-----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, PEhh/3TTPW2Rwijlrqq6wMzpSXNZdnTnzgPL5bye35HZbEKSX+SMGdVdMMxYUpPe 6cgK7mbzR3Qk9hw6vnuMsA== /in/edgar/work/20000804/0000828916-00-000041/0000828916-00-000041.txt : 20000921 0000828916-00-000041.hdr.sgml : 20000921 ACCESSION NUMBER: 0000828916-00-000041 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000804 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEINGARTEN REALTY INVESTORS /TX/ CENTRAL INDEX KEY: 0000828916 STANDARD INDUSTRIAL CLASSIFICATION: [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: 686645 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 0001.txt 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 June 30, 2000 ------------- 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 July 31, 2000, there were 26,783,962 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 Six Months Ended June 30, June 30, ---------------------- ---------------------- 2000 1999 2000 1999 ---------- ---------- ---------- ---------- Revenues: Rentals. . . . . . . . . . . . . . . . . . . . . . . . . $ 61,362 $ 54,989 $ 120,801 $ 108,422 Interest: Affiliates . . . . . . . . . . . . . . . . . . . . . . 1,442 623 2,728 1,098 Securities and Other . . . . . . . . . . . . . . . . . 96 1 196 524 Equity in earnings (loss) of real estate joint ventures and partnerships . . . . . . . . . . . . . . . . . . (26) 83 (98) 168 Other. . . . . . . . . . . . . . . . . . . . . . . . . . 709 616 1,157 864 ---------- ---------- ---------- ---------- Total . . . . . . . . . . . . . . . . . . . . . . . 63,583 56,312 124,784 111,076 ---------- ---------- ---------- ---------- Expenses: Depreciation and amortization. . . . . . . . . . . . . . 13,231 11,527 26,430 23,164 Interest . . . . . . . . . . . . . . . . . . . . . . . . 10,668 7,491 20,862 15,524 Operating. . . . . . . . . . . . . . . . . . . . . . . . 9,969 9,182 18,898 17,360 Ad valorem taxes . . . . . . . . . . . . . . . . . . . . 7,691 6,951 15,252 13,763 General and administrative . . . . . . . . . . . . . . . 2,046 1,922 3,913 3,790 ---------- ---------- ---------- ---------- Total . . . . . . . . . . . . . . . . . . . . . . . 43,605 37,073 85,355 73,601 ---------- ---------- ---------- ---------- Income from Operations . . . . . . . . . . . . . . . . . . 19,978 19,239 39,429 37,475 Loss on Sales of Property. . . . . . . . . . . . . . . . . (55) (55) ---------- ---------- ---------- ---------- Income Before Extraordinary Charge . . . . . . . . . . . . 19,978 19,184 39,429 37,420 Extraordinary Charge (early retirement of debt). . . . . . (149) ---------- ---------- ---------- ---------- Net Income . . . . . . . . . . . . . . . . . . . . . . . . 19,978 19,184 39,429 37,271 Dividends on Preferred Shares. . . . . . . . . . . . . . . 5,010 5,010 10,020 9,573 ---------- ---------- ---------- ---------- Net Income Available to Common Shareholders. . . . . . . . $ 14,968 $ 14,174 $ 29,409 $ 27,698 ========== ========== ========== ========== Net Income Per Common Share - Basic: Income Before Extraordinary Charge. . . . . . . . . $ .56 $ .53 $ 1.10 $ 1.05 Extraordinary Charge. . . . . . . . . . . . . . . . (.01) ---------- ---------- ---------- ---------- Net Income. . . . . . . . . . . . . . . . . . . . . $ .56 $ .53 $ 1.10 $ 1.04 ========== ========== ========== ========== Net Income Per Common Share - Diluted: Income Before Extraordinary Charge. . . . . . . . . $ .56 $ .53 $ 1.10 $ 1.04 Extraordinary Charge. . . . . . . . . . . . . . . . (.01) ---------- ---------- ---------- ---------- Net Income. . . . . . . . . . . . . . . . . . . . . $ .56 $ .53 $ 1.10 $ 1.03 ========== ========== ========== ==========
See Notes to Consolidated Financial Statements. Page 2
WEINGARTEN REALTY INVESTORS CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) June 30, December 31, 2000 1999 ------------ ------------ (unaudited) ASSETS Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,589,882 $ 1,514,139 Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . (351,154) (328,645) ------------ ------------ Property - net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,238,728 1,185,494 Investment in Real Estate Joint Ventures and Partnerships. . . . . . . . . 3,014 2,006 ------------ ------------ Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,241,742 1,187,500 Mortgage Bonds and Notes Receivable from: Real Estate Joint Ventures and Partnerships. . . . . . . . . . . . . . 70,038 52,824 Affiliate (net of deferred gain of $3,050 in 2000 and 1999). . . . . . 4,085 3,907 Unamortized Debt and Lease Costs . . . . . . . . . . . . . . . . . . . . . 32,878 29,986 Accrued Rent and Accounts Receivable (net of allowance for doubtful accounts of $1,068 in 2000 and $908 in 1999) . . . . . . . . . . . . . . 10,648 16,874 Cash and Cash Equivalents. . . . . . . . . . . . . . . . . . . . . . . . . 3,050 5,842 Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,791 12,463 ------------ ------------ Total. . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,377,232 $ 1,309,396 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 681,995 $ 594,185 Accounts Payable and Accrued Expenses. . . . . . . . . . . . . . . . . . . 48,615 57,518 Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,805 11,791 ------------ ------------ Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 740,415 663,494 ------------ ------------ 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 3,575 and 3,600 shares outstanding in 2000 and 1999; liquidation preference $25 per share. 108 108 7.0% Series C cumulative redeemable preferred shares of beneficial interest; 2,300 shares issued and 2,280 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: 26,784 in 2000 and 26,695 in 1999. . . . . . . . . . . . . . . . . . . 803 801 Capital Surplus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 754,610 753,030 Accumulated Dividends in Excess of Net Income. . . . . . . . . . . . . . (118,861) (108,193) Deferred Compensation Obligation . . . . . . . . . . . . . . . . . . . . (1) (3) ------------ ------------ Shareholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . 636,817 645,902 ------------ ------------ Total. . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,377,232 $ 1,309,396 ============ ============
See Notes to Consolidated Financial Statements. Page 3
WEINGARTEN REALTY INVESTORS STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED) (AMOUNTS IN THOUSANDS) Six Months Ended June 30, ------------------------ 2000 1999 ----------- ----------- Cash Flows from Operating Activities: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 39,429 $ 37,271 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization. . . . . . . . . . . . . . . . 26,430 23,164 Equity in (earnings) loss of real estate joint ventures and partnerships . . . . . . . . . . . . . . . . . . . . . . . 98 (168) Loss on sales of property. . . . . . . . . . . . . . . . . . 55 Extraordinary charge (early retirement of debt). . . . . . . 149 Changes in accrued rent and accounts receivable. . . . . . . 6,172 4,370 Changes in other assets. . . . . . . . . . . . . . . . . . . (8,290) (5,116) Changes in accounts payable and accrued expenses . . . . . . (8,621) (8,077) Other, net. . . . . . . . . . . . . . . . . . . . . . . . . 21 260 ----------- ----------- Net cash provided by operating activities. . . . . . . . . 55,239 51,908 ----------- ----------- Cash Flows from Investing Activities: Investment in properties . . . . . . . . . . . . . . . . . . . . (70,050) (94,866) Mortgage bonds and notes receivable: Advances . . . . . . . . . . . . . . . . . . . . . . . . . . (18,908) (4,820) Collections. . . . . . . . . . . . . . . . . . . . . . . . . 288 1,122 Proceeds from sales and disposition of property. . . . . . . . . 3 Proceeds from the sale of marketable debt securities . . . . . . 15,000 Real estate joint ventures and partnerships: Investments. . . . . . . . . . . . . . . . . . . . . . . . . (1,049) (454) Distributions. . . . . . . . . . . . . . . . . . . . . . . . 216 Other, net. . . . . . . . . . . . . . . . . . . . . . . . . . . (7) ----------- ----------- Net cash used in investing activities. . . . . . . . . . . (89,719) (83,806) ----------- ----------- Cash Flows from Financing Activities: Proceeds from issuance of: Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108,115 53,417 Common shares of beneficial interest . . . . . . . . . . . . 14 475 Preferred shares of beneficial interest. . . . . . . . . . . 111,263 Principal payments of debt . . . . . . . . . . . . . . . . . . . (25,891) (83,487) Common and preferred dividends paid. . . . . . . . . . . . . . . (50,097) (47,474) Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . (453) (76) ----------- ----------- Net cash provided by financing activities. . . . . . . . . 31,688 34,118 ----------- ----------- Net increase/(decrease) in cash and cash equivalents . . . . . . . (2,792) 2,220 Cash and cash equivalents at January 1 . . . . . . . . . . . . . . 5,842 1,672 ----------- ----------- Cash and cash equivalents at June 30 . . . . . . . . . . . . . . . $ 3,050 $ 3,892 =========== ===========
See Notes to Consolidated Financial Statements. Page 4 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, 1999. In the opinion of WRI, 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 WRI's annual financial statements and notes. 2. NEWLY ADOPTED ACCOUNTING PRONOUNCEMENT Effective January 1, 2000, WRI adopted the SEC Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" that requires recognition of percentage rental revenue only after a tenant exceeds their sales breakpoint. 3. 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 Six Months Ended June 30, June 30, ------------------ ------------------ 2000 1999 2000 1999 -------- -------- -------- -------- Numerator: Net income available to common shareholders - basic . . . $ 14,968 $ 14,174 $ 29,409 $ 27,698 Income attributable to operating partnership units. . . . 42 35 81 76 -------- -------- -------- -------- Net income available to common shareholders - diluted . . $ 15,010 $ 14,209 $ 29,490 $ 27,774 ======== ======== ======== ======== Denominator: Weighted average shares outstanding - basic . . . . . . . 26,754 26,692 26,730 26,687 Effect of dilutive securities: Share options and awards. . . . . . . . . . . . . . . 54 90 37 88 Operating partnership units . . . . . . . . . . . . . 103 148 117 148 -------- -------- -------- -------- Weighted average shares outstanding - diluted . . . . . . 26,911 26,930 26,884 26,923 ======== ======== ======== ========
Page 5 4. DEBT WRI's debt consists of the following (in thousands):
June 30, December 31, 2000 1999 ------------ ------------ Fixed-rate debt payable to 2015 at 6.0% to 10.0% . . $ 427,460 $ 423,906 Notes payable under revolving credit agreements. . . 212,750 114,000 Obligations under capital leases . . . . . . . . . . 33,467 48,467 Industrial revenue bonds to 2015 at 4.9% to 7.1% . . 6,076 6,141 Other. . . . . . . . . . . . . . . . . . . . . . . . 2,242 1,671 ------------ ------------ Total . . . . . . . . . . . . . . . . . . . . . $ 681,995 $ 594,185 ============ ============
At June 30, 2000, the variable interest rate for notes payable under the $200 million revolving credit agreement was 7.2%, and the variable interest rate under the $20 million revolving credit agreement was 7.1%. Effective March 1, 2000, WRI finalized an unsecured $100 million revolving credit agreement with a bank. This one-year facility is renewable at our option for an additional two-year period. At June 30, 2000, $12 million was borrowed under this line at a variable interest rate of 7.4%. 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. Additionally, WRI has three interest rate swap contracts with an aggregate notional amount of $40 million which swap floating-rate interest for fixed-rate interest. Such contracts, which expire through 2004, have been outstanding since their purchase in 1992. These interest rate swaps have an effective interest rate of 8.1%. In July 2000, WRI issued $50 million of variable-rate, unsecured medium term notes. Of the $50 million issued, $25 million is a two-year variable-rate note that bears interest at 50 basis points over LIBOR. The other $25 million is a three-year 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. In July 2000, we filed a $400 million shelf registration statement, of which $350 million is currently available. WRI's debt can be summarized as follows (in thousands):
June 30, December 31, 2000 1999 ------------ ------------ As to interest rate (including the effects of interest rate swaps): Fixed-rate debt . . . . . . . . . . . . . . . $ 477,972 $ 499,919 Variable-rate debt. . . . . . . . . . . . . . 204,023 94,266 ------------ ------------ Total . . . . . . . . . . . . . . . . . . . . $ 681,995 $ 594,185 ============ ============ As to collateralization: Unsecured debt. . . . . . . . . . . . . . . . $ 567,493 $ 482,671 Secured debt. . . . . . . . . . . . . . . . . 114,502 111,514 ------------ ------------ Total . . . . . . . . . . . . . . . . . . . . $ 681,995 $ 594,185 ============ ============
Page 6 5. PROPERTY WRI's property consists of the following (in thousands):
June 30, December 31, 2000 1999 ------------ ------------ Land . . . . . . . . . . . . . $ 287,291 $ 279,871 Land held for development. . . 24,567 24,509 Land under development . . . . 29,530 12,139 Buildings and improvements . . 1,224,087 1,189,687 Construction in-progress . . . 24,407 7,933 ------------ ------------ Total. . . . . . . . . . . . . $ 1,589,882 $ 1,514,139 ============ ============
Interest and ad valorem taxes capitalized to land under development or buildings under construction was $1.0 and $.8 million, respectively, for the quarter ending June 30, 2000 and 1999 and $1.5 and $1.3 million, respectively, for the six months ended June 30, 2000 and 1999. 6. 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. 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. Page 7 Information concerning WRI's reportable segments is as follows (in thousands):
SHOPPING CENTER INDUSTRIAL OTHER TOTAL ---------- ---------- ---------- ------------ Three Months Ended June 30, 2000: Revenues . . . . . . . . . $ 54,056 $ 7,219 $ 2,308 $ 63,583 Net operating income . . . 38,710 5,143 2,070 45,923 Total assets . . . . . . . 1,103,151 176,176 97,905 1,377,232 Three Months Ended June 30, 1999: Revenues . . . . . . . . . $ 48,707 $ 6,559 $ 1,046 $ 56,312 Net operating income . . . 34,429 4,717 1,033 40,179 Total assets . . . . . . . 949,049 153,340 74,685 1,177,074 Six Months Ended June 30, 2000: Revenues . . . . . . . . . $ 106,200 $ 14,164 $ 4,420 $ 124,784 Net operating income . . . 76,455 10,085 4,094 90,634 Six Months Ended June 30, 1999: Revenues . . . . . . . . . $ 96,074 $ 12,645 $ 2,357 $ 111,076 Net operating income . . . 68,305 9,141 2,507 79,953
Net operating income reconciles to income from operations as shown on the Statements of Consolidated Income as follows (in thousands):
Three Months Ended Six Months Ended June 30, June 30, ------------------ ------------------ 2000 1999 2000 1999 -------- -------- -------- -------- Total segment net operating income. . . $ 45,923 $ 40,179 $ 90,634 $ 79,953 Less: Depreciation and amortization . . . 13,231 11,527 26,430 23,164 Interest. . . . . . . . . . . . . . 10,668 7,491 20,862 15,524 General and administrative. . . . . 2,046 1,922 3,913 3,790 -------- -------- -------- -------- Income from operations. . . . . . . . . $ 19,978 $ 19,239 $ 39,429 $ 37,475 ======== ======== ======== ========
Equity in earnings (loss) 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. Page 8 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 193 anchored shopping centers, 50 industrial properties, one multi-family residential property and one office building at June 30, 2000. Of WRI's 245 developed properties, 181 are located in Texas (including 100 in Houston and Harris County). Our remaining properties are located in Louisiana (11), Arizona (11), Nevada (8), Arkansas (6), New Mexico (6), Oklahoma (4), Tennessee (4), Kansas (4), Colorado (5), Missouri (2), Illinois (1), Florida (1) and Maine (1). WRI has nearly 4,300 leases and 3,300 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, 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, 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 growth. Cash flow from operating activities as reported in the Statements of Consolidated Cash Flows was $55.2 million for the first six months of 2000 as compared to $51.9 million for the same period of 1999. The increase was due primarily to WRI's acquisition and new development programs and improvements in the performance of its existing portfolio of properties. Our Board of Trust Managers approved a quarterly dividend per common share of $.75 for the second quarter of 2000. Our dividend payout ratio on common equity for the second quarter of 2000 and 1999 was 71% and 74%, respectively, based on funds from operations for the applicable period. WRI invested an additional $22.9 million for the acquisition of three shopping centers during the second quarter. 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 March, WRI formed a strategic joint venture with Dana Commercial Credit Corporation 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 Dana Commercial Credit Corporation. 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. With respect to new development, we purchased land for three new projects. In April, twenty-five acres of land in Shreveport, Louisiana was purchased for the development of a 196,000 square foot shopping center adjacent to a new 176,000 square foot tenant-owned Super Target. This project is expected to open in the fall of 2001. In May, we purchased land in Arizona adjacent to a 65,000 square foot tenant-owned Fry's Supermarket on which we will develop 12,000 square feet of restaurant/small shop space. In June, we purchased approximately 13 acres of land in Las Vegas for the development of 60,000 square feet of retail space surrounding a 140,000 square foot tenant-owned Super Kmart. Construction continues to progress at several other locations, highlighted by the opening of the 66,000 square foot King Soopers supermarket anchoring the 134,000 square foot center owned in a joint venture with our Denver-based development partner. The projects under construction represent an estimated investment by WRI of approximately $76 million and will add over 700,000 square feet to the portfolio. Page 9 Total debt outstanding increased to $682.0 million at quarter-end from $594.2 at December 31, 1999. This increase was primarily due to acquisitions and WRI's ongoing development and redevelopment efforts. Included in total debt outstanding of $682.0 at June 30, 2000 is variable-rate debt of $154.9 million, after recognizing the effect of $50.5 million of interest rate swaps and $49.1 million of variable-rate notes receivables. WRI's debt to total capitalization is a conservative 33.4% and the interest coverage ratio is 4.0 to 1 for the four quarters ended June 30, 2000. 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. Effective March 1, 2000, WRI finalized an unsecured $100 million revolving credit agreement with a bank. This one-year facility is renewable at our option for an additional two-year period. In July 2000, the Company issued $50 million of variable-rate, unsecured medium term notes. Of the $50 million issued, $25 million is a two-year variable-rate note that bears interest at 50 basis points over LIBOR. The other $25 million is a three-year 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. FUNDS FROM OPERATIONS Industry analysts generally consider funds from operations to be an appropriate 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 WRI's operating performance or to cash flows from operations as a measure of liquidity. Funds from operations increased to $28.1 million for the second quarter of 2000, as compared to $25.7 million for the same period of 1999. For the six months ended June 30, 2000, funds from operations increased to $55.6 million from $50.9 million in 1999. These increases primarily relate to the impact of WRI's acquisitions, new development and activity at its existing properties. For further information on changes between years, see "Results of Operations" below. RESULTS OF OPERATIONS THREE MONTHS ENDED JUNE 30, 2000 Net income available to common shareholders increased to $15.0 million from $14.2 million for the second quarter of 2000 as compared with the same quarter of 1999. Net income per common share-basic increased to $.56 in 2000 from $.53 in 1999, while net income per share-diluted also increased to $.56 in 2000 from $.53 in 1999. Rental revenues were $61.4 million in 2000, as compared to $55.0 million in 1999, representing an increase of approximately $6.4 million or 11.6%. Of these increases, property acquisitions and new development contributed $5.9 million in 2000, as compared to $6.2 million for the same period of 1999. The remaining portion of these increases is due to activity at our existing properties. Occupancy of the total portfolio increased to 92.7% as compared to 91.3% as of December 31, 1999. The occupancy of the retail portfolio was also 92.7%, up from 91.3% at year-end 1999, while the industrial portfolio increased from 91.0% at year-end to 92.7%. This increase in occupancy results primarily from the lease-up of several large spaces that were vacated in the latter half of 1999. During the first six months of 2000, WRI completed 420 renewals or leases comprising 2.3 million square feet at an average rental rate of 10.7%. Net of the amortized portion of capital costs for tenant improvements, the increased averaged 7.3%. Retail sales on the same-store basis increased by 1.5% based on sales reported during the last twelve months. Page 10 Gross interest costs, before capitalization of interest, increased by $3.2 million from $8.3 million in the second quarter of 1999 to $11.5 million in the second quarter of 2000. The increase is due primarily to an increase in the average debt outstanding between periods of $461.8 in 1999 to $638.5 million in 2000. The average interest rate remained unchanged at 7.2%. The amount of interest capitalized during the period was $.8 million in 2000 and 1999. The increases in depreciation and amortization, operating expenses and ad valorem taxes were primarily the result of WRI's acquisitions and new development programs. SIX MONTHS ENDED JUNE 30, 2000 Net income available to common shareholders increased to $29.4 million from $27.7 million for the first six months of 2000 as compared with the same period of 1999. Net income per common share-basic increased to $1.10 in 2000 from $1.04 in 1999, while net income per share-diluted also increased to $1.10 in 2000 from $1.03 in 1999. Rental revenues were $120.8 million in 2000, as compared to $108.4 million in 1999, representing an increase of approximately $12.4 million or 11.4%. Of these increases, property acquisitions and new development contributed $11.8 million in 2000, as compared to $12.9 million for the same period of 1999. The remaining portion of these increases is due to activity at our existing properties. Gross interest costs, before capitalization of interest, increased by $5.4 million from $16.8 million for the first six months of 1999 to $22.2 million for the same period of 2000. The increase was due primarily to an increase in the average debt outstanding between periods from $469.1 million in 1999 to $616.2 million in 2000. The average interest rate remained unchanged at 7.2%. The amount of interest capitalized during the period was $1.3 million in 2000 and 1999. The increases in depreciation and amortization, operating expenses and ad valorem taxes were primarily the result of WRI's acquisition and new development programs. Page 11 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). (b) Reports on Form 8-K A Form 8-K, dated April 26, 2000, was filed with the Securities and Exchange Commission to file the Independent Auditors' Consent of Deloitte & Touche LLP relating to the Registration Statement No. 333-35174 on Form S-3. Page 12 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/Chief Financial Officer (Principal Accounting Officer) DATE: August 4, 2000 ---------------- Page 13 EX-12 2 0002.txt EXHIBIT 12
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 Six Months Ended June 30, June 30, ------------------- -------------------- 2000 1999 2000 1999 --------- --------- --------- --------- Net income available to common shareholders . . . . . . . . $ 14,968 $ 14,174 $ 29,409 $ 27,698 Add: Portion of rents representative of the interest factor. . . 225 363 448 692 Interest on indebtedness. . . . . . . . . . . . . . . . . . 10,668 7,491 20,862 15,524 Preferred dividends . . . . . . . . . . . . . . . . . . . . 5,010 5,010 10,020 9,573 Amortization of debt cost . . . . . . . . . . . . . . . . . 109 80 204 174 --------- --------- --------- --------- Net income as adjusted. . . . . . . . . . . . . . . . . $ 30,980 $ 27,118 $ 60,943 $ 53,661 ========= ========= ========= ========= Fixed charges: Interest on indebtedness. . . . . . . . . . . . . . . . . . $ 10,668 $ 7,491 $ 20,862 $ 15,524 Capitalized interest. . . . . . . . . . . . . . . . . . . . 844 808 1,349 1,255 Preferred dividends . . . . . . . . . . . . . . . . . . . . 5,010 5,010 10,020 9,573 Amortization of debt cost . . . . . . . . . . . . . . . . . 109 80 204 174 Portion of rents representative of the interest factor. . . 225 363 448 692 --------- --------- --------- --------- Fixed charges . . . . . . . . . . . . . . . . . . . . . $ 16,856 $ 13,752 $ 32,883 $ 27,218 ========= ========= ========= ========= RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS . . . . . . . . . . . . . . 1.84 1.97 1.85 1.97 ========= ========= ========= ========= Net income available to common shareholders . . . . . . . . $ 14,968 $ 14,174 $ 29,409 $ 27,698 Depreciation and amortization . . . . . . . . . . . . . . . 13,122 11,447 26,226 22,990 Loss on sales of property . . . . . . . . . . . . . . . . . 55 55 Extraordinary charge (early retirement of debt) . . . . . . 149 --------- --------- --------- --------- Funds from operations . . . . . . . . . . . . . . . . . 28,090 25,676 55,635 50,892 Add: Portion of rents representative of the interest factor. . . 225 363 448 692 Preferred dividends . . . . . . . . . . . . . . . . . . . . 5,010 5,010 10,020 9,573 Interest on indebtedness. . . . . . . . . . . . . . . . . . 10,668 7,491 20,862 15,524 Amortization of debt cost . . . . . . . . . . . . . . . . . 109 80 204 174 --------- --------- --------- --------- Funds from operations as adjusted . . . . . . . . . . . $ 44,102 $ 38,620 $ 87,169 $ 76,855 ========= ========= ========= ========= RATIO OF FUNDS FROM OPERATIONS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS . . . . . . . . . . . 2.62 2.81 2.65 2.82 ========= ========= ========= =========
EX-27 3 0003.txt
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WEINGARTEN REALTY INVESTORS' QUARTERLY REPORT FOR THE PERIOD ENDED JUNE 30, 2000. 1 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 3050 0 11716 1068 0 0 1589882 351154 1377232 0 0 803 0 266 635748 1377232 0 124784 0 34150 30343 0 20862 39429 0 39429 0 0 0 39429 1.10 1.10
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