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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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, 1994
[ ] 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 OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
2600 CITADEL PLAZA DRIVE
P. O. BOX 924133
HOUSTON, TEXAS 77292-4133
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(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
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Common Shares of Beneficial Interest, $0.03 New York Stock Exchange
par value
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. ___
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
24, 1995 was approximately $949,240,764. As of February 24, 1995, there were
26,367,799 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 27, 1995 are incorporated by reference
in Part III.
Exhibit Index beginning on Page 33.
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TABLE OF CONTENTS
ITEM NO. PAGE NO.
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PART I
1. Business........................................... 1
2. Properties......................................... 3
3. Legal Proceedings.................................. 9
4. Submission of Matters to a Vote of Security Holders 9
Executive Officers of the Registrant.............. 10
PART II
5. Market for Registrant's Common Shares of Beneficial
Interest and Related Shareholder Matters.......... 11
6. Selected Financial Data............................ 12
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations............... 13
8. Financial Statements and Supplementary Data........ 17
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure............... 32
PART III
10. Directors and Executive Officers of the Registrant. 32
11. Executive Compensation............................. 32
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, as of December 31, 1994,
owned or had interests in 161 developed income-producing real estate projects,
141 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 and Tennessee. The Company's other commercial real estate
projects included sixteen industrial projects, three multi-family housing
properties and one office building, which serves as the Company's headquarters.
The Company's interests in these projects aggregated approximately 16.3 million
square feet of building area and 71.2 million square feet of land area. The
Company also owned interests in 24 parcels of unimproved land held for future
development which aggregated approximately 8.3 million square feet.
The Company currently employs 163 persons, its 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 8 of the Notes to Consolidated Financial Statements at
page 26.
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"), in 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 trust 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.
Management Services. Through December 31, 1992, the Company contracted
with Weingarten Realty Management Company (the "Management Company"), whereby
the Management Company performed certain services for the Company as an
independent contractor. The Management Company provided leasing and management
services with respect to the operation of substantially all of the Company's
properties including collecting rent, making repairs, cleaning and providing
maintenance. In addition, the Management Company performed acquisition and
development services for the Company such as conducting feasibility studies on
properties subject to purchase, constructing additional improvements on its
existing properties, developing new properties or renovating existing
improvements. The Management Company paid all operating expenses of the
properties out of the rents collected from such properties and was required to
maintain books and records and to furnish to the Company monthly and annual
financial reports and annual budgets for each property. The Management Company
was paid a fee under the management agreement for managing the Company's
properties based on gross revenues from the Company's income producing
properties and was paid additional fees for leasing services and for certain
additional services specifically requested by the Company, including market
research, advertising and promotion, development, acquisition and management
information services. The Management Company was also reimbursed for certain of
its costs and expenses. The Company continues to be "self-advised" and is now
self-managed.
Effective January 1, 1993, the Management Company was acquired by the
Company, thereby allowing direct management of its properties. This transaction
was completed based on a favorable private letter ruling by the Internal Revenue
Service. It formally integrated the management personnel of the Company with
management personnel previously employed by the Management Company. The
combination had no material effect on the Company's operations or financial
position.
1
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 185 properties which were owned as of December 31, 1994, 81 of its 161
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 48 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.
The 1994 economic performance of the southwestern United States in which
the Company has its primary operations improved over 1993; however, this
improvement still generally lagged the national economy. 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 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 17 through 32 herein.
2
ITEM 2. PROPERTIES
At December 31, 1994 the Company's real estate properties consisted of 185
locations in eight states. A complete listing of these properties, including
the name, location, building area and land area, as applicable, is as follows:
SHOPPING CENTERS
Building
Name and Location Area Land Area
----------------- --------- ----------
HOUSTON AND HARRIS COUNTY TOTAL............................... 6,142,000 24,831,000
Alabama-Shepherd, S. Shepherd at W. Alabama................... 28,000* 88,000*
Almeda Road, Almeda at Cleburne............................... 35,000 147,000
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
Crestview, Bissonnet at Wilcrest.............................. 9,000 35,000
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.................. 100,000 737,000
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.............................. 70,000 320,000
Griggs Road, Griggs at Cullen................................. 85,000 422,000
Harrisburg Plaza, Harrisburg at Wayside....................... 86,000 334,000
Heights Plaza, 20th St. at Yale............................... 36,000* 114,000*
Humblewood Shopping Plaza, Eastex Fwy. at F.M. 1960........... 181,000 784,000
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....................... 153,000 648,000
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 (76%).......................... 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
North Oaks, F.M. 1960 at Veterans Memorial.................... 321,000 1,246,000
North Triangle, I-45 at F.M. 1960............................. 17,000 113,000
Northway, Northwest Fwy. at 34th.............................. 212,000 793,000
Northwest Crossing, N.W. Fwy. at Hollister (75%).............. 95,000* 476,000*
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
(Table continued on following page)
3
Building
Name and Location Area Land Area
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Randall's/Norchester, Grant at Jones................................. 107,000 475,000
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............................... 16,000 131,000
Sheldon Forest, South, I-10 at Sheldon............................... 39,000* 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 (76%)................ 40,000* 156,000*
Stella Link, South, Stella Link at S. Braeswood...................... 15,000 56,000
Studemont, Studewood at E. 14th St................................... 29,000 91,000
Ten Blalock Square, I-10 at Blalock.................................. 97,000 321,000
10/Federal, I-10 at Federal.......................................... 131,000 474,000
University Plaza, Bay Area At Space Center........................... 96,000 424,000
The Village Arcade, University at Kirby.............................. 84,000 168,000
Westbury Triangle, Chimney Rock at W. Bellfort....................... 67,000 257,000
Westchase, Westheimer at Wilcrest.................................... 234,000 766,000
Westhill Village, Westheimer at Hillcroft............................ 125,000 480,000
Wilcrest Southwest, Wilcrest at Southwest Fwy........................ 26,000 77,000
TEXAS (EXCLUDING HOUSTON & HARRIS CO.), TOTAL........................ 3,904,000 17,092,000
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
Wolflin Village, Wolflin Ave. at Georgia St., Amarillo............... 175,000 513,000
Merrilee, U.S. Highway 80 at Merrilee, Arlington..................... 8,000 74,000
Southridge Plaza, William Cannon Dr. at S. 1st St., Austin (51%)..... 73,000* 288,000*
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
Baywood, State Hwy. 60 at Baywood Dr., Bay City...................... 40,000 169,000
Bryan Village, Texas at Pease, Bryan................................. 29,000 98,000
Parkway Square, Southwest Pkwy. at Texas Ave., College Station....... 158,000 685,000
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
Coronado Hills, Mesa at Balboa, El Paso (15%)........................ 19,000* 86,000*
Broadway, Broadway at 59th St., Galveston (76%)...................... 58,000* 167,000*
Galveston Place, Central City Blvd. at 61st St., Galveston........... 123,000 527,000
Food King Place, 25th St. at Avenue P, Galveston..................... 28,000 78,000
Cedar Bayou, Bayou Rd., LaMarque..................................... 15,000 51,000
Corum South, Gulf Fwy., League City.................................. 91,000 574,000
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........................ 231,000 1,641,000
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
Porterwood, Eastex Fwy. at F.M. 1314, Porter......................... 99,000 487,000
Gilham Circle, Gilham Circle at Thomas, Port Arthur.................. 33,000 94,000
Village, 9th Ave. at 25th St., Port Arthur (76%)..................... 39,000* 185,000*
Plaza, Ave. H at U.S. Hwy. 90A, Rosenberg............................ 41,000* 135,000*
(Table continued on following page)
4
Building
Name and Location Area Land Area
------------------ --------- ----------
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.......... 56,000 221,000
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
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
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
Island Market Place, 6th St. at 9th Ave., Texas City................. 27,000 90,000
Broadway, S. Broadway at W. 9th St., Tyler (76%)..................... 41,000* 197,000*
Crossroads, I-10 at N. Main, Vidor................................... 116,000 516,000
LOUISIANA, TOTAL..................................................... 1,100,000 4,589,000
Park Terrace, U.S. Hwy. 171 at Parish, DeRidder...................... 137,000 520,000
Westwood Village, W. Congress at Bertrand, Lafayette................. 135,000 942,000
East Town, 3rd Ave. at 1st St., Lake Charles......................... 33,000* 117,000*
14/Park Plaza, Hwy. 14 at General Doolittle, Lake Charles............ 207,000 655,000
Kmart Plaza, Ryan St., Lake Charles.................................. 103,000* 406,000*
Southgate, Ryan at Eddy, Lake Charles................................ 157,000 627,000
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
OKLAHOMA, TOTAL...................................................... 678,000 3,173,000
Bryant Square, Bryant Ave. at 2nd St., Edmond........................ 270,000 1,259,000
Town & Country, Reno Ave at North Air Depot, Midwest City............ 137,000 540,000
Market Boulevard, E. Reno Ave. at N. Douglas Ave., Midwest City...... 36,000 142,000
Windsor Hills Center, Meridian at Windsor Place, Oklahoma City....... 235,000 1,232,000
ARKANSAS, TOTAL...................................................... 599,000 2,252,000
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
Crossroads, Main at Pershing, North Little Rock...................... 65,000 198,000
ARIZONA, TOTAL....................................................... 558,000 2,424,000
Camelback Village Square, Camelback at 7th Avenue, Phoenix........... 134,000 543,000
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
NEW MEXICO, TOTAL.................................................... 177,000 931,000
Eastdale, Candelaria Rd. at Eubank Blvd., Albuquerque (15%).......... 17,000* 90,000*
North Town Plaza, Little St. at N. Main, Albuquerque................. 103,000 656,000
DeVargas, N. Guadalupe at Paseo de Peralta, Santa Fe (23%)........... 57,000* 185,000*
MAINE, TOTAL......................................................... 115,000 482,000
The Promenade, Essex at Summit, Lewiston............................. 115,000* 482,000*
(Table continued on following page)
5
Building
Name and Location Area Land Area
----------------- -------- ---------
TENNESSEE, TOTAL............................................ 20,000 84,000
Highland Square, Summer at Highland, Memphis................ 20,000 84,000
INDUSTRIAL
HOUSTON AND HARRIS COUNTY, TOTAL............................ 2,509,000 5,995,000
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
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
Park Southwest, Stancliff at Brooklet....................... 52,000 159,000
Railwood Industrial Park, Mesa at U.S. 90................... 642,000 1,634,000
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............... 144,000 425,000
River Pointe Mini-Storage, Conroe........................... 32,000* 97,000*
Nasa One Business Center, Nasa Road One at Hwy. 3, Webster.. 112,000 328,000
MULTI-FAMILY RESIDENTIAL
HOUSTON & HARRIS COUNTY, TOTAL................................ 126,000 203,000
York Townhouse Apartments, Yorktown at San Felipe (26%)....... 126,000* 203,000*
TEXAS (EXCLUDING HOUSTON & HARRIS CO.), TOTAL................. 37,000 95,000
Summer Place Apartments, Hillcrest at Quill Dr., San Antonio.. 37,000* 95,000*
LOUISIANA, TOTAL.............................................. 41,000 132,000
Southern Oaks Apartments, Mansfield Rd., Shreveport........... 41,000* 132,000*
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................................ 6,405,000
Bissonnet at Wilcrest......................................... 798,000
Citadel Plaza at 610 N. Loop.................................. 137,000
East Orem..................................................... 122,000
Hollister at Hwy. 290......................................... 260,000
Kirkwood at Dashwood Dr....................................... 322,000
Lockwood at Navigation........................................ 163,000
Mesa Rd. at Tidwell........................................... 901,000
Mesa Rd. at Spikewood......................................... 1,810,000
Mowery at Cullen.............................................. 118,000
Northwest Fwy. at Gessner..................................... 484,000
(Table continued on following page)
6
Building
Name and Location Area Land Area
------------------ -------- ---------
Post Oak at Westheimer......................... 505,000
Redman at W. Denham............................ 17,000
Renwick at Gulfton............................. 17,000
Sheldon at I-10................................ 19,000
University at Morningside...................... 246,000
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.. 618,000
Loop 336 at I-45, Conroe....................... 77,000
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............................... 1,285,000
U.S. Hwy. 171 at Parish, DeRidder.............. 462,000
Woodland Hwy., Plaquemines Parish (5%)......... 823,000*
ALL PROPERTIES-BY LOCATION
GRAND TOTAL.................................... 16,271,000 71,187,000
Houston & Harris County........................ 8,898,000 37,605,000
Texas (excluding Houston & Harris County)...... 4,085,000 18,230,000
Louisiana...................................... 1,141,000 6,006,000
Arkansas....................................... 599,000 2,252,000
Oklahoma....................................... 678,000 3,173,000
New Mexico..................................... 177,000 931,000
Arizona........................................ 558,000 2,424,000
Maine.......................................... 115,000 482,000
Tennessee...................................... 20,000 84,000
ALL PROPERTIES-BY CLASSIFICATION
GRAND TOTAL.................................... 16,271,000 71,187,000
Shopping Centers............................... 13,293,000 55,858,000
Industrial..................................... 2,653,000 6,420,000
Multi-Family Residential....................... 204,000 430,000
Office Building................................ 121,000 171,000
Unimproved Land................................ 8,308,000
- --------
Note: Total square footage includes 6,240,000 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.
7
General. In 1994, no single property accounted for more than 3.3% of the
Company's total assets or 4.1% of gross revenues. Three properties, in the
aggregate, represented approximately 9.5% of the Company's gross revenues for
the year ended December 31, 1994; otherwise, none of the remaining properties
accounted for more than 2.4% 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, 1994 was 91.9%.
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, 1994, the Company owned, either
directly or through its interests in joint ventures, 141 shopping centers with
approximately 13.3 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 and Tennessee.
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 2,600 separate leases with over 1,900
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, Rice Food Markets 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
Wal-Mart 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, Furr's and Wyatt
cafeterias; Academy sporting goods; Service Merchandise catalog stores; and the
following restaurant chains: Arby's, Boston Chicken, Burger King, Champ's,
Church's Fried Chicken, Dairy Queen, Domino's, Jack-in-the-Box, Kentucky Fried
Chicken, China Coast, Pistol Pete Pizza, 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 Clothestime, The Gap, One Price
Stores, Tempo, Payless Shoes (a division of the May Company) 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
8
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 1994, the Company added approximately .8 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
continued to acquire shopping center properties outside the Houston metropolitan
area. Four properties representing .5 million square feet were acquired in
Phoenix, Arizona. Additionally, shopping centers were added to our existing
portfolio in Oklahoma City, Oklahoma, San Antonio and College Station, Texas.
All of the Company's new developments for 1994 were in Houston.
Industrial Properties. The Company currently owns a total of sixteen
industrial projects, all of which are located in the greater Houston area.
These projects include 58 buildings having a total of 2.7 million square feet of
building area situated on 6.4 million square feet of land. These figures
include the Company's interests in three 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, Iron Mountain
Records Storage and Paul Arpin Van Lines.
Four of such buildings, containing approximately .6 million square feet of
building space, are located in the Railwood Industrial Park, a master-planned
industrial park in northeast Houston, which offers full utilities, loading docks
and rail service in an architecturally controlled environment.
During 1994, the Company acquired two projects representing .3 million
square feet of industrial space. These properties are located in Houston and
had an average occupancy of 85% at the time of the acquisition. Additionally,
through a joint venture, the Company added 64,000 square feet (our 50%
ownership) of mini-warehouse space. These two properties were developed, and
are managed by our joint venture partner, an experienced mini-warehouse
operator. The properties were completed in the third and fourth quarter of
1994.
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 corporate headquarters. Other
than the Company, the major tenant of the building is Charter Bank, which
occupies 22%.
Multi-family Residential Properties. At December 31, 1994, the Company
owned, through joint venture interests, three apartment projects located in
Houston and San Antonio, Texas and Shreveport, Louisiana. The Company's
percentage ownership represents approximately 283 units of the projects'
aggregate 833 units. All are garden-type projects complemented by landscaping,
recreational areas and adequate parking. These projects are managed by our
joint venture partners, all of whom are experienced apartment operators.
Subsequent to December 31, 1994, the joint venture which owned the property in
Louisiana sold the project. The Company owned a 50% interest in the joint
venture.
Unimproved Land. The Company owns, directly or through its interest in
joint ventures, 24 parcels of unimproved land aggregating approximately 8.3
million square feet of land area located in Texas and Louisiana. These
properties include approximately 5.0 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 3.3 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 is subject.
9
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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 24, 1995.
NAME AGE POSITION
----- --- ----------
Stanford Alexander....... 66 Chairman/Chief Executive Officer
Martin Debrovner......... 58 President/Chief Operating Officer
Joseph W. Robertson, Jr.. 47 Executive Vice President/Chief
Financial Officer
Andrew M. Alexander...... 38 Executive Vice President/Asset
Management
Gary Cunningham.......... 46 Vice President/New Development and
Acquisitions
M. Candace DuFour........ 44 Vice President/Acquisitions and
Secretary
Johnny L. Hendrix........ 37 Vice President/Leasing
Joseph W. Karp........... 43 Vice President/Operating Properties
John J. Marcisz.......... 57 Vice President/Construction
Stephen C. Richter....... 40 Vice President/Financial Administration
and Treasurer
Jeffrey A. Tucker........ 48 Vice President/General Counsel
Steven R. Weingarten..... 37 Vice President/Leasing
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 President and Chief Operating Officer of the Company
on January 1, 1993. Prior to assuming such position, Mr. Debrovner served as
President of Weingarten Realty Management Company (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. Robertson is Executive Vice President of the Company and its Chief
Financial Officer. 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, and a director of Paine Webber Retail Properties
Investments, Inc.
Mr. A. Alexander became Executive Vice President/Asset Management on
January 1, 1993. Prior to his present position, Mr. Alexander was Senior Vice
President/Asset Management of the Management Company. Prior to such time, Mr.
Alexander was 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 and a director of Charter
Bank Houston, N.A.
Mr. Cunningham became Vice President/New Development and Acquisitions on
January 1, 1993. For the five years prior to that time, he served as Vice
President/New Development and Acquisitions of the Management Company.
10
Ms. DuFour became Vice President/Acquisitions and Secretary of the Company
on January 1, 1993. From January 1986 until March 1989, she was
Secretary/Treasurer and from March 1989 until December 1992 she was Vice
President, Secretary and Treasurer of the Company.
Mr. Hendrix became Vice President/Leasing of the Company during January
1994. From January 1, 1993 until that time, he served as Associate
Director/Leasing of the Company, and for the four years prior to that time, he
served the Management Company as a leasing executive.
Mr. Karp became Vice President/Operating Properties of the Company on
January 1, 1993. For the five years prior to that time, he served as Vice
President/Operating Properties of the Management Company.
Mr. Marcisz became Vice President/Construction of the Company on January 1,
1993. For the five years prior to that time, he served as Vice
President/Construction of the Management Company.
Mr. Richter became Vice President/Financial Administration and Treasurer of
the Company on January 1, 1993. For the five years prior to that time, he
served as Vice President/Financial Administration and Treasurer of the
Management Company.
Mr. Tucker became Vice President/General Counsel of the Company on January
1, 1993. For the five years prior to that time, he served as Vice President,
Secretary and General Counsel of the Management Company.
Mr. Weingarten became Vice President/Leasing of the Company during January
1994. From January 1, 1993 until that time, he served as Associate
Director/Leasing of the Company, and for the four years prior to that time, he
served the Management Company as a leasing executive.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON SHARES OF BENEFICIAL INTEREST AND
RELATED SHAREHOLDER MATTERS
The number of holders of record of the Company's Common Shares, as of
February 24, 1995 was 2,690. 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 periods indicated were as follows:
High Low Dividends
------- ------- ---------
1994:
First... $40 1/2 $36 3/8 $.57
Second.. 39 7/8 36 3/4 .57
Third... 39 1/2 34 3/4 .57
Fourth.. 38 1/8 32 3/4 .57
1993:
First... $44 $36 1/2 $.54
Second.. 43 5/8 37 7/8 .54
Third... 45 1/4 40 7/8 .54
Fourth.. 43 3/4 36 1/2 .54
11
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 the Consolidated
Financial Statements.
(Amounts in thousands, except per share amounts)
Years Ended December 31,
-----------------------------------------------------
1994 1993 1992 1991 1990
--------- --------- --------- --------- ---------
Revenues (primarily real estate rentals)........... $120,793 $103,282 $ 89,959 $ 82,645 $ 76,863
-------- -------- -------- -------- --------
Expenses:
Depreciation and amortization..................... 26,842 23,382 21,291 19,019 17,699
Interest.......................................... 10,694 10,046 18,689 20,157 19,938
Other............................................. 39,235 35,236 30,538 26,119 23,071
-------- -------- -------- -------- --------
Total........................................... 76,771 68,664 70,518 65,295 60,708
-------- -------- -------- -------- --------
Income from operations............................. 44,022 34,618 19,441 17,350 16,155
Gains (loss) on sales of property and securities... (234) 1,631 1,807 608 327
Extraordinary charge(1)............................ (1,167)
-------- -------- -------- -------- --------
Net Income......................................... $ 43,788 $ 36,249 $ 20,081 $ 17,958 $ 16,482
======== ======== ======== ======== ========
Weighted average number of common
shares outstanding................................ 26,190 24,211 17,503 16,580 16,279
Net income before extraordinary charge per
common share...................................... $1.67 $ 1.50 $ 1.21 $ 1.08 $ 1.01
Net income per common share........................ $1.67 $ 1.50 $ 1.15 $ 1.08 $ 1.01
Cash dividends per common share.................... $2.28 $ 2.16 $ 2.04 $ 1.92 $ 1.88
Property (at cost)................................. $735,134 $634,814 $540,671 $482,732 $435,457
Total assets....................................... $682,037 $602,042 $472,303 $440,088 $415,858
Debt and convertible notes and debentures.......... $229,597 $147,652 $243,627 $280,217 $249,686
Other Data:
Funds from Operations(2):
Net income........................................ $ 43,788 $ 36,249 $ 20,081 $ 17,958 $ 16,482
Depreciation and amortization..................... 26,842 23,382 21,291 19,019 17,699
(Gains) loss on sales of property and securities.. 234 (1,631) (1,807) (608) (327)
Extraordinary charge(1)........................... 1,167
-------- -------- -------- -------- --------
Total........................................... $ 70,864 $ 58,000 $ 40,732 $ 36,369 $ 33,854
======== ======== ======== ======== ========
(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.
12
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.
BUSINESS ENVIRONMENT
Weingarten Realty Investors owned and operated 141 anchored shopping centers,
16 industrial properties, 3 multi-family residential projects, and one office
building at December 31, 1994. Of the Company's 161 developed properties, 129
are located in Texas (including 81 in Houston and Harris County). The Company's
remaining properties are located in Louisiana (11), Arizona (6), Arkansas (6),
Oklahoma (4), New Mexico (3), Maine (1) and Tennessee (1). The Company has over
2,600 leases and 1,900 different tenants. Leases for the Company's properties
range from less than a year for smaller spaces to over twenty five 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 Company's revenues and occupancy
rates are directly affected by the square footage leased and the business
environment and conditions of the markets in which the Company owns and operates
its properties. The Company's results of operations are also significantly
affected by the property operating expenses, cost of capital and acquisition and
development of additional properties. Following is a summary of selected key
indicators (in thousands, except for percentages):
1994 1993 1992
--------- --------- ---------
Rental revenues..................................... $112,233 $ 95,791 $ 85,178
Occupancy rate...................................... 92% 92% 93%
Square footage leased............................... 14,956 13,802 12,479
Renewal rental rate increase........................ 5.7% 1.8% 2.4%
Property--at cost................................... $735,134 $634,814 $540,671
Property acquisitions and new development--at cost.. $100,458 $ 91,008 $ 61,872
Building square footage:
Acquisitions and new development.................. 1,302 1,483 1,119
Total............................................. 16,271 14,994 13,467
Debt (weighted average):
Outstanding....................................... $181,595 $138,323 $267,727
Interest rate..................................... 6.8% 8.1% 7.8%
The Company considers the renewal rental rate as one of the best indicators
for changes in overall rental rates for the Company's properties. The rate
presented herein is the percentage change in the weighted average rental rate
for shopping center space renewed by existing non-anchor tenants. Renewals of
anchor tenants are excluded from the computation, because their leases are of a
much longer term (and therefore, generally result in significant increase upon
renewal) and the extensive space leased by anchors could significantly skew the
overall average rate.
The 1994 economic performance of the southwestern United States in which the
Company has its primary operations improved over 1993; however, this improvement
still generally lagged the national economy. The overall economic conditions of
these areas can be illustrated through increases in total retail sales (as
distinguished from same store sales), and leading economic indicators as
published:
1994 1993
----- -----
Total retail sales for:
United States........................ 7.7% 6.3%
Houston.............................. 5.6% 1.0%
Texas................................ 7.3% 4.3%
(Source: U.S. Department of Commerce)
Leading economic indicators for:
United States........................ 3.6% 3.8%
Houston.............................. 4.9% 3.2%
Texas................................ 6.2% 5.0%
(Source: Texas Perspective, Inc.)
13
ACQUISITION AND NEW DEVELOPMENT ACTIVITIES
Since occupancy rates have remained constant and rental rates have only shown
modest increases in the past three years, increases in revenues are mainly due
to the acquisition and new development of additional properties. Such
activities had the following effects (in thousands) on the Company's rental
revenues from:
1994 1993 1992
-------- ------- -------
Base property $ 84,816 $81,415 $81,077
Acquired and developed property 27,417 14,376 4,101
-------- ------- -------
Total $112,233 $95,791 $85,178
======== ======= =======
In the above schedule, "base property" includes property acquired or developed
before 1992 and "acquired and developed property" includes property acquired or
developed during 1992 through 1994.
RESULTS OF OPERATIONS
Rental revenues increased by 17.2% or $16.4 million from $95.8 million in 1993
to $112.2 million in 1994 and by 12.4% or $10.6 million from $85.2 million in
1992 to $95.8 million in 1993. Of these increases, property acquisitions and
new development contributed $13.0 million in 1994 and $10.3 million in 1993.
Since occupancy rates have remained consistent during the periods, the remaining
portion of these increases is due primarily to increased rental rates obtained
from re-leasing and renewals of existing space.
Interest income was $3.4 million in 1992, $5.3 million in 1993 and $5.8
million in 1994. This increased income is mainly the result of investing
approximately $50 million of excess funds from a stock offering in March 1993 in
marketable debt securities.
Equity in earnings of real estate joint ventures and partnerships has
increased from $.7 million in 1992 to $1.1 million in 1993 to $1.3 million in
1994. These increases are the result of additional investment in entities
accounted for under the equity method. Other income increased from $.6 million
in 1992 to $1.1 million in 1993 to $1.5 million in 1994. These increases were
primarily due to lease cancellation income.
Direct costs and expenses of operating the Company's properties (i.e.,
depreciation and amortization, operating and ad valorem tax expenses) increased
from $47.3 million in 1992 to $53.6 million in 1993 to $61.6 million in 1994.
These increases are primarily due to property acquired and developed during
these periods. Overall, direct operating costs and expenses as a percent of
rental revenues have remained relatively constant at 56% in 1992 and 1993 and
55% in 1994.
Interest incurred on debt outstanding during the periods increased from $11.2
million in 1993 to $12.4 million in 1994. This increase was due to an increase
in the weighted average debt outstanding from $138.3 million in 1993 to $181.6
million in 1994, offset partially by a decrease in the weighted average interest
rate of 8.1% in 1993 to 6.8% in 1994. Interest expense increased in 1994 by
only $.6 million due to the decrease in the average interest rate mentioned
above and an increase in the amount of interest capitalized as a result of
additional projects under development during 1994. Interest incurred on debt
outstanding decreased from $20.7 million in 1992 to $11.2 million for 1993.
This decrease was due almost entirely to a decrease of $129.4 million in the
weighted average amount of debt outstanding as a result of the use of proceeds
from a public offering of common shares that were used to reduce debt and the
conversion of all the Company's convertible debt during 1993. The Company
capitalized $.9 million less interest in 1993 than in 1992 due to reduced levels
of development in 1993. As a result, interest expense decreased from $18.7
million in 1992 to $10.0 million in 1993.
The majority of the change in gains (loss) on sales of property and securities
from 1993 to 1994 related to the gains realized in 1993 as a result of fires at
two of the Company's properties; there were no similar occurrences in 1994. The
fires had no material impact on the Company's earnings for 1993 or 1994. The
$1.8 million gain in 1992 was the result of selling the Company's investment in
government backed debt securities and two small tracts of undeveloped land.
Additionally, the Company had a $1.2 million extraordinary charge for the early
retirement of debt in 1992; no such charges occurred in 1993 or 1994.
As a result of these changes, net income increased from $20.1 million in 1992
to $36.2 million (an 80.1% increase) in 1993 to $43.8 million (a 21.0% increase)
in 1994. Net income per common share increased from $1.15 in 1992 to $1.50 (a
30.4% increase) in 1993 to $1.67 (an 11.3% increase) in 1994.
14
FUNDS FROM OPERATIONS
The Company considers funds from operations (defined by the National
Association of Real Estate Investment Trusts as net income plus depreciation and
amortization, less gains (loss) on sales of property and securities) to be an
alternate measure of the performance of any equity REIT since such measure does
not recognize depreciation and amortization expenses as operating expenses.
Management believes that reductions for these charges are not meaningful in
evaluating income-producing real estate, which historically has not depreciated.
Funds from operations do 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 $70.9 million in 1994 compared to $58.0
million in 1993 and $40.7 million in 1992. The majority of the increase relates
to the impact of the Company's acquisitions and new development programs. For
further information on the changes between years, see "Results of Operations"
above.
CAPITAL RESOURCES AND LIQUIDITY
The Company anticipates that cash flow from operating activities will continue
to provide adequate capital for all principal payments as well as dividend
payments in accordance with REIT requirements, and that cash on hand, borrowings
under its existing credit facilities, the use of corporate and 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 $65.5
million for 1994 from $57.6 million for 1993 and $38.3 million for 1992.
Cash dividends increased to $59.7 million in 1994, compared to $52.3 million
in 1993 and $36.2 million in 1992. The Company satisfied its REIT requirement
of distributing at least 95% of ordinary taxable income for each of the three
years ending December 31, 1994 and, accordingly, federal income taxes were not
provided in these years. The Company's dividend payout ratio for 1994 and 1993
approximated 84.2% and 90.2% of the 1994 and 1993 funds from operations (defined
as net income plus depreciation and amortization, less gains (loss) on sales of
property and securities), respectively. Recently, the Company's Board of Trust
Managers approved an increase in the quarterly dividend per common share from
$.57 to $.60.
In 1994, the Company continued to expand its portfolio of income-producing
properties. This growth resulted from acquisitions of existing properties,
both shopping centers and industrial property, and development of new shopping
centers. The Company added, in millions, $100.5, $91.0 and $61.9 of new
property during 1994, 1993 and 1992, respectively.
Total debt outstanding at December 31, 1994 was $229.6 million compared to
$147.7 million at December 31, 1993, and $243.6 million at December 31, 1992.
In 1994, the Company increased total debt $81.9 million primarily to fund the
acquisition and new development programs. Three of the Company's acquisitions
were financed, in part, through the assumption of $13.4 million of debt with
interest rates ranging from 7.5 to 9.75%. The remainder of the purchase price
of the acquisitions was financed through the use of revolving credit debt and
the issuance of 300,000 common shares.
Following is the percentage of the Company's debt to equity and debt to total
capitalization as of December 31:
1994 1993 1992
----- ----- -----
Debt to equity 54% 35% 59%*
Debt to total market (equity) capitalization 19% 13% 26%
---------
* Excludes convertible debentures and notes which were converted to equity
in 1993.
During 1994, the Company replaced its two existing secured bank revolving
credit agreements totaling $100 million with a new syndicated bank agreement.
This new $150 million revolver, in addition to being unsecured, is also at a
more favorable rate. The agreement has an initial three year term with an
annual option to request a one year extension. The Company is currently
negotiating with the syndicate to increase the amount available under the credit
agreement.
At December 31, 1994, the Company had approximately $63 million of funds
available to support the growth of the Company. These funds were available
through a combination of $4 million available under the revolving line of
credit,
15
$29 million of unencumbered government debt securities and a $30 million
closed but unfunded loan from an insurance company.
In 1993, the Company had reduced total debt by calling all $123 million of
outstanding convertible note and debenture issues. The issues were converted
into 3.9 million common shares, all of which had a beneficial anti-dilutive
effect on earnings per share. During March 1993, the Company raised $113
million of new capital through an equity offering of 2.8 million common shares.
Although a large portion of these proceeds was initially used to reduce short-
term revolving credit debt, the proceeds were ultimately the primary source of
the Company's capital needs for the year. Approximately $91.0 million was
invested in new assets, consisting of acquisitions totaling 1.3 million square
feet, the development of new shopping centers and capital improvements to
existing properties.
EFFECTS OF INFLATION
The rate of inflation was on the rise in 1994, but was inconsequential to the
Company's operations. 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 with the Company to receive
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 a
large portion of operating expenses. As a result of these lease provisions,
increases due to inflation, as well as tax rate increases which are usually
anticipated to occur, generally do not have a significant adverse effect upon
the Company's operating results.
16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
Weingarten Realty Investors:
We have audited the accompanying consolidated balance sheets of Weingarten
Realty Investors as of December 31, 1994 and 1993, and the related statements of
consolidated income and cash flows for each of the three years in the period
ended December 31, 1994. 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, 1994 and 1993, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1994 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 22, 1995
17
STATEMENTS OF CONSOLIDATED INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Years Ended December 31,
----------------------------
1994 1993 1992
--------- -------- -------
Revenues:
Rentals..................................................... $112,233 $ 95,791 $85,178
Interest (including amounts from related parties of $2,478
in 1994, $3,020 in 1993 and $2,340 in 1992)............... 5,761 5,341 3,428
Equity in earnings of real estate joint ventures and
partnerships.............................................. 1,330 1,093 736
Other....................................................... 1,469 1,057 617
-------- -------- -------
Total.................................................. 120,793 103,282 89,959
-------- -------- -------
Expenses:
Depreciation and amortization............................... 26,842 23,382 21,291
Operating................................................... 19,368 17,348 14,600
Ad valorem taxes............................................ 15,433 12,887 11,372
Interest.................................................... 10,694 10,046 18,689
General and administrative.................................. 4,434 5,001 4,566
-------- -------- -------
Total.................................................. 76,771 68,664 70,518
-------- -------- -------
Income from Operations....................................... 44,022 34,618 19,441
Gains (Loss) on Sales of Property and Securities............. (234) 1,631 1,807
-------- -------- -------
Income Before Extraordinary Charge........................... 43,788 36,249 21,248
Extraordinary Charge (penalty for early retirement of debt).. 1,167
-------- -------- -------
Net Income................................................... $ 43,788 $ 36,249 $20,081
======== ======== =======
Per Common Share:
Income Before Extraordinary Charge.......................... $1.67 $1.50 $1.21
======== ======== =======
Net Income.................................................. $1.67 $1.50 $1.15
======== ======== =======
Weighted Average Number of Common Shares Outstanding......... 26,190 24,211 17,503
======== ======== =======
See Notes to Consolidated Financial Statements.
18
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
December 31,
----------------------
1994 1993
---------- ----------
ASSETS
Property............................................................. $ 735,134 $ 634,814
Accumulated Depreciation............................................. (191,427) (168,405)
--------- ---------
Property - net...................................................... 543,707 466,409
Investment in Real Estate Joint Ventures and Partnerships............ 9,442 9,542
--------- ---------
Total............................................................. 553,149 475,951
Mortgage Bonds and Notes Receivable from:
Affiliate (net of deferred gain of $16,235)......................... 25,112 24,914
Real Estate Joint Ventures and Partnerships......................... 13,590 10,090
Marketable Debt Securities (Held-to-Maturity)........................ 49,906 51,405
Unamortized Debt and Lease Costs..................................... 16,997 15,038
Accrued Rent and Accounts Receivable (net of allowance for doubtful
accounts of $1,007 in 1994 and $938 in 1993)........................ 14,367 13,880
Cash and Cash Equivalents............................................ 3,295 3,226
Other................................................................ 5,621 7,538
--------- ---------
Total.............................................. $ 682,037 $ 602,042
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Debt................................................................. $229,597 $147,652
Accounts Payable and Accrued Expenses................................ 26,512 22,975
Other................................................................ 2,535 4,328
-------- --------
Total......................................................... 258,644 174,955
-------- --------
Commitments and Contingencies
Shareholders' Equity:
Preferred Shares of beneficial interest - par value, $0.03 per share;
shares authorized: 10,000; shares issued or outstanding: none
Common Shares of beneficial interest - par value, $0.03 per share;
shares authorized: 150,000; shares issued and outstanding:
26,368 in 1994 and 25,972 in 1993................................. 791 779
Capital surplus..................................................... 422,602 426,308
-------- --------
Shareholders' equity.......................................... 423,393 427,087
-------- --------
Total.............................................. $682,037 $602,042
======== ========
See Notes to Consolidated Financial Statements.
19
STATEMENTS OF CONSOLIDATED CASH FLOWS
(AMOUNTS IN THOUSANDS)
Years Ended December 31,
--------------------------------
1994 1993 1992
--------- ---------- ---------
Cash Flows from Operating Activities:
Net Income.................................................... $ 43,788 $ 36,249 $ 20,081
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 26,842 23,382 21,291
Real estate joint ventures and partnerhsips:
Equity in earnings...................................... (1,330) (1,093) (736)
Cash distributions...................................... 1,238 904 606
(Gains) loss on sales of property and securities.......... 234 (1,631) (1,807)
Prepayment penalties associated with early retirement of
debt..................................................... 1,167
Amortization of direct financing leases................... 585 920 502
Net effect of changes in operating accounts............... (5,883) (1,222) (2,830)
Other, net................................................ 69 132
-------- --------- --------
Net cash provided by operating activities............... 65,543 57,641 38,274
-------- --------- --------
Cash Flows from Investing Activities:
Property acquisitions and development......................... (75,685) (91,008) (47,322)
Notes receivable:
Advances.................................................... (6,557) (3,775) (8,570)
Collections................................................. 2,694 3,423 2,582
Proceeds from sales and disposition of property............... 3,063 1,741 1,822
Proceeds from sales of marketable debt securities............. 32,612 18,632
Purchase of marketable debt securities........................ (84,718)
Investment in real estate joint ventures and partnerships..... (249) (2,803) (2,216)
Other......................................................... 2,519 1,213 1,523
-------- --------- --------
Net cash used in investing activities................... (74,215) (143,315) (33,549)
-------- --------- --------
Cash Flows from Financing Activities:
Proceeds from issuance of:
Debt........................................................ 145,251 71,834 42,042
Common Shares of beneficial interest........................ 410 113,190 64,210
Principal payments of debt.................................... (76,527) (44,837) (74,562)
Dividends paid................................................ (59,735) (52,345) (36,180)
Other, net.................................................... (658) (94) (1,176)
-------- --------- --------
Net cash provided by (used in) financing activities..... 8,741 87,748 (5,666)
-------- --------- --------
Net increase (decrease) in cash and cash equivalents........... 69 2,074 (941)
Cash and cash equivalents at January 1......................... 3,226 1,152 2,093
-------- --------- --------
Cash and cash equivalents at December 31....................... $ 3,295 $ 3,226 $ 1,152
======== ========= ========
See Notes to Consolidated Financial Statements.
20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Operations of Weingarten Realty Investors, a Texas business trust, consist of
one business segment--acquiring, developing and leasing of real estate,
primarily community shopping centers, in Texas and throughout the southwestern
part of the United States. The Company currently operates and intends to
operate in the future as a real estate investment trust ("REIT").
Consolidated financial statements include the accounts of the Company, its
subsidiaries and its interest in 50% or more-owned joint ventures and
partnerships. All significant intercompany balances and transactions have been
eliminated. Joint ventures, effectively owned more than 20%, but less than 50%,
are accounted for using the equity method.
Carrying charges, principally interest and ad valorem taxes, of land under
development and buildings under construction are capitalized as part of projects
under development and buildings and improvements to the extent that such charges
do not cause the carrying value of the asset to exceed its net realizable value.
Property is 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. Maintenance and repairs are expensed. Major replacements are
capitalized and the replaced asset and corresponding accumulated depreciation is
removed from the accounts.
Marketable debt securities (held-to-maturity), consisting of U. S. government
agency guaranteed pass-through certificates and U.S. Treasury Notes, are carried
at amortized cost. Premiums and discounts are amortized (accreted) to
operations over the estimated remaining lives of the mortgage-backed securities
using the constant yield method.
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.
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.
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 in connection with share options and awards.
Cash flows are computed using the indirect method. For cash flow purposes,
the Company considers all highly liquid debt instruments with a maturity of less
than three months as cash equivalents.
Dollar amounts presented in the tabulations in the notes to consolidated
financial statements are stated in thousands of dollars, except per share
amounts.
Reclassifications have been made to prior years' amounts to conform with the
current year presentation.
21
NOTE 2. DEBT
The Company's debt consists of the following:
December 31,
------------------
1994 1993
-------- --------
Permanent trust-deed and mortgage notes payable to 2014
at 6.0% to 10.5%, primarily with insurance companies........ $ 53,036 $ 41,066
Notes payable under revolving credit agreement............... 145,000 40,350
Reverse repurchase agreements, due daily and collateralized
by $31.9 million of marketable debt securities.............. 16,200 51,826
Industrial revenue bonds to 2014 at 5.7% to 6.8% at
December 31, 1994........................................... 7,772 7,899
Obligations under capital leases............................. 6,048 6,119
Other........................................................ 1,541 392
-------- --------
Total.................................................... $229,597 $147,652
======== ========
At December 31, 1994, the variable interest rate for notes payable under the
revolving credit agreement and the reverse repurchase agreement was 6.8% and
6.7%, respectively. The weighted average interest rate for the Company's short
term debt for 1994 was 4.4%.
The Company's debt can be summarized as follows:
December 31,
------------------
1994 1993
-------- --------
As to interest rate:
Fixed rate debt (including amounts fixed through
interest rate swaps)............................ $102,278 $ 87,577
Variable rate debt................................ 127,319 60,075
-------- --------
Total......................................... $229,597 $147,652
======== ========
As to collateralization:
Secured debt...................................... $ 84,284 $147,439
Unsecured debt.................................... 145,313 213
-------- --------
Total......................................... $229,597 $147,652
======== ========
22
Scheduled principal payments on the Company's debt (excluding $145.0 million
potentially due under the Company's revolving credit agreement in 1997 and $16.2
million of reverse repurchase agreements) are due during the following years:
1995............... $ 9,410
1996............... 1,253
1997............... 770
1998............... 840
1999............... 720
2000 through 2004.. 41,087
2005 through 2009.. 4,627
Thereafter......... 3,642
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, 1994 and 1993, the carrying value of such property aggregated $257
million and $328 million, respectively.
The Company has an unsecured $150 million revolving credit agreement with a
bank syndication (the "Banks"). Although the agreement expires in November
1997, the Company has an annual option to request a one year extension of the
agreement. Unless all of the banks in the syndication agree to the requested
extension by the Company, the agreement expires on the scheduled date and all
loans outstanding under the credit agreement are payable on the agreement's
expiration. The Company intends to request an extension of the agreement in
1995 and expects that the Banks will agree to their request. During 1994, the
maximum balance and weighted average balance outstanding under this agreement
was $145 million and $98 million, (at 6.3%) respectively. The revolving credit
agreement is subject to normal banking terms and conditions and does not
adversely restrict the Company's operations or liquidity.
The Company made cash payments for interest on debt, net of amounts
capitalized, of $10.1 million in 1994, $9.4 million in 1993 and $18.3 million in
1992.
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% (2.5 times) of
interest payments, to limit the payment of dividends to no more than 100% of the
Company's annual consolidated cash flow, to limit short term debt (as defined)
to the greater of 33% of total debt or $200 million and uncollateralized assets
must be at least 150% of unsecured debt. Management believes that the Company
is in compliance with all restrictive covenants.
In October 1992, the Company purchased 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. The Company intends
to hold such contracts through their expiration date and to use them as a means
of fixing 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: $1.4 in 1994, $1.9 in 1993 and
$.3 in 1992. The interest rate swaps increased the average interest rate for
the Company's debt by the following amounts: .8% for 1994, 1.3% for 1993 and
.1% for 1992. The Company currently has no financial exposure, in the unlikely
event of default by the counterparty, because the Company has paid a higher rate
of interest than it has received under these agreements.
23
Note 3. PROPERTY
The Company's property consists of the following:
December 31,
------------------
1994 1993
-------- --------
Land.................................... $121,773 $110,704
Land under development.................. 50,537 38,966
Buildings and improvements.............. 539,862 466,938
Construction in-progress................ 13,111 7,771
Property under direct financing leases.. 9,851 10,435
-------- --------
Total............................... $735,134 $634,814
======== ========
The following carrying charges were capitalized:
December 31,
----------------------
1994 1993 1992
------ ------ ------
Interest.......... $1,670 $1,114 $2,025
Ad valorem taxes.. 625 193 196
------ ------ ------
Total......... $2,295 $1,307 $2,221
====== ====== ======
NOTE 4. LEASING OPERATIONS
Leasing Arrangements
The Company's lease terms range from less than one year for smaller tenant
spaces to thirty-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, 1994, in millions, is: $83.3 in 1995; $73.5 in 1996; $63.0 in 1997; $54.5
in 1998; $46.4 in 1999 and $349.4 thereafter. The future minimum rental amounts
do not include estimates for contingent rentals. Such contingent rentals, in
millions, aggregated $24.6 in 1994, $21.4 in 1993 and $19.5 in 1992.
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 the
books and recorded the future lease payments receivable using the following
components:
December 31,
-------------------
1994 1993
-------- ---------
Total minimum lease payments to be received... $17,405 $ 19,280
Estimated residual values of leased property.. 1,991 2,224
Unearned income............................... (9,545) (11,069)
------- --------
Property under direct financing leases... $ 9,851 $ 10,435
======= ========
24
The Company recognized rental revenue from direct financing leases as follows,
in millions: $1.5 in 1994; $1.6 in 1993 and $2.0 in 1992. At December 31,
1994, minimum lease payments to be received in each of the five succeeding
years, in millions, are: $1.9 in 1995; $1.8 in 1996 and 1997; $1.7 in 1998 and
$1.5 in 1999. 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 1994, $.6 in 1993 and $.8 in 1992.
NOTE 5. LEASE COMMITMENTS
Operating Leases
The Company leases land and a shopping center from the owners, and then
subleases these properties to other parties. Future minimum rentals under these
operating leases, in millions, are: $1.4 in 1995; $1.3 in 1996; $1.2 in 1997
and 1998; $1.1 in 1999 and $14.9 thereafter.
Future minimum rental payments on these leases have not been reduced by future
minimum sublease rentals aggregating $15.7 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:
$1.6 in 1994; $1.6 in 1993 and $1.5 in 1992. Sublease rental revenue (excluding
amounts for improvements constructed by the Company on the leased land) from
these leased properties were as follows, in millions: $2.1 in 1994; $2.0 in
1993 and $1.6 in 1992.
Capital Leases
Leases which transfer substantially all of the risks and benefits of ownership
associated with the underlying property to the Company are considered capital
leases, and the present value of the required lease payments are recorded as
property and the related debt is recorded as obligations under capital leases.
The debt is amortized as each lease payment is made. Property under capital
leases, consisting of a shopping center aggregating $6.5 million, is included in
buildings and improvements at December 31, 1994 and 1993.
Future minimum lease payments under these capital leases total $12.2 million,
with annual payments due of $.6 million in 1995 through 1999, and $9.3 million
thereafter. The amount of these total payments representing interest is $6.1
million. Accordingly, the present value of the net minimum lease payments is
$6.0 million at December 31, 1994.
The Company subleases this property to other parties. The minimum lease
payments discussed above have not been reduced by minimum sublease rentals
aggregating $3.2 million due under non-cancelable subleases. Minimum sublease
rentals do not include estimates for contingent rentals that aggregated
approximately $.2 million in 1994, 1993, and 1992.
NOTE 6. RELATED PARTY TRANSACTIONS
The Company and Weingarten Realty Management Company (the "Management
Company") were related parties during 1992 because the Management Company was
owned by directors and shareholders of the Company. As the Company had only a
few employees, its operations were primarily performed by employees of the
Management Company through a contract to lease, manage and develop the Company's
properties. The Company and WRI Holdings, Inc. ("Holdings") are related parties
because they share certain directors and are under common management. See Note
8 for related party information about Holdings.
Effective January 1, 1993, the assets of the Management Company, which were
not material in relation to the Company's consolidated balance sheet, were
acquired by the Company through the assumption of less than $.1 million of net
liabilities from the shareholders of the Management Company. This event did not
have a significant effect on 1993 earnings because the additional salaries paid
as the result of this merger were offset by the various fees no longer being
paid to the Management Company.
The Management Company charged the Company fees aggregating $8.0 million for
1992, in connection with services rendered under the management contract. Fees
paid under the management contract were generally based upon
25
a specified percent of revenues, minimum lease rentals of space leased and costs
incurred for acquisition, construction and development of the Company's
properties.
The Company owns an interest in several joint ventures and partnerships.
Notes receivable from these entities bear interest at 4.0% to 10.5% at December
31, 1994 and are due at various dates through 2020. The Company recognized
interest income on these notes aggregating, in millions: $.9 in 1994; $1.0 in
1993 and $.7 in 1992.
Texas Commerce Bank National Association ("TCB") is a significant participant
in and the agent for the Banks that provide the Company's $150 million
syndicated revolving credit agreement. The Company and TCB have two common
directors.
NOTE 7. COMMITMENTS AND CONTINGENCIES
The Company was contingently liable at December 31, 1994 for $1.2 million of
notes payable executed by various joint ventures and partnerships.
The Company is committed to lend Holdings an additional $5.2 million. The
Company remains contingently liable for $.9 million of notes payable by
Hospitality Venture which were transferred to Holdings in 1988.
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 significant effect on the Company's consolidated financial
position.
In connection with the acquisition of certain property in exchange for the
Company's common shares in 1994, the Company entered into an agreement with the
seller under which the Company essentially guarantees that its shares would
exceed a specified value on a certain future date. If the shares' market value
does not exceed the threshold specified in the agreement, the Company has the
option to pay the seller the difference in cash, issue additional shares (based
upon the then market value of the shares) for the difference or settle the
difference by a combination of paying cash and issuing shares. The Company has
the option to settle the agreement in June 1996, December 1996 or June 1997. If
the Company had settled this agreement at December 31, 1994, the cash settlement
amount would have been $1.5 million or a maximum of 40,561 shares would have
been issued. The settlement amount would be considered additional consideration
paid for the property, and would have been included in the basis of the
property, provided such additional basis would not make the carrying value of
the property exceed its fair market value.
NOTE 8. INVESTMENT IN MORTGAGE BONDS AND NOTES RECEIVABLE FROM AN AFFILIATE
Concurrent with the Company being organized as a REIT in 1984, certain
property and investments in joint ventures, which were considered to be
incompatible with a REIT's operation and $3.5 million were transferred to
Holdings in exchange for $26.8 million of mortgage bonds. The transfer price
for the assets was based upon independent appraisals. The appraised values
exceeded the Company's carrying value of the assets; however, because Holdings
is a related party, the gain of $17.3 million was deferred by the Company.
Holdings currently owns three investments: a 50% interest in Hospitality
Venture, which owns and operates eight motor hotels in Florida and Alabama
("Hospitality"); unimproved land in a multi-use land development north of
Houston ("River Pointe") and unimproved land in a major industrial park in
Houston ("Railwood").
26
The mortgage bonds and notes receivable from Holdings, and related deferred
gain, were as follows:
December 31,
--------------------
1994 1993
--------- ---------
Hospitality mortgage bonds, bearing interest at the greater of 16% or
11% of gross receipts (as defined), due 2004 and collateralized by
an interest in Hospitality Venture.................................... $ 15,982 $ 15,982
Railwood mortgage bonds, bearing interest at 16% (payable at 10%),
due 2004 and collateralized by unimproved land........................ 6,223 6,223
River Pointe mortgage bonds, bearing interest at 16% (payable at 10%),
due 1995 and collateralized by unimproved land........................ 3,150 3,150
-------- --------
Total............................................................ 25,355 25,355
River Pointe development notes receivable, bearing interest at prime
rate plus 1% (9.5% at December 31, 1994), due December 1995
and collateralized by unimproved land................................. 10,612 9,907
Hospitality Venture note receivable under a credit agreement, bearing
interest at prime rate plus 1% (9.5% at December 31, 1994), due
August 1995 and collateralized by property............................ 350 2,200
Note receivable, bearing interest at prime rate plus 1% (9.5% at
December 31, 1994), due June 1996 and collateralized by an interest
in Hospitality Venture................................................ 5,030 3,687
-------- --------
Total............................................................ 41,347 41,149
Unrecognized portion of the deferred gain............................... (16,235) (16,235)
-------- --------
Net investment.............................................. $ 25,112 $ 24,914
======== ========
Before 1988, Holdings was current on the payments of all interest;
accordingly, the Company had recognized interest income on all the Holdings debt
at the stated interest pay rates. During the fourth quarter of 1988, Holdings'
cash flow and capital resources became insufficient to meet the full interest
requirements on the mortgage bonds. The accrual of interest income on the River
Pointe and Railwood mortgage bonds has been suspended and interest income on the
Hospitality mortgage bonds has been limited to Holdings' pro rata share of cash
flow from Hospitality Venture. Interest income from the mortgage bonds and
notes receivable recognized by the Company for financial reporting purposes, in
millions, aggregated $1.6 for 1994, $2.1 for 1993 and $1.6 for 1992. At
December 31, 1994 and 1993, accrued interest receivable from Holdings was $.2
million and $.4 million, respectively.
The Company had an unrecorded receivable for interest of $28.6 million and
$22.3 million at December 31, 1994 and 1993, respectively. Of these amounts,
$6.0 million and $5.4 million represent the difference between the accrual rate
and the pay rate on the Railwood and River Pointe mortgage bonds at 1994 and
1993, respectively. Interest income not recognized by the Company for financial
reporting purposes aggregated, in millions, $6.3, $5.2 and $4.9 for 1994, 1993
and 1992, 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 (cost less related deferred gain) 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
presently does not believe that the net investment in the mortgage bonds and
notes receivable from Holdings has been impaired nor that a reserve for any such
impairment is currently required.
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
27
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 $30.8 million at December 31,
1994. Such differences of books over (under) tax are primarily due to the
following, in millions: $50.6 for property basis and depreciation and ($19.1)
for additional interest income recognized for tax purposes on Holdings' debt.
For federal income tax purposes, the cash dividends distributed to
shareholders are characterized as follows:
1994 1993 1992
------ ------ ------
Ordinary Income............................ 94.0% 86.9% 83.3%
Return of capital (generally non-taxable).. 5.0 10.2 11.5
Long-term capital gains.................... 1.0 2.9 5.2
----- ----- -----
Total................................. 100.0% 100.0% 100.0%
===== ===== =====
NOTE 10. SHARE OPTIONS AND AWARDS
The Company has an incentive Share Option Plan (the "Plan") which expires in
December 1997. During 1991, the Company amended the Plan to add awards of
shares of beneficial interest, at nominal cost to the recipient, in addition to
options. The Plan provides options and awards for a maximum of 500,000 common
shares. 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 the
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 and awards that are granted expire
upon termination of employment or ten years from the date of the grant.
Following is a summary of the option activity of the Plans for the three years
ended December 31, 1994:
Shares Option
Under Price
Option Per Share
-------- ----------------
Outstanding, January 1, 1992.... 108,275 $19.50 -- $25.00
Granted....................... 159,500 31.00 -- 34.00
Cancelled..................... (1,500) 25.00
Exercised..................... (37,950) 19.50 -- 25.00
-------
Outstanding December 31, 1992... 228,325 19.50 -- 34.00
Granted....................... 11,700 36.88 -- 44.00
Exercised..................... (11,425) 19.50 -- 36.88
-------
Outstanding, December 31, 1993.. 228,600 19.50 -- 44.00
Granted....................... 552,150 33.00 -- 40.50
Cancelled..................... (15,000) 31.00 -- 41.50
Exercised..................... (18,500) 19.50 -- 31.00
-------
Outstanding, December 31, 1994.. 747,250 19.50 -- 44.00
=======
At December 31, 1994, 140,034 common shares were available for the future
grant of options or awards and options for 159,933 shares were exercisable.
28
On January 3, 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 a total of
500,000 shares, either in the form of restricted shares or 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 two years
after the date of grant. Share options were granted at the market price on the
date of grant. The Company recognized $.2 million in compensation expense
during 1994 relating to the restricted shares.
During 1991, 56,000 shares of beneficial interest were granted as awards to
certain key officers of the Company and the Management Company. All of these
common shares had vested and were issued at December 31, 1994. Compensation
expense relating to the share awards aggregated, in millions, $.5 in 1994, $.6
in 1993 and $.4 in 1992.
NOTE 11. CHANGES IN OPERATING ACCOUNTS
The effect of changes in the operating accounts on cash flows from operating
activities is as follows:
1994 1993 1992
-------- -------- --------
Increase in:
Accrued rent and accounts receivable............. $(2,632) $(1,635) $ (413)
All other assets - primarily unamortized lease
costs.......................................... (3,309) (5,459) (3,591)
Increase in:
Accounts payable and accrued expenses
(excluding amounts applicable to construction
in-progress)................................... 58 5,872 1,174
------- ------- -------
Net effect of changes in operating accounts....... $(5,883) $(1,222) $(2,830)
======= ======= =======
During 1994, the Company issued .3 million common shares valued at $11.4
million and assumed $13.4 million of debt in connection with the purchase of
property. During 1993, $123.0 million in convertible debentures and notes were
converted into 3.9 million common shares of beneficial interest. During 1992,
the Company converted $4.1 million of convertible debentures into .1 million
common shares and .4 million common shares valued at $14.6 million to a partner
for the purchase of the partner's interest in a joint venture.
NOTE 12. SHAREHOLDERS' EQUITY
Following is a summary of changes in the Company's shareholders' equity for
the three years ended December 31, 1994:
Common
Shares of
Beneficial Capital Retained
Interest Surplus Earnings
---------- ------------ --------
Balance, January 1, 1992............................. $499 $137,903 $22
Net income.......................................... 20,081
Public offering..................................... 60 63,393
Property acquisition................................ 12 14,538
Conversion of debentures............................ 4 3,911
Benefit plans....................................... 2 1,122
Cash dividends ($2.04 per share).................... (16,077) (20,103)
---- -------- --------
29
Balance, December 31, 1992........... 577 204,790 -
Net income.......................... 36,249
Public offering..................... 85 112,890
Conversion of notes and debentures.. 116 123,877
Benefit plans....................... 1 847
Cash dividends ($2.16 per share).... (16,096) (36,249)
--- -------- --------
Balance, December 31, 1993........... 779 426,308 -
Net income.......................... 43,788
Property acquisition................ 9 11,392
Benefit plans....................... 3 849
Cash dividends ($2.28 per share).... (15,947) (43,788)
--- -------- --------
Balance, December 31, 1994........... $791 $422,602 $ -
==== ======== ========
NOTE 13. FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS
The following disclosure of estimated fair value was determined by the
Company, using available market information and appropriate valuation
methodologies as of December 31, 1994. However, considerable judgment is
necessary to interpret market data and develop the related estimates of fair
value. Accordingly, the estimates presented herein are not necessarily
indicative of the amounts that the Company could realize upon disposition of the
asset. The use of different market assumptions and/or estimation methodologies
may have a material effect on the estimated fair value amounts. Unless
otherwise described below, all other financial instruments of the Company are
carried at amounts which approximate their fair values.
Marketable debt securities held-to-maturity have an estimated market value of
$45.8 million. Such securities include $16.5 million of U.S. government agency
guaranteed pass-through certificates which mature through 2008 and $29.3 million
of U.S. Treasury Notes which mature in 2000. The Company estimates that these
securities will mature, in millions, as follows: $1.5 in 1995; $38.1 in 1996
through 2000 and $10.3 thereafter.
Mortgage bonds and notes receivable from an affiliate were not fair valued
because it is not practicable to reasonably assess the credit adjustment that
would be applied in the marketplace for such bonds and notes receivable.
However, management of the Company believes that the fair value of the security
collateralizing such bonds and notes receivable is greater than the net
investment in such instruments (cost less related deferred gain).
Fixed rate debt with carrying values of $102.3 million have fair values of
$103.3 million, which were estimated based on interest rates currently available
to the Company for issuance of debt with similar terms and remaining maturities.
The Company believes that the carrying value of its $127.3 million of variable
rate debt is equivalent to its fair value.
Interest rate swap agreements are valued at amounts at which they could be
settled. Settlement amounts are based upon estimates obtained from dealers. If
the Company had settled these agreements with the counterparty at December 31,
1994, the Company would have received $.4 million from the counterparty.
The fair value estimates represented herein are based on pertinent information
available to management as of December 31, 1994. Although management is not
aware of any factors that would significantly affect the estimated fair value
amounts, such amounts have not been comprehensively revalued for purposes of
these financial statements since that date, and current estimates of fair value
may differ significantly from the amounts presented herein.
NOTE 14. PENSION PLAN
Effective January 1, 1993, the Company acquired the assets of the Management
Company, including a defined benefit pension plan covering substantially all of
its employees. This plan was merged with the plan of the Company, effective
January 1, 1993. The benefit formula for both pre-existing plans is identical
to the formula for the surviving merged plan.
30
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.
The following table sets forth the plan's funded status and amounts recognized
in the Company's balance sheet at:
1994 1993
------- -------
Actuarial present value of:
Vested benefit obligation............................ $5,218 $4,785
====== ======
Accumulated benefit obligation....................... $5,278 $5,017
====== ======
Projected benefit obligation......................... $6,748 $7,412
Plan assets at fair value, primarily
common stocks and bonds............................. 6,270 6,703
------ ------
Projected benefit obligation in excess
of plan assets..................................... (478) (709)
Unrecognized prior service cost...................... 196 404
Unrecognized net (gain) loss......................... (33) 212
Unrecognized net transition asset.................... (198) (271)
------ ------
Pension liability recognized in the
balance sheet.....................................$ (513) $ (364)
====== ======
The components of net periodic pension cost for the years ended December 31,
1994 and 1993 are as follows:
Service cost of benefits earned during the year........... $ 248 $ 115
Interest cost on projected benefit obligation............. 422 482
Actual return on plan assets.............................. 428 (646)
Net amortization and deferral............................. (948) 135
------ ------
Total................................................ $ 150 $ 86
====== ======
Assumptions used to develop periodic pension expense and the actuarial present
value of projected benefit obligations for:
1994 1993
----- -----
Weighted average discount rate.................... 7.0% 7.0%
Expected long-term rate of return on plan assets.. 7.0% 7.0%
Rate of increase in compensation levels........... 5.5% 5.5%
Disclosure for the Company's pension plan for 1992 is not included since such
plan was not significant prior to the merger of the Management Company.
31
Note 15. QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data for the years ended December 31, 1994 and
1993 is as follows:
First Second Third Fourth
------- ------- ------- -------
1994:
Revenues..................... $28,889 $29,416 $31,126 $31,362
Net income................... 10,591 10,216 11,873 11,108
Net income per common share.. .41 .39 .45 .42
1993:
Revenues..................... $24,206 $25,009 $26,836 $27,231
Net income................... 7,746 8,447 9,470 10,586
Net income per common share.. .38 .34 .37 .41
NOTE 16. 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
periods indicated were as follows:
High Low Dividends
------- ------- ---------
1994:
First... $40 1/2 $36 3/8 $.57
Second.. 39 7/8 36 3/4 .57
Third... 39 1/2 34 3/4 .57
Fourth.. 38 1/8 32 3/4 .57
1993:
First... $44 $36 1/2 $.54
Second.. 43 5/8 37 7/8 .54
Third... 45 1/4 40 7/8 .54
Fourth.. 43 3/4 36 1/2 .54
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Information with respect to the Company's trust managers is incorporated
by reference from pages 3 through 6 of the Company's Proxy Statement in
connection with the Annual Meeting of Shareholders to be held April 27,
1995
(b) See "Executive Officers of the Registrant" above.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from pages 11 through 13 of the Company's Proxy
Statement in connection with the Annual Meeting of Shareholders to be held April
27, 1995.
32
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference from pages 2 through 4 of the Company's Proxy
Statement in connection with the Annual Meeting of Shareholders to be held April
27, 1995.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from pages 16 through 18 of the Company's Proxy
Statement in connection with the Annual Meeting of Shareholders to be held April
27, 1995.
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.............................. 17
(B) Financial Statements
(i) Statements of Consolidated Income for the years
ended December 31, 1994, 1993 and 1992............... 18
(ii) Consolidated Balance Sheets as of December 31, 1994
and 1993............................................. 19
(iii) Statements of Consolidated Cash Flows for the years
ended December 31, 1994, 1993 and 1992.............. 20
(iv) Notes to Consolidated Financial Statements.......... 21
(2) Financial Statement Schedules:
SCHEDULE PAGE
-------- ----
II Valuation and Qualifying Accounts....... 38
III Real Estate and Accumulated Depreciation 39
IV Mortgage Loans on Real Estate........... 41
33
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 of 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 of 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).
10.4 -- 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).
10.5 -- 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 1994 of WRI Holdings, Inc.
in the original principal amount of $3,150,000 (filed as Exhibit
10.5.1 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1989 and incorporated herein by reference).
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* -- Second 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 $20,000,000 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
34
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 -- Amended and Restated Loan Agreement of $80,000,000 executed
January 22, 1993, between the Company and Texas Commerce Bank
National Association (filed as Exhibit 10.12 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992
and incorporated herein by reference.)
10.12.1*-- First Amendment to Amended and Restated Loan Agreement,
effective as of January 22, 1993, between the Company and Texas
Commerce Bank National Association, amending facility fee.
10.13 -- First, Second and Waiver and Third Amendment to the Amended and
Restated Loan Agreement of $80,000,000 dated February 5, 1986
between the Company and Texas Commerce Bank National Association
(filed as Exhibit 10.13 to the Company's Annual Report on Form 10-
K for the year ended December 31, 1989 and incorporated herein by
reference).
10.14 -- Not used.
10.15 -- 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).
10.16 -- 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).
10.17 -- The Fifth Amendment to Savings and Investment Plan for Employees
of Weingarten Realty (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).
10.18 -- Loan Agreement of $20,000,000 (as amended, supplemented and
restated) dated October 1, 1990, between the Company and Barclays
Bank PLC (filed as Exhibit 10.21 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1990 and incorporated
herein by reference).
10.18.1*-- Agreement and Amendment to Loan Agreement dated as of March 31,
1993 between the Company and Barclays Bank PLC, amending certain
provisions of the Loan Agreement of $20,000,000 dated October 1,
1990.
10.19 -- 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).
35
10.20 -- 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).
10.20.1*-- Fifth Renewal and Extension of Promissory Note in the amount of
$12,000,000, effective as of December 1, 1993, between the
Company, as payee, and Plaza Construction, Inc., as maker.
10.21 -- 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 10-0K for the year ended December 31, 1992 and
incorporated herein by reference).
10.21.1 -- 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).
10.21.2 -- 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).
10.21.3 -- 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).
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.
- ---------------
* Filed with this report.
+ Management contract or compensatory plan or arrangement.
36
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: Stanford Alexander
---------------------------
Stanford Alexander, President
Date: March 22, 1995
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: Stanford Alexander Chairman and Trust Manager March 16, 1995
------------------------------ (Chief Executive Officer)
Stanford Alexander
By: Andrew M. Alexander Executive Vice President/Asset March 16, 1995
------------------------------ Management and
Andrew M. Alexander Trust Manager
By: Martin Debrovner President, Chief March 16, 1995
------------------------------ Operating Officer and
Martin Debrovner Trust Manager
By: Melvin A. Dow Trust Manager March 16, 1995
------------------------------
Melvin A. Dow
By: Stephen A. Lasher Trust Manager March 16, 1995
------------------------------
Stephen A. Lasher
By: Joseph W. Robertson, Jr Executive Vice President and March 16, 1995
------------------------------- Trust Manager (Chief Financial Officer)
Joseph W. Robertson, Jr.
By: Douglas W. Schnitzer Trust Manager March 16, 1995
--------------------------------
Douglas W. Schnitzer
By: Marc J. Shapiro Trust Manager March 16, 1995
--------------------------------
Marc J. Shapiro
By: J. T. Trotter Trust Manager March 16, 1995
--------------------------------
J. T. Trotter
By: Stephen C. Richter Vice President and Treasurer March 16, 1995
-------------------------------- (Principal Accounting Officer)
Stephen C. Richter
37
SCHEDULE II
WEINGARTEN REALTY INVESTORS
VALUATION AND QUALIFYING ACCOUNTS
DECEMBER 31, 1994, 1993 AND 1992
(AMOUNTS IN THOUSANDS)
BALANCE AT CHARGED TO BALANCE
BEGINNING OF COSTS AND CHARGED TO AT END OF
DESCRIPTION PERIOD EXPENSES OTHER ACCOUNTS DEDUCTIONS/(A)/ PERIOD
- ----------- ------------ ---------- -------------- --------------- ---------
1994:
Allowance for Doubtful Accounts.. $938 $1,261 $1,192 $1,007
1993:
Allowance for Doubtful Accounts.. 755 844 661 938
1992:
Allowance for Doubtful Accounts.. 757 595 597 755
Note A - Write-offs of accounts receivable previously reserved.
38
SCHEDULE III
WEINGARTEN REALTY INVESTORS
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
(AMOUNTS IN THOUSANDS)
TOTAL COST
-----------------------------------------------------
PROPERTY
BUILDINGS UNDER DIRECT
AND PROJECTS UNDER FINANCING TOTAL ACCUMULATED ENCUMBRANCES
LAND IMPROVEMENTS DEVELOPMENT LEASES COST DEPRECIATION (A)
-------- ------------ -------------- ------------ -------- ------------ -------------
SHOPPING CENTERS:
Texas.......................... $ 95,391 $370,459 $ $7,781 $473,631 $137,021 $ 7,223
Other States................... 15,296 101,361 2,070 118,727 28,372 14,378
-------- -------- ------- ------ -------- ------------ ------------
Total Shopping Centers..... 110,687 471,820 9,851 592,358 165,393 21,601
INDUSTRIAL PROPERTIES -
Texas.......................... 9,920 46,042 55,962 14,030 3,931
OFFICE BUILDING - Texas......... 734 13,810 14,544 8,848
MULTI-FAMILY RESIDENTIAL
PROPERTIES:
Texas.......................... 399 1,098 1,497 599 1,116
Louisiana...................... 33 558 591 147 395
-------- -------- ------- ------ -------- ------------ ------------
Total Improved Properties.. 121,773 533,328 664,952 189,017 27,043
-------- -------- ------- ------ -------- ------------ ------------
LAND UNDER DEVELOPMENT:
Texas.......................... 48,766 48,766
Other States................... 1,772 1,772
-------- -------- ------- ------ -------- ------------ ------------
Total Land Under
Development................ 50,538 50,538
-------- -------- ------- ------ -------- ------------ ------------
LEASED PROPERTY
(SHOPPING CENTER)
UNDER CAPITAL LEASE
- Louisiana.................... 6,534 6,534 2,410 6,048
-------- -------- ------- ------ -------- ------------ ------------
CONSTRUCTION IN PROGRESS:
Texas.......................... 12,817 12,817
Other States................... 293 293
-------- -------- ------- ------ -------- ------------ ------------
Total Construction
in Progress................ 13,110 13,110
-------- -------- ------- ------ -------- ------------ ------------
Total of All
Properties................... $121,773 $539,862 $63,648 $9,851 $735,134 $191,427 $33,091
======== ======== ======= ====== ======== ============ ============
- --------------
Note A - Encumbrances do not include $145 million outstanding under the
revolving credit agreement and $35 million outstanding under the 14-year term
loan payable to a group of insurance companies secured by a property collateral
pool including all or part of 5 shopping centers.
39
SCHEDULE III
(CONTINUED)
The changes in total cost of the properties for the years ended December 31,
1994, 1993 and 1992 were as follows:
1994 1993 1992
--------- --------- ---------
Balance at beginning of year................................................................ $634,814 $540,671 $482,732
Additions at cost........................................................................... 101,402 95,502 62,559
Retirements or sales........................................................................ (1,082) (2,485) (5,103)
Other changes (B)........................................................................... 1,126 483
-------- -------- --------
Balance at end of year...................................................................... $735,134 $634,814 $540,671
======== ======== ========
The changes in accumulated depreciation for the years ended December 31, 1994,
1993 and 1992 were as follows:
1994 1993 1992
-------- -------- --------
Balance at beginning of year................................................................. $168,405 $150,366 $134,500
Additions charged to expense................................................................. 23,027 18,740 17,952
Retirements or sales......................................................................... (5) (701) (2,086)
-------- -------- --------
Balance at end of year....................................................................... $191,427 $168,405 $150,366
======== ======== ========
- --------------
Note B - Transferred from net investment in direct financing leases.
40
SCHEDULE IV
WEINGARTEN REALTY INVESTORS
MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31,1994
(AMOUNTS IN THOUSANDS)
FACE CARRYING
FINAL PERIODIC PRIOR AMOUNT AMOUNT
INTEREST MATURITY PAYMENT LIEN OF OF
RATE DATE TERMS AMOUNT MORTGAGES MORTGAGES(B)
--------- -------- ------- ------ --------- ------------
SHOPPING CENTERS:
FIRST MORTGAGES:
Sheldon Forest
Channelview, TX.......... Prime 12-31-95 Varying $ $ 179 $ 179
($179
balloon)
Phelan Boulevard
Beaumont, TX............. Prime 12-31-95 Varying 733 168
+ 2% ($168
balloon)
Eastex Venture
Beaumont, TX............. Prime 12-01-95 Varying 3,500 2,357
+ 1 1/2% ($2,357
balloon)
Main/O.S.T., Ltd.
Houston, TX.............. 9.2932% 02-01-20 $476 4,800 4,741
Annual
P & I
($1,241
balloon)
ssssssssINDUSTRIAL:
FIRST MORTGAGES:
Railwood
Houston, TX.............. 10% 12-28-04 Varying 7,000 6,223
($6,223
balloon)
River Pointe, Conroe, TX
(Note C)................. 9% 11-30-03 Varying 2,133 1,664
Little York, Houston, TX
(Note C)................. 9% 12-31-03 Varying 1,922 1,354
41
SCHEDULE IV
(CONTINUED)
FACE CARRYING
FINAL PERIODIC PRIOR AMOUNT AMOUNT
INTEREST MATURITY PAYMENT LIEN OF OF
RATE DATE TERMS AMOUNT MORTGAGES MORTGAGES(B)
--------- ----------------- --------------- -------------- ---------------- -------------------
MULTI-FAMILY RESIDENTIAL
FIRST MORTGAGE:
Stanford Court Apartments
Houston, TX 8.00% 03-30-98 Varying 1,440 1,414
UNIMPROVED LAND:
FIRST MORTGAGES:
Houston, TX 11% 12-01-95 Level 45 7
SECOND MORTGAGE:
River Pointe
Conroe, TX Prime 12-01-95 Varying 12,000 10,612
+1% ($10,612
balloon) --------- ------- -------
TOTAL MORTGAGE LOANS ON
REAL ESTATE (Note A)...... $ $33,752 $28,719
========= ======== =======
- ---------------
Note A - Changes in mortgage loans for the years ended December 31, 1994, 1993
and 1992 are summarized below:
1994 1993 1992
--------- --------- ----------
Balance, Beginning of Year.................. $ 25,635 $ 30,357 $ 25,563
New Mortgage Loans.......................... 1,354 456 4,800
Additions to Existing Loans................. 2,032 251 275
Collections of Principal.................... (302) (5,429) (281)
--------- --------- --------
Balance, End of Year........................ $ 28,719 $ 25,635 $ 30,357
========= ========= =========
- ---------------
Note B - The aggregate cost at December 31, 1994 for federal income tax
purposes is $27,137.
Note C - Principal payments are due monthly to the extent of cash flow
generated by the underlying property.
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