WRI - Embedded Expectations Analysis - 2021 05 10
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 dynamicsSpecifically, 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
Weingarten Realty Investors is a real estate investment trust. The company is engaged in the business of owning, managing and developing retail shopping centers. The company's primary business is leasing space to tenants in the shopping centers it owns or leases. The company also provides property management services to either joint ventures where the company is partners or other outside owners. The company's centers are designed to attract local area customers and are anchored by a supermarket or other national tenants (such as Kroger, HEB or T.J. Maxx). The centers are primarily neighborhood and community shopping centers that often include discounters, retailers and specialty grocers as additional anchors or tenants.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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