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, 1998
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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
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WEINGARTEN REALTY INVESTORS
---------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Texas 74-1464203
- ---------------------------------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
<S> <C>
2600 Citadel Plaza Drive, P.O. Box 924133, Houston, Texas. 77292-4133
- ---------------------------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (713) 866-6000
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____________________________________________
(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 24, 1998, there
were 26,666,501 common shares of beneficial interest of Weingarten Realty
Investors, $.03 par value, outstanding.
<PAGE>
PART 1
FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
WEINGARTEN REALTY INVESTORS
STATEMENTS OF CONSOLIDATED INCOME
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended
March 31,
------------------
1998 1997
-------- -------
<S> <C> <C>
Revenues:
Rentals . . . . . . . . . . . . . . . . . . . . . . . $46,236 $40,267
Interest:
Securities and Other. . . . . . . . . . . . . . . . 43 290
Affiliates. . . . . . . . . . . . . . . . . . . . . 364 361
Equity in earnings of real estate joint ventures and
partnerships. . . . . . . . . . . . . . . . . . . . 95 244
Other . . . . . . . . . . . . . . . . . . . . . . . . 224 511
-------- -------
Total. . . . . . . . . . . . . . . . . . . . . . 46,962 41,673
-------- -------
Expenses:
Depreciation and amortization . . . . . . . . . . . . 10,086 9,303
Interest. . . . . . . . . . . . . . . . . . . . . . . 8,334 6,898
Operating . . . . . . . . . . . . . . . . . . . . . . 6,813 6,006
Ad valorem taxes. . . . . . . . . . . . . . . . . . . 5,983 5,337
General and administrative. . . . . . . . . . . . . . 1,534 1,402
-------- -------
Total. . . . . . . . . . . . . . . . . . . . . . 32,750 28,946
-------- -------
Income from Operations. . . . . . . . . . . . . . . . . 14,212 12,727
Gain on sales of property and securities. . . . . . . . 83 49
-------- -------
Income Before Extraordinary Charge. . . . . . . . . . . 14,295 12,776
Extraordinary Charge (early retirement of debt) . . . . 1,392
-------- -------
Net Income. . . . . . . . . . . . . . . . . . . . . . . 12,903 12,776
Dividends on Preferred Shares . . . . . . . . . . . . . 574
-------- -------
Net Income Available to Common Shareholders . . . . . . $12,329 $12,776
======== =======
Net Income Per Common Share - Basic:
Income Before Extraordinary Charge. . . . . . . . . $ .51 $ .48
Extraordinary Charge. . . . . . . . . . . . . . . . (.05)
-------- -------
Net Income. . . . . . . . . . . . . . . . . . . . . $ .46 $ .48
======== =======
Net Income Per Common Share - Diluted:
Income Before Extraordinary Charge. . . . . . . . . $ .51 $ .48
Extraordinary Charge. . . . . . . . . . . . . . . . (.05)
-------- -------
Net Income. . . . . . . . . . . . . . . . . . . . . $ .46 $ .48
======== =======
</TABLE>
See Notes to Consolidated Financial Statements.
<TABLE>
<CAPTION>
WEINGARTEN REALTY INVESTORS
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
March 31, December 31,
1998 1997
------------ -----------
(unaudited)
ASSETS
<S> <C> <C>
Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,166,820 $1,118,758
Accumulated Depreciation. . . . . . . . . . . . . . . . . . . . . . . (271,077) (262,551)
------------ -----------
Property - net. . . . . . . . . . . . . . . . . . . . . . . . . . 895,743 856,207
Investment in Real Estate Joint Ventures and Partnerships . . . . . . 2,729 2,824
------------ -----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 898,472 859,031
Mortgage Bonds and Notes Receivable from:
Affiliate (net of deferred gain of $4,487 in 1998 and 1997) . . . 14,893 14,752
Real Estate Joint Ventures and Partnerships . . . . . . . . . . . 15,229 15,250
Marketable Debt Securities. . . . . . . . . . . . . . . . . . . . . . 12,345
Unamortized Debt and Lease Costs. . . . . . . . . . . . . . . . . . . 24,795 23,536
Accrued Rent and Accounts Receivable (net of allowance for doubtful
accounts of $959 in 1998 and $1,000 in 1997). . . . . . . . . . . . 7,291 14,583
Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . 3,214 2,754
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,117 4,542
------------ -----------
Total . . . . . . . . . . . . . . . . . . . . . . . . $ 969,011 $ 946,793
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 480,641 $ 507,366
Accounts Payable and Accrued Expenses . . . . . . . . . . . . . . . . 25,648 43,305
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,498 6,136
------------ -----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511,787 556,807
------------ -----------
Shareholders' Equity:
Preferred Shares of Beneficial Interest - par value, $.03 per share;
shares authorized: 10,000; shares issued and outstanding:
3,000 in 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Common Shares of Beneficial Interest - par value, $.03 per share;
shares authorized: 150,000; shares issued and outstanding:
26,667 in 1998 and 26,660 in 1997 . . . . . . . . . . . . . . . . 800 800
Capital Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . 456,334 389,186
------------ -----------
Shareholders' Equity. . . . . . . . . . . . . . . . . . . . . . 457,224 389,986
------------ -----------
Total . . . . . . . . . . . . . . . . . . . . . . . . $ 969,011 $ 946,793
============ ===========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
WEINGARTEN REALTY INVESTORS
STATEMENTS OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
Three Months Ended
March 31,
--------------------
1998 1997
--------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 12,903 $ 12,776
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization. . . . . . . . . . . . . 10,086 9,303
Equity in earnings of real estate joint ventures and
partnerships . . . . . . . . . . . . . . . . . . . . (71) (244)
Gain on sales of property and securities . . . . . . . (83) (49)
Extraordinary charge (early retirement of debt). . . . 1,392
Amortization of direct financing leases. . . . . . . . 146 256
Changes in accrued rent and accounts receivable. . . . 6,983 5,754
Changes in other assets. . . . . . . . . . . . . . . . (3,827) (1,411)
Changes in accounts payable and accrued expenses . . . (18,281) (9,779)
Other, net . . . . . . . . . . . . . . . . . . . . . . 8 38
--------- ---------
Net cash provided by operating activities. . . . . 9,256 16,644
--------- ---------
Cash Flows from Investing Activities:
Investment in properties . . . . . . . . . . . . . . . . . (44,097) (15,769)
Mortgage bonds and notes receivable:
Advances . . . . . . . . . . . . . . . . . . . . . . . (162) (704)
Collections. . . . . . . . . . . . . . . . . . . . . . 544 420
Proceeds from sales and disposition of property. . . . . . 221
Proceeds from sales of marketable debt securities. . . . . 12,269
Real estate joint ventures and partnerships:
Investments. . . . . . . . . . . . . . . . . . . . . . (23)
Distributions. . . . . . . . . . . . . . . . . . . . . 56 130
Other, net . . . . . . . . . . . . . . . . . . . . . . . . 281 579
--------- ---------
Net cash used in investing activities. . . . . . . (30,888) (15,367)
--------- ---------
Cash Flows from Financing Activities:
Proceeds from issuance of:
Debt . . . . . . . . . . . . . . . . . . . . . . . . . 16,776 17,415
Common shares of beneficial interest . . . . . . . . . 120 871
Preferred shares of beneficial interest. . . . . . . . 72,512
Principal payments of debt . . . . . . . . . . . . . . . . (48,863) (1,417)
Dividends paid . . . . . . . . . . . . . . . . . . . . . . (18,440) (17,027)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . (13) (46)
--------- ---------
Net cash provided by (used in) financing activities 22,092 (204)
--------- ---------
Net increase in cash and cash equivalents. . . . . . . . . . 460 1,073
Cash and cash equivalents at January 1 . . . . . . . . . . . 2,754 169
--------- ---------
Cash and cash equivalents at March 31. . . . . . . . . . . . $ 3,214 $ 1,242
========= =========
</TABLE>
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, 1997. In the opinion of the
Registrant, 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. SIGNIFICANT ACCOUNTING POLICIES
On March 19, 1998, the Emerging Issues Task Force of the Financial Accounting
Standards Board reached a consensus decision on Issue No. 97-11, "Accounting
for Internal Costs Relating to Real Estate Property Acquisitions" which
provides that internal costs of identifying and acquiring operating property
should be expensed as incurred. The Company has historically capitalized the
direct internal costs of identifying and acquiring operating property and,
accordingly, will realize an increase in expense upon adoption of this ruling,
which is effective immediately. The Company is currently determining the
magnitude of the impact on earnings.
3. PER SHARE DATA
Net income per common share-basic ("Basic EPS") is computed using net income
and the weighted average shares outstanding. Net income per common
share-diluted ("Diluted EPS") is also computed using net income, however, the
weighted average shares outstanding are adjusted for potentially dilutive
securities for the periods indicated, as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
<S> <C> <C>
----------------------
Weighted Average Shares: . . . . . . . . 1998 1997
--------- ---------
Basic EPS. . . . . . . . . . . . . . . . 26,665 26,598
Effect of dilutive securities:
Employee share options . . . . . . . . 178 141
Convertible partnership interest . . . 39
--------- ---------
Diluted EPS. . . . . . . . . . . . . . . 26,882 26,739
========= =========
</TABLE>
<PAGE>
4. COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income." This
statement requires presentation of the components of comprehensive income,
including the changes in equity from non-owner sources such as unrealized
gains on marketable securities. The Company's total comprehensive income was
as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1998 1997
--------- ---------
<S> <C> <C>
Net Income. . . . . . . . . . . . . . . . . . $ 12,903 $ 12,776
--------- ---------
Unrealized holding gain arising during period 58 148
Less: Reclassification adjustment for gain
included in net income. . . . . . . . . . (1)
--------- ---------
57 148
--------- ---------
Comprehensive Income. . . . . . . . . . . . . $ 12,960 $ 12,924
========= =========
</TABLE>
5. DEBT
The Company's debt consists of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
----------- ------------
<S> <C> <C>
Fixed-rate debt payable to 2015 at 6.0% to 10.5% . . . . $ 348,457 $ 379,749
Notes payable under revolving credit agreements. . . . . 111,175 94,400
Obligations under capital leases . . . . . . . . . . . . 12,467 12,467
Repurchase agreements. . . . . . . . . . . . . . . . . . 12,176
Industrial revenue bonds payable to 2015 at 3.7% to 6.8%
at March 31, 1998. . . . . . . . . . . . . . . . . . 7,404 7,437
Other. . . . . . . . . . . . . . . . . . . . . . . . . . 1,138 1,137
----------- -----------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . $ 480,641 $ 507,366
=========== ===========
</TABLE>
At March 31, 1998, the variable interest rate for notes payable under the $200
million revolving credit agreement, including the cost of the related
commitment fee, was 6.2% and the variable interest rate under the $20 million
revolving credit agreement was 6.3%.
On January 20, 1998, the Company sold its investment in U.S. government agency
pass-through certificates for $12.2 million, resulting in a gain of less than
$.1 million. The proceeds were used to retire overnight repurchase agreements
which were collateralized by these marketable debt securities.
In January 1998, the Company entered into a forward Treasury lock whereby the
Company locked a ten-year Treasury rate of 5.49% until August of 1998 for a
notional amount of $35 million in anticipation of the issuance of Medium Term
Notes at a future date. This financial instrument was purchased to hedge the
Company's exposure against changes in interest rates and, accordingly, the
gain or loss upon settlement will be recognized as a component of interest
expense over the life of the Medium Term Notes.
<PAGE>
In February 1998, the Company retired $35 million of 9.11% secured notes
payable to an insurance company prior to their scheduled maturity. The
payment of a prepayment penalty and the writeoff of unamortized loan issuance
costs resulted in an extraordinary charge to earnings of $1.4 million, or $.05
per share.
The Company's debt can be summarized as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------ ------------
<S> <C> <C>
As to interest rate:
Fixed-rate debt (including amounts fixed
through interest rate swaps). . . . . $ 388,501 $ 419,792
Variable-rate debt. . . . . . . . . . . . 92,140 87,574
------------ ------------
Total . . . . . . . . . . . . . . . . . . $ 480,641 $ 507,366
============ ============
As to collateralization:
Secured debt. . . . . . . . . . . . . . . $ 75,826 $ 107,152
Unsecured debt. . . . . . . . . . . . . . 404,815 400,214
------------ ------------
Total . . . . . . . . . . . . . . . . . . $ 480,641 $ 507,366
============ ============
</TABLE>
6. PREFERRED SHARES
On February 23, 1998, the Company issued $75 million of 7.44% cumulative
redeemable preferred shares with a liquidation preference of $25 per share in
an underwritten public offering. These shares are redeemable at the Company's
option any time after March 31, 2003, but otherwise have no stated maturity.
The redemption price is payable solely out of the sale proceeds of other
capital shares of the Company, which may include other series of preferred
shares. Dividends are cumulative and are payable quarterly on or about the
last day of March, June, September and December. The net proceeds of $72.5
million were used to pay down amounts outstanding under the Company's $200
million line of credit and to retire $35 million of 9.11% secured notes
payable.
7. PROPERTY
The Company's property consists of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------ -------------
<S> <C> <C>
Land . . . . . . . . . . . . . . . . . $ 216,783 $ 208,512
Land held for development. . . . . . . 31,135 31,679
Land under development . . . . . . . . 7,588 5,958
Buildings and improvements . . . . . . 900,656 863,567
Construction in-progress . . . . . . . 3,761 1,940
Property under direct financing leases 6,897 7,102
------------ -------------
Total. . . . . . . . . . . . . . . . . $ 1,166,820 $ 1,118,758
============= ============
</TABLE>
Interest and ad valorem taxes totaling $.3 million in 1998 and $.1 million in
1997 were capitalized to land under development or buildings under
construction.
<PAGE>
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 175 anchored shopping centers,
23 industrial properties, one multi-family residential project and one office
building at March 31, 1998. Of the Company's 200 developed properties, 151
are located in Texas (including 93 in Houston and Harris County). The
Company's remaining properties are located in Louisiana (11), Arizona (10),
Nevada (5), Arkansas (5), New Mexico (5), Oklahoma (4), Kansas (3), Colorado
(2), Missouri (1), Illinois (1), Maine (1) and Tennessee (1). The Company has
nearly 3,300 leases and 2,500 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 facility, 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 $9.3 million for the first three
months of 1998 as compared to $16.6 million for the same period of 1997. The
decrease was primarily due to the timing of payment of interest, ad valorem
taxes and accounts payable at year-end 1997.
The Company's Board of Trust Managers approved an increase in the quarterly
dividend per common share from $.64 to $.67, effective this first quarter of
1998. The percentage of funds from operations paid out in cash dividends, or
dividend payout ratio, was 75% and 78% for the first quarters of 1998 and
1997, respectively.
During the quarter, the Company acquired three shopping centers for an
aggregate purchase price of $42.1 million, adding 544,000 square feet to its
portfolio of properties. In early March, the Company acquired a 152,000 square
foot shopping center in Lubbock, Texas, the Company's third center in this
city. The Company's second purchase during March was a 360,000 square foot
center in Corpus Christi located across the street from the city's two
regional malls. This represents the Company's second property in Corpus
Christi. Lastly, the Company purchased a vacant 32,000 square foot
free-standing supermarket building in Grand Prairie, Texas, a suburb of
Dallas. The building has subsequently been leased in its entirety to a
regional supermarket operator.
During the quarter, the Company substantially completed construction at two
new development locations where retail space was being constructed adjacent to
occupant-owned anchor tenants. These properties, located in Houston and
McKinney, Texas, a suburb of Dallas, added an aggregate of 60,000 square feet
and represent an investment of $7 million.
Construction is ongoing at three other retail locations in Phoenix, Fairview
Heights, Illinois and Watauga, Texas, which is located in the Dallas/Fort
Worth area. These are also locations where the Company is developing space
adjacent to occupant-owned anchors. These centers are expected to be
completed at various times during 1998. The Company is also developing a
162,000 square foot bulk warehouse in Houston at the Company's master-planned
industrial park. This development is expected to be completed in June of
1998. In the first quarter, the Company began development of another 158,000
square foot industrial facility in Houston which will be comprised of three
separate buildings. The first building will be complete near the end of 1998,
with the remainder to be completed in 1999. When completed, these retail and
industrial developments will represent a total investment of $31 million and
will add 543,000 square feet to the portfolio.
<PAGE>
During this quarter, the Company announced the development of a $14 million,
260-unit luxury apartment project in River Pointe, a multi-use, master-planned
project developed by the Company in Conroe, a suburb north of Houston. A
well-respected, Houston-based developer of luxury apartments will build, lease
and manage the apartment complex on the Company's behalf. Construction should
commence in the second quarter and the project is scheduled for completion in
the spring of 1999. The Company views this development primarily as an
opportunistic use of land inventory rather than a programmed expansion of
multi-family holdings.
Debt to total market capitalization at March 31, 1998 was 29% as compared to
30% at December 31, 1997. Total debt outstanding decreased to $480.6 million
at quarter-end from $507.4 at December 31, 1997. This decrease was primarily
due to the previously mentioned acquisitions in the first quarter of this year
and the Company's ongoing development and redevelopment efforts, offset by the
retirement of debt with the $72.5 million of proceeds from the Company's
preferred share offering.
At quarter-end, the Company has protection against interest rate increases
through fixed-rate loans and interest rate swap agreements on $388.5 million
of the total debt outstanding at March 31, 1998. For the quarter ended March
31, 1998, the Company's average interest rate was unchanged at 7.2% as
compared to the same period of the prior year.
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 as a measure of liquidity.
Funds from operations increased to $23.6 million for the first quarter of
1998, as compared to $21.9 million for the same period of 1997. 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 decreased to $12.3 million, or $.46 per share, from $12.8 million,
or $.48 per share, for the first quarter of 1998 as compared with the same
quarter of 1997. Included in net income for 1998 was an extraordinary loss of
$1.4 million, or $.05 per share, on the early retirement of fixed-rate debt.
Excluding this loss from 1998, net income would have increased by $.9 million
from the prior year. This increase is due primarily to the Company's
acquisitions and new developments during the past twelve months.
Rental revenues were $46.2 million for 1998, as compared to $40.3 million for
1997, representing an increase of approximately $6.0 million or 14.8%. This
increase relates primarily to acquisitions and, to a lesser degree, new
development and activity at the Company's existing retail properties.
Occupancy of the Company's total portfolio increased to 92.9% at March 31,
1998 from 92.7% at the end of the first quarter of the prior year and was up
from 91.8% at year-end 1997. During the first quarter of 1998 the Company
completed 163 renewals or leases comprising .6 million square feet of space.
Rental rates increased an average of 8.9% over the rates charged to the prior
tenants. Net of capital costs for tenant improvements, the increase averaged
6.2%. 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, increased by $1.6
million from $7.0 million in the first quarter of 1997 to $8.6 million in the
first quarter of 1998. The increase was due primarily to the increase in the
average debt outstanding between periods, from $389.3 million in 1997 to
$473.8 million in 1998. The average interest rate between periods was
unchanged at 7.2%.
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.
<PAGE>
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 fixed charges.
(27) Article 5 Financial Data Schedule (EDGAR filing only).
(b) Reports on Form 8-K
A Form 8-K, dated February 23, 1998, was filed to report
the issuance of preferred shares in response to Item 5.,
Other Events.
A Form 8-K, dated April 24, 1998, was filed to report significant
acquisitions in response to Item 2., Acquisition or Disposition
of Assets and Item 7., Financial Statements, Pro Forma Financial
Information and Exhibits.
<PAGE>
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 28, 1998
------------------
EXHIBIT 12
<TABLE>
<CAPTION>
WEINGARTEN REALTY INVESTORS
COMPUTATION OF RATIOS OF EARNINGS
AND FUNDS FROM OPERATIONS TO FIXED CHARGES
(DOLLAR AMOUNTS IN THOUSANDS)
Three Months Ended
March 31,
------------------
1998 1997
-------- --------
<S> <C> <C>
Net income . . . . . . . . . . . . . . . . . . . . . . $12,329 $12,776
Add:
Portion of rents representative of the interest factor 203 162
Interest on indebtedness . . . . . . . . . . . . . . . 8,334 6,898
Preferred dividends. . . . . . . . . . . . . . . . . . 574
Amortization of debt cost. . . . . . . . . . . . . . . 99 110
-------- --------
Net income as adjusted . . . . . . . . . . . . . . $21,539 $19,946
======== ========
Fixed charges:
Interest on indebtedness . . . . . . . . . . . . . . . $ 8,334 $ 6,898
Capitalized interest . . . . . . . . . . . . . . . . . 272 125
Preferred dividends. . . . . . . . . . . . . . . . . . 574
Amortization of debt cost. . . . . . . . . . . . . . . 99 110
Portion of rents representative of the interest factor 203 162
-------- --------
Fixed charges. . . . . . . . . . . . . . . . . . . $ 9,482 $ 7,295
======== ========
RATIO OF EARNINGS TO FIXED CHARGES . . . . . . . . . . 2.27 2.73
======== ========
Net income . . . . . . . . . . . . . . . . . . . . . . $12,329 $12,776
Depreciation and amortization. . . . . . . . . . . . . 9,987 9,193
Gain on sales of property and securities . . . . . . . (83) (49)
Extraordinary charge . . . . . . . . . . . . . . . . . 1,392
--------
Funds from operations. . . . . . . . . . . . . . . 23,625 21,920
Add:
Portion of rents representative of the interest factor 203 162
Interest on indebtedness . . . . . . . . . . . . . . . 8,334 6,898
Preferred dividends. . . . . . . . . . . . . . . . . . 574
Amortization of debt cost. . . . . . . . . . . . . . . 99 110
-------- --------
Funds from operations as adjusted. . . . . . . . . $32,835 $29,090
======== ========
RATIO OF FUNDS FROM OPERATIONS TO FIXED CHARGES. . . . 3.46 3.99
======== ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
WEINGARTEN REALTY INVESTORS' ANNUAL REPORT FOR THE PERIOD ENDED
MARCH 31, 1998.
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 3,214
<SECURITIES> 0
<RECEIVABLES> 7,921
<ALLOWANCES> 959
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,166,820
<DEPRECIATION> 271,077
<TOTAL-ASSETS> 969,011
<CURRENT-LIABILITIES> 0
<BONDS> 0
90
0
<COMMON> 800
<OTHER-SE> 456,334
<TOTAL-LIABILITY-AND-EQUITY> 969,011
<SALES> 0
<TOTAL-REVENUES> 46,962
<CGS> 0
<TOTAL-COSTS> 12,726
<OTHER-EXPENSES> 11,537
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,334
<INCOME-PRETAX> 14,295
<INCOME-TAX> 0
<INCOME-CONTINUING> 14,295
<DISCONTINUED> 0
<EXTRAORDINARY> 1,392
<CHANGES> 0
<NET-INCOME> 12,903
<EPS-PRIMARY> .46
<EPS-DILUTED> .46
</TABLE>
