-----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, QktiBvFKdzZpm7+apt8sAgaEGkX7eUCY0pGWU/fSmzC8uj85sX8C1g+PgZXzYQKa bGUdcVXrHTeCnVkTLiWp6w== 0000828916-98-000016.txt : 19980430 0000828916-98-000016.hdr.sgml : 19980430 ACCESSION NUMBER: 0000828916-98-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980428 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEINGARTEN REALTY INVESTORS /TX/ CENTRAL INDEX KEY: 0000828916 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 741464203 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09876 FILM NUMBER: 98602688 BUSINESS ADDRESS: STREET 1: 2600 CITADEL PLAZA DR CITY: HOUSTON STATE: TX ZIP: 77008 BUSINESS PHONE: 7138666000 MAIL ADDRESS: STREET 1: P O BOX 924133 STREET 2: P O BOX 924133 CITY: HOUSTON STATE: TX ZIP: 77292-4133 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998 -------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from____________________ to ____________________ Commission file number 1-9876 ------ WEINGARTEN REALTY INVESTORS --------------------------- (Exact name of registrant as specified in its charter)
Texas 74-1464203 - ---------------------------------------------------------- ------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2600 Citadel Plaza Drive, P.O. Box 924133, Houston, Texas. 77292-4133 - ---------------------------------------------------------- ------------------ (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 866-6000 -------------- ____________________________________________ (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X. No. ---- ---- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes. No. ---- ---- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of April 24, 1998, there were 26,666,501 common shares of beneficial interest of Weingarten Realty Investors, $.03 par value, outstanding. PART 1 FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
WEINGARTEN REALTY INVESTORS STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED) (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Three Months Ended March 31, ------------------ 1998 1997 -------- ------- 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 ======== =======
See Notes to Consolidated Financial Statements.
WEINGARTEN REALTY INVESTORS CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) March 31, December 31, 1998 1997 ------------ ----------- (unaudited) ASSETS 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 ============ ===========
See Notes to Consolidated Financial Statements.
WEINGARTEN REALTY INVESTORS STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED) (AMOUNTS IN THOUSANDS) Three Months Ended March 31, -------------------- 1998 1997 --------- --------- 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 ========= =========
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):
Three Months Ended March 31, ---------------------- 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 ========= =========
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:
Three Months Ended March 31, ---------------------- 1998 1997 --------- --------- 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 ========= =========
5. DEBT The Company's debt consists of the following:
March 31, December 31, 1998 1997 ----------- ------------ 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 =========== ===========
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. 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:
March 31, December 31, 1998 1997 ------------ ------------ 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 ============ ============
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:
March 31, December 31, 1998 1997 ------------ ------------- 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 ============= ============
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. 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. 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. 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. 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 ------------------ EX-12 2 EXHIBIT 12
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 -------- -------- 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 ======== ========
EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WEINGARTEN REALTY INVESTORS' ANNUAL REPORT FOR THE PERIOD ENDED MARCH 31, 1998. 1,000 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 3,214 0 7,921 959 0 0 1,166,820 271,077 969,011 0 0 90 0 800 456,334 969,011 0 46,962 0 12,726 11,537 0 8,334 14,295 0 14,295 0 1,392 0 12,903 .46 .46
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