LV shopping center owner’s profit declines

Jennifer Shubinski

Tuesday, Oct. 28, 2003 | 11:10 a.m.

A big Las Vegas shopping center owner Monday reported a slightly lower third-quarter profit from the year-ago period despite an increase in revenue and rental revenue.

Weingarten Realty Investors reported a profit of $28.4 million or 54 cents per share for the third quarter ended Sept. 30, down from $34.5 million or 65 cents in the year-ago quarter.

Revenue grew 15 percent to $107.1 million, the Houston company said.

Income before discontinued operations of $29.7 million was up from $27.9 million in the 2003 quarter. But net income fell because of a decline in revenue from property sales. Real estate sales fell to $3.5 million in the 2003 quarter from $10.8 million in the 2002 quarter.

Drew Alexander, president and chief executive, said that every once in a while there will be surges in net income when a property is sold off.

"But our principal business is leasing space, we rarely sell things," Alexander said in an interview. "Every so often we do sell a property, but that is not what we are in the business to do."

The company's rental revenue in the third quarter 2003 was $103.5 million, up from $90.5 million, for the third quarter of 2002, a 14.4 percent increase.

Weingarten owns more than 1.6 million square feet of retail space in the Las Vegas Valley in 10 shopping centers and another 66,000 square feet of industrial properties.

It's newest Las Vegas-area shopping center, Tropicana Beltway Center at Tropicana Avenue and Fort Apache Road, is open with parts still under construction.

Alexander said the REIT doesn't have any immediate plans to build another Las Vegas-area center.

"Las Vegas has been a good market for us," he said. "We would actively look to invest more money there."

Concerns that the Las Vegas market was becoming saturated with centers a couple of years ago have diminished, Alexander said.

Weingarten is limiting its growth in Las Vegas because of the way it grows and is developed, he said.

In Las Vegas, land parcels are often sold off in chunks by one master-developer, which puts requirements and restrictions on the land.

"You often have to invest a tremendous amount of money before you actually see a lot of homes," Alexander said. "North Las Vegas, no doubt over time will have a lot of homes, but the amount of money that has to be invested in either nonrefundable options or in buying the property is more risk than we are comfortable with."

"There's a high probability that it will be successful, but we're not going to spend millions of dollars to buy land when streets aren't in," he said. "In two years we'll probably be kicking ourselves, but when you're under the microscope of being a public company, you tend to be more conservative."

Alexander said restricted land releases by the federal Bureau of Land Management and the area's natural mountain barriers should keep the amount of retail space available in check.

"The point was made during our last analyst meeting (held in Las Vegas) that while Las Vegas is not a physical island, in some respects it has a lot more restraints and barriers than people realize."

Weingarten's board of trust managers declared a dividend of .585 cents per common share of the third quarter of 2003, up from .555 cents per common share in 2002. On an annualized basis, it represents a dividend of $2.34 per share as compared to $2.22 per share in the prior year, a 5.4 percent increase.

Weingarten Realty Investors owns 315 properties totaling about 42 million square feet in 18 states in the southern half of the United States.