HOUSTON—Whole Foods Market will relocate and expand into a space formerly occupied by Randalls Food Markets across the street from its current Westchase District location, Weingarten Realty Investors announced Friday when reporting its second-quarter results. Weingarten is the landlord on both the current and future Whole Foods locations, and the REIT said Friday it was in discussions about filling the natural products retailer’s current space in the Market at Westchase.
Whole Foods will occupy 45,000 square feet at Weingarten’s Westchase Shopping Center and is expected to open the new store in early 2016; its current location is 25,663 square feet. Weingarten will also need to fill the unused Randalls space at Westchase Shopping Center. “Once the redevelopment is complete, we estimate we’ll pick up a net of $10 million in net asset value,” Johnny Hendrix, the REIT’s EVP and COO, and chief operating officer, said on a Q2 conference call.
The Houston Business Journal quoted a Weingarten spokeswoman as saying, “With Whole Foods moving across the street and expanding their footprint, this will strengthen the intersection and allow Weingarten Realty to provide additional tenants to the trade area to better serve the customers in the community.”
Although Weingarten’s 259-property shopping center portfolio spans 21 states, about one-third of its properties are in Texas. “Houston and Dallas have produced the highest percentage of job growth in the top 20 metros,” Hendrix said on Friday’s call. “And with our low cost of living, a paycheck in Houston goes farther than any other major metropolitan area.”
Weingarten’s Q2 funds from operations rose to $65.5 million, or 53 cents per share, from $46 million in the year-ago period. Same-property NOI increased 3.5% year over year, while occupancy increased 60 basis points Y-O-Y to 94.8% during Q2.
In view of its strong Q2 results, analysts at Cowen & Co. and RBC Capital Markets have given Weingarten an Outperform rating. “Weingarten’s three-year disposition program appears to be rapidly approaching the end, with completion expected by YE14,” wrote RBC analysts Rich Moore and Michael Carroll on Monday. “We look for the company’s remaining portfolio to generate steady same store NOI growth north of 3% for the foreseeable future. Developments and redevelopments should add accretively to cash flow.”