WRI - Earnings call transcript Q4 2018 | Weingarten Realty Investors

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Operator

Good morning and welcome to the Weingarten Realty Inc. Fourth Quarter 2018 Earnings Call for February 21, 2019. 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 a question-and-answer session [Operator Instructions]. is conference this note, being recorded. Please will I now turn Wiggs. Michelle to over it And begin. may you Michelle,

Michelle Wiggs

Good to and morning welcome call. XXXX conference our fourth quarter

Steve is Alexander, Joining Alexander, Richter Hendrix, today Shafer. and me Joe Drew Johnny Stanford

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

Andrew Alexander

Same-property in a we've growth another quarter, I'm remained outstanding. and year, on very continue rate a Stanford the years. greatly my have joining Thank our remain you, that Michelle. been Emeritus. fitting rental would elected and advice. team strong NOI strategy value has as I role us. for to important his I Chairman CEO. all And like with announce an to thanks were you President Good of good He over announcement Alexander morning. few elected of part the pleased increases successful executing last begin close the we articulated been to and and to will will Chairman

XXXX closed Our portfolio sold. centers. consumers with program disposition $XXX announced, And frequent is January, million properties in these continue stronger to strong, than ever. great our We early of

the our towards Over public arbitrage of these makes years, selling and property, portfolio. properties, XX% taken the of portfolio advantage bottom $X last our Selling between billion of about our even generally private two quality the of high stronger. portfolio, markets, we've

scores better, the centers. Our tertiary and household have power drastically markets to with significantly the income lowered average reduced the $XX,XXX, we've are TAP numerous states multiple and have of sale our and secondary tenants. exited in portfolio average improved, exposure at our through our exposure assets of demographics to We've watchlist

At paid dramatically a dividends of same As strengthened totaling special we've we $XXX result these our balance million. the shareholders dispositions, sheet. our time,

ever-changing retail shareholder flexibility the and well to our consider buyback increased the disposition program We sheet. We modest short as program created This has take of share stream strong while program, of worthwhile, environment. can a the believe advantage development, acquisitions, the quality the tremendous This our the dilutive portfolio, and given have fund market financial position, We significant our income dilution redevelopment is reliability value. earnings in improved of our new term. opportunities. given has maintaining as balance been strong

of development as to will to close the XXXX. and to Arlington, year but and of appropriately. West both At modest HQX proximity With We We're their much year-end open expect strategy benefit we'll in to of nicely. to progressing projects both online activities expect the all expect in the Centro our respect and DC, in scheduled Arlington to adjust be less activities, begin have market latter revenue our the disposition to about XXXX, XX-story is excited amount we a Alex Centro will Teeter before Amazon year-end. pre-leasing prominent the at half At Whittaker. of new year. to volumes over and residential are continue we're strong monitor Harris space and our Driscoll will from around at later ahead XX,XXX Whole the progressing approximate River is square luxury units is feet far Foods plan. above points of We floor Seattle, residential nicely. this million. Oaks paying ground are XXX XX expect basis The and rent Virginia so rise here Center $XXX ROI cost project Northern a open X.X%, stabilized market. plan. we The total in Oaks high finished around stabilizing River In Houston strong retail our include with Construction with

projects We progress the other Great on with invested terrific continue a the will capital to and financials? year. we and on pipeline provide those that the great and focus. development in redevelopment many have quarter excellent Steve, returns work

Stephen Richter

Thanks, morning, everyone. Drew. Good

As December down results, share, $X.XX per XXXX to our FFO core operating from the quarter the for $X.XX ended was prior year. XX, in

operating per net and For in from our existing program. share. increases, This was to due lower by interest the development quarter, increases completions, $X.XX we rental from offset expense redevelopment of disposition portfolio, primarily levels due us and to program outstanding reduced disposition our our income estimate rate cost new debt

expenses expense. higher expenses due program, the The fees. more in wanted I shares that comparison, deferred to share assets program. year. compensation G&A our doesn't benefited NOI increase year, in the compensation around FFO the compared to in XXXX due of per new third program, reconciliation developments, the quarter out to and to well share $X.XX by core This share accordance offset us XXXX. A price in significant These FFO from reduced as the as included cost in the expense. NAREIT The our realized in point Again, $X.XX core increases for increase per release. the which interest we by the up it $X.XX our also increases that, $X.XX. restricted QX year was in cost per also were of For net year-over-year is decreased XXXX was from $X.XX redevelopment, for existing full from by to disposition reduced the share in press G&A at reduced thus offset This with our for in professional while truing portfolio, were affect our of than granted drop cost our held quarter income FFO $X.XX. was resulted fourth long-term around end expense accrual us being share incentive in and

dividend debt. pay with to remainder per were proceeds dispositions. Our from of balance million of stronger We the The ever, disposition from our $X.XX deleveraging is than special share December our a or paid the due sheet $XXX gains program. significant in down used to further

EBITDA maturities X supported at was times our by and strong XXXX. debt to that debt maturity service coverage core was well-laddered year-end has net ratio significant until a a schedule no Our X.X times,

As income expected be to is range net XXXX, guidance the $X.XX of to share. diluted in to per for $X.XX

considerably in of range the to and in year; million. dispositions less of million level and This special dividend XXXX, of million in the albeit that million likely half range $XXX in in of the redevelopment will a per of million, dispositions $X.XX core This to $X.XX expect acquisitions FFO FFO payment than NAREIT assumes new $XX XXXX. $XXX development of latter and the of range investment the will be result We million; share. to $XXX in $XXX to $XXX primarily the

range with is X% of same-property NOI expected As the to be in the redevelopment to to X%. portfolio, existing

factors our few embedded assumptions. point Let contributing me a in out guidance

First, both experienced affect volume on dispositions, and the we significantly FFO last can timing as year.

of guidance dilution NOI includes dispositions to $X.XX core and partial-year NOI our the of FFO of of per share Our dilution an the XXXX for estimated of full-year XXXX about dispositions. $X.XX $X.XX

$X to standard quarter. leasing costs will going-forward administrative of of million by per per Secondly, XXXX, share increase expense new in the a in general to implementation $X $X.XX $X.XX a and resulting G&A million

we we And don't residential think renew properties, portion bad reserves regarding start year we for $X.XX incur tenants DC two a our own have we will XXXX, around budget net will share since expenses the the Third, process. pre-leasing those space-by-space or debt for our of fallout of fail. fourth, will and this we will development as

to have cover to the topside unexpected. this In we lost addition rent, reserve a

fallout number FFO a between are years. the similar our our Johnny? guidance. of supplemental, last bad XX details forward reserves, XXXX, on for included guidance for FFO is of our our XXXX of topside budget and roll year and historical of with along Our averages page debt All budgeted last the to to our to very over XXXX

Johnny Hendrix

Thanks, Steve. and had a We we're quarter fourth to great looking XXXX. forward

headwinds. increased produced rent on XX.X% the resilient same-property for base company and X.X%, of in transformed risk-adjusted During and the strong maintained quarter, strong very strong new XX% even $XX.X of proven continued rent, of a leases minimum new our the portfolio to leases, in Weingarten's for XXX produce returns million face redevelopments. renewals occupancy growth has NOI annualized executed

create most spaces, call, signed net will Bunker this both Ross Burlington all Houston. closed at the leases four of Hill We've As at we've three shareholders. significant increases leased of Station, value in and asset or Toys"R"Us with in of here Cypress for our which

lease near We That Palms signed expect interim an a second will hospital known redevelopment Florida closing this as looks a Florida, that us South is Payless to lease Country, Health deal expect and Ross through Miami, bankruptcies tenant. Baptist late the It its & lease Burlington all Most locations. tract. commence an year. Town redevelopment time will we South The like provide be resolved. commence five-year of At been quarter. with to anchor incorporating major will the other in Health the a work ultimately ShoeSource vertical We have Hospital. of

May. X.XX% expect We have be nine closed in Payless leases, ABR we those and of representing will

Fallas of Our with leases Firm the guidance terminated Stores, X-U Mattress does XX leases. their Paredes we terminated not date. Factory include of X that National them. and beyond rent one had four

store Plaza is two the already the we lease. of we're that their soon. know remain at closed in and Placerville, We open. efforts should Kmarts. for marketing believe designation Forks in rights As the only results ESL The Six store for Sears, Prospector's pleased We will Raleigh California have at is

does guidance the XXXX. after include for quarter rent not Our first of the any space

to our for expect be XXXX. we and NOI mentioned, Steve As X% X% between same-property

components. good is we there always risk, While have of visibility the

X%. between will another and We expect will to this some X% contribute contractual result X% to our of Fallouts NOI to steps leases X%. rent contribute X% offset of X%. same-property Commencement will in increases

in of include someone would in shape if XXXX. renewals. We're does soon, bankruptcies, expect XX% and unexpected also but fallouts even are renewals plan complete. business good of our most rent filed Our to XXXX our with receive the we

two shopping several center I we've square of space all Sprouts added. Hobby added Winter Beyond, Carter's we Lobby, XX, complete. in shop the of our has and incredible opened nicely. Kirkland's, an are redevelopments Below. spanned completed earlier, very mostly are XX,XXX and opened Park, Florida As feet large mentioned the progressing redevelopments The leasing for years. DSW, Bath that Sprouts, We completing center Plus, & Sprouts Bed, Sunset remerchandising also at Five relocated Cost

also our shop XX,XXX buildings, square new feet added outcome a We great of for shareholders.

We XX invest Excluding River expect currently redevelopment under fourth $XX we're return has XX%. couple buy not the we with company pursuing. Oaks, a do seriously any projects overall centers million to shopping but have quarter, around we did during an centers of the and

markets in trading X% for points and range, search trade to tenancy. very for We've to basis markets. accretive on to X.X% seem continue several to other the shareholders. XXX over change assets XXX coastal to pricing primary points last our have that We Drew? little basis will to X% great higher, wider months. observed Core Power in depending in assets X.X% to a centers be continue

Andrew Alexander

Thanks, Johnny.

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

our that a commenced, XXXX for on pipeline to dispositions, users. will in be We NOI redevelopments. always leasing growth. risk-reward sense but same-property centers We'll leases capital will the but Redevelopment perspective, will be some invest our significantly and signed, XXXX opportunities nice those focused make we're to not less especially on we growth on on opportunistic continue provide space strong right of tailwinds XXXX expect than from

to results. dry continues for Our people, other we're in improve powder our necessary still fund the your Operator, strong to great joining balance equals continued to properties you questions. the thank to they opportunities sheet react while a Great when call interest future and great and maintaining take to for well-positioned platform arise. now growth be requirements, today and all I great happy we'd Weingarten. capital

Operator

from have go [Operator ahead. Instructions]. Please Christy And Citi, we McElroy.

Christy McElroy

everyone. morning, Good Hi.

in the trying guidance. Just get dilution to disposition to your

or at relatively last a you is talked than midpoint, if year. at that cap Can – would little year sort you $X.XX of even As is think the we expected, rate? the you volume selling heavier bit this about timing are talk about think were have I X.X% assuming loaded. I the and you the front just

Just maybe a sense that assumptions going are dilution of the for kind that into number.

Andrew Alexander

It's Good Christy. morning. Sure, Drew.

more and take get let the it a then wants, and guidance. if Joe, on he Steve I'll little think maybe even I granular

opportunistic. tried So, we articulate it's something basically that very it's to that

point the is a a timing unclear produces a little So, range. of bit and, exact at this likewise,

the to the differently can but That cap to As year. last some as not of at much working lot forecast is and sort middle-Xs same helpful. quarter had money, that quarter. We're rates, we it's also it looked vary we that on generally is a land

sort that's Steve, So, to guidance more the of into of modeling in or…? you get broad the brush. want the

Stephen Richter

would Christy, to timing when what we're that say and good get volume. morning. we guessing I as you This is Steve. budgeted, to

missing really terms protect So, of wider in happen. when there range is the speak, to so from things to us,

of will there market. whether know lot We under have property close have some and out stuff don't we the We a on today. contract those

some to guess a it's extent. So,

Johnny Hendrix

also under contract not excessive deal, that We we a to very thought being accept. that it. opportunistic a was had we we're And we about that retrade large had was chose

makes we're don't price again, towards think bottom, for We So, things a it we sense. the anything. have getting opportunistic. if But good we're being sell to

a the to as range, I on. certainly we'll volume as the timing and both tried outline the we of and is, more goes function So, know which year the said,

Joe Shafer

keep Christy, that… And, mind in

Christy McElroy

ahead. Go

Joe Shafer

cash wanted a add, sitting now mind we're in keep We're I in to not just revolver. that in too.

it's on interest So, when a end. the pretty at you other a look low spread, income

Christy McElroy

acquisitions, the sitting earning I sort Yeah. not baked you're factor to put you've use on That's also obviously, a lot and was some cash there, there in into I to and but of that waiting income because, are going what ask think, that's of yet. it's proceeds sort development, of of there's which about be there

there's the So, there. dilution

Okay, I of I think sort get it.

Stephen Richter

That's for River XXXX, there significant the right. is at the Oaks revenue there's exactly projects go – not in a lot a and the through look year of is there. spend long-term as But we You're part the development of that two DC.

So, right. you're exactly

Christy McElroy

Okay. DC in start start that the missed I component driving you expensing capitalized you costs lease-up then, to but in and this that apologize of from are two the the on need time? and sort been that of just of the if need interest during And sort that have What's of sort resi to project other drag? $X.XX the drag I projects, opening remarks, is this

Stephen Richter

of capitalized be which as end expensed, because You're exactly is right. It's of the the leasing hired yet, on-site that. we'll project residential and people leasing been will they they being who more we which haven't start leasing aren't is the because the the expensing but get year, toward

So, long on-site projects think working to to see expense the we expensed revenue will sufficient starting managers, and that we've associated on-site on before be been with thing good that cover it's albeit a a have revenue, we're a time leasing will have it. these people we I little some

Andrew Alexander

development, are as is use mixed would I other well add these you thing Christy, that and just one that know.

bring typically some straight the in area project you that open would of the to commence have or you'd open. would a cost when earlier so, common than anchors basically And retail on

going there's that's So, area bit and, little retailers through pass there's commence of common a to cost to not the just any that obviously, open also to.

Christy McElroy

a as of there in come cost on the or open? Is does delay that soon you expensing as interest all the

Stephen Richter

get ultimately that when tied that deliver somewhat stop we occupancy we the capitalized. way time will to that's which, that the for over we of interest, capitalizing it's the subject that project. gets be the in certificates project and though, And that way No, – when to

Christy McElroy

you. thank Okay,

Andrew Alexander

Thank you.

Operator

McGinniss. Please And ahead. from Greg Scotiabank, go we have

Greg McGinniss

good Hey, morning.

range, Drew, for the the of to monitoring appropriate trying market dispositions the that XXXX? would disposition I'm similar the the be $XXX is adjusting on change details accordingly? just to you potential what higher for understand makes today? your adjusted? middle could some for $XXX strategy you about range million And give dispositions a Moving what than the and comment to more Is feel million have there minute. to back range year end to to million $XXX to

Andrew Alexander

repeating our it right at do some arbitrage I to something amount between of I articulate of But has Greg. still said, to able advantage opportunistic. morning, that, sell We're some has the opportunity totally the is NAV Good being stock best we're appreciate short-term without taking NAV. portfolio myself. my to will as of is when portion pain, think it at but bottom the that gain. We discount we being long-term

doesn't We've anything. other some so and far to about we year, retrades have with things for us, see do one reason, to that, right pricing don't property that this only $XX the we As or million. feel need sold look we changes

we mentioned, I fallout. As had something

have think good But for Is one. center Yeah, the to we're a side? range risk there a at being at and again certainly where factors big proprietary looking always on opportunistic. there we're the of a course, do. more to we need we is, and all model way way, is a I than range than we're outside either we looks working So, every that expect more grades lot chance because on everything, the different

So, it that it to when we'll not I the it opportunistic it. something be selective comes always the and short about right is in things, pleasant doing long-term But is understand. term, it's

Stephen Richter

larger million, kind the you a wind significant. that's and in to with million XX-kind-of-million one as approach, one transactions of the again, that, well, property that market we is lot on $XX have just on range transaction, of this opportunistic thing we if $XXX and our that big most But centers, range, $XXX some we given that's might of have million I up have and generally add on one a dollars. that that's

and wind being being So, up again, mix or over under. we could opportunistic ones it's in sell the which

Greg McGinniss

sheet you right got I for right are Steve, balance you've sale on you mentioned, how marketing just But, market know now. held as on the And much the now? nothing Okay.

Andrew Alexander

Comfortably what to to sell. over we need

Greg McGinniss

into us Johnny, the Okay, spend should of also, couple what can why a trending we some up. reading finish? And shrinking or thanks. give recurring And you that XXXX, that tenant over question years, CapEx the thinking details last be CapEx then, it's in Is especially you. Despite recurring? growth should anything portfolio about actually we be recurring been there just for has

Johnny Hendrix

is there numbers. overall. more negotiating Greg, years. good costs up, construction has think it into a don't some than costs I that leverage morning. read And the lot boxes powerful to going today are Yeah. in been Obviously, the past is have

I most would be boxes. increases to the think of related those re-leasing

Greg McGinniss

Okay.

So, year-over-year then would similar you expect level a here?

Johnny Hendrix

Yes.

Greg McGinniss

Okay, thank you.

Johnny Hendrix

Thanks.

Operator

Bank From Please go Craig Schmidt. of we America, have ahead.

Craig Schmidt

time? Good retailers am where which in pick wondering, in, of having and how just trying in you're in think on going morning. of are do access online, are the active to be number two of terms up roll I years' active you that most the you and out stores buy say, that terms to centers

Andrew Alexander

Good It's if the Drew. in Johnny morning, big wants. chime maybe might I Craig. you can picture he give and

we're think on we're point. is in almost So, seeing basically portfolio And working significantly in chain some our working at every I the it most supermarkets. it with

taken certainly, with long-term view seems Kroger, slower area. worked a and It various HEB, the common in the Walmart, and Marshalls. So, the click/pick we've the Rosses for facilities with them the little

thing driven to then, you're if traffic will at a being going away. subsidize, personally, it's current very very, Craig, buy is. buy you consumer store on last you very and And know, be as things. where online/pickup other delivery mile benefits store. basically expensive may right given in still is You of I that to now same to lot returns that And because to think with there's that more I be long-term should get the important thing think that subsidize it a

convenient Anything both So, I our to powerful Johnny? very locations. are to think add those

Johnny Hendrix

supermarkets close We're Yeah. XX% today, sort or have it to our online/pickup – and buy some of probably they'll in out by bring store of to come you.

recent are – report We the Walmart. super-excited by by

centers that that shop highlights is it with going, us, will business really do shopping think this think continue to space. and the omnichannel business people we to tenant model I driving is our to and our come continue where

front of about us. future kind excited we're we the what and of have So, in

Craig Schmidt

Thanks. Great.

Andrew Alexander

Thank you.

Operator

JP we ahead. go Please From have Mueller. Morgan, Michael

Michael Mueller

Yeah, hi.

same-store looks and of terms In ended year your it like occupancy, was flat XX.X%. XX% it total the at occupancy

metrics ending where curious, see you Just XXXX? do those

Johnny Hendrix

trends have bounce – – to the today. My have this little They're of going probably is bit. lot that's that bounce we is occupancy somewhere and up really, right and that be now, points tenants guess possible, are down it Johnny. kind growth signed XX modeled of is basis are a is ahead are will about They're around as going commenced who be the the for in around probably same beginning – the a back basis that the down or and is we a It's XX year same-store bit commencing. tenants those not of about then to through what trending XXX where normal and to of little of going year, rest bulge that goes points the NOI of we

Michael Mueller

Okay.

that XX by to you basis when said you So, points year-end, be when level that is said were XX points you everything all higher points when done? think, XX basis points, – basis and XX to basis could saying

Johnny Hendrix

Yes.

Michael Mueller

it. Okay. That Thank was you.

Operator

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

Christopher Lucas

Yeah. Hi, guys.

quick you. a of couple Just questions for

point, that? used pool What out were that to at disposition the the that assemble into pool? how this put the marketplace you assemble on that did you Just you criteria

Andrew Alexander

It's stuff, out. and Good Lee Brody, on as things, of know his I one morning, help through DC a those very and sort various the you I team, handles time process. region, you know, But personally collaborative I who the it's know Drew. a like Johnny Chris. to in lot Johnny DLs the spend of Atlanta who of

boots regional TAP formal but not scores, think proximity a to at we at demos, to intend on our than before, about look center a exposures, work plug like we tenants, you computer, selling. and the map, to the whole consulting grades as all lot power we a properties, with on look mentioned more ground. Our market the then, it ever offices, our it's research look team those the we into that the always trying all evaluate algorithm the watchlist at I things, And the again,

have we advantage to So, and opportunistic take good. is pricing a the flexibility lot the we when arbitrage of be think of

it's criteria, a local as judgment of So, looking process, and real involved judgment lot but well. a hands-on lot at quality of real with estate a tenant

Christopher Lucas

guess, terms better you that question the be, maybe things would So, you've just there the are exited other of in a or have pool fully to that factors? been of want versus, of that I part say, be markets exiting, the geographies are still you out are geographically driven

Andrew Alexander

We're it's things valued a this versus to pretty more Nothing that Then sold coastal of able cap office close Raleigh but couple into population. in center at on. Kentucky, great be in hours to. Carolina, one strong in it not-too-dense one North think, little Street. to were in property in a from And a of communities, in Main of one working geography big little was away left a year you we We've as from valued Harris on how rate Wall is Street The a the sell it on of it's some got, more it how a outlying. attractive our a would we very so more Teeter I one Arkansas, center, that the we're Utah that get picture are significant perspective.

deal to quite the metros. there's still states then with a bit to things little of we not So, that that have major are there work that mentioned little a honing do I couple is and

Christopher Lucas

how just redevelopment, the then, same-store the provided straight Appreciate NOI guidance is that. thinking Steve, or excluding on And Drew. that NOI, should different with we same-store redevelopment, any Thanks, be Okay. about that? you've

Stephen Richter

including historically, and morning, of redevelopment significant been strategy really with because best continue will the be, or Chris. Yeah. that the is NOI a same-store going for feel We part has metric Good process redevelopment to forward. our

difference if over redevelopment. And, you for same-store X% around generally, in points XXXX, for without NOI it time, two. it's of basis fact, is around look, the between XX So,

So, it's there. consistent pretty

Christopher Lucas

I Thank you. And Great. this that's have all morning.

Operator

Instructions]. [Operator

Drew, you back like further to at time. I'll looks for it this turn questions closing. no Okay,

Andrew Alexander

Thank appreciate to we'll of all you, some upcoming Well, Thank many in we at interest is of day forward questions. Weingarten. all look if really Brandon. We be you other any And the there around seeing conferences. you very much. your

Operator

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

You may now disconnect.

Weingarten Realty Investors (WRI) 21 Feb 192018 Q4 Earnings call transcript