Weingarten Realty Investors today announced strong earnings for the first quarter, prompting praise for the company’s performance from analysts, some of whom raised earnings expectations for the Houston-based REIT.

Weingarten, which has posted strong numbers for the past three quarters, announced that its diluted funds from operations (FFO) increased to $41.2 million for first quarter 2002, a 29.8% increase over last year.

Net income available to common shareholders increased 20.1% to $24.5 million, and quarterly rental revenues rose from $66.4 million last year to $84.9 million in first quarter 2002 — a 27.8% increase.

"Weingarten’s very strong growth was led by solid performance in the company’s core shopping center portfolio, where occupancy rose 30 basis points to 92.8% in first quarter 2002," notes McDonald Investments analyst Richard C. Moore. The shopping center portfolio generates 88% of the company’s revenue.

According to Deutsche Bank Securities analyst Louis Taylor, Weingarten’s same-store NOI growth rose 40 basis points from 1.6% last year to 2% for first quarter 2002.

Room to grow

In announcing the results, Weingarten’s president and CEO Drew Alexander attributed the strong numbers to acquisitions and new developments brought online. Alexander noted that, from first quarter 2001, the company completed 258 new leases or renewals totaling 1 million sq. ft., with an average increase of 9.1% in the rental rates.

According to Moore, those acquisitions were worth about $35 million, and Weingarten's new developments totaled $18 million. "Presently, the company has $203 million of development in its pipeline, with $125 million spent to date and an additional $79 million estimated to be spent in 2002," Moore notes.

Both Moore and Taylor reiterated "buy" ratings for Weingarten stock. "As a result of the company’s strong growth prospects and performance, we believe it warrants one of the highest multiples in the sector, and we are consequently raising our price target to $39 from $36," Moore writes in a report released today.

Weingarten continues to sport the highest combined credit rating of any REIT, with an "A" rating by S&P and an A3 rating by Moody’s, Moore notes. "We have modeled close to $300 million of acquisitions [by Weingarten] this year and $200 million next year along with $170 million of developments in 2002 and $150 million in 2003," the analyst writes.

-- Staff and wire reports