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Weingarten Realty Reports Strong Results

July 30, 2018

HOUSTON--(BUSINESS WIRE)--Jul 30, 2018--Weingarten Realty (NYSE: WRI) announced today the results of its operations for the quarter ended June 30, 2018. The supplemental financial package with additional information can be found on the Company’s website under the Investor Relations tab.

Second Quarter Operating and Financial Highlights

Net income attributable to common shareholders (“Net Income”) for the quarter increased to $0.61 per diluted share (hereinafter “per share”) from $0.49 per share in the same quarter of 2017; Core Funds From Operations Attributable to Common Shareholders (“Core FFO”) for the quarter was $0.57 per share compared to $0.61 per share a year ago; Same Property Net Operating Income (“SPNOI”) including redevelopments increased 2.7% over the same quarter of the prior year; Occupancy increased to 94.6% at quarter end from 94.5% in the prior year; Rental rates on new leases and renewals for the quarter were up 21.4% and 7.1%, respectively; and Dispositions totaled $77 million for the quarter and $358 million to-date.

Financial Results

The Company reported Net Income of $78.3 million or $0.61 per share for the second quarter of 2018, as compared to $63.9 million or $0.49 per share for the same period in 2017. This increase was due primarily to higher gains on sales of properties during 2018. Year-to-date, Net Income was $225.1 million or $1.74 per share for 2018 compared to $94.7 million or $0.74 per share for 2017.

Core FFO for the quarter ended June 30, 2018 was $0.57 per share or $74.3 million compared to $0.61 per share or $79.2 million for the same quarter of last year. Dispositions in 2017 and 2018 decreased Core FFO by $0.08 per share. This was offset by higher operating income driven by increased base rents, slightly higher expense reimbursements, bad debt recoveries and reduced interest expense due to the reduction in debt outstanding with disposition proceeds. For the six months, Core FFO was $149.1 million or $1.15 per share for 2018 compared to $158.8 million or $1.22 per share for 2017. Dispositions reduced Core FFO for the six months by $0.14 per share.

NAREIT FFO was $84.5 million or $0.65 per share for the second quarter of 2018 compared to $79.4 million or $0.61 per share for 2017. Included in 2018 is a benefit of $10.0 million, or $0.08 per share, from the write-off of under market rent intangibles related to terminated Toys R Us leases. Year-to-date, NAREIT FFO was $162.8 million or $1.25 per share for 2018 compared to $153.8 million or $1.18 per share for 2017.

A reconciliation of Net Income to NAREIT FFO and Core FFO is included herein.

Operating Results

For the period ending June 30, 2018, the Company’s operating highlights were as follows:

A reconciliation of Net Income to SPNOI is included herein.

“Operations remained strong this quarter, a reflection of our significantly improved portfolio of properties. With the most diversified tenant base in our sector, the impact of tenant closures has been relatively muted. The recent Toys R Us bankruptcy resulted in minimal impact to SPNOI for the quarter, but will reduce occupancy by 0.7% beginning in the third quarter and reduce revenue by approximately $0.9 million over the balance of the year. However, we have great interest in all of these locations and should have rent back on line for all of them within eighteen months,” said Johnny Hendrix, Executive Vice President and Chief Operating Officer.

Portfolio Activity

During the quarter, the Company closed $77 million of dispositions and an additional $13 million subsequent to quarter end. These dispositions included two centers each in Nevada, North Carolina and Texas, one in Georgia and a portion of Stoneridge Towne Centre in Moreno Valley, California. The Company also sold two land parcels.

The Company did not acquire any properties during the quarter.

During the quarter, the Company invested $34 million in new developments and redevelopments. We are breaking ground on the Driscoll at River Oaks, a 30-story residential tower to be constructed at the Company’s River Oaks Shopping Center. Details of these projects can be found in the Company’s Supplemental Financial Information package on its website.

“We continue to dispose of assets that are in the bottom portion of our portfolio where we can sell at or near the properties net asset value. While conditions can change rapidly, the current environment seems to be conducive to further disposition activity, leading to an increased guidance range for 2018,” said Drew Alexander, President and Chief Executive Officer.

Balance Sheet

Proceeds from the Company’s 2017 and 2018 dispositions were used to strengthen its balance sheet. At the beginning of the quarter, the Company paid down the remaining $100 million outstanding under its $200 million term loan. During the second quarter of 2018, the Company used additional proceeds to repurchase $0.6 million of its unsecured bonds and $10.4 million of its common shares at an average price of $26.90 per share. Year-to date, the Company has repurchased $14.3 million of its unsecured bonds and $18.5 million of its common shares at an average price of $27.10 per share. At quarter-end, Net Debt to Core EBITDAre was a strong 5.1 times and Debt to Total Market Capitalization was 31.4%.

“The use of proceeds from our disposition program has enabled us to further enhance our financial position through both the pay down and repurchase of debt. It will further provide funding for our new development and redevelopment programs, the repurchase of common shares and a relatively large special dividend at year-end that is required due to the significant tax gains generated by our disposition program. Our balance sheet is as strong as it has ever been and positions us to pursue opportunities as they arise,” said Steve Richter, Executive Vice President and Chief Financial Officer.

2018 Guidance

With respect to 2018 guidance, the Company increased guidance for Net Income and NAREIT FFO as set forth in the table below. Given the strong market for quality properties, the Company is cautious with respect to the pricing of acquisitions, and accordingly, is reducing its acquisitions guidance for the remainder of the year. Additionally, the Company has increased the amount of property it is marketing for sale; therefore, it has increased its guidance for dispositions. Shown below is the Company’s guidance with adjusted items highlighted.

Dividends

The Board of Trust Managers declared a quarterly cash dividend of $0.395 per common share payable on September 14, 2018 to shareholders of record on September 7, 2018.

Conference Call Information

The Company also announced that it will host a live webcast of its quarterly conference call on July 31, 2018 at 10:00 a.m. Central Time. The live webcast can be accessed via the Company’s website at www.weingarten.com. Alternatively, if you are not able to access the call on the web, you can listen live by phone by calling (888) 771-4371 (conference ID # 45774519). A replay will be available through the Company’s website starting approximately two hours following the live call.

About Weingarten Realty Investors

Weingarten Realty Investors (NYSE: WRI) is a shopping center owner, manager and developer. At June 30, 2018, the Company owned or operated under long-term leases, either directly or through its interest in real estate joint ventures or partnerships, a total of 190 properties which are located in 17 states spanning the country from coast to coast. These properties represent approximately 38.4 million square feet of which our interests in these properties aggregated approximately 24.6 million square feet of leasable area. To learn more about the Company’s operations and growth strategies, please visit www.weingarten.com.

Forward-Looking Statements

Statements included herein that state the Company’s or Management’s intentions, hopes, beliefs, expectations or predictions of the future are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 which by their nature, involve known and unknown risks and uncertainties. The Company’s actual results, performance or achievements could differ materially from those expressed or implied by such statements. Reference is made to the Company’s regulatory filings with the Securities and Exchange Commission for information or factors that may impact the Company’s performance.

Projections involve numerous assumptions such as rental income (including assumptions on percentage rent), interest rates, tenant defaults, occupancy rates, volume and pricing of properties held for disposition, volume and pricing of acquisitions, expenses (including salaries and employee costs), insurance costs and numerous other factors. Not all of these factors are determinable at this time and actual results may vary from the projected results, and may be above or below the ranges indicated. The above ranges represents management’s estimate of results based upon these assumptions as of the date of this press release. Accordingly, there is no assurance that our projections will be realized.

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