Shares of Weingarten Realty Investors fall on downgrades

Shares dropped $1.57, or 4.2 percent, to $36.01 in late morning trading. Shares have traded between $27.59 and $49.40 in the past 12 months.

In a note to clients late Wednesday, Citi Investment Research analyst Michael Bilerman said he is concerned that about 42 percent of Weingarten's $650 million development pipeline is in weak housing markets. Already in the first quarter the company delayed about 15 percent of projects by one year. Weingarten primarily owns and develops neighborhood shopping centers.

"Developments will likely face headwinds given a weakening economy," he said. He previously rated the shares "Hold."

What's more, because of the limited availability of financing and the widening spread between what sellers are asking for and what bidders are willing to pay for properties, transaction volume will likely slow, Bilerman said.

Additionally, occupancy of the company's properties was down in the quarter, with both retail and industrial properties showing weakness.

Bilerman said the REIT's grocery-anchored portfolio and diverse tenant base should help protect it somewhat.

Cantor Fitzgerald analyst Philip Martin also cut his rating on the shares to "Sell" from "Hold."

"Weingarten's portfolio can perform reasonably well, fundamentally," Martin said. "However, in the near term, its portfolio and growth strategy, relative to peers, faces greater pressure ... due to its exposure to small shop space and lack of concentration in above average growth markets."