WRI - Earnings call transcript Q3 2018 | Weingarten Realty Investors

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Operator

Good morning and welcome to the Weingarten Realty Inc.

Third Quarter 2018 Earnings Call for October 25, 2018. My name is Brandon, and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later we will conduct the question-and-answer session. this being note Please Instructions] conference recorded. is [Operator over Wiggs. I'll now Michelle it turn And to may you Michelle, begin.

Michelle Wiggs

and quarter XXXX morning, conference Good welcome call. to our third

Johnny CAO. and today Executive and Vice Joe me is Vice Alexander, CFO; and Joining President Senior and Drew President and Vice Steve COO; CEO; President Shafer, Richter, Executive President Hendrix,

results. in investors during management's funds Securities and Also, of Reconciliation are within the on meaning such As to a about which help during expectations results uncertainty variety and could located contained differ Relations Drew made call changes is measures to reference information are call, statements both make Investor available under operating forward-looking I Company's in the statements current core factors Act. these these circumstances. materially the information course Actual from statements statements the those tab the subject such More FFO, filings. and measures forward-looking our Private over may better in Litigation this are a to non-GAAP believe NAREIT, supplemental in Web to now financial turn certain package due site. is reminder management of Alexander. certain factors. of to from SEC we Reform will the projected non-GAAP our These this call understand and of or Weingarten's operations as to financial analysts based

Drew Alexander

announce you good joining Thank quarter. and you, us. I'm all Michelle, another pleased to to for thanks of

of a we which our testimony quality continue the While to the produce is challenges retail portfolio. results, market to has strong

and selling services. goods and centers of with resiliency Additionally, these basic the results neighborhood merchants grocers and show community

about our we this stronger, results the with program, the good diversification tenant continue our bottom produce and our gets our segment of best the continue quarter portfolio we we disposition As in coupled announced remaining future. portfolio to just solid pair through to feel performance our the of

As to portion believe of our follow especially at we successful range level $XXX strategy near can continue at when value right the that XXXX we're signals. a our property the transactions is million. bottom allocation, where of increasing or disposing we been market in the at asset discount to net closing in our to our to stock capital portfolio We assets disposition looking We've guidance and current a million NAV. significant of selling pipeline, is our $XXX sell to

During the of $XX million we the of $XXX and XXXX. million dispositions closed quarter nine months for first

XXXX multiple The scheduled working to that have produce FFO. shortly. and are increase deals will We a close for several in disposition headwind activity XXXX

dispositions will be to in XXXX to opportunistic the and market. to continue As we respond

We've and tertiary repositioning However, which bottom significant creating centers. and exited secondary lot significant third many of our activity. we our the the reduce portfolio. with slide of many to eliminated expect of quantifies significantly shared transformation roadshow the sold we've low scores where in TAP demographics disposition properties you with the of benefits We much of our We've value reduced for to sold we've numerous are our markets. better portfolio watchlist and a tenants. to our lowered of the We've assets last we've exposure multiple seven In exposure dramatically shareholders. property our states so the power years in significantly the

many So this positives there are strategy. to

continue proceeds, we use to the to pursue of actively As acquisitions.

market us amount forward to to balance We're made advantage our the repurchase and of at take it immense sheet. which sense development redevelopment product new our while of dividend going opportunities and strong difficult proceeds of chasing ability common give produces. this that capital large us end. solidly the for and has shares debt fund projects, special reasonably a positioned year maintaining However, there to fund competition the Disposition very remains quality make an pricing

our and new Whitaker nicely Driscoll growth. are actively River are our about will forward track. on West and Oaks, Arlington this Our work, shopping high The progressing the We're at at we're future which moving Alex, provide developments prominent quite XX-story construction. Central rise earnings River Oaks live, under transforming center is asset Houston to in excited play. and redevelopments nicely here also

future to to new As with being continue profile. on developments, projects are risk we but work cautious our very

adjusted produce very Steve, program financials. redevelopment Our the A generally over continues solid to returns strong quarter. risk XX%.

Steve Richter

was XXXX as compared the same higher morning, $X.XX share rent from increased Drew. and per cash. debt the interest income to for share FFO of Good invested ended for September the everyone. XXXX quarter the recoveries Thanks, quarter Core $X.XX from FFO benefited excess year. base bad Core XX, for per well prior as

income We also mark in of over we insurance held investments. Due implementation to investments accounting in pronouncement from new XXXX. investment captive where to a to those our $XXX,XXX by recognized market have the

see could you markets fluctuations here down forward, Going and as change. both up the

of outstanding disposition debt Additionally, proceeds. due interest reduction the lower with was expense to

reduced requires assumptions than dispositions proceeds is of in reconciliation FFO. about press on by dispositions. income were operating is quarter. increases some by estimate net earnings share FFO metric these offset These A This per but reasonable dispositions received, to the FFO our a the However, more on for to included regarding reduced $X.XX from income the the impact release. of core the

and XXXX. to debt million. nothing in we outstanding net had balance X.Xx is million our strong our no end, cash debt and XX.XX% the at excess At market to was Also capitalization sheet revolver EBITDA was sector. $XXX strongest quarter a totaling quarter have total maturities with Our end, only under among until $XX significant

metrics credit to Our great liquidity arise. flexibility strong pursue that provide significant opportunities and

share guidance, $X.XX a we NAREIT $X.XX $X.XX income to to reins $X.XX on and FFO to per the range a net of tightening are to share. earnings to As

XX guidance core Johnny? to changes of are full-year including details All are of million We we our the guidance the the as our mentioned our to FFO for in primarily the per success disposition Page $XXX also range of supplemental. of All to tightening XXXX. disposition share. of these driven $X.XX $X.XX million earlier by to increasing our on included a range $XXX are program

Johnny Hendrix

ended generated lease pleased the we're properties quarter Steve, minimum with Same the X.X% up NOI X.X% XX.X%, base same rent modest. in rent Thanks, fallout the at Occupancy increased Tenant increased with results those new for XX%. quarter. redevelopment quarter. was property with almost this we

addition, redevelopment program strong In our continues to produce risk-adjusted returns.

strong tenants to to sales attract Our and centers. of our continue to continue generate same-store customers millions

Since strong. Our retailers file as have represents three base top has difficulty] had Whole very last than we call, portfolio rent. Drew? five Foods, experienced and are our [technical annual tenants, months. diversification trouble noteworthy in other in Ross tenant HEB of some be Kroger, X.XX% our more important tenants This TJX to percent. proven No our recent

Drew Alexander

Thanks, Johnny.

focused that Our the shareholders goal. company to job maximize long-term on is to the our we position remain and for value

strong Our earnings same property some NOI. over XXXX last has years the pressure, but a made several for difficulty] dispositions good [technical create portfolio

sheets [technical difficulty]. to continues strong Our improve balance

Unidentified Analyst

target your as to leverage what's [technical powder -- level use difficulty]? dry look you

Drew Alexander

really foot in feet of opened going we're space Gulf Where the we the commencing going that Coast balance of through to that got be of increase Sprouts morning, already of XXX,XXX is quarter square to with quarter. square the commenced some that some commenced XX,XXX we've October. -- yesterday Hospital we've next And

But we to So the a expecting the lot built number. to that are already in acceleration yes, of in fourth accelerate is quarter.

Unidentified Analyst

currently you and type taxable income about different follow-up question, Okay, payout? AFFO disbursed thanks. percent that are but how being of of what is dividend And on, via payments, long-term thinking here

Drew Alexander

next our if that a going not we Greg, dividend but would your dispositions understand And of tell have obviously I you, 'XX. are well, year, I'm we're out sure as paying into I forward where I question, XXX% drive taxable would special probably that follow a we XXX% income. for obviously as

Unidentified Analyst

payout just I'm had, tax of changed increases? significant and dispositions that so or dividend it's any curious if [indiscernible] pressure the level how with Okay, kind whether not your on of creating your you've

Drew Alexander

kind we talk No, -- because it's borrow and but income simple are future from gains again, of pay gains normal being we we two. the offline, had taxable covered can but you forth. that, generated special some between said excess the year the The covered it's, dividend, the money quite year's current some we dividend. that and being the that can so have the to Having is the not of bifurcate that dividend. dispositions through by And

a So there's But line we're out bottom paying taxable is there. our of income. complication XXX% in a little

Unidentified Analyst

And then ratio? how are you payout thinking about long-term the AFFO

Drew Alexander

exactly -- not sure I'm

Unidentified Analyst

dividend. regular the On

Drew Alexander

been have gains same used the dividend obviously increase driven to the regular changing generally -- that level And in that off has really on consistent. don't policy the earnings We regular I the increase special remained on has being been FFO, is sales. dividend around of The that the side. or regular so generate dividend in the see we the

Unidentified Analyst

it. Appreciate much. very you Thank Right.

Operator

Please From go JPMorgan, we Mike ahead. Mueller. have

Mike Mueller

have scenario a reevaluate be lower I'm next cause curious. be them dispositions I factors and year could what mean that Yes, some this than not would year? you just significantly or

Drew Alexander

Morning, Mike. Drew.

take will think map, profile. that looked that continuing we'll significantly And with to be the power think selling be lower much. at the as and I reduced you is all this down I hone weak I I comfortable risk centers. the the that at As We've criteria we said, because power we're And supermarket-anchored very comes very improving terms stores year. feel of the tenant, through things I exposure in we a improving There strong as quote to we've look off not comfortable went as effectively tap can therefore of decreasing just it's know, things. to But selling. they if But the year are center, demographic also some table. it

And the of been we in that and as very we've of remarks. we've a to tenant to weak a Johnny sell able to his in have base, selective lot diversified also is a tenants lease of lot concern. advance touched We prepared because on the who been

it a question. that time will look will we a answers it'll your we've last because less things, the around so opportunistic. the over number improved I I comfortable that because be several lot hopefully at am this at much put years. portfolio be can't we So But

Mike Mueller

it. Got

it's where be step sell, and do sounds going like pricing just it a you like richer attractive even environment up if or case to can, because gets --? So to the it still sounds is it to you're going not

Drew Alexander

the extent. That's widen, to what markets an public think shareholders. be responsibility do long-term To between we'll to is thing the private by for were gap opportunistic and markets that I I our right mean if

certainly opportunistic, number. a about talk specific that I when factors So into

private think for I'm to stock if I still I NAV do one. and is the a shareholders significantly ever-increasing right less. say to I of which thing think less, decent an where long-term, discount it'll strong, at So the when as it But is, reasonably continue opportunistic, it's markets the be

Mike Mueller

got course, it. Of

you. thank Okay,

Operator

Advisors, And ahead. Vince Instructions] from have we Street [Operator Green go Please Tibone.

Vince Tibone

retailers big-box space. market are translating discussions if how the you for rank growth renewal of to rates sales limiting bankruptcies some curious of going Good are know kind discuss are of morning. Can or anchored these many potential. better solid growth into and vacancy I'm rank any results just elevated

Drew Alexander

you. comes Hey, rent It's question are a to is a Vice, complicated current specific down what really it the all space because property. the in on how

between is like and embedded on it the it what think the in space the I leverage landlord is which and depends negotiating your question really tenant, is. again

felt tenant lease had where negotiation we reducing we've a tenant. And we have cases have in ways properties. where are sales, great of is parting where We we replace holding anchored there on we really like up ever case. had feel was it's some some don't the of can And amount and strong -- properties like those. we are with a and the in tenant brinkmanship. And some had really think the We rent renewals. those lot discussion rent who's There with the we've some growth instances is in instances coming great the best

leverage I there And So years anchored of look tenant the at three think seen is I today, is two rent think more if clearly you little slowing there spaces part for that bit leverage than the what was we've the on or on the a in ago. growth.

cases. really And leasing, the leverage On I in has the of growth. that, we're shop space good think the landlord rent getting of those many side other the

property that is $XX that at rent coming that minimum feet look XXX,XXX you for the online, square square foot. If I of have a over

around So great a $XX. company, the I number the at think you when look average that's rent of

So situation. a think that. a I positive being sign. we're it always up that's very And ends case-by-case improving But

Vince Tibone

volume One color. can me, funding bit the you year, to next talk be around little given is about the lower. more really developments for That's particularly disposition plan the expected a just helpful for much

Steve Richter

Vince. This is Good Steve. morning,

dividend position. quarter excess that I we the think, cash we of remarks, up with where We mentioned as in an clearly, in at I wind we're dispositions the sitting end, have of year. will obviously special end prepared as the fund

on plus we you excess would source revolver. And would Going from I may funds, cash forward, the tell the of outstanding primary in be that we dispositions. nothing have have whatever

Vince Tibone

next Are how sense. the you or think much you makes providing year projects? development That redevelopment you'll on big spend

Drew Alexander

right. go is Oaks year. it a memory as two big a guidance We we a where here million-XX at have where those the look we Driscoll, are developments River of bit I ramp, QX will three And but million think it going we spending not quarter given -- my -- kind XX we are have, Houston, are crank up, yet, in little the in XXXX in begin will today, next that step-up million as $XX bit we little to you DC the if will about up if and are we

Vince Tibone

have. helpful. That's I That's all Okay.

Operator

Chris [Operator Instructions] ahead. Please Securities Lucas. have From go we Capital One

Chris Lucas

wanted West all timing when will accrue Alex bit Central, there a everybody. those, the morning, expenses? for apartments for will the I Good when see are start about each to for just is will what's when and be little the completed to you timing capitalization for then and what -- the chat

Drew Alexander

it's Chris, Hey, morning, Drew. good

is fluid As at this there we and we about, a that actually accelerate optimistic you are point, remains good could talked things. chance that

bulk to looking we to and when we stabilize. of field have to and the So that in with to are are the feel the I will generally done something working met should will team sooner, get chance [indiscernible] accelerate we at on is come XXXX you've the out We some and into know speaking, project that. start things

Steve Richter

see Chris, as interest in capitalization. on the follow-up we commencing of this the is terms Steve. To cap issue, comes -- rank online

one all at a So it's on over it's time. pro-rata not time, It's basis.

Chris Lucas

Okay, great.

expect assets? to don't for you 'XX transition drag of the So any these

Steve Richter

it will I in correct. mean capitalized That's 'XX. be

Chris Lucas

it as guess XXX your then And maybe disposition capital the relates the on the fully-funded next to special dividend proceeds laid other to look Is what's as it for there of and million what you just pipeline, -- as modest roughly. relates of mortgage maturity the uses feels I as year? well of debt going out maturities at -- if pipeline sort for beyond it numbers, kind Okay. forward, to year any the out for and is use needed there you get year like spend next of next opportunities currently for

Drew Alexander

capital lot multi-year enjoy trigger will the but be and early on add multi, nothing you there, -- as that that mentioned things have and deals, next there things can will mine, No, would we that's big I that you is be remarks good a different of on upside know, me would Constantly huge are scenarios in there in a say There lot know, redevelopment his that's deals working that few development compelling, generally number of think see working are country project Johnny we value. a nice risk redevelopment and is a Palms we certainly of award. effort, have that we a both but a year. and nothing acquisitions

a So some know, nothing and you the some I think under Steve pretty are we good the seeing definitely our opportunities that earlier, balance sheet to mentioned got as in and in bank line. we capacity have drawn do we it cash with spot, are

to will we continue judicious. be So

in a good are opportunities, we We are some seeing and spot.

Chris Lucas

Great. appreciate the Thank time. you. I

Operator

moment, we you Instructions] Showing remarks. questions further [Operator the it back Okay. Drew, no closing at for to turn will

Drew Alexander

and of to on at We you weeks. joining of for interest NARIET many us seeing in all a Weingarten the call. your Thank thanks couple look you, Brandon, you forward in to for of

for around and great your a if interest, there Thanks again will any questions. so have day. We much is be

Operator

concludes gentlemen, Thank joining. Thank and you. today's Ladies conference. for you this

You now disconnect. may

Weingarten Realty Investors (WRI) 25 Oct 182018 Q3 Earnings call transcript