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Weingarten Realty Investors Reports Operating Results (10-Q)

August 09, 2010 | About:
10qk

10qk

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Weingarten Realty Investors (WRI) filed Quarterly Report for the period ended 2010-06-30.

Weingarten Realty Investors has a market cap of $2.54 billion; its shares were traded at around $21.15 with a P/E ratio of 12.09 and P/S ratio of 4.44. The dividend yield of Weingarten Realty Investors stocks is 4.92%. Weingarten Realty Investors had an annual average earning growth of 3.3% over the past 10 years.WRI is in the portfolios of David Dreman of Dreman Value Management, Bruce Kovner of Caxton Associates, Kenneth Fisher of Fisher Asset Management, LLC, Kenneth Fisher of Fisher Asset Management, LLC, Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC, Steven Cohen of SAC Capital Advisors.

Highlight of Business Operations:

Total revenues were $138.8 million in the second quarter of 2010 versus $142.4 million in the second quarter of 2009, a decrease of $3.6 million or 2.5%. This decrease is primarily attributable to a decrease of $3.8 million in net rental revenues. The decrease in net rental revenues resulted primarily from the sale of an 80% interest in six shopping centers, which totaled $5.3 million. Offsetting this decline of $5.3 million is a reduction in bad debt expense of $1.5 million as a result of the slight improvement in the economy.

Total expenses for the second quarter of 2010 were $102.0 million versus $89.4 million in the second quarter of 2009, an increase of $12.6 million or 14.1%. The increase resulted primarily from an impairment loss of $15.8 million associated with the requirement to record our equity interests in two previously unconsolidated real estate joint ventures at their estimated fair values in accounting for the consolidation of these joint ventures. Offsetting this impairment loss is decreases in ad valorem taxes and operating expenses of $2.0 million and $1.0 million, respectively. The decrease in ad valorem taxes resulted primarily from the sale of an 80% interest in six shopping centers and rate and valuation changes from the prior year, while the decrease in operating expenses resulted primarily with a decrease in management fees of $1.3 million due to a fair value decrease of $1.5 million in the assets held in grantor trust related to our deferred compensation plan. Overall, direct operating costs and expenses (operating and net ad valorem taxes) of operating our properties as a percentage of rental revenues were 31.1% and 32.5% for the three months ended June 30, 2010 and 2009, respectively.

Gross interest expense totaled $38.7 million in the second quarter of 2010, down $2.8 million or 6.7% from the second quarter of 2009. The decrease in gross interest expense was due primarily to the reduction in the average debt outstanding, resulting from the retirement of convertible notes and other unsecured debt, including the revolving credit facility from our April 2009 common equity offering. For the second quarter of 2010, the weighted average debt outstanding was $2.5 billion at a weighted average interest rate of 6.2% as compared to $2.8 billion outstanding at a weighted average interest rate of 5.8% for the second quarter of 2009. The decrease of $1.3 million in the amortization of convertible bond discount relates to the retirement of the convertible notes. Capitalized interest decreased $2.0 million as a result of new development stabilizations, completions and the cessation of carrying costs capitalization on several new development projects transferred to land held for development.

Total expenses in the first six months of 2010 were $187.9 million versus $174.0 million in the first six months of 2009, an increase of $13.9 million or 8.0%. The increase resulted primarily from an impairment loss of $16.1 million and an increase in operating expenses of $1.9 million, which is offset by a decrease in ad valorem taxes of $3.0 million. The impairment loss is predominantly associated with the requirement to record our equity interests in two previously unconsolidated real estate joint ventures at their estimated fair values in accounting for the consolidation of these joint ventures. The increase in operating expenses resulted primarily from an increase in insurance premiums of $.6 million and marginal increases in professional fees, maintenance repair expenses and other operating expenses of the portfolio. The decrease in ad valorem taxes resulted primarily from the sale of an 80% interest in six shopping centers and rate and valuation changes from the prior year. Overall, direct operating costs and expenses (operating and net ad valorem taxes) of operating our properties as a percentage of rental revenues were 31.6% and 30.8% for the six months ended June 30, 2010 and 2009, respectively.

Gross interest expense totaled $77.8 million in the first six months of 2010, down $5.3 million or 6.4% from the first six months of 2009. The decrease in gross interest expense was due primarily to the reduction in the average debt outstanding, resulting from the retirement of convertible notes and other unsecured debt, including the revolving credit facility from our April 2009 common equity offering. For the first six months of 2010, the weighted average debt outstanding was $2.5 billion at a weighted average interest rate of 6.2% as compared to $3.0 billion outstanding at a weighted average interest rate of 5.4% in 2009. The decrease of $2.8 million in the amortization of convertible bond discount relates to the retirement of the convertible notes. Capitalized interest decreased $4.0 million as a result of new development stabilizations, completions and the cessation of carrying costs capitalization on several new development projects transferred to land held for development.

Total debt outstanding was $2.5 billion at both June 30, 2010 and December 31, 2009. Total debt at June 30, 2010 included $2.1 billion on which interest rates are fixed and $463.2 million, including the effect of $416.6 million of interest rate contracts that bear interest at variable rates. Additionally, debt totaling $1.2 billion was secured by operating properties while the remaining $1.4 billion was unsecured. At June 30, 2010, we had $36.5 million invested in short-term cash instruments. During July 2010, we established a restricted cash collateral account of $47.6 million as part of a settlement agreement in connection with a development project in Sheridan, Colorado, which we anticipate to replace with two letters of credit. In February 2010, we entered into an amended and restated $500 million unsecured revolving credit facility. The $500 million unsecured revolving credit facility expires in February 2013 and provides borrowing rates that float at a margin over LIBOR plus a facility fee. The borrowing margin and facility fee are priced off a grid that is tied to our senior unsecured credit ratings, which are currently 275.0 and 50.0 basis points, respectively. The facility also contains a competitive bid feature that will allow us to request bids for up to $250 million. Additionally, an accordion feature allows us to increase the new facility amount up to $700 million. As of July 31, 2010, no amounts were outstanding under this facility, and we had excess cash of $22.0 million. The available balance under our revolving credit facility was $491.7 million at July 31, 2010, which is net of $8.3 million in outstanding letters of credit.

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