Weingarten Realty Posts Q3 Loss, FFO Declines; Lifts FY09 FFO View - Update

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Real estate investment trust Weingarten Realty Investors (WRI) reported Monday a loss for the third quarter that primarily reflected a non-cash impairment charge. Funds from operations fell from last year, as revenues declined year-on-year. However, the company raised its FFO per share guidance for the full year 2009.

The Houston, Texas-based company's net loss available to shareholders was $9.38 million or $0.08 per share, compared to a net income of $26.94 million or $0.32 per share in the previous year.

Loss from continuing operations was $593 thousand compared to income from continuing operations of $32.93 million in the prior year.

Results for the quarter included a non-recurring, non-cash impairment charge of $46.1 million or $0.39 per share primarily from the company's new development program and a $16.5 million or $0.14 per share gain from the repurchase of debt securities.

Including the non-recurring items, funds from operations, or FFO, were $29.73 million or $0.25 per share, down from $59.89 million or $0.71 per share in the year earlier. Excluding items, FFO was $59.3 million or $0.50 per share compared to $59.9 million or $0.71 per share last year.

On average, 13 analysts polled by Thomson Reuters expected the company to report earnings of $0.54 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenues for the quarter decreased to $144.54 million from $153.97 million a year ago. Analysts expected revenues of $143.31 million for the quarter.

Rental revenues declined to $139.64 million from $149.72 million in the prior-year quarter. The company said its overall occupancy increased to 91.1% from the second quarter and overall occupancy is expected to remain at around 91% through the balance of 2009.

Total expenses for the quarter significantly increased to $120.12 million from $87.2 million in the preceding year. Expenses include impairment loss recorded during the period.
Operating income dropped to $24.42 million from $66.77 million in the comparable quarter a year ago.

For the nine-month period, the company's net income available to shareholders declined to $63 million or $0.59 per share from $118.57 million or $1.41 per share in the same period last year. FFO decreased to $166.12 million or $1.56 per share from $188.36 million or $2.23 per share in the preceding year. Total revenues for the period dropped to $434.43 million from $451.6 million a year ago.

Commenting on the third-quarter results, Drew Alexander, president and chief executive officer said, "Third quarter operating results were very successful, especially when you take into account the dilution from the equity offering, the progress we have made to right size the balance sheet and the opportunities we have taken this year through dispositions of non-core assets, all while keeping occupancy stable."

The company said it completed 393 new leases and renewals during the quarter, up from 305 new leases and renewals completed in the prior-year quarter, totaling 1.2 million square feet and representing $17.5 million of annual revenue.

Looking ahead, Weingarten raised its full-year 2009 FFO per share guidance to a range of $2.08 to $2.16, from the previous range of $1.88 to $2.12 per share, excluding the $0.39 per share effect of the non-cash impairment charge and $0.23 per share of gains from the retirement of debt. Street analysts expect the company to report earnings of $2.26 per share for the year.

The company also said that its 2010 budget process is not finalized, but anticipates full year 2010 FFO per share to be in the range of $1.54 to $1.78.

In addition, the board declared a common dividend of $0.25 per share for the quarter to shareholders of record on December 7, 2009, payable on December 15.

WRI is currently trading at $20.85, up $0.30 or 1.46%, on a volume of 273 thousand shares.

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