UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___________ TO ___________
COMMISSION FILE NUMBER 1-9876
WEINGARTEN REALTY INVESTORS
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 74-1464203
(State or other jurisdiction of (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.
Title of Each Class Name of each exchange on which registered
----------------------------------------------------------------- ------------------------------------------
Common Shares of Beneficial Interest, $0.03 par value New York Stock Exchange
Series A Cumulative Redeemable Preferred Shares, $0.03 par value New York Stock Exchange
Series C Cumulative Redeemable Preferred Shares, $0.03 par value New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K/A or any amendment to
this Form 10-K/A. [X]
The aggregate market value of the common shares held by non-affiliates
(based upon the closing sale price on the New York Stock Exchange) on February
23, 2001 was approximately $1,303,669,277. As of February 23, 2001 there were
31,444,025 common 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 20, 2001 are incorporated by reference
in Part III.
Exhibit Index beginning on Page 44
TABLE OF CONTENTS
ITEM NO. PAGE NO.
-------- --------
PART I
1. Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4. Submission of Matters to a Vote of Shareholders . . . . . . . . . . . 17
Executive Officers of the Registrant. . . . . . . . . . . . . . . . . 18
PART II
5. Market for Registrant's Common Shares of Beneficial
Interest and Related Shareholder Matters. . . . . . . . . . . . . . . 19
6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . 20
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . 23
7A. Quantitative and Qualitative Disclosures About Market Risk. . . . . . 27
8. Financial Statements and Supplementary Data . . . . . . . . . . . . . 28
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . 48
PART III
10. Trust Managers and Executive Officers of the Registrant . . . . . . . 49
11. Executive Compensation. . . . . . . . . . . . . . . . . . . . . . . . 49
12. Security Ownership of Certain Beneficial Owners and
Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13. Certain Relationships and Related Transactions. . . . . . . . . . . . 49
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K . . . 49
PART I
ITEM 1. BUSINESS
General. Weingarten Realty Investors, 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. WRI is self-advised and self-managed. As of December 31, 2000, we
owned or operated under long-term leases interests in 254 developed
income-producing real estate projects. We owned 197 shopping centers located in
the Houston metropolitan area and in other parts of Texas and in Louisiana,
Arizona, Nevada, Arkansas, New Mexico, Oklahoma, Tennessee, Kansas, Colorado,
Missouri, Illinois, Florida and Maine. We also owned 55 industrial projects
located in Tennessee, Nevada and Houston, Austin and Dallas, Texas.
Additionally, we owned one multi-family residential project and one office
building, which serves, in part, as WRI's headquarters. Our interests in these
projects aggregated approximately 30.0 million square feet of building area and
113.4 million square feet of land area. We also owned interests in 38 parcels
of unimproved land under development or held for future development that
aggregated approximately 12.5 million square feet.
WRI currently employs 222 persons and its principal executive offices are
located at 2600 Citadel Plaza Drive, Houston, Texas 77008, and its phone number
is (713) 866-6000.
Investment and Operating Strategy. WRI's investment strategy is to increase
cash flow and the value of its portfolio through intensive, hands-on management
of its existing portfolio of assets, selective remerchandising and renovation of
properties and the acquisition and development of income-producing real estate
assets where the returns on such investments exceed our blended long-term cost
of capital. We will also pursue the disposition of selective non-core assets as
circumstances warrant, and we believe the sales proceeds can be effectively
redeployed into assets with higher growth potential.
At December 31, 2000, neighborhood and community centers represented 83.6% of
total revenue, including our share of revenue from unconsolidated joint ventures
and excluding our partners share of revenue from consolidated joint ventures,
industrial properties accounted for 13.1% and the remainder relates to one
apartment complex and one office building, which serves in part as the company's
corporate headquarters. We expect to continue to focus the future growth of the
portfolio in neighborhood and community centers and bulk and office/service
industrial properties, generally in a ratio similar to our current holdings. We
expect this external growth to occur in the markets in which we currently
operate as well as other markets in the southern half of the U.S. While we do
not anticipate investment in other classes of real estate such as multi-family
or office assets, we remain open to opportunistic uses of our undeveloped land.
WRI may either purchase or lease income-producing properties in the future, and
may also participate with other entities in property ownership through
partnerships, joint ventures or similar types of co-ownership. Equity
investments may be subject to existing mortgage financing and other indebtedness
or such financing or indebtedness may be incurred in connection with acquiring
such investments.
WRI may invest in mortgages; however, we currently have only invested in first
mortgages to joint ventures or partnerships in which we own an equity interest.
We may also invest in securities of other issuers, for the purpose, among
others, of exercising control over such entities, subject to the gross income
and asset tests necessary for REIT qualification.
Our operating philosophy is based on intensive hands-on management and leasing
of our properties. In acquiring and developing properties, we attempt to
accumulate enough properties in a geographic area to allow for the establishment
of a regional office, which enables us to obtain in-depth knowledge of the
market from a leasing perspective and to have easy access to the property and
our tenants from a management viewpoint.
1
Diversification from both a geographic and tenancy perspective is a critical
component of our operating strategy. While over 70% of our properties are
located in the state of Texas, we continue to expand our holdings outside of the
state. With respect to tenant diversification, our two largest merchants,
Kroger and Safeway, accounted for 3.5% and 3.4% of our total revenue including
our share of revenue from unconsolidated joint ventures and excluding our
partners share of revenue from consolidated joint ventures, as of December 31,
2000, respectively. No other tenant accounted for more than 1.4%.
We finance the growth and working capital needs of the company in a conservative
manner. With a credit rating of A/a3 from Standard & Poors and Moody's Investor
Services, respectively, we have the highest unsecured credit rating of any
public REIT. We intend to maintain this conservative approach to managing our
balance combined sheet, which , in turn, gives us many options to raising debt
or equity capital when needed. At December 31, 2000, our fixed charge coverage
ratio was 2.6 to 1 and our debt to total market capitalization was 35%.
WRI's policies with respect to the investment and operating philosophies
discussed above are reviewed by our Board of Trust Managers periodically and may
be modified without a vote of our shareholders.
Location of Properties. Historically, WRI has emphasized investments in
properties located primarily in the Houston area. Since 1987, we began actively
acquiring properties outside of Houston. Of our 292 properties that were owned
or operated under long-term leases as of December 31, 2000, 99 of our 254
developed properties and 14 of our 38 parcels of unimproved land were located in
the Houston metropolitan area. In addition to these properties, we owned 88
developed properties and eight parcels of unimproved land located in other parts
of Texas. Because of our investments in the Houston area, as well as in other
parts of Texas, the Houston and Texas economies affect, to a significant degree,
the business and operations of WRI.
In 2000, the economies of Houston and Texas continued to grow, still exceeding
the national average. The economy of the entire southwestern United States,
where we have our primary operations, also remained strong relative to the
national average. The Houston economy, although bolstered by a resurgent oil
market, has become highly diversified after experiencing significant growth in
the technology, construction, services, health care and finance, insurance and
real estate sectors. It has become much more integrated into the international
economy and is somewhat affected by the international climate. Thus, Houston's
expansion is expected to continue in 2001 and beyond against a backdrop of a
slowing national economy. Any deterioration in the Houston or Texas economies
could adversely affect us. However, our centers are generally anchored by
supermarkets and drug stores under long-term leases, and these types of stores,
which deal in basic necessity-type items, tend to be less affected by economic
change.
Competition. WRI is among the five largest publicly-held owners and operators
of neighborhood and community shopping centers in the nation based on revenues,
number of properties and total market capitalization. There are numerous other
developers and real estate companies (both public and private) financial
institutions and other investors engaged in the development, acquisition and
operation of shopping centers and commercial property who compete with us in our
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 WRI and its competitors
develop, acquire and manage.
We believe that the principal competitive factors in attracting tenants in our
market areas are location, price, anchor tenants and maintenance of properties.
We also believe that our competitive advantages include the favorable locations
of our properties, our ability to provide a retailer with multiple locations
with anchor tenants in the Houston area and the practice of continuous
maintenance and renovation of our properties.
Financial Information. Additional financial information concerning WRI is
included in the Consolidated Financial Statements located on pages 29 through 47
herein.
2
ITEM 2. PROPERTIES
At December 31, 2000, WRI's real estate properties consisted of 292 locations in
fourteen states. A complete listing of these properties, including the name,
location, building area and land area (in square feet), as applicable, is set
forth below:
SHOPPING CENTERS
Building
Name and Location Area Land Area
----------------------------------------------------- --------- ---------
HOUSTON AND HARRIS COUNTY, TOTAL . . . . . . . . . . . 7,661,000 29,629,000
Alabama-Shepherd, S. Shepherd at W. Alabama. . . . . . 28,000 * 88,000 *
Almeda Road, Almeda at Southmore . . . . . . . . . . . 17,000 37,000
Bayshore Plaza, Spencer Hwy. at Burke Rd.. . . . . . . 36,000 196,000
Bellaire Boulevard, Bellaire at S. Rice. . . . . . . . 35,000 137,000
Bellfort, Bellfort at Southbank. . . . . . . . . . . . 48,000 167,000
Bellfort Southwest, Bellfort at Gessner. . . . . . . . 30,000 89,000
Bellwood, Bellaire at Kirkwood . . . . . . . . . . . . 136,000 655,000
Bingle Square, U.S. Hwy. 290 at Bingle . . . . . . . . 46,000 168,000
Braeswood Square, N. Braeswood at Chimney Rock . . . . 103,000 422,000
Centre at Post Oak, Westheimer at Post Oak Blvd. . . . 184,000 505,000
Champions Village, F.M. 1960 at Champions Forest Dr. . 408,000 1,391,000
Copperfield Village, Hwy. 6 at F.M. 529. . . . . . . . 163,000 712,000
Crestview, Bissonnet at Wilcrest . . . . . . . . . . . 9,000 35,000
Crosby, F.M. 2100 at Kenning Road (61%). . . . . . . . 36,000 * 124,000 *
Cullen Place, Cullen at Reed . . . . . . . . . . . . . 7,000 30,000
Cullen Plaza, Cullen at Wilmington . . . . . . . . . . 81,000 318,000
Cypress Pointe, F.M. 1960 at Cypress Station . . . . . 191,000 737,000
Cypress Village, Louetta at Grant Road . . . . . . . . 25,000 134,000
Eastpark, Mesa Rd. at Tidwell. . . . . . . . . . . . . 140,000 665,000
Edgebrook, Edgebrook at Gulf Fwy.. . . . . . . . . . . 78,000 360,000
Fiesta Village, Quitman at Fulton. . . . . . . . . . . 30,000 80,000
Fondren Southwest Village, Fondren at W. Bellfort. . . 323,000 1,362,000
Fondren/West Airport, Fondren at W. Airport. . . . . . 62,000 223,000
45/York Plaza, I-45 at W. Little York. . . . . . . . . 218,000 840,000
Glenbrook Square, Telephone Road . . . . . . . . . . . 76,000 320,000
Griggs Road, Griggs at Cullen. . . . . . . . . . . . . 85,000 422,000
Harrisburg Plaza, Harrisburg at Wayside. . . . . . . . 95,000 334,000
Heights Plaza, 20th St. at Yale. . . . . . . . . . . . 72,000 228,000
Humblewood Shopping Plaza, Eastex Fwy. at F.M. 1960. . 180,000 784,000
I-45/Telephone Rd. Center, I-45 at Maxwell Street. . . 178,000 819,000
Inwood Village, W. Little York at N. Houston-Rosslyn . 68,000 305,000
Jacinto City, Market at Baca . . . . . . . . . . . . . 24,000 * 67,000 *
Table continued on next page
3
Building
Name and Location Area Land Area
------------------------------------------------------------- -------- ---------
HOUSTON AND HARRIS COUNTY, (CONT'D.)
Kingwood, Kingwood Dr. at Chestnut Ridge . . . . . . . . . . 155,000 648,000
Landmark, Gessner at Harwin . . . . . . . . . . . . . . . . 56,000 228,000
Lawndale, Lawndale at 75th St. . . . . . . . . . . . . . . . 53,000 177,000
Little York Plaza, Little York at E. Hardy . . . . . . . . . 118,000 483,000
Long Point, Long Point at Wirt (77%) . . . . . . . . . . . . 68,000 * 257,000 *
Lyons Avenue, Lyons at Shotwell. . . . . . . . . . . . . . . 68,000 179,000
Market at Westchase, Westheimer at Wilcrest. . . . . . . . . 87,000 333,000
Miracle Corners, S. Shaver at Southmore. . . . . . . . . . . 86,000 386,000
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 . . . . . . . . . 322,000 1,246,000
North Triangle, I-45 at F.M. 1960. . . . . . . . . . . . . . 16,000 113,000
Northway, Northwest Fwy. at 34th . . . . . . . . . . . . . . 212,000 793,000
Northwest Crossing, N.W. Fwy. at Hollister (75%) . . . . . . 135,000 * 671,000 *
Northwest Park Plaza, F.M. 149 at Champions Forest . . . . . 32,000 268,000
Oak Forest, W. 43rd at Oak Forest. . . . . . . . . . . . . . 164,000 541,000
Orchard Green, Gulfton at Renwick. . . . . . . . . . . . . . 74,000 273,000
Randall's/Cypress Station, F.M. 1960 at I-45 . . . . . . . . 141,000 618,000
Randall's/El Dorado, El Dorado at Hwy. 3 . . . . . . . . . . 119,000 429,000
Randall's/Kings Crossing, Kingwood Dr. at Lake Houston Pkwy. 127,000 624,000
Randall's/Norchester, Grant at Jones . . . . . . . . . . . . 109,000 475,000
Richmond Square, Richmond Ave. at W. Loop 610. . . . . . . . 33,000 136,000
River Oaks, East, W. Gray at Woodhead. . . . . . . . . . . . 71,000 206,000
River Oaks, West, W. Gray at S. Shepherd . . . . . . . . . . 235,000 609,000
Sheldon Forest, North, I-10 at Sheldon . . . . . . . . . . . 22,000 131,000
Sheldon Forest, South, I-10 at Sheldon . . . . . . . . . . . 38,000 * 164,000 *
Shops at Three Corners, S. Main at Old Spanish Trail (70%) . 185,000 * 803,000 *
Southgate, W. Fuqua at Hiram Clark . . . . . . . . . . . . . 126,000 533,000
Spring Plaza, Hammerly at Campbell . . . . . . . . . . . . . 56,000 202,000
Steeplechase, Jones Rd. at F.M. 1960 . . . . . . . . . . . . 193,000 849,000
Stella Link, North, Stella Link at S. Braeswood (77%). . . . 40,000 * 156,000 *
Stella Link, South, Stella Link at S. Braeswood. . . . . . . 15,000 56,000
Studemont, Studewood at E. 14th St . . . . . . . . . . . . . 28,000 91,000
Ten Blalock Square, I-10 at Blalock. . . . . . . . . . . . . 97,000 321,000
10/Federal, I-10 at Federal. . . . . . . . . . . . . . . . . 132,000 474,000
University Plaza, Bay Area at Space Center . . . . . . . . . 96,000 424,000
The Village Arcade, University at Kirby. . . . . . . . . . . 191,000 413,000
West Junction, Hwy. 6 at Keith Harrow Dr. . . . . . . . . . 67,000 264,000
Table continued on next page
4
Building
Name and Location Area Land Area
------------------------------------------------------------------ -------- ---------
HOUSTON AND HARRIS COUNTY, (CONT'D.)
Westbury Triangle, Chimney Rock at W. Bellfort . . . . . . . . . . 67,000 257,000
Westchase, Westheimer at Wilcrest. . . . . . . . . . . . . . . . . 236,000 766,000
Westhill Village, Westheimer at Hillcroft. . . . . . . . . . . . . 131,000 480,000
Wilcrest Southwest, Wilcrest at Southwest Fwy. . . . . . . . . . . 26,000 78,000
TEXAS (EXCLUDING HOUSTON & HARRIS CO.), TOTAL. . . . . . . . . . . 6,665,000 28,948,000
McDermott Commons, McDermott at Custer Rd., Allen. . . . . . . . . 38,000 224,000
Bell Plaza, 45th Ave. at Bell St., Amarillo. . . . . . . . . . . . 129,000 682,000
Coronado, S.W. 34th St. at Wimberly Dr., Amarillo. . . . . . . . . 49,000 201,000
Grand Plaza, Interstate Hwy 40 at Grand Ave., Amarillo . . . . . . 157,000 637,000
Puckett Plaza, Bell Road, Amarillo . . . . . . . . . . . . . . . . 133,000 621,000
Spanish Crossroads, Bell St. at Atkinsen St., Amarillo . . . . . . 72,000 275,000
Wolflin Village, Wolflin Ave. at Georgia St., Amarillo . . . . . . 191,000 421,000
Brodie Oaks, South Lamar Blvd. at Loop 360, Austin . . . . . . . . 245,000 1,050,000
Southridge Plaza, William Cannon Dr. at S. 1st St., Austin . . . . 143,000 565,000
Baywood, State Hwy. 60 at Baywood Dr., Bay City. . . . . . . . . . 40,000 169,000
Calder, Calder at 24th St., Beaumont . . . . . . . . . . . . . . . 34,000 129,000
North Park Plaza, Eastex Fwy. at Dowlen, Beaumont. . . . . . . . . 70,000 * 318,000 *
Phelan West, Phelan at 23rd St., Beaumont (67%). . . . . . . . . . 16,000 * 59,000 *
Phelan, Phelan at 23rd St, Beaumont. . . . . . . . . . . . . . . . 12,000 63,000
Southgate, Calder Ave. at 6th St., Beaumont. . . . . . . . . . . . 34,000 118,000
Westmont, Dowlen at Phelan, Beaumont . . . . . . . . . . . . . . . 98,000 507,000
Bryan Village, Texas at Pease, Bryan . . . . . . . . . . . . . . . 29,000 98,000
Lone Star Pavilions, Texas. at Lincoln Ave., College Station (30%) 32,000 * 132,000 *
Parkway Square, Southwest Pkwy at Texas Ave., College Station. . . 158,000 685,000
Montgomery Plaza, Loop 336 West at I-45, Conroe. . . . . . . . . . 317,000 1,179,000
River Pointe, I-45 at Loop 336, Conroe . . . . . . . . . . . . . . 46,000 329,000
Moore Plaza, S. Padre Island Dr. at Staples, Corpus Christi. . . . 360,000 1,492,000
Portairs, Ayers St. at Horne Rd., Corpus Christi . . . . . . . . . 118,000 416,000
Dickinson, I-45 at F.M. 517, Dickinson (72%) . . . . . . . . . . . 55,000 * 225,000 *
Coronado Hills, Mesa at Balboa, El Paso. . . . . . . . . . . . . . 127,000 575,000
Southcliff, I-20 at Grandbury Rd., Ft. Worth . . . . . . . . . . . 116,000 568,000
Broadway, Broadway at 59th St., Galveston (77%). . . . . . . . . . 58,000 * 167,000 *
Galveston Place, Central City Blvd. at 61st St., Galveston . . . . 210,000 828,000
Food King Place, 25th St. at Avenue P, Galveston . . . . . . . . . 28,000 78,000
Fiesta, Belt Line Rd. at Marshall Dr., Grand Prairie . . . . . . . 32,000 236,000
Killeen Marketplace, 3200 E. Central Texas Expressway, Killeen . . 115,000 512,000
Cedar Bayou, Bayou Rd., La Marque. . . . . . . . . . . . . . . . . 15,000 51,000
Corum South, I-45 at F.M. 518, League City . . . . . . . . . . . . 112,000 680,000
Table continued on next page
5
Building
Name and Location Area Land Area
-------------------------------------------------------------------- -------- ---------
TEXAS (EXCLUDING HOUSTON & HARRIS CO.),(CONT'D.)
Caprock Center, 50th at Boston Ave., Lubbock . . . . . . . . . . . . 375,000 1,255,000
Central Plaza, Loop 289 at Slide Rd., Lubbock. . . . . . . . . . . . 152,000 529,000
Town & Country, 4th St. at University, Lubbock . . . . . . . . . . . 134,000 339,000
Angelina Village, Hwy. 59 at Loop 287, Lufkin. . . . . . . . . . . . 257,000 1,835,000
Independence Plaza, Town East Blvd., Mesquite. . . . . . . . . . . . 179,000 787,000
McKinney Centre, US Hwy 380 at U.S.Hwy 75, McKinney. . . . . . . . . 34,000 199,000
Murphy Crossing, F.M. 544 at Murphy Rd., Murphy. . . . . . . . . . . 28,000 134,000
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
Custer Park, SWC Custer Road at Parker Road, Plano . . . . . . . . . 119,000 641,000
Gillham Circle, Gillham Circle at Thomas, Port Arthur. . . . . . . . 33,000 94,000
Village, 9th Ave. at 25th St., Port Arthur (77%) . . . . . . . . . . 39,000 * 185,000 *
Porterwood, Eastex Fwy. at F.M. 1314, Porter . . . . . . . . . . . . 99,000 487,000
Rockwall, I-30 at Market Center Street, Rockwall (30%) . . . . . . . 65,000 * 280,000 *
Plaza, Ave. H at U.S. Hwy. 90A, Rosenberg. . . . . . . . . . . . . . 41,000 * 135,000 *
Rose-Rich, U.S. Hwy. 90A at Lane Dr., Rosenberg. . . . . . . . . . . 104,000 386,000
Bandera Village, Bandera at Hillcrest, San Antonio . . . . . . . . . 57,000 607,000
Oak Park Village, Nacogdoches at New Braunfels, San Antonio. . . . . 65,000 221,000
Parliament Square, W. Ave. at Blanco, San Antonio. . . . . . . . . . 65,000 260,000
San Pedro Court, San Pedro at Hwy. 281N., San Antonio. . . . . . . . 2,000 18,000
Valley View, West Ave. at Blanco Rd., San Antonio. . . . . . . . . . 89,000 341,000
Market at Town Center, Town Center Blvd., Sugar Land . . . . . . . . 392,000 1,732,000
Williams Trace, Hwy. 6 at Williams Trace, Sugar Land . . . . . . . . 263,000 1,187,000
New Boston Road, New Boston at Summerhill, Texarkana . . . . . . . . 97,000 335,000
Island Market Place, 6th St. at 9th Ave., Texas City . . . . . . . . 27,000 90,000
Mainland, Hwy. 1765 at Hwy. 3, Texas City. . . . . . . . . . . . . . 56,000 279,000
Palmer Plaza, F.M. 1764 at 34th St., Texas City. . . . . . . . . . . 97,000 367,000
Broadway, S. Broadway at W. 9th St., Tyler (77%) . . . . . . . . . . 46,000 * 197,000 *
Crossroads, I-10 at N. Main, Vidor . . . . . . . . . . . . . . . . . 116,000 516,000
Watauga Towne Center, Hwy. 377 at Bursey Rd., Watauga. . . . . . . . 60,000 328,000
LOUISIANA, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . 1,343,000 5,504,000
Park Terrace, U.S. Hwy. 171 at Parish, DeRidder. . . . . . . . . . . 137,000 520,000
Town & Country Plaza, U.S. Hwy. 190 West, Hammond. . . . . . . . . . 215,000 915,000
Westwood Village, W. Congress at Bertrand, Lafayette . . . . . . . . 141,000 942,000
East Town, 3rd Ave. at 1st St., Lake Charles . . . . . . . . . . . . 33,000 * 117,000 *
14/Park Plaza, Hwy. 14 at General Doolittle, Lake Charles. . . . . . 207,000 654,000
Kmart Plaza, Ryan St., Lake Charles. . . . . . . . . . . . . . . . . 105,000 * 406,000 *
Southgate, Ryan at Eddy, Lake Charles. . . . . . . . . . . . . . . . 171,000 628,000
Danville Plaza, Louisville at 19th, Monroe . . . . . . . . . . . . . 143,000 539,000
Table continued on next page
6
Building
Name and Location Area Land Area
-------------------------------------------------------------------- -------- ---------
LOUISIANA, (CONT'D.)
Orleans Station, Paris, Robert E. Lee at Chatham, New Orleans. . . . 5,000 31,000
Southgate, 70th at Mansfield, Shreveport . . . . . . . . . . . . . . 73,000 359,000
Westwood, Jewella at Greenwood, Shreveport . . . . . . . . . . . . . 113,000 393,000
NEVADA, TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,692,000 7,229,000
Francisco Centre, E. Desert Inn Rd. at S. Eastern Ave., Las Vegas. . 116,000 639,000
Mission Center, Flamingo Rd. at Maryland Pkwy, Las Vegas . . . . . . 152,000 570,000
Paradise Marketplace, Flamingo Rd. at Sandhill, Las Vegas. . . . . . 149,000 536,000
Rainbow Plaza, Rainbow Blvd. at Charleston Blvd., Las Vegas. . . . . 417,000 1,548,000
Rancho Towne & Country, Rancho Dr. at Charleston Blvd., Las Vegas. . 87,000 350,000
Tropicana Marketplace, Tropicana at Jones Blvd., Las Vegas . . . . . 143,000 519,000
Westland Fair, Charleston Blvd. At Decatur Blvd., Las Vegas. . . . . 464,000 2,346,000
College Park, E. Lake Mead Blvd. at Civic Ctr. Dr., North Las Vegas. 164,000 721,000
ARIZONA, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,092,000 4,928,000
Palmilla Center, Dysart Rd. at McDowell Rd., Avondale. . . . . . . . 45,000 226,000
University Plaza, Plaza Way at Milton Rd., Flagstaff . . . . . . . . 162,000 918,000
Arrowhead Festival, 75th Ave. at W. Bell Rd., Glendale . . . . . . . 26,000 157,000
Camelback Village Square, Camelback at 7th Avenue, Phoenix . . . . . 135,000 543,000
Squaw Peak Plaza, 16th Street at Glendale Ave., Phoenix. . . . . . . 61,000 220,000
Rancho Encanto, 35th Avenue at Greenway Rd., Phoenix . . . . . . . . 71,000 259,000
Fountain Plaza, 77th St. at McDowell, Scottsdale . . . . . . . . . . 112,000 460,000
Broadway Marketplace, Broadway at Rural, Tempe . . . . . . . . . . . 83,000 347,000
Fry's Valley Plaza, S. McClintock at E. Southern, Tempe. . . . . . . 145,000 570,000
Pueblo Anozira, McClintock Dr. at Guadalupe Rd., Tempe . . . . . . . 152,000 769,000
Desert Square Shopping Center, Golf Links at Kolb, Tucson. . . . . . 100,000 459,000
NEW MEXICO, TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . 952,000 4,024,000
Eastdale, Candelaria Rd. at Eubank Blvd., Albuquerque. . . . . . . . 111,000 601,000
North Towne Plaza, Academy Rd. at Wyoming Blvd., Albuquerque . . . . 103,000 607,000
Pavilions at San Mateo, I-40 at San Mateo, Albuquerque (30%) . . . . 59,000 * 237,000 *
Valle del Sol, Isleta Blvd. at Rio Bravo, Albuquerque. . . . . . . . 106,000 475,000
Wyoming Mall, Academy Rd. at Northeastern, Albuquerque . . . . . . . 326,000 1,309,000
DeVargas, N. Guadalupe at Paseo de Peralta, Santa Fe . . . . . . . . 247,000 795,000
OKLAHOMA, TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . 702,000 3,173,000
Bryant Square, Bryant Ave. at 2nd St., Edmond. . . . . . . . . . . . 282,000 1,259,000
Market Boulevard, E. Reno Ave. at N. Douglas Ave., Midwest City. . . 36,000 142,000
Town & Country, Reno Ave at North Air Depot, Midwest City. . . . . . 138,000 540,000
Windsor Hills Center, Meridian at Windsor Place, Oklahoma City . . . 246,000 1,232,000
Table continued on next page
7
Building
Name and Location Area Land Area
------------------------------------------------------------------ -------- ---------
ARKANSAS, TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . 624,000 2,568,000
Evelyn Hills, College Ave. at Abshier, Fayetteville. . . . . . . . 125,000 750,000
Broadway Plaza, Broadway at W. Roosevelt, Little Rock. . . . . . . 43,000 148,000
Geyer Springs, Geyer Springs at Baseline, Little Rock. . . . . . . 153,000 414,000
Markham Square, W. Markham at John Barrow, Little Rock . . . . . . 134,000 535,000
Markham West, 11400 W. Markham, Little Rock (67%). . . . . . . . . 119,000 * 515,000 *
Westgate, Cantrell at Bryant, Little Rock. . . . . . . . . . . . . 50,000 206,000
KANSAS, TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . 784,000 3,418,000
West State Plaza, State Ave. at 78th St., Kansas City. . . . . . . 94,000 401,000
Regency Park, 93rd St. at Metcalf Ave., Overland Park. . . . . . . 202,000 742,000
Westbrooke Village, Quivira Road at 75th St., Shawnee. . . . . . . 237,000 1,270,000
Shawnee Village, Shawnee Mission Pkwy. at Quivera Rd., Shawnee . . 135,000 561,000
Kohl's, Wanamaker Rd. at S.W. 17th St., Topeka . . . . . . . . . . 116,000 444,000
MISSOURI, TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . 338,000 1,101,000
Ballwin Plaza, Manchester Rd. at Vlasis Dr., Ballwin . . . . . . . 203,000 653,000
PineTree Plaza, U.S. Hwy. 50 at Hwy. 291, Lee's Summit . . . . . . 135,000 448,000
FLORIDA, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . 413,000 1,743,000
Pembroke Commons, University at Pines Blvd., Pembroke Pines. . . . 316,000 1,394,000
Market at Southside, Michigan Ave. at Delaney Ave., Orlando. . . . 97,000 349,000
COLORADO, TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . 268,000 1,193,000
Bridges at Smoky Hill, Smoky Hill Rd. at S. Picadilly St., Aurora. 6,000 * 28,000 *
Carefree, Academy Blvd. at N. Carefree Circle, Colorado Springs. . 127,000 460,000
Academy Place, Academy Blvd. at Union Blvd., Colorado Springs. . . 84,000 407,000
Gold Creek Center, Hwy. 86 at Elizabeth St., Elizabeth . . . . . . 14,000 * 55,000 *
Crossing at Stonegate, Jordon Rd. at Lincoln Ave., Parker (37.5%). 37,000 * 243,000 *
MAINE, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 124,000 482,000
The Promenade, Essex at Summit, Lewiston . . . . . . . . . . . . . 124,000 * 482,000 *
ILLINOIS, TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . 93,000 469,000
Lincoln Place Centre, Hwy. 59, Fairview Heights. . . . . . . . . . 93,000 469,000
TENNESSEE, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 84,000
Highland Square, Summer at Highland, Memphis . . . . . . . . . . . 20,000 84,000
Table continued on next page
8
Building
INDUSTRIAL Area Land Area
-------- ---------
HOUSTON AND HARRIS COUNTY, TOTAL . . . . . . . . . . . . . . . . . . . 3,383,000 9,703,000
Beltway 8 Business Park, Beltway 8 at Petersham Dr.. . . . . . . . . . 105,000 332,000
Blankenship Building, Kempwood Drive . . . . . . . . . . . . . . . . . 59,000 175,000
Brookhollow Business Center, Dacoma at Directors Row . . . . . . . . . 133,000 405,000
Cannon/So. Loop Business Park, Cannon Street (20%) . . . . . . . . . . 59,000 * 96,000 *
Central Park North, W. Hardy Rd. at Kendrick Dr. . . . . . . . . . . . 155,000 466,000
Central Park Northwest VI, Central Pkwy. at Dacoma . . . . . . . . . . 175,000 518,000
Central Park Northwest VII, Central Pkwy. at Dacoma. . . . . . . . . . 103,000 283,000
Claywood Industrial Park, Clay at Hollister. . . . . . . . . . . . . . 330,000 1,761,000
Crosspoint Warehouse, Crosspoint . . . . . . . . . . . . . . . . . . . 73,000 179,000
Jester Plaza, West T.C. Jester . . . . . . . . . . . . . . . . . . . . 101,000 244,000
Kempwood Industrial, Kempwood Dr. at Blankenship Dr. . . . . . . . . . 113,000 327,000
Kempwood Industrial, Kempwood Dr. at Blankenship Dr. (20%) . . . . . . 42,000 * 106,000 *
Lathrop Warehouse, Lathrop St. at Larimer St. (20%). . . . . . . . . . 51,000 * 87,000 *
Levitz Furniture Warehouse, Loop 610 South . . . . . . . . . . . . . . 184,000 450,000
Little York Mini-Storage, West Little York . . . . . . . . . . . . . . 32,000 * 124,000 *
Navigation Business Park, Navigation at N. York (20%). . . . . . . . . 47,000 * 111,000 *
Northway Park II, Loop 610 East at Homestead (20%) . . . . . . . . . . 61,000 * 149,000 *
Park Southwest, Stancliff at Brooklet. . . . . . . . . . . . . . . . . 52,000 160,000
Railwood Industrial Park, Mesa at U.S. 90. . . . . . . . . . . . . . . 616,000 1,651,000
Railwood Industrial Park, Mesa at U.S. 90 (20%). . . . . . . . . . . . 99,000 * 213,000 *
South Loop Business Park, S. Loop at Long Dr. . . . . . . . . . . . . 46,000 * 103,000 *
Southport Business Park 5, South Loop 610. . . . . . . . . . . . . . . 157,000 358,000
Southwest Park II, Rockley Road. . . . . . . . . . . . . . . . . . . . 68,000 216,000
Stonecrest Business Center, Wilcrest at Fallstone. . . . . . . . . . . 111,000 308,000
West-10 Business Center, Wirt Rd. at I-10. . . . . . . . . . . . . . . 141,000 331,000
West-10 Business Center II, Wirt Rd. at I-10 . . . . . . . . . . . . . 83,000 149,000
West Loop Commerce Center, W. Loop N. at I-10. . . . . . . . . . . . . 34,000 91,000
610 and 11th St. Warehouse, Loop 610 at 11th St. . . . . . . . . . . . 105,000 202,000
610 and 11th St. Warehouse, Loop 610 at 11th St. (20%) . . . . . . . . 48,000 * 108,000 *
TEXAS (EXCLUDING HOUSTON & HARRIS CO.), TOTAL. . . . . . . . . . . . . 2,725,000 6,756,000
Randol Mill Place, Randol Mill Road, Arlington . . . . . . . . . . . . 55,000 178,000
Braker 2 Business Center, Kramer Ln. at Metric Blvd., Austin . . . . . 27,000 93,000
Corporate Center I & II, Putnam Dr. at Research Blvd., Austin. . . . . 117,000 326,000
Rutland 10 Business Center, Metric Blvd. At Centimeter Circle, Austin. 54,000 139,000
Southpark A,B,C., East St. Elmo Rd. at Woodward St., Austin. . . . . . 78,000 238,000
Southpoint Service Center, Burleson at Promontory Point Dr., Austin. . 54,000 234,000
Walnut Creek Office Park, Cameron Rd., Austin. . . . . . . . . . . . . 34,000 122,000
Table continued on next page
9
Building
Name and Location Area Land Area
-------------------------------------------------------------------- -------- ---------
TEXAS (EXCLUDING HOUSTON & HARRIS CO.), (CONT'D)
Wells Branch Corporate Center, Wells Branch Pkwy., Austin. . . . . . 60,000 183,000
Midway Business Center, Midway at Boyington, Carrollton. . . . . . . 142,000 309,000
River Pointe Mini-Storage, I-45 at Hwy. 336, Conroe. . . . . . . . . 32,000 * 97,000 *
Manana Office Center, I-35 at Manana, Dallas . . . . . . . . . . . . 223,000 473,000
Newkirk Service Center, Newkirk near N.W. Hwy., Dallas . . . . . . . 106,000 223,000
Northaven Business Center, Northaven Rd., Dallas . . . . . . . . . . 151,000 178,000
Northeast Crossing Off/Svc Ctr., East N.W. Hwy. at Shiloh, Dallas. . 79,000 199,000
Northwest Crossing Off/Svc Ctr., N.W. Hwy. at Walton Walker, Dallas. 127,000 290,000
Redbird Distribution Center, Joseph Hardin Drive, Dallas . . . . . . 111,000 234,000
Regal Distribution Center, Leston Avenue, Dallas . . . . . . . . . . 203,000 318,000
Space Center Industrial Park, Pulaski St. at Irving Blvd., Dallas. . 265,000 426,000
Walnut Trails Business Park, Walnut Hill Lane, Dallas. . . . . . . . 103,000 311,000
DFW-Port America, Port America Place, Grapevine. . . . . . . . . . . 46,000 110,000
Jupiter Service Center, Jupiter near Plano Pkwy., Plano. . . . . . . 78,000 234,000
Sherman Plaza Business Park, Sherman at Phillips, Richardson . . . . 100,000 312,000
Interwest Business Park, Alamo Downs Parkway, San Antonio. . . . . . 218,000 742,000
O'Connor Road Business Park, O'Connor Road, San Antonio. . . . . . . 150,000 459,000
Nasa One Business Center, Nasa Road One at Hwy. 3, Webster . . . . . 112,000 328,000
TENNESSEE, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . 679,000 1,470,000
Southwide Warehouse # 2, Federal Compress Ind. Pk., Memphis. . . . . 124,000 302,000
Southwide Warehouse # 3, Federal Compress Ind. Pk., Memphis. . . . . 112,000 209,000
Southwide Warehouse # 4, Federal Compress Ind. Pk., Memphis. . . . . 120,000 220,000
Thomas Street Warehouse, N. Thomas Street, Memphis . . . . . . . . . 164,000 423,000
Crowfarn Drive Warehouse, Crowfarn Dr. at Getwell Rd., Memphis . . . 159,000 316,000
NEVADA, TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,000 162,000
East Sahara Off/Svc Ctr., E. Sahara Blvd., Las Vegas . . . . . . . . 66,000 162,000
OFFICE BUILDING
HOUSTON & HARRIS COUNTY, TOTAL . . . . . . . . . . . . . . . . . . . 121,000 171,000
Citadel Plaza, N. Loop 610 at Citadel Plaza Dr.. . . . . . . . . . . 121,000 171,000
MULTI-FAMILY RESIDENTIAL
TEXAS (EXCLUDING HOUSTON & HARRIS CO.), TOTAL. . . . . . . . . . . . 236,000 595,000
River Pointe Drive at I-45, Conroe . . . . . . . . . . . . . . . . . 236,000 595,000
Table continued on next page
10
Building
Name and Location Area Land Area
------------------------------------------------------ -------- ---------
UNIMPROVED LAND
HOUSTON & HARRIS COUNTY, TOTAL . . . . . . . . . . . . 3,646,000
Beltway 8 at W. Belfort. . . . . . . . . . . . . . . . 166,000
Bissonnet at Wilcrest. . . . . . . . . . . . . . . . . 773,000
Citadel Plaza at 610 N. Loop . . . . . . . . . . . . . 137,000
East Orem . . . . . . . . . . . . . . . . . . . . . . 122,000
Kirkwood at Dashwood Dr. . . . . . . . . . . . . . . . 322,000
Lockwood at Navigation . . . . . . . . . . . . . . . . 163,000
Mesa Rd. at Tidwell. . . . . . . . . . . . . . . . . . 901,000
Mowery at Cullen . . . . . . . . . . . . . . . . . . . 118,000
Northwest Fwy. at Gessner. . . . . . . . . . . . . . . 422,000
Redman at W. Denham. . . . . . . . . . . . . . . . . . 17,000
Sheldon at I-10. . . . . . . . . . . . . . . . . . . . 19,000
W. Little York at I-45 . . . . . . . . . . . . . . . . 322,000
W. Little York at N. Houston-Rosslyn . . . . . . . . . 19,000
W. Loop N. at I-10 . . . . . . . . . . . . . . . . . . 145,000
TEXAS (EXCLUDING HOUSTON & HARRIS CO.), TOTAL. . . . . 1,498,000
McDermott Drive at Custer Rd., Allen . . . . . . . . . 145,000
River Pointe Dr. at I-45, Conroe . . . . . . . . . . . 186,000
US Hwy 380 (University Drive) and US Hwy 75, McKinney. 135,000
F.M. 544 at Murphy Rd., Murphy . . . . . . . . . . . . 230,000
Dalrock Rd. at Lakeview Parkway, Rowlett . . . . . . . 381,000
Hillcrest, Sunshine at Quill, San Antonio. . . . . . . 171,000
Hwy. 3 at Hwy. 1765, Texas City. . . . . . . . . . . . 184,000
Hwy 377 at Bursey Road, Watauga. . . . . . . . . . . . 66,000
LOUISIANA, TOTAL . . . . . . . . . . . . . . . . . . . 5,311,000
Siegen Lane at Honore Ln., Baton Rouge . . . . . . . . 1,000,000
U.S. Hwy. 171 at Parish, DeRidder. . . . . . . . . . . 462,000
Ambassador Caffery Pkwy. at Congress St., Lafayette. . 196,000
Prien Lake Plaza, Lake Charles . . . . . . . . . . . . 860,000
Manhattan Blvd. at Gretna Blvd., Harvey. . . . . . . . 894,000
Woodland Hwy., Plaquemines Parish (5%) . . . . . . . . 822,000 *
70th. St. at Youree Dr., Shreveport. . . . . . . . . . 1,077,000
Table continued on next page
11
Building
Name and Location Area Land Area
--------------------------------------------------------------- --------- ---------
UNIMPROVED LAND (CONT'D.)
ARIZONA, TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . 424,000
Broadway Rd. and Ellsworth Rd., Mesa. . . . . . . . . . . . . . 58,000
Warner Rd. at Val Vista, Gilbert. . . . . . . . . . . . . . . . 366,000
COLORADO, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . 1,021,000
Jordan Rd. at Lincoln Ave., Parker (38%). . . . . . . . . . . . 84,000 *
Smoky Hill Rd. at S. Picadilly St., Aurora. . . . . . . . . . . 108,000 *
Hwy. 86 at Elizabeth St., Elizabeth . . . . . . . . . . . . . . 25,000 *
Hampton at Santa Fe, Englewood, Colorado. . . . . . . . . . . . 226,000 *
120th at Washington, Thornton, Colorado . . . . . . . . . . . . 578,000 *
ILLINOIS, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . 34,000
Lincoln Place Centre, SBI Rt. 159 at Matilda, Fairview Heights. 34,000
NEVADA, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . 601,000
Eastern Ave. at Horizon Ridge Pkwy., Henderson. . . . . . . . . 601,000
ALL PROPERTIES-BY LOCATION
GRAND TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . 29,981,000 125,885,000
Houston & Harris County . . . . . . . . . . . . . . . . . . . . 11,165,000 43,149,000
Texas (excluding Houston & Harris County) . . . . . . . . . . . 9,626,000 37,797,000
Louisiana . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,343,000 10,815,000
Nevada. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,758,000 7,992,000
Arizona . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,092,000 5,352,000
New Mexico. . . . . . . . . . . . . . . . . . . . . . . . . . . 952,000 4,024,000
Oklahoma. . . . . . . . . . . . . . . . . . . . . . . . . . . . 702,000 3,173,000
Tennessee . . . . . . . . . . . . . . . . . . . . . . . . . . . 699,000 1,554,000
Arkansas. . . . . . . . . . . . . . . . . . . . . . . . . . . . 624,000 2,568,000
Kansas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 784,000 3,418,000
Missouri. . . . . . . . . . . . . . . . . . . . . . . . . . . . 338,000 1,101,000
Florida . . . . . . . . . . . . . . . . . . . . . . . . . . . . 413,000 1,743,000
Colorado. . . . . . . . . . . . . . . . . . . . . . . . . . . . 268,000 2,214,000
Maine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124,000 482,000
Illinois. . . . . . . . . . . . . . . . . . . . . . . . . . . . 93,000 503,000
Table continued on next page
12
Building
Area Land Area
---------- ----------
ALL PROPERTIES-BY CLASSIFICATION
GRAND TOTAL. . . . . . . . . . . 29,981,000 125,885,000
Shopping Centers . . . . . . . . 22,771,000 94,493,000
Industrial . . . . . . . . . . . 6,853,000 18,091,000
Multi-Family Residential . . . . 236,000 595,000
Office Building. . . . . . . . . 121,000 171,000
Unimproved Land. . . . . . . . . 12,535,000
Note: Total square footage includes 7,875,000 square feet of land leased and
450,000 square feet of building leased from others.
* Denotes partial ownership. WRI's interest is 50% except where noted.
The square feet figures represent WRI's proportionate ownership of the
entire property.
13
General. In 2000, no single property accounted for more than 2.7% of WRI's
total assets or 2.6% of gross revenues. Four properties, in the aggregate,
represented approximately 9.2% of our gross revenues for the year ended December
31, 2000; otherwise, none of the remaining properties accounted for more than
1.8% of our gross revenues during the same period. The weighted average
occupancy rate for all of our improved properties as of December 31, 2000 was
93.0%.
Substantially all of our properties are owned directly by WRI (subject in some
cases to mortgages), although our interests in some properties are held
indirectly through interests in joint ventures or under long-term leases. In
our opinion, our properties are well maintained and in good repair, suitable for
their intended uses, and adequately covered by insurance.
Shopping Centers. As of December 31, 2000, WRI owned or operated under
long-term leases, either directly or through its interests in joint ventures,
197 shopping centers with approximately 22.8 million square feet of building
area. The shopping centers were located predominantly in Texas with other
locations in Louisiana, Arizona, Nevada, Arkansas, New Mexico, Oklahoma,
Tennessee, Kansas, Colorado, Missouri, Illinois, Florida and Maine.
WRI's shopping centers are primarily neighborhood and community shopping centers
that 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 that 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. Our 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 that have existing populations
sufficient to support retail activities of the types conducted in our centers.
We have approximately 4,600 separate leases with 3,500 different tenants,
including national and regional supermarket chains, drug stores, discount
department stores, junior department stores, other nationally or regionally
known stores and a great variety of other regional and local retailers. The
large number of locations offered by WRI and the types of traditional anchor
tenants help attract prospective new tenants. Some of the national and regional
supermarket chains, which are tenants in our centers, include Albertson's,
Fiesta, Smith's (Kroger), H.E.B., Kroger Company, Randall's Food Markets
(Safeway), Fry's Food Stores (Kroger), Publix, King Soopers, Inc. (Kroger) and
Safeway. In addition to these supermarket chains, WRI's nationally and
regionally known retail store tenants include Eckerd, Walgreen and Osco
(Albertson's) drugstores; Kmart discount stores; Bealls, Palais Royal and
Weiner's junior department stores; Kohl's, Marshall's, Office Depot, Office Max,
Babies 'R' Us, Ross, Stein Mart and T.J. Maxx off-price specialty stores;
Luby's, Piccadilly and Furr's cafeterias; Academy sporting goods; CompUSA, Best
Buy, Conn's and Circuit City electronics stores; FAO Schwarz toy store; Cost
Plus Imports; Linens 'N Things; Barnes & Noble bookstore; Border's Books; Home
Depot; Bed, Bath & Beyond; and the following restaurant chains: Arby's, Burger
King, Champ's, Church's Fried Chicken, Dairy Queen, Domino's, Jack-in-the-Box,
CiCi Pizza, Long John Silver's, McDonald's, Olive Garden, Outback Steakhouse,
Pizza Hut, Shoney's, Steak & Ale, Taco Bell and Whataburger. We also lease
space in 3,000 to 10,000 square foot areas to national chains such as the
Limited Store, The Gap, One Price Stores, Old Navy, Eddie Bauer and Radio Shack.
Other merchants in our portfolio include Al's Formal Wear, Anna's Linens, TGF
Haircutters, Clothestime, Big Lots, Jason's Deli, Dollar General, Dress Barn,
Family Dollar, Shoe Cents, Fashion Bug, Cloth World, Fox Photo, GNC, Goodyear
Tire, Luther's Bar-B-Q, Mattress Firm, Fantastic Sam's, One Price Clothing
Stores, Paper Warehouse, Rent-A-Center, Sally Beauty, Souper Salad, Black Eyed
Pea, Men's Wearhouse and Tuesday Morning. The diversity of our tenant base is
also evidenced in the fact that our largest tenant accounted for only 3.53% of
rental revenue during 2000 including our share of revenue from unconsolidated
joint ventures and excluding our partners share of revenue from consolidated
joint ventures.
WRI'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, with each of these periods 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.
14
Most of our 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 these
items). They also provide for the payment of additional rentals based on a
percentage of the tenants' sales. Utilities are generally paid directly by
tenants except where common metering exists with respect to a center. In this
case, WRI makes the payments for the utilities and is reimbursed by the tenants
on a monthly basis. Generally, our leases prohibit the tenant from assigning or
subletting its space. They also require the tenant to use its space for the
purpose designated in its lease agreement and to operate its business on a
continuous basis. Some of the lease agreements with major tenants contain
modifications of these basic provisions in view of the financial condition,
stability or desirability of those tenants. Where a tenant is granted the right
to assign its space, the lease agreement generally provides that the original
lessee will remain liable for the payment of the lease obligations under that
lease agreement.
During 2000, WRI acquired seven shopping centers and made investments in joint
ventures that acquired three additional retail centers. The investment in
retail properties totaled $184.5 million with our share being $141.3 million,
which added 1.4 million square feet to our portfolio. These joint ventures have
been accounted for under the equity method.
In March, we purchased a 315,000 square foot shopping center in Plano, Texas, a
suburb of Dallas. Redevelopment of this center is underway with the demolition
of a portion of the buildings, construction of a 64,000 square foot Kroger
supermarket and extensive renovation and remerchandising of the remainder of the
project. This redevelopment should be completed in the latter half of 2001.
Also in March, WRI formed a strategic joint venture with an institutional
investor to acquire $200 million of real estate assets using limited leverage.
As general partner in the joint venture, WRI is responsible for the acquisition
process, as well as, the on-going leasing and management activities of the
acquired properties. In June, two shopping centers were acquired with this
institutional joint venture partner. Our first purchase was the Pavilions at
San Mateo in Albuquerque, New Mexico. This 196,000 square foot center is
anchored by Circuit City, Linens 'n Things, CompUSA and Old Navy. This
represents WRI's fifth property in Albuquerque and our sixth in New Mexico. The
second shopping center is Lone Star Pavilion in College Station, Texas. This
107,000 square foot shopping center is anchored by Best Buy, Barnes and Noble
and Office Depot.
In April, we acquired Kohl's Shopping Center in Topeka, Kansas. This 116,000
square foot shopping center is anchored by an 80,700 square foot Kohl's
Department Store and a 35,000 square foot Barnes and Noble.
In August, WRI purchased Regency Park Shopping Center in Overland Park, Kansas.
This 202,000 square foot center is anchored by Micro Center, Border's Books and
Music, Marshall's and Old Navy and represents our fifth property in this market.
Later in August, WRI in partnership with its institutional joint venture partner
acquired Rockwall Market Center located in Rockwall, Texas, a suburb of Dallas.
Rockwall Market Center contains 217,000 square feet and is anchored by Linens 'n
Things, Ross Dress for Less, Office Max, Petco, Michael's Crafts, Pier 1 Imports
and Old Navy.
Also in August, WRI purchased the Market at Southside, our first shopping center
in the Orlando area. Anchored by a Walgreen's and Ross Dress for Less, this
97,000 square foot center is part of a 310,000 square foot center anchored by
Office Depot, Publix and Albertson's.
In December, we purchased three shopping centers. The largest was the 465,000
square foot Westland Fair shopping center, located in Las Vegas. We have
managed the center for the past three years and have planned a major renovation
and redevelopment of the property, including the demolition of several buildings
and the development of approximately 370,000 square feet of new buildings. The
redeveloped center will contain approximately 561,000 square feet when completed
and will feature a 220,000 square foot Super Wal-Mart and a 115,000 square foot
Home Depot. With the acquisition of Westland Fair, WRI now owns eight shopping
centers and one industrial property in the Las Vegas market.
15
WRI also acquired the 136,000 square foot first phase of Rainbow Plaza located
in Las Vegas, Nevada. WRI now owns this entire 416,000 square foot center, as
the Company acquired Phase II of the project in 1997. Anchor tenants for the
entire property include Home Depot, Lucky's Supermarket, Rite Aid Drugs, JC
Penny Home Store and the Q Club.
Lastly, we acquired Killeen Marketplace, a 115,000 square foot shopping center
in Killeen, Texas, which is located approximately 60 miles north of Austin. The
center, which was developed in 2000, is anchored by Best Buy, Ross Dress for
Less and Staples. The center is strategically located across from Killeen Mall.
In 2000, WRI acquired land at nine separate locations for the development of
retail shopping centers. Two of these acquisitions were made in joint ventures
with our development partner in Denver. These joint ventures are included in
the consolidated financial statements of WRI as we exercise financial and
operating control. Total expenditures on these nine projects during 2000
totaled $41.0 million. At the beginning of 2001, we have 13 retail developments
underway which, upon completion, will represent an investment of approximately
$140 million and will add 1.2 million square feet to the portfolio. These
projects will come on-line beginning in early 2001 through mid 2002.
Industrial Properties. At December 31, 2000, WRI owned 55 industrial projects.
The acquisition of five industrial office service centers added .5 million
square feet to our industrial portfolio and represented an investment of $23.4
million. We purchased three office/service facilities in Austin, Texas, which
added 160,000 square feet to the portfolio. With these acquisitions, we now
have seven industrial and two retail properties in Austin, comprising more than
813,000 square feet of building area. WRI also acquired two industrial
properties in San Antonio, Texas totaling 368,000 square feet. The two
industrial acquisitions bring WRI's total property holdings in San Antonio to
seven including five shopping centers and the two newly acquired industrial
properties.
Office Building. We own 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 our headquarters. Other than WRI, the major tenant of the
building is Bank of America, which currently occupies 9% of the office space.
Multi-family Residential Properties. WRI completed development of a 260-unit
luxury apartment complex within a multi-use master-planned project we developed
in a suburb north of Houston. An unrelated Houston-based multi-family operator
manages the property on our behalf.
Unimproved Land. At December 31, 2000, WRI owned, directly or through its
interest in a joint venture, 38 parcels of unimproved land aggregating
approximately 12.5 million square feet of land area located in Texas, Louisiana,
Arizona, Colorado, Illinois and Nevada. These properties include approximately
3.5 million square feet of land adjacent to certain of our existing developed
properties, which may be used for expansion of these developments, as well as
approximately 9.0 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 or industrial projects, and WRI intends to
emphasize the development of these parcels for such purpose.
16
ITEM 3. LEGAL PROCEEDINGS
WRI is involved in various matters of litigation arising in the normal course of
business. While WRI is unable to predict with certainty the amounts involved,
WRI's management and counsel are of the opinion that, when such litigation is
resolved, WRI's resulting liability, if any, will not have a material effect on
WRI's consolidated financial statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
None.
17
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information with respect to the executive
officers of WRI as of February 23, 2001. All executive officers of WRI are
elected annually by our Board of Trust Managers and serve until the successors
are elected and qualified.
Name Age Position
Stanford Alexander. . . . . 72 Chairman
Martin Debrovner. . . . . . 64 Vice Chairman
Andrew M. Alexander . . . . 44 President/Chief Executive Officer
Stephen C. Richter. . . . . 46 Senior Vice President/Chief Financial Officer
Mr. S. Alexander is the Chairman of WRI's Board of Trust Managers. He has been
employed by WRI 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 WRI since 1962. Mr. Alexander is President, Chief
Executive Officer and a Trust Manager of Weingarten Properties Trust.
Mr. Debrovner became Vice Chairman of WRI on February 25, 1997. Prior to
assuming such position, Mr. Debrovner served as President and Chief Operating
Officer since January 1, 1993. Mr. Debrovner served as President of Weingarten
Realty Management Company since WRI's reorganization in December 1984. Prior to
such time, Mr. Debrovner was an employee of WRI 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 WRI's operations. Mr. Debrovner is also a Trust
Manager of Weingarten Properties Trust.
Mr. A. Alexander became Chief Executive Officer of WRI on January 1, 2001. He
has also served as President since February 25, 1997. Prior to his present
position, Mr. Alexander was Executive Vice President/Asset Management of WRI and
President of Weingarten Realty Management Company. Prior to such time, Mr.
Alexander was Senior Vice President/Asset Management of the Management Company.
He also served as Vice President of the Management Company and, prior to WRI's
reorganization in December 1984, was Vice President and an employee of WRI since
1978. Mr. Alexander has been primarily involved with leasing operations at both
WRI and the Management Company. Mr. Alexander is also a Trust Manager of
Weingarten Properties Trust and a Director of Academy Sports and Outdoors, Inc.
Mr. Richter became Senior Vice President and Chief Financial Officer on April
15, 2000. Prior to his present position, Mr. Richter served as Senior Vice
President/Financial Administration and Treasurer since January 1, 1997 and Vice
President/Financial Administration and Treasurer of WRI since January 1, 1993.
For the five years prior to that time, he served as Vice President/Financial
Administration and Treasurer of the Management Company.
18
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON SHARES OF BENEFICIAL INTEREST AND
RELATED SHAREHOLDER MATTERS
WRI's common shares are listed and traded on the New York Stock Exchange under
the symbol "WRI". The number of holders of record of our common shares as of
February 23, 2001 was 3,201. The high and low sale prices per share of our
common shares, as reported on the New York Stock Exchange composite tape, and
dividends per share paid for the fiscal quarters indicated were as follows:
HIGH LOW DIVIDENDS
------ ------ ----------
2000:
Fourth. . . . . . . . . . . . . $45.00 $40.13 $ 0.75
Third . . . . . . . . . . . . . 43.00 40.06 0.75
Second. . . . . . . . . . . . . 42.50 36.56 0.75
First . . . . . . . . . . . . . 40.75 34.56 0.75
1999:
Fourth. . . . . . . . . . . . . $39.38 $37.00 $ 0.71
Third . . . . . . . . . . . . . 42.44 37.25 0.71
Second. . . . . . . . . . . . . 43.44 38.25 0.71
First . . . . . . . . . . . . . 45.63 38.38 0.71
19
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected consolidated financial data with respect
to WRI and should be read in conjunction with "Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations," the Consolidated
Financial Statements and accompanying Notes in "Item 8. Financial Statements and
Supplementary Data" and the financial schedules included elsewhere in this Form
10-K/A.
(Amounts in thousands, except per share amounts)
Years Ended December 31,
2000 1999 1998 1997 1996
----------- ----------- ----------- ----------- ---------
(As restated, see (1) below)
Revenues (primarily real estate rentals) $ 252,245 $ 225,478 $ 193,003 $ 168,368 $144,963
----------- ----------- ----------- ----------- ---------
Expenses:
Depreciation and amortization . . . . . 54,597 48,668 41,051 36,995 32,852
Interest. . . . . . . . . . . . . . . . 43,190 32,792 33,338 29,695 21,674
Other . . . . . . . . . . . . . . . . . 77,341 69,774 60,396 53,270 45,385
----------- ----------- ----------- ----------- ---------
Total . . . . . . . . . . . . . . . . 175,128 151,234 134,785 119,960 99,911
----------- ----------- ----------- ----------- ---------
Income from operations. . . . . . . . . . 77,117 74,244 58,218 48,408 45,052
Equity in earnings of joint ventures. . . 4,150 3,655 4,469 4,249 4,278
Minority interest . . . . . . . . . . . . (2,648) (2,173) (1,258) (1,018) (955)
Gain on sales of property and securities. 382 20,594 328 3,327 5,563
Extraordinary charge. . . . . . . . . . . (190) (1,392)
----------- ----------- ----------- ----------- ---------
Net income. . . . . . . . . . . . . . . . $ 79,001 $ 96,130 $ 60,365 $ 54,966 $ 53,938
=========== =========== =========== =========== =========
Net income available to common
shareholders. . . . . . . . . . . . . . $ 58,961 $ 76,537 $ 54,484 $ 54,966 $ 53,938
=========== =========== =========== =========== =========
Cash flows from operations. . . . . . . . $ 122,624 $ 113,554 $ 93,054 $ 85,846 $ 74,636
=========== =========== =========== =========== =========
Per share data - basic:
Income before extraordinary charge. . $ 2.20 $ 2.88 $ 2.09 $ 2.06 $ 2.03
Net income. . . . . . . . . . . . . . $ 2.20 $ 2.87 $ 2.04 $ 2.06 $ 2.03
Weighted average number of shares . . 26,775 26,690 26,667 26,638 26,555
Per share data - diluted:
Income before extraordinary charge. . $ 2.19 $ 2.86 $ 2.08 $ 2.05 $ 2.03
Net income. . . . . . . . . . . . . . $ 2.19 $ 2.85 $ 2.03 $ 2.05 $ 2.03
Weighted average number of shares . . 26,931 26,890 26,869 26,771 26,598
Cash dividends per common share . . . . . $ 3.00 $ 2.84 $ 2.68 $ 2.56 $ 2.48
Property (at cost). . . . . . . . . . . . $1,730,617 $1,484,177 $1,278,466 $1,092,869 $946,755
Total assets. . . . . . . . . . . . . . . $1,517,581 $1,320,095 $1,117,723 $ 948,230 $833,664
Debt. . . . . . . . . . . . . . . . . . . $ 792,353 $ 592,978 $ 513,361 $ 503,287 $385,349
Other data:
Funds from operations (2)
Net income available to common
shareholders . . . . . . . . . . . . $ 58,961 $ 76,537 $ 54,484 $ 54,966 $ 53,938
Depreciation and amortization . . . . 55,344 49,256 41,580 37,544 33,414
Gain on sales of property
and securities. . . . . . . . . . . . (382) (20,596) (885) (3,327) (5,563)
Extraordinary charge . . . . . . . . . 190 1,392
----------- ----------- ----------- ----------- ---------
Total . . . . . . . . . . . . . . . $ 113,923 $ 105,387 $ 96,571 $ 89,183 $ 81,789
=========== =========== =========== =========== =========
(1) As discussed in Note 17 to the Consolidated Financial Statements, WRI has
revised its consolidation policies with respect to certain joint ventures
and partnerships and, accordingly, has restated its previously issued
consolidated financial statements. There is no change in net income or
shareholders' equity. The effects of the restatement on the amounts shown
in the preceding table are as follows (in thousands):
20
(Amounts in thousands, except per share amounts)
Years Ended December 31,
2000 1999 1998 1997 1996
----------- ----------- ---------- ---------- ----------
Revenues, as previously reported . . . . . $ 273,374 $ 236,651 204,709 180,228 156,632
Adjustment . . . . . . . . . . . . . . . . (21,129) (11,173) (11,706) (11,860) (11,669)
Revenues, as restated. . . . . . . . . . . 252,245 225,478 193,003 168,368 144,963
Depreciation and amortization, as
previously reported
previously reported. . . . . . . . . . . 58,518 50,659 42,949 38,985 34,774
Adjustment . . . . . . . . . . . . . . . . (3,921) (1,991) (1,898) (1,990) (1,922)
----------- ----------- ---------- ---------- ----------
Depreciation and amortization, as restated 54,597 48,668 41,051 36,995 32,852
Interest expense, as previously reported . 45,545 32,941 33,900 30,274 22,219
Adjustment . . . . . . . . . . . . . . . . (2,355) (149) (562) (579) (545)
----------- ----------- ---------- ---------- ----------
Interest expense, as restated. . . . . . . 43,190 32,792 33,338 29,695 21,674
Other expense, as previously reported. . . 82,651 72,685 63,505 56,410 48,566
Adjustment . . . . . . . . . . . . . . . . (5,310) (2,911) (3,109) (3,140) (3,181)
----------- ----------- ---------- ---------- ----------
Other expense, as restated . . . . . . . . 77,341 69,774 60,396 53,270 45,385
Income from operations, as
previously reported. . . . . . . . . . . 86,660 80,366 64,355 54,559 51,073
Adjustment . . . . . . . . . . . . . . . . (9,543) (6,122) (6,137) (6,151) (6,021)
----------- ----------- ---------- ---------- ----------
Income from operations, as restated. . . . 77,117 74,244 58,218 48,408 45,052
Equity in earnings of joint ventures, as
previously reported
Adjustment . . . . . . . . . . . . . . . . 4,150 3,655 4,469 4,249 4,278
Equity in earnings of joint ventures,
----------- ----------- ---------- ---------- ----------
as restated. . . . . . . . . . . . . . . 4,150 3,655 4,469 4,249 4,278
Gain on sales of property, as
previously reported. . . . . . . . . . . 382 20,877 1,443 3,327 5,563
Adjustment (283) (1,115)
----------- ----------- ---------- ---------- ----------
Gain on sales of property, as restated . . 382 20,594 328 3,327 5,563
Minority interest, as previously reported. 8,041 4,923 4,041 2,920 2,698
Adjustment . . . . . . . . . . . . . . . . (5,393) (2,750) (2,783) (1,902) (1,743)
----------- ----------- ---------- ---------- ----------
Minority interest, as restated . . . . . . 2,648 2,173 1,258 1,018 955
Property (at cost), as previously reported 1,906,431 1,595,346 1,335,495 1,151,430 1,003,889
Adjustment . . . . . . . . . . . . . . . . (175,814) (111,169) (57,029) (58,561) (57,134)
----------- ----------- ---------- ---------- ----------
Property (at cost), as restated. . . . . . 1,730,617 1,484,177 1,278,466 1,092,869 946,755
Total assets, as previously reported . . . 1,646,011 1,382,709 1,139,475 970,682 855,266
Adjustment . . . . . . . . . . . . . . . . (128,430) (62,614) (21,752) (22,452) (21,602)
----------- ----------- ---------- ---------- ----------
Total assets, as restated. . . . . . . . . 1,517,581 1,320,095 1,117,723 948,230 833,664
Debt, as previously reported . . . . . . . 869,627 595,843 518,555 510,513 392,423
Adjustment . . . . . . . . . . . . . . . . (77,274) (2,865) (5,194) (7,226) (7,074)
----------- ----------- ---------- ---------- ----------
Debt, as restated. . . . . . . . . . . . . 792,353 592,978 513,361 503,287 385,349
(2) The Board of Governors of the National Association of Real Estate
Investment Trusts defines funds from operations as net income (loss)
computed in accordance with generally accepted accounting principles,
excluding gains or losses from sales of property, plus real estate related
depreciation and amortization, and after adjustments for unconsolidated
partnerships and joint ventures. In addition, NAREIT recommends that
extraordinary items not be considered in arriving at FFO. We calculate FFO
21
in a manner consistent with the NAREIT definition. Most industry analysts
and equity REITs, including Weingarten, believe FFO is an alternative
measure of performance relative to other REITs. There can be no assurance
that FFO presented by Weingarten is comparable to similarly titled measures
of other REITs. FFO should not be considered as an alternative to net
income or other measurements under GAAP as an indicator of our operating
performance or to cash flows from operating, investing, or financing
activities as a measure of liquidity. FFO does not reflect working capital
changes, cash expenditures for capital improvements, or principal payments
on indebtedness.
22
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
WRI's financial statements for the years ended December 31, 2000, 1999 and 1998
have been restated as discussed in Note 17 to the accompanying consolidated
financial statements. The information included in the following discussion
gives effect to that restatement. The following discussion should be read in
conjunction with the consolidated financial statements and notes thereto and the
comparative summary of selected financial data appearing elsewhere in this
report. Historical results and trends which might appear should not be taken as
indicative of future operations.
Weingarten Realty Investors owned or operated under long-term leases 197
shopping centers, 55 industrial properties, one multi-family residential project
and one office building at December 31, 2000. Of our 254 developed properties,
187 are located in Texas (including 99 in Houston and Harris County). Our
remaining properties are located in Louisiana (11), Arizona (11), Nevada (9),
Arkansas (6), New Mexico (6), Kansas (5), Colorado (5), Oklahoma (4), Tennessee
(4), Missouri (2), Florida (2), Illinois (1) and Maine (1). WRI has nearly
4,600 leases and 3,500 different tenants. Leases for our properties range from
less than a year for smaller spaces to over 25 years for larger tenants; leases
generally include minimum lease payments and contingent rentals for payment of
taxes, insurance and maintenance and for an amount based on a percentage of the
tenants' sales. The majority of our anchor tenants are supermarkets,
drugstores, value-oriented apparel and discount stores and other retailers,
which generally sell basic necessity-type items.
CAPITAL RESOURCES AND LIQUIDITY
WRI anticipates that cash flows from operating activities will continue to
provide adequate capital for all dividend payments in accordance with REIT
requirements. Cash on hand, internally-generated cash flow, borrowings under
our existing credit facilities, issuance of unsecured debt and the use of
project financing, as well as other debt and equity alternatives, will provide
the necessary capital to achieve planned growth. Cash flow from operating
activities as reported in the Statements of Consolidated Cash Flows increased to
$122.6 million in 2000 from $113.6 million for 1999 and $93.1 million for 1998.
During 2000, WRI invested $164.8 million through the acquisition of operating
properties. We acquired seven shopping centers and made investments in joint
ventures that acquired three additional retail centers. The investment in retail
properties totaled $184.5 million with our share being $141.3 million, which
added 1.4 million square feet to our portfolio. The acquisition of five
industrial office service centers added 500,000 square feet to our industrial
portfolio and represented an investment of $23.4 million. Two of the shopping
centers purchased in 2000 will be extensively redeveloped, which will require
the investment of an additional $10.8 million by WRI over the next 12 to 18
months.
In 2000, WRI acquired land at nine separate locations for the development of
retail shopping centers. Two of these acquisitions were made in joint ventures
with our development partner in Denver. These joint ventures are included in
the consolidated financial statements of WRI as we exercise financial and
operating control. Our share of total expenditures on these nine projects
during 2000 totaled $41.0 million. We also invested an additional $17.0 million
in projects which were under development at the beginning of 2000, and $37.3
million in renovating, expanding and maintaining our existing properties. At
the beginning of 2001, we have 13 retail developments underway which, upon
completion, will represent an investment of approximately $140 million and will
add 1.2 million square feet to the portfolio. These projects will come on-line
beginning in early 2001 through mid 2002. We expect to invest approximately
$67.0 million in these properties during 2001.
Capitalized expenditures for acquisitions, new development and additions to the
existing portfolio were, in millions, $240.0, $213.2 and $176.0 during 2000,
1999 and 1998, respectively. All of the acquisitions and new development during
2000 were either initially financed under WRI's revolving credit facilities or
funded with excess cash flow from our existing portfolio of properties. WRI's
share of capitalized expenditures for unconsolidated joint ventures and
partnerships were, in millions: $20.2, $11.1 and $.5 during 2000, 1999 and 1998.
With respect to other 2001 capital needs, WRI signed a contract in January of
2001 to acquire 19 supermarket-anchored shopping centers in California for a
total purchase price of $277.5 million, including the assumption of
approximately $132 million of debt. This acquisition is expected to close in
March of 2001 and will add approximately 2.5 million square feet to our
portfolio. In addition, we completed the purchase of a 488,000 square foot
retail center in Orlando, Florida in February of 2001 for $54.0 million.
23
Common and preferred dividends increased to $100.4 million in 2000, compared to
$95.4 million in 1999 and $77.3 million in 1998. WRI satisfied its REIT
requirement of distributing at least 95% of ordinary taxable income for each of
the three years ended December 31, 2000. Our dividend payout ratio on common
equity for 2000, 1999 and 1998 approximated 70.5%, 71.9% and 74.4%,
respectively, based on funds from operations for the applicable year.
In January 2000, WRI issued $10.5 million of ten-year 8.25% fixed-rate,
unsecured medium term notes. In connection with this debt issuance, we entered
into a ten-year interest rate swap agreement with a notional amount of $10.5
million to swap 8.25% fixed-rate interest for floating-rate interest. On
January 4, 2001, we terminated this swap with the counter-party, resulting in
the receipt of $.9 million. As the swap was accounted for as a hedge of the
medium term note, the gain will be amortized over the remaining life of the
note, which lowers the effective interest rate on the note to 7.4%.
In July 2000, the Company issued a two-year $25 million variable-rate, unsecured
medium term note that bears interest at 50 basis points over LIBOR and a
three-year $25 million variable-rate note that bears interest at 60 basis points
over LIBOR. At the time of issuance, the interest rates were 7.23% and 7.33%,
respectively. During November and December of 2000, we entered into interest
rate swap agreements, which fix the interest rates on these notes. We have
determined these swap agreements are highly effective in offsetting future
variable interest cash flows of the medium term notes and, accordingly, they
have been designated as cash flow hedges. These swaps fix the interest rates at
7.02% and 6.80% for the two and three year notes, respectively.
In December 2000, we completed three medium term note transactions totaling $36
million which included a twelve-year $11 million note bearing interest at 7.5%,
a ten-year $10 million note bearing interest at 7.4% and a ten-year $15 million
note bearing interest at 7.5%.
In conjunction with acquisitions completed during 2000, we assumed $30.7 million
of non-recourse debt secured by the related properties. The weighted average
interest rate on this debt is 8.1%, and the average remaining life is 5.0 years.
Additionally, non-recourse debt secured by retail properties held by joint
ventures in which we participate was issued during 2000, our share of which
totaled 17.8 million. The weighted average interest rate on our share of this
debt is 7.9%.
WRI had a $200 million unsecured revolving credit facility, which expired in
November of 2000. Concurrently, we entered into a new three-year $350 million
unsecured revolving credit facility with a syndicate of banks. This facility
will mature in November of 2003 and contains a one-year extension, at our sole
option. The facility bears interest at a rate of LIBOR plus 50 basis points.
Additionally, the facility includes a competitive bid option that allows WRI to
hold auctions at lower pricing for short-term funds for up to $175 million. WRI
also has an unsecured and uncommitted overnight credit facility totaling $20
million to be used for cash management purposes. WRI will maintain adequate
funds available under the $350 million revolving credit facility at all times to
cover the outstanding balance under the $20 million facility. WRI has three
interest rate swap contracts with an aggregate notional amount of $40 million
which fix interest rates on a like amount of the $350 million revolver at 7.8%.
One contract with a notional amount of $20 million expires in May of 2001 and
the other two contracts expire in June of 2004. We have determined these swap
agreements are highly effective in offsetting future variable interest cash
flows of the revolving credit debt and, accordingly, they have been designated
as cash flow hedges.
Effective March 1, 2000, WRI finalized an unsecured $100 million revolving
credit agreement with a bank. No amounts were outstanding under this line at
year-end, and the agreement expired on February 28, 2001.
In January 2001, WRI sold 4.5 million common shares of beneficial trust in a
secondary public offering. In February, the underwriters exercised their
over-allotment option and purchased an additional 200,000 shares. Net proceeds
to WRI totaled $188.1 million based on a price of $42.19 per share and were used
to pay down amounts outstanding under our $350 million revolving credit
facility.
We have a $400 million shelf registration statement on file under which $113.4
million was available after the sale of 4.7 million common shares in early 2001.
Total debt outstanding increased to $792.4 million at December 31, 2000 from
$593.0 million at December 31, 1999, primarily to fund acquisitions and new
development. Total debt at December 31, 2000 includes $572.8 million on which
interest rates are fixed, including the net effect of our $100.5 million of
interest rate swaps, and $219.6 million which bears interest at variable rates.
Additionally, debt totaling $123.2 million is secured by operating properties
while the remaining $669.1 million is unsecured.
24
WRI will continue to closely monitor both the debt and equity markets and
carefully consider its available alternatives, including both public and private
placements.
RESULTS OF OPERATIONS
Rental revenues increased 10.5%, or $23.1 million, from $220.6 million in 1999
to $243.6 million in 2000 and by 16.3%, or $31.0 million, from $189.6 million in
1998. Of these increases, property acquisitions and new development contributed
$21.5 million in 2000 and $27.0 million in 1999. The remaining portion of these
increases is due to activity at our existing properties. Occupancy of our
shopping centers increased to 93.4% at December 31, 2000 from 91.3% at the end
of 1999. Occupancy of our industrial portfolio increased slightly from 91.0% at
the end of 1999 to 91.2% at December 31, 2000 and occupancy of the total
portfolio increased from 91.3% to 93.0% at year-end. These increases are due to
a generally strong leasing environment in most of the markets in which we
operate, and more specifically, the leasing of a substantial portion of large
vacancies that arose in the latter part of 1999. In 2000, we completed 1,008
renewals or new leases comprising 4.9 million square feet at an average rental
rate increase of 10.0%. Net of the amortized portion of capital costs for
tenant improvements, the increase averaged 6.4%. Occupancy of our total
portfolio decreased from 93.1% at December 31, 1998 to 91.3% at the end of 1999.
In 1999, we completed 894 renewals or new leases comprising 4.8 million square
feet at an average rental rate increase of 9.5%. Net of the amortized portion
of capital costs for tenant improvements, the increase averaged 5.9%.
Interest income totaled $5.5 million in 2000, $3.1 million in 1999 and $2.1
million in 1998. The increase in income in 2000 and 1999 was due to the funding
of interim loans to our joint venture partners, pending the completion of
permanent financing with third parties. Interest income should decrease in 2001
as this permanent financing was finalized during 2000.
Direct costs and expenses of operating our properties (i.e., operating and ad
valorem tax expenses) increased to $69.1 million in 2000 from $62.3 million in
1999 and $53.3 million in 1998. These increases are primarily due to property
acquired and developed during these periods. Overall, direct operating costs
and expenses as a percentage of rental revenues were 28% in 2000, 1999 and 1998.
Bad debt expense increased from $.2 million in 1999 to $.9 million in 2000 due
to tenant bankruptcies in 2000, primarily Weiners and Stage Stores. This
resulted in an increase in the allowance for doubtful accounts from $.9 million
in 1999 to $1.9 million in 2000.
Depreciation and amortization have increased to $54.6 million in 2000 from $48.7
million in 1999 and $41.1 million in 1998, also as a result of the properties
acquired and developed during these periods. General and administrative expense
has increased to $8.2 million in 2000 from $7.5 million in 1999 and $7.1 million
in 1998. These increases are due to normal compensation increases as well as
increases in staffing necessitated by the growth in the portfolio.
Gross interest costs, before capitalization of interest to development projects,
increased from $35.8 million in 1999 to $47.4 million in 2000. This increase in
interest cost was due mainly to an increase in the average debt outstanding from
$499.7 million for 1999 to $652.9 million for 2000. The weighted-average
interest rate increased from 7.14% in 1999 to 7.23% in 2000. Interest expense,
net of amounts capitalized, increased $10.4 million from 1999. The amount of
interest capitalized increased to $4.2 million in 2000 from $3.0 million in 1999
due to an increase in the amount of development activity during the year.
Comparing 1999 to 1998, gross interest costs increased from $34.7 million in
1998 to $35.8 million in 1999. This was due to an increase in the average debt
outstanding from $488.6 million in 1998 to $499.7 million in 1999. The
weighted-average interest rate increased between the two periods from 7.10% in
1998 to 7.14% in 1999. Interest expense, net of amounts capitalized, decreased
$.5 million from 1998. The amount of interest capitalized increased to $3.0
million in 1999 from $1.4 million in 1998 due to an increase in the amount of
development activity during the year.
The gain on sale of $20.6 million in 1999 was due primarily to the sale of 28.5
acres of undeveloped land and an 80% interest in certain industrial properties
to American National Insurance Company.
FUNDS FROM OPERATIONS
The Board of Governors of the National Association of Real Estate Investment
Trusts defines funds from operations as net income (loss) computed in accordance
with generally accepted accounting principles, excluding gains or losses from
sales of property, plus real estate related depreciation and amortization, and
after adjustments for unconsolidated partnerships and joint ventures. In
addition, NAREIT recommends that extraordinary items not be considered in
arriving at FFO. We calculate FFO in a manner consistent with the NAREIT
definition. Most industry analysts and equity REITs, including Weingarten,
believe FFO is an alternative measure of performance relative to other REITs.
25
There can be no assurance that FFO presented by Weingarten is comparable to
similarly titled measures of other REITs. FFO should not be considered as an
alternative to net income or other measurements under GAAP as an indicator of
our operating performance or to cash flows from operating, investing, or
financing activities as a measure of liquidity. FFO does not reflect working
capital changes, cash expenditures for capital improvements, or principal
payments on indebtedness.
Funds from operations is calculated as follows (in thousands):
2000 1999 1998
--------- --------- --------
Net income available to common shareholders . . . . . . . . . . . . $ 58,961 $ 76,537 $54,484
Depreciation and amortization . . . . . . . . . . . . . . . . . . . 53,624 48,099 40,387
Depreciation and amortization of unconsolidated joint ventures. . . 1,720 1,157 1,193
Gain on sales of property . . . . . . . . . . . . . . . . . . . . . (382) (20,594) (328)
Gain on sales of property of unconsolidated joint ventures (2) (557)
Extraordinary charge - early retirement of debt 190 1,392
--------- --------- --------
Funds from operations . . . . . . . . . . . . . . . . 113,923 105,387 96,571
Funds from operations attributable to operating
partnership units . . . . . . . . . . . . . . . . . . . . . . . . 305 318 95
--------- --------- --------
Funds from operations assuming conversion of OP units $114,228 $105,705 $96,666
========= ========= ========
Weighted average shares outstanding - basic . . . . . . . . . . . . 26,775 26,690 26,667
Effect of dilutive securities:
Share options and awards. . . . . . . . . . . . . . . . . . . 52 58 132
Operating partnership units . . . . . . . . . . . . . . . . . 104 142 70
--------- --------- --------
Weighted average shares outstanding - diluted . . . . . . . . . . . 26,931 26,890 26,869
========= ========= ========
EFFECTS OF INFLATION
The rate of inflation was relatively unchanged in 2000. WRI has structured its
leases, however, in such a way as to remain largely unaffected should
significant inflation occur. Most of the leases contain percentage rent
provisions whereby WRI receives rentals based on the tenants' gross sales. Many
leases provide for increasing minimum rentals during the terms of the leases
through escalation provisions. In addition, many of WRI's leases are for terms
of less than ten years, which allows WRI to adjust rental rates to changing
market conditions when the leases expire. Most of WRI's leases require the
tenants to pay their proportionate share of operating expenses and ad valorem
taxes. As a result of these lease provisions, increases due to inflation, as
well as ad valorem tax rate increases, generally do not have a significant
adverse effect upon WRI's operating results.
NEW ACCOUNTING PRONOUNCEMENTS
26
In June 1998, Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities", as amended, was issued.
This statement requires that an entity recognize all derivatives as either
assets or liabilities and measure the instruments at fair value. The accounting
for changes in fair value of a derivative depends upon its intended use. WRI
adopted the provisions of this statement in the first quarter of fiscal year
2001. Based upon valuations at December 31, 2000, WRI would record liabilities
totaling $1.9 million with a corresponding entry to other comprehensive income
at that date relating to interest rate swaps that have been designated as cash
flow hedges. The effect of this pronouncement on net income will be
insignificant.
In December 1999, the SEC Staff Accounting Bulletin No. 101, "Revenue
Recognition in Financial Statements" was issued. This bulletin requires that
revenue based on a percentage of tenants' sales be recognized only after the
tenant exceeds their sales breakpoint. Implementation of this bulletin reduced
revenue by an estimated $.6 million in 2000 and will have no effect on 2001.
In July 2000, the Emerging Issues Task Force of the Financial Accounting
Standards Board reached a consensus on EITF Issue No. 00-1,"Investor Balance
Sheet and Income Statement Display under the Equity Method for Investments in
Certain Partnerships and Other Ventures." This consensus requires that the
proportionate share method of presenting balance sheet and income statement
information for partnerships and other ventures in which entities have joint
interest and control be discontinued, except in limited circumstances. WRI was
required to conform with the guidance provided in this Issue effective December
31, 2000. Accordingly, the consolidated financial statements for all periods
presented in this Annual Report have been restated to conform with the revised
presentation.
FORWARD-LOOKING STATEMENTS
This Annual Report includes certain forward-looking statements reflecting WRI's
expectations in the near term that involve a number of risks and uncertainties;
however, many factors may materially affect the actual results, including demand
for our properties, changes in rental and occupancy rates, changes in property
operating costs, interest rate fluctuations, and changes in local and general
economic conditions. Accordingly, there is no assurance that WRI's expectations
will be realized.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
WRI uses fixed and floating-rate debt to finance its capital requirements.
These transactions expose WRI to market risk related to changes in interest
rates. Derivative financial instruments are used to manage a portion of this
risk, primarily interest rate swap agreements with major financial institutions.
These swap agreements expose WRI to credit risk in the event of non-performance
by the counter-parties to the swaps. We do not engage in the trading of
derivative financial instruments in the normal course of business. At December
31, 2000, WRI had fixed-rate debt of $572.8 million and variable-rate debt of
$219.6 million, after adjusting for the effect of interest rate swaps. We also
had variable-rate notes receivable from joint venture partners totaling $23.8
million at year-end. In the event interest rates were to increase 100 basis
points, net income, funds from operations and future cash flows would decrease
$2.0 million based upon the variable-rate debt and notes receivable outstanding
at December 31, 2000.
27
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
To the Board of Trust Managers and Shareholders of
Weingarten Realty Investors:
We have audited the accompanying consolidated balance sheets of Weingarten
Realty Investors (the "Company") as of December 31, 2000 and 1999, and the
related statements of consolidated income, shareholders' equity, and cash flows
for each of the three years in the period ended December 31, 2000. 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 auditing standards generally
accepted in the United States of America. 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, 2000 and 1999, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2000 in conformity
with accounting principles generally accepted in the United States of America.
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.
As discussed in Note 17, the accompanying consolidated financial statements
have been restated.
DELOITTE & TOUCHE LLP
Houston, Texas
February 28, 2001 (October 24, 2001 as to Note 17)
28
STATEMENTS OF CONSOLIDATED INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Years Ended December 31,
-------------------------------
2000 1999 1998
--------- --------- ---------
(As restated, Note 17)
Revenues:
Rentals . . . . . . . . . . . . . . . . . . . . . . $243,633 $220,552 $189,563
Interest income. . . . . . . . . . . . . . . . . . 5,476 3,097 2,060
Other. . . . . . . . . . . . . . . . . . . . . . . 3,136 1,829 1,380
Total. . . . . . . . . . . . . . . . . . . . . . 252,245 225,478 193,003
Expenses:
Depreciation and amortization. . . . . . . . . . . . 54,597 48,668 41,051
Interest. . . . . . . . . . . . . . . . . . . . . . 43,190 32,792 33,338
Operating. . . . . . . . . . . . . . . . . . . . . . 37,689 34,480 29,432
Ad valorem taxes. . . . . . . . . . . . . . . . . . 31,439 27,781 23,845
General and administrative. . . . . . . . . . . . . 8,213 7,513 7,119
Total. . . . . . . . . . . . . . . . . . . . . . 175,128 151,234 134,785
Income Before Equity in Earnings of Joint Ventures,
Minority Interest in Income of Partnerships, Gain
on Sales of Property, and Extraordinary Charge. . 77,117 74,244 58,218
Equity in Earnings of Joint Ventures . . . . . . . . 4,150 3,655 4,469
Minority Interest in Income of Partnerships. . . . . (2,648) (2,173) (1,258)
Gain on Sales of Property. . . . . . . . . . . . . . 382 20,594 328
Income Before Extraordinary Charge. . . . . . . . . . 79,001 96,320 61,757
--------- --------- ---------
Extraordinary Charge (early retirement of debt) . . . (190) (1,392)
Net Income. . . . . . . . . . . . . . . . . . . . . . $ 79,001 $ 96,130 $ 60,365
--------- --------- ---------
Net Income Available to Common Shareholders . . . . . $ 58,961 $ 76,537 $ 54,484
========= ========= =========
Net Income Per Common Share - Basic:
Income Before Extraordinary Charge . . . . . . . $ 2.20 $ 2.88 $ 2.09
Extraordinary Charge. . . . . . . . . . . . . . . (.01) (.05)
--------- --------- ---------
Net Income. . . . . . . . . . . . . . . . . . . . $ 2.20 $ 2.87 $ 2.04
========= ========= =========
Net Income Per Common Share - Diluted:
Income Before Extraordinary Charge . . . . . . . $ 2.19 $ 2.86 $ 2.08
Extraordinary Charge . . . . . . . . . . . . . . (.01) (.05)
--------- --------- ---------
Net Income . . . . . . . . . . . . . . . . . . . $ 2.19 $ 2.85 $ 2.03
========= ========= =========
See Notes to Consolidated Financial Statements.
29
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
December 31,
------------------------
2000 1999
----------- -----------
(As restated, Note 17)
ASSETS
Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,730,617 $1,484,177
Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . (365,344) (322,386)
----------- -----------
Property - net . . . . . . . . . . . . . . . . . . . . . . . . . . 1,365,273 1,161,791
Investment in Real Estate Joint Ventures . . . . . . . . . . . . . . . 27,871 18,782
----------- -----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,393,144 1,180,573
----------- -----------
Notes Receivable from Real Estate Joint Ventures and Partnerships. . . 38,636 69,158
Unamortized Debt and Lease Costs . . . . . . . . . . . . . . . . . . . 36,970 29,773
Accrued Rent and Accounts Receivable (net of allowance for doubtful
accounts of $1,884 in 2000 and $909 in 1999) . . . . . . . . . . . . 24,485 19,373
Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . 7,321 4,603
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,025 16,615
----------- -----------
Total. . . . . . . . . . . . . . . . . . . . . . . . . $1,517,581 $1,320,095
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 792,353 $ 592,978
Accounts Payable and Accrued Expenses. . . . . . . . . . . . . . . . . 63,884 57,059
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,891 4,637
----------- -----------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 860,128 654,674
----------- -----------
Minority Interest. . . . . . . . . . . . . . . . . . . . . . . . . . 27,586 19,519
----------- -----------
Commitments and Contingencies
Shareholders' Equity:
Preferred Shares of Beneficial Interest - par value, $.03 per share;
shares authorized: 10,000
7.44% Series A cumulative redeemable preferred shares of
beneficial interest; 3,000 shares issued and outstanding;
liquidation preference $25 per share . . . . . . . . . . . . 90 90
7.125% Series B cumulative redeemable preferred shares of
beneficial interest; 3,600 shares issued and 3,552 and
3,600 shares outstanding in 2000 and 1999; liquidation
preference $25 per share. . . . . . . . . . . . . . . . . . 107 108
7.0% Series C cumulative redeemable preferred shares of
beneficial interest; 2,300 shares issued and 2,266 and
2,297 shares outstanding in 2000 and 1999; liquidation
preference $50 per share. . . . . . . . . . . . . . . . . . 68 69
Common Shares of Beneficial Interest - par value, $.03 per share;
shares authorized: 150,000; shares issued and outstanding:
26,921 in 2000 and 26,695 in 1999. . . . . . . . . . . . . . . . 807 801
Capital Surplus. . . . . . . . . . . . . . . . . . . . . . . . . . 758,363 753,030
Accumulated Dividends in Excess of Net Income. . . . . . . . . . . (129,568) (108,193)
Deferred Compensation Obligation. . . . . . . . . . . . . . . . . . (3)
----------- -----------
Shareholders' Equity. . . . . . . . . . . . . . . . . . . . . . 629,867 645,902
----------- -----------
Total. . . . . . . . . . . . . . . . . . . . . . . . . $1,517,581 $1,320,095
=========== ===========
See Notes to Consolidated Financial Statements.
30
STATEMENTS OF CONSOLIDATED CASH FLOWS
(AMOUNTS IN THOUSANDS)
Years Ended December 31,
----------------------------------
2000 1999 1998
---------- ---------- ----------
(As restated, Note 17)
Cash Flows from Operating Activities:
Net income $ 79,001 $ 96,130 $ 60,365
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 54,597 48,668 41,051
Equity in earnings of joint ventures (4,150) (3,655) (4,469)
Minority interest in income of partnerships 2,648 2,173 1,258
Gain on sales of property (382) (20,594) (328)
Extraordinary charge (early retirement of debt) 190 1,392
Changes in accrued rent and accounts receivable (5,171) (4,215) (463)
Changes in other assets (15,577) (13,078) (12,717)
Changes in accounts payable and accrued expenses 6,067 5,595 5,410
Other, net 5,591 2,340 1,555
---------- ---------- ----------
Net cash provided by operating activities 122,624 113,554 93,054
---------- ---------- ----------
Cash Flows from Investing Activities:
Investment in properties (228,068) (185,667) (171,601)
Notes receivable:
Advances (41,786) (20,602) (12,598)
Collections 75,054 9,761 4,408
Proceeds from sales and disposition of property 3,368 15,010 1,109
Purchase of marketable debt securities (14,951)
Proceeds from sales of marketable debt securities 15,000 12,229
Real estate joint ventures and partnerships:
Investments (12,475) (3,368) (882)
Distributions 3,241 4,057 3,665
Other, net (514) (4) 241
---------- ---------- ----------
Net cash used in investing activities (201,180) (165,813) (178,380)
---------- ---------- ----------
Cash Flows from Financing Activities:
Proceeds from issuance of:
Debt 211,557 125,898 136,363
Common shares of beneficial interest 1,398 546 301
Preferred shares of beneficial interest 111,263 159,552
Principal payments of debt (28,161) (85,532) (134,210)
Common and preferred dividends paid (100,376) (95,397) (77,347)
Other, net (3,144) (628) (354)
---------- ---------- ----------
Net cash provided by financing activities 81,274 56,150 84,305
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 2,718 3,891 (1,021)
Cash and cash equivalents at January 1 4,603 712 1,733
---------- ---------- ----------
Cash and cash equivalents at December 31 $ 7,321 $ 4,603 $ 712
========== ========== ==========
See Notes to Consolidated Financial Statements.
31
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
(AMOUNTS IN THOUSANDS)
Years Ended December 31, 2000, 1999 and 1998
Preferred Common Accumulated
Shares of Shares of Dividends in Deferred
Beneficial Beneficial Capital Excess of Compensation
Interest Interest Surplus Net Income Obligation
------------ ----------- --------- -------------- --------------
Balance, January 1, 1998 . . . . . . . . . . $ 800 $481,130 $ (91,944)
Net income . . . . . . . . . . . . . . . . 60,365
Issuance of Series A preferred shares . . $ 90 72,422
Issuance of Series B preferred shares . . . 108 86,932
Shares issued under benefit plans . . . . . 696
Dividends declared - common shares . . . . (71,466)
Dividends declared - preferred shares . . . (5,881)
Adjustment for cumulative effect of adopting
accounting for deferred compensation
plan:
Common shares held in plan . . . . . $ (3,531)
Deferred compensation obligation . . . 3,458
------------ ----------- --------- -------------- --------------
Balance, December 31, 1998 . . . . . . . . . 198 800 641,180 (108,926) (73)
Net income . . . . . . . . . . . . . . . . 96,130
Issuance of Series C preferred shares . . . 69 111,119
Shares issued under benefit plans . . . . 1 883
Dividends declared - common shares . . . . (75,804)
Dividends declared - preferred shares . . . (19,593)
Redemption of Series C preferred shares . . (152)
Deferred compensation obligation . . . . . 70
------------ ----------- --------- -------------- --------------
Balance, December 31, 1999 . . . . . . . . . 267 801 753,030 (108,193) (3)
Net income . . . . . . . . . . . . . . . . 79,001
Shares issued under benefit plans . . . . . 2 1,783
Shares issued in exchange for interest
in limited partnerships . . . . . . . . . 2 3,554
Dividends declared - common shares. . . . . (80,336)
Dividends declared - preferred shares . . . (20,040)
Redemption of Series B preferred shares. . (1) 1 (2)
Redemption of Series C preferred shares. . (1) 1 (2)
Deferred compensation obligation . . . . . 3
------------ ----------- --------- -------------- --------------
Balance, December 31, 2000 . . . . . . . . . $ 265 $ 807 $758,363 $ (129,568) $ -
============ =========== ========= ============== ==============
See Notes to Consolidated Financial Statements.
32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Weingarten Realty Investors, a Texas real estate investment trust, is engaged in
the acquisition, development and management of real estate, primarily anchored
neighborhood and community shopping centers and, to a lesser extent, industrial
properties. Over 69% of the square footage of WRI's portfolio is in Texas, with
the remainder located primarily throughout the southwestern part of the United
States. WRI's major tenants include supermarkets, drugstores and other
retailers who generally sell basic necessity-type commodities. WRI currently
operates and intends to operate in the future as a real estate investment trust.
Basis of Presentation
In July 2000, the Emerging Issues Task Force of the Financial Accounting
Standards Board reached a consensus on EITF Issue No. 00-1, "Investor Balance
Sheet and Income Statement Display under the Equity Method for Investments in
Certain Partnerships and Other Ventures." This consensus requires that the
proportionate share method of presenting balance sheet and income statement
information for partnerships and other ventures in which entities have joint
interest and control be discontinued, except in limited circumstances. WRI was
required to conform with the guidance provided in this Issue effective December
31, 2000. Accordingly, the consolidated financial statements for all periods
have been restated to include the accounts of WRI and its subsidiaries, as well
as 100% of the accounts of joint ventures and partnerships over which WRI
exercises financial and operating control and the related amounts of minority
interests. All significant intercompany balances and transactions have been
eliminated. Investments in joint ventures and partnerships where WRI has the
ability to exercise significant influence but does not exercise financial and
operating control are accounted for using the equity method.
Revenue Recognition
Rental revenue is generally recognized on a straight-line basis over the life of
the lease. Revenue from tenant reimbursements of taxes, maintenance expenses
and insurance is recognized in the period the related expense is recorded.
Revenue based on a percentage of tenants' sales was estimated and accrued
ratably over the year in 1999 and 1998. Beginning January 1, 2000, such revenue
was recognized only after the tenant exceeded their sales breakpoint, in
accordance with the SEC Staff Accounting Bulletin No. 101, "Revenue Recognition
in Financial Statements." Implementation of this bulletin reduced revenue by an
estimated $.6 million in 2000 and will have no effect on 2001.
Property
Real estate assets are stated at cost less accumulated depreciation, which, in
the opinion of management, is not in excess of the individual property's
estimated undiscounted future cash flows, including estimated proceeds from
disposition. Depreciation is computed using the straight-line method, generally
over estimated useful lives of 18-50 years for buildings and 10-20 years for
parking lot surfacing and equipment. Major replacements where the betterment
extends the useful life of the asset are capitalized and the replaced asset and
corresponding accumulated depreciation are removed from the accounts. All other
maintenance and repair items are charged to expense as incurred.
WRI's properties are reviewed for impairment if events or changes in
circumstances indicate that the carrying amount of the property may not be
recoverable. In such an event, a comparison is made of the current and
projected operating cash flows of each such property into the foreseeable future
on an undiscounted basis to the carrying amount of such property. Such carrying
amount would be adjusted, if necessary, to estimated fair value to reflect an
impairment in the value of the asset.
Capitalization
Carrying charges, principally interest and ad valorem taxes, on land under
development and buildings under construction are capitalized as part of land
under development and buildings and improvements.
33
Deferred Charges
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.
Use of Estimates
The preparation of financial statements requires management to make use of
estimates and assumptions that affect amounts reported in the financial
statements as well as certain disclosures. Actual results could differ from
those estimates.
Per Share Data
Net income per common share - basic is computed using net income available to
common shareholders and the weighted average shares outstanding. Net income per
common share - diluted includes the effect of potentially dilutive securities
for the periods indicated, as follows (in thousands):
2000 1999 1998
------- ------- -------
Numerator:
Net income available to common shareholders - basic . $58,961 $76,537 $54,484
Income attributable to operating partnership units . . 131 141 37
------- ------- -------
Net income available to common shareholders - diluted $59,092 $76,678 $54,521
======= ======= =======
Denominator:
Weighted average shares outstanding - basic . . . . . 26,775 26,690 26,667
Effect of dilutive securities:
Share options and awards . . . . . . . . . . . . . 52 58 132
Operating partnership units . . . . . . . . . . . 104 142 70
------- ------- -------
Weighted average shares outstanding - diluted . . . . 26,931 26,890 26,869
======= ======= =======
Options to purchase 893,401, 550,200 and 13,200 common shares in 2000, 1999 and
1998, respectively, were not included in the calculation of net income per
common share - diluted as the exercise prices were greater than the average
market price for the year.
On January 29, 2001, WRI issued 4.5 million common shares of beneficial interest
in a secondary public offering. On February 27, 2001, an additional 200,000
shares were sold upon exercise of a portion of the over-allotment option. Had
these transactions occurred on January 1, 2000, earnings per common share-basic
and earnings per common share-diluted for the year ended December 31, 2000 would
have both decreased by $.07.
Statements of Cash Flows
WRI considers all highly liquid investments with original maturities of three
months or less as cash equivalents. WRI issued .1 million common shares of
beneficial interest in 2000 valued at $3.6 million in exchange for interests in
limited partnerships which had been formed to acquire operating properties. We
assumed debt and/or capital lease obligations totaling $30.7 million, $39.1
million and $6.7 million in connection with purchases of property during 2000,
1999 and 1998, respectively. We issued limited partnership interests in
exchange for property valued at $4.0 million in 1998, and in connection with the
sale of improved properties in 1999, we received notes receivable totaling $41.4
million.
Comprehensive Income
WRI adopted Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" in 1998. For the years presented, WRI did not have
significant amounts of comprehensive income.
34
New Accounting Pronouncement
In June 1998, Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities", as amended, was issued.
This statement requires that an entity recognize all derivatives as either
assets or liabilities and measure the instruments at fair value. The accounting
for changes in fair value of a derivative depends upon its intended use. WRI
adopted the provisions of this statement in the first quarter of fiscal year
2001. Based upon valuations at December 31, 2000, WRI would record liabilities
totaling $1.9 million with a corresponding entry to other comprehensive income
at that date relating to interest rate swaps that have been designated as cash
flow hedges. The effect of this pronouncement on net income and funds from
operations will be insignificant.
Reclassifications
Certain reclassifications of prior years' amounts have been made to conform with
the current year presentation.
NOTE 2. DEBT
WRI's debt consists of the following (in thousands):
DECEMBER 31,
------------------
2000 1999
-------- --------
Fixed-rate debt payable to 2015 at 6.0% to 10.0% . . . . . $472,271 $423,906
Variable-rate unsecured notes payable. . . . . . . . . . . 50,000
Unsecured notes payable under revolving credit agreements. 230,100 114,000
Obligations under capital leases . . . . . . . . . . . . . 33,467 48,467
Industrial revenue bonds payable to 2015 at 5.0% to 7.1% . 6,010 6,141
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . 505 464
-------- --------
Total. . . . . . . . . . . . . . . . . . . . . . . . $792,353 $592,978
======== ========
In November 2000, WRI entered into a new unsecured $350 million revolving credit
agreement with a syndicate of banks. The agreement expires in November 2003,
but we can request a one-year extension of the agreement, solely at our option.
We also have an agreement for an unsecured and uncommitted overnight credit
facility totaling $20 million with a bank to be used for cash management
purposes. We will maintain adequate funds available under our revolving credit
facilities at all times to cover the outstanding balance under the $20 million
facility. WRI also has letters of credit totaling $19.3 million outstanding
under the $350 million revolving credit facility at December 31, 2000. The
revolving credit agreements are subject to normal banking terms and conditions
and do not adversely restrict our operations or liquidity. On March 1, 2000, we
finalized an additional $100 million revolving credit agreement with a bank,
which expired February 28, 2001. There were no amounts outstanding under this
line at year-end.
At December 31, 2000, the variable interest rate for notes payable under the $20
million revolving credit agreement was 7.0%. During 2000, the maximum balance
and weighted average balance outstanding under all three credit facilities were
$232.9 million and $152.5 million, respectively, at an average interest rate of
6.97%. WRI made cash payments for interest on debt, net of amounts capitalized,
of $40.8 million in 2000, $31.9 million in 1999 and $32.4 million in 1998.
Various leases and properties and current and future rentals from those leases
and properties collateralize certain debt. At December 31, 2000 and 1999, the
carrying value of such property aggregated $221.6 million and $175.1 million,
respectively.
WRI has three interest rate swap contracts with an aggregate notional amount of
$40 million that serve as a hedge against changes in interest rates on a like
amount of our $350 million variable-rate revolving credit facility. Such
contracts, which expire through 2004, have been outstanding since their purchase
in 1992 and fix the interest rate at 7.8%. We also entered into two additional
interest rate swaps for a notional amount of $25 million each which serve as
hedges against changes in interest rates on two separate $25 million
variable-rate medium term notes which mature in 2002 and 2003. These swaps fix
the interest rates on the medium term notes at 7.0% and 6.8% for the two-year
and three-year notes, respectively. The interest rate swaps increased interest
expense and decreased net income by $.5 million in 2000, $1.0 million in 1999
and $.9 million in 1998. The interest rate swaps increased the average interest
rate for our debt by .1% for 2000 and .2% for 1999 and 1998. WRI could be
exposed to credit losses in the event of non-performance by the counter-party;
however, the likelihood of such non-performance is remote.
35
In January 2000, WRI issued $10.5 million of ten-year 8.25% fixed-rate,
unsecured medium term notes. In connection with this debt issuance, we entered
into a ten-year interest rate swap agreement with a notional amount of $10.5
million to swap 8.25% fixed-rate interest for floating-rate interest. On
January 4, 2001, we terminated this swap with the counter-party, resulting in
the receipt of $.9 million. As the swap was accounted for as a hedge of the
medium term note, the gain will be amortized over the remaining life of the
note, which lowers the effective interest rate on the note to 7.4%.
In July 2000, the Company issued a two-year $25 million variable-rate, unsecured
medium term note that bears interest at 50 basis points over LIBOR and a
three-year $25 million variable-rate note that bears interest at 60 basis points
over LIBOR. At the time of issuance, the interest rates were 7.23% and 7.33%,
respectively. During November and December of 2000, we entered into interest
rate swap agreements which fix the interest rates on these notes.
In December 2000, we completed three fixed-rate medium term note transactions
totaling $36 million which included a twelve-year $11 million note bearing
interest at 7.5%, a ten-year $10 million note bearing interest at 7.4% and a
ten-year $15 million note bearing interest at 7.5%.
In conjunction with acquisitions completed during 2000, we assumed $30.7 million
of non-recourse debt secured by the related properties. The weighted average
interest rate on this debt is 8.1%, and the average remaining life is 5.0 years.
Additionally, ten-year non-recourse debt secured by retail properties held by
joint ventures in which we participate was issued during 2000, our share of
which totaled $17.8 million. The weighted average interest rate on this debt is
7.90%.
In the third quarter of 1999, WRI filed a $400 million shelf registration
statement with the SEC, which allows for the issuance of debt or equity
securities or warrants. The unused portion of the shelf registration was $311.7
million at December 31, 2000 and $113.4 million following the sale of 4.7
million common shares in early 2001.
WRI's debt can be summarized as follows (in thousands):
DECEMBER 31,
--------------------
2000 1999
--------- ---------
As to interest rate (including the effects of
interest rate swaps):
Fixed-rate debt . . . . . . . . . . . . . . $ 572,783 $ 499,906
Variable-rate debt. . . . . . . . . . . . . . 219,570 93,072
--------- ---------
Total . . . . . . . . . . . . . . . . . . $ 792,353 $ 592,978
========= =========
As to collateralization:
Unsecured debt. . . . . . . . . . . . . . . $ 669,106 $ 481,464
Secured debt. . . . . . . . . . . . . . . . 123,247 111,514
--------- ---------
Total . . . . . . . . . . . . . . . . . . $ 792,353 $ 592,978
========= =========
36
Scheduled principal payments on our debt (excluding $230.1 million due under our
revolving credit agreements and $21 million of capital leases) are due during
the following years (in thousands):
2001. . . . . . . $ 34,244
2002. . . . . . . 69,503
2003. . . . . . . 53,671
2004. . . . . . . 52,961
2005. . . . . . . 62,989
2006 through 2010 228,374
2011 through 2015 39,511
Various debt agreements contain restrictive covenants, the most restrictive of
which requires WRI to maintain a pool of qualifying assets, as defined, of not
less than 185% of unsecured debt. Other restrictions include minimum interest
and fixed charge coverage ratios, minimum unencumbered interest coverage ratios,
minimum net worth requirements and both secured and unsecured debt to total
asset value measures. Management believes that WRI is in compliance with all
restrictive covenants.
NOTE 3. PREFERRED SHARES
In February 1998, WRI issued $75 million of 7.44% Series A cumulative redeemable
preferred shares with a liquidation preference of $25 per share. The shares are
callable at WRI's option any time after March 31, 2003 and have no stated
maturity. In October 1998, WRI issued $90 million of 7.125% Series B cumulative
redeemable preferred shares with a liquidation preference of $25 per share and
no stated maturity. WRI can elect to redeem the shares anytime after October
20, 2003. The Series B shares are redeemable by the holder only upon their
death and are also redeemable in either cash or common shares at our option.
There are limitations on the number of shares per shareholder and in the
aggregate that may be redeemed per year.
In January 1999, WRI issued $115 million of 7.0% Series C cumulative redeemable
preferred shares with a liquidation preference of $50 per share and no stated
maturity. WRI can elect to redeem these shares anytime after March 15, 2004.
The redemption rights of the shareholders and the related restrictions are
effectively the same as for the Series B preferred shares.
The proceeds of these offerings were used to pay down amounts outstanding under
WRI's revolving credit facilities, to fund acquisition and new development
activity, to retire $35 million of 9.11% secured notes payable and to retire $82
million of variable-rate, medium term notes due in 2000. Any redemption of
preferred shares initiated by WRI must be funded with proceeds from an offering
of additional common or preferred shares.
NOTE 4. PROPERTY
WRI's property consists of the following (in thousands):
DECEMBER 31,
----------------------
2000 1999
---------- ----------
Land . . . . . . . . . . . $ 328,462 $ 274,047
Land held for development. 24,013 22,964
Land under development . . 42,430 14,755
Buildings and improvements 1,302,092 1,163,051
Construction in-progress . 33,620 9,360
---------- ----------
Total. . . . . . . . . . . $1,730,617 $1,484,177
========== ==========
37
The following carrying charges were capitalized (in thousands):
DECEMBER 31,
----------------------
2000 1999 1998
------ ------ ------
Interest . . . . $4,204 $3,037 $1,375
Ad valorem taxes 333 326 50
------ ------ ------
Total. . . $4,537 $3,363 $1,425
====== ====== ======
During 2000, WRI acquired ten shopping centers and five industrial properties.
Three of the shopping center acquisitions were made through investment in joint
ventures which are accounted for under the equity method. These transactions
added 2.0 million square feet to our portfolio and represent an investment of
$164.8 million. In 2000, WRI acquired land at nine separate locations for the
development of retail shopping centers. We also completed new development
totaling $22 million, which added 215,000 square feet to the portfolio.
NOTE 5. INVESTMENTS IN REAL ESTATE JOINT VENTURES
WRI owns interests in 17 joint ventures or limited partnerships where we do not
exercise financial and operating control. These partnerships are accounted for
under the equity method since WRI exercises significant influence. Our
interests range from 20% to 75% and, with the exception of our partnership with
American National Insurance Company ("AN") discussed further below, each venture
owns a single real estate asset. Combined condensed financial information of
these ventures is summarized as follows (in thousands):
December 31,
--------------------
2000 1999
--------- ---------
Combined Balance Sheets
Property . . . . . . . . . . . . . . . . . . . . . $176,247 $111,214
Accumulated Depreciation . . . . . . . . . . . . . (21,755) (18,384)
--------- ---------
Property - net . . . . . . . . . . . . . . . . 154,492 92,830
Other Assets . . . . . . . . . . . . . . . . . . . 10,800 6,043
--------- ---------
Total. . . . . . . . . . . . . . . . . . $165,292 $ 98,873
========= =========
Debt . . . . . . . . . . . . . . . . . . . . . . . $ 77,274 $ 2,866
Amounts Payable to WRI . . . . . . . . . . . . . . 16,622 57,434
Other Liabilities . . . . . . . . . . . . . . . . . 5,359 2,578
Accumulated Equity. . . . . . . . . . . . . . . . . 66,037 35,995
--------- ---------
Total. . . . . . . . . . . . . . . . . . . . $165,292 $ 98,873
========= =========
38
Years Ended December 31,
-------------------------
2000 1999 1998
------- ------- -------
Combined Statements of Income
Revenues. . . . . . . . . . . . . . . . . . . . $21,301 $10,960 $11,363
------- ------- -------
Expenses:
Depreciation and amortization . . . . . . . . 3,924 1,991 1,919
Operating . . . . . . . . . . . . . . . . . . 3,208 1,943 2,089
Interest . . . . . . . . . . . . . . . . . . . 6,427 1,538 1,681
Ad valorem taxes . . . . . . . . . . . . . . . 2,731 1,280 1,325
General and administrative . . . . . . . . . . 18 16 17
------- ------- -------
Total . . . . . . . . . . . . . . . . . . . . . 16,308 6,768 7,031
------- ------- -------
Gain on sales of property . . . . . . . . . . 5 1,114
------- ------- -------
Net Income . . . . . . . . . . . . . . . . . . $ 4,993 $ 4,197 $ 5,446
======= ======= =======
Our investment in real estate joint ventures, as reported on the balance sheets,
differs from our proportionate share of the joint ventures' underlying net
assets due to basis differentials which arose upon the transfer of assets from
WRI to the joint ventures. This basis differential which totaled $2.0 million
at December 31, 2000 and 1999, respectively, is depreciated over the useful
lives of the related assets.
Fees earned by WRI for the management of these joint ventures totaled, in
millions, $.4 in 2000, $.1 in 1999 and $.1 in 1998.
In 1999, we entered into a limited partnership, Weingarten-Murphy, LTD., which
was formed to develop a shopping center in a suburb of Dallas. WRI is the
general partner and owns a 50% interest in the partnership.
In December 1999, WRI sold seven industrial properties totaling 2.0 million
square feet to a limited partnership, AN/WRI PARTNERSHIP, LTD. in which we
retained 20% ownership. WRI serves as general partner. WRI loaned $41.4
million to the partnership until August of 2000, at which time the loan was
replaced with a ten-year non-recourse third party mortgage with an interest rate
of 8.1%.
In March 2000, WRI formed a strategic joint venture with an institutional
investor to acquire $200 million of real estate assets using limited leverage.
Each asset purchase is made by a separate limited partnership in which WRI has a
30% interest. As general partner in the joint venture, WRI is responsible for
the acquisition process, as well as, the on-going leasing and management
activities of the acquired properties, subject to limited partner approval of
significant transactions. Two shopping centers were acquired in June and one in
August of this year under this joint venture arrangement. WRI loaned these
three partnerships an aggregate of $32.0 million which was replaced with
ten-year non-recourse third party mortgages with a weighted average rate of
7.8%.
NOTE 6. RELATED PARTY TRANSACTIONS
WRI has mortgage bonds and notes receivable from WRI Holdings, Inc. of $3.8
million and $3.9 million, net of deferred gain of $3.0 million at December 31,
2000 and 1999, respectively. WRI and WRI Holdings share certain directors and
are under common management. Unimproved land and an investment in a joint
venture which owns and manages a motor hotel collateralize these receivables.
The bonds and notes bear interest at rates of 16% and prime plus 1%,
respectively. However, due to WRI Holdings' poor financial condition, WRI has
limited the recognition of interest income for financial statement purposes to
the amount of cash payments received. WRI did not receive any interest payments
in 1999 or 2000 and does not anticipate receiving such payments in the near
term. No interest income has been recognized for financial reporting purposes
in the last three years.
In the second quarter of 1998, WRI purchased 13.7 acres of undeveloped land from
WRI Holdings to be used for the development of a luxury apartment complex in
Conroe, Texas. The purchase price was $2.2 million and was based upon an
39
independent third party appraisal. WRI Holdings used the proceeds to pay down
amounts outstanding under mortgage bonds and notes payable to WRI.
In December 1999, undeveloped land from WRI Holdings of 102.6 acres was sold and
the net proceeds of $8.1 million were used to pay down amounts outstanding under
mortgage bonds and notes payable to WRI.
WRI's unrecorded receivable for interest on the mortgage bonds and notes
receivable was $23.6 million and $20.9 million at December 31, 2000 and 1999,
respectively. Interest income not recognized by WRI for financial reporting
purposes aggregated, in millions, $2.7, $4.2 and $4.8 for 2000, 1999 and 1998,
respectively. WRI does not anticipate recovery of the unrecorded receivable in
the future.
WRI owns interests in several joint ventures and partnerships. Notes receivable
from these entities bear interest at 8% to 10.5% at December 31, 2000, are due
at various dates through 2028 and are generally secured by real estate assets.
WRI recognized interest income on these notes as follows, in millions: $5.0 in
2000; $2.3 in 1999 and $1.5 in 1998.
The Chase Manhattan Bank is a significant participant in and the agent for the
banks that provide WRI's $350 million revolving credit agreement and is a
counter-party in four interest rate swap agreements with WRI. An executive
officer of J.P. Morgan Chase serves on the WRI Board of Trustees.
NOTE 7. FEDERAL INCOME TAX CONSIDERATIONS
Federal income taxes are not provided because WRI believes it qualifies as a
REIT under the provisions of the Internal Revenue Code. Shareholders of WRI
include their proportionate taxable income in their individual tax returns. As
a REIT, we must distribute at least 95% of our ordinary taxable income to our
shareholders and meet certain income source and investment restriction
requirements.
Taxable income differs from net income for financial reporting purposes
principally because of differences in the timing of recognition of interest, ad
valorem taxes, depreciation, rental revenue, pension expense and installment
gains on sales of property. As a result of these differences, the book value of
our net assets exceeds the tax basis by $4.6 million at December 31, 2000.
For federal income tax purposes, the cash dividends distributed to common
shareholders are characterized as follows:
2000 1999 1998
------ ------ ------
Ordinary income . . . . . . . . . . . . . 87.1% 84.2% 97.0%
Return of capital (generally non-taxable) . 12.7 4.0 2.1
Capital gain distributions . . . . . . . . .2 11.8 .9
------ ------ ------
Total . . . . . . . . . . . . . . . 100.0% 100.0% 100.0%
====== ====== ======
NOTE 8. LEASING OPERATIONS
WRI's lease terms range from less than one year for smaller tenant spaces to
over twenty-five years for larger tenant spaces. In addition to minimum lease
payments, most of the leases provide for contingent rentals (payments for taxes,
maintenance and insurance by lessees and for an amount based on a percentage of
the tenants' sales). Future minimum rental income from non-cancelable tenant
leases at December 31, 2000, in millions, is: $191.3 in 2001; $166.2 in 2002;
$142.6 in 2003; $119.2 in 2004; $95.7 in 2005 and $523.7 thereafter. The future
minimum rental amounts do not include estimates for contingent rentals. Such
contingent rentals, in millions, aggregated $50.3 in 2000, $44.5 in 1999 and
$39.6 in 1998.
40
NOTE 9. COMMITMENTS AND CONTINGENCIES
WRI leases land and one shopping center from the owners and then subleases these
properties to other parties. Future minimum rental payments under these
operating leases, in millions, are: $1.2 in 2001; $1.1 in 2002; $1.0 in 2003;
$.8 in 2004; $.7 in 2005 and $4.4 thereafter. Future minimum rental payments on
these leases have not been reduced by future minimum sublease rentals
aggregating $20.1 million through 2036 that are due under various non-cancelable
subleases. Rental expense (including insignificant amounts for contingent
rentals) for operating leases aggregated, in millions: $2.5 in 2000, $3.8 in
1999 and $2.6 in 1998. Sublease rental revenue (excluding amounts for
improvements constructed by WRI on the leased land) from these leased properties
was as follows, in millions: $3.1 in 2000, $2.9 in 1999 and $2.8 in 1998.
Property under capital leases, consisting of four shopping centers, aggregated
$29.1 and $41.1 million, respectively, at December 31, 2000 and 1999 and is
included in buildings and improvements. Amortization of property under capital
leases is included in depreciation and amortization expense. Future minimum
lease payments under these capital leases total $67.2 million, with annual
payments due, in millions, of $1.8 in each of 2001 and 2002; $1.9 in each of
2003 and 2004; $2.0 in 2005; and $57.8 thereafter. The amount of these total
payments representing interest is $33.7 million. Accordingly, the present value
of the net minimum lease payments is $33.5 million at December 31, 2000.
In 1998 and 1997, WRI formed limited partnerships to acquire certain property.
WRI exercises operating and financial control of the partnerships and
consolidates their operations in the accompanying consolidated financial
statements. The partnership agreements allow for the outside limited partners
to put their interests to the partnership for the original consideration of $5.7
million payable in cash or WRI common shares at the option of WRI. In 2000, WRI
issued .1 million common shares of beneficial interest valued at $3.6 million in
exchange for certain of these limited partnership interests.
WRI is involved in various matters of litigation arising in the normal course of
business. While WRI is unable to predict with certainty the amounts involved,
WRI's management and counsel are of the opinion that, when such litigation is
resolved, WRI's resulting liability, if any, will not have a material effect on
WRI's consolidated financial statements.
NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of WRI's financial instruments was determined using available
market information and appropriate valuation methodologies as of December 31,
2000. Unless otherwise described below, all other financial instruments are
carried at amounts which approximate their fair values.
Based on rates currently available to WRI for debt with similar terms and
average maturities, fixed-rate debt with carrying values of $572.8 million and
$499.9 million have fair values of approximately $575.9 million and $485.6
million at December 31, 2000 and 1999, respectively. The fair value of WRI's
variable-rate debt approximates its carrying values of $219.6 million and $93.1
million at year-end 2000 and 1999, respectively.
The fair value of the interest rate swap agreements is based on the estimated
amounts WRI would receive or pay to terminate the contracts. If WRI had
terminated these agreements at December 31, 2000 and 1999, WRI would have paid
$1.9 million and $1.1 million at each year-end, respectively.
41
NOTE 11. SHARE OPTIONS AND AWARDS
WRI had an incentive share option plan, which provided for the issuance of
options and share awards up to a maximum of 700,000 common shares that expired
in December 1997. Options granted under this plan become exercisable in equal
increments over a three-year period. WRI has an additional share option plan,
which grants 100 share options to every employee of WRI, 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. Options
granted under this plan are exercisable immediately. For both of these share
option plans, options are granted to employees of WRI at an exercise price equal
to the quoted fair market value of the common shares on the date the options are
granted and expire upon termination of employment or ten years from the date of
grant.
In 2000, WRI granted 370,801 share options under a compensatory incentive share
plan. This plan, which expires in 2002, provides for the issuance of up to
1,750,000 shares, either in the form of restricted shares or share options.
Prior to 2000, the restricted shares generally vested over a ten-year period,
with potential acceleration of vesting due to appreciation in the market value
of our common shares. Beginning in 2000, the vesting period is five years. The
share options granted to non-officers vest over a three-year period beginning
one year after the date of grant and over a seven-year period beginning two
years after the date of grant for officers. Share options were granted at the
quoted fair market value on the date of grant. Restricted shares are issued at
no cost to the employee, and as such we recognized compensation expense relating
to restricted shares as follows, in millions: $ .3 in 2000, 1999 and 1998.
WRI does not recognize compensation cost for share options when the option
exercise price equals or exceeds the quoted fair market value on the date of the
grant. Had we determined compensation cost for our share option and award plans
based on the fair value of the options granted at the grant dates, our proforma
net income available to common shareholders would have been as follows, in
millions: $58.7, $75.9 and $53.8 in 2000, 1999 and 1998, respectively. Proforma
net income per common share - basic would have been $2.19, $2.84 and $2.02 in
2000, 1999 and 1998, respectively.
The fair value of each option grant was estimated on the date of grant using the
Black-Scholes option-pricing method with the following weighted-average
assumptions in 2000, 1999 and 1998, respectively: dividend yield of 6.9%, 7.3%
and 6.5%; expected volatility of 15.4%, 18.1% and 18.1%; expected lives of 7.4,
6.9 and 6.9 and risk-free interest rates of 5.1%, 6.6% and 4.8%.
Following is a summary of the option activity for the three years ended December
31, 2000:
SHARES WEIGHTED
UNDER AVERAGE
OPTION EXERCISE PRICE
---------- ---------------
Outstanding, January 1, 1998 . 1,175,025 $ 37.85
Granted. . . . . . . . . . . . 14,900 42.99
Canceled . . . . . . . . . . . (7,802) 40.14
Exercised. . . . . . . . . . . (29,344) 34.01
----------
Outstanding, December 31, 1998 1,152,779 37.99
Granted. . . . . . . . . . . . 17,900 41.29
Canceled . . . . . . . . . . . (14,800) 40.23
Exercised. . . . . . . . . . . (39,089) 32.95
----------
Outstanding, December 31, 1999 1,116,790 38.19
Granted. . . . . . . . . . . . 371,801 42.17
Canceled . . . . . . . . . . . (27,800) 42.17
Exercised. . . . . . . . . . . (45,000) 34.40
----------
Outstanding, December 31, 2000 1,415,791 $ 39.28
===========
The number of share options exercisable at December 31, 2000, 1999 and 1998 was
920,000, 728,000 and 432,000, respectively. Options exercisable at year-end
2000 had a weighted average exercise price of $38.23. The weighted average fair
value per share of options granted during 2000, 1999 and 1998 was $2.92, $4.25
42
and $4.05, respectively. Share options outstanding at December 31, 2000 had
exercise prices ranging from $25.00 to $45.81 and a weighted average remaining
contractual life of 6.1 years. Approximately 94% of the options outstanding at
year-end 2000 have exercise prices between $37.00 and $42.63 and a weighted
average contractual life of 6.4 years. There were 629,000 common shares
available for the future grant of options or awards at December 31, 2000.
NOTE 12. EMPLOYEE BENEFIT PLANS
WRI has a Savings and Investment Plan to which eligible employees may elect to
contribute from 1% to 12% of their salaries. Employee contributions are matched
by WRI at the rate of $.50 per $1.00 for the first 6% of the employee's salary.
The employees vest in the employer contributions ratably over a six-year period.
Compensation expense related to the plan was $.3 million in 2000, 1999 and 1998.
Effective April 1, 1999, WRI adopted an Employee Share Purchase Plan under which
250,000 WRI common shares have been authorized. These shares, as well as common
shares purchased by WRI on the open market, are made available for sale to
employees at a discount of 15%. Shares purchased by the employee under the plan
are restricted from being sold for two years from the date of purchase or until
termination of employment with WRI. During 2000, a total of 9,759 shares were
purchased by employees at an average price of $37.73.
WRI has a defined benefit pension plan covering substantially all of its
employees. The benefits are based on years of service and the employee's
compensation during the last five years of service. Our funding policy is to
make annual contributions as required by applicable regulations; however, we
have not been required to make contributions for any of the past three years.
Reconciliation of the benefit obligation, plan assets at fair value and
the funded status of the plan are as follows (in thousands):
2000 1999
-------- --------
Benefit obligation at beginning of year . . . . . $10,703 $10,485
Service cost. . . . . . . . . . . . . . . . . . . 539 533
Interest cost . . . . . . . . . . . . . . . . . . 746 729
Actuarial gain. . . . . . . . . . . . . . . . . . (640) (841)
Benefit payments. . . . . . . . . . . . . . . . . (219) (203)
-------- --------
Benefit obligation at end of year . . . . . . . . $11,129 $10,703
======== ========
Fair value of plan assets at beginning of year. . $12,057 $10,676
Actual return on plan assets. . . . . . . . . . . 405 1,584
Benefit payments. . . . . . . . . . . . . . . . . (219) (203)
-------- --------
Fair value of plan assets at end of year. . . . . $12,243 $12,057
======== ========
Plan assets at fair value less benefit obligation $ 1,114 $ 1,354
Unrecognized gain . . . . . . . . . . . . . . . . (2,785) (3,096)
-------- --------
Pension liability . . . . . . . . . . . . . . . . $(1,671) $(1,742)
======== ========
43
The components of net periodic pension cost are as follows (in thousands):
2000 1999 1998
-------- ------ ------
Service cost. . . . . . . . . . $ 539 $ 533 $ 457
Interest cost . . . . . . . . . 746 729 663
Expected return on plan assets. (1,075) (950) (923)
Prior service cost. . . . . . . 8 47
Recognized gains. . . . . . . . (281) (59) (124)
-------- ------ ------
Total . . . . . . . . $ (71) $ 261 $ 120
======== ====== ======
Assumptions used to develop periodic expense and the actuarial present value of
the benefit obligations were:
2000 1999 1998
----- ----- -----
Weighted average discount rate. . . . . . . . . . 7.5% 7.5% 6.7%
Expected long-term rate of return on plan assets. 9.0% 9.0% 9.0%
Rate of increase in compensation levels . . . . . 5.0% 5.0% 5.0%
WRI also has a non-qualified supplemental retirement plan for officers of WRI,
which provides for benefits in excess of the statutory limits of its defined
benefit pension plan. The obligation is funded in a grantor trust with our
common shares. We recognized expense as follows, in millions: $.3 in 2000,
1999 and 1998.
NOTE 13. SEGMENT INFORMATION
The operating segments presented are the segments of WRI for which separate
financial information is available, and operating performance is evaluated
regularly by senior management in deciding how to allocate resources and in
assessing performance. WRI evaluates the performance of its operating segments
based on net operating income that is defined as total revenues less operating
expenses and ad valorem taxes. Management does not consider the effect of gains
or losses from the sale of property in evaluating ongoing operating
performance.
The shopping center segment is engaged in the acquisition, development and
management of real estate, primarily anchored neighborhood and community
shopping centers located in Texas, Louisiana, Arizona, Nevada, Arkansas, New
Mexico, Oklahoma, Tennessee, Kansas, Colorado, Missouri, Illinois, Florida and
Maine. The customer base includes supermarkets, drugstores and other retailers
who generally sell basic necessity-type commodities. The industrial segment is
engaged in the acquisition, development and management of bulk warehouses and
office/service centers. Its properties are located in Texas, Nevada and
Tennessee, and the customer base is diverse. Included in "Other" are
corporate-related items, insignificant operations and costs that are not
allocated to the reportable segments.
44
Information concerning WRI's reportable segments is as follows (in thousands):
SHOPPING
CENTER INDUSTRIAL OTHER TOTAL
---------- ----------- --------- ----------
2000:
Revenues . . . . . . . . . . . . . . . . $ 215,780 $ 27,500 $ 8,965 $ 252,245
Net operating income . . . . . . . . . . 155,003 18,826 9,288 183,117
Equity in earnings of joint ventures . . 3,410 907 (167) 4,150
Investment in real estate joint ventures 25,514 1,311 1,046 27,871
Total assets . . . . . . . . . . . . . . 1,229,340 185,938 102,303 1,517,581
Capital expenditures . . . . . . . . . . 241,321 22,532 594 264,447
1999:
Revenues . . . . . . . . . . . . . . . . $ 193,163 $ 27,556 $ 4,759 $ 225,478
Net operating income . . . . . . . . . . 137,315 19,653 6,249 163,217
Equity in earnings of joint ventures . . 3,277 398 (20) 3,655
Investment in real estate joint ventures 16,940 1,401 441 18,782
Total assets . . . . . . . . . . . . . . 1,048,408 159,464 112,223 1,320,095
Capital expenditures . . . . . . . . . . 184,323 49,469 11,095 244,887
1998:
Revenues . . . . . . . . . . . . . . . . $ 172,694 $ 17,208 $ 3,101 $ 193,003
Net operating income . . . . . . . . . . 123,354 12,453 3,919 139,726
Equity in earnings of joint ventures . . 3,388 560 521 4,469
Investment in real estate joint ventures 18,534 1,004 418 19,956
Total assets . . . . . . . . . . . . . . 899,041 132,355 86,327 1,117,723
Capital expenditures . . . . . . . . . . 126,096 53,870 8,136 188,102
Net operating income reconciles to income before extraordinary charge as shown
on the Statements of Consolidated Income as follows (in thousands):
-------------------------------
2000 1999 1998
--------- --------- ---------
Total segment net operating income . . $183,117 $163,217 $139,726
Less:
Depreciation and amortization 54,597 48,668 41,051
Interest . . . . . . . . . . . . . . 43,190 32,792 33,338
General and administrative . . . . . 8,213 7,513 7,119
Minority interest in partnerships. . 2,648 2,173 1,258
Equity in Earnings of Joint Ventures (4,150) (3,655) (4,469)
Gain on sales of property. . . . . . (382) (20,594) (328)
--------- --------- ---------
Income before extraordinary charge . . $ 79,001 $ 96,320 $ 61,757
========= ========= =========
45
NOTE 14. SUBSEQUENT EVENTS
In January 2001, we entered into a contract to acquire 19 supermarket-anchored
shopping centers in California for a total purchase price of $277.5 million,
including the assumption of approximately $132 million of debt. This
acquisition is expected to close in March of 2001 and will add approximately 2.5
million square feet to our portfolio.
On January 29, 2001, we issued 4.5 million common shares of beneficial interest
in a secondary public offering. In February 2001, the underwriters exercised
their over-allotment option and purchased an additional 200,000 shares. Net
proceeds of $188.1 million based on a price of $42.19 per share were used to pay
down amounts outstanding under our $350 revolving line of credit.
In February 2001, we purchased a 488,000 square foot retail center in Orlando,
Florida for $54.0 million.
NOTE 15. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
During the year ended December 31, 2000, WRI acquired seven retail centers, five
industrial projects and interests in joint ventures which own three additional
retail centers for a total of $164.8 million. The pro forma financial
information for the years ended December 31, 2000 and 1999 is based on the
historical statements of WRI after giving effect to the acquisitions as if such
acquisitions took place on January 1, 2000 and 1999, respectively.
The pro forma financial information shown below is presented for informational
purposes only and may not be indicative of results that would have actually
occurred if the acquisitions had been in effect at the dates indicated, nor does
it purport to be indicative of the results that may be achieved in the future
(in thousands, except per share amounts).
DECEMBER 31,
------------------
2000 1999
-------- --------
Pro forma revenues . . . . . . . . . . . . . . . . . . $265,790 $243,274
======== ========
Pro forma net income available to common shareholders. $ 79,246 $ 97,183
======== ========
Pro forma net income per common share - basic. . . . . $ 2.97 $ 3.64
======== ========
Pro forma net income per common share - diluted. . . . $ 2.95 $ 3.62
======== ========
NOTE 16. QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data is as follows (in thousands, except per
share amounts):
FIRST SECOND THIRD FOURTH
------- ------- ------- -------
2000:
Revenues. . . . . . . . . . . . . . . . . . $59,699 $62,033 $64,218 $66,295
Net income available to common shareholders 14,441 14,968 14,852 14,700
Net income per common share - basic . . . . 0.54 0.56 0.55 .55
Net income per common share - diluted . . . 0.54 0.56 0.55 .54
1999:
Revenues. . . . . . . . . . . . . . . . . . $53,372 $54,918 $57,003 $60,185
Net income available to common shareholders 13,524 14,174 14,562 34,277 (1)
Net income per common share - basic . . . . 0.51 0.53 0.55 1.28 (1)
Net income per common share - diluted . . . 0.50 0.53 0.54 1.28 (1)
(1) Increase is primarily the result of a gain on the sale of property
during the quarter.
46
NOTE 17. RESTATEMENT
Subsequent to the issuance of its financial statements for each of the three
years in the period ended December 31, 2000, WRI determined that 17 joint
ventures or partnerships which had previously been consolidated should have been
accounted for under the equity method. The accompanying financial statements
have been restated to present these joint ventures and partnerships on the
equity method. The restatement did not change net income or shareholders'
equity. The effect of the restatement on specific line items on the statements
of consolidated income and consolidated balance sheets is as follows (in
thousands):
Year ended December 31,
-----------------------------------------------------------------------------
2000 1999 1998
------------------------- ------------------------- -----------------------
As As As
Previously As Previously As Previously As
Reported Restated Reported Restated Reported Restated
------------ ----------- ------------ ----------- ----------- ----------
Operating results:
Rental revenues . . . . . . . . $ 264,552 $ 243,633 $ 231,331 $ 220,552 $ 200,792 $ 189,563
Interest Income . . . . . . . . 5,638 5,476 3,158 3,097 2,111 2,060
Other . . . . . . . . . . . . . 3,184 3,136 2,162 1,829 1,806 1,380
Expenses:
Depreciation and amortization . 58,518 54,597 50,659 48,668 42,949 41,051
Interest. . . . . . . . . . . . 45,545 43,190 32,941 32,792 33,900 33,338
Operating . . . . . . . . . . . 40,268 37,689 36,102 34,480 31,178 29,432
Ad valorem taxes. . . . . . . . 34,170 31,439 29,061 27,781 25,171 23,845
General and administrative. . . 8,213 8,213 7,522 7,513 7,156 7,119
Equity in earnings of joint
ventures. . . . . . . . . . . . . 4,150 3,655 4,469
Minority interest in income
of partnerships . . . . . . . . 8,041 2,648 4,923 2,173 4,041 1,258
Gain on sale of property. . . . . 382 382 20,877 20,594 1,443 328
Balance sheet:
Property. . . . . . . . . . . . . 1,906,431 1,730,617 1,595,346 1,484,177
Accumulated Depreciation. . . . . (387,118) (365,344) (340,789) (322,386)
Investment in real estate joint
ventures. . . . . . . . . . . . 27,871 18,782
Notes receivable from real estate
joint ventures and partnerships 31,002 38,636 52,824 69,158
Unamortized Debt and Lease Costs
Costs . . . . . . . . . . . . . 38,453 36,970 30,638 29,773
Accrued Rent and Accounts
Receivable. . . . . . . . . . . 22,273 24,485 17,557 19,373
Cash and Cash Equivalents . . . . 14,825 7,321 8,467 4,603
Other Assets. . . . . . . . . . . 20,145 17,025 18,666 16,615
Debt. . . . . . . . . . . . . . . 869,627 792,353 595,843 592,978
Accounts Payable and Accrued
Expenses. . . . . . . . . . . . 69,561 63,884 59,156 57,059
Other Liabilities . . . . . . . . 4,263 3,891 4,945 4,637
Minority Interest . . . . . . . . 72,693 27,586 76,863 19,519
47
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
48
PART III
ITEM 10. TRUST MANAGERS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Information with respect to WRI's Trust Managers is incorporated
herein by reference to the "Election of Trust Managers" section of WRI's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
April 20, 2001.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated herein by reference to the "Executive Compensation" and
"Pension Plan" sections of WRI's definitive Proxy Statement for the Annual
Meeting of Shareholders to be held April 20, 2001.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated herein by reference to the "Election of Trust Managers"
section of WRI's definitive Proxy Statement for the Annual Meeting of
Shareholders to be held April 20, 2001.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated herein by reference to the "Compensation Committee Interlocks
and Insider Participation" section of WRI's definitive Proxy Statement for the
Annual Meeting of Shareholders to be held April 20, 2001.
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 . . . . . . . . . . . . . . . . . . . 28
(B) Financial Statements
(i) Statements of Consolidated Income for the years
ended December 31, 2000, 1999 and 1998. . . . . . . . . . . 29
(ii) Consolidated Balance Sheets as of December 31, 2000 and 1999 30
(iii) Statements of Consolidated Cash Flows for the years ended
December 31, 2000, 1999 and 1998. . . . . . . . . . . . . . 31
(iv) Statements of Consolidated Shareholders' Equity for the years
ended December 31, 2000, 1999 and 1998 . . . . . . . . . . . 32
(v) Notes to Consolidated Financial Statements. . . . . . . . . . . 33
(2) Financial Statement Schedules:
SCHEDULE PAGE
-------- ----
II Valuation and Qualifying Accounts . . . . . . . . . . . . . . 54
III Real Estate and Accumulated Depreciation. . . . . . . . . . 55
IV Mortgage Loans on Real Estate . . . . . . . . . . . . . . . 57
All other schedules are omitted since the required information is not present or
is not present in amounts sufficient to require submission of the schedule or
because the information required is included in the consolidated financial
statements and notes hereto.
(b) No reports on Form 8-K were filed during the last quarter of the period
covered by this annual report.
(c) Exhibits:
49
3.1 - Restated Declaration of Trust (filed as Exhibit 3.1 to WRI's Registration Statement on Form S-3
(No. 33-49206) and incorporated herein by reference).
3.2 - Amendment of the Restated Declaration of Trust (filed as Exhibit 3.2 to WRI's Registration
Statement on Form 8-A dated January 19, 1999 and incorporated herein by reference).
3.3 - Second Amendment of the Restated Declaration of Trust (filed as Exhibit 3.3 to WRI's
Registration Statement on Form 8-A dated January 19, 1999 and incorporated herein by
reference).
3.4 - Third Amendment of the Restated Declaration of Trust (filed as Exhibit 3.4 to WRI's Registration
Statement on Form 8-A dated January 19, 1999 and incorporated herein by reference).
3.5 - Amended and Restated Bylaws of WRI (filed as Exhibit 3.2 to WRI's Registration Statement on
Form S-3 (No. 33-49206) and incorporated herein by reference).
4.1 - 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc., dated December 28, 1984, payable to
WRI in the original principal amount of $16,682,000 (filed as Exhibit 10.10 to WRI's Registration
Statement on Form S-4 (No. 33-19730) and incorporated herein by reference).
4.2 - 16% Mortgage Bonds Due 1994 of WRI Holdings, Inc. dated December 28, 1984, payable to WRI
in the original principal amount of $3,150,000 (filed as Exhibit 10.8 to WRI's Registration
Statement on Form S-4 (No. 33-19730) and incorporated herein by reference).
4.2.1*** - Seventh Bonds Renewal and Extension Agreement, effective December 28, 2000, for the 16%
Mortgage Bonds of WRI Holdings, Inc., payable to WRI in the original principal amount of
3,150,000.
4.3 - Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Chase Bank of
Texas, National Association (formerly, 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 WRI's Registration Statement on Form S-4 (No. 33-
19730) and incorporated herein by reference).
4.3.1 - Supplemental Indenture of Trust, dated February 22, 1995, between WRI Holdings, Inc. and
Chase Bank of Texas, National Association (formerly, Texas Commerce Bank National
Association) relating to the 16% Mortgage Bonds due December 28, 1994 of WRI Holdings, Inc.
in the original principal amount of $3,150,000 (filed as Exhibit 10.4.1 to WRI's Annual Report on
Form 10-K for the year ended December 31, 1994 and incorporated herein by reference).
4.4*** - Seventh Supplemental Indenture of Trust between WRI Holdings, Inc. and Chase Bank of Texas,
National Association (formerly, Texas Commerce Trust Company of New York), as Trustee,
amending Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Chase
Bank of Texas, National Association (formerly, 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.
4.5 - Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Chase Bank of
Texas, National Association (formerly, 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 WRI's Registration Statement on Form S-4 (No.
33-19730) and incorporated herein by reference).
4.5.1 - First Supplemental Indenture of Trust between WRI Holdings, Inc. and Chase Bank of Texas,
National Association (formerly, Texas Commerce Trust Company of New York), as Trustee,
amending Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Chase
Bank of Texas, National Association (formerly, 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 WRI's Annual Report on Form 10-K for
the year ended December 31, 1989 and incorporated herein by reference).
4.6 - Third Amended Promissory Note, as restated, effective as of January 1, 1992, executed by WRI
Holdings, Inc., pursuant to which it may borrow up to the principal sum of $40,000,000 from WRI
(filed as Exhibit 10.8 to WRI's Annual Report on Form 10-K for the year ended December 31,
1998 and incorporated herein by reference).
4.7 - 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc., dated December 28, 1984, payable to
WRI in the original principal amount of $7,000,000 (filed as Exhibit 10.13 to WRI's Registration
Statement on Form S-4 (No. 33-19730) and incorporated herein by reference).
50
4.8 - Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Chase Bank of
Texas, National Association (formerly, 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 WRI's Registration Statement on Form S-4 (No.
33-19730) and incorporated herein by reference).
4.8.1 - First Supplemental Indenture of Trust between WRI Holdings, Inc. and Chase Bank of Texas,
National Association (formerly, Texas Commerce Trust Company of New York), as Trustee,
amending Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Chase
Bank of Texas, National Association (formerly, 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 WRI's Annual Report on Form 10-K for
the year ended December 31, 1989 and incorporated herein by reference).
4.9 - 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 WRI's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by
reference).
4.10 - 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 WRI's Annual Report on Form 10-K for the year ended December 31, 1992 and
incorporated herein by reference).
4.11 - Promissory Note in the amount of $12,000,000 between WRI, as payee, and Plaza Construction,
Inc., as maker (filed as Exhibit 10.23 to WRI's Annual Report on Form 10-K for the year ended
December 31, 1991 and incorporated herein by reference).
4.11.1*** - Twelfth Renewal and Extension of Promissory Note in the amount of $12,000,000, effective as of
December 1, 2000, between WRI, as payee, and Plaza Construction, Inc., as maker.
4.12 - Master Promissory Note in the amount of $20,000,000 between WRI, as payee, and Chase Bank
of Texas, National Association (formerly, Texas Commerce Bank National Association), as
maker, effective December 30, 1998 (filed as Exhibit 4.15 to WRI's Annual Report on Form 10-K
for the year ended December 31, 1999 and incorporated herein by reference).
4.13 - Senior Indenture dated as of May 1, 1995 between WRI and Chase Bank of Texas, National
Association (formerly, Texas Commerce Bank National Association), as trustee (filed as Exhibit
4(a) to WRI's Registration Statement on Form S-3 (No. 33-57659) and incorporated herein by
reference).
4.14 - Subordinated Indenture dated as of May 1, 1995 between WRI and Chase Bank of Texas,
National Association (formerly, Texas Commerce Bank National Association) (filed as Exhibit 4(b)
to WRI's Registration Statement on Form S-3 (No. 33-57659) and incorporated herein by
reference).
4.15 - Form of Fixed Rate Senior Medium Term Note (filed as Exhibit 4.19 to WRI's Annual Report on
Form 10-K for the year ended December 31, 1999 and incorporated herein by reference).
4.16 - Form of Floating Rate Senior Medium Term Note (filed as Exhibit 4.20 to WRI's Annual Report on
Form 10-K for the year ended December 31, 1999 and incorporated herein by reference).
4.17 - Form of Fixed Rate Subordinated Medium Term Note (filed as Exhibit 4.21 to WRI's Annual
Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by
reference).
4.18 - Form of Floating Rate Subordinated Medium Term Note (filed as Exhibit 4.22 to WRI's Annual
Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by
reference).
4.19 - Statement of Designation of 7.44% Series A Cumulative Redeemable Preferred Shares (filed as
Exhibit 99 to WRI's Current Report on Form 8-A dated February 18, 1999 and incorporated herein
by reference).
4.20 - Statement of Designation of 7.125% Series B Cumulative Redeemable Preferred Shares (filed as
Exhibit 4.2 to WRI's Current Report on Form 8-K dated October 28, 1999 and incorporated herein
by reference).
51
4.21 - Statement of Designation of 7.00% Series C Cumulative Redeemable Preferred Shares (filed as
Exhibit 4.1 to WRI's Registration Statement on Form 8-A dated January 19, 1999 and
incorporated herein by reference).
4.22 - 7.44% Series A Cumulative Redeemable Preferred Share Certificate (filed as Exhibit 4 to WRI's
Current Report on Form 8-K dated February 23, 1999 and incorporated herein by reference).
4.23 - 7.125% Series B Cumulative Redeemable Preferred Share Certificate (filed as Exhibit 4.1 to
WRI's Current Report on Form 8-K dated October 28, 1999 and incorporated herein by
reference).
4.24 - 7.00% Series C Cumulative Redeemable Preferred Share Certificate (filed as Exhibit 4.2 to WRI's
Registration Statement on Form 8-A dated January 19, 1999 and incorporated herein by
reference).
4.25*** - Credit Agreement dated November 21. 2000 among WRI, the Lenders Party Hereto and the
Chase Manhattan Bank as Administrative Agent.
10.1+ - 1988 Share Option Plan of WRI, as amended (filed as Exhibit 10.1 to WRI'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 WRI's Annual Report on Form 10-K for the year ended December 31,
1992 and incorporated herein by reference).
10.3+ - The Savings and Investment Plan for Employees of WRI, as amended (filed as Exhibit 4.1 to
WRI's Registration Statement on Form S-8 (No. 33-25581) and incorporated herein by reference).
10.4+ - The Fifth Amendment to Savings and Investment Plan for Employees of WRI (filed as Exhibit
4.1.1 to WRI's Post-Effective Amendment No. 1 to Registration Statement on Form S-8 (No. 33-
25581) and incorporated herein by reference).
10.5+ - The 1993 Incentive Share Plan of WRI (filed as Exhibit 4.1 to WRI's Registration Statement on
Form S-8 (No. 33-52473) and incorporated herein by reference).
10.6+ - 1999 WRI Employee Share Purchase Plan (filed as Exhibit 10.6 to WRI's Annual Report on Form
10-K for the year ended December 31, 1999 and incorporated herein by reference).
12.1* - Computation of Fixed Charges Ratios.
21.1*** - Subsidiaries of the Registrant.
23.1* - Consent of Deloitte & Touche llp.
* Filed with this report.
+ Management contract or compensatory plan or arrangement.
*** Previously filed with the Form 10-K filed with the Commission on March 13, 2001.
52
SIGNATURES
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: Andrew M. Alexander
-----------------------
Andrew M. Alexander
Chief Executive Officer
Date: October 25, 2001
Pursuant to the requirement of the Securities and Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
------------------------- ------------------------------ ----------------
By: Stanford Alexander Chairman October 25, 2001
-------------------- and Trust Manager
Stanford Alexander
By: Andrew M. Alexander Chief Executive Officer, October 25, 2001
-------------------- President and Trust Manager
Andrew M. Alexander
By: Robert J. Cruikshank Trust Manager October 25, 2001
--------------------
Robert J. Cruikshank
By: Martin Debrovner Vice Chairman October 25, 2001
-------------------- and Trust Manager
Martin Debrovner
By: Melvin Dow Trust Manager October 25, 2001
--------------------
Melvin Dow
By: Stephen A. Lasher Trust Manager October 25, 2001
--------------------
Stephen A. Lasher
By: Douglas W. Schnitzer Trust Manager October 25, 2001
--------------------
Douglas W. Schnitzer
By: Marc J. Shapiro Trust Manager October 25, 2001
--------------------
Marc J. Shapiro
By: J.T. Trotter Trust Manager October 25, 2001
--------------------
J.T. Trotter
By: Joe D. Shafer Vice President/Controller October 25, 2001
-------------------- (Principal Accounting Officer)
Joe D. Shafer
53
SCHEDULE II
WEINGARTEN REALTY INVESTORS
VALUATION AND QUALIFYING ACCOUNTS
DECEMBER 31, 2000, 1999 AND 1998
(AMOUNTS IN THOUSANDS)
CHARGED
BALANCE AT TO COSTS CHARGED BALANCE
BEGINNING AND TO OTHER DEDUCTIONS AT END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS (A) PERIOD
--------------------------------- ----------- --------- -------- ------------ ----------
2000:
Allowance for Doubtful Accounts $ 909 $ 1,667 $ 692 $ 1,884
1999:
Allowance for Doubtful Accounts $ 887 $ 1,043 $ 1,021 $ 909
1998:
Allowance for Doubtful Accounts $ 1,001 $ 681 $ 795 $ 887
_______________
Note A - Write-offs of accounts receivable previously reserved.
54
SCHEDULE III
WEINGARTEN REALTY INVESTORS
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2000
(AMOUNTS IN THOUSANDS)
Total Cost
-------------------------------------
Buildings Projects
and Under Total Accumulated Encumbrances
Land Improvements Development Cost Depreciation (A)
-------- ------------- ------------ ---------- ------------- --------------
SHOPPING CENTERS:
Texas. . . . . . . . . . $171,211 $ 680,464 $ 851,675 $ 256,363 $ 33,151
Other States . . . . . . 121,603 404,996 526,599 69,914 66,312
-------- ------------- ------------ ---------- ------------- --------------
Total Shopping Centers 292,814 1,085,460 1,378,274 326,277 99,463
INDUSTRIAL:
Texas. . . . . . . . . . 30,325 135,779 166,104 25,384 43,586
Other States . . . . . . 2,512 10,786 13,298 623
-------- ------------- ------------ ---------- ------------- --------------
Total Industrial . . . 32,837 146,565 179,402 26,007 43,586
OFFICE BUILDING:
Texas. . . . . . . . . . 534 9,340 9,874 6,200
-------- ------------- ------------ ---------- ------------- --------------
MULTI-FAMILY
RESIDENTIAL:
Texas. . . . . . . . . . 2,277 12,720 14,997 855
-------- ------------- ------------ ---------- ------------- --------------
Total Improved
Properties . . . . . 328,462 1,254,085 1,582,547 359,339 143,049
-------- ------------- ------------ ---------- ------------- --------------
LAND UNDER DEVELOPMENT
OR HELD FOR
DEVELOPMENT:
Texas. . . . . . . . . . $ 27,509 27,509
Other States . . . . . . 38,934 38,934
-------- ------------- ------------ ---------- ------------- --------------
Total Land Under
Development or Held
for Development. . . 66,443 66,443
-------- ------------- ------------ ---------- ------------- --------------
LEASED PROPERTY
(SHOPPING CENTER)
UNDER CAPITAL LEASE:
Texas. . . . . . . . . . 18,953 18,953 39
Other States . . . . . . 29,054 29,054 5,966 5,857
-------- ------------- ------------ ---------- ------------- --------------
Total Leased Property
Under Capital Lease. . 48,007 48,007 6,005 5,857
-------- ------------- ------------ ---------- ------------- --------------
CONSTRUCTION IN
PROGRESS:
Texas. . . . . . . . . . 8,221 8,221
Other States . . . . . . 25,399 25,399
-------- ------------- ------------ ---------- ------------- --------------
Total Construction in
Progress . . . . . . 33,620 33,620
-------- ------------- ------------ ---------- ------------- --------------
TOTAL OF ALL
PROPERTIES . . . . . . $328,462 $ 1,302,092 $ 100,063 $1,730,617 $ 365,344 $ 148,906
======== ============= ============ ========== ============= ==============
Note A - Encumbrances do not include $24.0 million outstanding under a $30
million 20-year term loan, payable to a group of insurance companies
secured by a property collateral pool including all or part of three
shopping centers.
55
SCHEDULE III
(CONTINUED)
The changes in total cost of the properties for the years ended December
31, 2000, 1999 and 1998 were as follows:
2000 1999 1998
----------- ----------- -----------
Balance at beginning of year $1,484,177 $1,278,466 $1,092,869
Additions at cost . . . . . . 264,447 244,887 188,102
Retirements or sales. . . . . (18,007) (39,176) (2,505)
----------- ----------- -----------
Balance at end of year. . . . $1,730,617 $1,484,177 $1,278,466
=========== =========== ===========
The changes in accumulated depreciation for the years ended December 31,
2000, 1999 and 1998 were as follows:
2000 1999 1998
--------- --------- ---------
Balance at beginning of year $322,386 $291,080 $256,689
Additions at cost. . . . . . 47,175 42,882 34,916
Retirements or sales . . . . (4,217) (11,576) (525)
--------- --------- ---------
Balance at end of year . . . $365,344 $322,386 $291,080
========= ========= =========
56
SCHEDULE IV
WEINGARTEN REALTY INVESTORS
MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 2000
(AMOUNTS IN THOUSANDS)
FINAL PERIODIC FACE CARRYING
INTEREST MATURITY PAYMENT AMOUNT OF AMOUNT OF
RATE DATE TERMS MORTGAGES MORTGAGES(A)
--------- -------- ---------- ---------- -------------
SHOPPING CENTERS:
FIRST MORTGAGES:
Eastex Venture
Beaumont, TX
(Note D) . . . . . . . . 8% 10-31-09 $ 335 $ 2,300 $ 2,130
Annual
P & I
Main/O.S.T., Ltd.
Houston, TX
(Note D). . . . . . . . . 9.3% 02-01-20 $ 476 4,800 4,461
Annual
P & I
($1,241
balloon)
INDUSTRIAL:
FIRST MORTGAGES:
River Pointe, Conroe,TX
(Notes B and D). . . . . Prime 11-30-03 Varying 2,133 1,891
+2%
Little York, Houston, TX
(Notes B and D). . . . . Prime 12-31-03 Varying 1,922 1,760
+2%
South Loop Business Park
Houston, TX
(Note D) . . . . . . . . 9.25% 11-01-07 $ 74 439 373
Annual
P & I
Schedule continued on next page
57
SCHEDULE IV
(CONTINUED)
WEINGARTEN REALTY INVESTORS
MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 2000
(AMOUNTS IN THOUSANDS)
FINAL PERIODIC FACE CARRYING
INTEREST MATURITY PAYMENT AMOUNT OF AMOUNT OF
RATE DATE TERMS MORTGAGES MORTGAGES(A)
--------- -------- --------- ---------- -------------
UNIMPROVED LAND:
SECOND MORTGAGE:
River Pointe
Conroe, TX. . . . . Prime 12-01-01 Varying 12,000 3,712
+1% ($3,806
balloon)
---------- -------------
TOTAL MORTGAGE LOANS ON
REAL ESTATE (Note D). . $ 23,594 $ 14,327
========== =============
Note A - The aggregate cost at December 31, 2000 for federal income tax purposes
is $14,327.
Note B - Principal payments are due monthly to the extent of cash flow generated
by the underlying property.
Note C - Changes in mortgage loans for the years ended December 31, 2000, 1999
and 1998 are summarized below:
Note D - Represents WRI share of mortgage loans to joint ventures.
--------- --------- --------
2000 1999 1998
--------- --------- --------
Balance, Beginning of Year $ 47,828 $ 28,359 $25,653
New Mortgage Loans 33,588 3,116
Additions to Existing Loans 380 1,773 1,560
Collections of Principal (33,881) (15,892) (1,970)
--------- --------- --------
Balance, End of Year $ 14,327 $ 47,828 $28,359
========= ========= ========
58