Weingarten Realty Investors Reports Operating Results (10-Q)
Weingarten Realty Investors has a market cap of $3 billion; its shares were traded at around $25.02 with a P/E ratio of 14.1 and P/S ratio of 5.3. The dividend yield of Weingarten Realty Investors stocks is 4.2%. 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, Kenneth Fisher of Fisher Asset Management, LLC, Steven Cohen of SAC Capital Advisors, Jeremy Grantham of GMO LLC.
Highlight of Business Operations:Total revenues were $139.0 million in the third quarter of 2010 versus $143.1 million in the third quarter of 2009, a decrease of $4.1 million or 2.9%. This decrease is primarily attributable to a decrease of $3.5 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 $5.4 million. Offsetting this decline of $5.4 million is rentals associated primarily with new development completions and the acquisition of three properties.
Total revenues were $414.9 million in the first nine months of 2010 versus $429.8 million in the first nine months of 2009, a decrease of $14.9 million or 3.5%. This decrease is primarily attributable to decreases in net rental revenues and other income of $13.5 million and $1.4 million, respectively. The decrease in net rental revenues resulted primarily from the sale of an 80% interest in six shopping centers, which totaled $15.1 million. Offsetting this decline of $15.1 million is rentals associated primarily with new development completions and the acquisition of three properties. The decrease in other revenues results primarily from a decline in lease cancellation revenue.
Total expenses in the first nine months of 2010 were $277.7 million versus $293.2 million in the first nine months of 2009, a decrease of $15.5 million or 5.3%. The decrease resulted primarily from decreases in impairment losses and real estate taxes of $11.8 million and $5.5 million, respectively, offset by an increase in operating expenses of $1.8 million. The impairment loss in 2010 is attributable to 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, and a $5.2 million loss associated primarily with new development properties. The 2009 impairment loss of $32.8 million relates to new development properties resulting from changes in economic conditions, our new development business plans and tenant expansion plans. The decrease in real estate taxes resulted primarily from the sale of an 80% interest in six shopping centers and rate and valuation changes from the prior year. 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. Overall, direct operating costs and expenses (operating and net real estate taxes) of operating our properties as a percentage of rental revenues were 31.2% and 31.1% for the nine months ended September 30, 2010 and 2009, respectively.
Gross interest expense totaled $115.3 million in the first nine months of 2010, down $6.0 million or 5.0% from the first nine 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 a reduction in other unsecured debt. For the first nine months of 2010, the weighted average debt outstanding was $2.5 billion at a weighted average interest rate of 6.1% as compared to $2.9 billion outstanding at a weighted average interest rate of 5.4% in 2009. The decrease of $2.8 million in the amortization of convertible notes discount relates to the retirement of the convertible notes. Capitalized interest decreased $4.7 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.
The primary sources of capital for funding any debt maturities and acquisitions are our revolving credit facility; proceeds from both secured and unsecured debt issuances; proceeds from common and preferred capital issuances; cash generated from the sale of property and the formation of joint ventures; and cash flow generated by our operating properties. Amounts outstanding under the revolving credit facility are retired as needed with proceeds from the issuance of long-term debt, common and preferred equity, cash generated from disposition of properties and cash flow generated by our operating properties. As of September 30, 2010, we had no amounts outstanding under our $500 million revolving credit facility and $50.0 million was outstanding under our $99 million credit facility, which we use for cash management purposes. We have repositioned our future debt maturities to manageable levels and had $3.3 million invested in short-term cash investments at September 30, 2010. 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 a letter of credit. See Contractual Obligations for additional information.
Total debt outstanding was $2.6 billion and $2.5 billion at September 30, 2010 and December 31, 2009, respectively. Total debt at September 30, 2010 included $2.1 billion on which interest rates are fixed and $519.7 million, including the effect of $416.3 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 September 30, 2010, we had $3.3 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 a letter 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 October 29, 2010, no amounts were outstanding under this facility.
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