-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LoCFjIDX7cg4TRQcpQKeBz/onGpiNTt5DJk3z0bCrcfgzG0mrTmN/jjWTtx24wSk TgVr9BA8dvZ9sja8kQ7vQQ== 0000828916-99-000010.txt : 19990430 0000828916-99-000010.hdr.sgml : 19990430 ACCESSION NUMBER: 0000828916-99-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990429 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEINGARTEN REALTY INVESTORS /TX/ CENTRAL INDEX KEY: 0000828916 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 741464203 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09876 FILM NUMBER: 99603977 BUSINESS ADDRESS: STREET 1: 2600 CITADEL PLAZA DR STREET 2: SUITE 300 CITY: HOUSTON STATE: TX ZIP: 77292 BUSINESS PHONE: 7138666000 MAIL ADDRESS: STREET 1: P O BOX 924133 STREET 2: P O BOX 924133 CITY: HOUSTON STATE: TX ZIP: 77292-4133 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1999 -------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from____________________ to ____________________ Commission file number 1-9876 ------ WEINGARTEN REALTY INVESTORS --------------------------- (Exact name of registrant as specified in its charter)
Texas 74-1464203 - ---------------------------------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2600 Citadel Plaza Drive, P.O. Box 924133, Houston, Texas 77292-4133 - ---------------------------------------------------------- ------------------- (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 866-6000 -------------- ____________________________________________ (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes. No. ----- ----- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of April 26, 1999, there were 26,690,320 common shares of beneficial interest of Weingarten Realty Investors, $.03 par value, outstanding. PART 1 FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
WEINGARTEN REALTY INVESTORS STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED) (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Three Months Ended March 31, -------------------- 1999 1998 --------- --------- Revenues: Rentals . . . . . . . . . . . . . . . . . . . . . $ 53,433 $ 46,236 Interest: Securities and Other. . . . . . . . . . . . . . 523 43 Affiliates. . . . . . . . . . . . . . . . . . . 475 364 Equity in earnings of real estate joint ventures and partnerships. . . . . . . . . . . . . . . . 85 95 Other . . . . . . . . . . . . . . . . . . . . . . 248 224 --------- --------- Total. . . . . . . . . . . . . . . . . . . . 54,764 46,962 --------- --------- Expenses: Depreciation and amortization . . . . . . . . . . 11,637 10,086 Operating . . . . . . . . . . . . . . . . . . . . 8,178 6,813 Interest. . . . . . . . . . . . . . . . . . . . . 8,033 8,334 Ad valorem taxes. . . . . . . . . . . . . . . . . 6,812 5,983 General and administrative. . . . . . . . . . . . 1,868 1,534 --------- --------- Total. . . . . . . . . . . . . . . . . . . . 36,528 32,750 --------- --------- Income from Operations. . . . . . . . . . . . . . . 18,236 14,212 Gain on Sales of Property and Securities. . . . . . 83 --------- --------- Income Before Extraordinary Charge. . . . . . . . . 18,236 14,295 Extraordinary Charge (early retirement of debt) . . 149 1,392 --------- --------- Net Income. . . . . . . . . . . . . . . . . . . . . 18,087 12,903 Dividends on Preferred Shares . . . . . . . . . . . 4,563 574 --------- --------- Net Income Available to Common Shareholders . . . . $ 13,524 $ 12,329 ========= ========= Net Income Per Common Share - Basic: Income Before Extraordinary Charge . . . . . $ .52 $ .51 Extraordinary Charge . . . . . . . . . . . . (.01) (.05) --------- --------- Net Income . . . . . . . . . . . . . . . . . $ .51 $ .46 ========= ========= Net Income Per Common Share - Diluted: Income Before Extraordinary Charge . . . . . $ .51 $ .51 Extraordinary Charge . . . . . . . . . . . . (.01) (.05) --------- --------- Net Income . . . . . . . . . . . . . . . . . $ .50 $ .46 ========= =========
See Notes to Consolidated Financial Statements.
WEINGARTEN REALTY INVESTORS CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) March 31, December 31, 1999 1998 ------------ ------------ (unaudited) ASSETS Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,361,387 $ 1,294,632 Accumulated Depreciation. . . . . . . . . . . . . . . . . . . . . . . (306,708) (296,989) ------------ ------------ Property - net. . . . . . . . . . . . . . . . . . . . . . . . . . 1,054,679 997,643 Investment in Real Estate Joint Ventures and Partnerships . . . . . . 2,758 2,741 ------------ ------------ Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,057,437 1,000,384 Mortgage Bonds and Notes Receivable from: Affiliate (net of deferred gain of $4,487 in 1999 and 1998) . . . 12,410 13,444 Real Estate Joint Ventures and Partnerships . . . . . . . . . . . 20,345 23,388 Marketable Debt Securities. . . . . . . . . . . . . . . . . . . . . . 14,951 Unamortized Debt and Lease Costs. . . . . . . . . . . . . . . . . . . 25,974 25,612 Accrued Rent and Accounts Receivable (net of allowance for doubtful accounts of $1,229 in 1999 and $888 in 1998). . . . . . . . . . . . 11,517 15,197 Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . 126 1,672 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,038 12,395 ------------ ------------ Total . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,140,847 $ 1,107,043 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 460,198 $ 516,366 Accounts Payable and Accrued Expenses . . . . . . . . . . . . . . . . 29,079 49,269 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,069 8,229 ------------ ------------ Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501,346 573,864 ------------ ------------ 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 outstanding; liquidation preference $25 per share. . . . . . . . . . . . . 108 108 7.0% Series C cumulative redeemable preferred shares of beneficial interest; 2,300 shares issued and outstanding; liquidation preference $50 per share. . . . . . . . . . . . . 69 Common Shares of Beneficial Interest - par value, $.03 per share; shares authorized: 150,000; shares issued and outstanding: 26,690 in 1999 and 26,673 in 1998 . . . . . . . . . . . . . . . . 801 800 Capital Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . 638,506 532,254 Deferred Compensation Obligation. . . . . . . . . . . . . . . . . . (73) (73) ------------ ----------- Shareholders' Equity. . . . . . . . . . . . . . . . . . . . . 639,501 533,179 ------------ ----------- Total . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,140,847 $ 1,107,043 ============ ============
See Notes to Consolidated Financial Statements.
WEINGARTEN REALTY INVESTORS STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED) (AMOUNTS IN THOUSANDS) Three Months Ended March 31, --------------------- 1999 1998 ---------- --------- Cash Flows from Operating Activities: Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,087 $ 12,903 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization . . . . . . . . . . . . . . . . . 11,637 10,086 Equity in earnings of real estate joint ventures and partnerships. . . . . . . . . . . . . . . . . . . . . . . . . (85) (71) Gain on sales of property and securities. . . . . . . . . . . . (83) Extraordinary charge (early retirement of debt) . . . . . . . . 149 1,392 Changes in accrued rents and accounts receivable. . . . . . . . 3,680 6,983 Changes in other assets . . . . . . . . . . . . . . . . . . . . (3,884) (3,827) Changes in accounts payable and accrued expenses. . . . . . . . (19,690) (18,281) Other, net. . . . . . . . . . . . . . . . . . . . . . . . . . . 42 154 ---------- --------- Net cash provided by operating activities . . . . . . . . . . 9,936 9,256 ---------- --------- Cash Flows from Investing Activities: Investment in properties. . . . . . . . . . . . . . . . . . . . . . (55,666) (44,097) Mortgage bonds and notes receivable: Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,953) (162) Collections . . . . . . . . . . . . . . . . . . . . . . . . . . 90 544 Proceeds from sales and disposition of property . . . . . . . . . . 221 Proceeds from marketable debt securities. . . . . . . . . . . . . . 15,000 12,269 Distributions from real estate joint ventures and partnerships. . . 56 Other, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (47) 281 ---------- --------- Net cash used in investing activities . . . . . . . . . . . . (43,576) (30,888) ---------- --------- Cash Flows from Financing Activities: Proceeds from issuance of: Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,810 16,776 Common shares of beneficial interest. . . . . . . . . . . . . . 475 120 Preferred shares of beneficial interest . . . . . . . . . . . . 111,263 72,512 Principal payments of debt. . . . . . . . . . . . . . . . . . . . . (82,935) (48,863) Common and preferred dividends paid . . . . . . . . . . . . . . . . (23,512) (18,440) Other, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7) (13) ---------- --------- Net cash provided by financing activities . . . . . . . . . . 32,094 22,092 ---------- --------- Net (decrease)/increase in cash and cash equivalents. . . . . . . . . (1,546) 460 Cash and cash equivalents at January 1. . . . . . . . . . . . . . . . 1,672 2,754 ---------- --------- Cash and cash equivalents at March 31 . . . . . . . . . . . . . . . . $ 126 $ 3,214 ========== =========
See Notes to Consolidated Financial Statements. WEINGARTEN REALTY INVESTORS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (AMOUNTS IN THOUSANDS) 1. INTERIM FINANCIAL STATEMENTS The consolidated financial statements included in this report are unaudited, except for the balance sheet as of December 31, 1998. In the opinion of the Company, all adjustments necessary for a fair presentation of such financial statements have been included. Such adjustments consisted of normal recurring items. Interim results are not necessarily indicative of results for a full year. The consolidated financial statements and notes are presented as permitted by Form 10-Q, and do not contain certain information included in the Company's annual financial statements and notes. 2. PER SHARE DATA Net income per common share - basic is computed using net income available to common shareholders and the weighted average shares outstanding. Net income per common share - diluted includes the effect of potentially dilutive securities for the periods indicated, as follows (in thousands):
Three Months Ended March 31, ------------------ 1999 1998 -------- -------- Numerator: Net income available to common shareholders - basic . . . $ 13,524 $ 12,329 Income attributable to operating partnership units. . . . 41 -------- -------- Net income available to common shareholders - diluted . . $ 13,565 $ 12,329 ======== ======== Denominator: Weighted average shares outstanding - basic . . . . . . . 26,683 26,665 Effect of dilutive securities: Share options and awards. . . . . . . . . . . . . . . 88 178 Operating partnership units . . . . . . . . . . . . . 148 39 -------- -------- Weighted average shares outstanding - diluted . . . . . . 26,919 26,882 ======== ========
3. DEBT The Company's debt consists of the following:
March 31, December 31, 1999 1998 ------------ ------------ Fixed-rate debt payable to 2015 at 6.0% to 10.5% . . $ 403,118 $ 404,061 Variable-rate unsecured notes payable to 2000. . . . 82,000 Notes payable under revolving credit agreements. . . 37,060 10,250 Obligations under capital leases . . . . . . . . . . 12,467 12,467 Industrial revenue bonds to 2015 at 3.1% to 5.8% at March 31, 1999. . . . . . . . . . . . . . . . 6,232 6,262 Other. . . . . . . . . . . . . . . . . . . . . . . . 1,321 1,326 ------------ ------------ Total. . . . . . . . . . . . . . . . . . . $ 460,198 $ 516,366 ============ ============
At March 31, 1999, the variable interest rate for notes payable under the $200 million revolving credit agreement was 5.4%, and the variable interest rate under the $20 million revolving credit agreement was 5.1%. In February 1999, the Company retired $82 million of variable-rate unsecured Medium Term Notes resulting in an extraordinary charge to earnings of $.1 million. The Company's debt can be summarized as follows (in thousands):
March 31, December 31, 1999 1998 ------------ ------------ As to interest rate: Fixed-rate debt (including amounts fixed through interest rate swaps). . . . . . . $ 443,131 $ 444,060 Variable-rate debt. . . . . . . . . . . . . 17,067 72,306 ------------ ------------ Total . . . . . . . . . . . . . . . . . . . $ 460,198 $ 516,366 ============ ============ As to collateralization: Unsecured debt. . . . . . . . . . . . . . . $ 385,200 $ 440,433 Secured debt. . . . . . . . . . . . . . . . 74,998 75,933 ------------ ------------ Total . . . . . . . . . . . . . . . . . . . $ 460,198 $ 516,366 ============ ============
4. PREFERRED SHARES On January 21, 1999, the Company issued $115 million of 7.0% Series C cumulative redeemable preferred shares with a liquidation preference of $50 per share and no stated maturity in an underwritten public offering. The Company can elect to redeem the shares anytime after March 15, 2004. The Series C shares are redeemable by the holder only upon their death and are also redeemable in cash or common shares at the Company's option. Dividends are cumulative and payable quarterly on or about the 15th of each March, June, September and December. The net proceeds of $111.3 million from the preferred shares were used to pay down all amounts outstanding under the Company's revolving credit facilities and retire $82 million of variable-rate unsecured Medium Term Notes. 5. PROPERTY The Company's property consists of the following (in thousands):
March 31, December 31, 1999 1998 ------------- ------------- Land . . . . . . . . . . . . . $ 247,702 $ 236,221 Land held for development. . . 30,194 30,156 Land under development . . . . 14,428 13,024 Buildings and improvements . . 1,052,228 1,009,166 Construction in-progress . . . 16,835 6,065 ------------- ------------- Total. . . . . . . . . . . . . $ 1,361,387 $ 1,294,632 ============= =============
Interest and ad valorem taxes totaling $.5 million in 1999 and $1.4 million in 1998 were capitalized to land under development or buildings under construction. 6. SEGMENT INFORMATION The operating segments presented are the segments of the Company 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. The Company evaluates the performance of its operating segments based on net operating income that is defined as total revenues less operating expenses and ad valorem taxes. The shopping center segment is engaged in the acquisition, development and management of real estate, primarily anchored neighborhood and community shopping centers located in Texas, Louisiana, Arizona, Nevada, New Mexico, Oklahoma, Arkansas, Kansas, Colorado, Missouri, Illinois, Maine and Tennessee. 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. Information concerning the Company's reportable segments is as follows (in thousands):
SHOPPING CENTER INDUSTRIAL OTHER TOTAL --------- ----------- ------- ---------- Three Months Ended March 31, 1999: Revenues . . . . . . . . $ 47,366 $ 6,086 $ 1,312 $ 54,764 Net operating income . . 33,875 4,424 1,475 39,774 Total assets . . . . . . 941,063 136,799 62,985 1,140,847 Three Months Ended March 31, 1998: Revenues . . . . . . . . $ 42,175 $ 3,964 $ 823 $ 46,962 Net operating income . . 30,357 2,889 920 34,166 Total assets . . . . . . 845,869 88,985 34,157 969,011
Net operating income reconciles to income from operations as shown on The Statements of Consolidated Income as follows (in thousands):
Three Months Ended March 31, ------------------ 1999 1998 -------- -------- Total segment net operating income . . . $ 39,774 $ 34,166 Less: Depreciation and amortization. . . . 11,637 10,086 Interest . . . . . . . . . . . . . . 8,033 8,334 General and administrative . . . . . 1,868 1,534 -------- -------- Income from operations . . . . . . . . . $ 18,236 $ 14,212 ======== ========
Equity in earnings of real estate joint ventures and partnerships as shown on the Statements of Consolidated Income and the corresponding investment balances relate exclusively to the shopping center segment. PART I FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the consolidated financial statements and notes thereto and the comparative summary of selected financial data appearing elsewhere in this report. Historical results and trends which might appear should not be taken as indicative of future operations. Weingarten Realty Investors owned and operated 180 anchored shopping centers, 38 industrial properties and one office building at March 31, 1999. Of the Company's 219 developed properties, 163 are located in Texas (including 98 in Houston and Harris County). The Company's remaining properties are located in Louisiana (11), Arizona (10), Nevada (8), Arkansas (6), New Mexico (5), Oklahoma (4), Tennessee (4), Kansas (3), Colorado (2), Missouri (1), Illinois (1), and Maine (1). The Company has nearly 4,000 leases and 3,000 different tenants. Leases for the Company's properties range from less than a year for smaller spaces to over 25 years for larger tenants; leases generally include minimum lease payments and contingent rentals for payment of taxes, insurance and maintenance and for an amount based on a percentage of the tenants' sales. The majority of the Company's anchor tenants are supermarkets, drugstores and other retailers which generally sell basic necessity-type items. CAPITAL RESOURCES AND LIQUIDITY The Company anticipates that cash flows from operating activities will continue to provide adequate capital for all dividend payments in accordance with REIT requirements, and that cash on hand, borrowings under its existing credit facilities, issuance of unsecured debt and the use of project financing, as well as other debt and equity alternatives, will provide the necessary capital to achieve growth. Cash flow from operating activities as reported in the Statements of Consolidated Cash Flows was $9.9 million for the first three months of 1999 as compared to $9.3 million for the same period of 1998. The increase was due primarily to the Company's acquisition and new development programs. The Company's Board of Trust Managers approved an increase in the quarterly dividend per common share from $.67 to $.71, effective this first quarter of 1999. The Company's dividend payout ratio on common equity was 75% for the first quarter of 1999 and 1998 based on funds from operations for the applicable period. The Company invested $53.0 million in the portfolio through acquisitions and new development. Acquisitions during the quarter added .6 million square feet to the portfolio, representing an investment of $41.8 million. The Company purchased a shopping center, an office/service center and a vacant 98,000 square foot building adjacent to one of our shopping centers on which we are finalizing a lease for the entire space with a national discount department store. Champions Village Shopping Center is a 408,000 square foot supermarket-anchored shopping center located in one of the more affluent and densely populated areas of Houston. The center is anchored by Randall's Foods, Barnes & Noble, Steinmart, Palais Royal and Walgreens and was 87% occupied when acquired. The office/service center purchased represents our first industrial property in Las Vegas. This 66,000 square foot facility was 95% occupied when acquired. With respect to new development, the Company began construction of retail space adjacent to a corporately-owned Albertson's supermarket in a suburb of Dallas during the quarter and purchased land for the development of a 134,000 square foot shopping center in the Denver area. The Denver shopping center, which will be owned in a joint venture with our Denver-based partner, is anchored by a 68,000 square foot King Soopers supermarket for which a lease has been executed. Including these two shopping centers, we currently have eight retail locations and one industrial facility under construction. The projects will total about 575,000 square feet upon completion and will represent an investment of approximately $47.5 million. Additionally, we are finishing construction of a 260-unit luxury apartment complex on previously undeveloped land of the Company, which will represent an investment of about $14 million. With the exception of the Denver property purchased during this quarter, the balance of the projects will be substantially completed prior to year-end. Total debt outstanding decreased to $460.2 million at quarter-end from $516.4 at December 31, 1998. This decrease was primarily due to the retirement of debt with the $111.3 million of net proceeds from the Company's first quarter preferred share offering. The Company's debt to total capitalization is a conservative 25.6% and its cash flow covers its interest costs a strong 4.0 times for the four quarters ended March 31, 1999. In January 1999, the Company issued $115 million of 7.0% Series C cumulative redeemable preferred shares with a liquidation preference of $50 per share and no stated maturity in an underwritten public offering. The Company can elect to redeem the shares anytime after March 15, 2004. The Series C shares are redeemable by the holder only upon their death (up to a maximum of 3% of the total issue per year) and are also redeemable in cash or common shares at the Company's option. The proceeds from the preferred share offering were used to pay down all amounts outstanding under the Company's revolving credit facilities and retire $82 million of variable-rate unsecured Medium Term Notes. FUNDS FROM OPERATIONS The Company considers funds from operations to be an alternate measure of the performance of an equity REIT since such measure does not recognize depreciation and amortization of real estate assets as operating expenses. Management believes that reductions for these charges are not meaningful in evaluating income-producing real estate, which historically has not depreciated. The National Association of Real Estate Investment Trusts defines funds from operations as net income plus depreciation and amortization of real estate assets, less gains and losses on sales of properties and securities. Funds from operations does not represent cash flows from operations as defined by generally accepted accounting principles and should not be considered as an alternative to net income as an indicator of the Company's operating performance or to cash flows from operations as a measure of liquidity. Funds from operations increased to $25.2 million for the first quarter of 1999, as compared to $23.6 million for the same period of 1998. This increase relates primarily to the impact of the Company's acquisitions and, to a lesser degree, new development and activity at its existing properties. RESULTS OF OPERATIONS Net income available to common shareholders increased to $13.5 million from $12.3 million for the first quarter of 1999 as compared with the same quarter of 1998. Net income per common share-basic increased to $.51 in 1999 from $.46 in 1998, while net income per share-diluted increased to $.50 in 1999 from $.46 in 1998. Included in net income in 1998 was an extraordinary loss of $1.4 million, or $.05 per share, on the early retirement of fixed-rate debt. Rental revenues were $53.4 million in 1999, as compared to $46.2 million in 1998, representing an increase of approximately $7.2 million or 15.6%. This increase relates primarily to acquisitions and, to a lesser degree, new development and activity at the Company's existing properties. Occupancy of the Company's retail properties was 92.9% at the end of the first quarter of 1999 as compared to 92.7% at March 31, 1998. Occupancy of the Company's total portfolio stood at 92.8% at March 31, 1999 as compared to 92.9% at the end of the first quarter of the prior year. During the first quarter of 1999, the Company completed 193 renewals or leases comprising .8 million square feet of space. Rental rates increased an average of 6.8% over the rates charged to the prior tenants. Net of capital costs for tenant improvements, the increase averaged 4.0%. Retail sales on a same-store basis increased by 1% based on sales reported during the last twelve months. Gross interest costs, before capitalization of interest, decreased by $.1 million from $8.6 million in the first quarter of 1998 to $8.5 million in the first quarter of 1999. The decrease was due primarily to the decrease in the average interest rate between periods from 7.2% in 1998 to 7.1% in 1999. The amount of interest capitalized during the period increased from $.3 million in 1998 to $.4 million in 1999 due to an increase in new development activity. General and administrative expenses increased by $.3 million to $1.9 million in the first quarter of 1999 from $1.5 million in the same quarter of 1998. The increase is due to the Company's adoption of the new Emerging Issues Task Force Consensus decision which provides that internal costs of identifying and acquiring operating property incurred subsequent to March 19, 1998 should be expensed. Also, contributing to the increase is an increase in staffing necessitated by the growth in the portfolio. The increases in depreciation and amortization, operating expenses and ad valorem taxes were primarily the result of the Company's acquisition and new development programs. YEAR 2000 COMPLIANCE Many currently installed computer systems and software products are coded to accept only two-digit entries in the date code field. These date code fields will need to be amended to allow the system to distinguish 21st century dates from the 20th century dates. The use of software and computer systems that are not Year 2000 compliant could result in system failures or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions or engage in normal business activities. As a result, many companies' software and computer systems may need to be upgraded or replaced in order to comply with Year 2000 requirements. The Company has completed a review of its software and hardware and determined that all mission-critical systems are Year 2000 compliant. Non-mission critical software and hardware have also been reviewed, and the Company has identified certain personal computers, local area networks and file servers which are scheduled for upgrades or replacement as part of the Company's ongoing maintenance of its information system technology. The Company has also completed a review of Year 2000 issues not related to information technology including, but not limited to, the use of imbedded chips or internal clocks in machinery or equipment. As the Company owns primarily single-story industrial buildings and neighborhood retail centers without enclosed common areas, the use of this technology is very limited and, accordingly, the Company believes that it is Year 2000 compliant. The Company has no incremental costs in addressing these Year 2000 issues. The Company has communicated with its major tenants, financial institutions and utility companies to determine the extent to which the Company is vulnerable to third parties' failures to resolve their Year 2000 issues. Based on the representations received from these third parties, the Company does not believe this represents a material risk to the Company. Nevertheless, the Company has no guarantee that such third party systems will operate as represented. In the event significant systems of one of these third parties fails, the operating results and financial condition of the Company could be adversely effected. Based on the Company's assessment of the readiness of its own systems and those of significant third parties, it has not deemed it necessary to develop a formal contingency plan. In the event additional information comes to the Company's attention which would change its current assessment, it will consider the need for a contingency plan at that time. PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (numbered in accordance with Item 601 of Regulation S-K) (12) A statement of computation of ratios of earnings and funds from operations to combined fixed charges and preferred dividends. (27) Article 5 Financial Data Schedule (EDGAR filing only). SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WEINGARTEN REALTY INVESTORS ----------------------------- (Registrant) BY: /s/ Stanford Alexander -------------------------- Stanford Alexander Chairman/Chief Executive Officer (Principal Executive Officer) BY: /s/ Stephen C. Richter -------------------------- Stephen C. Richter Senior Vice President/Financial Administration and Treasurer (Principal Accounting Officer) DATE: April 29, 1999 ---------------- EX-12.1 2 EXHIBIT 12.1
WEINGARTEN REALTY INVESTORS COMPUTATION OF RATIOS OF EARNINGS AND FUNDS FROM OPERATIONS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS (AMOUNTS IN THOUSANDS) Three Months Ended March 31, -------------------------- 1999 1998 ------------ ------------ Net income available to common shareholders . . . . . . . $ 13,524 $ 12,329 Add: Portion of rents representative of the interest factor. . 329 203 Interest on indebtedness. . . . . . . . . . . . . . . . . 8,033 8,334 Preferred dividends . . . . . . . . . . . . . . . . . . . 4,563 574 Amortization of debt cost . . . . . . . . . . . . . . . . 94 99 ------------ ------------ Net income as adjusted. . . . . . . . . . . . . . . . $ 26,543 $ 21,539 ============ ============ Fixed charges: Interest on indebtedness. . . . . . . . . . . . . . . . . $ 8,033 $ 8,334 Capitalized interest. . . . . . . . . . . . . . . . . . . 447 272 Preferred dividends . . . . . . . . . . . . . . . . . . . 4,563 574 Amortization of debt cost . . . . . . . . . . . . . . . . 94 99 Portion of rents representative of the interest factor. . 329 203 ------------ ------------ Fixed charges . . . . . . . . . . . . . . . . . . . . $ 13,466 $ 9,482 ============ ============ RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS . . . . . . . . . . . . . 1.97 2.27 ============ ============ Net income available to common shareholders . . . . . . . $ 13,524 $ 12,329 Depreciation and amortization . . . . . . . . . . . . . . 11,543 9,987 Gain on sales of property and securities. . . . . . . . . (83) Extraordinary charge (early retirement of debt) . . . . . 149 1,392 ------------ ------------ Funds from operations . . . . . . . . . . . . . . . . 25,216 23,625 Add: Portion of rents representative of the interest factor. . 329 203 Preferred dividends . . . . . . . . . . . . . . . . . . . 4,563 574 Interest on indebtedness. . . . . . . . . . . . . . . . . 8,033 8,334 Amortization of debt cost . . . . . . . . . . . . . . . . 94 99 ------------ ------------ Funds from operations as adjusted . . . . . . . . . . $ 38,235 $ 32,835 ============ ============ RATIO OF FUNDS FROM OPERATIONS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS . . . . . . . . . . 2.84 3.46 ============ ============
EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WEINGARTEN REALTY INVESTORS' QUARTERLY REPORT FOR THE PERIOD ENDED MARCH 31, 1999. 1 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 126 0 12746 1229 0 0 1361387 306708 1140847 0 0 801 0 267 638433 1140847 0 54764 0 14990 13505 0 8033 18236 0 18236 0 149 0 18087 .51 .50
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