Weingarten: Q3 Results “Solid” in Face of Sluggish Economy

HOUSTON – Weingarten Realty’s Q3 earnings offered somewhat of a mixed bag – though FFO increased 6l.8% on a per-share basis year over year, and occupancy increased slightly across the board, the balance sheet also saw a loss in net income of $42.1 million compared to net income of $8.7 million from the same period a year ago.

Weingarten president and CEO Drew Alexander pointed to what he called  “another quarter of solid operating results,” even in the face of a weak recovery. The company’s core strategy, he pointed out, remains on keeping strong operations. He pointed to a total portfolio occupancy of 91.6%, an increase from 91.1% during the same time last year to support his point.

The balance sheet also showed impairments: An impairment of $0.21 per share involved the company’s strategic plan to dispose of secondary assets, while an impairment of $0.18 per share was tied to the company’s Land Held for Development. Finally, the remaining $0.05 per share of impairment focused on properties involved in finite JVs, in which the REIT would assume liquidation at the end of the joint venture’s life.

Though small-business leasing edged upward slightly, the bankruptcy of both Borders Group Inc. (owner of Borders Book Stores) and Ultimate Electronics did impact the Weingarten portfolio. According to Alexander, an additional 77,000 square feet of vacant space arrived on the market, thanks to the Borders’ bankruptcy. However, on the good news side, “the fallout of small shop tenants has declined,” Alexander commented.

Weingarten EVP and COO Johnny Hendrix went on to explain that some retail sectors continued to show some good strength. Restaurants, he noted, were strong, especially those in the quick-casual, family dining segment. “We also see medical as a significant group that’s leasing space. Primarily dental, though some doctors, as well as medical uses,” he added.

Also touched on was some guidance for 2012. Though all guidance wasn’t outlined – acquisitions, for example, hasn’t been determined yet – the executives did say the plan was to dispose of $300 million to $400 million worth of assets during 2012.