WEINGARTEN REALTY INVESTORS
ANNOUNCES RECORD FOURTH QUARTER EARNINGS,
INCREASES DIVIDEND 6.4% AND
DECLARES A 3 FOR 2 COMMON SHARE SPLIT
Houston, Texas, February 23, 2004: Weingarten Realty Investors (NYSE:WRI)
announced today the results of its fourth quarter and year ended December 31,
2003. The highlights included:
(All per share amounts reflect the Company's 3 for 2 share split effective April
15, 2002, but not the share split occurring in 2004 discussed herein, unless
otherwise noted.)
- Rental revenues for the fourth quarter 2003 increased to $110.0
million as compared to $94.7 million for the same period of 2002, a
16.2% increase. For the year ended 2003, rental revenues increased to
$410.5 million as compared to $356.9 million for 2002, a 15.0%
increase;
- Funds from Operations (FFO) for the fourth quarter on a diluted basis
totaled $50.7 million, or $.91 per share, excluding a non-cash charge
of $2.7 million, or $.05 per share, for original issuance costs
related to the Company's Series B Cumulative Redeemable Preferred
Shares, which were redeemed during the quarter. This represents an
increase of 12.4%, or 8.3% on a per share basis, over FFO of $45.1
million, or $.84 per share, for the same period in 2002. For the year
ended December 31, 2003, Weingarten generated diluted FFO of $189.2
million, or $3.48 per share, excluding a non-recurring and non-cash
charge of $5.2 million, or $.10 per share, for original issuance costs
related to the Company's Series A and B Cumulative Redeemable
Preferred Shares. This compares to $174.0 million, or $3.26 per share,
of FFO in 2002, an increase of 8.7%, or 6.7% per share. Including the
$.10 non-cash charge, reported FFO was $3.38 per diluted share for the
year ending December 31, 2003;
- Diluted net income available to common shareholders for the fourth
quarter 2003 totaled $24.2 million, or $.43 per share, as compared to
$27.5 million, or $.51 per share, for the fourth quarter 2002. For the
year 2003, diluted net income available to common shareholders was
$100.9 million as compared to $114.5 million for 2002, or $1.86 per
share as compared to $2.15 per share for 2002. Net income available to
common shareholders during 2003 was also affected by the
non-recurring, non-cash 2003 charge of $5.2 million, or $.10 per
share, related to the original issuance costs associated with the
preferred shares as discussed above. In addition, net income for the
year 2002 benefited from gains of $19.7 million on the sale of
properties as compared to a smaller gain of $6.8 million in 2003;
- Acquisitions and new development projects in 2003 added 5.4 million
square feet to the portfolio, which, net of dispositions during the
year, brings the total portfolio to 43.1 million square feet. These
acquisitions and new developments represent a total investment of
$477.8 million during 2003;
- The Board of Trust Managers increased the cash dividend for 2004 to
$.6225 per common share, up from $.585 per common share paid in 2003,
a 6.4% increase. The dividend is payable on March 15, 2004 to
shareholders of record on March 5, 2004; and
- The Board of Trust Managers also declared a 3 for 2 common share split
effective in the form of a fifty percent common share dividend to
shareholders of record March 16, 2004, payable March 30, 2004.
In recapping the year 2003, Drew Alexander, President and Chief Executive
Officer, stated, "Through our successful execution of hands-on leasing and
management of our properties, and our disciplined growth through selective
acquisitions and new developments, we have once again increased our FFO as well
as our dividend payment to common shareholders, something we have accomplished
each of the 18 years since our initial public offering. Additionally,
Weingarten provided a total return for the year (share price appreciation and
dividends, assuming quarterly dividend reinvestment) of 27.2% for our
shareholders. This represents our second consecutive year of total returns in
excess of 20%. Moreover, throughout the 18 years we have been a publicly-traded
company, we have generated for our shareholders a compound total annual return
of 14.4%."
Alexander noted that the Company purchased 16 shopping centers and 5 industrial
properties during 2003, comprising 4.5 million square feet, and representing a
total investment of $413.8 million with a weighted average stabilized return of
8.3%. These purchases included six properties in Florida, four each in Georgia
and Texas, two in California, one each in Colorado, Illinois and North Carolina,
and two in the state of Utah, which the Company expanded successfully into in
the latter part of the year. Utah represents Weingarten's 19th state, and was a
logical expansion given the Company's geographic footprint in the southern part
of the United States from coast to coast.
With respect to new development, Weingarten completed twelve projects during
2003 totaling 1.1 million square feet, representing an investment of $151.1
million. These properties are 97.5% leased and have a stabilized return of over
10%. Weingarten currently has 13 shopping centers in various stages of
development. These projects will add 944,000 square feet to the portfolio with
a total investment upon completion of $129.0 million, and are 83.8% leased. The
developments are located in Nevada, Arizona, Utah, Colorado, Texas and
Louisiana, and the Company anticipates that the majority of them will come
on-line during 2004.
Continuing its strategy of selling assets that no longer meet its ownership
criteria, the Company disposed of eight properties during the year. These
property sales represented a total of 404,000 square feet and provided proceeds
of $17.9 million, generating a gain of $6.5 million.
Alexander commented, "Weingarten's portfolio of neighborhood and community
shopping centers remains extremely stable primarily due to the nature of our
retailers which provide basic, everyday consumer necessities. In fact, the vast
majority of our shopping centers are anchored by either a supermarket or a
national discount department store such as Wal-Mart or Target. Combined with
convenient locations, attractive and well-maintained properties, high quality
retailers and a strong tenant mix, this ensures the long-term success of our
merchants and the viability of our portfolio."
Alexander noted that the Company's occupancy levels have remained above 90% for
the 54 years it has been in business, and with current levels of leasing
activity and other factors, management anticipates the upward trend in occupancy
to continue throughout 2004. Occupancy in the portfolio increased as compared
to prior periods as follows:
Property Type December 31, 2003 September 30, 2003 December 31, 2002
- ---------------- ------------------ ------------------- ------------------
Shopping Centers 93.5% 93.1% 92.5%
- ---------------- ------------------ ------------------- ------------------
Industrial 92.4% 91.0% 88.7%
- ---------------- ------------------ ------------------- ------------------
Total 93.3% 92.6% 91.7%
- ---------------- ------------------ ------------------- ------------------
The Company reported the completion of 1,215 new leases or renewals for the year
totaling 6.7 million square feet. According to Mr. Alexander, the Company
enjoyed outstanding leasing activity in 2003, increasing rental rates an average
of 9.2% on a same space basis. Net of capital costs, the average increase in
rental rates was 5.1%.
Alexander further reported that the Company was extremely active in the
financing arena during the year. On May 5, 2003, Weingarten redeemed its $75
million 7.44% Series A Cumulative Redeemable Preferred Shares. The redemption
of these shares was financed by the issuance of three million depositary shares
representing $75 million of 6.75% Series D Cumulative Redeemable Preferred
Shares. The net effect of these preferred share transactions will be a savings
to the Company and its shareholders of over $500,000 annually.
On October 9, 2003, Weingarten sold 1,150,000 common shares of beneficial
interest at $45.50 with net proceeds from the offering of $50.9 million, and on
November 19, 2003, an additional 1,000,000 common shares were sold at $45.70
with net proceeds of $44.5 million. The proceeds from these offerings were used
primarily to redeem the Company's 7.125% Series B Cumulative Redeemable
Preferred Shares. This redemption was completed on December 19, 2003.
On several occasions throughout the year, the Company issued medium term notes
in order to take advantage of the continued low interest rate environment. The
result was the issuance of $211 million of medium term notes with a weighted
average maturity of 10.7 years and a weighted average interest rate of 5.2%.
Net proceeds from these transactions were used to pay down similar amounts
outstanding under the Company's revolving credit facility, where the interest
rate averaged 2.3% during 2003. Locking in these attractive long-term rates
also reduced Weingarten's exposure to floating-rate debt to 19.7% of total debt
as of December 31, 2003. Alexander noted that these transactions have a
short-term negative impact on Weingarten's cost of debt, but that this
disciplined strategy is deemed prudent as insurance against rising interest
costs and provides an all-important matching of long-term liabilities with the
significant amount of long-term assets purchased during the year.
Alexander commented, "All of the aforementioned financing transactions were
executed in accordance with our strategy of maintaining a strong, conservative
capital structure which provides constant access to a variety of capital
sources. The strength of our balance sheet is further evidenced by our debt
ratings of "A" by Standard and Poor's and "A3" by Moody's rating services, the
highest combined ratings of any public REIT."
In addition to the 3 for 2 common share split discussed above, Weingarten's
quarterly cash dividend on its common shares of beneficial interest increased by
6.4%, or $.0375 per share (pre-2004 split), to $.6225 per share from $.585 per
share. This represents a $2.49 annualized dividend, which converts, post-2004
split, to $1.66 per share annual dividend, or $.415 per share quarterly. The
common dividend payments made in 2003 represented a 69% payout of FFO.
Including the preferred dividends paid, the Company retained over $40 million to
reinvest toward future growth through its acquisition and new development
programs.
The Board of Trust Managers declared dividends on the Company's two series of
preferred shares. The 7.0% Series C Cumulative Redeemable Preferred Shares
(NYSE:WRIPrC) dividend of $.875 per share, and the depositary shares of 6.75%
Series D Cumulative Redeemable Preferred Shares (NYSE: WRIPrD) dividend of
$.4219 per share, are both payable on March 15, 2004 to shareholders of record
on March 5, 2004.
Mr. Alexander concluded by saying, "2004 is already shaping up to be another
outstanding year for Weingarten Realty Investors. We have already closed three
acquisitions totaling 389,500 square feet with a total investment of $71.5
million, and our acquisitions program remains strong with numerous outstanding
properties totaling almost $300 million in our pipeline. Of course, each of
these potential acquisitions is still subject to our stringent due diligence
process and, therefore, there is no assurance that we will close on all of these
opportunities. So far in 2004, we have issued $150 million of medium term notes
with 10-year maturities and a weighted average interest rate of 5.1%. This has
further reduced our variable-rate debt to 12.9% of total debt. Among our goals
for 2004 are the investment of approximately $400 million through our
acquisitions program and the investment of between $50 and $75 million for new
development properties. We are cautiously optimistic that, through these
efforts, as well as the growth of our existing portfolio through increased
occupancy and rental rates, we will produce FFO of $3.71 - $3.77 (pre-2004
split) per diluted share, or $2.47 - $2.51 on a post-split basis, during 2004."
The Company announced that it will host a live webcast of its quarterly
conference on Monday, February 23, 2004 at 10:00 AM Central Time. A replay of
the call will be available for 24 hours following the live call, and can be
heard by dialing (877) 519-4471, reservation #4224372. The webcast can also be
accessed via the Company's website at www.weingarten.com, and will be archived
------------------
there for approximately 90 days.
Weingarten Realty Investors is a Houston, Texas based real estate investment
trust with 330 income-producing and new development properties in 19 states that
span the southern half of the United States from coast to coast. Included in
the portfolio are 269 neighborhood and community shopping centers and 61
industrial properties aggregating 43.5 million square feet. The Company's
common shares are listed on the New York Stock Exchange, trading under the
symbol "WRI".
#
Please visit Weingarten's web site at www.weingarten.com
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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.
FINANCIAL STATEMENTS
WEINGARTEN REALTY INVESTORS
(in thousands, except per share amounts)
Three Months Ended Twelve Months Ended
STATEMENTS OF CONSOLIDATED INCOME AND December 31, December 31,
FUNDS FROM OPERATIONS 2003 2002 2003 2002
(Unaudited) (Unaudited)
---------------------- ----------------------
Rental Income. . . . . . . . . . . . . . . . . . . . . . . . . $ 109,967 $ 94,669 $ 410,490 $ 356,887
Interest Income. . . . . . . . . . . . . . . . . . . . . . . . 311 353 1,594 1,054
Other Income . . . . . . . . . . . . . . . . . . . . . . . . . 1,320 1,098 7,076 5,146
---------- ---------- ---------- ----------
Total Revenues. . . . . . . . . . . . . . . . . . . 111,598 96,120 419,160 363,087
---------- ---------- ---------- ----------
Depreciation and Amortization. . . . . . . . . . . . . . . . . 27,302 22,076 94,108 77,822
Interest Expense . . . . . . . . . . . . . . . . . . . . . . . 26,176 17,273 88,871 65,863
Operating Expense. . . . . . . . . . . . . . . . . . . . . . . 18,144 14,924 65,022 55,232
Ad Valorem Taxes . . . . . . . . . . . . . . . . . . . . . . . 12,158 11,503 47,553 44,076
General and Administrative Expense . . . . . . . . . . . . . . 3,694 2,498 13,820 11,148
Loss on Early Redemption of Preferred Shares . . . . . . . . . 2,739 2,739
---------- ---------- ---------- ----------
Total Expenses. . . . . . . . . . . . . . . . . . . 90,213 68,274 312,113 254,141
---------- ---------- ---------- ----------
Operating Income . . . . . . . . . . . . . . . . . . . . . . . 21,385 27,846 107,047 108,946
Equity in Earnings of Joint Ventures . . . . . . . . . . . . . 1,222 1,015 4,743 4,043
Income Allocated to Minority Interests . . . . . . . . . . . . (400) (1,916) (2,723) (3,553)
Gain on Sale of Properties . . . . . . . . . . . . . . . . . . 714 188 714 188
---------- ---------- ---------- ----------
Income Before Discontinued Operations. . . . . . . . . . . . . 22,921 27,133 109,781 109,624
---------- ---------- ---------- ----------
Operating Income From Discontinued Operations. . . . . . . . . 4 244 460 2,771
Gain on Sale of Properties . . . . . . . . . . . . . . . . . . 1,811 4,314 6,039 19,472
---------- ---------- ---------- ----------
Income from Discontinued Operations . . . . . . . . 1,815 4,558 6,499 22,243
---------- ---------- ---------- ----------
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . 24,736 31,691 116,280 131,867
Less: Preferred Dividends . . . . . . . . . . . . . . . . . . 1,266 4,939 15,912 19,756
Original Issuance Costs associated with Redeemed
Series A Preferred Shares . . . . . . . . . . . . . . 2,488
---------- ---------- ---------- ----------
Net Income Available to Common Shareholders--Basic . . . . . . $ 23,470 $ 26,752 $ 97,880 $ 112,111
========== ========== ========== ==========
Net Income Per Common Share--Basic . . . . . . . . . . . . . . $ 0.44 $ 0.51 $ 1.86 $ 2.16
========== ========== ========== ==========
Net Income Available to Common Shareholders--Diluted . . . . . $ 24,163 $ 27,500 $ 100,920 $ 114,499
========== ========== ========== ==========
Net Income Per Common Share--Diluted . . . . . . . . . . . . . $ 0.43 $ 0.51 $ 1.86 $ 2.15
========== ========== ========== ==========
Funds from Operations:
Net Income Available to Common Shareholders. . . . . . . . . . $ 23,470 $ 26,752 $ 97,880 $ 112,111
Depreciation and Amortization. . . . . . . . . . . . . . . . . 25,395 19,949 86,913 74,870
Depreciation and Amortization of Unconsolidated Joint Ventures 583 491 1,940 1,985
Gain on Sale of Properties . . . . . . . . . . . . . . . . . . (2,527) (3,456) (6,765) (18,614)
Gain on Sale of Properties of Unconsolidated Joint Ventures. . (508)
---------- ---------- ---------- ----------
Funds from Operations--Basic . . . . . . . . . . . . . . . . . $ 46,921 $ 43,736 $ 179,460 $ 170,352
========== ========== ========== ==========
Funds from Operations Per Common Share--Basic. . . . . . . . . $ 0.87 $ 0.84 $ 3.42 $ 3.28
========== ========== ========== ==========
Funds from Operations--Diluted . . . . . . . . . . . . . . . . $ 47,914 $ 45,092 $ 184,014 $ 173,996
========== ========== ========== ==========
Funds from Operations Per Common Share--Diluted. . . . . . . . $ 0.86 $ 0.84 $ 3.38 $ 3.26
========== ========== ========== ==========
Weighted Average Shares Outstanding--Basic . . . . . . . . . . 53,740 52,034 52,534 51,911
========== ========== ========== ==========
Weighted Average Shares Outstanding--Diluted . . . . . . . . . 55,550 53,890 54,383 53,360
========== ========== ========== ==========
December 31, December 31,
2003 2002
CONSOLIDATED BALANCE SHEETS (Unaudited) (Audited)
------------- -------------
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,200,091 $ 2,695,286
Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . (527,375) (460,832)
Investment in Real Estate Joint Ventures . . . . . . . . . . . . 32,742 28,738
Notes Receivable . . . . . . . . . . . . . . . . . . . . . . . . 36,825 14,747
Unamortized Debt and Lease Costs . . . . . . . . . . . . . . . . 70,895 48,377
Accrued Rent and Accounts Receivable, net. . . . . . . . . . . . 43,368 38,156
Cash and Cash Equivalents. . . . . . . . . . . . . . . . . . . . 20,255 27,420
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 46,993 31,997
------------- -------------
Total Assets . . . . . . . . . . . . . . . $ 2,923,794 $ 2,423,889
============= =============
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,810,706 $ 1,330,369
Preferred Shares Subject to Mandatory Redemption . . . . . . . . 109,364
Accounts Payable and Accrued Expenses. . . . . . . . . . . . . . 79,686 81,488
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,671 23,636
------------- -------------
Total Liabilities. . . . . . . . . . . . . . . . . . 2,052,427 1,435,493
------------- -------------
Minority Interest. . . . . . . . . . . . . . . . . . . . . . . . 49,804 54,983
------------- -------------
Preferred Shares of Beneficial Interest. . . . . . . . . . . . . 90 263
Common Shares of Beneficial Interest . . . . . . . . . . . . . . 1,632 1,559
Capital Surplus. . . . . . . . . . . . . . . . . . . . . . . . . 993,570 1,082,046
Accumulated Dividends in Excess of Net Income. . . . . . . . . . (173,378) (147,853)
Accumulated Other Comprehensive Loss . . . . . . . . . . . . . . (351) (2,602)
------------- -------------
Total Shareholders' Equity . . . . . . . . . . . . . 821,563 933,413
------------- -------------
Total Liabilities and Shareholders' Equity $ 2,923,794 $ 2,423,889
============= =============