WEINGARTEN REALTY INVESTORS Weingarten Realty Investors (NYSE: WRI) announced today the transactions for the fourth quarter and full year that resulted in the early completion of the strategic portfolio transformation it presented in April 2011. The Company also increased 2014 Recurring Funds from Operations (“FFO”) guidance and introduced 2015 earnings guidance.
Transformational Activity
Weingarten Realty is pleased to announce the acquisition of Scottsdale Horizon located in North Scottsdale, Arizona for $43.8 million. This asset is anchored by Safeway and CVS Pharmacy and is located in an exceptional trade area that boasts average household incomes in excess of $120,000 and a highly educated population base with 65% of adult residents having a college degree. The 155,000 square foot shopping center is 94% leased. With this acquisition, Weingarten Realty currently owns 16 shopping centers in the greater Phoenix area totaling 1.5 million square feet.
“Scottsdale Horizon is a great addition to our Phoenix portfolio,” said Johnny Hendrix, Executive Vice President and Chief Operating Officer. “It is strategically located in close proximity to the Scottsdale Airpark, which is Arizona’s second largest employment center and home to several regional and national headquarters. It also serves the affluent superzip of the McDowell Mountain Ranch community.”
During the fourth quarter, the Company sold 14 non-core properties and four land parcels for gross proceeds of $166.4 million. The sold properties had demographics below WRI’s portfolio averages, including an average population of 73,000 compared to WRI’s current average of 109,000 and household incomes of $72,000 which is 15% below WRI’s current average.
For the full year of 2014, the Company sold 31 properties and 11 land parcels for $387.4 million of gross proceeds. The 31 shopping centers included ten non-anchored properties, five independent supermarkets, and two shadow-anchored projects.
Subsequent to year-end, the Company also sold Markham Square in Little Rock, Arkansas and Southgate Shopping Center in Lake Charles, Louisiana for a combined $25.1 million. Markham Square is anchored by Burlington Coat Factory and Southgate is anchored by Market Basket.
“The purpose of the transformation was to significantly improve the quality of our portfolio to ensure solid growth in net operating income. We accomplished this by the disposition of non-core properties and the reinvestment of the proceeds into high-quality shopping centers in targeted markets supported by much stronger demographics,” said Drew Alexander, President and Chief Executive Officer. “With approximately $413 million of dispositions since January of 2014, we are pleased to conclude, over a year ahead of time, the plan we announced in April of 2011. Since inception, the $1.5 billion of disposition proceeds were reinvested into $522 million of high-quality acquisitions and $182 million of new development projects primarily in infill locations. The success of the program resulted in an increase in average base rent per square foot of the entire portfolio by nearly 20% during this period. Although the transformation of the portfolio has been dilutive to FFO in the short term, it positions us for much stronger growth going forward. Additionally, we have significantly strengthened our balance sheet which positions us to take advantage of future growth opportunities.”
Guidance
The Company is increasing its 2014 full-year recurring FFO guidance from a range of $2.01 to $2.03 per diluted share to a range of $2.04 to $2.06 per diluted share. The increase is primarily due to timing of fourth quarter dispositions, stronger than expected operating results primarily from unanticipated bad debt and litigation recoveries and positive results from its insurance captive. It is estimated that between $0.01 and $0.02 per share for the quarter is not expected to recur going forward.
The Company is introducing 2015 guidance as follows:
Initial Full-Year 2015 Guidance | ||||
| Recurring Funds from Operations per diluted share | $2.12 - $2.17 | |||
| Same Property NOI increase | 2.5% - 3.5% | |||
| Dispositions ($000s) | $125,000 - $175,000 | |||
| Acquisitions ($000s) | $200,000 - $250,000 | |||
| New Development investment ($000s) | $50,000 - $100,000 | |||
“While 2015 FFO will be reduced by $0.16 per share from the dilutive effect of the 2014 dispositions, we will still produce solid year-over-year FFO growth, highlighting the improved quality of our transformed portfolio. Additionally, income from our existing new developments will contribute $0.06 per share of NOI in 2015. Recurring FFO will be in the range of $2.12 to $2.17 per share in 2015,” said Steve Richter, Executive Vice President and Chief Financial Officer. “With the transformation complete, we are now focused on growing NAV through accretive acquisitions, redevelopments and the efforts of our new development team. Our greatly enhanced balance sheet provides us the capacity to invest a considerable amount of capital while still maintaining credit metrics that will rank among the top of our peer group. Continued growth in rental rates and occupancy will fuel solid Same Property NOI and we will further enhance the value of our existing portfolio through select redevelopment projects.”
About Weingarten Realty Investors
Weingarten Realty Investors (NYSE: WRI) is a shopping center owner, manager and developer. At December 31, 2014, the Company owned or operated under long-term leases, either directly or through its interest in real estate joint ventures or partnerships, a total of 237 properties which are located in 21 states spanning the country from coast to coast. These properties represent approximately 45.3 million square feet of which our interests in these properties aggregated approximately 27.8 million square feet of leasable area. To learn more about the Company’s operations and growth strategies, please visit 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.
