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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
--------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from____________________ to ____________________
Commission file number 1-9876
------
WEINGARTEN REALTY INVESTORS
---------------------------
(Exact name of registrant as specified in its charter)
Texas 74-1464203
- ---------------------------------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2600 Citadel Plaza Drive, P.O. Box 924133, Houston, Texas. 77292-4133
- ---------------------------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 866-6000
--------------
____________________________________________
(Former name, former address and former fiscal
year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X. No .
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes . No .
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes X. No .
--- ---
As of April 30, 2003, there were 52,122,029 common shares of beneficial
interest of Weingarten Realty Investors, $.03 par value, outstanding.
PART 1
FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
WEINGARTEN REALTY INVESTORS
STATEMENTS OF CONSOLIDATED INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended
March 31,
--------------------
2003 2002
--------- ---------
Revenues:
Rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 96,917 $ 83,421
Interest income . . . . . . . . . . . . . . . . . . . . . . . 246 200
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,022 760
--------- ---------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . 98,185 84,381
--------- ---------
Expenses:
Depreciation and amortization . . . . . . . . . . . . . . . . 21,199 17,761
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 19,439 14,996
Operating . . . . . . . . . . . . . . . . . . . . . . . . . . 14,146 12,250
Ad valorem taxes. . . . . . . . . . . . . . . . . . . . . . . 11,491 10,171
General and administrative. . . . . . . . . . . . . . . . . . 3,057 2,676
--------- ---------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . 69,332 57,854
--------- ---------
Income Before Equity in Earnings of Joint Ventures,
Minority Interest in Income of Partnerships, Gain
on Sale of Properties and Discontinued Operations . . . . 28,853 26,527
Equity in Earnings of Joint Ventures. . . . . . . . . . . . . . 1,038 1,074
Minority Interest in Income of Partnerships . . . . . . . . . . (895) (116)
Gain on Sale of Properties. . . . . . . . . . . . . . . . . . . 9
--------- ---------
Income Before Discontinued Operations . . . . . . . . . . . . . 29,005 27,485
--------- ---------
Operating Income from Discontinued Operations . . . . . . . . . 15 711
Gain on Sale of Properties. . . . . . . . . . . . . . . . . . . 871 1,221
--------- ---------
Income From Discontinued Operations. . . . . . . . . . . 886 1,932
--------- ---------
Net Income. . . . . . . . . . . . . . . . . . . . . . . . . . . 29,891 29,417
Dividends on Preferred Shares . . . . . . . . . . . . . . . . . 4,922 4,939
--------- ---------
Net Income Available to Common Shareholders . . . . . . . . . . $ 24,969 $ 24,478
========= =========
Net Income Per Common Share - Basic:
Income Before Discontinued Operations . . . . . . . . . . . . $ .46 $ .43
Income From Discontinued Operations . . . . . . . . . . . . . .02 .04
--------- ---------
Net Income. . . . . . . . . . . . . . . . . . . . . . . . . . $ .48 $ .47
========= =========
Net Income Per Common Share - Diluted:
Income Before Discontinued Operations . . . . . . . . . . . . $ .46 $ .43
Income From Discontinued Operations . . . . . . . . . . . . . .02 .04
--------- ---------
Net Income. . . . . . . . . . . . . . . . . . . . . . . . . . $ .48 $ .47
========= =========
Net Income. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,891 $ 29,417
--------- ---------
Other Comprehensive Income:
Unrealized derivative gain on interest rate swaps . . . . . . 529 1,166
Amortization of forward-starting interest rate swaps. . . . . (40) (40)
--------- ---------
Other Comprehensive Income. . . . . . . . . . . . . . . . . . . 489 1,126
--------- ---------
Comprehensive Income. . . . . . . . . . . . . . . . . . . . . . $ 30,380 $ 30,543
========= =========
See Notes to Consolidated Financial Statements.
PAGE 2
WEINGARTEN REALTY INVESTORS
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
March 31, December 31,
2003 2002
------------ ------------
ASSETS
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,762,271 $ 2,695,286
Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . (475,034) (460,832)
------------ ------------
Property - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,287,237 2,234,454
Investment in Real Estate Joint Ventures . . . . . . . . . . . . . . . . . . . . 28,574 28,738
------------ ------------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,315,811 2,263,192
Notes Receivable from Real Estate Joint Ventures and Partnerships. . . . . . . . 18,304 14,747
Unamortized Debt and Lease Costs . . . . . . . . . . . . . . . . . . . . . . . . 50,614 48,377
Accrued Rent and Accounts Receivable (net of allowance for doubtful
accounts of $4,926 in 2003 and $4,302 in 2002) . . . . . . . . . . . . . . . . 30,584 38,256
Cash and Cash Equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,630 27,420
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,108 31,897
------------ ------------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,479,051 $ 2,423,889
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,423,143 $ 1,330,369
Accounts Payable and Accrued Expenses. . . . . . . . . . . . . . . . . . . . . . 48,025 81,488
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,074 23,636
------------ ------------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,492,242 1,435,493
------------ ------------
Minority Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,238 54,983
------------ ------------
Commitments and Contingencies
Shareholders' Equity:
Preferred Shares of Beneficial Interest - par value, $.03 per share;
shares authorized: 10,000
7.44% Series A cumulative redeemable preferred shares of
beneficial interest; 3,000 shares issued and outstanding;
liquidation preference $75,000 . . . . . . . . . . . . . . . . . . . . 90 90
7.125% Series B cumulative redeemable preferred shares of
beneficial interest; 3,600 shares issued and 3,518 shares
outstanding in 2003 and 2002; liquidation preference $87,950 . . . . . 106 106
7.0% Series C cumulative redeemable preferred shares of
beneficial interest; 2,300 shares issued and 2,252 and 2,253 shares
outstanding in 2003 and 2002; liquidation preference $112,590. . . . . 67 67
Common Shares of Beneficial Interest - par value, $.03 per share;
shares authorized: 150,000; shares issued and outstanding:
52,113 in 2003 and 52,076 in 2002. . . . . . . . . . . . . . . . . . . . . 1,560 1,559
Capital Surplus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,083,227 1,082,046
Accumulated Dividends in Excess of Net Income. . . . . . . . . . . . . . . . . (153,366) (147,853)
Accumulated Other Comprehensive Loss . . . . . . . . . . . . . . . . . . . . . (2,113) (2,602)
------------ ------------
Shareholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 929,571 933,413
------------ ------------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,479,051 $ 2,423,889
============ ============
See Notes to Consolidated Financial Statements.
PAGE 3
WEINGARTEN REALTY INVESTORS
STATEMENTS OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
Three Months Ended
March 31,
-----------------------
2003 2002
---------- ----------
Cash Flows from Operating Activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,891 $ 29,417
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization. . . . . . . . . . . . . . . . 21,199 18,103
Equity in earnings of joint ventures . . . . . . . . . . . . (1,038) (1,074)
Minority interest in income of partnerships. . . . . . . . . 895 116
Gain on sale of properties . . . . . . . . . . . . . . . . . (880) (1,221)
Changes in accrued rent and accounts receivable. . . . . . . 7,690 8,385
Changes in other assets . . . . . . . . . . . . . . .. . . . (7,023) (4,825)
Changes in accounts payable and accrued expenses . . . . . . (36,418) (26,839)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . 236 200
---------- ----------
Net cash provided by operating activities. . . . . . . . . 14,552 22,262
---------- ----------
Cash Flows from Investing Activities:
Investment in properties . . . . . . . . . . . . . . . . . . . . . (56,088) (62,696)
Notes Receivable:
Advances . . . . . . . . . . . . . . . . . . . . . . . . . . (3,678) (255)
Collections. . . . . . . . . . . . . . . . . . . . . . . . . 131 1,464
Proceeds from sales and disposition of property. . . . . . . . . . 1,716 2,412
Real estate joint ventures and partnerships:
Investments. . . . . . . . . . . . . . . . . . . . . . . . . (60) (194)
Distributions. . . . . . . . . . . . . . . . . . . . . . . . 904 979
---------- ----------
Net cash used in investing activities. . . . . . . . . . . (57,075) (58,290)
---------- ----------
Cash Flows from Financing Activities:
Proceeds from issuance of:
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136,013 80,500
Common shares of beneficial interest . . . . . . . . . . . . 1,050 11,730
Principal payments of debt . . . . . . . . . . . . . . . . . . . . (54,883) (1,291)
Common and preferred dividends paid. . . . . . . . . . . . . . . . (35,404) (33,753)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . (43) (39)
---------- ----------
Net cash provided by financing activities. . . . . . . . . 46,733 57,147
---------- ----------
Net increase in cash and cash equivalents. . . . . . . . . . . . . . . 4,210 21,119
Cash and cash equivalents at January 1 . . . . . . . . . . . . . . . . 27,420 12,434
---------- ----------
Cash and cash equivalents at March 31. . . . . . . . . . . . . . . . . $ 31,630 $ 33,553
========== ==========
See Notes to Consolidated Financial Statements.
PAGE 4
WEINGARTEN REALTY INVESTORS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
1. INTERIM FINANCIAL STATEMENTS
The consolidated financial statements included in this report are
unaudited, however, amounts presented in the balance sheet as of December
31, 2002 are derived from the audited financial statements of the Company
at that date. In the opinion of WRI, all adjustments necessary for a fair
presentation of such financial statements have been included. Such
adjustments consisted of normal recurring items. Interim results are not
necessarily indicative of results for a full year.
The consolidated financial statements and notes are presented as permitted
by Form 10-Q, and do not contain certain information included in WRI's
annual financial statements and notes.
Certain reclassifications of prior year's amounts have been made to conform
to the current year presentation.
2. NEWLY ADOPTED ACCOUNTING PRONOUNCEMENTS
In December 2002, FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure- an amendment of FASB Statement No.
123", which is effective for fiscal years beginning after December 15,
2002. This statement provides alternative methods of transition for an
entity that voluntarily changes to the fair value-based method of
accounting for stock-based employee compensation. It also amends the
disclosure requirements of SFAS No. 123 to require prominent disclosures in
both annual and interim financial statements about the method of accounting
for stock-based employee compensation and the effect of the method used on
reported results. We adopted this statement effective January 1, 2003 using
the prospective method, which requires us to recognize stock-based employee
compensation as new share options are awarded. No stock-based employee
compensation was recognized for the quarter ending March 31, 2003 as only a
diminimus number of options were awarded during this period. With respect
to share options awarded prior to January 1, 2003, WRI accounted for
stock-based employee compensation using the intrinsic valued method
prescribed in Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees", and related interpretations. In accordance with
this opinion, no stock-based employee compensation had been recognized in
WRI's financial statements prior to January 1, 2003.
PAGE 5
The following table illustrates the effect on net income available to
common shareholders and net income per common share if the fair value-based
method had been applied to all outstanding and unvested awards in each
period:
Three Months Ended
March 31,
--------------------
2003 2002
--------- ---------
Net income available to common shareholders . . . . . . . . . . . . $ 24,969 $ 24,478
Stock-based employee compensation included in net income
available to common shareholders . . . . . . .. . . . . . . . . . - -
Stock-based employee compensation determined under the
fair value-based method for all awards. . . . . . . . . . . . . . (101) (86)
--------- ---------
Pro forma net income available to common shareholders . . . . . . . $ 24,868 $ 24,392
========= =========
Net income per common share:
Basic - as reported . . . . . . . . . . . . . . . . . . . . . $ .48 $ .47
========= =========
Basic - pro forma . . . . . . . . . . . . . . . . . . . . . . $ .48 $ .47
========= =========
Net income per common share:
Diluted - as reported . . . . . . . . . . . . . . . . . . . . $ .48 $ .47
========= =========
Diluted - pro forma . . . . . . . . . . . . . . . . . . . . . $ .48 $ .47
========= =========
In November 2002, FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others". FIN 45 establishes new disclosure
and liability-recognition requirements for direct and indirect debt
guarantees with specified characteristics. The initial measurement and
recognition requirements of FIN 45 are effective prospectively for
guarantees issued or modified after December 31, 2002. However, the
disclosure requirements are effective for interim and annual
financial-statement periods ending after December 15, 2002. WRI has adopted
the disclosure provisions, and management does not expect the full adoption
of FIN 45 to have a material impact on the financial position, results of
operations or cash flows.
In January 2003, FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities". FIN 46 requires a variable interest entity to
be consolidated by a company if that company is subject to a majority of
the risk of loss from the variable interest entity's activities or entitled
to receive a majority of the entity's residual returns or both. FIN 46
requires disclosures about variable interest entities that a company is not
required to consolidate, but in which it has a significant variable
interest. The consolidation requirements of FIN 46 apply immediately to
variable interest entities created after January 31, 2003. The
consolidation requirements apply to existing entities in the first fiscal
year or interim period beginning after June 15, 2003. Certain of the
disclosure requirements apply in all financial statements issued after
January 31, 2003, regardless of when the variable interest entity was
established. We will adopt this statement in 2003, and we do not expect the
adoption of this statement to have a material impact on our financial
position, results of operations or cash flows.
PAGE 6
3. DISCONTINUED OPERATIONS
On January 1, 2002, WRI adopted SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". SFAS No. 144 addresses
accounting and reporting for the impairment or disposal of a segment of a
business. More specifically, this Statement broadens the presentation of
discontinued operations to include a component of an entity whose
operations and cash flows can be clearly distinguished, operationally and
for financial reporting purposes, from the rest of the entity.
In 2002, we sold five retail projects located in Houston (3), Grand Prairie
and San Antonio, Texas; one industrial building located in Houston, Texas
and the River Pointe Apartments located in Conroe, Texas. Accordingly, the
operating results and the gain on sale of the disposed properties have been
reclassified and reported as discontinued operations in the Statements of
Consolidated Income and Comprehensive Income.
In January 2003, a warehouse building was sold that was classified as held
for sale in 2002. The operating results of this industrial facility have
been reclassified and reported as discontinued operations in the Statements
of Consolidated Income and Comprehensive Income, and $1.6 million was
reported as property held for sale in the Consolidated Balance Sheet at
December 31, 2002.
4. DERIVATIVES AND HEDGING
WRI hedges the future cash flows of debt transactions principally through
interest rate swaps with major financial institutions. WRI has three
interest rate swap contracts with an aggregate notional amount of $45
million, which are designated as cash flow hedges, and eleven interest rate
swap contracts with an aggregate notional amount of $107.5 million, which
are designated as fair value hedges.
On March 31, 2003, the derivative instruments designated as cash flow
hedges were reported at their fair values as Other Liabilities, net of
accrued interest, of $1.9 million. The derivative instruments designated as
fair value hedges on March 31, 2003 were reported at their fair values as
Other Assets, net of accrued interest, of $7.5 million.
Within the next twelve months, the Company expects to reclassify to
earnings as interest expense approximately $1.5 million of the current
balance held in accumulated other comprehensive loss. As of March 31, 2003,
the balance in accumulated other comprehensive loss relating to the
derivatives was $.5 million. With respect to fair value hedges, both
changes in fair market value of the derivative hedging instrument and
changes in the fair value of the hedged item will be recorded in earnings
each reporting period. These amounts should completely offset with no
impact to earnings, except for the portion of the hedge that proves to be
ineffective, if any.
PAGE 7
5. PER SHARE DATA
Net income per common share - basic is computed using net income available
to common shareholders and the weighted average shares outstanding. Net
income per common share - diluted includes the effect of potentially
dilutive securities for the periods indicated, as follows (in thousands):
Three Months Ended
March 31,
--------------------
2003 2002
--------- ---------
Numerator:
Net income available to common shareholders - basic . . . . . . $ 24,969 $ 24,478
Income attributable to operating partnership units. . . . . . . 832 31
--------- ---------
Net income available to common shareholders - diluted . . . . . $ 25,801 $ 24,509
========= =========
Denominator:
Weighted average shares outstanding - basic . . . . . . . . . . 52,091 51,686
Effect of dilutive securities:
Share options and awards. . . . . . . . . . . . . . . . . 397 298
Operating partnership units . . . . . . . . . . . . . . . 1,529 77
--------- ---------
Weighted average shares outstanding - diluted . . . . . . . . . 54,017 52,061
========= =========
Options to purchase 1,300 shares for the first quarter ended March 31, 2003
were not included in the calculation of net income per common share -
diluted as the exercise prices were greater than the average market price.
No common shares have been excluded from the first quarter ended March 31,
2002 calculation of net income per common share - diluted.
6. DEBT
WRI's debt consists of the following (in thousands):
March 31, December 31,
2003 2002
------------ ------------
Fixed-rate debt payable to 2030 at 5.0 to 8.8% . . . . . . . . . $ 1,231,181 $ 1,097,185
Variable-rate unsecured notes payable. . . . . . . . . . . . . . 75,000 75,000
Unsecured notes payable under revolving credit agreements. . . . 75,170 119,000
Obligations under capital leases . . . . . . . . . . . . . . . . 33,462 33,462
Industrial revenue bonds payable to 2015 at 1.1% to 3.2% . . . . 8,330 5,722
------------ ------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,423,143 $ 1,330,369
============ ============
At March 31, 2003, the variable interest rate for notes payable under the
$50 million term loan agreement and the $350 million revolving credit
agreement was 1.8%. At March 31, 2003, $13.2 million was outstanding under
the $20 million revolving credit agreement at 1.8%.
PAGE 8
During the first quarter of 2003, WRI issued a total of $136 million of
unsecured fixed-rate medium term notes at a weighted average rate of 5.4%
and a weighted average term of 11.4 years. Proceeds received were used to
pay down amounts outstanding under our $350 million revolving credit
facility. Following is a summary of the medium term note activity for the
three months ended March 31, 2003 (in thousands, except years to maturity
and interest rate):
YEARS TO INTEREST
DATE ISSUED PRINCIPAL MATURITY RATE
---------------------- --------- ---------- ----------
January 15, 2003. . . . $ 20,000 12.0 5.75%
January 28, 2003. . . . 15,000 10.0 5.50%
January 28, 2003. . . . 6,000 10.0 5.50%
February 12, 2003 . . . 20,000 12.0 5.57%
February 26, 2003 . . . 25,000 12.0 5.35%
February 28, 2003 . . . 25,000 12.0 5.25%
March 5, 2003 . . . . . 25,000 10.5 4.99%
On April 24, 2003, the SEC declared effective WRI's $1 billion shelf
registration statement. WRI has not used the shelf registration statement
for offerings of its securities.
WRI's debt can be summarized as follows (in thousands):
March 31, December 31,
2003 2002
------------ ------------
As to interest rate (including the effects of
interest rate swaps):
Fixed-rate debt . . . . . . . . . . . . . . $ 1,189,683 $ 1,055,688
Variable-rate debt. . . . . . . . . . . . . 233,460 274,681
------------ ------------
Total . . . . . . . . . . . . . . . . . . . $ 1,423,143 $ 1,330,369
============ ============
As to collateralization:
Unsecured debt. . . . . . . . . . . . . . . $ 1,050,578 $ 958,719
Secured debt. . . . . . . . . . . . . . . . 372,565 371,650
------------ ------------
Total . . . . . . . . . . . . . . . . . . . $ 1,423,143 $ 1,330,369
============ ============
PAGE 9
7. PROPERTY
WRI's property consists of the following (in thousands):
March 31, December 31,
2003 2002
------------ ------------
Land . . . . . . . . . . . . . . $ 512,490 $ 497,168
Land held for development. . . . 23,675 23,613
Land under development . . . . . 42,468 44,847
Buildings and improvements . . . 2,102,523 2,051,065
Construction in-progress . . . . 81,115 77,006
Property held for sale . . . . . 1,587
------------ ------------
Total. . . . . . . . . . . . . . $ 2,762,271 $ 2,695,286
============ ============
Interest and ad valorem taxes capitalized to land under development or
buildings under construction was $2.2 million and $2.6 million for the
quarters ended March 31, 2003 and 2002, respectively.
8. INVESTMENTS IN REAL ESTATE JOINT VENTURES
WRI owns interests in 16 joint ventures or limited partnerships where we do
not exercise financial and operating control. These partnerships are
accounted for under the equity method since WRI exercises significant
influence. Our interests in these joint ventures and limited partnerships
range from 20% to 75% and, with the exception of one partnership, which
owns seven industrial properties, each venture owns a single real estate
asset. Combined condensed financial information of these ventures (at 100%)
is summarized as follows (in thousands):
March 31, December 31,
2003 2002
------------ ------------
Combined Balance Sheets
Property . . . . . . . . . . . . . . . . $ 182,155 $ 177,396
Accumulated depreciation . . . . . . . . (24,844) (23,877)
------------ ------------
Property - net. . . . . . . . . . . 157,311 153,519
Other assets . . . . . . . . . . . . . . 9,394 11,898
------------ ------------
Total. . . . . . . . . . . . . $ 166,705 $ 165,417
============ ============
Debt . . . . . . . . . . . . . . . . . . $ 71,830 $ 71,985
Amounts payable to WRI . . . . . . . . . 19,321 16,334
Other liabilities. . . . . . . . . . . . 2,004 4,152
Accumulated equity . . . . . . . . . . . 73,550 72,946
------------ ------------
Total. . . . . . . . . . . . . $ 166,705 $ 165,417
============ ============
PAGE 10
Combined Statements of Income
Three Months Ended
March 31,
--------------------------
2003 2002
------------ ------------
Revenues . . . . . . . . . . . . . . . . $ 6,142 $ 6,421
------------ ------------
Expenses:
Depreciation and amortization. . . . . 1,058 1,164
Operating. . . . . . . . . . . . . . . 778 860
Interest . . . . . . . . . . . . . . . 1,518 1,634
Ad valorem taxes . . . . . . . . . . . 782 797
General and administrative . . . . . . 38 15
------------ ------------
Total . . . . . . . . . . . . . . . 4,174 4,470
------------ ------------
Net Income . . . . . . . . . . . . . . . $ 1,968 $ 1,951
============ ============
Our investment in real estate joint ventures, as reported on the balance
sheets, differs from our proportionate share of the joint ventures'
underlying net assets due to basis differentials, which arose upon the
transfer of assets from WRI to the joint ventures. This basis differential,
which totaled $4.8 million at March 31, 2003 and December 31, 2002,
respectively, is depreciated over the useful lives of the related assets.
Fees earned by WRI for the management of these joint ventures totaled $.1
million for the quarters ended March 31, 2003 and 2002, respectively.
9. SEGMENT INFORMATION
The operating segments presented are the segments of WRI for which separate
financial information is available, and operating performance is evaluated
regularly by senior management in deciding how to allocate resources and in
assessing performance. WRI evaluates the performance of its operating
segments based on net operating income that is defined as total revenues
less operating expenses and ad valorem taxes.
The shopping center segment is engaged in the acquisition, development and
management of real estate, primarily anchored neighborhood and community
shopping centers located in Texas, California, Louisiana, Arizona, Nevada,
Arkansas, New Mexico, Oklahoma, Tennessee, Kansas, Colorado, Missouri,
Illinois, Florida, Mississippi, North Carolina and Maine. The customer base
includes supermarkets, discount retailers, drugstores and other retailers
who generally sell basic necessity-type commodities. The industrial segment
is engaged in the acquisition, development and management of bulk
warehouses and office/service centers. Its properties are located in Texas,
Nevada, Georgia, Florida and Tennessee, and the customer base is diverse.
Included in "Other" are corporate-related items, insignificant operations
and costs that are not allocated to the reportable segments.
PAGE 11
Information concerning WRI's reportable segments is as follows (in
thousands):
SHOPPING
CENTER INDUSTRIAL OTHER TOTAL
------------ ---------- ---------- -------------
Three Months Ended
March 31, 2003:
Revenues . . . . . . . . . . . . . . . . . . . $ 87,985 $ 9,708 $ 492 $ 98,185
Net operating income . . . . . . . . . . . . . 65,529 6,872 147 72,548
Equity in earnings of joint ventures . . . . . 977 92 (31) 1,038
Investment in real estate joint ventures . . . 28,299 275 28,574
Total assets . . . . . . . . . . . . . . . . . 2,090,813 236,932 151,306 2,479,051
Three Months Ended
March 31, 2002:
Revenues . . . . . . . . . . . . . . . . . . . $ 74,906 $ 8,929 $ 546 $ 84,381
Net operating income . . . . . . . . . . . . . 55,522 6,228 210 61,960
Equity in earnings of joint ventures . . . . . 987 96 (9) 1,074
Investment in real estate joint ventures . . . 24,920 845 25,765
Total assets . . . . . . . . . . . . . . . . . 1,815,020 221,588 117,845 2,154,453
Net operating income reconciles to income before discontinued operations as
shown on the Statements of Consolidated Income and Comprehensive Income as
follows (in thousands):
Three Months Ended
March 31,
--------------------
2003 2002
--------- ---------
Total segment net operating income . . . . . . . . . . $ 72,548 $ 61,960
Less:
Depreciation and amortization . . . . . . . . . . 21,199 17,761
Interest. . . . . . . . . . . . . . . . . . . . . 19,439 14,996
General and administrative. . . . . . . . . . . . 3,057 2,676
Minority interest in income of partnerships . . . 895 116
Equity in earnings of joint ventures. . . . . . . (1,038) (1,074)
Gain on sale of properties. . . . . . . . . . . . (9)
--------- ---------
Income Before Discontinued Operations. . . . . . . . . $ 29,005 $ 27,485
========= =========
10. COMMON SHARES OF BENEFICIAL INTEREST
In February 2002, a three-for-two share split, effected in the form of a
50% share dividend, was declared for shareholders of record on April 1,
2002, payable April 15, 2002. We issued 17.3 million common shares of
beneficial interest as a result of the share split. All references to the
number of shares and per share amounts have been restated to reflect the
share split, and an amount equal to the par value of the number of common
shares issued have been reclassified to common stock from retained
earnings.
PAGE 12
In February 2002, we completed the sale of .3 million common shares of
beneficial interest. Net proceeds to WRI totaled $9.5 million based on a
price of $33.65 per share and were used to pay down amounts outstanding
under our $350 million revolving credit facility.
11. BANKRUPTCY REMOTE PROPERTIES
On April 2, 2001, we purchased 19 supermarket-anchored shopping centers,
aggregating 2.5 million square feet, in California. The purchase price for
the properties was $277.5 million, including the assumption of
approximately $132 million in debt secured by all 19 properties.
These 19 properties, having a net book value of approximately $269.8
million at March 31, 2003 (collectively the "Bankruptcy Remote Properties",
and each a "Bankruptcy Remote Property"), are wholly owned by various
"Bankruptcy Remote Entities". Each Bankruptcy Remote Entity is an indirect
subsidiary of the Company. The assets of each Bankruptcy Remote Entity,
including the respective Bankruptcy Remote Property or Properties owned by
each, are owned by that Bankruptcy Remote Entity alone and are not
available to satisfy claims that any creditor may have against the Company,
its affiliates, or any other person or entity. No Bankruptcy Remote Entity
has agreed to pay or make its assets available to pay creditors of the
Company, any of its affiliates, or any other person or entity. Neither the
Company nor any of its affiliates has agreed to pay or make its assets
available to pay creditors of any Bankruptcy Remote Entity (other than any
agreement by a Bankruptcy Remote Entity to pay its own creditors). No
affiliate of any Bankruptcy Remote Entity has agreed to pay or make its
assets available to pay creditors of any Bankruptcy Remote Entity.
The accounts of the Bankruptcy Remote Entities are included in WRI's
consolidated financial statements, as WRI owns, indirectly, 100% of each of
the entities. Additionally, WRI, through its wholly owned subsidiaries,
makes all day to day operating and financial decisions with respect to
these properties, subject to approval by the loan servicing agent for the
certain significant transactions. WRI has the right to prepay the loan at
any time, which would eliminate all encumbrances and restrictions.
12. SUBSEQUENT EVENTS
On April 4, 2003, WRI called for redemption of the 7.44% Series A
Cumulative Redeemable Preferred Shares. The redemption of these shares on
May 5, 2003 was financed through the issuance on April 30, 2003 of $75
million of depositary shares. Each depositary share, representing
one-thirtieth of a Series D Cumulative Redeemable Preferred Share, is
redeemable at par at WRI's election on or after April 30, 2008. The
depositary shares pay a 6.75% annual dividend and have a liquidation value
of $25 per share.
PAGE 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the consolidated
financial statements and notes thereto and the comparative summary of selected
financial data appearing elsewhere in this report. Historical results and
trends which might appear should not be taken as indicative of future
operations.
At March 31, 2003, WRI owned or operated under long-term leases, either directly
or through its interests in joint ventures, 306 developed income-producing
properties located in 18 states that span from coast to coast in the southern
half of the United States. Included in the portfolio are 247 shopping centers,
58 industrial properties and one office building. WRI has 5,700 leases and
4,400 different tenants. Leases for our properties range from less than a year
for smaller spaces to over 25 years for larger tenants; leases generally include
minimum lease payments and contingent rentals for payment of taxes, insurance
and maintenance and for an amount based on a percentage of the tenants' sales.
The majority of our anchor tenants are supermarkets, value-oriented
apparel/discount stores and other retailers, which generally sell basic
necessity-type items.
CAPITAL RESOURCES AND LIQUIDITY
WRI anticipates that cash flows from operating activities will continue to
provide adequate capital for all dividend payments in accordance with REIT
requirements. Cash on hand, borrowings under our existing credit facilities,
issuance of unsecured debt and the use of project financing, as well as other
debt and equity alternatives, will provide the necessary capital to achieve
growth. Cash flow from operating activities as reported in the Statements of
Consolidated Cash Flows decreased to $14.6 million for the first three months of
2003 as compared to $22.3 million for the same period of 2002. This decrease
was due primarily to changes in working capital items.
Our Board of Trust Managers approved a quarterly dividend of $.585 per common
share for the first quarter of 2003. Our dividend payout ratio on common equity
for the first quarter of 2003 and 2002 was 69% and 70%, respectively, based on
funds from operations for the applicable period.
WRI invested $41.8 million for the acquisition of one retail center and two
industrial properties during the first quarter of 2003.
In January 2003, we acquired the Sears Distribution Center located in Atlanta,
Georgia. This 403,000 square foot property is 100% occupied with Sears
Logistics Services as the sole tenant. In February 2003, we acquired the
Atlanta Industrial Park. This seven-building complex aggregates 502,000 square
feet and is also located in Atlanta, Georgia. With these acquisitions, we now
own three industrial properties in Atlanta, which collectively total over 1.3
million square feet.
In February 2003, we also completed the acquisition of Rancho San Marcos
Village, a 121,000 square foot shopping center anchored by Von's (Safeway) and
24-Hour Fitness. The center is located in San Marcos, California (near San
Diego), and is currently 94% occupied.
With respect to new development, we have 18 projects at various stages of
construction. These projects, upon completion, will represent an investment of
approximately $216 million and will add 1.6 million square feet to the
portfolio. We expect to invest approximately $56.6 million in these properties
during 2003. These projects will continue to come on-line during the remainder
of 2003 and into 2004.
PAGE 14
During the first quarter of 2003, WRI issued a total of $136 million of
unsecured fixed-rate medium term notes at a weighted average rate of 5.4% and a
weighted average term of 11.4 years. Proceeds received were used to pay down
amounts outstanding under our $350 million revolving credit facility. Following
is a summary of the medium term note activity for the three months ended March
31, 2003 (in thousands, except years to maturity and interest rate):
YEARS TO INTEREST
DATE ISSUED PRINCIPAL MATURITY RATE
- ---------------------- --------- ---------- ----------
January 15, 2003. . . . $ 20,000 12.0 5.75%
January 28, 2003. . . . 15,000 10.0 5.50%
January 28, 2003. . . . 6,000 10.0 5.50%
February 12, 2003 . . . 20,000 12.0 5.57%
February 26, 2003 . . . 25,000 12.0 5.35%
February 28, 2003 . . . 25,000 12.0 5.25%
March 5, 2003 . . . . . 25,000 10.5 4.99%
Total debt outstanding increased $92.8 million to $1.4 billion at March 31,
2003. This increase was primarily due to the funding of the Company's
acquisitions and ongoing development and redevelopment efforts. Included in
total debt outstanding of $1.4 billion at March 31, 2003 is variable-rate debt
of $233.5 million, after recognizing the net effect of $152.5 million of
interest rate swaps.
On April 24, 2003, the SEC declared effective WRI's $1 billion shelf
registration statement. WRI has not used the shelf registration statement for
offerings of its securities.
On April 4, 2003, WRI called for redemption of the 7.44% Series A Cumulative
Redeemable Preferred Shares. The redemption of these shares on May 5, 2003 was
financed through the issuance on April 30, 2003 of $75 million of depositary
shares. Each depositary share, representing one-thirtieth of a Series D
Cumulative Redeemable Preferred Share, is redeemable at par at WRI's election on
or after April 30, 2008. The depositary shares pay a 6.75% annual dividend and
have a liquidation value of $25 per share.
FUNDS FROM OPERATIONS
The Board of Governors of the National Association of Real Estate Investment
Trusts defines funds from operations (FFO) as net income (loss) computed in
accordance with generally accepted accounting principles, excluding gains or
losses from sales of property, plus real estate related depreciation and
amortization, and after adjustments for unconsolidated partnerships and joint
ventures. In addition, NAREIT recommends that extraordinary items not be
considered in arriving at FFO. We calculate FFO in a manner consistent with the
NAREIT definition. Most industry analysts and equity REITS, including WRI,
believe FFO is an appropriate alternative measurement of performance relative to
other REITs. FFO provides investors with additional information to better
understand our ability to incur and service debt, make capital expenditures and
pay common share dividends. There can be no assurance that FFO presented by WRI
is comparable to similarly titled measures of other REITs. FFO should not be
considered as an alternative to net income or other measurements under GAAP as
an indicator of our operating performance or to cash flows from operating,
investing, or financing activities as a measure of liquidity. FFO does not
reflect working capital changes, cash expenditures for capital improvements, or
principal payments on indebtedness.
PAGE 15
Funds from operations - diluted for the three months ended March 31, 2003 and
2002 is calculated as follows:
Three Months Ended
March 31,
--------------------
2003 2002
--------- ---------
Net income available to common shareholders . . . . . . . . . . . . . . $ 24,969 $ 24,478
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . 19,392 17,476
Depreciation and amortization of unconsolidated joint ventures. . . . . 434 475
Gain on sale of properties. . . . . . . . . . . . . . . . . . . . . . . (880) (1,221)
--------- ---------
Funds from operations . . . . . . . . . . . . . . . . . . 43,915 41,208
Funds from operations attributable to operating partnership units . . . 1,263 55
--------- ---------
Funds from operations assuming conversion of OP units . . $ 45,178 $ 41,263
========= =========
Weighted average shares outstanding - basic . . . . . . . . . . . . . . 52,091 51,686
Effect of dilutive securities:
Share options and awards. . . . . . . . . . . . . . . . . . . . . 397 298
Operating partnership units . . . . . . . . . . . . . . . . . . . 1,529 77
--------- ---------
Weighted average shares outstanding - diluted . . . . . . . . . . . . . 54,017 52,061
========= =========
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2003 AND 2002
Net income available to common shareholders increased to $25.0 million, or $.48
per diluted share, from $24.5 million, or $.47 per diluted share for the first
quarter of 2003 as compared with the same quarter of 2002. The increase in net
income available to common shareholders is due primarily from growth in the
portfolio from acquisitions and new development.
Rental revenues were $96.9 million in 2003, as compared to $83.4 million in
2002, representing an increase of approximately $13.5 million or 16.2%.
Property acquisitions and new development contributed $11.5 million to this
increase, with the remaining increase of $2.0 million attributable to our
existing properties. Occupancy of the total portfolio was 91.8% at March 31,
2003 as compared to 91.7% at March 31, 2002. The occupancy of the retail
portfolio was down slightly at 92.6% at March 31, 2003 as compared to 92.8% at
March 31, 2002, while the occupancy of the industrial portfolio increased to
89.0% from 88.2% in the prior year. During the first three months of 2003, WRI
completed 238 renewals or new leases comprising 1.5 million square feet at an
average rental rate increase of 6.8%. Net of the amortized portion of capital
costs for tenant improvements, the increase averaged 4.1%.
Other income increased by $.2 million to $1.0 million in the first quarter of
2003 from $.8 million for the same quarter of 2002. This increase is due
primarily to an increase in lease cancellation income from various tenants.
PAGE 16
Gross interest costs, before capitalization of interest, increased by $3.9
million from $17.4 million in the first quarter of 2002 to $21.3 million for the
first quarter of 2003. The increase is due primarily to an increase in the
average debt outstanding between periods of $1.1 billion in 2002 to $1.4 billion
in 2003. The average interest rate decreased from 6.4% in 2002 to 6.2% in 2003.
The amount of interest capitalized during the period was $1.8 million and $2.4
million in 2003 and 2002, respectively. The decrease in interest capitalized
between periods is due primarily to the completion of five new development
projects during the first quarter of 2003.
General and administrative expenses increased by $.4 million to $3.1 million in
the first quarter of 2003 from $2.7 million for the same quarter of 2002. The
increase is due primarily to an increase in staffing necessitated by the growth
in the portfolio from acquisitions and new development.
The increases in depreciation and amortization, operating expenses and ad
valorem taxes were primarily the result of WRI's acquisitions and new
development programs.
Minority interest in income of partnerships increased by $.8 million to $.9
million in the first quarter of 2003 from $.1 million for the same quarter of
2002. The increase is due primarily from the acquisition of seven
supermarket-anchored shopping centers in the Raleigh-Durham market in April 2002
utilizing a DownREIT structure. These limited partnerships are included in our
consolidated financial statements because we exercise financial and operating
control.
NEWLY ADOPTED ACCOUNTING PRONOUNCEMENTS
In December 2002, FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure- an amendment of FASB Statement No. 123",
which is effective for fiscal years beginning after December 15, 2002. This
statement provides alternative methods of transition for an entity that
voluntarily changes to the fair value-based method of accounting for stock-based
employee compensation. It also amends the disclosure requirements of SFAS No.
123 to require prominent disclosures in both annual and interim financial
statements about the method of accounting for stock-based employee compensation
and the effect of the method used on reported results. We adopted this
statement effective January 1, 2003 using the prospective method, which requires
us to recognize stock-based employee compensation as new share options are
awarded. No stock-based employee compensation was recognized for the quarter
ending March 31, 2003 as only a diminimus number of options were awarded during
this period. With respect to share options awarded prior to January 1, 2003,
WRI accounted for stock-based employee compensation using the intrinsic valued
method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees", and related interpretations. In accordance with
this opinion, no stock-based employee compensation had been recognized in WRI's
financial statements prior to January 1, 2003.
PAGE 17
The following table illustrates the effect on net income available to common
shareholders and net income per common share if the fair value-based method had
been applied to all outstanding and unvested awards in each period:
Three Months Ended
March 31,
--------------------
2003 2002
--------- ---------
Net income available to common shareholders . . . . . . . . . . . $ 24,969 $ 24,478
Stock-based employee compensation included in net income
available to common shareholders . . . . . . .. . . . . . . . . - -
Stock-based employee compensation determined under the
fair value-based method for all awards. . . . . . . . . . . . . (101) (86)
--------- ---------
Pro forma net income available to common shareholders . . . . . . $ 24,868 $ 24,392
========= =========
Net income per common share:
Basic - as reported . . . . . . . . . . . . . . . . . . . . $ .48 $ .47
========= =========
Basic - pro forma . . . . . . . . . . . . . . . . . . . . . $ .48 $ .47
========= =========
Net income per common share:
Diluted - as reported . . . . . . . . . . . . . . . . . . . $ .48 $ .47
========= =========
Diluted - pro forma . . . . . . . . . . . . . . . . . . . . $ .48 $ .47
========= =========
In November 2002, FASB issued Interpretation No. 45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others". FIN 45 establishes new disclosure and
liability-recognition requirements for direct and indirect debt guarantees with
specified characteristics. The initial measurement and recognition requirements
of FIN 45 are effective prospectively for guarantees issued or modified after
December 31, 2002. However, the disclosure requirements are effective for
interim and annual financial-statement periods ending after December 15, 2002.
WRI has adopted the disclosure provisions, and management does not expect the
full adoption of FIN 45 to have a material impact on the financial position,
results of operations or cash flows.
In January 2003, FASB issued Interpretation No. 46, "Consolidation of Variable
Interest Entities". FIN 46 requires a variable interest entity to be
consolidated by a company if that company is subject to a majority of the risk
of loss from the variable interest entity's activities or entitled to receive a
majority of the entity's residual returns or both. FIN 46 requires disclosures
about variable interest entities that a company is not required to consolidate,
but in which it has a significant variable interest. The consolidation
requirements of FIN 46 apply immediately to variable interest entities created
after January 31, 2003. The consolidation requirements apply to existing
entities in the first fiscal year or interim period beginning after June 15,
2003. Certain of the disclosure requirements apply in all financial statements
issued after January 31, 2003, regardless of when the variable interest entity
was established. We will adopt this statement in 2003, and we do not expect the
adoption of this statement to have a material impact on our financial position,
results of operations or cash flows.
PAGE 18
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
WRI uses fixed and floating-rate debt to finance its capital requirements.
These transactions expose WRI to market risk related to changes in interest
rates. Derivative financial instruments are used to manage a portion of this
risk, primarily interest rate swap agreements with major financial institutions.
These swap agreements expose WRI to credit risk in the event of non-performance
by the counter-parties to the swaps. We do not engage in the trading of
derivative financial instruments in the normal course of business. At March 31,
2003, WRI had fixed-rate debt of $1.2 billion and variable-rate debt of $233.5
million, after adjusting for the net effect of $152.5 million of interest rate
swaps.
ITEM 4. DISCLOSURE CONTROLS AND PROCEDURES
The principal executive officer and principal financial officer have evaluated
the disclosure controls and procedures as of a date within 90 days before the
filing date of this quarterly report. Based on this evaluation, the principal
executive officer and principal financial officer have concluded that the
disclosure controls and procedures effectively ensure that information required
to be disclosed in the Company's filings and submissions with the Securities and
Exchange Commission under the Exchange Act, is recorded, processed, summarized
and reported within the time periods specified by the Securities and Exchange
Commission. In addition, the Company has reviewed its internal controls and
there have been no significant changes in its internal controls or in other
factors that could significantly affect those controls subsequent to the date of
its last evaluation.
PAGE 19
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
12.1 A statement of computation of ratios of earnings
and funds from operations to combined fixed
charges and preferred dividends.
99.1 Certification pursuant to 18 U.S.C. Sec. 1350, as
adopted pursuant to Sec. 906 of the Sarbanes-Oxley
Act of 2002 (Chief Executive Officer).
99.2 Certification pursuant to 18 U.S.C. Sec. 1350, as
adopted pursuant to Sec. 906 of the Sarbanes-Oxley
Act of 2002 (Chief Financial Officer).
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the
quarter covered by this quarterly report.
PAGE 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WEINGARTEN REALTY INVESTORS
--------------------------------------
(Registrant)
BY: /s/ Andrew M. Alexander
-----------------------------------
Andrew M. Alexander
President/Chief Executive Officer
(Principal Executive Officer)
BY: /s/ Joe D. Shafer
-----------------------------------
Joe D. Shafer
Vice President/Controller
(Principal Accounting Officer)
DATE: May 13, 2003
---------------
PAGE 21
CERTIFICATION
I, Andrew M. Alexander, Chief Executive Officer of Weingarten Realty Investors
certify that:
1. I have reviewed this quarterly report on Form 10-Q of Weingarten Realty
Investors;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of trust managers:
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and
have identified for the registrant's auditors any material weaknesses
in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
BY: /s/ Andrew M. Alexander
-----------------------------------
Andrew M. Alexander
President/Chief Executive Officer
May 13, 2003
PAGE 22
CERTIFICATION
I, Stephen C. Richter, Sr. Vice President/Chief Financial Officer of Weingarten
Realty Investors certify that:
1. I have reviewed this quarterly report on Form 10-Q of Weingarten Realty
Investors;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of trust managers:
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and
have identified for the registrant's auditors any material weaknesses
in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
BY: /s/ Stephen C. Richter
------------------------------------------
Stephen C. Richter
Sr. Vice President/Chief Financial Officer
May 13, 2003
PAGE 23
EXHIBIT INDEX
EXHIBIT
NUMBER
- ------
12.1 A statement of computation of ratios of earnings and funds from
operations to combined fixed charges and preferred dividends.
99.1 Certification pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant
to Sec. 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive
Officer).
99.2 Certification pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant
to Sec. 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial
Officer).
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