WRI Weingarten Realty Investors

HOUSTON, July 31 /PRNewswire-FirstCall/ -- Weingarten Realty announced today the results of its second quarter ended June 30, 2008. -- Net income, on a diluted per-share basis, was $0.79 for the second quarter of 2008, the same level of net income per share recorded in the second quarter of 2007. A $1.0 million non-cash preferred share redemption charge recorded in the second quarter of 2008 negatively impacted the comparison to the prior year; -- Funds from operations (FFO), a non-GAAP financial indicator considered one of the most meaningful performance measurements within the REIT industry, was $0.78 per share for the second quarter of 2008. Excluding the non-cash preferred share redemption charge recorded in the second quarter, FFO per share was $0.79, up 5% from the prior year; -- Overall occupancy for the operating portfolio was 93.6% at the end of the second quarter of 2008 compared to 93.7% in the previous quarter. Occupancy for the retail properties was 94.2% compared to 94.8% in the first quarter of 2008, while industrial occupancy increased to 91.9% compared to 90.7% in the first quarter; -- Merchant development gains for the quarter totaled $5.7 million (net of tax) or $0.07 of FFO per share resulting from the execution of ten separate transactions; -- During the quarter, the Company reopened its 6.50% Series F Preferred Shares and issued an additional 6,000,000 shares at a discount raising $118.1 million. The effective cost of this capital is 8.25%. The proceeds were ultimately used to repay approximately 60% of the outstanding variable rate Series G preferred shares. As a result, a proportionate share of the original issue costs for the Series G preferred shares was written off, resulting in a non-cash redemption charge of $0.01 per share in the second quarter. Subsequent to quarter end, the Company repaid the remainder of the Series G preferred series utilizing its existing credit facilities, resulting in an additional non-cash redemption charge of $0.01 per share. "Our FFO per share, excluding the non-cash preferred redemption charge, was $0.79 for the second quarter of 2008, up 5% from the prior year. Our high-quality portfolio of properties continues to perform well in this challenging economic environment with same property net operating income growth of 2.0%, occupancy of 93.6%, and average GAAP rental rate increases of 17.2% for the quarter. Additionally, we recorded merchant build gains of $0.07 per share (net of tax) in the second quarter," stated Drew Alexander, President and Chief Executive Officer. Existing Portfolio During the second quarter of 2008, the Company completed 320 new leases and renewals, totaling 1.6 million square feet with an average rental rate increase of 17.2% on a same space GAAP basis and 12.2% on a cash basis. The primary driver for this strong rental rate increase was new retail leases which increased 26.2% on a GAAP basis and 20.1% on a cash basis. Same property net operating income (NOI), on a cash basis, grew 2.0% in the second quarter, with growth of 2.0% from retail properties and 2.3% from industrial properties. Retail occupancy ended the quarter at 94.2% versus 94.8% in the prior quarter. The decrease in occupancy was due primarily to several mid-size tenant fallouts. "I am optimistic we will see improved same property NOI through the balance of 2008 as leases we signed in the first half of the year commence," said Johnny Hendrix, Executive Vice President/Asset Management. "Retail same property NOI grew 2.0% in the second quarter. Most of the increase was attributable to contractual rent steps offsetting a decline in occupancy. Rental growth on leases commenced and renewals exceeded 17% on a same space GAAP basis and the volume of leasing activity was up 15% from the prior year. While there is no single tenant or category driving this increased leasing activity, discount retailers, retailers that sell necessity based goods, and health and fitness retailers were significant contributors to the increase." New Development The Company's new development pipeline at the end of the second quarter 2008 includes 35 properties at various stages of development. Weingarten has invested $390 million in these projects to date and estimates its total investment, at completion, to be $622 million. The Company also projected that 13 of our 35 projects currently under development will be stabilized by the end of 2009 and these centers are currently 79% leased, including tenant-owned square footage. "We continue to make progress in new development, including our merchant build activities," said Robert Smith, Senior Vice President and Director of New Development. "We recently completed two outstanding grocery anchored shopping centers that were part of our new development pipeline -- Raintree Ranch Center in Phoenix and Sharyland Towne Crossing in Mission, Texas. Raintree Ranch is a 140,000 square foot center anchored by Whole Foods and Sharyland Towne Crossing is a 489,000 square foot center anchored by Target and HEB Grocery. These two centers have a combined WRI investment of $56 million, a weighted average yield of 9.1%, and current occupancy levels in excess of 97%. Additionally, our merchant build activities contributed $0.07 of FFO per share in the second quarter." Portfolio Enhancements Dispositions of non-core properties in Texas and Louisiana totaled $87 million in the second quarter, representing five properties and 750,000 square feet. Year-to-date, dispositions totaled $106 million. "Acquisition activity continues to be very slow. REIT's and pension fund advisors are on the sidelines due to a lack of quality assets for sale and concerns about pricing," said Candace DuFour, Senior Vice President and Director of Acquisitions. Dividends The Board of Trust Managers declared a dividend of $0.525 for the second quarter of 2008. On an annualized basis, this represents a dividend of $2.10 per common share. The dividend is payable on September 15, 2008 to shareholders of record on September 5, 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. All preferred share dividends are payable on September 15, 2008 to shareholders of record on September 5, 2008. Outlook "Certainly this economy is challenging and could get worse. To date, our portfolio of properties continues to perform reasonably well. Over 70% of our retail portfolio is anchored by supermarkets which provide the strength to weather a slowing economy," said Alexander. "Transaction volume for acquisitions and dispositions is down significantly from last year, although, as we demonstrated this quarter, these markets are not totally closed. Our outstanding team of associates successfully executed ten merchant build transactions generating $0.07 of FFO per share this quarter and further strengthened our existing portfolio through the disposition of five non-core properties totaling $87 million. Markets could deteriorate further and negatively affect our ability to do sale transactions but at this time we are reaffirming our previously announced full year 2008 guidance range of $3.21 to $3.27 for FFO per share, although, as mentioned last quarter, it may be in the lower end of the range. We are very well positioned for the future and I am confident we will 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 August 1, 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 55445036 until 11:59 PM Central Time on August 4, 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 414 properties includes 334 neighborhood and community shopping centers and 80 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 5,400 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 Six Months Ended June 30, June 30, STATEMENTS OF CONSOLIDATED INCOME AND FUNDS FROM OPERATIONS 2008 2007 2008 2007 (Unaudited) (Unaudited) Rental Income $151,196 $139,053 $301,491 $277,709 Other Income 3,428 3,163 6,150 5,176 Total Revenues 154,624 142,216 307,641 282,885 Depreciation and Amortization 39,538 31,506 82,396 62,718 Operating Expense 26,666 24,479 53,105 47,214 Ad Valorem Taxes 17,622 16,305 35,544 32,174 General and Administrative Expense 7,104 6,504 13,958 13,113 Total Expenses 90,930 78,794 185,003 155,219 Operating Income 63,694 63,422 122,638 127,666 Interest Expense (38,474) (35,624) (73,954) (71,713) Interest and Other Income 1,699 3,044 2,748 4,756 Equity in Earnings of Real Estate Joint Ventures and Partnerships, net 5,139 4,273 10,386 7,620 Income Allocated to Minority Interests (2,627) (3,497) (4,453) (4,675) Gain (Loss) on Sale of Properties 132 (65) 144 2,024 Gain on Land and Merchant Development Sales 6,303 3,285 6,822 3,951 Provision for Income Taxes (1,543) (1,012) (2,290) (1,003) Income From Continuing Operations 34,323 33,826 62,041 68,626 Operating Income From Discontinued Operations 683 1,407 1,989 5,136 Gain on Sale of Properties From Discontinued Operations 41,093 40,544 49,463 53,400 Income from Discontinued Operations 41,776 41,951 51,452 58,536 Net Income 76,099 75,777 113,493 127,162 Less: Preferred Share Dividends 8,110 5,775 16,728 10,503 Redemption Costs of Preferred Shares 990 990 Net Income Available to Common Shareholders -- Basic $66,999 $70,002 $95,775 $116,659 Net Income Per Common Share -- Basic $0.80 $0.81 $1.14 $1.35 Net Income Available to Common Shareholders -- Diluted $68,146 $71,105 $98,074 $118,868 Net Income Per Common Share -- Diluted $0.79 $0.79 $1.13 $1.32 Funds from Operations: Net Income Available to Common Shareholders $66,999 $70,002 $95,775 $116,659 Depreciation and Amortization 37,951 31,902 80,253 63,881 Depreciation and Amortization of Unconsolidated Joint Ventures 3,021 2,536 5,561 4,593 Gain on Sale of Properties (41,231) (38,253) (48,967) (53,198) Gain on Sale of Properties of Unconsolidated Joint Ventures (14) Funds from Operations -- Basic $66,740 $66,187 $132,608 $131,935 Funds from Operations Per Common Share -- Basic $0.80 $0.77 $1.58 $1.53 Funds from Operations -- Diluted $67,887 $67,290 $134,907 $134,144 Funds from Operations Per Common Share -- Diluted $0.78 $0.75 $1.56 $1.49 Weighted Average Shares Outstanding -- Basic 83,742 86,274 83,710 86,140 Weighted Average Shares Outstanding -- Diluted 86,766 89,735 86,668 89,768 June 30, December 31, 2008 2007 CONSOLIDATED BALANCE SHEETS (Unaudited) (Audited) Property $5,007,361 $4,972,344 Accumulated Depreciation (791,929) (774,321) Property Held for Sale, net 373 Investment in Real Estate Joint Ventures and Partnerships 309,252 300,756 Notes Receivable from Real Estate Joint Ventures and Partnerships 151,057 81,818 Unamortized Debt and Lease Costs 120,116 114,969 Accrued Rent and Accounts Receivable, net 83,262 94,607 Cash and Cash Equivalents 40,427 65,777 Restricted Deposits and Mortgage Escrows 34,018 38,884 Other 120,507 98,509 Total Assets $5,074,444 $4,993,343 Debt $3,187,622 $3,165,059 Accounts Payable and Accrued Expenses 160,223 155,137 Other 88,860 104,439 Total Liabilities 3,436,705 3,424,635 Minority Interest 158,489 96,885 Preferred Shares of Beneficial Interest 9 8 Common Shares of Beneficial Interest 2,531 2,565 Treasury Shares of Beneficial Interest (41) Accumulated Additional Paid-In Capital 1,448,162 1,442,027 Net Income in Excess of Accumulated Dividends 50,363 42,739 Accumulated Other Comprehensive Loss (21,815) (15,475) Total Shareholders' Equity 1,479,250 1,471,823 Total Liabilities and Shareholders' Equity $5,074,444 $4,993,343 DATASOURCE: Weingarten Realty CONTACT: Richard Summers, VP/Director of Investor Relations of Weingarten Realty, +1-713-866-6050 Web site: http://www.weingarten.com/

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