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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, 1993
[ ] 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, New York Stock Exchange
$0.03 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 March 4,
1994 was approximately $861,194,144. As of March 4, 1994, there were 26,038,279
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 28, 1994 are incorporated by reference
in Part III.
Exhibit Index beginning on Page 32.
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TABLE OF CONTENTS
PAGE
ITEM NO. 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....................... 10
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....................................... 12
8. Financial Statements and Supplementary Data............................... 16
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure....................................... 31
PART III
10. Directors and Executive Officers of the Registrant........................ 31
11. Executive Compensation.................................................... 31
12. Security Ownership of Certain Beneficial Owners and
Management................................................................ 31
13. Certain Relationships and Related Transactions............................ 31
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K........... 32
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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, 1993,
owned or had interests in 150 developed income-producing real estate projects,
134 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 twelve 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 15.0 million
square feet of building area and 57.3 million square feet of land area. The
Company also owned interests in 24 parcels of unimproved land held for future
development which aggregated approximately 8.5 million square feet.
The Company currently employs 153 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 25.
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 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
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management personnel previously employed by the Management Company. The
combination had no material effect on the Company's operations or financial
position.
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
174 properties which were owned as of December 31, 1993, 77 of its 150 developed
properties and 16 of its 24 parcels of unimproved land were located in the
Houston metropolitan area. In addition to these properties, the Company owned 46
developed properties and 5 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.
Houston's 1993 economic performance was generally flat compared to 1992 and
performed at a lower level than the strengthening national economy. This
stagnant economic performance was due in large part to weak oil and gas prices,
energy industry consolidations, and national policy uncertainty in the health
care and aerospace industries. 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 16 through 30 herein.
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ITEM 2. PROPERTIES
At the end of 1993 the Company's real estate properties consisted of 174
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................................... 6,036,000 24,282,000
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...................... 84,000 568,000
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..................................... 83,000 412,000
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...................................... 23,000* 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................................. 17,000 131,000
Northway, Northwest Fwy. at 34th.................................. 212,000 793,000
Northwest Crossing, N.W. Fwy. at Hollister........................ 4,000 38,000
(Table continued on following page)
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Building
Name and Location Area Land Area
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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
Randalls/Cypress Station, F.M. 1960 at I-45....................... 141,000 668,000
Randalls/El Dorado, El Dorado at Hwy. 3........................... 119,000 429,000
Randalls/Kings Crossing, Kingwood Dr. at Lake Houston Pkwy........ 128,000 624,000
Randalls/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............................ 20,000 131,000
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..................... 3,781,000 16,630,000
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.... 98,000 444,000
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
(Table continued on following page)
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Building
Name and Location Area Land Area
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Corum South, Gulf Fwy., League City............................... 88,000 574,000
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*
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
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, Sugarland............... 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......................... 65,000 279,000
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.................................................. 1,086,000 4,146,000
Park Terrace, U.S. Hwy. 171 at Parish, DeRidder................... 137,000 520,000
Westwood Village, W. Congress at Bertrand, Lafayette.............. 135,000 508,000
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............................... 89,000* 406,000*
Southgale, Ryan at Eddy, Lake Charles............................. 157,000 618,000
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
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
OKLAHOMA, TOTAL................................................... 455,000 1,941,000
Bryant Square, Bryant Ave. at 2nd St., Edmond..................... 282,000 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
(Table continued on following page)
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Building
Name and Location Area Land Area
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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*
ARIZONA, TOTAL.................................................... 108,000 432,000
Broadway Marketplace, Broadway at Rural, Tempe.................... 86,000 347,000
Fry's Valley Plaza, S. McClintock at E. Southern, Tempe (15%)..... 22,000* 85,000*
MAINE, TOTAL...................................................... 143,000 482,000
The Promenade, Essex at Summit, Lewiston.......................... 143,000* 482,000*
TENNESSEE, TOTAL.................................................. 20,000 84,000
Highland Square, Summer at Highland, Memphis...................... 20,000 84,000
INDUSTRIAL
HOUSTON AND HARRIS COUNTY, TOTAL.................................. 2,152,000 5,226,000
Central Park North, W. Hardy Rd. at Kendrick Dr. ................. 155,000 465,000
Central Park Northwest, Central Pkwy. at Dacoma................... 175,000 518,000
Railwood Industrial Park, Mesa at U.S. 90......................... 642,000 1,634,000
West Loop Business Center, Loop 610 at 11th St. .................. 349,000 719,000
Navigation Business Park, Navigation At N. York................... 238,000 555,000
South Loop Business Park, S. Loop at Long Dr...................... 46,000* 103,000*
South Park II, Rockley Road....................................... 68,000 216,000
Park Southwest, Stancliff at Brooklet............................. 52,000 159,000
West Loop Commerce Center, W. Loop N. at I-10..................... 34,000 91,000
West-10 Business Center, Wirt Rd. at I-10......................... 141,000 330,000
1200 Lathrop, 1200 Lathrop St. ................................... 252,000 436,000
TEXAS (EXCLUDING HOUSTON & HARRIS CO.), TOTAL..................... 112,000 328,000
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.................................... 6,275,000
Bissonnet at Wilcrest............................................. 798,000
Citadel Plaza at 610 N. Loop...................................... 137,000
(Table continued on following page)
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Building
Name and Location Area Land Area
----------------- ---------- ----------
East Orem......................................................... 122,000
Hollister at Hwy. 290............................................. 634,000
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
Redman at W. Denham............................................... 17,000
Renwick at Gulfton................................................ 17,000
Sheldon at I-10................................................... 19,000
W. Little York at I-45............................................ 322,000
W. Little York at N. Houston-Rosslyn.............................. 266,000
W. Loop N. at I-10................................................ 145,000
TEXAS (EXCLUDING HOUSTON & HARRIS CO.), TOTAL..................... 716,000
Loop 336 at I-45, Conroe.......................................... 77,000
River Pointe Dr. at I-45, Conroe.................................. 186,000
River Pointe, Montgomery County................................... 98,000*
Hillcrest, Sunshine at Quill, San Antonio......................... 171,000
Hwy. 3 at Hwy. 1765, Texas City................................... 184,000
LOUISIANA, TOTAL.................................................. 1,537,000
U.S. Hwy. 171 at Parish, DeRidder................................. 462,000
Ernest, Ryan at Eddy, Lake Charles................................ 252,000
Woodland Hwy., Plaquemines Parish (5%)............................ 823,000*
ALL PROPERTIES -- BY LOCATION
GRAND TOTAL....................................................... 14,994,000 65,863,000
Houston & Harris County........................................... 8,435,000 36,157,000
Texas (excluding Houston & Harris County)......................... 3,930,000 17,769,000
Louisiana......................................................... 1,127,000 5,815,000
Arkansas.......................................................... 599,000 2,252,000
Oklahoma.......................................................... 455,000 1,941,000
New Mexico........................................................ 177,000 931,000
Arizona........................................................... 108,000 432,000
Maine............................................................. 143,000 482,000
Tennessee......................................................... 20,000 84,000
ALL PROPERTIES -- BY CLASSIFICATION
GRAND TOTAL....................................................... 14,994,000 65,863,000
Shopping Centers.................................................. 12,405,000 51,180,000
Industrial........................................................ 2,264,000 5,554,000
Multi-Family Residential.......................................... 204,000 430,000
Office Building................................................... 121,000 171,000
Unimproved Land................................................... 8,528,000
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Note: Total square footage includes 4,700,000 square feet of land leased and
170,000 square feet of building leased from others. The square feet
figures represent the Company's proportionate ownership of the entire
property.
* Denotes partial ownership. The Company's interest is 50% except where noted.
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General. In 1993, no single property accounted for more than 3.7% of the
Company's total assets or 5.6% gross revenues. Three properties, in the
aggregate, represented approximately 12.6% of the Company's gross revenues for
the year ended December 31, 1993; otherwise, none of the remaining properties
accounted for more than 2.6% 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, 1993 was 92.1%.
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, 1993, the Company owned, either
directly or through its interests in joint ventures, 134 shopping centers with
approximately 12.4 million square feet of building area. The shopping centers
were located predominantly in Texas with other locations in Louisiana, Arkansas,
Oklahoma, New Mexico, Arizona, Maine and Tennessee.
The Company's shopping centers are primarily neighborhood and 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 approximately
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. National and regional supermarket chains
which are tenants in the Company's centers include Albertsons, Fiesta, Fleming
Foods, HEB, Kroger Supermarkets, Market Basket, Price-Lo, Randalls Food Markets,
Rice Food Markets and Super Value Supermarkets. In addition to these supermarket
chains, the Company's nationally and regionally known retail store tenants
include Eckerd and Walgreen drugstores; K-Mart and Wal-Mart discount stores;
Beall's, Palais Royal and Weiner's junior department stores; MacFrugals,
Marshall's, Office Depot, Solo Serve, 50-Off and T.J. Maxx off-price specialty
stores; Luby's, Piccadilly and Wyatt cafeterias; Academy, Oshman's and
SportsTown 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, Long
John Silver's, McDonald's, Olive Garden, Outback Steakhouse, Pizza Hut,
Shoney's, Steak & Ale, Taco Bell and What-a-burger. 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, Payless Shoes (a division of the May
Company) and Radio Shack (McDuff's).
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
8
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items) and for the payment of additional rentals based on a percentage of the
tenants' sales ("percentage rentals"). Utilities are generally paid directly by
tenants except where common metering exists with respect to a center, in which
case the Company makes the payments for the utilities and is reimbursed by the
tenants on a monthly basis. Generally, the Company's leases prohibit the tenant
from assigning or subletting its space and require the tenant to use its space
for the purpose designated in its lease agreement and to operate its business on
a continuous basis. Certain of the lease agreements with major tenants contain
modifications of these basic provisions in view of the financial condition,
stability or desirability of such tenants. Where a tenant is granted the right
to assign or sublet its space, the lease agreement generally provides that the
original lessee will remain liable for the payment of the lease obligations
under such lease agreement.
During 1993, the Company added approximately 1.2 million square feet to its
portfolio of shopping center properties through the acquisition of properties
and another 148,000 square feet of space through development. The acquisitions
were primarily focused in the Houston area. However, during the year, the
Company entered two new markets -- El Paso, which complements its West Texas and
Albuquerque holdings, and Phoenix, Arizona, which represents an opportunity to
gain a significant presence in a growing metropolitan area.
Industrial Properties. The Company currently owns a total of twelve
industrial projects, all located in the greater Houston area. These projects
include 40 buildings having a total of 2.3 million square feet of building area
situated on 5.6 million square feet of land. These figures include the Company's
interests in a joint venture. 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 642,000 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 1993, the Company acquired one project representing 68,000 square
feet of office/service space. This center is located in Houston and had an
average occupancy of 26% at the time of the acquisition.
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. The Company owns, 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.
Unimproved Land. The Company owns, directly or through its interest in
joint ventures, 24 parcels of unimproved land aggregating approximately 8.5
million square feet of land area located in Texas and Louisiana. These
properties include approximately 5.6 million square feet of land adjacent to
certain of the Company's existing developed properties, which may be used for
expansion of these developments, as well as approximately 2.9 million square
feet of land which may be used for new development. Almost all of these
unimproved properties are served by roads and utilities and are ready for
development. Most of these parcels are suitable for development as shopping
centers, and the Company intends to emphasize the development of these parcels
for such purpose.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to its business, to which the Company is a party
or to which any of its properties is subject.
9
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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
twelve executive officers of the Company as of March 4, 1994.
NAME AGE POSITION
---- --- --------
Stanford Alexander............ 65 Chairman/Chief Executive Officer
Martin Debrovner.............. 57 President/Chief Operating Officer
Joseph W. Robertson, Jr....... 46 Executive Vice President/Chief
Financial Officer
Andrew M. Alexander........... 37 Executive Vice President/Asset
Management
Gary Cunningham............... 45 Vice President/New Development and
Acquisitions
M. Candace DuFour............. 44 Vice President/Acquisitions and
Secretary
Johnny L. Hendrix............. 36 Vice President/Leasing
Joseph W. Karp................ 42 Vice President/Operating Properties
John J. Marcisz............... 56 Vice President/Construction
Stephen C. Richter............ 39 Vice President/Financial
Administration and Treasurer
Jeffrey A. Tucker............. 46 Vice President/General Counsel
Steven R. Weingarten.......... 36 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
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 PaineWebber Retail Properties
Investments, Inc.
Mr. A. Alexander became Executive Vice President/Asset Management of the
Company 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.
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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. 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. 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.
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. 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 March
4, 1994 was 2,443. 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 Common Share paid for the periods indicated were as follows:
HIGH LOW DIVIDENDS
---- ---- ---------
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
1992:
First........................................ $35 1/8 $30 5/8 $.51
Second....................................... 34 3/8 29 1/2 .51
Third........................................ 35 1/8 32 1/2 .51
Fourth....................................... 38 33 3/8 .51
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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.
YEARS ENDED DECEMBER 31,
----------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Revenues (primarily real estate rentals).... $103,282 $ 89,959 $ 82,645 $ 76,863 $ 68,019
-------- -------- -------- -------- --------
Expenses:
Depreciation and amortization............. 23,382 21,291 19,019 17,699 15,914
Interest.................................. 10,046 18,689 20,157 19,938 17,430
Other..................................... 35,236 30,538 26,119 23,071 21,055
-------- -------- -------- -------- --------
Total............................. 68,664 70,518 65,295 60,708 54,399
-------- -------- -------- -------- --------
Income from operations...................... 34,618 19,441 17,350 16,155 13,620
Gains on sales of property and securities... 1,631 1,807 608 327
Extraordinary charge(1)..................... (1,167)
-------- -------- -------- -------- --------
Net Income.................................. 36,249 $ 20,081 $ 17,958 $ 16,482 $ 13,620
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Funds from Operations(2):
Net income................................ 36,249 $ 20,081 $ 17,958 $ 16,482 $ 13,620
Depreciation and amortization............. 23,382 21,291 19,019 17,699 15,914
Gains on sales of property and
securities............................. (1,631) (1,807) (608) (327)
Extraordinary charge...................... 1,167
-------- -------- -------- -------- --------
Total............................. $ 58,000 $ 40,732 $ 36,369 $ 33,854 $ 29,534
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Weighted average number of common shares
outstanding............................... 24,211 17,503 16,580 16,279 13,984
Net income per common share................. $ 1.50 $ 1.15 $ 1.08 $ 1.01 $ .97
Cash dividends per common share............. $ 2.16 $ 2.04 $ 1.92 $ 1.88 $ 1.76
Total property (at cost).................... $624,379 $528,362 $469,510 $419,958 $384,379
Total assets................................ $602,042 $472,303 $440,088 $415,858 $365,324
Debt, obligations under capital leases and
convertible debentures and notes.......... $147,652 $243,627 $280,217 $249,686 $257,666
- ---------------
(1) Relates to prepayment penalties paid in connection with the early retirement
of permanent debt.
(2) Funds from operations does not consider the effects of changes in operating
assets and liabilities such as receivables and payables; consequently, it
may not be the same as cash flows from operating activities.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should read in conjunction with the Consolidated
Financial Statements and the Notes thereto and the Comparative Summary of
Selected Financial Data appearing elsewhere in this report. Historical results
and percentage relationships on the Statements of Consolidated Income, including
trends which might appear, should not be taken as indicative of future
operations.
FINANCING AND CAPITAL STRUCTURE
The Company's total debt decreased $95.9 million to $147.7 million at
December 31, 1993, compared to $243.6 million at the end of 1992. This
significant reduction in debt between years was primarily the result of the
Company's decision to call all $123.0 million of outstanding convertible note
and debenture issues during 1993. 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 $113.0 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
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revolving credit debt, the proceeds were ultimately the primary source of the
Company's capital needs for the year. During 1993, approximately $96.0 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.
The Company had an average cost of debt for 1993 of 8.1% and its current
debt structure provides protection against future interest rate fluctuations.
The $92.2 million of floating-rate debt currently in place is covered by virtue
of $40.0 million of interest rate swap contracts (extending out 8-11 years) and
the existing option of liquidating the $51.4 million of government securities
and reducing a like amount of debt. As a result of the conversion of all
outstanding convertible notes and debentures into equity and the common share
offering, the Company's financial position and capital structure is the
strongest in its history.
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, and the use of project
financing as well as other debt and equity alternatives will provide the
necessary capital to achieve growth. Cash flow from operating activities as
reported in the Statements of Consolidated Cash Flows increased to $57.6 million
for 1993 from $38.3 million for 1992.
The Company satisfied its REIT requirement of distributing at least 95% of
ordinary taxable income with dividend distributions of $52.3 million in 1993.
Accordingly, federal income taxes were not provided. The Company's dividend
payout ratio for the year approximated 90% of the 1993 funds from operations
(defined as net income plus depreciation, amortization and extraordinary charge,
less gains on sales of property and securities). Recently, the Company's Board
of Trust Managers approved an increase in the quarterly dividend per common
share from $.54 to $.57.
As of December 31, 1993, the Company had approximately $59.7 million
available under its $100 million revolving credit facilities. The Company also
has a substantial number of operating properties which are currently free of
debt or other restrictions, thereby providing a collateral base for future
borrowings. More importantly, the Company's extremely low debt-to-equity ratio
subsequent to the capital restructuring discussed above affords it a wide range
of alternatives in the financial markets to fund future capital needs.
RESULTS OF OPERATIONS
The Company considers funds from operations to be the most appropriate
measure of the performance of an equity REIT since such measure does not
recognize depreciation and amortization expenses as operating expenses.
Management believes that reduction for these charges are not meaningful in
evaluating income-producing real estate, which historically has not depreciated.
COMPARISON OF 1993 TO 1992
Net income increased $16.2 million, or 80.5%, to $36.2 million ($1.50 per
share) in 1993 from $20.1 million ($1.15 per share) in 1992. Funds from
operations increased $17.3 million, or 42.4%, to $58.0 million in 1993 from
$40.7 million in 1992. These significant increases realized between comparative
years relate to the Company's shopping center acquisitions during the past two
years, as well as a substantial decrease in interest expense achieved through
the conversion into equity of all the convertible issues outstanding at the
start of 1993.
Rental revenues were $94.2 million for 1993 as compared to $83.2 million
for 1992. The $11.0 million difference represents a 13.2% increase. New
properties added through the Company's acquisition and new development programs
contributed a significant part of this increase.
Interest income increased $1.9 million in 1993 as compared with 1992,
primarily because the Company had significantly more funds invested in
government securities in 1993 than it did in 1992. The funds invested during
1993 represented a portion of the proceeds derived from a public offering during
March of 1993. The
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increase in interest income was also due to $.4 million more interest received
from WRI Holdings, Inc. on the Hospitality mortgage bonds, due to its improved
cash flow from its hotel operations. The Company did not recognize interest
income from various other debt with WRI Holdings, Inc. of approximately $5.2
million and $4.9 million in 1993 and 1992, respectively.
The $.8 million increase in other income between years is due, in part, to
additional income recorded with respect to the Company's unconsolidated equity
investment in real estate properties. Since the fourth quarter of 1992, the
Company has increased its investment in joint ventures accounted for using the
equity method, resulting in this increase. The increase in other income is also
due to certain management fee income relating primarily to the non-owned portion
of the Company's joint venture investments, as the Company became self-managed
at the beginning of 1993 (more fully explained below).
Interest expense decreased $8.6 million in 1993 to $10.0 million, as
compared to $18.7 million in 1992, primarily because average debt outstanding
during the year decreased $129.2 million, from $267.7 million in 1992 to $138.5
million in 1993. This significant reduction in average debt outstanding was
achieved by the use of proceeds from the Company's last two public offerings and
the conversion of all of the Company's outstanding convertible debt issues into
equity. The conversion of the convertible notes and debentures during 1993 is
expected to further decrease interest expense by $3.1 million and increase net
income by a like amount for 1994.
The reduction in interest expense for the year was partially offset by the
Company's $40 million in interest rate swap contracts. Although these
instruments provide rate protection for the long-term (8.1% for 8-11 years),
they penalized the 1993 results of operations with $1.0 million of additional
interest expense. During the year, the Company had an average of only $18.5
million of floating rate debt outstanding, thus leaving approximately $21.5
million of unmatched interest rate swaps. The reduction in interest expense was
also partially offset by a $.9 million decrease in the amount of interest which
was capitalized during the year (thus serving to increase interest expense). The
significant portion of this change in capitalized interest ($.7 million) relates
to certain tracts of land under development, which, as of the end of 1992, had
reached their net realizable value.
Depreciation and amortization was $23.4 million for 1993 and $21.3 million
for 1992 and operating expenses were $17.3 million for 1993 and $14.6 million
for 1992. This aggregate $4.8 million increase was primarily due to property
additions made by the Company during the past two years. Ad valorem taxes
charged to operations increased $1.5 million to $12.9 million in 1993 from $11.4
million in 1992, also as the result of the property additions mentioned above.
Gains on sales of property and securities for 1993 relate to gains realized
as the results of fires at two of the Company's properties. The fires had no
material impact on the Company's current earnings.
Effective January 1, 1993, Weingarten Realty Management Company (the
"Management Company"), a separate but related company, was acquired by the
Company, thus allowing direct management of the Company's properties. The
Company also performs property management services for joint ventures in which
it participates. The acquisition had no material financial effect on the Company
because the additional salaries paid as a result of the merger were offset by
the various management fees no longer being paid to the Management Company.
Beginning in the first quarter of 1994, the Company will adopt Statement of
Financial Accounting Standards No. 115, which requires that marketable
securities be carried at the lower of aggregate cost or market. The adoption of
this standard will not have a material effect on the Company's consolidated
financial statements.
COMPARISON OF 1992 TO 1991
Net income increased $2.1 million, or 11.8%, to $20.1 million ($1.15 per
share) in 1992 from $18.0 million ($1.08 per share) in 1991. Funds from
operations increased $4.4 million, or 12.0% to $40.7 million in 1992 from $36.4
million in 1991, primarily due to increased rental revenues.
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Rental revenues were $83.2 million for 1992 as compared to $74.5 million
for 1991. The $8.7 million difference represents an 11.8% increase. New
properties added through the Company's acquisition and development programs
contributed $6.7 million of the increase. The remainder stems from existing
properties and relates to increases in minimum rentals on renewals and increases
in reimbursements of ad valorem taxes and other operating expenses.
Interest income decreased approximately $1.9 million in 1992 as compared
with 1991, primarily because of less interest income from the government
securities. The Company's remaining investment of $17.3 million in these
securities was sold at the end of the second quarter of 1992, after having been
held during all of 1991. These securities were sold because management had
concluded that the gain associated with this investment had been maximized. The
Company did not recognize interest income from various debt with an affiliate of
approximately $4.9 million and $4.7 million in 1992 and 1991, respectively.
The $.5 million increase in other income between years related primarily to
lease cancellation income, most of which was received during the second quarter
of 1992 as the result of a settlement with a prior tenant. The remainder of the
positive change in this line item was due to increased income recorded with
respect to the Company's unconsolidated equity investments in real estate
properties.
Interest expense decreased $1.5 million in 1992 to $18.7 million, as
compared to $20.2 million in 1991. Of this decrease, $1.0 million related to a
decrease in average rate from 8.2% in 1991 to 7.8% in 1992. The remainder is due
to an increase in capitalized interest associated with the increased development
activity experienced by the Company. Average debt outstanding was relatively
stable between years in spite of the capital expenditures previously mentioned,
due to the $82.1 million of new proceeds associated with the 2 million common
share offering and the sale of the Company's remaining investment in government
securities.
Depreciation and amortization was $21.3 million for 1992 and $19.0 million
for 1991 and operating expenses were $14.6 million for 1992 and $12.6 million
for 1991. This aggregate $4.3 million increase was primarily due to property
additions made by the Company during the past two years. Ad valorem taxes
charged to operations increased to $11.4 million in 1992 from $9.5 million in
1991. The $1.9 million increase was due to property additions as well as tax
rate increases.
The increase between years of $.5 million in general and administrative
expenses was due to increases in executive compensation, professional fees and
state income taxes.
The $1.8 million gains on sales property and securities is the result of a
$1.3 million gain realized upon the sale of the Company's remaining $17.3
million investment in government securities coupled with gains associated with
the sale of two small tracts of unimproved land. The extraordinary charge of
$1.2 million consisted of prepayment penalties incurred as a result of the
Company's election to pay off a number of its permanent loans.
EFFECTS OF INFLATION
The rate of inflation remained modest during 1993 and, as such, 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
rental 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.
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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, 1993 and 1992, and the related statements of
consolidated income, cash flows and shareholders' equity for each of the three
years in the period ended December 31, 1993. 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, 1993 and 1992, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1993 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
Houston, Texas
February 24, 1994
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STATEMENTS OF CONSOLIDATED INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEARS ENDED DECEMBER 31,
--------------------------------
1993 1992 1991
-------- ------- -------
Revenues:
Rentals.................................................... $ 94,195 $83,224 $74,458
Income from direct financing leases........................ 1,596 1,954 2,057
Interest:
Securities and other.................................... 2,321 1,088 2,834
Affiliate............................................... 2,052 1,616 1,633
Related joint ventures and partnerships................. 968 724 844
Other...................................................... 2,150 1,353 819
-------- ------- -------
Total.............................................. 103,282 89,959 82,645
-------- ------- -------
Expenses:
Depreciation and amortization.............................. 23,382 21,291 19,019
Operating (including $3,599 and $3,313 for 1992 and 1991,
paid to a related party)................................ 17,348 14,600 12,596
Ad valorem taxes........................................... 12,887 11,372 9,454
Interest................................................... 10,046 18,689 20,157
General and administrative................................. 5,001 4,566 4,069
-------- ------- -------
Total.............................................. 68,664 70,518 65,295
-------- ------- -------
Income from Operations....................................... 34,618 19,441 17,350
Gains on Sales of Property and Securities.................... 1,631 1,807 608
-------- ------- -------
Income Before Extraordinary Charge........................... 36,249 21,248 17,958
Extraordinary Charge (penalty for early retirement of
debt)...................................................... 1,167
-------- ------- -------
Net Income................................................... $ 36,249 $20,081 $17,958
-------- ------- -------
-------- ------- -------
Per Common Share:
Income Before Extraordinary Charge......................... $ 1.50 $ 1.21 $ 1.08
-------- ------- -------
-------- ------- -------
Net Income................................................. $ 1.50 $ 1.15 $ 1.08
-------- ------- -------
-------- ------- -------
Weighted Average Number of Common Shares Outstanding......... 24,211 17,503 16,580
-------- ------- -------
-------- ------- -------
See Notes to Consolidated Financial Statements.
17
20
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
DECEMBER 31,
-----------------------
1993 1992
-------- --------
ASSETS
Property:
Land.............................................................. $110,704 $ 93,104
Buildings and improvements........................................ 466,938 386,226
Projects under development (including land under development of
$38,966 in 1993 and $38,377 in 1992)........................... 46,737 49,032
-------- --------
Total..................................................... 624,379 528,362
Less accumulated depreciation..................................... 168,405 150,366
-------- --------
Property -- net...................................... 455,974 377,996
Property under Direct Financing Leases.............................. 10,435 12,309
Investment in Mortgage Bonds and Notes Receivable from an Affiliate
(net of deferred gain of $16,235)................................. 24,914 25,174
Investment in and Notes Receivable from Joint Ventures and
Partnerships...................................................... 19,632 20,916
Marketable Debt Securities.......................................... 51,405
Accrued Rent and Accounts Receivable (net of allowance for doubtful
accounts of $938 in 1993 and $755 in 1992)........................ 13,880 12,614
Unamortized Debt and Lease Costs.................................... 15,038 16,209
Cash and Cash Equivalents........................................... 3,226 1,152
Other............................................................... 7,538 5,933
-------- --------
Total................................. $602,042 $472,303
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Permanent and Interim Debt.......................................... $141,533 $114,397
Obligation under Capital Leases..................................... 6,119 6,182
Accounts Payable and Accrued Expenses............................... 22,975 20,672
Other............................................................... 4,328 2,637
-------- --------
Total..................................................... 174,955 143,888
-------- --------
Convertible Debentures and Notes.................................... 123,048
--------
Commitments and Contingencies
Shareholders' Equity:
Preferred Shares of beneficial interest -- par value, $0.03 per
share; shares authorized: 10,000; shares issued and
outstanding: none
Common Shares of beneficial interest -- par value, $0.03 per
share; shares authorized: 150,000; shares issued and
outstanding: 25,972 in 1993
and 19,231 in 1992............................................. 779 577
Capital surplus................................................... 426,308 204,790
-------- --------
Shareholders' equity...................................... 427,087 205,367
-------- --------
Total................................. $602,042 $472,303
-------- --------
-------- --------
See Notes to Consolidated Financial Statements.
18
21
STATEMENTS OF CONSOLIDATED CASH FLOWS
(AMOUNTS IN THOUSANDS)
YEARS ENDED DECEMBER 31,
--------------------------------
1993 1992 1991
-------- -------- --------
Cash Flows from Operating Activities:
Net Income................................................. $ 36,249 $ 20,081 $ 17,958
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization........................... 23,382 21,291 19,019
Gains on sales of property and securities............... (1,631) (1,807) (608)
Prepayment penalties associated with early
extinguishment of
debt.................................................. 1,167
Amortization of direct financing leases................. 920 503 495
Net effect of changes in operating accounts............. (1,222) (2,830) (2,865)
Other, net.............................................. (57) (131) 175
-------- -------- --------
Net cash provided by operating activities.......... 57,641 38,274 34,174
-------- -------- --------
Cash Flows from Investing Activities:
Property acquisitions and development...................... (91,008) (47,322) (36,540)
Notes receivable:
Advances................................................ (3,775) (8,570) (3,963)
Collections............................................. 3,423 2,582 2,942
Proceeds from sales of property............................ 1,741 1,822 695
Proceeds from sales of marketable debt securities.......... 32,612 18,632 9,347
Purchase of marketable debt securities..................... (84,718)
Investments in equity ventures............................. (2,803) (2,216)
Other...................................................... 1,213 1,523 1,535
-------- -------- --------
Net cash used in investing activities.............. (143,315) (33,549) (25,984)
-------- -------- --------
Cash Flows from Financing Activities:
Proceeds from issuance of:
Debt.................................................... 71,834 42,042 31,531
Common Shares of beneficial interest.................... 113,190 64,210 726
Redemption of convertible debentures....................... (3) (131)
Principal payments of debt and capital lease obligations... (44,837) (74,562) (7,649)
Prepayment penalties associated with early extinguishment
of
debt.................................................... (932)
Dividends paid............................................. (52,345) (36,180) (31,818)
Debt costs incurred........................................ (94) (241) (283)
-------- -------- --------
Net cash provided by (used in) financing
activities....................................... 87,748 (5,666) (7,624)
-------- -------- --------
Net increase (decrease) in cash and cash equivalents......... 2,074 (941) 566
Cash and cash equivalents at January 1....................... 1,152 2,093 1,527
-------- -------- --------
Cash and cash equivalents at December 31..................... $ 3,226 $ 1,152 $ 2,093
-------- -------- --------
-------- -------- --------
See Notes to Consolidated Financial Statements.
19
22
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
COMMON
SHARES OF
BENEFICIAL CAPITAL RETAINED
INTEREST SURPLUS EARNINGS
---------- -------- --------
Balance, January 1, 1991...................................... $495 $133,812 $13,882
Net income.................................................. 17,958
Conversion of debentures.................................... 3 3,365
Common Shares issued under benefit plans.................... 1 726
Cash dividends ($1.92 per share)............................ (31,818)
---- -------- --------
Balance, December 31, 1991.................................... 499 137,903 22
Net income.................................................. 20,081
Public offering of 2,000 Common Shares...................... 60 63,393
Common Shares exchanged for property........................ 12 14,538
Conversion of debentures.................................... 4 3,911
Common Shares issued under benefit plans.................... 2 1,122
Cash dividends ($2.04 per share)............................ (16,077) (20,103)
---- -------- --------
Balance, December 31, 1992.................................... 577 204,790 --
Net income.................................................. 36,249
Public offering of 2,835 Common Shares...................... 85 112,890
Conversion of notes and debentures.......................... 116 123,877
Shares issued under benefit plans........................... 1 847
Cash dividends ($2.16 per share)............................ (16,096) (36,249)
---- -------- --------
Balance, December 31, 1993.................................... $779 $426,308 $ --
---- -------- --------
---- -------- --------
See Notes to Consolidated Financial Statements.
20
23
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 anchored 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 which are less than 50% owned 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, 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 securities using the constant yield method.
Federal income taxes are not provided because the Company believes it
qualifies as a REIT under the provisions of the Internal Revenue Code and,
therefore, applicable taxable income is included in the taxable income to its
shareholders. As a REIT, the Company must distribute at least 95% of its
ordinary taxable income to its shareholders and meet certain other 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 and installment gains on sales of
property.
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, insurance and maintenance 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.
21
24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 2. DEBT AND CONVERTIBLE DEBENTURES
The Company's total debt consisted of the following:
DECEMBER 31,
---------------------
1993 1992
-------- --------
Permanent Debt:
Permanent trust-deed and mortgage notes payable to
2012 at 6.0% to 10.5%, primarily with insurance
companies........................................ $ 41,066 $ 43,618
Revolving credit agreements, rate fixed at 8.1%
through interest rate swap agreements............ 40,000 40,000
Industrial revenue bonds to 2014 at 3.1% to 4.8%.... 7,899 8,020
-------- --------
Total permanent debt........................ 88,965 91,638
-------- --------
Interim Debt:
Reverse repurchase agreements, due daily; variable
interest rate at 3.3% as of December 31, 1993,
collateralized by $51.4 million of marketable
debt securities.................................. 51,826
Revolving credit agreement, variable interest rate
at 3.6% as of December 31, 1993.................. 350 22,450
Other............................................... 392 309
-------- --------
Total interim debt.......................... 52,568 22,759
-------- --------
Total permanent and interim debt....... 141,533 114,397
Obligation under Capital Leases..................... 6,119 6,182
Convertible Notes and Debentures.................... 123,048
-------- --------
Total.................................. $147,652 $243,627
-------- --------
-------- --------
Principal due in the next five years (excluding amounts due under interim
debt), in millions, is $.8 in 1994, $.5 in 1995, 1996 and 1997, and $.6 in 1998.
The Company made cash payments for interest on debt, net of amounts capitalized,
in millions, of $9.4 in 1993, $18.3 in 1992 and $19.8 in 1991.
At December 31, 1993, property under direct financing leases and other
property with carrying values aggregating $328 million and current and future
rentals from these properties and leases were used as collateral for the
Company's debt.
Various debt agreements contain restrictive covenants, the most restrictive
of which requires the Company to produce annual consolidated distributable cash
flow, as defined in the applicable debt agreements, of not less than 170% of
interest payments, to limit the payment of dividends to no more than 95% of such
annual consolidated distributable cash flow and to limit short term debt (as
defined) to the greater of 33% of total debt or $75 million. Management believes
that the Company is in compliance with all restrictive covenants.
Permanent and Interim Debt
The Company generally classifies debt as permanent if the debt is payable
over an initial period of more than ten years and as interim if the debt is
payable over five years or less. Interim debt is typically used to provide funds
for the acquisition or development of properties, and is replaced by permanent
debt, subject to availability and relative costs.
The Company has a revolving credit agreement with a bank for $80 million,
available through June 2004. Under the agreement, the lender has the option to
call and convert the outstanding debt to a term loan that would be payable over
approximately four years. During 1993, the balance outstanding under the
agreement
22
25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
averaged about $14.3 million with a weighted average interest rate of 3.8%; and
the maximum balance outstanding under the agreement was $62.5 million.
The Company also has an additional $20 million revolving credit agreement
with another bank, available through May 1994. Funds advanced under the
agreement generally bear interest at the federal funds rate plus one percent,
without any obligation to maintain collected balances. Upon termination of the
agreement, the outstanding amount may be converted to a term loan payable over a
two-year period.
During 1993, the balance outstanding under the agreement averaged $4.2
million with a weighted average interest rate of 4.1%. The maximum balance
outstanding under the agreement was $20 million.
These revolving credit facilities are subject to normal banking terms and
conditions and do not materially restrict the Company's activities.
In 1992, the Company purchased $40 million of interest rate swap contracts
which fix the average effective interest rate of an equal amount under the
Company's revolving credit agreements at an estimated 8.1% for periods maturing
in 2001 and 2004. Amounts outstanding under the revolving credit agreement up to
the $40 million notional amount of the interest rate swaps are not callable by
the lender as long as the swaps are owned by the Company. The Company is
currently paying a higher rate of interest than it is receiving under the swap
agreements, and thus currently has no financial exposure in the unlikely event
of default by the counterparty.
Convertible Notes and Debentures
In 1993, the Company converted all of its convertible notes and debentures
into common shares of beneficial interest. A total of 3.9 million shares were
issued during the year related to these conversions. Had all of the debt been
converted as of January 1, 1993, net income per common share would have been
$1.55 per share for the year ended December 31, 1993.
NOTE 3. CARRYING CHARGES CAPITALIZED
The following carrying charges were capitalized:
1993 1992 1991
------ ------ ------
Interest....................................... $1,114 $2,025 $1,586
Ad valorem taxes............................... 193 196 142
------ ------ ------
Total................................ $1,307 $2,221 $1,728
------ ------ ------
------ ------ ------
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, 1993, in millions, is: $75.5 in 1994; $67.2 in 1995; $58.1 in 1996;
$49.1 in 1997; $42.4 in 1998 and $277.9 thereafter. The future minimum rental
amounts do not include estimates for contingent rentals. Such contingent
rentals, in millions, aggregated $21.4 in 1993, $19.5 in 1992 and $16.5 in 1991.
23
26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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,
--------------------
1993 1992
------- -------
Total minimum lease payments to be received............ $19,280 $24,513
Estimated residual values of leased property........... 2,224 2,237
Unearned income........................................ (11,069) (14,441)
------- -------
Property under direct financing leases....... $10,435 $12,309
------- -------
------- -------
At December 31, 1993, minimum lease payments to be received in each of the
five succeeding years, in millions, are: $1.9 in 1994 and 1995; $1.8 in 1996 and
1997 and $1.7 in 1998. 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 $.6 in 1993, $.8 in 1992 and $.6 in
1991.
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: $1.2 in 1994; $1.3 in 1995; $1.2 in 1996;
$1.1 in 1997; $1.0 in 1998 and $15.4 thereafter.
Future minimum rental payments on these leases have not been reduced by
future minimum sublease rentals aggregating $15.8 million through 2017 that are
due under various noncancelable subleases. The following summarizes total rental
expenses and sublease rental revenue (excluding amounts for improvements
constructed by the Company on the leased land):
1993 1992 1991
------ ------ ------
Minimum rentals................................ $1,457 $1,354 $1,214
Contingent rentals............................. 159 108 109
------ ------ ------
Total rental expense................. $1,616 $1,462 $1,323
------ ------ ------
------ ------ ------
Sublease rental revenue........................ $2,012 $1,630 $1,731
------ ------ ------
------ ------ ------
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, 1993 and 1992.
Future minimum lease payments under these capital leases total $12.7
million, with annual payments due of $.6 million in 1994 through 1998, and $9.7
million thereafter. The amount of these total payments representing interest is
$6.4 million. Accordingly, the present value of the net minimum lease payments
is $6.1 million at December 31, 1993.
The Company subleases this property to other parties. The minimum lease
payments discussed above have not been reduced by minimum sublease rentals
aggregating $3.4 million due under non-cancelable
24
27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
subleases. Minimum sublease rentals do not include estimates for contingent
rentals that aggregated $.2 million in 1993 and 1992 and $.1 million in 1991.
NOTE 6. RELATED PARTY TRANSACTIONS
The Company and Weingarten Realty Management Company (the "Management
Company") were related parties during 1991 and 1992 because, prior to January 1,
1993, 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 $8.3 million
and $8.0 million for 1992 and 1991, respectively, in connection with services
rendered under the management contract. Fees paid under the management contract
were generally based upon 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 Management Company owed the Company $1.3
million at December 31, 1992.
The Company owns an interest in several joint ventures and partnerships.
Notes receivable from these entities totalled $10.1 million and $14.0 million at
December 31, 1993 and 1992, respectively, and bear interest at 2.7% to 9.3% at
December 31, 1993 and are due at various dates through 2020.
The Company's $80 million revolving credit agreement is with Texas Commerce
Bank National Association ("TCB").
NOTE 7. COMMITMENTS AND CONTINGENCIES
The Company was contingently liable at December 31, 1993 for $1.2 million
of notes payable executed by various joint ventures and partnerships.
The Company is committed to lend Holdings an additional $3.3 million. The
Company remains contingently liable for $1.5 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.
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
25
28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
north of Houston ("River Pointe"); and unimproved land in a major industrial
park in Houston ("Railwood").
The mortgage bonds and notes receivable from Holdings, and related deferred
gain, were as follows:
DECEMBER 31,
-------------------
1993 1992
------- -------
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 1994 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% (7.0% at December 31,
1993), due December 1994 and collateralized by
unimproved land...................................... 9,907 10,404
Hospitality Venture note receivable under a credit
agreement, bearing interest at prime rate plus 1%
(7.0% at December 31, 1993), due July 1995 and
collateralized by property........................... 2,200 3,550
Note receivable, bearing interest at prime rate plus 1%
(7.0% at December 31, 1993), due June 1996 and
collateralized by an interest in Hospitality
Venture.............................................. 3,687 2,100
------- -------
Total........................................ 41,149 41,409
Unrecognized portion of the deferred gain on original
transfer of assets to Holdings....................... (16,235) (16,235)
------- -------
Net investment............................... $24,914 $25,174
------- -------
------- -------
Before 1988, Holdings was current on the payments of all interest;
accordingly, the Company had recognized interest income on all of 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 $2.1 for 1993, and $1.6 for 1992 and 1991. At December 31,
1993 and 1992, accrued interest receivable from Holdings was $.4 million and $.3
million, respectively.
The Company had an unrecorded receivable for interest of $22.3 million and
$17.1 million at December 31, 1993 and 1992, respectively. Of these amounts,
$5.4 million and $4.8 million represent the difference between the accrual rate
and the pay rate on the Railwood and River Pointe mortgage bonds at December 31,
1993 and 1992, respectively. Interest income not recognized by the Company for
financial reporting purposes aggregated, in millions, $5.2, $4.9 and $4.7 for
1993, 1992 and 1991, respectively.
Management of the Company believes that the fair value of the security
collateralizing the 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, however, 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.
Accordingly, the
26
29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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. 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
common 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 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 grant.
Following is a summary of the option activity for the three years ended
December 31, 1993:
SHARES OPTION
UNDER PRICE
OPTION PER SHARE
------- -------------
Outstanding, January 1, 1991..................... 120,160 $19.50--25.00
Exercised........................................ (11,885) 19.50
-------
Outstanding, December 31, 1991................... 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
-------
-------
During 1991, 56,000 common shares were granted as awards to certain key
officers of the Company and the Management Company. Through December 31, 1993,
42,000 of these common shares had vested and were issued; the remaining 14,000
common shares will vest in 1994. Compensation expense of $.6 million, $.4
million and $.5 million was recognized in 1993, 1992 and 1991, respectively,
relating to the share awards.
At December 31, 1993, 238,884 common shares were available for the future
grant of options or awards and options for 123,267 shares were exercisable.
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 are granted at the market price at the date of
grant.
27
30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 10. DIVIDEND DISTRIBUTIONS
For federal income tax purposes, the cash dividends distributed to
shareholders are characterized as follows:
1993 1992 1991
----- ----- -----
Ordinary income.................................. 86.9% 83.3% 97.4%
Return of capital (generally non-taxable)........ 10.2 11.5
Long-term capital gains.......................... 2.9 5.2 2.6
----- ----- -----
Total.................................. 100.0% 100.0% 100.0%
----- ----- -----
----- ----- -----
NOTE 11. CHANGES IN OPERATING ACCOUNTS
The effect of changes in the operating accounts on cash flows from
operating activities is as follows:
1993 1992 1991
------- ------- -------
Increase in:
Accrued rent and accounts receivable....... $(1,635) $ (413) $ (801)
All other assets -- primarily unamortized
lease costs............................. (5,459) (3,591) (4,416)
Increase in:
Accounts payable and accrued expenses
(excluding amounts applicable to
construction in progress)............... 5,872 1,174 2,352
------- ------- -------
Net effect of changes in operating
accounts................................... $(1,222) $(2,830) $(2,865)
------- ------- -------
------- ------- -------
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 issued .4 million common shares valued at $14.6 million to a
partner for the purchase of the partner's interest in a joint venture. During
1991, the Company converted $3.6 million of convertible debentures into .1
million common shares and assumed $10.4 million of permanent debt in connection
with the acquisition of certain properties.
NOTE 12. 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. 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 financial instrument. The use of different
market assumptions and/or estimation methodologies may have a material effect on
the estimated fair value amounts.
Cash and cash equivalents, accrued rent and accounts receivable, marketable
debt securities, notes receivable from joint ventures, partnerships and tenants,
interim debt and accounts payable and accrued expenses are carried at amounts
which reasonably approximate their fair value.
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).
28
31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Permanent debt with carrying values of $89.0 million has fair values of
$93.8 million, which were estimated based on interest rates currently available
to the Company for issuance of debt with similar terms and remaining maturities.
Interest rate swap agreements are valued at an estimated unrealized net
loss of $5.6 million, which represents amounts at which they could be settled,
based upon estimates obtained from dealers.
The fair value estimates presented herein are based on pertinent
information available to management as of December 31, 1993. 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 13. 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.
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 December 31, 1993.
Actual present value of:
Vested benefit obligation......................................... $4,785
------
------
Accumulated benefit obligation.................................... $5,017
------
------
Projected benefit obligation........................................ $7,412
Plan assets at fair value, primarily common stocks and bonds........ 6,703
------
Projected benefit obligation in excess of plan assets............... (709)
Unrecognized prior service cost..................................... 404
Unrecognized net loss............................................... 212
Unrecognized net transition asset................................... (271)
------
Pension liability recognized in the balance sheet................... $ (364)
------
------
The components of net periodic pension cost are as follows:
Service cost of benefits earned during the year..................... $ 115
Interest cost on projected benefit obligation....................... 482
Actual return on plan assets........................................ (646)
Net amortization and deferral....................................... 135
------
Total..................................................... $ 86
------
------
Assumptions used to develop periodic pension expense and the actuarial
present value of projected benefit obligations:
Weighted average discount rate............................... 7.0%
Expected long-term rate of return on plan assets............. 7.0%
Rate of increase in compensation levels...................... 5.5%
29
32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
NOTE 14. QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data for the years ended December 31, 1993
and 1992 is as follows:
FIRST SECOND THIRD FOURTH
------- ------- ------- -------
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
1992:
Revenues............................ $21,578 $22,496 $22,768 $23,117
Income before extraordinary
charge........................... 4,599 6,097 5,038 5,514
Net income.......................... 4,599 6,097 4,132 5,253
Income per common share:
Income before extraordinary
charge.................... $ .28 $ .37 $ .28 $ .28
Net income.................. $ .28 $ .37 $ .23 $ .27
NOTE 15. PRICE RANGE OF COMMON SHARES (UNAUDITED)
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
---- -- - ---------
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
1992:
First.............................................. $35 1/8 $30 5/8 $.51
Second............................................. 34 3/8 29 1/2 .51
Third.............................................. 35 1/8 32 1/2 .51
Fourth............................................. 38 33 3/8 .51
30
33
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 and compliance
with Section 16(a) of the Securities Exchange Act of 1934, as amended,
is incorporated by reference from the Company's Proxy Statement in
connection with the Annual Meeting of Shareholders to be held April 28,
1994, which Proxy Statement will be filed with the Securities and
Exchange Commission not later than 120 days after the end of the fiscal
year covered by this Form 10-K. Except for those portions of such Proxy
Statement specifically incorporated by reference herein, such Proxy
Statement is deemed not to be filed as part of this Report.
(b) See "Executive Officers of the Registrant" above.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to executive compensation is incorporated by
reference from pages 11 through 14 of the Company's Proxy Statement in
connection with the Annual Meeting of Shareholders to be held April 28, 1994,
which Proxy Statement will be filed with the Securities and Exchange Commission
not later than 120 days after the end of the fiscal year covered by this Form
10-K. Except for those portions of such Proxy Statement specifically
incorporated by reference herein, such Proxy Statement is deemed not to be filed
as part of this Report.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information with respect to security ownership of certain beneficial owners
and management is 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 28, 1994, which Proxy Statement will be filed with the
Securities and Exchange Commission not later than 120 days after the end of the
fiscal year covered by this Form 10-K. Except for those portions of such Proxy
Statement specifically incorporated by reference herein, such Proxy Statement is
deemed not to be filed as part of this Report.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to certain relationships and related transactions
is incorporated by reference from pages 14 through 16 of the Company's Proxy
Statement in connection with the Annual Meeting of Shareholders to be held April
28, 1994, which Proxy Statement will be filed with the Securities and Exchange
Commission not later than 120 days after the end of the fiscal year covered by
this Form 10-K. Except for those portions of such Proxy Statement specifically
incorporated by reference herein, such Proxy Statement is deemed not to be filed
as part of this Report.
31
34
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........................................ 16
(B) Financial Statements
(i) Statements of Consolidated Income for the years ended
December 31, 1993, 1992 and 1991............................ 17
(ii) Consolidated Balance Sheets as of December 31, 1993 and
1992........................................................ 18
(iii) Statements of Consolidated Cash Flows for the years ended
December 31, 1993, 1992 and 1991............................ 19
(iv) Statements of Consolidated Shareholders' Equity for the
years ended December 31, 1993, 1992 and 1991................ 20
(v) Notes to Consolidated Financial Statements.................. 21
(2) Financial Statement Schedules:
SCHEDULE PAGE
-------- ----
II Amounts Receivable from Related Parties and Underwriters,
Promoters and Employees (Other than Related Parties)........ 37
VIII Valuation and Qualifying Accounts............................. 39
X Supplementary Income Statement Information.................... 40
XI Real Estate and Accumulated Depreciation...................... 41
XII Mortgage Loans on Real Estate................................. 43
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.
32
35
(c) Exhibits:
3. 1 -- Restated Declaration of Trust, with all amendments thereto (filed as
Exhibit 3.1 to the Company's Registration Statement on Form S-3 (No.
33-49206) and incorporated herein by reference).
3. 2 -- Bylaws of the Company (filed as Exhibit 3.2 to the Company's
Registration Statement on Form S-3 (No. 33-49206) and incorporated
herein by reference).
10. 1+ -- 1988 Share Option Plan of the Company, as amended (filed as Exhibit
10.1 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1990 and incorporated herein by reference).
10. 2+ -- Weingarten Realty Investors Supplemental Retirement Account Plan, as
Amended and Restated (filed as Exhibit 10.26 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1992, and
incorporated herein by reference.)
10. 3 -- 16% Mortgage Bonds Due 1994 of WRI Holdings, Inc. dated December 28,
1984, payable to the Company in the original principal amount of
$3,150,000 (filed as Exhibit 10.8 to the Company's Registration
Statement on Form S-4 (No. 33-19730) and incorporated herein by
reference).
10. 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 Company's Registration
Statement on Form S-4 (No. 33-19730) and incorporated herein by
reference).
33
36
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 $5,000,000, American General Life Insurance Company of
Delaware for $5,000,000, 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.
34
37
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).
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-K 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.
21. 1* -- Subsidiaries of the Registrant.
23. 1* -- Consent of Deloitte & Touche.
- ---------------
* Filed with this report.
+ Management contract or compensatory plan or arrangement.
35
38
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 21, 1994
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
--------- ----- ----
STANFORD ALEXANDER Chairman and Trust Manager March 21, 1994
------------------------------------------ (Chief Executive Officer)
STANFORD ALEXANDER
Executive Vice March , 1994
------------------------------------------ President/ Asset
ANDREW M. ALEXANDER Management and
Trust Manager
MARTIN DEBROVNER President, Chief March 21, 1994
------------------------------------------ Operating Officer and
MARTIN DEBROVNER Trust Manager
MELVIN A. DOW Trust Manager March 18, 1994
- -------------------------------------------
MELVIN A. DOW
STEPHEN A. LASHER Trust Manager March 21, 1994
- -------------------------------------------
STEPHEN A. LASHER
JOSEPH W. ROBERTSON, JR. Executive Vice President and March 21, 1994
- ------------------------------------------- Trust Manager (Chief
JOSEPH W. ROBERTSON, JR. Financial Officer)
DOUGLAS W. SCHNITZER Trust Manager March 21, 1994
- -------------------------------------------
DOUGLAS W. SCHNITZER
MARC J. SHAPIRO Trust Manager March 21, 1994
- -------------------------------------------
MARC J. SHAPIRO
J. T. TROTTER Trust Manager March 21, 1994
- -------------------------------------------
J. T. TROTTER
STEPHEN C. RICHTER Vice President and Treasurer March 21, 1994
- ------------------------------------------- (Principal Accounting
STEPHEN C. RICHTER Officer)
36
39
SCHEDULE II
WEINGARTEN REALTY INVESTORS
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS AND EMPLOYEES
(OTHER THAN RELATED PARTIES)
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(AMOUNTS IN THOUSANDS)
DEDUCTIONS BALANCE AT END OF YEAR
BALANCE AT ------------------------- ------------------------
BEGINNING AMOUNTS AMOUNTS DUE WITHIN DUE AFTER
NAME OF DEBTOR OF YEAR ADDITIONS COLLECTED WRITTEN OFF ONE YEAR ONE YEAR
-------------- ----------- --------- --------- ------------ ----------- ---------
1993:
DeVargas Center Joint Venture.......... $ 1,168 $ 382 $ $ $ 1,550(A)
DeVargas Center Joint Venture.......... 400 60 340(B)
Main/O.S.T., Ltd....................... 4,800 26 4,774(C)
Phelan Boulevard Venture............... 229 39 190(D)
GJR/Weingarten River Pointe Venture.... 456 456(E)
Plaza Construction, Inc................ 10,404 201 698 9,907(F)
WRI Holdings, Inc...................... 3,150 3,150(G)
WRI Holdings, Inc...................... 6,223 6,223(H)
WRI Holdings, Inc...................... 15,982 15,982(I)
Hospitality Venture.................... 3,550 1,350 2,200(J)
Eastex Venture......................... 2,690 50 207 2,533(K)
East Town, Lake Charles Company........ 47 17 25 39(L)
Sheldon Center, Ltd.................... 179 179(M)
Steeplechase Mall Joint Venture........ 4,450 4,450
Larry Johnson.......................... 322 322
F. B. Lake Charles, Ltd................ 66 66
Leisure Dynamics, Inc.................. 2,100 1,587 3,687(N)
----------- --------- --------- ------------ ----------- ---------
TOTAL............................ $55,760 $ 2,693 $ 7,243 $15,998 $35,212
----------- --------- --------- ------------ ----------- ---------
----------- --------- --------- ------------ ----------- ---------
1992:
DeVargas Center Joint Venture.......... $ 595 $ 573 $ $ $ 1,168
DeVargas Center Joint Venture.......... 400 400
Main/O.S.T., Ltd....................... 4,800 4,800
Phelan Boulevard Venture............... 255 26 229
Plaza Construction, Inc................ 10,179 225 10,404
WRI Holdings, Inc...................... 3,150 3,150
WRI Holdings, Inc...................... 6,223 6,223
WRI Holdings, Inc...................... 15,982 15,982
Hospitality Venture.................... 4,055 800 1,305 3,550
Eastex Venture......................... 2,888 50 248 2,690
East Town, Lake Charles Company........ 46 22 21 47
Sheldon Center, Ltd.................... 179 179
Steeplechase Mall Joint Venture........ 4,450 4,450
Larry Johnson.......................... 448 126 322
F. B. Lake Charles, Ltd................ 100 34 66
Leisure Dynamics, Inc.................. 900 1,200 2,100
----------- --------- --------- ------------ ----------- ---------
TOTAL............................ $49,350 $ 8,170 $ 1,760 $13,871 $41,889
----------- --------- --------- ------------ ----------- ---------
----------- --------- --------- ------------ ----------- ---------
1991:
DeVargas Center Joint Venture.......... $ 439 $ 156 $ $ $ 595
Phelan Boulevard Venture............... 256 11 12 255
Plaza Construction, Inc................ 11,418 325 1,564 10,179
WRI Holdings, Inc...................... 3,150 3,150
WRI Holdings, Inc...................... 6,660 437 6,223
WRI Holdings, Inc...................... 15,982 15,982
Hospitality Venture.................... 3,455 1,400 800 4,055
Eastex Venture......................... 2,926 92 130 2,888
East Town, Lake Charles Company........ 58 13 25 46
Sheldon Center, Ltd.................... 179 179
Steeplechase Mall Joint Venture........ 4,450 4,450
Larry Johnson.......................... 400 48 448
Leisure Dynamics, Inc.................. 900 900
----------- --------- --------- ------------ ----------- ---------
TOTAL............................ $49,373 $ 2,945 $ 2,968 $21,618 $27,732
----------- --------- --------- ------------ ----------- ---------
----------- --------- --------- ------------ ----------- ---------
37
40
- ------------
Note A -- The balance outstanding is due January 25, 1995 and bears interest at prime + 1%
not to exceed the maximum rate permitted by law.
Note B -- The balance outstanding is due November 1, 2002 and bears interest at prime + 1%
not to exceed the maximum rate permitted by law.
Note C -- The balance outstanding is due February 1, 2020 and bears interest at 9.2932% not
to exceed the maximum rate permitted by law.
Note D -- The balance outstanding is due June 1, 1994 and bears interest at prime + 2% not
to exceed the maximum rate permitted by law.
Note E -- The balance outstanding is due November 30, 2003 and bears interest at 9% not to
exceed the maximum rate permitted by law.
Note F -- The balance outstanding is due December 1, 1994 and bears interest at prime + 1%
not to exceed the maximum rate permitted by law. The note is subject to renewal
at the Company's option. Based upon available financing alternatives, the Company
currently intends to extend the maturity of the note for an additional year.
Note G -- The balance outstanding is due December 28, 1994 and bears interest at 10% not to
exceed the maximum rate permitted by law. The note is subject to renewal at the
Company's option. Based upon available financing alternatives, the Company
currently intends to extend the maturity of the note for an additional year.
Note H -- The balance outstanding is due December 28, 2004 and bears interest at 10% not to
exceed the maximum rate permitted by law.
Note I -- The balance outstanding is due December 28, 2004 and bears interest at 16% not to
exceed the maximum rate permitted by law.
Note J -- The balance outstanding is due August 18, 1995 and bears interest at prime + 1%
not to exceed the maximum rate permitted by law.
Note K -- The balance outstanding is due June 1, 1994 and bears interest at prime + 1 1/2%
not to exceed the maximum rate permitted by law. The note is subject to renewal
at the Company's option. Based upon available financing alternatives, the Company
currently intends to extend the maturity of the note for an additional year.
Note L -- The balance outstanding is due December 31, 1994 and bears interest at prime + 1%
not to exceed the maximum rate permitted by law.
Note M -- The balance outstanding is due June 1, 1994 and bears interest at prime not to
exceed the maximum rate permitted by law.
Note N -- The balance outstanding is due June 30, 1996 and bears interest at prime + 1% not
to exceed the maximum rate permitted by law.
38
41
SCHEDULE VIII
WEINGARTEN REALTY INVESTORS
VALUATION AND QUALIFYING ACCOUNTS
DECEMBER 31, 1993, 1992 AND 1991
(AMOUNTS IN THOUSANDS)
ADDITIONS
--------------------------
BALANCE AT CHARGED TO BALANCE
BEGINNING OF COSTS AND CHARGED TO AT END OF
DESCRIPTION PERIOD EXPENSES OTHER ACCOUNTS DEDUCTIONS(1) PERIOD
----------- ------------ ---------- -------------- ------------- ---------
1993:
Allowance for Doubtful Accounts.... $755 $ 844 $ 661 $938
1992:
Allowance for Doubtful Accounts.... 757 595 597 755
1991:
Allowance for Doubtful Accounts.... 661 1,185 1,089 757
- ---------------
(1) Write-offs of accounts receivable previously reserved.
39
42
SCHEDULE X
WEINGARTEN REALTY INVESTORS
SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(AMOUNTS IN THOUSANDS)
ITEM 1993 1992 1991
---- ------ ------ ------
Utilities, repairs and maintenance............................... $9,089 $7,696 $6,415
Amortization of debt, lease and organizational costs............. 2,690 3,112 2,618
40
43
SCHEDULE XI
WEINGARTEN REALTY INVESTORS
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1993
(AMOUNTS IN THOUSANDS)
TOTAL COST
----------------------------------------------------------
BUILDINGS
AND PROJECTS UNDER TOTAL ACCUMULATED ENCUMBRANCES
PROPERTIES LAND IMPROVEMENTS DEVELOPMENT COST DEPRECIATION (NOTE A)
---------- -------- ------------ -------------- ------------ ------------ ------------
SHOPPING CENTERS:
Texas............................ $ 92,413 $345,777 $ $438,190 $119,959 $ 7,391
Other States..................... 8,325 59,754 68,079 25,258 3,097
-------- -------- -------- -------- -------- --------
Total Shopping Centers... 100,738 405,531 506,269 145,217 10,488
INDUSTRIAL PROPERTIES --
Texas............................ 9,000 41,203 50,203 12,192 2,130
OFFICE BUILDING -- Texas........... 534 12,014 12,548 8,155
MULTI-FAMILY RESIDENTIAL
PROPERTIES:
Texas............................ 399 1,098 1,497 539 1,130
Louisiana........................ 33 558 591 120 403
-------- -------- -------- -------- -------- --------
Total Improved
Properties............. 110,704 460,404 571,108 166,223 14,151
-------- -------- -------- -------- -------- --------
LAND UNDER DEVELOPMENT:
Texas............................ 36,305 36,305
Other States..................... 2,661 2,661
-------- -------- -------- -------- -------- --------
Total Land Under
Development............ 38,966 38,966
-------- -------- -------- -------- -------- --------
LEASED PROPERTY (SHOPPING CENTER)
UNDER CAPITAL LEASE
-- Louisiana..................... 6,534 6,534 2,182 5,990
-------- -------- -------- -------- -------- --------
CONSTRUCTION IN PROGRESS:
Texas............................ 5,698 5,698
Other States..................... 2,073 2,073
-------- -------- -------- -------- -------- --------
Total Construction in
Progress............... 7,771 7,771
-------- -------- -------- -------- -------- --------
Total of All
Properties............. $110,704 $466,938 $ 46,737 $624,379 $168,405 $ 20,141
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
- ---------------
Note A -- Encumbrances do not include $40,350,000 outstanding under the
revolving credit agreements and $35,000,000 outstanding under the
14-year term loan payable to a group of insurance companies secured by
property collateral pools including all or part of 42 shopping
centers, one industrial project and five parcels of unimproved land.
41
44
SCHEDULE XI
(CONTINUED)
The changes in total cost of the properties for the years ended December
31, 1993, 1992 and 1991 were as follows:
1993 1992 1991
-------- -------- --------
Balance at beginning of year............. $528,362 $469,510 $419,958
Additions at cost........................ 95,502 62,559 50,176
Retirements or sales..................... (611) (4,190) (624)
Other changes (Note B)................... 1,126 483
-------- -------- --------
Balance at end of year................... $624,379 $528,362 $469,510
-------- -------- --------
-------- -------- --------
The changes in accumulated depreciation for the years ended December 31,
1993, 1992 and 1991 were as follows:
1993 1992 1991
-------- -------- --------
Balance at beginning of year............. $150,366 $134,500 $118,166
Additions charged to expense............. 18,740 17,952 16,358
Retirements or sales..................... (701) (2,086) (24)
-------- -------- --------
Balance at end of year................... $168,405 $150,366 $134,500
-------- -------- --------
-------- -------- --------
- ---------------
Note B -- Transferred from net investment in direct financing leases.
42
45
SCHEDULE XII
WEINGARTEN REALTY INVESTORS
MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1993
(AMOUNTS IN THOUSANDS)
FINAL PERIODIC PRIOR FACE CARRYING
INTEREST MATURITY PAYMENT LIEN AMOUNT OF AMOUNT OF
RATE DATE TERMS AMOUNT MORTGAGES MORTGAGES
-------- -------- ------------- ------- --------- ---------
(NOTE B)
SHOPPING CENTERS:
FIRST MORTGAGES:
Sheldon Forest
Channelview, TX............ Prime 6-01-94 Varying ($179 $ $ 179 $ 179
balloon)
Phelan Boulevard
Beaumont, TX............... Prime 6-01-94 Varying ($190 733 190
+ 2% balloon)
Eastex Venture
Beaumont, TX............... Prime 6-01-94 Varying 3,500 2,533
+ 1 1/2% ($2,533
balloon)
Main/O.S.T., Ltd
Houston, TX................ 9.2932% 2-01-20 $476 Annual 4,800 4,774
P & I
($1,241
balloon)
INDUSTRIAL:
FIRST MORTGAGES:
Railwood
Houston, TX................ 10% 12-28-04 Varying
($ 6,223
balloon) 7,000 6,223
River Pointe, Conroe, TX
(Note C)................... 9% 11-30-03 Varying 2,133 456
MULTI-FAMILY RESIDENTIAL:
FIRST MORTGAGE:
Stanford Court Apartments
Houston, TX................ 8.00% 3-30-98 Varying 1,440 1,360
($1,360
balloon)
UNIMPROVED LAND:
FIRST MORTGAGES:
Houston, TX.................. 11% 12-01-95 Level 45 13
SECOND MORTGAGE:
River Pointe
Conroe, TX................. Prime 12-01-94 Varying 12,000 9,907
+ 1% ($9,907
balloon)
------- --------- ---------
TOTAL MORTGAGE LOANS ON REAL
ESTATE (Note A).............. $ $ 31,830 $ 25,635
------- --------- ---------
------- --------- ---------
(See notes on following page)
43
46
SCHEDULE XII
(CONTINUED)
- ------------
Note A -- Changes in mortgage loans for the years ended December 31, 1993, 1992
and 1991 are summarized below:
1993 1992 1991
------- ------- -------
Balance, Beginning of Year.................................... $30,357 $25,563 $27,285
New Mortgage Loans............................................ 456 4,800
Additions to Existing Loans................................... 251 275 428
Collections of Principal...................................... (5,429) (281) (2,150)
------- ------- -------
Balance, End of Year.......................................... $25,635 $30,357 $25,563
------- ------- -------
------- ------- -------
- ------------
Note B -- The aggregate cost at December 31, 1993 for federal income tax
purposes is $24,104.
Note C -- Principal payments are due monthly to the extent of cash flow
generated by the underlying property.
44