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
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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 26, 1999, there
were 26,690,320 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,
--------------------
<S> <C> <C>
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
========= =========
</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,
1999 1998
------------ ------------
(unaudited)
ASSETS
<S> <C> <C>
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
============ ============
</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,
---------------------
1999 1998
---------- ---------
<S> <C> <C>
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
========== =========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
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):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
<S> <C> <C>
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
======== ========
</TABLE>
<PAGE>
3. DEBT
The Company's debt consists of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
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
============ ============
</TABLE>
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):
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
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
============ ============
</TABLE>
<PAGE>
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):
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------- -------------
<S> <C> <C>
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
============= =============
</TABLE>
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.
<PAGE>
Information concerning the Company's reportable segments is as follows (in
thousands):
<TABLE>
<CAPTION>
SHOPPING
CENTER INDUSTRIAL OTHER TOTAL
--------- ----------- ------- ----------
<S> <C> <C> <C> <C>
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
</TABLE>
Net operating income reconciles to income from operations as shown on
The Statements of Consolidated Income as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1999 1998
-------- --------
<S> <C> <C>
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
======== ========
</TABLE>
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.
<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 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.
<PAGE>
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.
<PAGE>
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.
<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 combined fixed charges and
preferred dividends.
(27) Article 5 Financial Data Schedule (EDGAR filing only).
<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 29, 1999
----------------
EXHIBIT 12.1
<TABLE>
<CAPTION>
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
------------ ------------
<S> <C> <C>
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
============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WEINGARTEN
REALTY INVESTORS' QUARTERLY REPORT FOR THE PERIOD ENDED MARCH 31, 1999.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 126
<SECURITIES> 0
<RECEIVABLES> 12746
<ALLOWANCES> 1229
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1361387
<DEPRECIATION> 306708
<TOTAL-ASSETS> 1140847
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 801
0
267
<OTHER-SE> 638433
<TOTAL-LIABILITY-AND-EQUITY> 1140847
<SALES> 0
<TOTAL-REVENUES> 54764
<CGS> 0
<TOTAL-COSTS> 14990
<OTHER-EXPENSES> 13505
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8033
<INCOME-PRETAX> 18236
<INCOME-TAX> 0
<INCOME-CONTINUING> 18236
<DISCONTINUED> 0
<EXTRAORDINARY> 149
<CHANGES> 0
<NET-INCOME> 18087
<EPS-PRIMARY> .51
<EPS-DILUTED> .50
</TABLE>
