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WRI – Market expectations are for record-high Uniform ROA, but management may have concerns about their liquidity, acquisitions, and leasing dynamics

May 10, 2021

  • Weingarten Realty Investors (WRI:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 92.3x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about their liquidity position, acquisition strategy, and leasing business dynamics
  • Specifically, management may have concerns about the widening spread between signed and commenced occupancy, as well as their decision to repurchase stock at a discount to maintain liquidity. Also, they may lack confidence in their ability to continue to be selective on acquisitions, preserve their residential leasing levels, and capitalize on development opportunities. In addition, they may also have concerns about the quarterly decline in core FFO and occupancy rates, as well as business uncertainties driven by the pandemic. Furthermore, management may lack confidence in their ability to develop their construction pipeline with watch list tenants, and they may have concerns about the pace of recovery of gym businesses and the progress of anchor tenant leasing negotiations