WRI Weingarten Realty Investors

HOUSTON, May 7 /PRNewswire-FirstCall/ -- Weingarten Realty (NYSE:WRI) announced today the results of its first quarter ended March 31, 2008. "Our funds from operations (FFO), on a diluted per-share basis, grew to $0.78 for the first quarter of 2008, up 5% from the prior year. Additionally, in the first quarter, we closed on a new $228 million joint venture with AEW Capital Management, on behalf of a major institutional client. Additional joint ventures are a key strategic objective and we are very pleased to add another partnership with AEW," stated Drew Alexander, President and Chief Executive Officer. Financial and Operating Highlights -- Net income, on a diluted, per-share basis, was $0.34 for the first quarter of 2008, compared to $0.53 per share for the same period of 2007. The decline from the prior year was due to a reduction in gains on property sales and an increase in depreciation expense associated with the redevelopment of an existing property; -- Funds from operations (FFO), a non-GAAP financial indicator considered one of the most meaningful performance measurements within the REIT industry, grew 5% on a diluted per-share basis to $0.78 for the first quarter of 2008; -- Overall occupancy was 93.7% at the end of the first quarter of 2008 compared to 94.4% a year ago. Occupancy for the retail properties was down slightly to 94.8% from 95.4% in the prior year while industrial occupancy was 90.7% compared to 90.8% a year ago; -- As previously reported, the Company closed on a new joint venture with AEW Capital Management, on behalf of a major institutional client, which recapitalized a WRI portfolio of eighteen Texas properties totaling 2.1 million square feet. The joint venture acquiring the properties is 15% owned by WRI and 85% by AEW's client. Weingarten Realty received more than $216 million in cash proceeds from this transaction while maintaining a significant ownership stake in the properties. Additional benefits included property management, leasing, and asset management fees as well as a performance enhancement above certain hurdle returns. Existing Portfolio Rental rates remained solid during the first quarter of 2008 as the Company completed 288 new leases and renewals, totaling 1.7 million square feet with an average rental rate increase of 15.3% on a same space GAAP basis and 12.5% on a cash basis. The primary driver for the rental rate increases were new retail leases which increased 27.7% on a same space GAAP basis and 27.3% on a cash basis. Same property net operating income (NOI), on a cash basis, rose a modest .8% in the first quarter, with growth of .7% from retail properties and 1.8% from industrial properties. Minimum rents increased 1.8%, however this was offset by lower occupancy and increased bad debt expense due to bankruptcies including retailers like Hollywood Video. Occupancy ended the quarter at 93.7% versus 94.4% a year ago. "The existing portfolio results for the first quarter were certainly affected by a weakening economy as we experienced a slight increase in vacancy due to the loss of some weaker retailers," said Johnny Hendrix, Executive Vice President Asset Management. "However, we are confident that our strong focus on neighborhood and community shopping centers with retailers that provide basic necessities, combined with the efforts of our very productive associates, positions us to take advantage of opportunities in this economic downturn and return to strong growth as the economy recovers." New Development The Company's new development pipeline at the end of the first quarter 2008 includes 35 properties at various stages of development. Weingarten has invested $382 million in these projects to date and estimates its total investment, at completion, to be $657 million. The Company also projected that 15 of our 35 projects currently under development will be stabilized by the end of 2009 and these centers are currently 81% leased, including tenant-owned square footage. For the remaining 20 projects stabilizing in 2010 and beyond, the Company has committed national or regional anchors for 15 of the projects. The Company is aggressively pursuing anchors for the remaining 5 projects and management is comfortable that these strong locations will be successfully developed. "Clearly, the slowing economy has impacted our development program," said Robert Smith, Senior Vice President and Director of New Development. "Retailers have reevaluated and reduced their demand for space which impacts the growth of our new development program. However, the risks in the existing development pipeline are well controlled through the quality of our anchor commitments and our level of pre-leasing." Portfolio Enhancements Dispositions of non-core properties totaled $19 million in the first quarter, representing two properties and 173,000 square feet. These properties were sold at an average cap rate of 7.0%. "Since the disruption to the credit markets in the third quarter of last year, acquisition activity, particularly, has been very slow. We have seen deal flow resume at a muted pace but both buyers and sellers are slow as they wait to see where the market is going and where prices will settle," said Candace DuFour, Senior Vice President and Director of Acquisitions. Dividends The Board of Trust Managers declared a dividend of $0.525 for the first quarter of 2008. On an annualized basis, this represents a dividend of $2.10 per common share. The dividend is payable on June 16, 2008 to shareholders of record on June 6, 2008. 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. Dividends on the 6.50% Series F Cumulative Redeemable Preferred Shares (NYSE:WRIPrF) are $0.40625 per share for the quarter. Dividends on the Series G Cumulative Redeemable Preferred Shares are $0.226173 per share. All preferred share dividends are payable on June 16, 2008 to shareholders of record on June 6, 2008. Outlook "The year 2008 is expected to be a very challenging year. Neighborhood and community shopping centers that cater to basic necessities are the most resilient sector in real estate. Over 70% of our retail portfolio is anchored by supermarkets which provide the strength to weather a slowing economy," said Alexander. "As we move forward in 2008, our team will remain focused on leasing and managing our quality portfolio and we will be highly selective in investing our capital in new development and acquisition opportunities. "It is still early in the year and market conditions have been volatile, but we still expect to generate FFO per share in our previously announced guidance range of $3.21 to $3.27 for 2008, although it may be in the lower end of the range. We are very well positioned for the future and I am confident we can create long-term value for our investors." Conference Call Information The Company also announced that it will host a live webcast of its quarterly conference call on May 8, 2008 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 800-642-1687, identification number 40923137 until 11:59 PM Central Time on May 9, 2008. About Weingarten Realty Investors As one of the largest real estate investment trusts listed on the New York Stock Exchange, Weingarten Realty (NYSE:WRI) is celebrating its 60th anniversary as a commercial real estate owner, manager and developer, formed in 1948. Focused on delivering solid returns to shareholders, Weingarten is actively developing, acquiring, and intensively managing properties in 23 states that span the United States from coast-to-coast. The Company's portfolio of 416 properties includes 335 neighborhood and community shopping centers and 81 industrial properties. Including tenant-owned square footage, the Company's portfolio currently totals approximately 74 million square feet under management. Weingarten has one of the most diversified tenant bases of any major REIT in its sector, with the largest of its 5,500 tenants comprising less than 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. Financial Statements Weingarten Realty Investors (in thousands, except per share amounts) Three Months Ended March 31, STATEMENTS OF CONSOLIDATED INCOME AND 2008 2007 FUNDS FROM OPERATIONS (Unaudited) Rental Income $152,428 $140,668 Other Income 2,732 2,020 Total Revenues 155,160 142,688 Depreciation and Amortization 43,324 31,685 Operating Expense 26,748 23,042 Ad Valorem Taxes 18,249 16,184 General and Administrative Expense 6,854 6,609 Total Expenses 95,175 77,520 Operating Income 59,985 65,168 Interest Expense (35,480) (36,089) Interest and Other Income 1,049 1,712 Equity in Earnings of Real Estate Joint Ventures and Partnerships, net 5,247 3,347 Income Allocated to Minority Interests (1,826) (1,178) Gain on Sale of Properties 12 2,089 Gain on Land and Merchant Development Sales 519 666 (Provision) Benefit for Income Taxes (747) 9 Income From Continuing Operations 28,759 35,724 Operating Income From Discontinued Operations 265 2,805 Gain on Sale of Properties From Discontinued Operations 8,370 12,856 Income from Discontinued Operations 8,635 15,661 Net Income 37,394 51,385 Less: Preferred Share Dividends 8,618 4,728 Net Income Available to Common Shareholders--Basic $28,776 $46,657 Net Income Per Common Share--Basic $0.34 $0.54 Net Income Available to Common Shareholders--Diluted $28,776 $47,763 Net Income Per Common Share--Diluted $0.34 $0.53 Funds from Operations: Net Income Available to Common Shareholders $28,776 $46,657 Depreciation and Amortization 42,302 31,979 Depreciation and Amortization of Unconsolidated Joint Ventures 2,540 2,057 Gain on Sale of Properties (7,736) (14,945) Gain on Sale of Properties of Unconsolidated Joint Ventures (14) Funds from Operations--Basic $65,868 $65,748 Funds from Operations Per Common Share--Basic $0.79 $0.76 Funds from Operations--Diluted $65,868 $66,854 Funds from Operations Per Common Share--Diluted $0.78 $0.74 Weighted Average Shares Outstanding-- Basic 83,679 86,005 Weighted Average Shares Outstanding-- Diluted 84,167 89,809 March 31, December 31, 2008 2007 CONSOLIDATED BALANCE SHEETS (Unaudited) (Audited) Property $4,993,765 $4,972,344 Accumulated Depreciation (789,244) (774,321) Property Held for Sale, net 7,590 Investment in Real Estate Joint Ventures and Partnerships 297,412 300,756 Notes Receivable from Real Estate Joint Ventures and Partnerships 109,661 81,818 Unamortized Debt and Lease Costs 118,368 114,969 Accrued Rent and Accounts Receivable, net 95,628 94,607 Cash and Cash Equivalents 61,488 65,777 Restricted Deposits and Mortgage Escrows 31,066 38,884 Other 117,951 98,509 Total Assets $5,043,685 $4,993,343 Debt $3,214,656 $3,165,059 Accounts Payable and Accrued Expenses 117,111 155,137 Other 99,754 104,439 Total Liabilities 3,431,521 3,424,635 Minority Interest 160,449 96,885 Preferred Shares of Beneficial Interest 8 8 Common Shares of Beneficial Interest 2,528 2,565 Treasury Shares of Beneficial Interest (41) Accumulated Additional Paid in Capital 1,444,180 1,442,027 Net Income in Excess of Accumulated Dividends 27,459 42,739 Accumulated Other Comprehensive Loss (22,460) (15,475) Total Shareholders' Equity 1,451,715 1,471,823 Total Liabilities and Shareholders' Equity $5,043,685 $4,993,343 DATASOURCE: Weingarten Realty Investors CONTACT: Richard Summers, VP-Director of Investor Relations of Weingarten Realty Investors, +1-713-866-6050 Web site: http://www.weingarten.com/

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