 90,266 70,205 144,875 106,767 Less: Preferred Share Dividends 2,525 2,526 5,050 5,051 Net Income Available to Common Shareholders--Basic $87,741 $67,679 $139,825 $101,716 Net Income Per Common Share--Basic $0.98 $0.76 $1.56 $1.14 Net Income Available to Common Shareholders--Diluted $89,109 $69,018 $142,593 $104,289 Net Income Per Common Share-- Diluted $0.95 $0.74 $1.53 $1.12 Funds from Operations: Net Income Available to Common Shareholders $87,741 $67,679 $139,825 $101,716 Depreciation and Amortization 30,617 29,447 61,075 57,759 Depreciation and Amortization of Unconsolidated Joint Ventures 1,106 939 2,124 1,843 Gain on Sale of Properties (56,157) (35,622) (73,299) (39,713) (Gain) Loss on Sale of Properties of Unconsolidated Joint Ventures (2,497) 2 (4,054) 3 Funds from Operations--Basic $60,810 $62,445 $125,671 $121,608 Funds from Operations Per Common Share--Basic $0.68 $0.70 $1.40 $1.36 Funds from Operations--Diluted $63,165 $64,606 $130,398 $125,842 Funds from Operations Per Common Share--Diluted $0.68 $0.69 $1.39 $1.35 Weighted Average Shares Outstanding--Basic 89,519 89,178 89,446 89,150 Weighted Average Shares Outstanding--Diluted 93,533 93,170 93,502 93,118 June 30, December 31, 2006 2005 CONSOLIDATED BALANCE SHEETS (Unaudited) (Audited) Property $4,114,530 $4,033,579 Accumulated Depreciation (695,979) (679,642) Investment in Real Estate Joint Ventures 94,900 84,348 Notes Receivable from Real Estate Joint Ventures and Partnerships 20,467 42,195 Unamortized Debt and Lease Costs 96,791 95,616 Accrued Rent and Accounts Receivable, net 50,273 60,905 Cash and Cash Equivalents 132,858 42,690 Restricted Deposits and Mortgage Escrows 13,550 11,747 Other 70,598 46,303 Total Assets $3,897,988 $3,737,741 Debt $2,373,399 $2,299,855 Accounts Payable and Accrued Expenses 100,059 102,143 Other 120,815 102,099 Total Liabilities 2,594,273 2,504,097 Minority Interest 84,913 83,358 Preferred Shares of Beneficial Interest 4 4 Common Shares of Beneficial Interest 2,700 2,686 Additional Paid in Capital 1,293,826 1,288,432 Accumulated Dividends in Excess of Net Income (76,321) (132,786) Accumulated Other Comprehensive Loss (1,407) (8,050) Total Shareholders' Equity 1,218,802 1,150,286 Total Liabilities and Shareholders' Equity $3,897,988 $3,737,741 DATASOURCE: Weingarten Realty Investors CONTACT: Stephen C. Richter of Weingarten Realty Investors, +1-713-866-6054 Web site: http://www.weingarten.com/

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