Weingarten Realty Investors executives delivered an upbeat report Wednesday morning on the company's shopping center business, expressing confidence specifically in the Houston market, where falling crude prices are slamming the upstream oil industry.
"There's certainly no panic in Houston. There's not a sense of a recession," the chief operating officer, Johnny Hendrix, said during a conference call to discuss second-quarter earnings. "We lived through this in the '80s. You could feel it; you could smell it."
The Houston-based real estate investment trust posted a second-quarter profit of $25.2 million, or 20 cents per diluted share, compared with $32.7 million, or 27 cents per share, for the same period a year ago. The decline was due primarily to the write-off of redemption costs, the company said.
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Funds from operations, a widely used measure of REIT performance, was $58.4 million, or 46 cents per share, for the second quarter, compared with $65.5 million, or 53 cents per share last year.
CEO Drew Alexander said the company is closely watching the area economy.
Because Weingarten's local properties are in densely populated areas with relatively high household income, combined with the fact that there's been little new space developed, "we remain confident our Houston properties will be fine," he said.
Weingarten owns or operates 232 shopping-center properties in 20 states.
Hendrix said the company has not seen any negative effect from its tenants from falling oil prices.
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"Obviously, it's something that one would expect, but today it hasn't hit us," Hendrix said, noting that across Weingarten's portfolio, tenant fallout, which includes when a tenant defaults on its lease or decides not to renew it, is at a record low.
The company said its same-property net operating income rose 4.1 percent for the quarter, primarily due to higher occupancy, increased rental rates and fewer tenant fallouts. Occupancy rose to 95.5 percent in the second quarter, up from 94.8 percent a year earlier.
