HOUSTON, Feb. 22 /PRNewswire-FirstCall/ -- Weingarten Realty Investors announced today the results of its fourth quarter and year ended December 31, 2006, which included substantial progress on its long-term growth strategy. The highlights included:
* Net income available to common shareholders, on a diluted basis, for
the fourth quarter of 2006 totaled $53.2 million, or $.59 per share,
as compared to $.54 per share for the fourth quarter of 2005, an
increase of 9%. For the year ended December 31, 2006, net income was
$300.4 million or $3.27 per share compared to $2.31 per share a year
earlier, an increase of 42%. The increase over the prior year was
primarily the result of strong gains on sales of properties;
* Funds from operations (FFO), a non-GAAP financial indicator
considered one of the most meaningful performance measurements within
the REIT industry, on a diluted per share basis, was $.72 for the
fourth quarter of 2006 compared to $.68 for the same quarter of the
previous year, a 6% increase. For the full year, FFO per share, on a
diluted basis, was $2.83 compared to $2.72 a year ago, a 4% increase;
* The Company purchased ten shopping centers and three industrial
projects during the fourth quarter, adding 1.2 million square feet to
its portfolio representing a gross investment, including our joint
venture partners' interests, of $402 million. Gross acquisitions for
the full year of 2006, including our joint venture partners'
interests, totaled a record $1.0 billion;
* As previously announced, two new strategic joint ventures were formed
in the fourth quarter with two outstanding partners -- TIAA-CREF
Global Real Estate and AEW Capital Management on behalf of one of its
institutional clients;
* Dispositions of non-core properties for the fourth quarter totaled
688,000 square feet, provided proceeds of $53 million, and generated
gains of $27 million. Non-core property dispositions for the full year
totaled $316 million and generated gains of $150 million;
* Merchant development income for the fourth quarter totaled $1.7
million. For the full year, merchant development activities provided
$6.9 million (net of tax) or $0.08 of FFO per share;
* Same-property net operating income increased 4.2% in the fourth
quarter with the retail portfolio up 4.3%. During the quarter, the
Company completed 283 new leases or renewals totaling 1.6 million
square feet with an average rental rate increase of 10.3% on a GAAP
basis or 8.2% on a cash basis;
* As previously announced, subsequent to quarter-end, we issued $200
million of 6.50% Series F Cumulative Redeemable Preferred Shares;
* The Board of Trust Managers increased the cash dividend for 2007 to an
annualized $1.98 per common share, up from $1.86 per common share paid
in 2006, a 6.5% increase. The first quarter 2007 dividend of $0.495
per common share is payable on March 15, 2007 to shareholders of
record on March 8, 2007. This extends the Company's record of
increasing the dividend to 22 consecutive years; and
* 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 are $0.421875 per share for
the quarter. Dividends on the 6.95% Series E Cumulative Redeemable
Preferred Shares are $0.434375 per share for the same
period. Dividends on the newly issued 6.50% Series F Cumulative
Redeemable Preferred Shares for this quarter are
$0.20764 per share, prorated based on the settlement date of
January 30, 2007. All preferred share dividends are payable on
March 15, 2007 to shareholders of record on March 8, 2007.
Strategic Growth Plan
In the first quarter of 2006, we articulated a new long-term growth strategy with a planned three year implementation. The key elements of this strategy are as follows:
* A much greater focus on new development, including merchant
development, with $300 million in annual new development completions
beginning in 2009. Projected returns from our new development pipeline
are approximately 9%.
* Increased use of joint ventures for acquisitions including the
recapitalization (or partial sale) of existing assets, which provide
the opportunity to further increase returns on investment.
* Further recycling capital through the active disposition of non-core
properties and reinvesting the proceeds into properties with strong
barriers to entry within high growth metropolitan markets. This,
combined with our continuous focus on our existing assets, produces a
higher quality portfolio with higher occupancy rates and stronger
internal revenue growth.
During 2006, we made excellent progress in the execution of this long-term growth strategy as described in the following sections on new development, acquisitions and joint ventures, and capital recycling.
New Development
Currently the Company has 30 properties in various stages of development, up from 10 properties under development at the end of 2005. We have invested $204 million to-date on these projects and, at completion, we estimate our total investment to be $650 million. These properties are generally slated to open over the next two years with a projected return on investment in excess of 9% when completed.
In addition to these projects, the Company has significantly increased its development pipeline with nine development sites under contract that have a projected final investment of $218 million. In addition to the nine development sites under contract, we have 22 development sites under preliminary pursuit.
Merchant development is a new program in which we develop a project with the objective of selling all or part of it, instead of retaining it in our portfolio on a long-term basis. The Company generated $6.9 million (after-tax) from this program in 2006 adding $0.08 of FFO per share.
"We are making excellent progress in new development including merchant development activities. During 2006, we tripled the number of properties under development and invested $167 million in our new development program. We are confident that we will achieve our goal of $300 million of annual completions beginning in 2009. We are also very pleased to have contributed $0.08 of FFO per share from merchant development activities in the first year of this new program and expect continued strong growth over the next three years," stated Robert Smith, Senior Vice President and Director of New Development.
Acquisitions and Joint Ventures
In 2006, we completed a record $1.0 billion of acquisitions. Properties acquired in 2006 included 34 shopping centers and 6 industrial properties that added a total of 4.0 million square feet. During 2006, just over half of our acquisitions were through institutional joint ventures.
We formed the following new joint venture partnerships in 2006:
* We acquired seven neighborhood/community shopping centers in South
Florida in a new joint venture with TIAA-CREF Global Real Estate;
* In partnership with AEW Capital Management, on behalf of its
institutional client, we acquired four grocery-anchored centers and
two power centers in Oregon and Washington state, marking our entry
into two desirable metropolitan markets -- Portland, Oregon and
Seattle/Tacoma, Washington;
* We also formed a joint venture with Mercantile Real Estate Advisors
and its client, the AFL-CIO Building Investment Trust to acquire and
operate industrial properties within target markets across the United
States. The partners plan to invest an additional $375 million in
total capital over the next two years.
"Acquisitions are critical to Weingarten's growth and a key component of our strategy. However, intense competition for good quality assets has driven asset prices up and returns down. Partnering with institutional investors through joint ventures enables us to acquire high quality assets in our target markets while also meeting our financial return objectives. We benefit from access to lower-cost capital as well as leveraging our expertise to provide fee-based services, such as the acquisition, leasing, and asset management of properties, for these joint ventures," stated Steve Richter, Executive Vice President and Chief Financial Officer.
Capital Recycling
During 2006, the Company sold 21 shopping centers and four industrial projects representing 3.6 million square feet. Sale proceeds from these dispositions totaled $316 million and generated gains of $150 million. The proceeds from these dispositions, combined with the joint venture program, provided more than 70% of the capital required for the 2006 acquisitions and reduced the need to issue additional common equity.
"Capitalizing on strong demand and favorable prices for real estate assets during 2006, we completed a record level of asset sales. Dispositions are part of an on-going portfolio management process where we prune our portfolio of properties that do not meet our geographic or growth targets and provide capital to recycle into properties that have strong barrier-to-entry locations within high growth metropolitan markets. Over time, this produces a portfolio with higher occupancy rates and stronger internal revenue growth. We are beginning to see the success of this strategy in the strong retail same store net operating income growth of 4.3% for the fourth quarter," stated Johnny Hendrix, Executive Vice President/Asset Management.
Outlook
"We are making great progress in the implementation of the three year strategic plan we announced one year ago. Our accomplishments, as described above, include a substantial increase in new development, including merchant development activities, record levels of acquisitions and non-core asset dispositions, three new institutional joint venture partnerships that will have a total investment of nearly $1 billion when fully funded, and a significant improvement in the quality of our portfolio, producing stronger internal revenue growth. We delivered good financial performance in 2006 and raised the dividend for 2007 by 6.5%, extending our record of dividend increases to 22 consecutive years. We delivered a total return to shareholders (share price appreciation plus dividends) of 27.5% in 2006 and a compound total annual return of 15.0% for the 21 years since the company's IPO in 1985. Two-thousand-six was a remarkably successful year in which we created the foundation for future growth while also exceeding our goals for the year.
For 2007, we will continue the aggressive implementation of our three year strategic growth plan. We expect to generate FFO per share in the range of $2.98 to $3.04. Our guidance includes the short-term negative FFO impact created by our substantial disposition program as well as the planned contribution of properties to new joint ventures. While these dispositions have a short-term negative FFO impact, it is a key part of this plan and will contribute to much stronger growth and profitability over the long-term. Overall, I am very optimistic about our ability to execute our strategic growth plan and, when fully implemented, to produce strong FFO per share growth," stated Drew Alexander, President and Chief Executive Officer.
Conference Call Information
The Company also announced that it will host a live webcast of its quarterly conference call on Friday, February 23, 2007 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 8298578 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 is focused on delivering solid returns to shareholders by actively developing, acquiring, and intensively managing properties in 22 states that span the United States from coast to coast. The Company's portfolio of 389 properties includes 322 neighborhood and community shopping centers and 67 industrial properties, aggregating 47.5 million square feet. Weingarten has one of the most diversified tenant bases of any major REIT in its sector, with the largest of its 5,500 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 Twelve Months Ended
STATEMENTS OF CONSOLIDATED INCOME December 31, December 31,
AND FUNDS FROM OPERATIONS 2006 2005 2006 2005
(Unaudited) (Unaudited)
Rental Income $144,380 $128,799 $554,361 $504,034
Other Income 2,227 1,168 7,019 6,367
Total Revenues 146,607 129,967 561,380 510,401
Depreciation and Amortization 33,446 30,914 127,613 117,062
Operating Expense 27,632 21,583 91,422 76,630
Ad Valorem Taxes 14,057 13,606 65,528 58,923
General and Administrative Expense 7,301 4,256 23,801 17,379
Total Expenses 82,436 70,359 308,364 269,994
Operating Income 64,171 59,608 253,016 240,407
Interest Expense (40,056) (34,236) (146,943) (130,761)
Interest and Other Income 4,226 1,110 9,045 2,867
Equity in Earnings of Joint
Ventures, net 3,789 1,822 14,655 6,610
Income Allocated to Minority
Interests (1,437) (1,530) (6,414) (6,060)
Gain (Loss) on Sale of Properties (4,507) 195 22,467 22,306
Gain on Land and Merchant
Development Sales 986 804 7,166 804
Benefit (Provision) for Income
Taxes 35 --- (1,366) ---
Income From Continuing
Operations 27,207 27,773 151,626 136,173
Operating Income From Discontinued
Operations 239 3,853 7,864 18,021
Gain on Sale of Properties From
Discontinued Operations 26,940 19,777 145,520 65,459
Income from Discontinued
Operations 27,179 23,630 153,384 83,480
Net Income 54,386 51,403 305,010 219,653
Less: Preferred Share Dividends 2,525 2,525 10,101 10,101
Net Income Available to Common
Shareholders--Basic $51,861 $48,878 $294,909 $209,552
Net Income Per Common Share--Basic $0.61 $0.55 $3.36 $2.35
Net Income Available to Common
Shareholders--Diluted $53,191 $50,209 $300,362 $214,770
Net Income Per Common Share--
Diluted $0.59 $0.54 $3.27 $2.31
Funds from Operations:
Net Income Available to Common
Shareholders $51,861 $48,878 $294,909 $209,552
Depreciation and Amortization 32,204 31,976 126,713 122,203
Depreciation and Amortization of
Unconsolidated Joint Ventures 1,751 961 5,079 3,539
Gain on Sale of Properties (22,446) (19,976) (168,004) (87,569)
(Gain) Loss on Sale of Properties
of Unconsolidated Joint Ventures 2 6 (4,052) 8
Funds from Operations--Basic $63,372 $61,845 $254,645 $247,733
Funds from Operations Per Common
Share--Basic $0.74 $0.69 $2.90 $2.78
Funds from Operations--Diluted $64,702 $63,176 $260,098 $252,951
Funds from Operations Per Common
Share--Diluted $0.72 $0.68 $2.83 $2.72
Weighted Average Shares
Outstanding--Basic 85,476 89,336 87,719 89,224
Weighted Average Shares
Outstanding--Diluted 89,613 93,327 91,779 93,166
December 31, December 31,
2006 2005
CONSOLIDATED BALANCE SHEETS (Unaudited) (Audited)
Property $4,445,888 $4,033,579
Accumulated Depreciation (707,005) (679,642)
Investment in Real Estate Joint
Ventures 203,839 84,348
Notes Receivable from Real Estate
Joint Ventures and Partnerships 3,971 42,195
Unamortized Debt and Lease Costs 112,873 95,616
Accrued Rent and Accounts Receivable,
net 78,893 60,905
Cash and Cash Equivalents 71,003 42,690
Restricted Deposits and Mortgage
Escrows 94,466 11,747
Other 71,612 46,303
Total Assets $4,375,540 $3,737,741
Debt $2,900,952 $2,299,855
Accounts Payable and Accrued Expenses 132,821 102,143
Other 128,306 102,099
Total Liabilities 3,162,079 2,504,097
Minority Interest 87,680 83,358
Preferred Shares of Beneficial
Interest 4 4
Common Shares of Beneficial Interest 2,582 2,686
Additional Paid in Capital 1,136,481 1,288,432
Accumulated Dividends in Excess of Net
Income (786) (132,786)
Accumulated Other Comprehensive Loss (12,500) (8,050)
Total Shareholders' Equity 1,125,781 1,150,286
Total Liabilities and
Shareholders' Equity $4,375,540 $3,737,741
