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Weingarten Realty Investors Reports Operating Results (10-Q)

November 06, 2009 | About:
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10qk

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Weingarten Realty Investors (WRI) filed Quarterly Report for the period ended 2009-09-30.

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 $2.22 billion; its shares were traded at around $18.55 with a P/E ratio of 6.1 and P/S ratio of 3.7. The dividend yield of Weingarten Realty Investors stocks is 5.4%. 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 $38.3 million in the third quarter of 2009, down $6.8 million or 15.1% from the third quarter of 2008. The decrease in gross interest expense was due primarily to the reduction in the average debt outstanding, relating to the retirement of the convertible notes and other unsecured debt. For the third quarter of 2009, the weighted average debt outstanding was $2.8 billion at a weighted average interest rate of 5.4% as compared to $3.2 billion outstanding at a weighted average interest rate of 5.4% in 2008. The decrease of $1.6 million in the amortization of convertible bond discount relates to the retirement of the convertible notes, and capitalized interest decreased $3.8 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 revenues were $434.4 million in the first nine months of 2009 versus $451.6 million in the first nine months of 2008, a decrease of $17.2 million or 3.8%. This decrease resulted from a decrease in net rental revenues of $19.2 million, which is offset by an increase in other income of $2.0 million.

Total expenses in the first nine months of 2009 were $295.8 million versus $266.8 million in the first nine months of 2008, an increase of $29.0 million or 10.9%. This increase resulted primarily from the impairment loss of $32.8 million associated with certain new development properties based on current economic conditions, changes in our new development business plans, the suspension in tenant expansion plans and declines in real estate values. Offsetting this increase of $32.8 million is a decrease in depreciation and amortization expense of $2.4 million, which 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. Overall, direct operating costs and expenses (operating and net ad valorem taxes) of operating our properties as a percentage of rental revenues were 31.0% and 29.9% in 2009 and 2008, respectively.

Gross interest expense totaled $121.4 million in the first nine months of 2009, down $10.7 million or 8.1% from the first nine months of 2008. The decrease in gross interest expense was due primarily to the reduction in the average debt outstanding, relating to the retirement of the convertible notes and other unsecured debt. For the first nine months of 2009, the weighted average debt outstanding was $2.9 billion at a weighted average interest rate of 5.4% as compared to $3.2 billion outstanding at a weighted average interest rate of 5.5% in 2008. The decrease of $2.0 million in the amortization of convertible bond discount relates to the retirement of the convertible notes, and capitalized interest decreased $7.9 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 credit market turmoil affected our ability to obtain additional capital earlier in the year; however, we have been able to complete transactions thereby significantly improving our overall liquidity. As described under Investing Activities and Financing Activities below, through October 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) contributions of property to two joint ventures that provided $106.5 million in cash; 4) dispositions including merchant development sales of $176.4 million; and 5) secured and unsecured loans totaling $267.6 million and $100.0 million, respectively. We currently plan on obtaining additional secured debt in the retail joint venture we closed subsequent to quarter end. If investment opportunities present themselves, we may consider adding some additional debt as long as we maintain acceptable overall levels of leverage. There can be no assurance that we will obtain debt on terms acceptable to us. We presently have $82.8 million of dispositions under contract or under letters of intent, $50.5 million of which was deemed to be held for sale at September 30, 2009. Additionally, we have more than $90 million of individual properties currently being marketed for sale. There can be no assurance that these transactions can be completed as planned.

We have repositioned our future debt maturities to manageable levels. During the second quarter of 2009, we repurchased $82.3 million principal amount of our 3.95% convertible senior unsecured notes. In addition, we issued a tender offer for up to $427.9 million aggregate principal amount of a series of unsecured notes and our 3.95% convertible senior unsecured notes. As a result of the tender offer, we repurchased $102.9 million principal amount of our unsecured notes and $319.7 million principal amount of our 3.95% convertible senior unsecured notes. These transactions were primarily funded with excess cash from our April 2009 equity issuance and our $575 million revolving credit facility.

Read the The complete ReportWRI is in the portfolios of Kenneth Fisher of Fisher Asset Management, LLC.

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