Weingarten Realty Investors Earnings Call Nuggets: Occupancy Gains and Acquired Assets

Weingarten Realty Investors (NYSE:WRI) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

Occupancy Gains

Craig Schmidt – Bank of America Merrill Lynch: I wondered if you could give a little more color on the occupancy. It’s great that you still were able to raise it by year-end, but where will that occupancy gain come from, by what tenants?

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Johnny Hendrix – EVP and COO: This is Johnny. Our projections is most of this occupancy gain is going to come out of shop leasing. We do have a few anchor spaces, but most of it come out of shop leasing. I think regionally we’re probably going to be depending on Atlanta, little more on Florida I think we can get some more occupancy out of, and a little bit of Raleigh. Phoenix has shown a lot of promise in the last couple of months too. We’re certainly not full in Texas and in California but we’re getting up towards that area of 95%, 96%that’s our room left there.

Craig Schmidt – Bank of America Merrill Lynch: Would you say that the leasing the environment now is stronger than 2002, similar or weaker?

Johnny Hendrix – EVP and COO: In 2002?

Craig Schmidt – Bank of America Merrill Lynch: I’m sorry, 2012?

Johnny Hendrix – EVP and COO: Okay 2012, it’s about the same Craig. I don’t think it’s any better. Most of what we’re looking at are our national tenants and most of the tenants we’re talking to are national tenants and most of those are public companies. I think they have a pretty balanced expansion program and they are under some amount of pressure just because there’s less space available in the market. But I don’t see a tremendous amount of pressure to expand certainly not like it was back in 2006.

Acquired Assets

Paula Poskon – Robert W. Baird: First two housekeeping questions. What was the over a market mortgage adjustment of any acquired asset?

Andrew M. Alexander – President and CEO: That was in — we acquired an asset I guess 10 years ago Best in the West out in the Vegas where we had…

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Stephen C. Richter – EVP and CFO: West Jordan.

Andrew M. Alexander – President and CEO: West Jordan, it was where we paid off a loan and wrote off the balance of unamortized I guess loan cost.

Stephen C. Richter – EVP and CFO: Yeah, it was mark-to-market when we bought it. But we had to amortized it over 20 years but we were able to pay it off in 10. So, that was 10 years of unamortized market adjustment left. But I’d note we backed that gain out in coming down the recurring FFO.

Paula Poskon – Robert W. Baird: Also what generated the $1.5 million of new OP units in the quarter?

Stephen C. Richter – EVP and CFO: That’s really for the quarter we were dilutive. Every other quarter this year, we were anti-dilutive. So, when you are anti-dilutive, you don’t add those back. For the year, we were also anti-dilutive, but going into 2013, we expect to be dilutive the whole year and they will be added in every quarter.

Johnny Hendrix – EVP and COO: The driver of that quite frankly had to do with the impairment losses that ran through those JVs, those down rate units. So, that’s what caused the swing in 2012.

Paula Poskon – Robert W. Baird: What percentage of the expiring leases ended up renewing?

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Johnny Hendrix – EVP and COO: Well, I’m not — that’s not really a number that we have. We certainly — I can tell you that 44% of the leases that are planned to expire this year, we’ve already renewed. I’m not really certain of the other one, I’ll just have to get back with you on it.

Paula Poskon – Robert W. Baird: Then just one big picture question. Any thoughts on the commentary in the news about a potential Kroger buyout of Harris Teeter and do you think that we can expect accelerated supermarket consolidation, what are your thoughts on that?

Johnny Hendrix – EVP and COO: As to the second part of the question, yeah, I think that there will be M&A activity in retail generally, in supermarkets in particular. Obviously, we all heard the news about Harris Teeter, good chain, good stores with them. So, we are very comfortable that that will be fine whatever happens and as to, I wouldn’t really want to get into speculate as to who they are talking to or what they’ll end up doing. That’s really their process.

A Closer Look: Weingarten Realty Investors Earnings Cheat Sheet>>