Weingarten Realty Investors Reports Operating Results (10-Q)
Weingarten Realty Investors is focused on delivering solid returns to shareholders by actively developing acquiring and intensively managing properties in twenty one states that span the southern portion of the United States from coast to coast. Weingarten\'s business activities encompass the long-term ownership management acquisition development and redevelopment of strategically located neighborhood and community shopping centers and select industrial properties. The vast majority of our shopping centers are anchored by either a supermarket or a national value-oriented retailer. These anchors combined with convenient locations attractive and well-maintained properties and a strong tenant mix help to ensure the long-term success of our merchants and the viability of our portfolio. The Company\'s portfolio of Thirf caproperties includes thirty neighborhood and community shopping centers and sixty four industrial properties aggregating fourty million square feet. Weingarten Realty Investors has a market cap of $2.1 billion; its shares were traded at around $17.56 with a P/E ratio of 5.9 and P/S ratio of 3.4. The dividend yield of Weingarten Realty Investors stocks is 5.7%. Weingarten Realty Investors had an annual average earning growth of 8.6% over the past 10 years. GuruFocus rated Weingarten Realty Investors the business predictability rank of 5-star. Highlight of Business Operations:Gross interest expense totaled $41.6 million in the second quarter of 2009, down $3.4 million or 7.6% from the second quarter of 2008. The decrease in gross interest expense was due primarily to the decrease in the weighted average debt outstanding from $3.1 billion in 2008 to $2.8 billion in 2009. Offsetting this decrease is an increase in the weighted average interest rate from 5.5% in 2008 to 5.8% in 2009. Capitalized interest decreased $2.1 million as a result of development completions and the cessation of carrying costs capitalization on several new development projects.
Total revenues were $295.4 million in the first six months of 2009 versus $303.0 million in the first six months of 2008, a decrease of $7.6 million or 2.5%. This decrease resulted from a decrease in net rental revenues of $8.9 million, which is offset by an increase in other income of $1.3 million.
This decrease resulted primarily from decreases in depreciation and amortization expense and general and administrative expenses of $4.2 million and $0.9 million, respectively. The decrease in depreciation and amortization resulted primarily from an acceleration of depreciation in the amount of $13.0 million for redevelopment activities in 2008, which is offset by the completions of our new developments and other capital activities in 2009. The decrease in general and administrative expenses resulted primarily from a reduction in our workforce. Offsetting this $5.1 million decrease is an increase in net ad valorem taxes of $2.1 million, which is associated with development completions, redevelopments and the cessation of carrying cost capitalization for land that is held for development. Overall, direct operating costs and expenses (operating and net ad valorem taxes) of operating our properties as a percentage of rental revenues were 30.8% and 29.4% in 2009 and 2008, respectively.
Gross interest expense totaled $83.4 million in the first six months of 2009, down $3.8 million or 4.4% from the first six months of 2008. The decrease in gross interest expense was due primarily to the decrease in the weighted average debt outstanding from $3.1 billion in 2008 to $3.0 billion in 2009 and the decrease in the weighted average interest rate of from 5.5% in 2008 to 5.4% in 2009. The decrease in over-market mortgage adjustment of acquired properties of $1.0 million resulted primarily from loan payoffs in 2008. Capitalized interest decreased $4.1 million as a result of development completions and the cessation of carrying costs capitalization on several new development properties.
The current credit market turmoil affected our ability to obtain additional capital; however, we have been able to complete some transactions and continue to pursue additional sources of capital. As described under Investing Activities and Financing Activities below, through July 31, 2009 we completed: 1) an offering for 32.2 million common shares with net proceeds totaling $439.1 million, 2) concurrent with the offering, we reduced our quarterly dividend rate per share from $.525 to $.25 which commenced with the second quarter 2009 distribution; 3) additional contributions of property to a joint venture that provided $20.6 million in cash; 4) dispositions including merchant development sales of $114.1 million; and 5) secured loans totaling $184 million. We currently have one transaction in the market to form a $175 million to $225 million retail joint venture; however, there is no assurance this transaction will be completed. Furthermore, we are currently planning to obtain an additional $190 million in secured debt, which is under review with various lenders, including a major life insurance company. There can be no assurance that we will obtain secured debt on terms acceptable to us. We presently have $46 million of dispositions under contract, one of which was deemed to be held for sale at June 30, 2009, and another $134 million under letters of intent. Additionally, we have more than $455 million of individual properties currently being marketed for sale. There can be no assurance that these transactions can be completed as planned.
Total debt outstanding was $2.7 billion at June 30, 2009. Total debt at June 30, 2009 included $2.6 billion of which interest rates are fixed and $68.4 million, including the effect of $50 million of interest rate swaps, that bears interest at variable rates. Additionally, debt totaling $1.1 billion was secured by operating properties while the remaining $1.5 billion was unsecured. At June 30, 2009, we had $52.3 million invested in overnight cash instruments.
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