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Executives

Tim Goss -

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

Robert Smith - Senior Vice President of Development

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

Analysts

Craig R. Schmidt - BofA Merrill Lynch, Research Division

Quentin Velleley - Citigroup Inc, Research Division

Ki Kim

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

Vincent Chao - Deutsche Bank AG, Research Division

Michael W. Mueller - JP Morgan Chase & Co, Research Division

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

Philip J. Martin - Morningstar Inc., Research Division

Weingarten Realty Investors (WRI) Q4 2011 Earnings Call March 1, 2012 11:00 AM ET

Operator

Welcome to the Weingarten Realty Fourth Quarter Earnings Conference Call. My name is John, and I'll be your operator for today's call. [Operator Instructions] I will now turn the call over to Mr. Tim Goss. Mr. Goss, you may begin.

Tim Goss

Good morning, and welcome to our fourth quarter 2011 conference call. My name is Tim Goss, and I will be assisting the management team with our Investor Relations efforts. 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; Robert Smith, Senior Vice President; 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, which we believe help analysts and investors to better understand Weingarten's operating results. Reconciliation to this non-GAAP financial measure is available in our supplemental information packet located under the Investor Relations tab of our website.

[Operator Instructions]

I will now turn the call over to Drew Alexander.

Andrew M. Alexander

Thank you, Tim, and thanks to all of you for joining our call. I'm pleased to announce another quarter of solid operating results, which was a fitting finish to a good year considering the economic environment. Our fourth quarter results marked an upward movement in operations which sets the stage for what we believe will be an even stronger 2012.

As we formulated our business plan for 2011, we felt the economy would gradually improve during the year giving us cause for optimism. Instead, we encountered economic turmoil around the world. Nonetheless, we increased occupancy over the course of the year in spite of big-box closings early in the year and finished the year with strong Same Property NOI growth in the fourth quarter. We also made good progress with our disposition program. We sold nearly 120 million of non-core assets in land holdings last year. We remained focused on reducing our land holdings, whether through selling parcels or converting land into new phases of active developments.

During 2011, we sold approximately 17 million of our land held for future development. The proceeds from our disposition program were recycled into investments in acquisitions and our development program. Especially considering the recent improvements in the CMBS market, we are bullish on our ability to continue the evolution of our portfolio through additional capital recycling in 2012 and beyond.

We invested over $65 million in a very competitive acquisition market last year despite an increase in prices for top-tier assets to pre-recession levels, and in some cases, even higher. With an immense amount of capital chasing the higher-quality properties, we continue to actively compete, but have remained disciplined by pursuing only those opportunities that will create acceptable long-term returns to our shareholders.

We also continue to make progress in our New Development program. In 2011, we commenced 3 excellent new projects, including our entry into the Washington, D.C. market, investing over $35 million during the year. We anticipate that both the acquisitions and New Development market will remain challenging, and we will stay focused and disciplined to grow shareholder value in this area. By recycling capital from our disposition program into new acquisitions and development, we continue to further improve the overall quality of our portfolio.

The finance team was also very busy in 2011. We extended the term of our credit facility to 4 years plus an option year and closed a $200 million term loan. This affords us adequate liquidity to handle all near-term debt maturities, which all of us in the industry have come to appreciate.

Now many of you have read reports that indicate our industrial portfolio is on the market. As we have communicated many times in the past, we're open to any opportunities that arise. And under the right circumstances, we would consider selling those assets. However, at this time, we have nothing further to report.

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 versus $0.43 last year, resulting in an increase of 11.6%. Increased occupancy, lower bad debt and reduced interest expense from very favorable refinancings of recent debt maturities were the significant drivers of this increase.

Reported FFO was also a $0.48 per share compared to $0.33 per share in 2010, which included impairments of $0.10 per share in 2010. Both reported and recurring FFO for 2011 is net of a noncash impairment of $0.02 per share primarily related to a property that was classified as held for sale.

We made great progress in strengthening our balance sheet and enhancing our liquidity during the year. As Drew indicated, we extended and renewed our $500 million unsecured revolving credit facility and also closed on a $200 million term loan that allowed us to pay down the revolver, thereby providing additional capacity for future capital needs and creating flexibility with our accelerated disposition program.

While we continue to pursue accretive acquisitions to recycle the capital provided by the disposition program, the proceeds provided by these property sales in 2011 were used to continue to delever our balance sheet, reducing our net debt to EBITDA to 6.5x at year end. We have made solid improvement in our key financial ratios during the year.

With respect to 2012 guidance, we reaffirm a range of recurring FFO of $1.81 to $1.91 per share. This guidance assumes $300 million to $400 million of dispositions, $125 million to $175 million of acquisitions and $75 million to $100 million of incremental investment and new developments. As discussed last quarter, we also anticipate a Same Property NOI increase of 4% to 5%.

There are some additional assumptions on our 2012 business plan on Page 50 of the supplemental. Our global assumption for 2012 is a slow, modest improvement in the general economy, as well as the retail environment. However, only marginally better than 2011.

Before I turn the call over to Robert Smith to discuss development, I'd like to formally introduce Tim Goss, who will be helping Drew, Johnny and myself interface with all of you. As many of you know, Kristin Horn is no longer with the company. Tim has been with the company 7 years leading our financial planning and analysis area, and he provides us with the answers to many of your questions. I look forward to personally introducing Tim to each of you at upcoming NAREIT or other investor conferences. Robert?

Robert Smith

Well, we continued to see gradual improvements in the New Development arena. As you know, our 3 areas of focus have been on leasing the projects that are currently in our pipeline, utilizing our existing inventory of land through either sales or initiating new phases of existing developments and the continued pursuit of new opportunities, both ground-up developments, as well as redevelopments.

On the leasing front, we are pleased with the progress that we're experiencing on our active developments. For the 7 projects that were in the pipeline at the beginning of the year, we have increased signed occupancy by almost 18% and have added $1.4 million in NOI during the year. In fact, in the fourth quarter alone, we added 4 percentage points of occupancy, a clear indication of the traction that we have gained at several of our projects.

With respect to our unimproved land inventory, our team is very focused on finding ways to monetize this investment. In fact, during the year, we reduced our investment in unimproved land by $22 million by selling over $17 million of the land, and also by moving 18 acres of the land into our active development pipeline as new phases in response to increased demand for space. We also have several other parcels currently under contract, which is a good indication of the progress expected in 2012.

We are also very pleased with the new projects that we commenced last year. We began construction on 3 centers, each anchored by a leading supermarket. Earlier in the year, we kicked off projects with Kroger and Whole Foods. And then in November, we finalized a joint venture with a landowner near Alexandria, Virginia for a 258,000 square-foot shopping center anchored by Wegmans, which many of you know is a highly successful supermarket operator on the East Coast.

This project, which represents our entry into the Washington, D.C. market, has an estimated final investment of $62 million and is already nearly 70% pre-leased. The Wegmans store, which is expected to open in the spring of 2014, we will continue our strong pre-leasing efforts. We will be quite selective, however, with new leases as we believe we'll see even better ramps on the shop space the closer we get to the opening of the center.

Combined with our Kroger and our Whole Foods developments, these 3 projects represent $74 million of additions to our development pipeline in 2011. Considering the economy, we are pleased with this progress and look forward to more positive results in 2012.

I will now turn it over to Johnny.

Johnny L. Hendrix

Thanks, Robert. We continue to see small, positive steps towards an improved operating environment, and it feels like we're picking up a little momentum going into 2012.

Shop fallout has continued to subside. Over the last half of 2011, we saw a 25% reduction from a year ago. We're encouraged by the most recent jobs reports. Almost 1 million jobs, over 60% of all the jobs created in 2011 were within Weingarten's operating footprint. We gained jobs in 64 of the 66 MSAs represented in our portfolio. Jobs will drive increased retail sales and ultimately, improved metrics for our shopping centers.

We finished 2011 with a strong quarter, ending the year with 93% occupancy for our retail properties. This includes small shop occupancy of 86.7%, an increase of 110 basis points during the year. We're seeing the most interest from service tenants, healthy living and fast buys categories. Tenants like insurance agents, medical services, Supercuts, SUBWAY, pizza shops, Weight Watchers and Mattress Firm. Our Healthy Living category which includes GNC, urgent care, chiropractors and senior care had significant increase of transaction flow during 2011.

In recent discussions with our dental and medical franchisors, we continue to see strong open device for our shopping centers. We've been able to increase our overall shop occupancy primarily based on 2 factors. First, we have a great operating team that is focused at a local level, maximizing occupancy by making decisions in the field. The team executed 665 new leases representing $30 million in annualized rents in 2011. And second, we have great properties. 74% of our retail NOI comes from shopping centers anchored by a supermarket.

On average, one of our shopping centers anchored by a supermarket and a discount clothing operator creates 20,000 customer visits a week to our shopping centers. This traffic, combined with our best-in-class operating platform, generated 110 basis point improvement in shop space occupancy during 2011. Those same 2 factors also contributed to a healthy fourth quarter retail Same Property NOI increase of 1.8%.

For 2012, we're positioned to see a very good increase of between 4% and 5%. We still have some work to do, but we're closing in on the goal. The bulk of the Same Property NOI increase will be driven by 4 components. First, the full year effect of leases commenced in 2011. Second, the commencement of leases already signed which will commence during 2012, and third, contractual rent steps.

While there is work commencing leases, the first 3 components are pretty much done. Majority of the work that still has to be completed falls into the fourth category, leases that still need to be signed and commenced during 2012. We estimate we need an additional $5 million of rent from this category during the year. This translates roughly 450,000 square feet of space that would need to be commenced in 2012.

The timing and the volume of production required is about the same we've experienced over the last 2 years. We're seeing the Same Property NOI improving unevenly through 2012. We commenced a lot of leases in the second quarter of 2011, so for 2012 that will be a more challenging quarter. We didn't see finishing the year strong. The company continues to be focused on repositioning our retail portfolio.

During 2011, we sold 26 assets for close to $120 million. Since the end of the year, we closed an additional 5 properties for $37 million. The majority of the centers we sold are small between $5 million and $10 million. Most of the buyers are local investors that have access to bank debt. Selling to a little less experienced buyer, combined with the CMBS slow down during 2011, led to a little slower execution of our strategy. But we continue to be committed to sell these lower-quality assets and improve our overall portfolio.

Finally, I wanted to touch briefly on the performance of our industrial portfolio. We ended the year with 89.5% occupancy which is up from 87.9% last quarter, an increase of 160 basis points. You can see in the supplemental, we now have about 630,000 square feet of space that is signed and not commenced. This will obviously lead to improving Same Property NOI going forward. No significant new space is being added to the market, and as the economy improves, this should result in better operating metrics. These improvements will become evident much quicker for industrial assets as we generally have shorter-term leases. So you'd see a higher rate of turn and leases commenced more quickly than retail.

We clearly have some good upside going forward. We're looking forward to the rest of 2012, improving Same Property NOI, improving occupancy and finally, improve negotiating leverage as good space continues to become more scarce. Drew?

Andrew M. Alexander

Thanks, Johnny. Well, I believe it's beneficial to look in the rearview mirror in order to recognize accomplishments and to learn valuable lessons. Our attention is clearly focused on the road ahead. Our strategic plan for 2012 is consistent with what you have heard for some time. We will stay focused on 5 key areas. First, continued growth in Same Property NOI; second, disciplined accretive investments in both acquisitions and new development; third, continued dispositions of non-core assets and strengthening of our quality portfolio; fourth, continued improvement of our strong balance sheet and financial metrics; and fifth, growing FFO and NAV per share.

As it relates to our operating metrics, a lot of the work we completed in 2011 produced significant portions of the planned improvements in 2012 such as our projected increases in Same Property NOI. Additionally, our performance thus far in 2012 has been very positive with continued declines in tenant fallout and favorable leasing activity, both of which should contribute to further occupancy improvements.

Thanks to all of the Weingarten associates that have worked so hard in 2011 and will certainly continue their efforts in 2012, and thanks to 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] Our first question comes from Craig Schmidt from Bank of America.

Craig R. Schmidt - BofA Merrill Lynch, Research Division

You mentioned in your press release you picked up 110 bps in leasing for a space, 110,000 square feet. I wonder, could you categorize that? Well, were those nationals or local? Were they at the smaller end of that range or the larger end of that range?

Johnny L. Hendrix

Craig, I would say they're really right in the middle. Most of the shop space that we're leasing today would fall into a category that I would -- kind of lump a little bit together. And that's the national, regional and franchisor-driven opportunities. It's people like GNC, Sally Beauty, SUBWAY. So a lot of those are in the 2,000 square foot range. We kind of think of the average shop space for us is about 2,200 square feet.

Craig R. Schmidt - BofA Merrill Lynch, Research Division

And are those names investing throughout the geography of the U.S.?

Johnny L. Hendrix

Yes. I would also include medical services with that, dentists, chiropractors and people like that which have been part of that increase.

Operator

Our next question comes from Quentin Velleley from Citigroup.

Quentin Velleley - Citigroup Inc, Research Division

Just in terms of guidance, just curious in terms of the acquisitions and the dispositions which you're having coming through throughout the year. I'm just -- can you give us a sense of what cap rates you're assuming in guidance so we can get a sense of the dilution from the dispositions?

Stephen C. Richter

Well, Quentin, this is Steve. We're assuming around an 8% cap rate on dispositions and generally spread throughout the year. On acquisitions, we're obviously a little more lower cap rate than that. So I think we're closer in the call it 6, little -- maybe a little heavier than that.

Quentin Velleley - Citigroup Inc, Research Division

Okay. And then Steve, with the interest expense coming down in the quarter, in the fourth quarter, can you just talk through the difference in that? I know you had some asset sales and some minor refinancing stuff but was a big drop, so could you just talk us through that?

Stephen C. Richter

Sure. A big -- the big pieces of that have to do with the refinance of the 7% bonds that we paid off last year as well as the redemption of the 395 convertibles we had. Even though it had a 395 coupon, the actual accrual expense that was hitting the P&L was a little over 5.25% because of the amortization of the convertible feature and so forth. So about -- and then we also had the refinancing of the revolver, which we went from a 275 spread to 125. So those are the 3 major pieces that account for the big difference in interest expense.

Operator

Our next question comes from Ki Bin Kim from Macquarie.

Ki Kim

Just a follow up on that, a quick question. You have about $500 million coming due this year. What are your refinancing plans?

Stephen C. Richter

Obviously, as we've mentioned several times, there's a $200 million term loan that actually runs until the end of August. The anticipated take out of that, if you will, is the disposition program that we have articulated. And beyond that, we obviously that -- we're expecting $300 million to $400 million from that program, so that will clearly take out the $200 million in the current balance on the revolver which allows us then to use the revolver for the other $330-ish million, $340-ish million of what I'd call normal debt maturities beyond the $200 million term loan.

Ki Kim

So you're not planning to raise any longer-term debt? You're going to keep on the revolver, the remainder?

Stephen C. Richter

That's correct. Obviously, we're working through the disposition program until we have better clarity there. The one caveat, I would say, is we continue to look for acquisition opportunities. So we have to balance that with -- should we find something or be successful in that market, we could, in fact, approach the long-term market at that point.

Ki Kim

Okay. And in terms of market rents and what you're seeing, could you talk about if there are certain markets that you're observing increases in market land square? It just -- has it justified more development?

Johnny L. Hendrix

Ki, this is Johnny. First of all, I want to answer the last question first. We have not seen significant rental increases that would justify a lot of new development. There are selective opportunities for new development, but I wouldn't say that the rent increases we're seeing are there yet. I think you can kind of look at the occupancy in the regional areas that we're in to get an idea of where we seem to have some amount of leverage. So California, which is 94.6% leased, we have pretty good leverage in -- we're seeing better rental increases. Texas, we're at 94 -- 93.6%, which is really almost pre-recession levels. And so we have pretty decent leverage there. Florida, our occupancy is up really nicely over the last several years. We're almost to 94% in Florida today. We've actually got about 390 basis points of spread between signed and leased. So we've got a lot of good same store NOI coming out of there in 2012. So we're seeing better leverage in Florida. Both the Mountain and Atlantic regions actually is kind of different than you might initially look at. The occupancy is a little lower than the average of the portfolio. But actually, their shop space is higher than the rest of the portfolio. It's somewhere around 89%, both of them. Those markets have been hit primarily by some fallouts, Borders, we had a home improvement store that we talked about last year and Ultimate Electronics. So overall, those markets have a little bit less occupancy. But from a shop space perspective, we're still in pretty good shape. So I think the leverage is getting a little bit better. And you can't really tell that quite from the same property from the old versus new. But I think it is getting better, and I think we will see it improve through 2012.

Ki Kim

And is the strength in Florida all Florida or just Southern Florida?

Johnny L. Hendrix

Our experience is Southern Florida clearly is the best. The recovery that we saw last year, and we talked a lot about it on the various conference calls about how well Florida was leasing up, that recovery primarily occurred in the central part of the state.

Operator

Our next question comes from Nathan Isbee from Stifel, Nicolaus.

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

You previously mentioned you were moving a lot of your small shop leasing to short-term. I think the number was about 70% on the last call. At what point -- or have you already reached that point where you start dialing that back and start to move out term a little bit?

Johnny L. Hendrix

Nate, I think that's a great question. It really is a question that we're answering on a space by space basis. There's always this question, are you really pushing for occupancy? Are you pushing for rental increases? That decision is made in the field by our regional folks. Overall, I will tell you that we are continuing to push for occupancy. I think if I had to go one way or the other today and I had to take a little bit less rent, get the space leased and online faster, I'd probably do that on a shorter term basis or one of the things we talked about last year is -- or last quarter, is we're also having rent steps involved in that. So I would probably say we're trying to lease the space faster.

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

Okay. And then you had spoken about it on the last call when you went from that 5% number to the 4% to 5% number having 2 drivers just uncertain about the economy and timing on the sales. Can you -- I mean, it's 4 months later now, can you just give us a little bit more of how you're feeling about your same store NOI? And given that there are some, I guess, better signs for the economy than where we were 4 months ago, are you feeling better towards the upper end of that range yet? or is it still too early?

Johnny L. Hendrix

I don't know that I feel better about it. I feel like we can achieve between the 4% and the 5%. It is not locked in. It is not done. We've got about 200 people that are working to commence leases, to sign new leases, to build out spaces and to get people open as quickly as we can. And that is going to be a tremendous focus of the company this year. And to pick up an additional $5 million. And that's not total. That's net of what falls out. That will take a significant effort, so it is not locked in. I think we can do it, though.

Operator

Our next question comes from Vincent Chao from Deutsche Bank.

Vincent Chao - Deutsche Bank AG, Research Division

I just want to go back to the acquisition guidance for 2012. Just in the prepared remarks, about $65 million in 2011 and a pretty cautious outlook and a conservative underwriting. Just wondering what's changing to make you a little bit more aggressive or positive on acquisitions in 2012.

Andrew M. Alexander

This is Drew. I think it's a combination of things. I think we've got a great network of people who are looking at a lot of different opportunities. I think we understand our market and can find those opportunities where we can improve things and value things better. We're hearing from the brokerage community about a lot of property coming to the market. So while it's very competitive, and we'll remain disciplined, we also think that we'll get our fair share of deals in 2012.

Vincent Chao - Deutsche Bank AG, Research Division

Okay. It sounds like the pipeline overall though is maybe a little bit bigger than it was in 2011.

Andrew M. Alexander

Yes, slightly. But I think it's also something that we are very focused in evaluating the things that we think make sense and focused on the dozen or so markets that we want to principally focus on to grow the company.

Vincent Chao - Deutsche Bank AG, Research Division

Okay. And just on the disposition side. I thought last quarter, you talked about sort of 150 million to 200 million for dispositions for the year. It came up a little bit short of that. I'm just wondering if you could provide some color on what happened there?

Johnny L. Hendrix

Yes, I think -- this is Johnny. What I said in the prepared remarks is we -- the CMBS market is not quite as robust as we had hoped it was. And we are generally dealing with a less sophisticated buyer that takes a little bit longer to execute transactions with. And I think that's really what it's about.

Vincent Chao - Deutsche Bank AG, Research Division

But I mean it seems like the 2012 guidance was unchanged. So those deals just kind of fell through. Some that you thought would go through just kind of fell off, and you don't expect them to come back in 2012?

Andrew M. Alexander

This is Drew. I think it's more that we are working on them and while it's taking longer, and we didn't get them done in '11, we will get things done in '12. And that's why you see the guidance where it is for '12.

Johnny L. Hendrix

The other thing that I would mention is that during '11, the CMBS market literally shut down. We did not have a source of capital there. So we're anticipating that the CMBS market today seems to be coming back. It is our -- you do see transactions in that market, and we are assuming that, that market will not shut down again.

Operator

Our next question comes from Michael Mueller from JPMorgan.

Michael W. Mueller - JP Morgan Chase & Co, Research Division

In terms of 2012 occupancy guidance, I think you mentioned 92%, 93% unassigned basis by year end, ended the year at about 89.3% occupancy. Can you talk about where you expect that number to go? And maybe give a little more clarity on the breakout between retail, which I think was about 91% and industrial which was about 84%?

Johnny L. Hendrix

Yes. I think the guidance was to improve the occupancy about 100 basis points and -- to 93%. Most of that is actually coming out of the retail group and the industrial group is going to be a little bit flat to sideways.

Michael W. Mueller - JP Morgan Chase & Co, Research Division

Okay. So industrial occupancy's about 84%, and you think that's going to stay there?

Andrew M. Alexander

Industrial signed [ph] is 89%. And, of course, the main thing is we think that will commence, which is, as Johnny mentioned, we actually are pretty bullish about the industrial performance as the economy gets better.

Michael W. Mueller - JP Morgan Chase & Co, Research Division

Okay. But I thought you said occupancy would be sideways?

Johnny L. Hendrix

Well, from that, I think it's going to be around 89%, which is where it is today...

Andrew M. Alexander

The signed [ph] occupancy, we don't see -- while we see it increasing, we don't see it dramatically increasing. But it is at the 89.5% in industrial. And of course, the big part is getting that commenced.

Operator

Our next question comes from Rich Moore from RBC Capital Markets.

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

The average base rent number ticked up pretty substantially in the quarter. Is there anything special going on there? Is that weak centers that you sold? Or what is that exactly?

Johnny L. Hendrix

Rich, it's Johnny, and I appreciate you asking that question. I did see that in your write-up earlier. I think I probably didn't do a very good job of some disclosure on the ABR. It starts on Page 26 of the supplemental. I think we made a change in the way we're reporting ABR in that we've taken out ground leases, and that's a change from the methodology that we used last quarter. I think the methodology we're using today is more widely accepted by our peer group and is probably what most everybody else reports. I should have made a -- some sort of footnote about that. So most of the increase from the 1,360 to the 1,451 was kind of that change in methodology and taking the ground leases out, it would have been, I think, about $0.70 less if we had not have made that change.

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

Okay, good. Yes, great. That's helpful. Then on the disposition side of things, you guys said $300 million to $400 million for the year. Would that include industrial assets as well, or are you thinking that's just retail?

Andrew M. Alexander

As mentioned, we're really focused on the non-select portfolio, our secondary portfolio in retail. So that's what we're focused on at this time.

Operator

Our next question comes from Philip Martin from MorningStar.

Philip J. Martin - Morningstar Inc., Research Division

A question, could you shed some guidance on maintenance CapEx, TI expectations for 2012? Certainly, it looks like 2011 versus 2010, TI's went down a meaningful amount on a percentage basis. But again, just want to get your feel for 2012.

Stephen C. Richter

This is Steve Richter. On the CapEx, it runs between $5 million, $7 million depending upon the amount of roofs that we wind up putting on anywhere. It can go up to $10 million, pretty not significant amount of capital required there. On the TI money, it does vary based upon the leasing. Given that we are so heavily invested -- or excuse me, so heavily occupied with the anchors where you generally spend more TI dollars, again, that number fluctuates. So I would anticipate that you would not see the amount of TI capital in 2012 that you, for example, saw last year when we were leasing up a lot of the big boxes.

Philip J. Martin - Morningstar Inc., Research Division

Correct. Okay, okay. Now in terms of new leasing, the tenants that are coming into your properties here, the new tenants. Are these brand new -- especially your small shop, are they new tenants, or are they relocations? I mean, are they new start-ups or are they relocations from another property in the area that was -- that maybe didn't benefit from as good a location, et cetera?

Johnny L. Hendrix

Philip, this is Johnny. I think it really is a combination of both of those. We believe and I think the statistics when you look at our rent versus the rents -- average rents in the markets, our properties are the best properties in the markets that we're in. So there are a significant number of tenants who are relocating to what they think is a better shopping center for the long term. We're also seeing expansion by national and regional retailers that are expanding into new markets and opening new stores. So I would say most of what I would consider to be the local, the mom-and-pop folks, those are mostly relocating. And the national and regional folks are the people who are opening new stores.

Philip J. Martin - Morningstar Inc., Research Division

Okay, and that actually answers part of my next question and that -- are you having more discussions with tenants about expansion or the thought of expansion down the road? Is that entering into the discussion more today than it was even 6 months ago?

Johnny L. Hendrix

Philip, I would tell you that this is something that we've been focused on for years. Many of the analysts probably remember that 3 years ago, we introduced a shortfall lease. And you might recall, one of the images that we had was a leasing executive sign in the -- the lease on the roof of a car. Last year, we signed 250 of those leases. Those are leases that have a leasing cycle that is greatly reduced, could be as short as 3 or 4 days between the time that we make the deal with the tenant and the time that we actually tender the space to him. So we've been active in that for a long time. We've also had a lot of work on global meetings that really started out as -- with the larger tenants. But we've actually expanded to the shop tenants. So that's national and regional franchises that we talked to. And last year, we had over 100 meetings with shop tenants. Even last week, we met with Chipotle and Miami Subs. So we're always looking at opportunities to go to their office or go to our office and talk with them about renewals and talk to them about new leases. And there's a lot of that discussion going on. We're also talking to our existing tenants about what their situation is and what their interest might be in renewal, what their interest might be in expansion. And this is kind of all of the blocking and tackling that we've been doing for the last several years. We've actually branded the program as shop-centric, and you can actually go to the website and click on shop-centric and see all of the efforts that we're going through to lease shop space. And I'm sure that as we have meetings with the analysts and investors, you'll see a little bit more of that. But this is again something that we've been doing for years.

Philip J. Martin - Morningstar Inc., Research Division

Have some tenants feel -- do they feel like they've missed their shot at the best locations in some cases because they may have waited longer than they should have in this environment? Just trying to time it. Because obviously, occupancy is on the rise, and much of sought-after space may be gone or -- characterize that for us a bit.

Johnny L. Hendrix

I certainly think the best opportunity has probably passed. And we're -- I think I said before that we're, I think, getting closer to a tipping point where there is equal leverage between the landlord and the retailer. So I think we may be moving back to a time that the landlord actually has more leverage. Obviously, the best spaces is gone, and there's not a whole lot of it being built. So we have had discussions in these global meetings with tenants, and there is -- they have expressed some concern about where they're going to get more space going forward. So I think we're getting closer to that time. I don't know if we're -- time is totally past yet. So we certainly have a few opportunities left if anyone wants to call us.

Philip J. Martin - Morningstar Inc., Research Division

Okay. And my last question, the assets held for sale. I know it's taken a bit longer because of the CMBS market, the disruptions there. What does that mean in terms of your CapEx in order to ultimately get these sold to reposition them, or is it just purely the disruptions in the CMBS market? I'm just wondering if there's incremental CapEx spend there that wasn't necessarily in the numbers 6, 12 months ago.

Johnny L. Hendrix

Yes. I don't think that there is any additional CapEx in properties that we have for sale. We really don't -- I wouldn't think there's any additional CapEx just because the property is one that we're looking at selling. I mean, we would lease the property the same as if we're going to keep it for the next 20 years. And if the roof needs to get fixed, we need to fix it.

Operator

[Operator Instructions] We have no further questions at this time. Do you have any closing remarks?

Tim Goss

I just like to thank everybody for their interest in the company. We'll be around if there are any further questions. I hope everyone has a great day, and thanks again for your interest in Weingarten.

Operator

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for your participation. You may now disconnect.

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