Weingarten Realty Investors Management Discusses Q1 2013 Results - Earnings Call Transcript

May. 1.13 | About: Weingarten Realty (WRI)

Weingarten Realty Investors (NYSE:WRI)

Q1 2013 Earnings Call

May 01, 2013 11:00 am ET

Executives

Michelle Wiggs - Vice President of Investor Relations

Andrew M. Alexander - Chief Executive Officer, President, Trust Manager, Chairman of Executive Committee and Chairman of Pricing Committee

Stephen C. Richter - Chief Financial Officer and Executive Vice President

Johnny L. Hendrix - Chief Operating Officer and Executive Vice President

Analysts

Christy McElroy - UBS Investment Bank, Research Division

Nathan Isbee - Stifel, Nicolaus & Co., Inc., Research Division

Richard C. Moore - RBC Capital Markets, LLC, Research Division

Carol L. Kemple - Hilliard Lyons, Research Division

Cedrik Lachance - Green Street Advisors, Inc., Research Division

Tamara J. Fique - Wells Fargo Securities, LLC, Research Division

Paula J. Poskon - Robert W. Baird & Co. Incorporated, Research Division

Operator

Good morning, and welcome to the Weingarten Realty First Quarter Earnings Conference Call. My name is Brandon, and I'll be the operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I will now turn it over to Michelle Wiggs. Michelle, you may begin.

Michelle Wiggs

Good morning, and welcome to our first quarter 2013 conference call. Joining me today is Drew Alexander, President and CEO; Stanford Alexander, Chairman; Johnny Hendrix, Executive Vice President and COO; Steve Richter, Executive Vice President and CFO; and Joe Shafer, Senior Vice President and CAO.

As a reminder, certain statements made during the course of this call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results could differ materially from those projected in such forward-looking statements due to a variety of factors. More information about these factors is contained in the company's SEC filings.

Also during this conference call, management may make reference to certain non-GAAP financial measures, such as funds from operations or FFO, both recurring and reported, which we believe help analysts and investors to better understand Weingarten's operating results. Reconciliation to these non-GAAP financial measures is available in our supplemental information package located under the Investor Relations tab of our website.

I would also like to request that callers observe a 2-question limit during the Q&A portion of our call in order to give everyone a chance to participate. If you have additional questions, please rejoin the queue. I will now turn the call over to Drew Alexander.

Andrew M. Alexander

Thank you, Michelle, and thanks to all of you for joining us. We are very pleased with a strong start to 2013. We once again made significant progress in achieving our 3 strategic objectives. Number one, operations were very strong for the quarter. Number two, our capital recycling activities are moving forward. And number three, we further strengthened our balance sheet with some important financing transactions during the quarter.

Our first quarter results were excellent with strong Same Property NOI growth of 3.9% and an increase in occupancy to 93.7%. Looking forward in 2013, retail sales have been a little bit choppy, which provides an uncertain backdrop for our business. We've been concerned the tax increase in the sequester would push sales down, but falling gas prices and the wealth effect of a rising stock market and rising home prices seemed to have somewhat offset those factors. Still, the overriding driver impacting our operating metrics is the lack of new supply. Even in Houston, perhaps the strongest economy in the country, we've seen very few in new development starts. We're not seeing any significant new supply in any of our other markets either. So our well-located properties, which have great supermarket anchors, along with discount ready-to-wear, will continue to benefit from the scarcity of quality space.

As to our capital recycling efforts, our acquisition and disposition production in the first quarter was a little slow. However, the activity in our pipelines and in the marketplace in general, gives us confidence that we will hit our targeted levels for the year. I'll now turn the call over to Steve to discuss our financial results.

Stephen C. Richter

Thanks, Drew. Recurring FFO was $0.48 per diluted share for the quarter, up from $0.46 in the first quarter last year. Our Same Property NOI growth was a strong 3.9%, clearly above our guidance for the year, up 2% to 3%. The solid FFO and better-than-planned Same Property NOI growth benefited from bad debt recoveries and percentage rent collections from strong retailers sales. Additionally, several tenants that were budgeted to fall out at year end did not vacate their spaces until well into the first quarter. These items added about $1.50 per share that may not re-occur going forward. This was an outstanding quarter for operations which clearly reflects the strength of our operating platform and the quality of our portfolio. Given the results of the first quarter, it's likely we will be towards the upper end of our guidance range for Same Property NOI. We expect the balance of 2013 to be in that 2% to 3% range. We remain comfortable with our previous guidance of recurring FFO of $1.84 to $1.90 per share.

As you heard, we are optimistic that we can meet our full year goals for acquisitions and dispositions, however, the timing of this activity can impact our ability to meet or exceed our FFO guidance. Reported FFO for the first quarter was $0.53 per share compared to $0.46 per share in 2012. Included in the 2013 amount was a benefit of $0.07 per share related to the write-off of an above-market mortgage intangible that was triggered upon the repayment of the mortgage, offset by $0.02 preferred redemption costs. So we had a very good quarter from an operating perspective.

Turning to the balance sheet. We continue to enhance our financial position and liquidity through a series of transactions. In mid-March, we completed the issuance of $300 million of 3.5% 10-year notes. With these proceeds we redeemed the $75 million of 6.75% Series D preferred shares and completely paid down our $500 million revolving credit facility. Subsequent to quarter end, we finalized an agreement to our revolver that allowed us to reduce our credit spread by 10 basis points and facility fees by 5 basis points. More importantly, we extended the maturity to 2017 with an option for 2 six-month extensions. So as of yesterday, we had full access to our $500 million line of credit as well as $50 million in cash that allows us to take advantage of growth opportunities as they arise, to maintain our strong overall credit metrics and to better position us for future debt maturities. At quarter end, the company's net debt to EBITDA is a strong 6.18x and debt to total market cap remains low at only 35.4%. Our intention is to keep our leverage below the 40% level. So things are also very good on the financial front. Johnny?

Johnny L. Hendrix

Thanks, Steve. We're very pleased with the continued positive operating metrics the company produced during the first quarter. 3.9% Same Property NOI is a great start for 2013. Our leasing velocity is up, fallouts remain low, and we had a slight occupancy pick-up during the first quarter, which has traditionally been a tough period for retailers. Our leasing velocity picked up at the end of the quarter after a bit of a slow start in January. For the quarter, we executed 142 new leases for an annual rent of $6.7 million. A little better than last year. In addition, we currently have 92 leases in the negotiation stage of the leasing process. That's an improvement over the last couple of years and a good indication that in the near term, at least, leasing has some good momentum. Texas, California and Florida continue to show solid demand. But we're also seeing an increase in leasing activity from our Mid-Atlantic and Mountain regions. These 2 regions contributed nearly 50% of their production during the first quarter. It's very encouraging to see activity in Las Vegas, Phoenix, Raleigh and Atlanta picking up.

Renewals are good, too. We saw in 239 renewals in the quarter for $15.2 million in annual rent. So far this year, we renewed about 75% of 2013 expiring leases. Rate renewals in the quarter was 3.9%. New leases were about the same, but it feels like we have more negotiating leverage with renewing tenants than new ones. We still have some tough comps for leases signed in 2007 and commenced in 2008 rolling to the system. So I think our previous guidance of 3% to 6% is appropriate.

Occupancy improves a little during the quarter, up to 93.7%, 10 basis points higher than last quarter and 30 basis higher than a year ago. This is a little better than planned. Shop space remained at 88.2%. We still have some more to do to get to the midpoint of our overall occupancy guidance of 94% to 95%, but given the consistently low fallout we've been experiencing in our leasing momentum, we expect to achieve that number.

Several of you have already noticed our signed and not commenced space has risen to 250 basis points, roughly 800,000 square feet. We traditionally felt 150 to 180 was more in the normal range, so it would be natural to see this as an indication of significant embedded Same Property NOI growth. There are a couple of items I would like to point out. Signed and not commenced is only 210 basis points where asset is categorized as Same Property. And second, those commencements are heavily weighted to the end of the year so they will benefit us in 2014, but the effect of 2013 is relatively small.

As you heard, we're optimistic about the $175 million to $225 million for acquisitions and the $200 million to $300 million for dispositions. During the quarter, we sold 5 projects for pro rata share of $15.7 million. We currently have about $100 million of property with a letter of intent or under contract to sell. We are seeing some cap rate compression in those B assets we're selling. We're seeing more sophisticated buyers showing up with access to good financing from CMBS market and from local banks.

On the acquisition side, we're seeing very competitive pricing for core assets, with very little new inventory being marketed. During the quarter, we bought the Sea Ranch Shopping Centre in Fort Lauderdale, Florida. It's a high-volume Publix-anchored center with the CVS. We also have 2 supermarket-anchored shopping centers we expect to close within the next couple of weeks for about $70 million. That would put us at almost $100 million halfway through the year. In coastal market, we see cap rates in the 5% to 5.75% range for core assets. In other strong markets, we see cap rates in the range of 5.5% to 6.5%. We'll continue to maintain our discipline of buying great properties that are accretive to our shareholders. So in closing, we produced another good quarter with great Same Property NOI, increasing occupancy, improving leasing velocity and good prospects for our capital recycling. Drew?

Andrew M. Alexander

Thanks, Johnny. This is a great start to 2013. Operations are strong, leasing is steady, our balance sheet is solid, the capital markets are wide open and extremely favorable, the disposition markets are improving and there's activity in the acquisitions market, albeit very competitive. As such, I'm extremely confident that we will continue to make great progress in our 3 strategic initiatives of continually improving operations, recycling capital to improve our portfolio and maintaining a strong flexible balance sheet. At WRI, great people, great properties and a great platform results in great progress. I thank all of you for joining the call today and for your continued interest in Weingarten. Operator, we'll now be happy to take questions.

Question-and-Answer Session

Operator

[Operator Instructions] And from UBS, we have Christy McElroy.

Christy McElroy - UBS Investment Bank, Research Division

Steve, I have a question on the 3 items that you mentioned as having contributed to the strength and the same-store NOI growth. You mentioned bad debt recoveries. Was that a onetime impact? Can you sort of quantify it in dollars and basis points impact to NOI growth? And did that flow through tenant recoveries or was that a net to operating expenses?

Stephen C. Richter

Christie, the 3 items that we identified quite frankly, are -- and I think there was a lot of comments on the pre-call notes that came out about -- that we affirmed FFO guidance versus same property. We indicated we be at the higher end. Those items basically flow through those Same Property and FFO guidance. So it's basically the same. When you think about things like bad debt recoveries, we have bad debt recoveries generally every quarter. Fallout and we mentioned was a little slower to occur in the Q1 than we expected, et cetera. So those issues, it's difficult to get our arms around exactly how much was unusual. We estimated somewhere between $0.01 and $0.02. But again, that's -- there's a little bit of art to that as opposed to knowing exactly what it is.

Christy McElroy - UBS Investment Bank, Research Division

So in terms of basis points, addition on that 3.9%, it's difficult to quantify?

Stephen C. Richter

Yes. We think, generally, it's 100 basis points or maybe even a little more.

Johnny L. Hendrix

Christie, this is Johnny. If you took out bad debt from last year and this year. It would've been 3.3%. That seems to be the biggest piece that you could really identify.

Christy McElroy - UBS Investment Bank, Research Division

And so bad debt was a recovery this quarter as opposed to an expense?

Johnny L. Hendrix

Correct.

Stephen C. Richter

That's correct.

Christy McElroy - UBS Investment Bank, Research Division

And what was the amount of the recovery?

Stephen C. Richter

It's about -- well, what we think is a little bit unusual is about $500,000.

Christy McElroy - UBS Investment Bank, Research Division

Okay. And then repairs and TIs, [ph] just looking at your CapEx, seem to be running low versus sort of what you've been seeing the last 2 years. Can you give us a sense for sort of where should -- where we should expect CapEx will be relative to 2012 levels?

Stephen C. Richter

I think that on repair and maintenance capital expenditures, I think that's just a timing issue. I would tell you, normally, if you look at 2012 is a good guide. We don't -- I mean, quite frankly, we replaced roof and parking lots as needed, and with the portfolio our size, it's generally pretty ratably. So we don't see any real fluctuation there. So this is a timing issue.

Christy McElroy - UBS Investment Bank, Research Division

Okay. And the internal leasing fees that are footnoted on that schedule, is that something that runs through G&A or operating expense?

Stephen C. Richter

It does. Basically, it is part of what is capitalized into leasing costs. But that's the piece that you see flowing through on that page. Yes, those costs are -- a piece of that is in G&A.

Operator

From Stifel, Nicolaus, we have Nathan Isbee online.

Nathan Isbee - Stifel, Nicolaus & Co., Inc., Research Division

Your stock prices had -- has had a nice run in this clearly a much-lower cost of capital for you here. I'm just curious if you can address how that might impact your acquisition plans over the next year or so?

Andrew M. Alexander

It's Drew. We've always looked at the long term and feel that our cost of capital is the return that shareholders expect going forward. So we are comfortable buying good assets, I would say, in the middle 5 cap rate range as long as they have good growth. And I think, we're much more focused on the long term. We're obviously very happy and feel proud of the fact that stock prices improved, but we're not going to just ratchet up our acquisitions and get a lot more aggressive in the prices we pay because of it. We're going to continue doing what we think is the long-term right thing, buying goods, assets with high barriers to entry and further cleaning the geographic portfolio and selling some of the centers that are in smaller towns and more outlying areas.

Nathan Isbee - Stifel, Nicolaus & Co., Inc., Research Division

How much would you say that, that's changed over the last 3 to 6 months? And have you changed any of your geographic focus to some of the more infill cities basically?

Andrew M. Alexander

I'll let Johnny add on, but I don't think we have changed our focus at all. We are active in the 12 states that we talked about from Washington State, basically, the coastal states through Washington, D.C., plus Las Vegas and Denver, those 20 to 25 markets, depending how you count them, are where we focus using our local resources, our so-called boots on the ground to find things that enhance the value. So we are always comfortable looking. Las Vegas has been a very good market for us, and if we could find the right center there, we'd add to things. Texas is obviously hot, bought some great things in California last year, Atlanta. So really, look, we have our own rankings internally of how we see those places, but really, looking at those 12 states. Anything to add, Johnny?

Johnny L. Hendrix

No. I think as you look at where our regional offices are, that's a really good proxy for where we're looking to buy property and where we don't have close contact to assets primarily in the Midwest, that's a lot of where we're looking to dispose of things, Nate.

Nathan Isbee - Stifel, Nicolaus & Co., Inc., Research Division

And then just focusing on Vegas for a second. There has been some discussion about the housing recovery there. Anything you guys have seen specifically on the ground that would support that?

Johnny L. Hendrix

No, Nate. It's really difficult for me to correlate our -- exactly what's happening with our assets to the housing recovery. What I can tell you is, is that Las Vegas performed extremely well for Weingarten Realty during the downturn in 2009 and 2010. We started to experience some issues on into 2011 with some rising vacancy and the lack of some leasing. Over the last several months, we've had very good progress with leasing. And my expectation is based on what we have worked in the negotiation stage, we'll be able to see a significant increase in occupancy in Las Vegas in the next quarter or so. And then I would expect on into 2014 some really nice pickup in Same Property NOI. Our properties in Las Vegas are very well located. They have great density and most of them are very simple supermarket-anchored shopping centers.

Operator

From RBC Capital Markets we have Richard Moore online.

Richard C. Moore - RBC Capital Markets, LLC, Research Division

On the development side of the equation, I mean, you guys always have been big developers, I mean, what are you seeing out there? You only have a few projects underway, but is there any thought that in some market, maybe the ones you've indicated on the call today, there might be something new to pursue?

Andrew M. Alexander

Rich, it's Drew. We, as you know, sort of retooled our model and our going with a strong team of folks again in the regional offices who are focused on both acquisitions and development. So we think we're covering all the bases very efficiently. And we actually did just a big strategic review of all the developments going on and got very comfortable that we are not missing much that would be, if any, that would be of interest to us. So we're very encouraged. ICS is coming up in a few weeks. We've got a lot of meetings, but we really just don't see quite yet the catalysts for a lot of new development. It's getting closer, but the tenants are obviously very focused on their rent expense and for the time being able to fill their store count bucket with existing opportunities. I personally think there's been a reasonable amount of inflation, and when the economy gets traction, there'll be even more. Such that I think you could see box rentals in some markets, 30%, 40%, even 50% higher. So we're working it. There are some complicated urban infill opportunities that we're working on, but I just don't see it becoming a hundreds of million dollar pipeline any time soon. But obviously, as the -- as we and everybody else fill out their boxes, we'll need to build more new space.

Richard C. Moore - RBC Capital Markets, LLC, Research Division

Okay. That's good, Drew. And then, on that same vein, as you look at Page 12 where you have this -- the supplemental where you have the new development-phased projects, I mean, are those things really -- really just saying it's not quite there at the moment. So are those things really projects, I guess, or is that more of the category down below which is other raw land that is just you're waiting to figure out if something's going to happen?

Andrew M. Alexander

There are nuances to a lot of it, Rich, where it's technically correct like the first one on -- in Wake Forest, there is a bit of shopping center there. So it is -- it's technically in the right bucket, but it is arguable that, that one isn't that different from some of the other raw land. And then in Las Vegas, the Decatur site is sort of at the other extreme. There's an open Target and open WinCo. We are actively working with some fast food users and some -- probably going to build a multi-tenant building. So we will be bringing modest portions of that one into the existing property. So there are some nuances, but the distinction in the report is accurate. We are making nice progress, do have some deals working to sell some of the tracks [ph] but while the market is better, in order to sell big amounts of raw land, one would have to sell to speculators. So one would have to sell to people who are looking at 25%, 30% IRR so one would have to discount it pretty substantially, and given our overall dispositions and need for capital, we don't see a need to fire sell any of the unimproved land.

Operator

From Hilliard Lyons, we have Carol Kemple.

Carol L. Kemple - Hilliard Lyons, Research Division

Do you know what your ground lease rent was in the quarter?

Johnny L. Hendrix

We have that in the supplemental, don't we?

Michelle Wiggs

At year end.

Johnny L. Hendrix

Hey, Carol can we get back with on you that?

Operator

From Green Street Advisors, we have Cedrik Lachance online.

Cedrik Lachance - Green Street Advisors, Inc., Research Division

I just want to go back to the same-store line of question. I'm just trying to put the pieces together and when I look at your commenced basis and let's focus on the retail because it's really -- it appears to me virtually everything in the portfolio. You've had no real change in occupancy, and when we look at releasing spreads, it's marginally positive but maybe on 10%, 15% of portfolio's so it wouldn't contribute much to same-store growth. I have a hard time reconciling the 3.9% same store with hardly any gain in occupancy. Can you help me run through that?

Johnny L. Hendrix

Well, a lot of, Cedrik, what I think that you're seeing is kind of this built-in increases of that we have. We've talked a lot about that over the last several quarters that we are getting regular increases from the tenants. I think some of that is that part of it, probably, I think almost 1.5% to 2% is kind of what we've thought that, that would be. And then there are just some increases in rent and some changes in the nature of the portfolio.

Cedrik Lachance - Green Street Advisors, Inc., Research Division

Okay. So from your perspective, it's largely your annual rent bumps that contribute to same store at this point?

Johnny L. Hendrix

Right. And you have a little bit of percentage rent to that. You do have some BMR pickup in terms of the tenants that have commenced maybe last year. If you had a tenant that commenced in the last half of last year, then you're going to get that bump in the first quarter of this year even though you may not have a specific occupancy bump now.

Cedrik Lachance - Green Street Advisors, Inc., Research Division

Okay. And thinking about the annual releasing spreads or the -- sorry, the annual rent bumps that you can negotiate in your leases, where do you get the most bang for the buck? Is it in small shops? Is it in junior anchors and anchors? Can you segment by buckets what you're able to negotiate at this point in terms of annual rent bumps?

Johnny L. Hendrix

I think, Cedric, you obviously have better negotiating leverage with the smaller tenants. We have been able to get some from the boxes but not very many. And again, from the supermarkets, we do get some but not a lot.

Andrew M. Alexander

Cedric, it's Drew. The other thing to bear in mind in terms of your literal question is, you get annual rent bumps often from the small tenants. From the large tenants, you typically get a rent bump every 5 years or so but it's larger. Now over time, you have different boxes who are hitting that 5-year anniversary every year. But that's where it -- it can move around a bit depending on upon just the universe of boxes versus shop tenant.

Cedrik Lachance - Green Street Advisors, Inc., Research Division

Okay. And then in terms of -- I'm just thinking about the housing recovery and what it can do to your leasing ability. Do you see any demand on the small-shop side in particular from tenants that boosted I guess by -- the housing recovery by the improvement in their home price feel the confidence to go hope -- to go open small shops in your centers?

Johnny L. Hendrix

Cedrik, I would answer that question, I guess, maybe in a roundabout way. Our experience over the last, let me say, 12 months is that there has been very little formation of mom-and-pop businesses. So I guess, you really don't see it. Most of what we're seeing is a franchise or a national regional tenants, filling in spaces that were formerly mom-and-pops. It's difficult for me to imagine that they are really driven by that increase in home prices. But I think there certainly is some increased spending associated with that. The general wealth effect that we're seeing was not only the home prices but the stock market, and I think that is positively impacting sales and probably indirectly influencing national and regional tenants opening up space.

Operator

From Wells Fargo Securities, we have Tammi Fique on the line.

Tamara J. Fique - Wells Fargo Securities, LLC, Research Division

I was just wondering what return you're currently generating on the development portfolio of $100 million that you completed last year. And is the 7% returns still a stabilized target for that portfolio?

Andrew M. Alexander

I think that's a reasonable number. Obviously, you're looking at a lot of different things and some projects work well and some projects didn't. Going forward, we are generally looking at returns of about 200 basis points over the exit cap rates. So in most of markets that we'd be looking to developing, you could talk about something like a 6 -- an 8 becomes a 6 or a 6.5 is an 8.5. So as you look through the legacy of some of the problem projects, we're making nice progress on things. The current return and the return that we stabilize that when we took those projects off at the end of last year is below that. But as you saw, we had a nice pick up in the occupancy generally, so things are moving in the right direction.

Tamara J. Fique - Wells Fargo Securities, LLC, Research Division

Right. And so I guess, last quarter, you mentioned that the yield on those development projects was 4.5%, where is that today?

Andrew M. Alexander

My guess is it's moved up towards 5%. But now that those are in the existing portfolio, we don't really segregate them out.

Tamara J. Fique - Wells Fargo Securities, LLC, Research Division

Okay. Is most of the outside gap between the commenced and lease rate today related to development portfolio?

Johnny L. Hendrix

Well, some of it is. It's -- the new developments that are categorized as new developments are not included in occupancy. So the new developments that were just transitioned into the portfolio do have a significant amount of a space that is leased and not commenced. Those will have to be in the portfolio for 1 year prior to the time that they moved to same property, so the -- yes and no. I want to also go back and answer Carol's question about the ground lease. There's a summary on Page 44 from the supplemental in the fourth quarter supplemental. Basically, we have 229 ground leases in the average ABRs -- $8.53. And there's more detail in the supplemental there.

Tamara J. Fique - Wells Fargo Securities, LLC, Research Division

Okay and then [Audio Gap] gap between commenced and lease rate. Should, by the end of this year, we expect that to be a more normalized level, the 150 to 180 basis points that you referenced?

Johnny L. Hendrix

It is my expectation that it will be closer to normal. I obviously would like to lease some more space. And I think I have more runway leasing space before I get to what I would consider to be a normal amount of specs to lease. I think we've said before, we think we can get to 95, a little bit over 95. Drew once told me 96. But -- so I still have some movement there that I'll be able to lease some more space, but I think it'll be more normal. And again, it's really only 210 basis points today in the same property.

Andrew M. Alexander

One of the other things we've mentioned before that we're also working with as we move in the more and more high-barrier entry markets, the permit process is a lot longer. We have our regional offices. We have the great relationships. We can get things done as fast as anybody and faster than most, but a lot of municipalities are still under some amount of governmental fiscal pressure, so the permit offices and everything can take some time. So some of it is a function of the increased quality of the portfolio, the higher percentage of assets and high-barrier entry markets such that we are -- we're not 100% sure what the new normal looks like, but as Johnny said, we do think it'll narrowing.

Tamara J. Fique - Wells Fargo Securities, LLC, Research Division

Okay. And then, just with regard to the asset you have under letter of intent for sale. I think you said you have $100 million. Do you expect those to close this quarter?

Johnny L. Hendrix

It would be my expectation that most of that would close in the second quarter.

Tamara J. Fique - Wells Fargo Securities, LLC, Research Division

Okay. And then the 250 basis points negative spread between dispositions and acquisitions in light of the compression you're seeing on the B Class side of the market, do you expect that it will be the range still?

Johnny L. Hendrix

We have -- we've maintained that range in our business plan and in the projections that we've had. I think some of the compression we've seen is somewhat anecdotal and we're not prepared yet to declare that as the new normal.

Operator

From Robert W. Baird, we have Paula Poskon online.

Paula J. Poskon - Robert W. Baird & Co. Incorporated, Research Division

Just wondering what your thoughts are heading into ICSC, if you're hearing any kind of pretty conference chatter, what you're hoping to hear when you get there.

Johnny L. Hendrix

Sure. Paula, we are very excited about ICSC as we always are. It's a good time to go see a lot of our old friends and then share the old war stories. We have a pretty nice dance card for this year, and again -- what I've said before is what we're really seeing is a lot of national, regional and franchise businesses expanding. And certainly, everybody is interested in expanding into Texas and into Houston. So we're very encouraged about the activity that we've talked with folks. Everybody is under pressure to make sure that they're maintaining margins, and so they're pretty tight on the rent, but that's kind of the business that we're in. So we're excited and looking forward to May.

Operator

[Operator Instructions] Looks like we have no further questions. I will now turn it back to the speakers for any final remarks.

Andrew M. Alexander

Well, since we ended on ICSC, let me just say I look forward to seeing a lot of you out there. I know a number of you will be out there. I think Steve and Michelle's dance card is pretty full. Johnny and I really focus time out there on the tenant relationships, as Johnny mentioned. So I know ICSC will be great. It's frankly not as important to as it used to be because we do so much during the year with all of our global meetings and portfolio reviews with folks, but it is still an important time for the industry to get a sense of things. And we are very optimistic about it. We know it will be very good, because as Johnny said, we've set up all the meetings and we know what the agenda is. So we look forward to it, look forward to seeing a lot of you being around all day, and we very much appreciate your interest in Weingarten. Thanks so much.

Operator

And this concludes today's conference. Thank you for joining. You may now disconnect.

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