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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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 (IRS Employer
of incorporation or organization) Identification No.)
2600 Citadel Plaza Drive
P.O. Box 924133
Houston, Texas 77292-4133
(Address of principal executive offices) (Zip Code)
(713) 866-6000
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act.
Name of each exchange
Title of Each Class on which registered
- ------------------------------------ ---------------------
Common Shares of New York Stock
Beneficial Interest, $0.03 par value Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
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 [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the common shares held by non-affiliates
(based upon the closing sale price on the New York Stock Exchange) on February
27, 1997 was approximately $1,137,328,396. As of February 27, 1997, there
were 26,604,173 shares of beneficial interest, $.03 par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement in connection with its
Annual Meeting of Shareholders to be held April 29, 1997 are incorporated by
reference in Part III.
Exhibit Index beginning on Page 33
TABLE OF CONTENTS
ITEM NO PAGE NO.
- -------- --------
PART I
1. Business 1
2. Properties 3
3. Legal Proceedings 11
4. Submission of Matters to a Vote of Security Holders 11
Executive Officers of the Registrant 12
PART II
5. Market for Registrant's Common Shares of Beneficial
Interest and Related Shareholder Matters 13
6. Selected Financial Data 14
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 15
8. Financial Statements and Supplementary Data 18
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 32
PART III
10. Trust Managers and Executive Officers of the Registrant 32
11. Executive Compensation 33
12. Security Ownership of Certain Beneficial Owners and
Management 33
13. Certain Relationships and Related Transactions 33
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 33
PART I
ITEM 1. BUSINESS
General. Weingarten Realty Investors (the "Company"), an unincorporated
trust organized under the Texas Real Estate Investment Trust Act, and its
predecessor entity began the ownership and development of shopping centers and
other commercial real estate in 1948. The Company is self-advised and
self-managed and, as of December 31, 1996, owned or had interests in 182
developed income-producing real estate projects, 160 of which were shopping
centers, located in the Houston metropolitan area and in other parts of Texas
and in Louisiana, Arkansas, Oklahoma, New Mexico, Arizona, Maine, Tennessee,
Kansas, Nevada, Missouri and Colorado. The Company's other commercial real
estate projects included 20 industrial projects, one multi-family housing
property and one office building, which serves as the Company's headquarters.
The Company's interests in these projects aggregated approximately 20.2
million square feet of building area and 77.9 million square feet of land
area. The Company also owned interests in 24 parcels of unimproved land held
for future development which aggregated approximately 6.9 million square feet.
The Company currently employs 156 persons. The Company's principal
executive offices are located at 2600 Citadel Plaza Drive, Houston, Texas
77008, and its phone number is (713) 866-6000.
Reorganizations. In December 1984, the Company engaged in a series of
transactions primarily designed to enable it to qualify as a real estate
investment trust ("REIT") for federal income tax purposes for the 1985
calendar year and subsequent years. The Company contributed certain assets
considered unsuitable for ownership by the Company as a REIT and $3.5 million
in cash to WRI Holdings, Inc. ("Holdings"), a Texas corporation and a
newly-formed subsidiary of the Company, in exchange for voting and non-voting
common stock of Holdings (which was subsequently distributed to the Company's
shareholders) and $26.8 million of mortgage bonds. For additional information
concerning Holdings, refer to Note 6 of the Notes to Consolidated Financial
Statements at page 27.
On March 22, 1988, the Company's shareholders approved the conversion of
the Company's form of organization from a Texas corporation to an
unincorporated trust organized under the Texas Real Estate Investment Trust
Act. The conversion was effected by the Company's predecessor entity,
Weingarten Realty, Inc., transferring substantially all of its assets and
liabilities to the newly-formed Company in exchange for common shares of
beneficial interest, $.03 par value ("Common Shares"), of the Company. The
shareholders of the corporation received Common Shares for their shares of
Common Stock of the corporation (on a share-for-share basis), and the Company
continues the business that was previously conducted by the corporation. The
change did not affect the registrant's assets, liabilities, management or
federal income tax status as a REIT.
Location of Properties. Historically, the Company has emphasized
investments in properties located primarily in the Houston area. Since 1987,
the Company has actively acquired properties outside of Houston. Of the
Company's 206 properties which were owned as of December 31, 1996, 89 of its
182 developed properties and 18 of its 24 parcels of unimproved land were
located in the Houston metropolitan area. In addition to these properties,
the Company owned 51 developed properties and 4 parcels of unimproved land
located in other parts of Texas. Because of the Company's investments in the
Houston area, as well as in other parts of Texas, the Houston and Texas
economies affect, to some degree, the business and operations of the Company.
In 1996, the economies in Houston and Texas continued to grow, exceeding
the national average; the economy of the entire southwestern United States,
where the Company has its primary operations, also remained strong relative to
the national average. A deterioration in the Houston or Texas economies could
adversely affect the Company. However, the Company's centers are generally
anchored by grocery and drug stores under long-term leases, and such types of
stores, which deal in basic necessity-type items, tend to be less affected by
economic change.
Competition. There are other developers and operators engaged in the
development, acquisition and operation of shopping centers and commercial
property who compete with the Company in its trade areas. This results in
competition for both acquisitions of existing income-producing properties and
also for prime development sites. There is also competition for tenants to
occupy the space that the Company and its competitors develop, acquire and
manage.
The Company believes that the principal competitive factors in attracting
tenants in its market areas are location, price, anchor tenants and
maintenance of properties and that the Company's competitive advantages
include the favorable locations of its properties, its ability to provide a
retailer with multiple locations in the Houston area with anchor tenants and
its practice of continuous maintenance and renovation of its properties.
Financial Information. Certain additional financial information
concerning the Company is included in the Company's Consolidated Financial
Statements located on pages 18 through 32 herein.
ITEM 2. PROPERTIES
At December 31, 1996 the Company's real estate properties consisted of
206 locations in twelve states. A complete listing of these properties,
including the name, location, building area and land area (in square feet),
as applicable, is as follows:
SHOPPING CENTERS
Building
Name and Location Area Land Area
- ----------------------------------------------------- ---------- ----------
HOUSTON AND HARRIS COUNTY, TOTAL 6,871,000 27,015,000
Alabama-Shepherd, S. Shepherd at W. Alabama 28,000 * 88,000 *
Almeda Road, Almeda at Cleburne 34,000 147,000
Bayshore Plaza, Spencer Hwy. at Burke Rd 36,000 196,000
Bellaire Boulevard, Bellaire at S. Rice 35,000 137,000
Bellfort, Bellfort at Southbank 48,000 167,000
Bellfort Southwest, Bellfort at Gessner 30,000 89,000
Bellwood, Bellaire at Kirkwood 136,000 655,000
Bingle Square, U.S. Hwy. 290 at Bingle 46,000 168,000
Braeswood Square, N. Braeswood at Chimney Rock 103,000 422,000
Centre at Post Oak, Westheimer at Post Oak Blvd. 170,000 468,000
Copperfield Village, Hwy. 6 at F.M. 529 153,000 712,000
Crestview, Bissonnet at Wilcrest 9,000 35,000
Crosby, F.M. 2100 at Kenning Road (61%) 36,000 * 124,000 *
Cullen Place, Cullen at Reed 7,000 30,000
Cullen Plaza, Cullen at Wilmington 81,000 318,000
Cypress Pointe, F.M. 1960 at Cypress Station 191,000 737,000
Del Sol Market Place, Telephone at Monroe 26,000 87,000
Eastpark, Mesa Rd. at Tidwell 140,000 665,000
Edgebrook, Edgebrook at Gulf Fwy. 76,000 360,000
Fiesta Village, Quitman at Fulton 30,000 80,000
Fondren Southwest Village, Fondren at W. Bellfort 225,000 1,014,000
Fondren/West Airport, Fondren at W. Airport 62,000 223,000
45/York Plaza, I-45 at W. Little York 210,000 840,000
Glenbrook Square, Telephone Road 71,000 320,000
Griggs Road, Griggs at Cullen 85,000 422,000
Harrisburg Plaza, Harrisburg at Wayside 95,000 334,000
Heights Plaza, 20th St. at Yale 72,000 228,000
Humblewood Shopping Plaza, Eastex Fwy. at F.M. 1960 180,000 784,000
Inwood Village, W. Little York at N. Houston-Rosslyn 68,000 305,000
Jacinto City, Market at Baca 24,000 * 67,000 *
Kingwood, Kingwood Dr. at Chesnut Ridge 155,000 648,000
Landmark, Gessner at Harwin 56,000 228,000
Lawndale, Lawndale at 75th St. 53,000 177,000
Little York Plaza, Little York at E. Hardy 115,000 486,000
Long Point, Long Point at Wirt (77%) 58,000 * 257,000 *
Lyons Avenue, Lyons at Shotwell 63,000 185,000
Market at Westchase, Westheimer at Wilcrest 84,000 333,000
Miracle Corners, S. Shaver at Southmore 87,000 386,000
Northbrook, Northwest Fwy. at W. 34th 204,000 656,000
North Main Square, Pecore at N. Main 18,000 64,000
Table continued on next page
Building
Name and Location Area Land Area
- -------------------------------------------------------------- --------- ----------
North Oaks, F.M. 1960 at Veterans Memorial 315,000 1,246,000
North Triangle, I-45 at F.M. 1960 14,000 113,000
Northway, Northwest Fwy. at 34th 212,000 793,000
Northwest Crossing, N.W. Fwy. at Hollister (75%) 133,000 * 671,000 *
Northwest Park Plaza, F.M. 149 at Champions Forest 32,000 268,000
Oak Forest, W. 43rd at Oak Forest 156,000 541,000
Orchard Green, Gulfton at Renwick 64,000 257,000
Randall's/Cypress Station, F.M. 1960 at I-45 141,000 618,000
Randall's/El Dorado, El Dorado at Hwy. 3 119,000 429,000
Randall's/Kings Crossing, Kingwood Dr. at Lake Houston Pkwy. 128,000 624,000
Randall's/Norchester, Grant at Jones 109,000 475,000
Richmond Square, Richmond Ave. at W. Loop 610 22,000 77,000
River Oaks, East, W. Gray at Woodhead 65,000 206,000
River Oaks, West, W. Gray at S. Shepherd 235,000 609,000
Sheldon Forest, North, I-10 at Sheldon 22,000 131,000
Sheldon Forest, South, I-10 at Sheldon 38,000 * 164,000 *
Shops at Three Corners, S. Main at Old Spanish Trail (70%) 183,000 * 803,000 *
Southgate, W. Fuqua at Hiram Clark 115,000 533,000
Spring Plaza, Hammerly at Campbell 56,000 202,000
Steeplechase, Jones Rd. at F.M. 1960 193,000 849,000
Stella Link, North, Stella Link at S. Braeswood (77%) 40,000 * 156,000 *
Stella Link, South, Stella Link at S. Braeswood 15,000 56,000
Studemont, Studewood at E. 14th St 28,000 91,000
Ten Blalock Square, I-10 at Blalock 97,000 321,000
10/Federal, I-10 at Federal 132,000 474,000
University Plaza, Bay Area At Space Center 96,000 424,000
The Village Arcade, University at Kirby 184,000 398,000
West Junction, Hwy. 6 at Kieth Harrow Dr. 67,000 264,000
Westbury Triangle, Chimney Rock at W. Bellfort 67,000 257,000
Westchase, Westheimer at Wilcrest 236,000 766,000
Westhill Village, Westheimer at Hillcroft 131,000 480,000
Wilcrest Southwest, Wilcrest at Southwest Fwy. 26,000 77,000
TEXAS (EXCLUDING HOUSTON & HARRIS CO.), TOTAL 4,496,000 19,861,000
Coronado, S.W. 34th St. at Wimberly Dr., Amarillo 49,000 201,000
Puckett Plaza, Bell Road, Amarillo 133,000 621,000
Spanish Crossroads, Bell St. at Atkinson St., Amarillo 72,000 275,000
Wolfin Village, Wolfin Ave. at Georgia St., Amarillo 191,000 513,000
Merrilee, U.S. Highway 80 at Merrilee, Arlington 8,000 74,000
Southridge Plaza, William Cannon Dr. at S. 1st St., Austin 143,000 565,000
Baywood, State Hwy. 60 at Baywood Dr., Bay City 40,000 169,000
Calder, Calder at 24th St., Beaumont 34,000 129,000
North Park Plaza, Eastex Fwy. at Dowlen, Beaumont 70,000 * 318,000 *
Phelan West, Phelan at 23rd St., Beaumont (67%) 16,000 * 59,000 *
Southgate, Calder Ave. at 6th St., Beaumont 34,000 118,000
Westmont, Dowlen at Phelan, Beaumont 95,000 507,000
Bryan Village, Texas at Pease, Bryan 29,000 98,000
Parkway Square, Southwest Pkwy at Texas Ave., College Station 158,000 685,000
Table continued on next page
Building
Name and Location Area Land Area
- -------------------------------------------------------------------- --------- ---------
Montgomery Plaza, Loop 336 West, Conroe 233,000 911,000
River Pointe, I-45 at Loop 336, Conroe 42,000 252,000
Portairs Shopping Center, Ayers St. at Horne Rd., Corpus Christi 121,000 416,000
Dickinson, I-45 at F.M. 517, Dickinson (72%) 55,000 * 225,000 *
Coronado Hills, Mesa at Balboa, El Paso (15%) 19,000 * 86,000 *
Broadway, Broadway at 59th St., Galveston (77%) 58,000 * 167,000 *
Food King Place, 25th St. at Avenue P, Galveston 28,000 78,000
Galveston Place, Central City Blvd. at 61st St., Galveston 123,000 527,000
Cedar Bayou, Bayou Rd., LaMarque 15,000 51,000
Corum South, Gulf Fwy., League City 92,000 574,000
Caprock Center, 50th at Boston Ave., Lubbock 375,000 1,255,000
Town & Country, 4th St. at University, Lubbock 171,000 703,000
Angelina Village, Hwy. 59 at Loop 287, Lufkin 229,000 1,835,000
Independence Plaza, Town East Blvd., Mesquite (15%) 27,000 * 118,000 *
University Park Plaza, University Dr. at E. Austin St., Nacogdoches 78,000 283,000
Mid-County, Twin Cities Hwy. at Nederland Ave., Nederland 107,000 611,000
Gilham Circle, Gilham Circle at Thomas, Port Arthur 33,000 94,000
Village, 9th Ave. at 25th St., Port Arthur (77%) 39,000 * 185,000 *
Porterwood, Eastex Fwy. at F.M. 1314, Porter 99,000 487,000
Plaza, Ave. H at U.S. Hwy. 90A, Rosenberg 41,000 * 135,000
Rose-Rich, U.S. Hwy. 90A at Lane Dr., Rosenberg 104,000 386,000
Bandera Village, Bandera at Hillcrest, San Antonio 57,000 607,000
Oak Park Village, Nacogdoches at New Braunfels, San Antonio 65,000 221,000
Parliament Square, W. Ave. at Blanco, San Antonio 65,000 260,000
San Pedro Court, San Pedro at Hwy. 281N., San Antonio 2,000 18,000
Valley View, West Ave. at Blanco Rd., San Antonio 89,000 341,000
Market at Town Center, Town Center Blvd., Sugar Land 349,000 1,732,000
Williams Trace, Hwy. 6 at Williams Trace, Sugar Land 263,000 1,187,000
New Boston Road, New Boston at Summerhill, Texarkana 90,000 335,000
Island Market Place, 6th St. at 9th Ave., Texas City 27,000 90,000
Mainland, Hwy. 1765 at Hwy. 3, Texas City 69,000 279,000
Palmer Plaza, F.M. 1764 at 34th St., Texas City 97,000 367,000
Broadway, S. Broadway at W. 9th St., Tyler (77%) 46,000 * 197,000 *
Crossroads, I-10 at N. Main, Vidor 116,000 516,000
LOUISIANA, TOTAL 1,337,000 5,504,000
Park Terrace, U.S. Hwy. 171 at Parish, DeRidder 137,000 520,000
Town & Country Plaza, U.S. Hwy. 190 West, Hammond 215,000 915,000
Westwood Village, W. Congress at Bertrand, Lafayette 141,000 942,000
East Town, 3rd Ave. at 1st St., Lake Charles 33,000 * 117,000 *
14/Park Plaza, Hwy. 14 at General Doolittle, Lake Charles 207,000 654,000
Kmart Plaza, Ryan St., Lake Charles 105,000 * 406,000 *
Southgate, Ryan at Eddy, Lake Charles 171,000 628,000
Danville Plaza, Louisville at 19th, Monroe 143,000 539,000
Orleans Station, Paris, Robert E. Lee & Chatham, New Orleans 5,000 31,000
Southgate, 70th at Mansfield, Shreveport 73,000 359,000
Westwood, Jewella at Greenwood, Shreveport 107,000 393,000
Table continued on next page
Building
Name and Location Area Land Area
- -------------------------------------------------------------------- -------- ---------
ARIZONA, TOTAL 725,000 3,342,000
University Plaza, Plaza Way at Milton Rd., Flagstaff 166,000 918,000
Camelback Village Square, Camelback at 7th Avenue, Phoenix 135,000 543,000
Squaw Peak Plaza, 16th Street at Glendale Ave., Phoenix 61,000 220,000
Fountain Plaza, 77th St. at McDowell, Scottsdale 107,000 460,000
Broadway Marketplace, Broadway at Rural, Tempe 86,000 347,000
Fry's Valley Plaza, S. McClintock at E. Southern, Tempe (15%) 21,000 * 85,000 *
Pueblo Anozira, McClintock Dr. at Guadalupe Rd., Tempe 149,000 769,000
OKLAHOMA, TOTAL 687,000 3,173,000
Bryant Square, Bryant Ave. at 2nd St., Edmond 268,000 1,259,000
Market Boulevard, E. Reno Ave. at N. Douglas Ave., Midwest City 36,000 142,000
Town & Country, Reno Ave at North Air Depot, Midwest City 137,000 540,000
Windsor Hills Center, Meridian at Windsor Place, Oklahoma City 246,000 1,232,000
NEW MEXICO, TOTAL 606,000 2,666,000
Eastdale, Candelaria Rd. at Eubank Blvd., Albuquerque (15%) 17,000 * 90,000 *
North Towne Plaza, Academy Rd. @ Wyoming Blvd., Albuquerque 103,000 607,000
Valle del Sol, Isleta Blvd. at Rio Bravo, Albuquerque 106,000 475,000
Wyoming Mall, Academy Rd. at Northeastern, Albuquerque 323,000 1,309,000
DeVargas, N. Guadalupe at Paseo de Peralta, Santa Fe (23%) 57,000 * 185,000 *
ARKANSAS, TOTAL 534,000 2,054,000
Evelyn Hills, College Ave. at Abshier, Fayetteville 154,000 750,000
Broadway Plaza, Broadway at W. Roosevelt, Little Rock 43,000 148,000
Geyer Springs, Geyer Springs at Baseline, Little Rock 153,000 415,000
Markham Square, W. Markham at John Barrow, Little Rock 134,000 535,000
Westgate, Cantrell at Bryant, Little Rock 50,000 206,000
NEVADA, TOTAL 450,000 1,659,000
Mission Center, Flamingo Rd. at Maryland Pkwy, Las Vegas 71,000 254,000
Paradise Marketplace, Flamingo Rd. at Sandhill, Las Vegas 149,000 536,000
Rancho Towne & Country, Rancho Dr. at Charleston Blvd., Las Vega s 87,000 350,000
Tropicana Marketplace, Tropicana at Jones Blvd., Las Vegas 143,000 519,000
KANSAS, TOTAL 372,000 1,830,000
Westbrooke Village, Quivira Road at 75th St., Shawnee 237,000 1,269,000
Shawnee Village, Shawnee Mission Pkwy. at Quivera Rd., Shawnee 135,000 561,000
MISSOURI, TOTAL 135,000 448,000
PineTree Plaza, U.S. Hwy. 150 at Hwy. 291, Lee's Summit 135,000 448,000
COLORADO, TOTAL 127,000 460,000
Carefree, Academy Blvd. at N. Carefree Circle, Colorado Springs 127,000 460,000
MAINE, TOTAL 124,000 482,000
The Promenade, Essex at Summit, Lewiston 124,000 * 482,000 *
TENNESSEE, TOTAL 20,000 84,000
Highland Square, Summer at Highland, Memphis 20,000 84,000
Table continued on next page
Building
INDUSTRIAL Area Land Area
--------- ----------
HOUSTON AND HARRIS COUNTY, TOTAL 3,420,000 8,603,000
Brookhollow Business Center, Dacoma at Directors Row 133,000 405,000
Cannon/So. Loop Business Park, Cannon Street (75%) 221,000 * 362,000 *
Central Park North, W. Hardy Rd. at Kendrick Dr. 155,000 465,000
Central Park Northwest VI, Central Pkwy. at Dacoma 175,000 518,000
Central Park Northwest VII, Central Pkwy. at Dacoma 104,000 283,000
Jester Plaza, West T.C. Jester 101,000 244,000
Kempwood Industrial, Kempwood Dr. at Blankenship Dr. 211,000 778,000
Lathrop Warehouse, Lathrop St. at Larimer St. 252,000 436,000
Little York Mini-Storage, West Little York 32,000 * 124,000 *
Navigation Business Park, Navigation At N. York 238,000 555,000
Northway Park II, Loop 610 East at Homestead 303,000 745,000
Park Southwest, Stancliff at Brooklet 52,000 159,000
Railwood Industrial Park, Mesa at U.S. 90 805,000 2,070,000
South Loop Business Park, S. Loop at Long Dr. 46,000 * 103,000 *
Southwest Park II, Rockley Road 68,000 216,000
West-10 Business Center, Wirt Rd. at I-10 141,000 330,000
West Loop Commerce Center, W. Loop N. at I-10 34,000 91,000
610 and 11th St. Warehouse, Loop 610 at 11th St. 349,000 719,000
TEXAS (EXCLUDING HOUSTON & HARRIS CO.), TOTAL 143,000 425,000
River Pointe Mini-Storage, Conroe 32,000 * 97,000 *
Nasa One Business Center, Nasa Road One at Hwy. 3, Webster 111,000 328,000
MULTI-FAMILY RESIDENTIAL
TEXAS (EXCLUDING HOUSTON & HARRIS CO.), TOTAL 37,000 95,000
Summer Place Apartments, Hillcrest at Quill Dr., San Antonio 37,000 * 95,000 *
OFFICE BUILDING
HOUSTON & HARRIS COUNTY, TOTAL 121,000 171,000
Citadel Plaza, N. Loop 610 at Citadel Plaza Dr. 121,000 171,000
UNIMPROVED LAND
HOUSTON & HARRIS COUNTY, TOTAL 5,046,000
Bissonnet at Wilcrest 773,000
Citadel Plaza at 610 N. Loop 137,000
East Orem 122,000
Kirkwood at Dashwood Dr. 322,000
Lockwood at Navigation 163,000
Mesa Rd. at Tidwell 901,000
Mesa Rd. at Spikewood 1 ,374,000
Mowery at Cullen 118,000
Northwest Fwy. at Gessner 484,000
Post Oak at Westheimer 37,000
Redman at W. Denham 17,000
Renwick at Gulfton 17,000
Richmond at Loop 610 60,000
Sheldon at I-10 19,000
University at Morningside 16,000
Table continued on next page
Building
Name and Location Area Land Area
- ---------------------------------------------- ---------- ----------
W. Little York at I-45 322,000
W. Little York at N. Houston-Rosslyn 19,000
W. Loop N. at I-10 145,000
TEXAS (EXCLUDING HOUSTON & HARRIS CO.), TOTAL 619,000
Loop 336 at I-45, Conroe 78,000
River Pointe Dr. at I-45, Conroe 186,000
Hillcrest, Sunshine at Quill, San Antonio 171,000
Hwy. 3 at Hwy. 1765, Texas City 184,000
LOUISIANA, TOTAL 1,284,000
U.S. Hwy. 171 at Parish, DeRidder 462,000
Woodland Hwy., Plaquemines Parish (5%) 822,000 *
ALL PROPERTIES-BY LOCATION
GRAND TOTAL 20,205,000 84,821,000
Houston & Harris County 10,412,000 40,835,000
Texas (excluding Houston & Harris County) 4,496,000 21,000,000
Louisiana 1,337,000 6,788,000
Arizona 725,000 3,342,000
Oklahoma 687,000 3,173,000
New Mexico 606,000 2,666,000
Arkansas 534,000 2,054,000
Nevada 450,000 1,659,000
Kansas 372,000 1,830,000
Missouri 135,000 448,000
Colorado 127,000 460,000
Maine 124,000 482,000
Tennessee 20,000 84,000
ALL PROPERTIES-BY CLASSIFICATION
GRAND TOTAL 20,205,000 84,821,000
Shopping Centers 16,484,000 68,578,000
Industrial 3,563,000 9,028,000
Office Building 121,000 171,000
Multi-Family Residential 37,000 95,000
Unimproved Land 6,949,000
Note: Total square footage includes 6,700,000 square feet of land leased and
170,000 square feet of building leased from others.
* Denotes partial ownership. The Company's interest is 50% except where
noted. The square feet figures represent the Company's proportionate
ownership of the entire property.
General. In 1996, no single property accounted for more than 3.6% of the
Company's total assets or 3.5% of gross revenues. Three properties, in the
aggregate, represented approximately 8.7% of the Company's gross revenues for
the year ended December 31, 1996; otherwise, none of the remaining properties
accounted for more than 2.0% of the Company's gross revenues during the same
period. The occupancy rate for all of the Company's improved properties as of
December 31, 1996 was 93.0%.
Substantially all of the Company's properties are owned directly by the
Company (subject in certain cases to mortgages), although the Company's
interests in certain of its properties are held indirectly through its
interests in joint ventures or under long-term leases. In the opinion of
management of the Company, its properties are well maintained and in good
repair, suitable for their intended uses, and adequately covered by insurance.
Shopping Centers. As of December 31, 1996, the Company owned, either
directly or through its interests in joint ventures, 160 shopping centers with
approximately 16.5 million square feet of building area. The shopping centers
were located predominantly in Texas with other locations in Louisiana,
Oklahoma, Arkansas, Arizona, New Mexico, Maine, Tennessee, Nevada, Kansas,
Missouri and Colorado.
The Company's shopping centers are primarily community shopping centers
which range in size from 100,000 to 400,000 square feet, as distinguished from
small strip centers which generally contain 5,000 to 25,000 square feet and
from large regional enclosed malls which generally contain over 500,000 square
feet. Most of the centers do not have climatized common areas but are
designed to allow retail customers to park their automobiles in close
proximity to any retailer in the center. The Company's centers are
customarily constructed of masonry, steel and glass and all have lighted,
paved parking areas which are typically landscaped with berms, trees and
shrubs. They are generally located at major intersections in close proximity
to neighborhoods which have existing populations sufficient to support retail
activities of the types conducted in the Company's centers.
The Company has approximately 3,200 separate leases with 2,400 different
tenants in its portfolio, including national and regional supermarket chains,
other nationally or regionally known stores (including drug stores, discount
department stores, junior department stores and catalog stores) and a great
variety of other regional and local retailers. The large number of locations
offered by the Company and the types of traditional anchor tenants help
attract prospective new tenants. Some of the national and regional
supermarket chains which are tenants in the Company's centers include
Albertson's, Fiesta, Jewel, Smith's, Fleming Foods, H.E.B., Kroger Company,
Randall's Food Markets, Fry's Food Stores and Super Value Holdings. In
addition to these supermarket chains, the Company's nationally and regionally
known retail store tenants include Eckerd, Walgreen and Osco drugstores; Kmart
and Venture discount stores; Bealls, Palais Royal and Weiner's junior
department stores; Marshall's, Office Depot, 50-Off, Office Max, Baby
Superstore, Ross and T.J. Maxx off-price specialty stores; Luby's, Piccadilly
and Furr's; Academy sporting goods; Service Merchandise catalog stores; FAO
Schwarz toy store; Cost Plus Imports; Linens 'N Things; Barnes & Noble
bookstore; and the following restaurant chains: Arby's, Burger King, Champ's,
Church's Fried Chicken, Dairy Queen, Domino's, Jack-in-the-Box, CiCi Pizza,
Long John Silver's, McDonald's, Olive Garden, Outback Steakhouse, Pizza Hut,
Shoney's, Steak & Ale, Taco Bell and Whataburger. The Company also leases
space in 3,000 to 10,000 square foot areas to national chains such as the
Limited Store, The Gap, One Price Stores, Tempo, Eddie Bauer and Radio Shack.
The Company's shopping center leases have lease terms generally ranging
from three to five years for tenant space under 5,000 square feet and from 10
to 35 years for tenant space over 10,000 square feet. Leases with primary
lease terms in excess of 10 years, generally for anchor and out-parcels,
frequently contain renewal options which allow the tenant to extend the term
of the lease for one or more additional periods, each such period generally
being of a shorter duration than the primary lease term. The rental rates
paid during a renewal period are generally based upon the rental rate for the
primary term, sometimes adjusted for inflation or for the amount of the
tenant's sales during the primary term.
Most of the Company's leases provide for the monthly payment in advance
of fixed minimum rentals, the tenants' pro rata share of ad valorem taxes,
insurance (including fire and extended coverage, rent insurance and liability
insurance) and common area maintenance for the center (based on estimates of
the costs for such items) and for the payment of additional rentals based on a
percentage of the tenants' sales ("percentage rentals"). Utilities are
generally paid directly by tenants except where common metering exists with
respect to a center, in which case the Company makes the payments for the
utilities and is reimbursed by the tenants on a monthly basis. Generally, the
Company's leases prohibit the tenant from assigning or subletting its space
and require the tenant to use its space for the purpose designated in its
lease agreement and to operate its business on a continuous basis. Certain of
the lease agreements with major tenants contain modifications of these basic
provisions in view of the financial condition, stability or desirability of
such tenants. Where a tenant is granted the right to assign or sublet its
space, the lease agreement generally provides that the original lessee will
remain liable for the payment of the lease obligations under such lease
agreement.
During 1996, the Company added approximately 1.4 million square feet to
its portfolio of shopping center properties through the acquisition of
properties and another .1 million square feet of space through development.
The Company entered a new market with a 127,000 square foot acquisition in
Colorado. The Company acquired two shopping centers in the suburbs of Kansas
City aggregating 270,000 square feet. In additon the Company also added
470,000 square feet of properties in Arizona, Louisiana and San Antonio,
Texas. The remaining shopping center acquisitions were located in the Houston
metropolitan area.
Industrial Properties. The Company currently owns a total of twenty
industrial projects, all of which are located in the greater Houston area.
These projects include 76 buildings having a total of 3.6 million square feet
of building area situated on 9.0 million square feet of land. These figures
include the Company's interests in four joint ventures. Major tenants of the
Company's industrial properties include Advo (a leading direct mail
advertising company), Pepsico's PFS division, Stone Container Corporation and
Iron Mountain Records Storage.
During 1996, the Company completed the development of a 163,000 square
foot build-to-suit project on a tract of the Company's undeveloped land
located in the Railwood Industrial Park. Railwood Industrial Park is a
master-planned industrial park in northeast Houston, which offers full
utilities, loading docks and rail service in an architecturally controlled
environment.
During 1996, the Company acquired three properties representing 615,000
square feet of industrial space. These acquistions included a combination of
both office/service center space and bulk/dock high facilities. These
properties are all located in Houston.
Office Building. The Company owns a seven-story, 121,000 square foot
masonry office building with a detached, covered, three-level parking garage
situated on 171,000 square feet of land fronting on North Loop 610 West in
Houston. The building serves as the Company's headquarters. Other than the
Company, the major tenant of the building is Nations Bank, which currently
occupies 11% of the office space.
Multi-family Residential Properties. At December 31, 1996, the Company
owned, through a joint venture interest, one apartment project located in San
Antonio, Texas. The Company's percentage ownership represents approximately
79 units of the project's aggregate 159 units. This project is a garden-type
project complemented by landscaping, recreational areas and adequate parking.
This project is managed by our joint venture partner, who is an experienced
apartment operator. During 1996, a 564 unit project in Houston, Texas in
which the Company had a 26% equity interest was sold.
Unimproved Land. The Company owns, directly or through its interest in a
joint venture, 24 parcels of unimproved land aggregating approximately 6.9
million square feet of land area located in Texas and Louisiana. These
properties include approximately 4.0 million square feet of land adjacent to
certain of the Company's existing developed properties, which may be used for
expansion of these developments, as well as approximately 2.9 million square
feet of land, which may be used for new development. Almost all of these
unimproved properties are served by roads and utilities and are ready for
development. Most of these parcels are suitable for development as shopping
centers, and the Company intends to emphasize the development of these parcels
for such purpose.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to its business, to which the Company is a party
or to which any of its properties are subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information with respect to the
executive officers of the Company as of February 27, 1997. All executive
officers of the Company are elected annually by the Board of Trust Managers
and serve until the successors are elected and qualified.
Name Age Position
Stanford Alexander 68 Chairman/Chief Executive Officer
Martin Debrovner 60 Vice Chairman
Andrew M. Alexander 40 President
Joseph W. Robertson, Jr. 49 Executive Vice President/Chief Financial
Officer
Stephen C. Richter 42 Senior Vice President/Financial
Administration and Treasurer
Mr. S. Alexander is the Company's Chairman and its Chief Executive
Officer. He has been employed by the Company since 1955 and has served in his
present capacity since January 1, 1993. Prior to becoming Chairman, Mr.
Alexander served as President and Chief Executive Officer of the Company since
1962. Mr. Alexander is President, Chief Executive Officer and a Trust Manager
of Weingarten Properties Trust and a member of the Houston Regional Advisory
Board of Texas Commerce Bank National Association, Houston, Texas ("TCB").
Mr. Debrovner became Vice Chairman of the Company on February 25, 1997.
Prior to assuming such position Mr. Debrovner served as President and Chief
Operating Officer since January 1, 1993. Mr. Debrovner served as President of
the Management Company since the Company's reorganization in December 1984.
Prior to such time, Mr. Debrovner was an employee of the Company for 17 years,
holding the positions of Senior Vice President from 1980 until March 1984 and
Executive Vice President until December 1984. As Executive Vice President,
Mr. Debrovner was generally responsible for the Company's operations. Mr.
Debrovner is also a Trust Manager of Weingarten Properties Trust.
Mr. A. Alexander became President of the Company on February 25, 1997.
Prior to his present position, Mr. Alexander was Executive Vice
President/Asset Management of the Company and President of Weingarten Realty
Management Company (the "Management Company"). Prior to such time, Mr.
Alexander was Senior Vice President/Asset Management of the Management
Company. He also served as Vice President of the Management Company and,
prior to the Company's reorganization in December 1984, was Vice President and
an employee of the Company since 1978. Mr. Alexander has been primarily
involved with leasing operations at both the Company and the Management
Company. Mr. Alexander is also a Trust Manager of Weingarten Properties
Trust.
Mr. Robertson became Executive Vice President of the Company and its
Chief Financial Officer on January 1, 1993. Prior to becoming Executive Vice
President, Mr. Robertson served as Senior Vice President and Chief Financial
Officer since 1980. He has been with the Company since 1971. Mr. Robertson
is also a Trust Manager of Weingarten Properties Trust.
Mr. Richter became Senior Vice President/Financial Administration and
Treasurer on January 1, 1997. Prior to his present position, Mr. Richter
served as Vice President/Financial Administration and Treasurer of the Company
since January 1, 1993. For the five years prior to that time, he served as
Vice President/Financial Administration and Treasurer of the Management
Company.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON SHARES OF BENEFICIAL INTEREST AND
RELATED SHAREHOLDER MATTERS
The Company's Common Shares are listed and traded on the New York Stock
Exchange under the symbol "WRI". The number of holders of record of the
Company's Common Shares as of February 27, 1997 was 2,834. The high and low
sale prices per share of the Company's Common Shares, as reported on the New
York Stock Exchange composite tape, and dividends per share paid for the
fiscal quarters indicated were as follows:
HIGH LOW DIVIDENDS
----- ---- ---------
1996:
Fourth $ 40 3/4 $ 36 $ 0.62
Third 40 1/2 37 3/8 0.62
Second 38 7/8 34 1/4 0.62
First 38 7/8 35 5/8 0.62
1995:
Fourth $ 38 1/2 $ 33 1/2 $ 0.60
Third 37 7/8 35 1/8 0.60
Second 38 1/8 34 1/4 0.60
First 38 34 1/2 0.60
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected consolidated financial data with
respect to the Company and should be read in conjunction with "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations," the Consolidated Financial Statements and accompanying Notes in
"Item 8. Financial Statements and Supplementary Data" and the financial
schedules included elsewhere in this Form 10-K.
(Amounts in thousands, except per share amounts)
Years Ended December 31,
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
Revenues (primarily real estate
rentals) $151,123 $134,197 $120,793 $103,282 $ 89,959
--------- --------- --------- --------- ---------
Expenses:
Depreciation and amortization 33,769 30,060 26,842 23,382 21,291
Interest 21,975 16,707 10,694 10,046 18,689
Other 47,004 42,614 39,235 35,236 30,538
--------- --------- --------- --------- ---------
Total 102,748 89,381 76,771 68,664 70,518
--------- --------- --------- --------- ---------
Income from operations 48,375 44,816 44,022 34,618 19,441
Gain (loss) on sales of property and
securities 5,563 (14) (234) 1,631 1,807
Extraordinary charge(1) (1,167)
--------- --------- --------- --------- ---------
Net Income $ 53,938 $ 44,802 $ 43,788 $ 36,249 $ 20,081
========= ========= ========= ========= =========
Weighted average number of common
shares outstanding 26,555 26,464 26,190 24,211 17,503
Net income per common share $ 2.03 $ 1.69 $ 1.67 $ 1.50 $ 1.15
Cash dividends per common share $ 2.48 $ 2.40 $ 2.28 $ 2.16 $ 2.04
Property (at cost) $970,418 $849,894 $735,134 $634,814 $540,671
Total assets $831,097 $734,824 $682,037 $602,042 $472,303
Debt and convertible notes and
debentures $389,225 $289,339 $229,597 $147,652 $243,627
Other Data:
Funds from Operations (2)
Net income $ 53,938 $ 44,802 $ 43,788 $ 36,249 $ 20,081
Depreciation and amortization(3) 33,414 29,813 26,842 23,382 21,291
(Gain) loss on sales of property and
securities (5,563) 14 234 (1,631) (1,807)
Extraordinary charge (1) 1,167
--------- --------- --------- --------- ---------
Total $ 81,789 $ 74,629 $ 70,864 $ 58,000 $ 40,732
========= ========= ========= ========= =========
(1) Relates to prepayment penalties paid in connection with the early retirement of
debt.
(2) Funds from operations do not represent cash flows from operations and should not be
considered as an alternative to net income.
(3) In accordance with the newly-adopted NAREIT definition of funds from operations,
debt cost amortization is not included beginning with the year ended December
31, 1995.
ITEM 7. 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.
Weingarten Realty Investors owned and operated 160 anchored shopping centers,
20 industrial properties, one multi-family residential project and one office
building at December 31, 1996. Of the Company's 182 developed properties, 140
are located in Texas (including 89 in Houston and Harris County). The
Company's remaining properties are located in Louisiana (11), Arizona (7),
Arkansas (5), New Mexico (5), Oklahoma (4), Nevada (4), Kansas (2), Colorado
(1), Missouri (1), Tennessee (1) and Maine (1). The Company has nearly 3,200
leases and 2,400 different tenants. Leases for the Company's 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 the Company's anchor
tenants are supermarkets, drugstores and other retailers which generally sell
basic necessity-type items.
CAPITAL RESOURCES AND LIQUIDITY
The Company anticipates that cash flows from operating activities will
continue to provide adequate capital for all dividend payments in accordance
with REIT requirements and that cash on hand, borrowings under its existing
credit facility 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 increased to $76.3 million for 1996 from $72.5 million
for 1995 and $64.3 million for 1994.
Cash dividends increased to $65.9 million in 1996, compared to $63.5 million
in 1995 and $59.7 million in 1994. The Company satisfied its REIT requirement
of distributing at least 95% of ordinary taxable income for each of the three
years ended December 31, 1996, and, accordingly, federal income taxes were not
provided in these years. The Company's dividend payout ratio for 1996, 1995
and 1994 approximated 80.5%, 85.1% and 84.2%, respectively, based on funds
from operations for that year.
The Company continued to expand its portfolio of income-producing properties
in 1996. This growth resulted primarily from acquisitions of existing
properties, both shopping centers and industrial properties. During the year,
the Company purchased nine shopping centers and three industrial projects.
These acquisitions added 2.1 million square feet to the Company's portfolio,
at a combined cost of $99.1 million. The Company expanded its presence in its
existing markets and entered a new market in 1996 with the acquisition of a
shopping center in Colorado. The Company completed the development of a .2
million square foot build-to-suit industrial project on a tract of the
Company's undeveloped land and also completed development of three shopping
centers which added .1 million square feet. Additionally, the Company has an
ongoing program for maintaining and renovating its existing portfolio of
properties. Capitalized expenditures for acquisitions, new development and
additions to the existing portfolio were, in millions, $131.6, $114.7 and
$100.5 during 1996, 1995 and 1994, respectively. All of the acquisitions and
new development during 1996 were initially financed under the Company's
revolving credit facility.
Total debt outstanding increased to $389.2 million at December 31, 1996, from
$289.3 million at December 31, 1995. The Company increased total debt by
$99.9 million primarily to fund acquisitions and new development. The
Company's ratio of debt to total market capitalization was 27% at December 31,
1996, as compared to 22% at year end 1995.
During the year, the Company issued an additional $79 million in unsecured
Medium Term Notes ("MTNs"). These MTNs were issued with an average life of
11 years at an average interest rate of 7.2% and the proceeds were used to pay
down balances outstanding under the Company's revolving credit facility.
Continued growth through acquisitions and new development will eventually
necessitate the issuance of additional equity securities; however, the
Company's current capital structure should allow the issuance of additional
debt before this is required. In the interim, the Company will continue to
closely monitor both the debt and equity markets and carefully consider its
available alternatives, including both public and private placements.
During 1996, the Company's $200 million unsecured revolving credit facility
was amended to improve the pricing and effectively extend the term of the
commitment. In addition, the Company executed an agreement with a bank for an
unsecured and uncommitted overnight credit facility totaling $20 million to be
used for cash management purposes. The Company will maintain adequate funds
available under the $200 million revolving credit facility at all times to
cover the outstanding balance under the $20 million facility.
At December 31, 1996, the Company had approximately $98 million of funds
available under the revolving credit facilities. In the third quarter of
1996, the Company filed a $250 million shelf registration statement with the
Securities and Exchange Commission (which includes $23.5 million from the
Company's prior shelf registration), which allows for the issuance of debt,
equity securities or warrants. At December 31, 1996, amounts available under
the shelf registration totaled $231 million. The Company expects to continue
to issue debt under its shelf registration and to continually seek and
evaluate other sources of capital.
FUNDS FROM OPERATIONS
The Company considers funds from operations to be an alternate measure of the
performance of an equity REIT since such measure does not recognize
depreciation and amortization of real estate assets as operating expenses.
Management believes that reductions for these charges are not meaningful in
evaluating income-producing real estate, which historically has not
depreciated. The National Association of Real Estate Investment Trusts
defines funds from operations as net income plus depreciation and amortization
of real estate assets, less gains and losses on sales of properties. Funds
from operations does not represent cash flows from operations as defined by
generally accepted accounting principles and should not be considered as an
alternative to net income as an indicator of the Company's operating
performance or to cash flows as a measure of liquidity.
Funds from operations increased to $81.8 million in 1996, as compared to $74.6
million in 1995 and $70.9 million in 1994. These increases relate primarily
to the impact of the Company's acquisitions and new developments and, to a
lesser degree, the activity at its existing properties. For further
information on changes between years, see "Results of Operations" below.
RESULTS OF OPERATIONS
Rental revenues increased 15.9% or $19.9 million from $125.4 million in 1995
to $145.3 million in 1996 and by 11.8% or $13.2 million from $112.2 million in
1994. These increases are primarily the result of the Company's acquisition
and new development programs. Occupancy of the Company's shopping centers and
total portfolio increased from 92% at December 31, 1995 to 93% at the end of
1996. The Company's industrial portfolio remained constant at 94%. The
increase in occupancy from 1995, in addition to increased rental rates
obtained from the re-leasing and renewal of existing space, accounted for the
remaining increase in rental revenues. The Company completed 600 renewals or
leases comprising 1.9 million square feet at an average rental rate increase
of 9.2%. Net of capital costs for tenant improvements, the increase averaged
4.5%.
Interest income totaled $3.1 million in 1996, $5.3 million in 1995 and $5.8
million in 1994. This decrease in income is primarily the result of the
Company selling $31.8 million of its investment in marketable debt securities
during the fourth quarter of 1995. The sale resulted in a gain of $.1
million.
Equity in earnings of real estate joint ventures and partnerships totaled $1.2
million in 1996, $1.5 million in 1995 and $1.3 million in 1994. The decrease
in 1996 is due to the sale in the third quarter of 1996 of the Company's 26%
interest in an apartment complex accounted for under the equity method. This
sale resulted in a gain of $4.2 million. The increase in 1995 is due to
improvements in the operating results from the properties held in the joint
ventures and partnerships.
Direct costs and expenses of operating the Company's properties (i.e.,
operating and ad valorem tax expenses) increased to $41.9 million in 1996 from
$37.7 million in 1995 and $34.8 million in 1994. These increases are
primarily due to property acquired and developed during these periods.
Overall, direct operating costs and expenses as a percentage of rental
revenues have continually declined from 31% in 1994 to 30% in 1995 and to 29%
in 1996. Depreciation and amortization have increased to $33.8 million in
1996 from $30.1 million in 1995 and $26.8 million in 1994, also as a result of
the properties acquired and developed during these periods.
Gross interest costs, before capitalization of interest to development
projects, increased by $3.7 million from $19.6 million in 1995 to $23.3
million in 1996. This increase in interest cost was due mainly to the
increase in the average debt outstanding from $261.3 million for 1995 to
$314.4 million for 1996. The weighted-average interest rate decreased
slightly from 7.44% in 1995 to 7.36 % in 1996. Interest expense, net of
amounts capitalized, increased $5.3 million from 1995 due to the decrease in
interest capitalization from $2.9 million in 1995 to $1.3 million in 1996 as a
result of the completion in 1996 of two of the Company's significant
development projects. Comparing 1995 to 1994, gross interest costs increased
from $12.4 million in 1994 to $19.6 million in 1995. This was due to an
increase in the average debt outstanding from $181.6 million in 1994 to
$261.3 million in 1995 and to an increase in the weighted-average interest
rate between the two periods from 6.80% in 1994 to 7.44% in 1995. Interest
expense, net of amounts capitalized, increased by only $6.0 million due to the
increase in interest capitalization as a result of increased development
activity during 1995.
The gain on sales of property and securities of $5.6 million in 1996 is due
primarily to the sale of two properties and the receipt of insurance proceeds
from fires which destroyed parts of two shopping centers during 1996. There
were no such occurrences in 1995 or 1994.
As a result of the changes described above, net income increased 20.4% to
$53.9 million in 1996 from $44.8 million in 1995 and by 2.3% from $43.8
million in 1994. Net income per common share increased to $2.03 in 1996 from
$1.69 in 1995 and $1.67 in 1994.
EFFECTS OF INFLATION
The rate of inflation was relatively unchanged in 1996. The Company has
structured its leases, however, in such a way as to remain largely unaffected
should significant inflation occur. Most of the leases contain percentage
rent provisions whereby the Company receives rentals based on the tenants'
gross sales. Many leases provide for increasing minimum rentals during the
terms of the leases through escalation provisions. In addition, many of the
Company's leases are for terms of less than ten years, which allows the
Company to adjust rentals to changing market conditions when the leases
expire. Most of the Company's leases require the tenant to pay their
proportionate share of operating expenses and ad valorem taxes. As a result
of these lease provisions, increases due to inflation, as well as ad valorem
tax rate increases, generally do not have a significant adverse effect upon
the Company's operating results.
FORWARD LOOKING STATEMENTS
This Annual Report on Form 10-K includes certain forward looking statements
reflecting the Company's expectations in the near term; however, many factors
which may affect the actual results, especially the everchanging retail
environment, are difficult to predict. Accordingly, there is no assurance
that the Company's expectations will be realized.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
To the Board of Trust Managers and Shareholders of
Weingarten Realty Investors:
We have audited the accompanying consolidated balance sheets of
Weingarten Realty Investors (the "Company") as of December 31, 1996 and 1995,
and the related statements of consolidated income, shareholders' equity, and
cash flows for each of the three years in the period ended December 31, 1996.
Our audits also included the financial statement schedules listed in the Index
at Item 14. These financial statements and financial statement schedules are
the responsibility of the Company's management. Our responsibility is to
express an opinion on the financial statements and financial statement
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Weingarten Realty Investors
at December 31, 1996 and 1995, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1996 in
conformity with generally accepted accounting principles. Also, in our
opinion, such financial statement schedules, when considered in relation to
the basic consolidated financial statements taken as a whole, present fairly
in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Houston, Texas
February 25, 1997
STATEMENTS OF CONSOLIDATED INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Years Ended December 31,
------------------------
1996 1995 1994
-------- --------- ---------
Revenues:
Rentals $145,307 $125,400 $112,233
Interest (including amounts from related parties of
$1,576 in 1996, $2,304 in 1995 and $2,478 in
1994) 3,148 5,338 5,761
Equity in earnings of real estate joint ventures
and partnerships 1,232 1,549 1,330
Other 1,436 1,910 1,469
-------- --------- ---------
Total 151,123 134,197 120,793
-------- --------- ---------
Expenses:
Depreciation and amortization 33,769 30,060 26,842
Operating 23,021 20,890 19,368
Interest 21,975 16,707 10,694
Ad valorem taxes 18,874 16,776 15,433
General and administrative 5,109 4,948 4,434
-------- --------- ---------
Total 102,748 89,381 76,771
-------- --------- ---------
Income from Operations 48,375 44,816 44,022
Gain (loss) on Sales of Property and Securities 5,563 (14) (234)
-------- --------- ---------
Net Income $ 53,938 $ 44,802 $ 43,788
======== ========= =========
Net Income Per Common Share $ 2.03 $ 1.69 $ 1.67
======== ========= =========
Weighted Average Number of Common Shares
Outstanding 26,555 26,464 26,190
======== ========= =========
See Notes to Consolidated Financial Statements.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
December 31,
------------
1996 1995
---------- ----------
ASSETS
Property $ 970,418 $ 849,894
Accumulated Depreciation (233,514) (216,657)
---------- ----------
Property - net 736,904 633,237
Investment in Real Estate Joint Ventures and Partnerships 7,282 8,960
---------- ----------
Total 744,186 642,197
Mortgage Bonds and Notes Receivable from:
Affiliate (net of deferred gain of $4,487 in 1996 and $5,514 in 1995) 14,550 15,863
Real Estate Joint Ventures and Partnerships 15,235 13,897
Marketable Debt Securities 13,806 16,262
Unamortized Debt and Lease Costs 23,411 20,602
Accrued Rent and Accounts Receivable (net of allowance for doubtful
accounts of $1,236 in 1996 and $1,436 in 1995) 13,164 13,357
Cash and Cash Equivalents 169 3,355
Other 6,576 9,291
---------- ----------
Total $ 831,097 $ 734,824
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Debt $ 389,225 $ 289,339
Accounts Payable and Accrued Expenses 36,949 30,880
Other 3,925 3,006
---------- ----------
Total 430,099 323,225
---------- ----------
Commitments and Contingencies
Shareholders' Equity:
Preferred Shares of Beneficial Interest - par value, $.03 per share;
shares authorized: 10,000; shares issued and outstanding:
none
Common Shares of Beneficial Interest - par value, $.03 per share;
shares authorized: 150,000; shares issued and outstanding:
26,576 in 1996 and 26,546 in 1995 797 796
Capital Surplus 400,201 410,803
---------- ----------
Shareholders' Equity 400,998 411,599
---------- ----------
Total $ 831,097 $ 734,824
========== ==========
See Notes to Consolidated Financial Statements.
STATEMENTS OF CONSOLIDATED CASH FLOWS
(AMOUNTS IN THOUSANDS)
Years Ended December 31,
------------------------
1996 1995 1994
---------- ---------- ---------
Cash Flows from Operating Activities:
Net income $ 53,938 $ 44,802 $ 43,788
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 33,769 30,060 26,842
Equity in earnings of real estate joint ventures and
partnerships (1,232) (1,549) (1,330)
(Gain) loss on sales of property and securities (5,563) 14 234
Amortization of direct financing leases 639 664 585
Changes in accrued rent and accounts receivable (1,836) (526) (2,632)
Changes in other assets (7,507) (7,087) (3,309)
Changes in accounts payable and accrued expenses 4,032 6,187 58
Other, net 59 (67) 69
---------- ---------- ---------
Net cash provided by operating activities 76,299 72,498 64,305
---------- ---------- ---------
Cash Flows from Investing Activities:
Investment in properties (121,379) (105,438) (75,685)
Mortgage bonds and notes receivable:
Advances (3,151) (6,691) (6,557)
Collections 6,188 12,468 2,694
Proceeds from sales and disposition of property 7,231 444 3,063
Proceeds from sales of marketable debt securities 31,836
Real estate joint ventures and partnerships:
Investments (69) (66) (249)
Distributions 1,032 1,337 1,238
Other, net 3,291 2,672 2,519
---------- ---------- ---------
Net cash used in investing activities (106,857) (63,438) (72,977)
---------- ---------- ---------
Cash Flows from Financing Activities:
Proceeds from issuance of:
Debt 95,770 144,500 145,251
Common shares of beneficial interest 231 398 410
Principal payments of debt (2,350) (89,406) (76,527)
Dividends paid (65,851) (63,478) (59,735)
Other, net (428) (1,014) (658)
---------- ---------- ---------
Net cash provided by (used in) financing activities 27,372 (9,000) 8,741
---------- ---------- ---------
Net (decrease) increase in cash and cash equivalents (3,186) 60 69
Cash and cash equivalents at January 1 3,355 3,295 3,226
---------- ---------- ---------
Cash and cash equivalents at December 31 $ 169 $ 3,355 $ 3,295
========== ========== =========
See Notes to Consolidated Financial Statements.
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Years Ended December 31, 1996, 1995 and 1994
Common
Shares of
Beneficial Capital Retained
Interest Surplus Earnings
----------- --------- ----------
Balance, January 1, 1994 $ 779 $426,308
Net income $ 43,788
Shares exchanged for property 9 11,392
Shares issued under benefit plans 3 849
Cash dividends ($2.28 per share) (15,947) (43,788)
----------- --------- ----------
Balance, December 31, 1994 791 422,602 ---
Net income 44,802
Shares exchanged for property 5 6,342
Shares issued under benefit plans 679
Unrealized loss on marketable securities transferred
to available for sale (144)
Cash dividends ($2.40 per share) (18,676) (44,802)
----------- --------- ----------
Balance, December 31, 1995 796 410,803 ---
Net income 53,938
Shares exchanged for property 1 968
Shares issued under benefit plans 469
Unrealized loss on marketable securities (125)
Cash dividends ($2.48 per share) (11,914) (53,938)
----------- --------- ----------
Balance, December 31, 1996 $ 797 $400,201 $ ---
=========== ========= ==========
See Notes to Consolidated Financial Statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Weingarten Realty Investors (the "Company"), a Texas real estate investment
trust, is engaged in the acquisition, development and management of real
estate, primarily neighborhood and community shopping centers. Over 75% of
the Company's properties are located in Texas, with the remainder located
throughout the southwestern part of the United States. The Company's major
tenants include supermarkets, drugstores and other retailers who generally
sell basic necessity-type commodities. The Company currently operates and
intends to operate in the future as a real estate investment trust ("REIT").
Basis of Presentation
The consolidated financial statements include the accounts of the Company,
its subsidiaries and its interest in 50% or more-owned joint ventures and
partnerships over which the Company exercises control. All significant
intercompany balances and transactions have been eliminated. Investments in
less than 50%-owned joint ventures and partnerships are accounted for using
the equity method.
Revenue Recognition
Rental revenue is generally recognized on a straight-line basis over the life
of the lease for operating leases and over the lease terms using the interest
method for direct financing leases. Contingent rentals (payments for taxes,
maintenance and insurance by the lessees and for an amount based on a
percentage of the tenants' sales) are estimated and accrued over the lease
year.
Property
Real estate assets are carried at cost plus capitalized carrying charges.
Depreciation is computed using the straight-line method, generally over
estimated useful lives of 18-50 years for buildings and 10-20 years for
parking lot surfacing and equipment. Major replacements are capitalized and
the replaced asset and corresponding accumulated depreciation are removed from
the accounts. All other maintenance and repair items are charged to expense
as incurred.
The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" effective January 1, 1996. The Company evaluates
long-lived assets for impairment based upon the recoverability of the asset's
carrying value. When it is probable that the undiscounted future cash flows
will not be sufficient to recover the asset's carrying value, an impairment is
recognized. No such impairments were recognized by the Company during the
year ended December 31, 1996.
Capitalization
Carrying charges, principally interest and ad valorem taxes, on land under
development and buildings under construction are capitalized as part of land
under development and buildings and improvements.
Deferred Charges
Unamortized debt and lease costs are amortized primarily on a straight-line
basis over the terms of the debt and over the lives of leases, respectively.
Marketable Debt Securities
The Company's investment in marketable securities is classified as "available
for sale." The securities are carried at market with any unrealized gains or
losses included as a component of shareholders' equity. Premiums and
discounts are amortized (accreted) to operations over the estimated remaining
lives of the securities using the constant yield method.
Use of Estimates
The preparation of financial statements requires management to make use of
estimates and assumptions that affect amounts reported in the financial
statements as well as certain disclosures. Actual results could differ from
those estimates.
Per Share Data
Net income per common share is computed using the weighted average number of
common shares outstanding during the period and excludes the negligible
dilutive effect of shares issuable under benefit plans.
Statements of Cash Flows
The Company considers all highly liquid investments with original maturities
of three months or less as cash equivalents. The Company issued .1 million, .2
million and .3 million common shares of beneficial interest valued at $1.0
million, $6.3 million and $11.4 million in 1996, 1995 and 1994, respectively,
in connection with the purchases of property. The Company also assumed debt
and capital lease obligations totaling $6.6 million, $2.9 million and $13.4
million in connection with the purchases of properties during 1996, 1995 and
1994, respectively.
NOTE 2. DEBT
The Company's debt consists of the following (in thousands):
DECEMBER 31,
------------
1996 1995
-------- --------
Fixed-rate debt payable to 2015 at 6.0% to 10.5% $266,810 $189,413
Notes payable under revolving credit agreements 87,120 73,500
Repurchase agreements, due daily and collateralized by
$13.8 million of marketable debt securities 13,475 11,900
Industrial revenue bonds payable to 2015 at 4.8% to 6.6%
at December 31, 1996 7,558 7,669
Obligations under capital leases 12,467 6,001
Other 1,795 856
-------- --------
Total $389,225 $289,339
======== ========
The Company has an unsecured $200 million revolving credit agreement with a
bank syndicate. The agreement expires in November 1999, but the Company has
an annual option to request a one year extension of the agreement. All
members of the bank syndicate must agree to the requested extension or the
agreement expires on the scheduled date, at which time all loans outstanding
under the credit agreement become payable over a two-year period. The Company
intends to request an extension of the agreement in 1997 and expects that the
bank syndicate will agree to its request. During 1996, the Company executed
an agreement for an unsecured and uncommitted overnight credit facility
totaling $20 million with a bank to be used for cash management purposes. The
Company will maintain adequate funds available under the $200 million
revolving credit facility at all times to cover the outstanding balance under
this facility. The Company also has letters of credit totaling $14.9 million
outstanding under the $200 million revolving credit facility at December 31,
1996. The revolving credit agreements are subject to normal banking terms and
conditions and do not adversely restrict the Company's operations or
liquidity.
At December 31, 1996, the variable interest rate for notes payable under the
$200 million revolving credit agreement, including the cost of the related
commitment fee, was 7.2% and the variable interest rates under the $20 million
revolving credit agreement and the repurchase agreements were 7.0% and 6.8%,
respectively. During 1996, the maximum balance and weighted-average balance
outstanding under these agreements were $116.2 million and $81.5 million,
respectively, at an average interest rate of 6.1%. The Company made cash
payments for interest on debt, net of amounts capitalized, of $21.3 million
in 1996, $13.9 million in 1995 and $10.1 million in 1994.
Certain debt is collateralized by various direct financing leases or other
property and current and future rentals from these leases and properties. At
December 31, 1996 and 1995, the carrying value of such property aggregated
$173 million and $177 million, respectively.
The Company has three interest rate swap contracts with an aggregate notional
amount of $40 million. Such contracts, which expire through 2004, have been
outstanding since their purchase in 1992. The Company intends to hold such
contracts through their expiration date and to use them as a means of fixing
the interest rate on a portion of the Company's variable-rate debt. The
interest rate swaps have an effective interest rate of 8.1%. The difference
between the interest received and paid on the interest rate swaps is
recognized as interest expense as incurred. The interest rate swaps increased
interest expense and decreased net income as follows, in millions: $.9 in
1996, $.8 in 1995 and $1.4 in 1994. The interest rate swaps increased the
average interest rate for the Company's debt by the following amounts: .3% for
1996, .2% for 1995 and .8% for 1994. The Company could be exposed to credit
losses in the event of non-performance by the counterparty; however, the
likelihood of such non-performance is remote.
The Company's debt can be summarized as follows (in thousands):
DECEMBER 31,
------------
1996 1995
-------- --------
As to interest rate:
Fixed-rate debt (including amounts fixed through interest
rate swaps) $306,853 $229,994
Variable-rate debt 82,372 59,345
-------- --------
Total $389,225 $289,339
======== ========
DECEMBER 31,
------------
1996 1995
-------- --------
As to collateralization:
Secured debt $ 91,334 $ 87,133
Unsecured debt 297,891 202,206
-------- --------
Total $389,225 $289,339
======== ========
Scheduled principal payments on the Company's debt (excluding $87.1 million
potentially due under the Company's revolving credit agreements in 1997 and
1999 and $13.5 million of repurchase agreements) are due during the following
years (in thousands):
1997 $ 6,466
1998 1,356
1999 1,469
2000 30,540
2001 47,792
2002 through 2006 112,465
2007 through 2011 77,414
Thereafter 10,902
Various debt agreements contain restrictive covenants, the most restrictive of
which requires the Company to produce annual consolidated distributable cash
flow, as defined by the agreements, of not less than 250% of interest
payments, to limit the payment of dividends to no more than 100% of the
Company's annual consolidated cash flow (as defined), to limit short-term debt
(as defined) to the greater of 33% of total debt or $200 million (exclusive of
repurchase agreements) and to maintain uncollateralized assets equal to at
least 150% of unsecured debt. Management believes that the Company is in
compliance with all restrictive covenants.
During 1996, the Company issued $79 million of unsecured Medium Term Notes
("MTNs") with an average life of 11 years at an average interest rate of 7.2%.
As of December 31, 1996, the Company had issued a total of $195.5 million of
MTNs. In the third quarter of 1996, the Company filed a $250 million shelf
registration statement with the Securities and Exchange Commission, which
allows for the issuance of debt or equity securities or warrants. At December
31, 1996, the unused portion of the shelf registration totaled $231 million.
NOTE 3. PROPERTY
The Company's property consists of the following (in thousands):
DECEMBER 31,
------------
1996 1995
-------- --------
Land $183,431 $151,985
Land under development 33,140 40,464
Buildings and improvements 743,688 636,601
Construction in-progress 1,897 11,648
Property under direct financing leases 8,262 9,196
-------- --------
Total $970,418 $849,894
======== ========
The following carrying charges were capitalized (in thousands):
DECEMBER 31,
------------
1996 1995 1994
------ ------ ------
Interest $1,285 $2,878 $1,670
Ad valorem taxes 269 486 625
------ ------ ------
Total $1,554 $3,364 $2,295
====== ====== ======
NOTE 4. LEASING OPERATIONS
Leasing Arrangements
The Company's lease terms range from less than one year for smaller tenant
spaces to over twenty-five years for larger tenant spaces. In addition to
minimum lease payments, most of the leases provide for contingent rentals.
Rentals under Operating Leases
Future minimum rental income from non-cancelable operating leases at December
31, 1996, in millions, is: $115.5 in 1997; $102.1 in 1998; $88.5 in 1999;
$73.9 in 2000, $63.0 in 2001 and $468.5 thereafter. The future minimum rental
amounts do not include estimates for contingent rentals. Such contingent
rentals, in millions, aggregated $31.2 in 1996, $26.8 in 1995 and $24.6 in
1994.
Property under Direct Financing Leases
Leases that are, in substance, the financing of an asset purchase by the party
leasing the property are recorded as property under direct financing leases.
The Company, in its capacity as lessor, has removed the leased property from
its books and recorded the future lease payments receivable using the
following components (in thousands):
DECEMBER 31,
------------
1996 1995
-------- --------
Total minimum lease payments to be received $13,052 $15,303
Estimated residual values of leased property 1,984 2,005
Unearned income (6,774) (8,112)
-------- --------
Property under direct financing leases $ 8,262 $ 9,196
======== ========
The Company recognized rental revenue from direct financing leases as follows,
in millions: $1.7 in 1996; $1.9 in 1995 and $1.5 in 1994. At December 31,
1996, minimum lease payments to be received in each of the five succeeding
years, in millions, are: $1.8 in 1997; $1.7 in 1998; $1.5 in 1999; $1.1 in
2000; $1.0 in 2001 and $5.6 thereafter. The future minimum lease payments do
not include amounts for contingent rentals. Contingent rental income on
properties leased under direct financing leases, in millions, was $.8 in 1996,
$.7 in 1995 and $.8 in 1994.
NOTE 5. LEASE COMMITMENTS
The Company leases land and a shopping center from the owners and then
subleases these properties to other parties. Future minimum rental payments
under these operating leases, in millions, are: $1.5 in 1997 and 1998; $1.4
in 1999; $1.3 in 2000 and 2001 and $19.6 thereafter.
Future minimum rental payments on these leases have not been reduced by future
minimum sublease rentals aggregating $14.6 million through 2017 that are due
under various non-cancelable subleases. Rental expense (including
insignificant amounts for contingent rentals) for operating leases aggregated,
in millions: $1.8 in 1996 and 1995 and $1.6 in 1994. Sublease rental
revenue (excluding amounts for improvements constructed by the Company on the
leased land) from these leased properties was as follows, in millions: $2.0
in 1996; $2.2 in 1995 and $2.1 in 1994.
Property under capital leases, consisting of two shopping centers aggregating
$12.3 million at December 31, 1996 and one shopping center aggregating $6.5
million at December 31, 1995, is included in buildings and improvements.
Future minimum lease payments under these capital leases total $19.0 million,
with annual payments due of $.5 million in each of 1997 through 2001, and
$16.4 million thereafter. The amount of these total payments representing
interest is $6.5 million. Accordingly, the present value of the net minimum
lease payments is $12.5 million at December 31, 1996.
NOTE 6. RELATED PARTY TRANSACTIONS
The Company has mortgage bonds and notes receivable of $14.6 million and $15.9
million, net of deferred gain of $4.5 million and $5.5 million, at December
31, 1996 and 1995, respectively, from WRI Holdings, Inc. ("Holdings"). The
Company and Holdings share certain directors and are under common management.
These receivables are collateralized by unimproved land and an investment in a
joint venture which owns and manages a motor hotel ("Hospitality"). The bonds
and notes bear interest at rates of 16% and prime plus 1%, respectively.
However, due to its poor financial condition, Holdings reduced the payment of
interest to the Company in 1988 to the cash flow received from Hospitality
and, accordingly, the Company limited the recognition of interest income for
financial statement purposes to the same amount. The Company does not
anticipate receiving interest payments in excess of this cash flow in the near
term. Interest income recognized for financial reporting purposes was $.3
million, $1.2 million and $1.6 million in 1996, 1995 and 1994, respectively.
During 1995, seven of the eight motor hotels owned by Hospitality were sold.
The Company received $6.6 million in cash and effective ownership of a
three-year, interest-only $3.5 million note receivable which was paid down by
the purchaser in 1996. These proceeds were used to repay the $2.7 million net
investment (cost less related deferred gain) in the mortgage bonds secured by
the seven motels plus accrued interest and $7.4 million of notes receivable.
In 1996, Hospitality obtained secured financing on the remaining motor hotel.
Proceeds from the borrowings were used to repay $.6 million net investment in
the mortgage bonds and $1.3 million of notes receivable. The Company did not
recognize any of the previously deferred gain on these transactions.
The Company had an unrecorded receivable for interest on the mortgage bonds of
$22.4 million and $18.7 million at December 31, 1996 and 1995, respectively.
Interest income not recognized by the Company for financial reporting purposes
aggregated, in millions, $3.7, $3.6 and $3.0 for 1996, 1995 and 1994,
respectively.
Management of the Company believes that the fair market value of the security
collateralizing debt from Holdings is greater than the net investment in such
debt and that there would not be a charge to operations if the Company were
to foreclose on the debt. If foreclosure were required, the net investment
in such debt would become the Company's basis of the repossessed assets.
However, the Company does not currently anticipate foreclosure on Holdings'
properties due to certain restrictions imposed on such assets in connection
with the Company's REIT status. The Company's management does not presently
believe that the net investment in the mortgage bonds and notes receivable
from Holdings has been impaired.
The Company owns interests in several joint ventures and partnerships. Notes
receivable from these entities bear interest at 8.3% to 10.3% at December 31,
1996 and are due at various dates through 2020. The Company recognized
interest income on these notes as follows, in millions: $1.3 in 1996; $1.1 in
1995 and $.9 in 1994.
Texas Commerce Bank National Association ("TCB") is a significant participant
in and the agent for the banks that provide the Company's $200 million
revolving credit agreement. The Company and TCB have two common directors.
NOTE 7. COMMITMENTS AND CONTINGENCIES
The Company has guaranteed $1.1 million of notes payable executed by various
joint ventures and partnerships at December 31, 1996.
The Company is involved in various matters of litigation arising in the normal
course of business. While the Company is unable to predict with certainty the
amounts involved, the Company's management and counsel are of the opinion
that, when such litigation is resolved, the Company's resulting liability, if
any, will not have a material effect on the Company's consolidated financial
statements.
In connection with the acquisition of certain properties in exchange for the
Company's common shares in 1994 and 1995, the Company entered into agreements
with the sellers under which the Company essentially guaranteed that its
common shares would equal or exceed specified values on certain future dates.
The Company settled these agreements in 1996 through the issuance of $1.0
million in common shares and $.6 million in cash.
In connection with the acquisition of a shopping center in 1996, the Company
is obligated to fund additional payments to the seller upon the execution of
new leases at the property and the satisfaction of other conditions. These
additional payments will range from $2.4 million to $11.5 million and will be
made prior to October of 1997. At December 31, 1996, the Company had already
included $2.4 million of these payments in its consolidated balance sheet.
NOTE 8. SHARE OPTIONS AND AWARDS
The Company has an incentive Share Option Plan which provides for the issuance
of options and share awards up to a maximum of 700,000 common shares and
expires in December 1997. The Company has an additional share option plan
which grants 100 share options to every employee of the Company, excluding
executive officers, upon completion of each five-year interval of service.
This plan, which expires in 2002, provides options for a maximum of 100,000
common shares. For both of these share option plans, options are granted to
employees of the Company at an exercise price equal to the quoted fair market
value of the common shares on the date the options are granted. All options
granted under these plans become exercisable in equal increments over a
three-year period and expire upon termination of employment or ten years from
the date of grant.
In January 1994, the Company issued 62,900 restricted shares and granted
434,400 share options under a compensatory Incentive Share Plan for key
officers of the Company. This plan, which expires in 2003, provides for the
issuance of up to 1,000,000 shares, either in the form of restricted shares or
share options. The restricted shares generally vest over a ten-year period,
with potential acceleration of vesting due to appreciation in the market value
of the Company's shares. The share options vest over a five-year period
beginning three years after the date of grant. Share options were granted at
the market price on the date of grant. The Company recognized $.2 million of
compensation expense relating to the restricted shares in 1996, 1995 and 1994.
Effective January 1, 1996, the Company adopted SFAS No. 123, "Accounting for
Stock-Based Compensation." As allowed under this standard, the Company has
continued to use the intrinsic value based method of accounting for such
plans. With respect to the Company's share option and incentive share plans,
adoption of the fair value based approach would result in compensation expense
being recognized in the results of operations when share options are granted,
whereas the intrinsic value based method does not result in the recognition of
compensation expense. Compensation expense for the share awards is the same
under both the fair value and intrinsic value approaches. Had the Company
determined compensation cost for its share option and award plans under the
fair value based approach, the Company's net income would have been reduced by
less than $20,000 and net income per common share would have been unchanged in
both 1995 and 1996. Compensation expense as determined under the fair value
approach was based only on share options granted in 1996 and 1995 and,
accordingly, is not representative of amounts which will be reported in future
years.
The fair value of each option grant was estimated on the date of grant using
the Black-Scholes option-pricing method with the following weighted-average
assumptions; dividend yield of 6.0%, expected volatility of 18.3% and
expected lives of 7.1 years for both 1996 and 1995 and risk-free interest
rates of 6.4% and 6.5% in 1996 and 1995, respectively.
Following is a summary of the option activity for the three years ended
December 31, 1996:
SHARES WEIGHTED
UNDER AVERAGE
OPTION EXERCISE PRICE
-------- ---------------
Outstanding, January 1, 1994 228,600 $ 29.50
Granted 552,150 37.00
Canceled (15,000) 36.10
Exercised (18,500) 22.25
--------
Outstanding, December 31, 1994 747,250 35.10
Granted 3,510 35.75
Canceled (26,500) 34.25
Exercised (15,610) 29.25
--------
Outstanding, December 31, 1995 708,650 35.25
Granted 24,260 38.10
Canceled (34,300) 37.00
Exercised (10,875) 27.00
--------
Outstanding December 31, 1996 687,735 $ 35.40
========
The number of share options exercisable at December 31, 1996, 1995 and 1994
were 243,000, 189,000 and 160,000, respectively. Options exercisable at
year-end 1996 had a weighted-average exercise price of $32.30. The
weighted-average fair value of share options granted during 1996 and 1995 were
$5.10 and $4.85, respectively. Share options outstanding at December 31, 1996
had exercise prices ranging from $19.50 to $43.50 and a weighted-average
remaining contractual life of 6.6 years. Approximately 91% of the options
outstanding at year-end 1996 have exercise prices between $31.00 and $37.00.
There were 878,000 common shares available for the future grant of options or
awards at December 31, 1996.
NOTE 9. FEDERAL INCOME TAX CONSIDERATIONS
Federal income taxes are not provided because the Company believes it
qualifies as a REIT under the provisions of the Internal Revenue Code.
Shareholders of the Company include their proportionate taxable income in
their individual tax returns. As a REIT, the Company must distribute at least
95% of its ordinary taxable income to its shareholders and meet certain income
source and investment restriction requirements.
Taxable income differs from net income for financial reporting purposes
principally because of differences in the timing of recognition of interest,
ad valorem taxes, depreciation, rental revenue, pension expense and
installment gains on sales of property. As a result of these differences, the
book value of the Company's net assets exceeds its tax basis by $53.2 million
at December 31, 1996.
For federal income tax purposes, the cash dividends distributed to
shareholders are characterized as follows:
1996 1995 1994
------ ------ ------
Ordinary income 87.1% 76.4% 94.0%
Return of capital
(generally non-taxable) 4.0 20.1 5.0
Long-term capital gains 8.9 3.5 1.0
------ ------ ------
Total 100.0% 100.0% 100.0%
====== ====== ======
NOTE 10. MARKETABLE SECURITIES
The Company's investment in marketable debt securities at December 31, 1996
consists of U.S. government agency guaranteed pass-through certificates which
mature through 2008. During 1995, the Company sold U.S. Treasury Notes with
an amortized cost of $31.8 million as determined using the specific
identification method and realized a gain of $.1 million. These securities,
which were classified as "held to maturity," were sold due to changes in
market rates coupled with a shift in the Company's philosophy regarding the
holding of marketable securities. The Company's remaining investment was
reclassified to "available for sale." At December 31, 1996 and 1995, the fair
value of these investments totaled $13.8 million and $16.3 million,
respectively. The amortized cost of the investments at December 31, 1996 and
1995 was $14.1 million and $16.4 million, respectively, and the related
unrealized losses were $.3 million and $.1 million at December 31, 1996 and
1995, respectively.
NOTE 11. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of the Company's financial instruments was determined using
available market information and appropriate valuation methodologies as of
December 31, 1996. Unless otherwise described below, all other financial
instruments are carried at amounts which approximate their fair values.
Based on rates currently available to the Company for debt with similar terms
and average maturities, fixed-rate debt with a carrying value of $306.9
million has a fair value of approximately $309.6 million at December 31, 1996.
The fair value of the Company's variable-rate debt approximates its carrying
value of $82.4 million.
The fair value of the interest rate swap agreements is based on the estimated
amounts the Company would receive or pay to terminate the contracts at
December 31, 1996. If the Company had terminated these agreements at December
31, 1996, the Company would have paid $3.1 million.
The fair value of the mortgage bonds and notes receivable from Holdings was
not determined because it is not practical to reasonably assess the credit
adjustment that would be applied in the marketplace for such bonds and notes
receivable.
NOTE 12. EMPLOYEE BENEFIT PLANS
The Company has a Savings and Investment Plan to which eligible employees may
elect to contribute from 1% to 12% of their salaries. Employee contributions
are matched by the Company at the rate of $.50 per $1.00 for the first 6% of
the employee's salary. The employees vest in the employer contributions
ratably over a six-year period. Compensation expense related to the plan was
$.2 million per year for 1996, 1995 and 1994.
The Company has a defined benefit pension plan covering substantially all of
its employees. The benefits are based on years of service and the employee's
compensation during the last five years of service. The Company's funding
policy is to make annual contributions as required by applicable regulations,
however, the Company has not been required to make contributions for any of
the past three years. The following table sets forth the plan's funded status
and amounts recognized in the Company's balance sheet (in thousands):
1996 1995
-------- -------
Actuarial present value of:
Vested benefit obligation $ 6,263 $5,908
======== =======
Accumulated benefit obligation $ 6,368 $5,976
======== =======
Projected benefit obligation $ 7,943 $7,665
Plan assets at fair value, primarily common stocks and bonds 8,677 7,654
-------- -------
Plan assets in excess of (less than) projected benefit obligation 734 (11)
Unrecognized prior service cost 102 149
Unrecognized net gain (1,882) (851)
Unrecognized net transition asset (53) (125)
-------- -------
Pension liability $(1,099) $ (838)
======== =======
The components of net periodic pension cost are as follows (in thousands):
1996 1995 1994
-------- -------- ------
Service cost of benefits earned during the year $ 361 $ 300 $ 248
Interest cost on projected benefit obligation 506 478 422
Actual return on plan assets (1,295) (1,499) 428
Net amortization and deferral 688 1,047 (948)
-------- -------- ------
Total $ 260 $ 326 $ 150
======== ======== ======
Assumptions used to develop periodic expense and the actuarial present value
of projected benefit obligations for:
1996 1995 1994
----- ----- -----
Weighted average discount rate 7.0% 7.0% 7.0%
Expected long-term rate of return on plan assets 8.0% 8.0% 7.0%
Rate of increase in compensation levels 5.0% 5.5% 5.5%
NOTE 13. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
During the year ended December 31, 1996, the Company acquired nine retail
centers and three industrial projects. The pro forma financial information
for the years ended December 31, 1996 and 1995 shown below is based on the
historical statements of the Company after giving effect to the acquisitions
as if such acquisitions took place on January 1, 1996 and 1995, respectively
(in thousands, except per share amounts).
DECEMBER 31,
------------
1996 1995
-------- --------
Pro forma revenues $163,972 $151,357
======== ========
Pro forma net income $ 57,592 $ 49,273
======== ========
Pro forma net income per common share $ 2.17 $ 1.86
======== ========
The pro forma financial information is presented for informational purposes
only and may not be indicative of results that would have actually occurred if
the acquisitions had been in effect at the dates indicated, nor does it
purport to be indicative of the results that may be achieved in the future.
NOTE 14. QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data for the years ended December 31, 1996 and
1995 is as follows:
FIRST SECOND THIRD FOURTH
------- ------- ------- -------
1996:
Revenues $36,762 $37,178 $37,956 $39,227
Net Income 12,625 12,910 16,325 (1) 12,078
Net Income per Common Share 0.48 0.48 0.61 (1) 0.46
1995:
Revenues $32,092 $32,659 $33,885 $35,561
Net Income 11,364 10,931 11,259 11,248
Net Income per Common Share 0.43 0.41 0.42 0.43
(1) Increase is primarily the result of a gain on the sale of property during
the quarter.
NOTE 15. PRICE RANGE OF COMMON SHARES (UNAUDITED)
The high and low sale prices per share of the Company's shares, as reported on
the New York Stock Exchange composite tape, and dividends per share paid for
the fiscal quarters indicated were as follows:
HIGH LOW DIVIDENDS
----- ---- ---------
1996:
Fourth $ 40 3/4 $ 36 $ 0.62
Third 40 1/2 37 3/8 0.62
Second 38 7/8 34 1/4 0.62
First 38 7/8 35 5/8 0.62
1995:
Fourth $ 38 1/2 $ 33 1/2 $ 0.60
Third 37 7/8 35 1/8 0.60
Second 38 1/8 34 1/4 0.60
First 38 34 1/2 0.60
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. TRUST MANAGERS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Information with respect to the Company's Trust Managers is
incorporated by reference from pages 3 through 7 of the Company's definitive
Proxy Statement for the Annual Meeting of Shareholders to be held April 29,
1997.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from pages 11 through 13 of the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
April 29, 1997.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference from pages 2 through 4 of the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
April 29, 1997.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from pages 14 through 15 of the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
April 29, 1997.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements and Financial Statement Schedules: PAGE
----
(1) (A) Independent Auditors' Report 18
(B) Financial Statements
(i) Statements of Consolidated Income for the years
ended December 31, 1996, 1995 and 1994 19
(ii) Consolidated Balance Sheets as of December 31, 1996 and 1995 20
(iii) Statements of Consolidated Cash Flows for the years ended
December 31, 1996, 1995 and 1994 21
(iv) Statements of Consolidated Shareholders' Equity for
the years ended December 31, 1996, 1995 and 1994. 22
(v) Notes to Consolidated Financial Statements 23
(2) Financial Statement Schedules:
SCHEDULE PAGE
-------- ----
II Valuation and Qualifying Accounts 39
III Real Estate and Accumulated Depreciation 40
IV Mortgage Loans on Real Estate 42
All other schedules are omitted since the required information is not present
or is not present in amounts sufficient to require submission of the schedule
or because the information required is included in the consolidated financial
statements and notes hereto.
(b) No reports on Form 8-K were filed during the last quarter of the
period covered by this annual report.
(c) Exhibits:
3.1 - Restated Declaration of Trust, with all amendments thereto (filed as Exhibit 3.1 to the Company's
Registration Statement on Form S-3 (No. 33-49206) and incorporated herein by reference).
3.2 - Bylaws of the Company (filed as Exhibit 3.2 to the Company's Registration Statement on Form
S-3 (No. 33-49206) and incorporated herein by reference).
10.1** - 1988 Share Option Plan of the Company, as amended (filed as Exhibit 10.1 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1990 and incorporated herein by
reference).
10.2** - Weingarten Realty Investors Supplemental Retirement Account Plan, as amended and restated
(filed as Exhibit 10.26 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1992 and incorporated herein by reference).
10.3 - 16% Mortgage Bonds Due 1994 of WRI Holdings, Inc. dated December 28, 1984, payable to the
Company in the original principal amount of $3,150,000 (filed as Exhibit 10.8 to the Company's
Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by reference).
10.3.1* - Third Bonds Renewal and Extension Agreement, effective December 28, 1996, for the 16%
Mortgage Bonds of WRI Holdings, Inc., payable to the Company in the original principal amount
of $3,150,000.
10.4 - Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Texas Commerce
Bank National Association, as Trustee, relating to the 16% Mortgage Bonds Due 1994 of WRI
Holdings, Inc. in the original principal amount of $3,150,000 (filed as Exhibit 10.9 to the
Company's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by
reference).
10.4.1 - Supplemental Indenture of Trust, dated February 22, 1995, between WRI Holdings, Inc. and
Texas Commerce Bank National Association relating to the 16% Mortgage Bonds due December
28, 1994 of WRI Holdings, Inc. in the original principal amount of $3,150,000 (filed as exhibit
10.4.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994
and incorporated herein by reference).
10.5* - Third Supplemental Indenture of Trust between WRI Holdings, Inc. and Texas Commerce Trust
Company of New York, as Trustee, amending Trust Indenture, dated December 28, 1984,
between WRI Holdings, Inc. and Texas Commerce Bank National Association, as Trustee,
relating to the 16% Mortgage Bonds Due 1994 of WRI Holdings, Inc. in the original principal
amount of $3,150,000 .
10.6 - 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc., dated December 28, 1984, payable to the
Company in the original principal amount of $16,682,000 (filed as Exhibit 10.10 to the Company's
Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by reference).
10.7 - Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Texas Commerce
Bank National Association, as Trustee, relating to the 16% Mortgage Bonds Due 2004 of WRI
Holdings, Inc. in the original principal amount of $16,682,000 (filed as Exhibit 10.11 to the
Company's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by
reference).
10.7.1 - First Supplemental Indenture of Trust between WRI Holdings, Inc. and Texas Commerce Trust
Company of New York, as Trustee, amending Trust Indenture, dated December 28, 1984,
between WRI Holdings, Inc. and Texas Commerce Bank National Association, as Trustee,
relating to the 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc. in the original principal
amount of $16,682,000 (filed as Exhibit 10.7.1 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1989 and incorporated herein by reference).
10.8 - Third Amended Promissory Note, as restated, effective as of January 1, 1992, executed by WRI
Holdings, Inc., pursuant to which it may borrow up to the principal sum of $40,000,000 from the
Company.
10.9 - 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc., dated December 28, 1984, payable to the
Company in the original principal amount of $7,000,000 (filed as Exhibit 10.13 to the Company's
Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by reference).
10.10 - Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Texas Commerce
Bank National Association, as Trustee, relating to the 16% Mortgage Bonds Due 2004 of WRI
Holdings, Inc. in the original principal amount of $7,000,000 (filed as Exhibit 10.14 to the
Company's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by
reference).
10.10.1 - First Supplemental Indenture of Trust between WRI Holdings, Inc. and Texas Commerce Trust
Company of New York, as Trustee, amending Trust Indenture, dated December 28, 1984,
between WRI Holdings, Inc. and Texas Commerce Bank National Association, as Trustee,
relating to the 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc. in the original principal
amount of $7,000,000 (filed as Exhibit 10.10.1 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1989 and incorporated herein by reference).
10.11 - Agreement Correcting Trust Indenture, dated February 11, 1985, relating to 16% Mortgage
Bonds Due 2004 of WRI Holdings, Inc. in the original principal amount of $7,000,000 (filed as
Exhibit 10.15 to the Company's Registration Statement on Form S-4 (No. 33-19730) and
incorporated herein by reference).
10.12 - Amendment to Note Purchase Agreement, dated March 31, 1991, amending loan agreement,
dated August 6, 1987, Life and Accident Insurance Company for $4,000,000, American General
Life Insurance Company of Delaware for $4,000,000, Republic National Life Insurance Company
for $3,000,000 and American Amicable Life Insurance Company of Texas for $2,000,000 (filed
as Exhibit 10.15.1 to the Company's Annual Report on Form 10-K for the year ended December
31, 1992 and incorporated herein by reference).
10.13** - The Savings and Investment Plan for Employees of the Company, as amended (filed as Exhibit
4.1 to the Company's Registration Statement on Form S-8 (No. 33-25581) and incorporated
herein by reference).
10.14** - The Fifth Amendment to Savings and Investment Plan for Employees of the Company (filed as
Exhibit 4.1.1 to the Company's Post-Effective Amendment No. 1 to Registration Statement on
Form S-8 (No. 33-25581) and incorporated herein by reference).
10.15 - Promissory Note and Line of Credit Loan Agreement in the amount of $5,000,000, effective as of
May 13, 1991, between the Company, as payee, and Leisure Dynamics, Inc. as maker (filed as
Exhibit 10.22 to the Company's Annual Report on Form 10-K for the year ended December 31,
1991 and incorporated herein by reference).
10.16 - Promissory Note in the amount of $12,000,000 between the Company, as payee, and Plaza
Construction, Inc., as maker (filed as Exhibit 10.23 to the Company's Annual Report on Form 10
K for the year ended December 31, 1991 and incorporated herein by reference).
10.16.1* - Eighth Renewal and Extension of Promissory Note in the amount of $12,000,000, effective as of
December 1, 1996, between the Company, as payee, and Plaza Construction, Inc., as maker.
10.17 - Amended and Restated Master Swap Agreement dated as of January 29, 1992, between the
Company and Texas Commerce Bank National Association, (filed as Exhibit 10.24 to the
Company's Annual Report on Form 10-K for the year ended December 31, 1992 and
incorporated herein by reference).
10.17.1 - Rate swap Transaction, dated as of May 15, 1992, between the Company and Texas Commerce
Bank National Association (filed as Exhibit 10.24.1 to the Company's Annual Report on Form 10
K for the year ended December 31, 1992 and incorporated herein by reference).
10.17.2 - Rate Swap Transaction, dated as of June 24, 1992, between the Company and Texas
Commerce Bank National Association (filed as Exhibit 10.24.2 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992 and incorporated herein by reference).
10.17.3 - Rate Swap Transaction, dated as of July 2, 1992, between the Company and Texas Commerce
Bank National Association (filed as Exhibit 10.24.3 to the Company's Annual Report on Form 10
K for the year ended December 31, 1992 and incorporated herein by reference).
10.18* - Amended and Restated Credit Agreement dated as of November 21, 1996 between the
Company and Texas Commerce Bank National Association, as Agent, and individually as a
Bank, and the Banks defined therein.
10.19 - Note Purchase Agreement, dated April 1, 1994, between The Variable Annuity Life Insurance
Company, American General Life Insurance Company and the Company in the amount of
30,000,000 (filed as Exhibit 10.25 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1994 and incorporated herein by reference).
10.20** - The 1993 Incentive Share Plan of the Company (filed as Exhibit 4.1 to the Company's
Registration Statement on Form S-8 (No. 33-52437) and incorporated herein by reference).
10.21 - 7.10% Senior Medium Term Note (Series A) of the Company, dated 5-22-95, in the amount of
12,500,000 (filed as Exhibit 10.27 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995 and incorporated herein by reference).
10.22 - 7.29% Senior Medium Term Note (Series A) of the Company, dated 5-22-95, in the amount of
12,500,000 (filed as Exhibit 10.28 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995 and incorporated herein by reference).
10.23 - 7.35% Senior Medium Term Note (Series A) of the Company, dated 5-30-95, in the amount of
12,500,000 (filed as Exhibit 10.29 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995 and incorporated herein by reference).
10.24 - 7.125% Senior Medium Term Note (Series A) of the Company, dated 5-30-95, in the amount of
12,500,000 (filed as Exhibit 10.30 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995 and incorporated herein by reference).
10.25 - 7.22% Senior Medium Term Note (Series A) of the Company, dated 6-1-95, in the amount of
12,500,000 (filed as Exhibit 10.31 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995 and incorporated herein by reference).
10.26 - 6.82% Senior Medium Term Note (Series A) of the Company, dated 6-1-95, in the amount of
25,000,000 (filed as Exhibit 10.32 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995 and incorporated herein by reference).
10.27 - 7.28% Senior Medium Term Note (Series A) of the Company, dated 8-21-95, in the amount of
10,000,000 (filed as Exhibit 10.33 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995 and incorporated herein by reference).
10.28 - 6.84% Senior Medium Term Note (Series A) of the Company, dated 11-7-95, in the amount of
2,000,000 (filed as Exhibit 10.28 to the Company's Annual Report of Form 10-K for the year
ended December 31, 1995 and incorporated herein by reference).
10.29 - 6.84% Senior Medium Term Note (Series A) of the Company, dated 11-20-95, in the amount of
5,000,000 (filed as Exhibit 10.29 to the Company's Annual Report of Form 10-K for the year
ended December 31, 1995 and incorporated herein by reference).
10.30 - 6.62% Senior Medium Term Note (Series A) of the Company, dated 12-11-95, in the amount of
10,000,000 (filed as Exhibit 10.30 of the Company's Annual Report of Form 10-K for the year
ended December 31, 1995 and incorporated herein by reference).
10.31 - 6.65% Senior Medium Term Note (Series A) of the Company, dated 12-14-95, in the amount of
2,000,000 (filed as Exhibit 10.31 to the Company's Annual Report of Form 10-K for the year
ended December 31, 1995 and incorporated herein by reference).
10.32 - 7.12% Senior Medium-Term Note (Series A) of the Company, dated 8-13-96, in the amount of
15,000,000 (filed as Exhibit 10.34 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996 and incorporated herein by reference).
10.33 - 7.44% Senior Medium-Term Note (Series A) of the Company, dated 8-14-96, in the amount of
15,000,000 (filed as Exhibit 10.35 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996 and incorporated herein by reference).
10.34 - 7.39% Senior Medium-Term Note (Series A) of the Company, dated 08-06-96, in the amount of
15,000,000 (filed as Exhibit 10.36 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996 and incorporated herein by reference).
10.35 - 6.95% Senior Medium-Term Note (Series A) of the Company, dated 8-07-96, in the amount of
15,000,000 (filed as Exhibit 10.37 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996 and incorporated herein by reference).
10.36 - 6.90% Senior Medium-Term Note (Series A) of the Company, dated 11-22-96, in the amount of
12,000,000 (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated
November 15, 1996 and incorporated herein by reference).
10.37 - 6.60% Senior Medium-Term Note (Series A) of the Company, dated 11-26-96, in the amount of
7,000,000 (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K dated November
15, 1996 and incorporated herein by reference).
10.38 - Revolving Credit Note, dated September 20, 1995, between the Company and Texas Commerce
Bank National Association in the amount of $73,000,000.
10.39 - Revolving Credit Note, dated September 20, 1995, between the Company and NationsBank of
Texas, N.A. in the amount of $45,000,000.
10.40 - Revolving Credit Note, dated September 20, 1995, between the Company and First Interstate
Bank of Texas, N.A. in the amount of $40,000,000.
10.41 - Revolving Credit Note, dated September 20, 1995, between the Company and Signet
Bank/Virginia in the amount of $22,000,000.
10.42 - Revolving Credit Note, dated September 20, 1995, between the Company and Commerzbank,
A.G. in the amount of $20,000,000.
10.43* - Master Promissory Note in the amount of $20,000,000 between the Company, as payee, and
Texas Commerce Bank National Association, as maker, effective December 30, 1996.
10.44 - Distribution Agreement among the Company and the Agents dated November 15, 1996 relating
to the MTN's (filed as Exhibit 1.1 to the Company's Current Report of Form 8-K dated November
15, 1996 and incorporated herein by reference).
10.45 - Senior Indenture dated as of May 1, 1995 between the Company and Texas Commerce Bank,
National Association, as trustee (filed as Exhibit 4(a) to the Company's Registration Statement
on Form S-3 (No. 33-57659) and incorporated herein by reference).
10.46 - Subordinated Indenture dated as of May 1, 1995 between the Company and Texas Commerce
Bank, National Association (filed as Exhibit 4(b) to the Company's Registration Statement on
Form S-3 (No. 33-57659) and incorporated herein by reference).
11.1* - Computation of Net Income Per Common and Common Equivalent Share.
12.1* - Computation of Fixed Charges Ratios.
21.1* - Subsidiaries of the Registrant.
23.1* - Consent of Deloitte & Touche LLP.
27.1* - Financial Data Schedule.
* Filed with this report.
** Management contract or compensatory plan or arrangement.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
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
By: /S/ STANFORD ALEXANDER
-----------------------
Stanford Alexander
Chairman/Chief Executive Officer
Date: March 10, 1997
Pursuant to the requirement of the Securities and Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
--------- ----- ----
By: /S/ Stanford Alexander Chairman and Trust Manager March 10,1997
------------------------
Stanford Alexander (Chief Executive Officer)
By: /S/ Andrew M. Alexander President March 10,1997
------------------------
Andrew M. Alexander and Trust Manager
By: /S/ Martin Debrovner Vice Chairman March 10,1997
------------------------
Martin Debrovner and Trust Manager
By: /S/ Melvin Dow Trust Manager March 10,1997
------------------------
Melvin Dow
By: /S/ Stephen A. Lasher Trust Manager March 10,1997
------------------------
Stephen A. Lasher
By: /S/ Joseph W. Robertson, Jr. Executive Vice President and March 10,1997
------------------------
Joseph W. Robertson, Jr. Trust Manager (Chief Financial Officer)
By: /S/ Douglas W. Schnitzer Trust Manager March 10,1997
------------------------
Douglas W. Schnitzer
By: /S/ Marc J. Shapiro Trust Manager March 10,1997
------------------------
Marc J. Shapiro
By: /S/ J.T. Trotter Trust Manager March 10,1997
------------------------
J.T. Trotter
By: /S/ Stephen C. Richter Senior Vice President/ March 10,1997
------------------------
Stephen C. Richter Financial Administration
and Treasurer
(Principal Accounting Officer)
SCHEDULE II
WEINGARTEN REALTY INVESTORS
VALUATION AND QUALIFYING ACCOUNTS
DECEMBER 31, 1996, 1995 AND 1994
(AMOUNTS IN THOUSANDS)
CHARGED
BALANCE AT TO COSTS CHARGED BALANCE
BEGINNING AND TO OTHER DEDUCTIONS AT END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS (A) PERIOD
- ------------------------------- ----------- --------- -------- ------------ ----------
1996:
Allowance for Doubtful Accounts $ 1,436 $ 1,014 $ 1,214 $ 1,236
1995:
Allowance for Doubtful Accounts 1,007 1,126 697 1,436
1994:
Allowance for Doubtful Accounts 938 1,261 1,192 1,007
Note A - Write-offs of accounts receivable previously reserved.
SCHEDULE III
WEINGARTEN REALTY INVESTORS
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
(AMOUNTS IN THOUSANDS)
Total Cost
----------
Property
Under
Buildings Direct
and Projects under Financing Total Accumulated Encumbrances
Land Improvements Development Leases Cost Depreciation (A)
-------- ------------- --------------- ---------- -------- ------------- --------------
SHOPPING CENTERS:
Texas $133,577 $ 469,377 $ 6,256 $609,210 $ 166,121 $ 5,849
Other States 35,171 184,712 2,006 221,889 36,271 8,115
-------- ------------- ---------- -------- ------------- --------------
Total Shopping Centers 168,748 654,089 8,262 831,099 202,392 13,964
INDUSTRIAL PROPERTIES:
Texas 13,750 69,399 83,149 18,896 3,569
OFFICE BUILDING:
Texas 534 12,712 13,246 8,687
MULTI-FAMILY RESIDENTIAL
PROPERTIES:
Texas 399 1,098 1,497 678 1,083
-------- ------------- --------------- ---------- -------- ------------- --------------
Total Improved
Properties 183,431 737,298 8,262 928,991 230,653 18,616
-------- ------------- ---------- -------- ------------- --------------
LAND UNDER DEVELOPMENT:
Texas $ 31,268 31,268
Other States 1,872 1,872
--------------- --------
Total Land Under
Development 33,140 33,140
--------------- --------
LEASED PROPERTY
(SHOPPING CENTER)
UNDER CAPITAL LEASE:
Louisiana 6,390 6,390 2,861 5,857
------------- -------- ------------- --------------
CONSTRUCTION IN
PROGRESS:
Texas 1,164 1,164
Other States 733 733
--------------- --------
Total Construction in
Progress 1,897 1,897
-------- ------------- --------------- ---------- -------- ------------- --------------
TOTAL OF ALL
PROPERTIES $183,431 $ 743,688 $ 35,037 $ 8,262 $970,418 $ 233,514 $ 24,473
======== ============= =============== ========== ======== ============= ==============
Note A - Encumbrances do not include $62.0 million outstanding under a $35
million 14-year term loan and a $30 million 20-year term loan, both payable to
a group of insurance companies secured by a property collateral pool including
all or part of 8 shopping centers.
SCHEDULE III
(CONTINUED)
The changes in total cost of the properties for the years ended December
31, 1996, 1995 and 1994 were as follows:
1996 1995 1994
--------- --------- ---------
Balance at beginning of year $849,894 $735,134 $634,814
Additions at cost 131,814 115,687 101,402
Retirements or sales (11,585) (1,433) (1,082)
Other changes (B) 295 506
--------- --------- ---------
Balance at end of year $970,418 $849,894 $735,134
========= ========= =========
The changes in accumulated depreciation for the years ended December 31,
1996, 1995 and 1994 were as follows:
1996 1995 1994
--------- --------- ---------
Balance at beginning of year $216,657 $191,427 $168,405
Additions charged to expense 27,732 25,541 23,027
Retirements or sales (10,875) (311) (5)
--------- --------- ---------
Balance at end of year $233,514 $216,657 $191,427
========= ========= =========
Note B - Transferred from net investment in direct financing leases.
SCHEDULE IV
WEINGARTEN REALTY INVESTORS
MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1996
(AMOUNTS IN THOUSANDS)
FINAL PERIODIC FACE CARRYING
INTEREST MATURITY PAYMENT AMOUNT OF AMOUNT OF
RATE DATE TERMS MORTGAGES MORTGAGES(B)
--------- -------- ------------------------- ---------- -------------
SHOPPING CENTERS:
FIRST MORTGAGES:
Sheldon Forest
Channelview, TX Prime 12-01-97 Varying ($179 balloon) $ 179 $ 179
Phelan Boulevard
Beaumont, TX Prime 12-31-97 Varying ($129 balloon) 733 79
+2%
Eastex Venture
Beaumont, TX Prime 12-31-97 Varying ($2,465 balloon) 3,500 2,465
+1 1/2%
Main/O.S.T., Ltd.
Houston, TX 9.3% 02-01-20 $ 476 Annual P & I 4,800 4,664
($1,241 balloon)
INDUSTRIAL:
FIRST MORTGAGES:
Railwood
Houston, TX 10% 12-28-04 Varying ($6,223 balloon) 7,000 6,223
River Pointe, Conroe,TX
(Note C) 9% 11-30-03 Varying 2,133 1,839
Little York, Houston, TX
(Note C) 9% 12-31-03 Varying 1,922 1,707
SCHEDULE IV
(CONTINUED)
WEINGARTEN REALTY INVESTORS
MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1996
(AMOUNTS IN THOUSANDS)
FINAL PERIODIC FACE CARRYING
INTEREST MATURITY PAYMENT AMOUNT OF AMOUNT OF
RATE DATE TERMS MORTGAGES MORTGAGES(B)
--------- -------- --------- ---------- -------------
MULTI-FAMILY RESIDENTIAL
FIRST MORTGAGES:
Stanford Court Apartments
Houston, TX 8.00% 03-30-98 Varying 1,440 1,414
UNIMPROVED LAND:
SECOND MORTGAGE:
River Pointe
Conroe, TX Prime 12-01-97 Varying 12,000 8,587
+1% ($8,587
balloon)
---------- -------------
TOTAL MORTGAGE LOANS ON
REAL ESTATE (Note A) $ 33,707 $ 27,157
========== =============
Note A - Changes in mortgage loans for the years ended December 31,
1996, 1995 and 1994 are summarized below:
1996 1995 1994
-------- -------- --------
Balance, Beginning of year $31,292 $28,719 $25,635
New Mortgage Loans 3,500 1,354
Additions to Existing Loans 1,075 1,041 2,032
Collections of Principal (5,210) (1,968) (302)
-------- -------- --------
Balance, End of Year 27,157 $31,292 $28,719
======== ======== ========
Note B - The aggregate cost at December 31, 1996 for federal income tax
purposes is $25,580.
Note C - Principal payments are due monthly to the extent of cash flow
generated by the underlying property.