HOUSTON – (Realty News Report) – Weingarten Realty, a Houston-based owner of grocery-anchored shopping centers, expects occupancy at its properties to reach a low point by midyear and then gradually recover as COVID-19 vaccinations expand and the economy slowly improves.
On a conference call with investors Tuesday morning to discuss fourth-quarter results, company leaders noted that Houston has recovered roughly half of the jobs lost at the start of the pandemic, offering an early sign of labor-market stabilization in one of its key markets.
The real estate investment trust, which concentrates on grocery-anchored shopping centers across the southern and western United States, reported that occupancy — including recently signed leases — fell to 92.9 percent in the fourth quarter of 2020, down from 95.2 percent a year earlier.
“Our signed occupancy has never dropped below 90 percent in the history of the company,” Weingarten CEO Drew Alexander said on the call. “It didn’t in Texas in the mid and late ’80s; it didn’t during the global financial crisis; and while the business plan doesn’t expect it this year, it’s likely to get very close to that level.”
Like other retail property owners, Weingarten has experienced pressure on earnings due to tenant defaults, increases in bad-debt expenses and uncollected rent tied to the pandemic’s effects on consumer traffic and business activity.
For the fourth quarter, Weingarten reported net income of $23.1 million, or $0.18 per share — a 69 percent decline from $75.2 million, or $0.58 per share, a year earlier.
Funds from operations (FFO) for the quarter were $55.8 million, or $0.43 per share, down from $69.2 million, or $0.53 per share in the same quarter of 2019.
Looking ahead to 2021, the company expects uncollected rent and bad-debt expenses to decrease from 2020 levels, but said that much of the improvement could be offset by additional tenant turnover and lease terminations as the retail environment resets.
In addition to its core shopping-center portfolio, Weingarten is advancing several mixed-use developments. One notable project is a luxury residential and retail property in Houston’s River Oaks neighborhood — the Driscoll at River Oaks — which the company said is nearly complete and currently about 47 percent leased.
The company had planned to release fourth-quarter results on Feb. 18 but delayed the announcement because of the severe winter storm and widespread power outages that affected Texas last week. Alexander noted that Weingarten’s properties in the state fared relatively well, experiencing only minimal power and water outages.
Feb. 23, 2021 Realty News Report Copyright 2021
File: Occupancy Decline Continuing Till Midyear: Weingarten Realty Anticipates
File: (2) Weingarten Realty (WRI). Occupancy Decline Continuing Till Midyear. Pandemic Recovery. Retail REIT. Drew Alexander.