-----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, GgCvdypF6o1d+LsiaCYQfYsGDGgASG0mWueMWzj2yf/i1vbaVBU39n6tGDe5vPmR Zc4FeDn0Z2Y14i+uQbPwzw== 0000828916-03-000046.txt : 20030513 0000828916-03-000046.hdr.sgml : 20030513 20030513161343 ACCESSION NUMBER: 0000828916-03-000046 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030331 FILED AS OF DATE: 20030513 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: 1934 Act SEC FILE NUMBER: 001-09876 FILM NUMBER: 03695766 BUSINESS ADDRESS: STREET 1: 2600 CITADEL PLAZA DR STREET 2: SUITE 300 CITY: HOUSTON STATE: TX ZIP: 77292 BUSINESS PHONE: 7138666000 MAIL ADDRESS: STREET 1: PO BOX 924133 CITY: HOUSTON STATE: TX ZIP: 77292-4133 10-Q 1 doc1.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2003 -------------- 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 by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes X. No . --- --- As of April 30, 2003, there were 52,122,029 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 AND COMPREHENSIVE INCOME (UNAUDITED) (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended March 31, -------------------- 2003 2002 --------- --------- Revenues: Rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 96,917 $ 83,421 Interest income . . . . . . . . . . . . . . . . . . . . . . . 246 200 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,022 760 --------- --------- Total. . . . . . . . . . . . . . . . . . . . . . . . . . 98,185 84,381 --------- --------- Expenses: Depreciation and amortization . . . . . . . . . . . . . . . . 21,199 17,761 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 19,439 14,996 Operating . . . . . . . . . . . . . . . . . . . . . . . . . . 14,146 12,250 Ad valorem taxes. . . . . . . . . . . . . . . . . . . . . . . 11,491 10,171 General and administrative. . . . . . . . . . . . . . . . . . 3,057 2,676 --------- --------- Total. . . . . . . . . . . . . . . . . . . . . . . . . . 69,332 57,854 --------- --------- Income Before Equity in Earnings of Joint Ventures, Minority Interest in Income of Partnerships, Gain on Sale of Properties and Discontinued Operations . . . . 28,853 26,527 Equity in Earnings of Joint Ventures. . . . . . . . . . . . . . 1,038 1,074 Minority Interest in Income of Partnerships . . . . . . . . . . (895) (116) Gain on Sale of Properties. . . . . . . . . . . . . . . . . . . 9 --------- --------- Income Before Discontinued Operations . . . . . . . . . . . . . 29,005 27,485 --------- --------- Operating Income from Discontinued Operations . . . . . . . . . 15 711 Gain on Sale of Properties. . . . . . . . . . . . . . . . . . . 871 1,221 --------- --------- Income From Discontinued Operations. . . . . . . . . . . 886 1,932 --------- --------- Net Income. . . . . . . . . . . . . . . . . . . . . . . . . . . 29,891 29,417 Dividends on Preferred Shares . . . . . . . . . . . . . . . . . 4,922 4,939 --------- --------- Net Income Available to Common Shareholders . . . . . . . . . . $ 24,969 $ 24,478 ========= ========= Net Income Per Common Share - Basic: Income Before Discontinued Operations . . . . . . . . . . . . $ .46 $ .43 Income From Discontinued Operations . . . . . . . . . . . . . .02 .04 --------- --------- Net Income. . . . . . . . . . . . . . . . . . . . . . . . . . $ .48 $ .47 ========= ========= Net Income Per Common Share - Diluted: Income Before Discontinued Operations . . . . . . . . . . . . $ .46 $ .43 Income From Discontinued Operations . . . . . . . . . . . . . .02 .04 --------- --------- Net Income. . . . . . . . . . . . . . . . . . . . . . . . . . $ .48 $ .47 ========= ========= Net Income. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,891 $ 29,417 --------- --------- Other Comprehensive Income: Unrealized derivative gain on interest rate swaps . . . . . . 529 1,166 Amortization of forward-starting interest rate swaps. . . . . (40) (40) --------- --------- Other Comprehensive Income. . . . . . . . . . . . . . . . . . . 489 1,126 --------- --------- Comprehensive Income. . . . . . . . . . . . . . . . . . . . . . $ 30,380 $ 30,543 ========= =========
See Notes to Consolidated Financial Statements. PAGE 2
WEINGARTEN REALTY INVESTORS CONSOLIDATED BALANCE SHEETS (UNAUDITED) (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) March 31, December 31, 2003 2002 ------------ ------------ ASSETS Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,762,271 $ 2,695,286 Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . (475,034) (460,832) ------------ ------------ Property - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,287,237 2,234,454 Investment in Real Estate Joint Ventures . . . . . . . . . . . . . . . . . . . . 28,574 28,738 ------------ ------------ Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,315,811 2,263,192 Notes Receivable from Real Estate Joint Ventures and Partnerships. . . . . . . . 18,304 14,747 Unamortized Debt and Lease Costs . . . . . . . . . . . . . . . . . . . . . . . . 50,614 48,377 Accrued Rent and Accounts Receivable (net of allowance for doubtful accounts of $4,926 in 2003 and $4,302 in 2002) . . . . . . . . . . . . . . . . 30,584 38,256 Cash and Cash Equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,630 27,420 Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,108 31,897 ------------ ------------ Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,479,051 $ 2,423,889 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,423,143 $ 1,330,369 Accounts Payable and Accrued Expenses. . . . . . . . . . . . . . . . . . . . . . 48,025 81,488 Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,074 23,636 ------------ ------------ Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,492,242 1,435,493 ------------ ------------ Minority Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,238 54,983 ------------ ------------ 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 $75,000 . . . . . . . . . . . . . . . . . . . . 90 90 7.125% Series B cumulative redeemable preferred shares of beneficial interest; 3,600 shares issued and 3,518 shares outstanding in 2003 and 2002; liquidation preference $87,950 . . . . . 106 106 7.0% Series C cumulative redeemable preferred shares of beneficial interest; 2,300 shares issued and 2,252 and 2,253 shares outstanding in 2003 and 2002; liquidation preference $112,590. . . . . 67 67 Common Shares of Beneficial Interest - par value, $.03 per share; shares authorized: 150,000; shares issued and outstanding: 52,113 in 2003 and 52,076 in 2002. . . . . . . . . . . . . . . . . . . . . 1,560 1,559 Capital Surplus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,083,227 1,082,046 Accumulated Dividends in Excess of Net Income. . . . . . . . . . . . . . . . . (153,366) (147,853) Accumulated Other Comprehensive Loss . . . . . . . . . . . . . . . . . . . . . (2,113) (2,602) ------------ ------------ Shareholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 929,571 933,413 ------------ ------------ Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,479,051 $ 2,423,889 ============ ============
See Notes to Consolidated Financial Statements. PAGE 3
WEINGARTEN REALTY INVESTORS STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED) (AMOUNTS IN THOUSANDS) Three Months Ended March 31, ----------------------- 2003 2002 ---------- ---------- Cash Flows from Operating Activities: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,891 $ 29,417 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization. . . . . . . . . . . . . . . . 21,199 18,103 Equity in earnings of joint ventures . . . . . . . . . . . . (1,038) (1,074) Minority interest in income of partnerships. . . . . . . . . 895 116 Gain on sale of properties . . . . . . . . . . . . . . . . . (880) (1,221) Changes in accrued rent and accounts receivable. . . . . . . 7,690 8,385 Changes in other assets . . . . . . . . . . . . . . .. . . . (7,023) (4,825) Changes in accounts payable and accrued expenses . . . . . . (36,418) (26,839) Other, net . . . . . . . . . . . . . . . . . . . . . . . . . 236 200 ---------- ---------- Net cash provided by operating activities. . . . . . . . . 14,552 22,262 ---------- ---------- Cash Flows from Investing Activities: Investment in properties . . . . . . . . . . . . . . . . . . . . . (56,088) (62,696) Notes Receivable: Advances . . . . . . . . . . . . . . . . . . . . . . . . . . (3,678) (255) Collections. . . . . . . . . . . . . . . . . . . . . . . . . 131 1,464 Proceeds from sales and disposition of property. . . . . . . . . . 1,716 2,412 Real estate joint ventures and partnerships: Investments. . . . . . . . . . . . . . . . . . . . . . . . . (60) (194) Distributions. . . . . . . . . . . . . . . . . . . . . . . . 904 979 ---------- ---------- Net cash used in investing activities. . . . . . . . . . . (57,075) (58,290) ---------- ---------- Cash Flows from Financing Activities: Proceeds from issuance of: Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136,013 80,500 Common shares of beneficial interest . . . . . . . . . . . . 1,050 11,730 Principal payments of debt . . . . . . . . . . . . . . . . . . . . (54,883) (1,291) Common and preferred dividends paid. . . . . . . . . . . . . . . . (35,404) (33,753) Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . (43) (39) ---------- ---------- Net cash provided by financing activities. . . . . . . . . 46,733 57,147 ---------- ---------- Net increase in cash and cash equivalents. . . . . . . . . . . . . . . 4,210 21,119 Cash and cash equivalents at January 1 . . . . . . . . . . . . . . . . 27,420 12,434 ---------- ---------- Cash and cash equivalents at March 31. . . . . . . . . . . . . . . . . $ 31,630 $ 33,553 ========== ==========
See Notes to Consolidated Financial Statements. PAGE 4 WEINGARTEN REALTY INVESTORS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (AMOUNTS IN THOUSANDS) 1. INTERIM FINANCIAL STATEMENTS The consolidated financial statements included in this report are unaudited, however, amounts presented in the balance sheet as of December 31, 2002 are derived from the audited financial statements of the Company at that date. In the opinion of WRI, all adjustments necessary for a fair presentation of such financial statements have been included. Such adjustments consisted of normal recurring items. Interim results are not necessarily indicative of results for a full year. The consolidated financial statements and notes are presented as permitted by Form 10-Q, and do not contain certain information included in WRI's annual financial statements and notes. Certain reclassifications of prior year's amounts have been made to conform to the current year presentation. 2. NEWLY ADOPTED ACCOUNTING PRONOUNCEMENTS In December 2002, FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure- an amendment of FASB Statement No. 123", which is effective for fiscal years beginning after December 15, 2002. This statement provides alternative methods of transition for an entity that voluntarily changes to the fair value-based method of accounting for stock-based employee compensation. It also amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. We adopted this statement effective January 1, 2003 using the prospective method, which requires us to recognize stock-based employee compensation as new share options are awarded. No stock-based employee compensation was recognized for the quarter ending March 31, 2003 as only a diminimus number of options were awarded during this period. With respect to share options awarded prior to January 1, 2003, WRI accounted for stock-based employee compensation using the intrinsic valued method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and related interpretations. In accordance with this opinion, no stock-based employee compensation had been recognized in WRI's financial statements prior to January 1, 2003. PAGE 5 The following table illustrates the effect on net income available to common shareholders and net income per common share if the fair value-based method had been applied to all outstanding and unvested awards in each period:
Three Months Ended March 31, -------------------- 2003 2002 --------- --------- Net income available to common shareholders . . . . . . . . . . . . $ 24,969 $ 24,478 Stock-based employee compensation included in net income available to common shareholders . . . . . . .. . . . . . . . . . - - Stock-based employee compensation determined under the fair value-based method for all awards. . . . . . . . . . . . . . (101) (86) --------- --------- Pro forma net income available to common shareholders . . . . . . . $ 24,868 $ 24,392 ========= ========= Net income per common share: Basic - as reported . . . . . . . . . . . . . . . . . . . . . $ .48 $ .47 ========= ========= Basic - pro forma . . . . . . . . . . . . . . . . . . . . . . $ .48 $ .47 ========= ========= Net income per common share: Diluted - as reported . . . . . . . . . . . . . . . . . . . . $ .48 $ .47 ========= ========= Diluted - pro forma . . . . . . . . . . . . . . . . . . . . . $ .48 $ .47 ========= =========
In November 2002, FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others". FIN 45 establishes new disclosure and liability-recognition requirements for direct and indirect debt guarantees with specified characteristics. The initial measurement and recognition requirements of FIN 45 are effective prospectively for guarantees issued or modified after December 31, 2002. However, the disclosure requirements are effective for interim and annual financial-statement periods ending after December 15, 2002. WRI has adopted the disclosure provisions, and management does not expect the full adoption of FIN 45 to have a material impact on the financial position, results of operations or cash flows. In January 2003, FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities". FIN 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity's activities or entitled to receive a majority of the entity's residual returns or both. FIN 46 requires disclosures about variable interest entities that a company is not required to consolidate, but in which it has a significant variable interest. The consolidation requirements of FIN 46 apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements apply to existing entities in the first fiscal year or interim period beginning after June 15, 2003. Certain of the disclosure requirements apply in all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established. We will adopt this statement in 2003, and we do not expect the adoption of this statement to have a material impact on our financial position, results of operations or cash flows. PAGE 6 3. DISCONTINUED OPERATIONS On January 1, 2002, WRI adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS No. 144 addresses accounting and reporting for the impairment or disposal of a segment of a business. More specifically, this Statement broadens the presentation of discontinued operations to include a component of an entity whose operations and cash flows can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. In 2002, we sold five retail projects located in Houston (3), Grand Prairie and San Antonio, Texas; one industrial building located in Houston, Texas and the River Pointe Apartments located in Conroe, Texas. Accordingly, the operating results and the gain on sale of the disposed properties have been reclassified and reported as discontinued operations in the Statements of Consolidated Income and Comprehensive Income. In January 2003, a warehouse building was sold that was classified as held for sale in 2002. The operating results of this industrial facility have been reclassified and reported as discontinued operations in the Statements of Consolidated Income and Comprehensive Income, and $1.6 million was reported as property held for sale in the Consolidated Balance Sheet at December 31, 2002. 4. DERIVATIVES AND HEDGING WRI hedges the future cash flows of debt transactions principally through interest rate swaps with major financial institutions. WRI has three interest rate swap contracts with an aggregate notional amount of $45 million, which are designated as cash flow hedges, and eleven interest rate swap contracts with an aggregate notional amount of $107.5 million, which are designated as fair value hedges. On March 31, 2003, the derivative instruments designated as cash flow hedges were reported at their fair values as Other Liabilities, net of accrued interest, of $1.9 million. The derivative instruments designated as fair value hedges on March 31, 2003 were reported at their fair values as Other Assets, net of accrued interest, of $7.5 million. Within the next twelve months, the Company expects to reclassify to earnings as interest expense approximately $1.5 million of the current balance held in accumulated other comprehensive loss. As of March 31, 2003, the balance in accumulated other comprehensive loss relating to the derivatives was $.5 million. With respect to fair value hedges, both changes in fair market value of the derivative hedging instrument and changes in the fair value of the hedged item will be recorded in earnings each reporting period. These amounts should completely offset with no impact to earnings, except for the portion of the hedge that proves to be ineffective, if any. PAGE 7 5. PER SHARE DATA Net income per common share - basic is computed using net income available to common shareholders and the weighted average shares outstanding. Net income per common share - diluted includes the effect of potentially dilutive securities for the periods indicated, as follows (in thousands):
Three Months Ended March 31, -------------------- 2003 2002 --------- --------- Numerator: Net income available to common shareholders - basic . . . . . . $ 24,969 $ 24,478 Income attributable to operating partnership units. . . . . . . 832 31 --------- --------- Net income available to common shareholders - diluted . . . . . $ 25,801 $ 24,509 ========= ========= Denominator: Weighted average shares outstanding - basic . . . . . . . . . . 52,091 51,686 Effect of dilutive securities: Share options and awards. . . . . . . . . . . . . . . . . 397 298 Operating partnership units . . . . . . . . . . . . . . . 1,529 77 --------- --------- Weighted average shares outstanding - diluted . . . . . . . . . 54,017 52,061 ========= =========
Options to purchase 1,300 shares for the first quarter ended March 31, 2003 were not included in the calculation of net income per common share - diluted as the exercise prices were greater than the average market price. No common shares have been excluded from the first quarter ended March 31, 2002 calculation of net income per common share - diluted. 6. DEBT WRI's debt consists of the following (in thousands):
March 31, December 31, 2003 2002 ------------ ------------ Fixed-rate debt payable to 2030 at 5.0 to 8.8% . . . . . . . . . $ 1,231,181 $ 1,097,185 Variable-rate unsecured notes payable. . . . . . . . . . . . . . 75,000 75,000 Unsecured notes payable under revolving credit agreements. . . . 75,170 119,000 Obligations under capital leases . . . . . . . . . . . . . . . . 33,462 33,462 Industrial revenue bonds payable to 2015 at 1.1% to 3.2% . . . . 8,330 5,722 ------------ ------------ Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,423,143 $ 1,330,369 ============ ============
At March 31, 2003, the variable interest rate for notes payable under the $50 million term loan agreement and the $350 million revolving credit agreement was 1.8%. At March 31, 2003, $13.2 million was outstanding under the $20 million revolving credit agreement at 1.8%. PAGE 8 During the first quarter of 2003, WRI issued a total of $136 million of unsecured fixed-rate medium term notes at a weighted average rate of 5.4% and a weighted average term of 11.4 years. Proceeds received were used to pay down amounts outstanding under our $350 million revolving credit facility. Following is a summary of the medium term note activity for the three months ended March 31, 2003 (in thousands, except years to maturity and interest rate):
YEARS TO INTEREST DATE ISSUED PRINCIPAL MATURITY RATE ---------------------- --------- ---------- ---------- January 15, 2003. . . . $ 20,000 12.0 5.75% January 28, 2003. . . . 15,000 10.0 5.50% January 28, 2003. . . . 6,000 10.0 5.50% February 12, 2003 . . . 20,000 12.0 5.57% February 26, 2003 . . . 25,000 12.0 5.35% February 28, 2003 . . . 25,000 12.0 5.25% March 5, 2003 . . . . . 25,000 10.5 4.99%
On April 24, 2003, the SEC declared effective WRI's $1 billion shelf registration statement. WRI has not used the shelf registration statement for offerings of its securities. WRI's debt can be summarized as follows (in thousands):
March 31, December 31, 2003 2002 ------------ ------------ As to interest rate (including the effects of interest rate swaps): Fixed-rate debt . . . . . . . . . . . . . . $ 1,189,683 $ 1,055,688 Variable-rate debt. . . . . . . . . . . . . 233,460 274,681 ------------ ------------ Total . . . . . . . . . . . . . . . . . . . $ 1,423,143 $ 1,330,369 ============ ============ As to collateralization: Unsecured debt. . . . . . . . . . . . . . . $ 1,050,578 $ 958,719 Secured debt. . . . . . . . . . . . . . . . 372,565 371,650 ------------ ------------ Total . . . . . . . . . . . . . . . . . . . $ 1,423,143 $ 1,330,369 ============ ============
PAGE 9 7. PROPERTY WRI's property consists of the following (in thousands):
March 31, December 31, 2003 2002 ------------ ------------ Land . . . . . . . . . . . . . . $ 512,490 $ 497,168 Land held for development. . . . 23,675 23,613 Land under development . . . . . 42,468 44,847 Buildings and improvements . . . 2,102,523 2,051,065 Construction in-progress . . . . 81,115 77,006 Property held for sale . . . . . 1,587 ------------ ------------ Total. . . . . . . . . . . . . . $ 2,762,271 $ 2,695,286 ============ ============
Interest and ad valorem taxes capitalized to land under development or buildings under construction was $2.2 million and $2.6 million for the quarters ended March 31, 2003 and 2002, respectively. 8. INVESTMENTS IN REAL ESTATE JOINT VENTURES WRI owns interests in 16 joint ventures or limited partnerships where we do not exercise financial and operating control. These partnerships are accounted for under the equity method since WRI exercises significant influence. Our interests in these joint ventures and limited partnerships range from 20% to 75% and, with the exception of one partnership, which owns seven industrial properties, each venture owns a single real estate asset. Combined condensed financial information of these ventures (at 100%) is summarized as follows (in thousands):
March 31, December 31, 2003 2002 ------------ ------------ Combined Balance Sheets Property . . . . . . . . . . . . . . . . $ 182,155 $ 177,396 Accumulated depreciation . . . . . . . . (24,844) (23,877) ------------ ------------ Property - net. . . . . . . . . . . 157,311 153,519 Other assets . . . . . . . . . . . . . . 9,394 11,898 ------------ ------------ Total. . . . . . . . . . . . . $ 166,705 $ 165,417 ============ ============ Debt . . . . . . . . . . . . . . . . . . $ 71,830 $ 71,985 Amounts payable to WRI . . . . . . . . . 19,321 16,334 Other liabilities. . . . . . . . . . . . 2,004 4,152 Accumulated equity . . . . . . . . . . . 73,550 72,946 ------------ ------------ Total. . . . . . . . . . . . . $ 166,705 $ 165,417 ============ ============
PAGE 10
Combined Statements of Income Three Months Ended March 31, -------------------------- 2003 2002 ------------ ------------ Revenues . . . . . . . . . . . . . . . . $ 6,142 $ 6,421 ------------ ------------ Expenses: Depreciation and amortization. . . . . 1,058 1,164 Operating. . . . . . . . . . . . . . . 778 860 Interest . . . . . . . . . . . . . . . 1,518 1,634 Ad valorem taxes . . . . . . . . . . . 782 797 General and administrative . . . . . . 38 15 ------------ ------------ Total . . . . . . . . . . . . . . . 4,174 4,470 ------------ ------------ Net Income . . . . . . . . . . . . . . . $ 1,968 $ 1,951 ============ ============
Our investment in real estate joint ventures, as reported on the balance sheets, differs from our proportionate share of the joint ventures' underlying net assets due to basis differentials, which arose upon the transfer of assets from WRI to the joint ventures. This basis differential, which totaled $4.8 million at March 31, 2003 and December 31, 2002, respectively, is depreciated over the useful lives of the related assets. Fees earned by WRI for the management of these joint ventures totaled $.1 million for the quarters ended March 31, 2003 and 2002, respectively. 9. SEGMENT INFORMATION The operating segments presented are the segments of WRI for which separate financial information is available, and operating performance is evaluated regularly by senior management in deciding how to allocate resources and in assessing performance. WRI evaluates the performance of its operating segments based on net operating income that is defined as total revenues less operating expenses and ad valorem taxes. The shopping center segment is engaged in the acquisition, development and management of real estate, primarily anchored neighborhood and community shopping centers located in Texas, California, Louisiana, Arizona, Nevada, Arkansas, New Mexico, Oklahoma, Tennessee, Kansas, Colorado, Missouri, Illinois, Florida, Mississippi, North Carolina and Maine. The customer base includes supermarkets, discount retailers, 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, Georgia, Florida 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 11 Information concerning WRI's reportable segments is as follows (in thousands):
SHOPPING CENTER INDUSTRIAL OTHER TOTAL ------------ ---------- ---------- ------------- Three Months Ended March 31, 2003: Revenues . . . . . . . . . . . . . . . . . . . $ 87,985 $ 9,708 $ 492 $ 98,185 Net operating income . . . . . . . . . . . . . 65,529 6,872 147 72,548 Equity in earnings of joint ventures . . . . . 977 92 (31) 1,038 Investment in real estate joint ventures . . . 28,299 275 28,574 Total assets . . . . . . . . . . . . . . . . . 2,090,813 236,932 151,306 2,479,051 Three Months Ended March 31, 2002: Revenues . . . . . . . . . . . . . . . . . . . $ 74,906 $ 8,929 $ 546 $ 84,381 Net operating income . . . . . . . . . . . . . 55,522 6,228 210 61,960 Equity in earnings of joint ventures . . . . . 987 96 (9) 1,074 Investment in real estate joint ventures . . . 24,920 845 25,765 Total assets . . . . . . . . . . . . . . . . . 1,815,020 221,588 117,845 2,154,453
Net operating income reconciles to income before discontinued operations as shown on the Statements of Consolidated Income and Comprehensive Income as follows (in thousands):
Three Months Ended March 31, -------------------- 2003 2002 --------- --------- Total segment net operating income . . . . . . . . . . $ 72,548 $ 61,960 Less: Depreciation and amortization . . . . . . . . . . 21,199 17,761 Interest. . . . . . . . . . . . . . . . . . . . . 19,439 14,996 General and administrative. . . . . . . . . . . . 3,057 2,676 Minority interest in income of partnerships . . . 895 116 Equity in earnings of joint ventures. . . . . . . (1,038) (1,074) Gain on sale of properties. . . . . . . . . . . . (9) --------- --------- Income Before Discontinued Operations. . . . . . . . . $ 29,005 $ 27,485 ========= =========
10. COMMON SHARES OF BENEFICIAL INTEREST In February 2002, a three-for-two share split, effected in the form of a 50% share dividend, was declared for shareholders of record on April 1, 2002, payable April 15, 2002. We issued 17.3 million common shares of beneficial interest as a result of the share split. All references to the number of shares and per share amounts have been restated to reflect the share split, and an amount equal to the par value of the number of common shares issued have been reclassified to common stock from retained earnings. PAGE 12 In February 2002, we completed the sale of .3 million common shares of beneficial interest. Net proceeds to WRI totaled $9.5 million based on a price of $33.65 per share and were used to pay down amounts outstanding under our $350 million revolving credit facility. 11. BANKRUPTCY REMOTE PROPERTIES On April 2, 2001, we purchased 19 supermarket-anchored shopping centers, aggregating 2.5 million square feet, in California. The purchase price for the properties was $277.5 million, including the assumption of approximately $132 million in debt secured by all 19 properties. These 19 properties, having a net book value of approximately $269.8 million at March 31, 2003 (collectively the "Bankruptcy Remote Properties", and each a "Bankruptcy Remote Property"), are wholly owned by various "Bankruptcy Remote Entities". Each Bankruptcy Remote Entity is an indirect subsidiary of the Company. The assets of each Bankruptcy Remote Entity, including the respective Bankruptcy Remote Property or Properties owned by each, are owned by that Bankruptcy Remote Entity alone and are not available to satisfy claims that any creditor may have against the Company, its affiliates, or any other person or entity. No Bankruptcy Remote Entity has agreed to pay or make its assets available to pay creditors of the Company, any of its affiliates, or any other person or entity. Neither the Company nor any of its affiliates has agreed to pay or make its assets available to pay creditors of any Bankruptcy Remote Entity (other than any agreement by a Bankruptcy Remote Entity to pay its own creditors). No affiliate of any Bankruptcy Remote Entity has agreed to pay or make its assets available to pay creditors of any Bankruptcy Remote Entity. The accounts of the Bankruptcy Remote Entities are included in WRI's consolidated financial statements, as WRI owns, indirectly, 100% of each of the entities. Additionally, WRI, through its wholly owned subsidiaries, makes all day to day operating and financial decisions with respect to these properties, subject to approval by the loan servicing agent for the certain significant transactions. WRI has the right to prepay the loan at any time, which would eliminate all encumbrances and restrictions. 12. SUBSEQUENT EVENTS On April 4, 2003, WRI called for redemption of the 7.44% Series A Cumulative Redeemable Preferred Shares. The redemption of these shares on May 5, 2003 was financed through the issuance on April 30, 2003 of $75 million of depositary shares. Each depositary share, representing one-thirtieth of a Series D Cumulative Redeemable Preferred Share, is redeemable at par at WRI's election on or after April 30, 2008. The depositary shares pay a 6.75% annual dividend and have a liquidation value of $25 per share. PAGE 13 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. At March 31, 2003, WRI owned or operated under long-term leases, either directly or through its interests in joint ventures, 306 developed income-producing properties located in 18 states that span from coast to coast in the southern half of the United States. Included in the portfolio are 247 shopping centers, 58 industrial properties and one office building. WRI has 5,700 leases and 4,400 different tenants. Leases for our properties range from less than a year for smaller spaces to over 25 years for larger tenants; leases generally include minimum lease payments and contingent rentals for payment of taxes, insurance and maintenance and for an amount based on a percentage of the tenants' sales. The majority of our anchor tenants are supermarkets, value-oriented apparel/discount stores and other retailers, which generally sell basic necessity-type items. CAPITAL RESOURCES AND LIQUIDITY WRI anticipates that cash flows from operating activities will continue to provide adequate capital for all dividend payments in accordance with REIT requirements. Cash on hand, borrowings under our existing credit facilities, issuance of unsecured debt and the use of project financing, as well as other debt and equity alternatives, will provide the necessary capital to achieve growth. Cash flow from operating activities as reported in the Statements of Consolidated Cash Flows decreased to $14.6 million for the first three months of 2003 as compared to $22.3 million for the same period of 2002. This decrease was due primarily to changes in working capital items. Our Board of Trust Managers approved a quarterly dividend of $.585 per common share for the first quarter of 2003. Our dividend payout ratio on common equity for the first quarter of 2003 and 2002 was 69% and 70%, respectively, based on funds from operations for the applicable period. WRI invested $41.8 million for the acquisition of one retail center and two industrial properties during the first quarter of 2003. In January 2003, we acquired the Sears Distribution Center located in Atlanta, Georgia. This 403,000 square foot property is 100% occupied with Sears Logistics Services as the sole tenant. In February 2003, we acquired the Atlanta Industrial Park. This seven-building complex aggregates 502,000 square feet and is also located in Atlanta, Georgia. With these acquisitions, we now own three industrial properties in Atlanta, which collectively total over 1.3 million square feet. In February 2003, we also completed the acquisition of Rancho San Marcos Village, a 121,000 square foot shopping center anchored by Von's (Safeway) and 24-Hour Fitness. The center is located in San Marcos, California (near San Diego), and is currently 94% occupied. With respect to new development, we have 18 projects at various stages of construction. These projects, upon completion, will represent an investment of approximately $216 million and will add 1.6 million square feet to the portfolio. We expect to invest approximately $56.6 million in these properties during 2003. These projects will continue to come on-line during the remainder of 2003 and into 2004. PAGE 14 During the first quarter of 2003, WRI issued a total of $136 million of unsecured fixed-rate medium term notes at a weighted average rate of 5.4% and a weighted average term of 11.4 years. Proceeds received were used to pay down amounts outstanding under our $350 million revolving credit facility. Following is a summary of the medium term note activity for the three months ended March 31, 2003 (in thousands, except years to maturity and interest rate):
YEARS TO INTEREST DATE ISSUED PRINCIPAL MATURITY RATE - ---------------------- --------- ---------- ---------- January 15, 2003. . . . $ 20,000 12.0 5.75% January 28, 2003. . . . 15,000 10.0 5.50% January 28, 2003. . . . 6,000 10.0 5.50% February 12, 2003 . . . 20,000 12.0 5.57% February 26, 2003 . . . 25,000 12.0 5.35% February 28, 2003 . . . 25,000 12.0 5.25% March 5, 2003 . . . . . 25,000 10.5 4.99%
Total debt outstanding increased $92.8 million to $1.4 billion at March 31, 2003. This increase was primarily due to the funding of the Company's acquisitions and ongoing development and redevelopment efforts. Included in total debt outstanding of $1.4 billion at March 31, 2003 is variable-rate debt of $233.5 million, after recognizing the net effect of $152.5 million of interest rate swaps. On April 24, 2003, the SEC declared effective WRI's $1 billion shelf registration statement. WRI has not used the shelf registration statement for offerings of its securities. On April 4, 2003, WRI called for redemption of the 7.44% Series A Cumulative Redeemable Preferred Shares. The redemption of these shares on May 5, 2003 was financed through the issuance on April 30, 2003 of $75 million of depositary shares. Each depositary share, representing one-thirtieth of a Series D Cumulative Redeemable Preferred Share, is redeemable at par at WRI's election on or after April 30, 2008. The depositary shares pay a 6.75% annual dividend and have a liquidation value of $25 per share. FUNDS FROM OPERATIONS The Board of Governors of the National Association of Real Estate Investment Trusts defines funds from operations (FFO) as net income (loss) computed in accordance with generally accepted accounting principles, excluding gains or losses from sales of property, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. In addition, NAREIT recommends that extraordinary items not be considered in arriving at FFO. We calculate FFO in a manner consistent with the NAREIT definition. Most industry analysts and equity REITS, including WRI, believe FFO is an appropriate alternative measurement of performance relative to other REITs. FFO provides investors with additional information to better understand our ability to incur and service debt, make capital expenditures and pay common share dividends. There can be no assurance that FFO presented by WRI is comparable to similarly titled measures of other REITs. FFO should not be considered as an alternative to net income or other measurements under GAAP as an indicator of our operating performance or to cash flows from operating, investing, or financing activities as a measure of liquidity. FFO does not reflect working capital changes, cash expenditures for capital improvements, or principal payments on indebtedness. PAGE 15 Funds from operations - diluted for the three months ended March 31, 2003 and 2002 is calculated as follows:
Three Months Ended March 31, -------------------- 2003 2002 --------- --------- Net income available to common shareholders . . . . . . . . . . . . . . $ 24,969 $ 24,478 Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . 19,392 17,476 Depreciation and amortization of unconsolidated joint ventures. . . . . 434 475 Gain on sale of properties. . . . . . . . . . . . . . . . . . . . . . . (880) (1,221) --------- --------- Funds from operations . . . . . . . . . . . . . . . . . . 43,915 41,208 Funds from operations attributable to operating partnership units . . . 1,263 55 --------- --------- Funds from operations assuming conversion of OP units . . $ 45,178 $ 41,263 ========= ========= Weighted average shares outstanding - basic . . . . . . . . . . . . . . 52,091 51,686 Effect of dilutive securities: Share options and awards. . . . . . . . . . . . . . . . . . . . . 397 298 Operating partnership units . . . . . . . . . . . . . . . . . . . 1,529 77 --------- --------- Weighted average shares outstanding - diluted . . . . . . . . . . . . . 54,017 52,061 ========= =========
RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2003 AND 2002 Net income available to common shareholders increased to $25.0 million, or $.48 per diluted share, from $24.5 million, or $.47 per diluted share for the first quarter of 2003 as compared with the same quarter of 2002. The increase in net income available to common shareholders is due primarily from growth in the portfolio from acquisitions and new development. Rental revenues were $96.9 million in 2003, as compared to $83.4 million in 2002, representing an increase of approximately $13.5 million or 16.2%. Property acquisitions and new development contributed $11.5 million to this increase, with the remaining increase of $2.0 million attributable to our existing properties. Occupancy of the total portfolio was 91.8% at March 31, 2003 as compared to 91.7% at March 31, 2002. The occupancy of the retail portfolio was down slightly at 92.6% at March 31, 2003 as compared to 92.8% at March 31, 2002, while the occupancy of the industrial portfolio increased to 89.0% from 88.2% in the prior year. During the first three months of 2003, WRI completed 238 renewals or new leases comprising 1.5 million square feet at an average rental rate increase of 6.8%. Net of the amortized portion of capital costs for tenant improvements, the increase averaged 4.1%. Other income increased by $.2 million to $1.0 million in the first quarter of 2003 from $.8 million for the same quarter of 2002. This increase is due primarily to an increase in lease cancellation income from various tenants. PAGE 16 Gross interest costs, before capitalization of interest, increased by $3.9 million from $17.4 million in the first quarter of 2002 to $21.3 million for the first quarter of 2003. The increase is due primarily to an increase in the average debt outstanding between periods of $1.1 billion in 2002 to $1.4 billion in 2003. The average interest rate decreased from 6.4% in 2002 to 6.2% in 2003. The amount of interest capitalized during the period was $1.8 million and $2.4 million in 2003 and 2002, respectively. The decrease in interest capitalized between periods is due primarily to the completion of five new development projects during the first quarter of 2003. General and administrative expenses increased by $.4 million to $3.1 million in the first quarter of 2003 from $2.7 million for the same quarter of 2002. The increase is due primarily to an increase in staffing necessitated by the growth in the portfolio from acquisitions and new development. The increases in depreciation and amortization, operating expenses and ad valorem taxes were primarily the result of WRI's acquisitions and new development programs. Minority interest in income of partnerships increased by $.8 million to $.9 million in the first quarter of 2003 from $.1 million for the same quarter of 2002. The increase is due primarily from the acquisition of seven supermarket-anchored shopping centers in the Raleigh-Durham market in April 2002 utilizing a DownREIT structure. These limited partnerships are included in our consolidated financial statements because we exercise financial and operating control. NEWLY ADOPTED ACCOUNTING PRONOUNCEMENTS In December 2002, FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure- an amendment of FASB Statement No. 123", which is effective for fiscal years beginning after December 15, 2002. This statement provides alternative methods of transition for an entity that voluntarily changes to the fair value-based method of accounting for stock-based employee compensation. It also amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. We adopted this statement effective January 1, 2003 using the prospective method, which requires us to recognize stock-based employee compensation as new share options are awarded. No stock-based employee compensation was recognized for the quarter ending March 31, 2003 as only a diminimus number of options were awarded during this period. With respect to share options awarded prior to January 1, 2003, WRI accounted for stock-based employee compensation using the intrinsic valued method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and related interpretations. In accordance with this opinion, no stock-based employee compensation had been recognized in WRI's financial statements prior to January 1, 2003. PAGE 17 The following table illustrates the effect on net income available to common shareholders and net income per common share if the fair value-based method had been applied to all outstanding and unvested awards in each period:
Three Months Ended March 31, -------------------- 2003 2002 --------- --------- Net income available to common shareholders . . . . . . . . . . . $ 24,969 $ 24,478 Stock-based employee compensation included in net income available to common shareholders . . . . . . .. . . . . . . . . - - Stock-based employee compensation determined under the fair value-based method for all awards. . . . . . . . . . . . . (101) (86) --------- --------- Pro forma net income available to common shareholders . . . . . . $ 24,868 $ 24,392 ========= ========= Net income per common share: Basic - as reported . . . . . . . . . . . . . . . . . . . . $ .48 $ .47 ========= ========= Basic - pro forma . . . . . . . . . . . . . . . . . . . . . $ .48 $ .47 ========= ========= Net income per common share: Diluted - as reported . . . . . . . . . . . . . . . . . . . $ .48 $ .47 ========= ========= Diluted - pro forma . . . . . . . . . . . . . . . . . . . . $ .48 $ .47 ========= =========
In November 2002, FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others". FIN 45 establishes new disclosure and liability-recognition requirements for direct and indirect debt guarantees with specified characteristics. The initial measurement and recognition requirements of FIN 45 are effective prospectively for guarantees issued or modified after December 31, 2002. However, the disclosure requirements are effective for interim and annual financial-statement periods ending after December 15, 2002. WRI has adopted the disclosure provisions, and management does not expect the full adoption of FIN 45 to have a material impact on the financial position, results of operations or cash flows. In January 2003, FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities". FIN 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity's activities or entitled to receive a majority of the entity's residual returns or both. FIN 46 requires disclosures about variable interest entities that a company is not required to consolidate, but in which it has a significant variable interest. The consolidation requirements of FIN 46 apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements apply to existing entities in the first fiscal year or interim period beginning after June 15, 2003. Certain of the disclosure requirements apply in all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established. We will adopt this statement in 2003, and we do not expect the adoption of this statement to have a material impact on our financial position, results of operations or cash flows. PAGE 18 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK WRI uses fixed and floating-rate debt to finance its capital requirements. These transactions expose WRI to market risk related to changes in interest rates. Derivative financial instruments are used to manage a portion of this risk, primarily interest rate swap agreements with major financial institutions. These swap agreements expose WRI to credit risk in the event of non-performance by the counter-parties to the swaps. We do not engage in the trading of derivative financial instruments in the normal course of business. At March 31, 2003, WRI had fixed-rate debt of $1.2 billion and variable-rate debt of $233.5 million, after adjusting for the net effect of $152.5 million of interest rate swaps. ITEM 4. DISCLOSURE CONTROLS AND PROCEDURES The principal executive officer and principal financial officer have evaluated the disclosure controls and procedures as of a date within 90 days before the filing date of this quarterly report. Based on this evaluation, the principal executive officer and principal financial officer have concluded that the disclosure controls and procedures effectively ensure that information required to be disclosed in the Company's filings and submissions with the Securities and Exchange Commission under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission. In addition, the Company has reviewed its internal controls and there have been no significant changes in its internal controls or in other factors that could significantly affect those controls subsequent to the date of its last evaluation. PAGE 19 PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 12.1 A statement of computation of ratios of earnings and funds from operations to combined fixed charges and preferred dividends. 99.1 Certification pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer). 99.2 Certification pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer). (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter covered by this quarterly report. PAGE 20 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/ Andrew M. Alexander ----------------------------------- Andrew M. Alexander President/Chief Executive Officer (Principal Executive Officer) BY: /s/ Joe D. Shafer ----------------------------------- Joe D. Shafer Vice President/Controller (Principal Accounting Officer) DATE: May 13, 2003 --------------- PAGE 21 CERTIFICATION I, Andrew M. Alexander, Chief Executive Officer of Weingarten Realty Investors certify that: 1. I have reviewed this quarterly report on Form 10-Q of Weingarten Realty Investors; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of trust managers: a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. BY: /s/ Andrew M. Alexander ----------------------------------- Andrew M. Alexander President/Chief Executive Officer May 13, 2003 PAGE 22 CERTIFICATION I, Stephen C. Richter, Sr. Vice President/Chief Financial Officer of Weingarten Realty Investors certify that: 1. I have reviewed this quarterly report on Form 10-Q of Weingarten Realty Investors; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of trust managers: a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. BY: /s/ Stephen C. Richter ------------------------------------------ Stephen C. Richter Sr. Vice President/Chief Financial Officer May 13, 2003 PAGE 23 EXHIBIT INDEX EXHIBIT NUMBER - ------ 12.1 A statement of computation of ratios of earnings and funds from operations to combined fixed charges and preferred dividends. 99.1 Certification pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer). 99.2 Certification pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer). PAGE 24 EX-12.1 3 doc2.txt EXHIBIT 12.1
WEINGARTEN REALTY INVESTORS COMPUTATION OF RATIOS OF EARNINGS AND FUNDS FROM OPERATIONS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS (AMOUNTS IN THOUSANDS) Three Months Ended March 31, -------------------- 2003 2002 --------- --------- Net income available to common shareholders . . . . . . . . . . . $ 24,969 $ 24,478 Add: Portion of rents representative of the interest factor. . . . . . 236 228 Interest on indebtedness. . . . . . . . . . . . . . . . . . . . . 19,439 14,996 Preferred dividends . . . . . . . . . . . . . . . . . . . . . . . 4,922 4,939 Amortization of debt cost . . . . . . . . . . . . . . . . . . . . 328 334 --------- --------- Net income as adjusted. . . . . . . . . . . . . . . . . . . . $ 49,894 $ 44,975 ========= ========= Fixed charges: Interest on indebtedness. . . . . . . . . . . . . . . . . . . . . $ 19,439 $ 14,996 Capitalized interest. . . . . . . . . . . . . . . . . . . . . . . 1,816 2,382 Preferred dividends . . . . . . . . . . . . . . . . . . . . . . . 4,922 4,939 Amortization of debt cost . . . . . . . . . . . . . . . . . . . . 328 334 Portion of rents representative of the interest factor. . . . . . 236 228 --------- --------- Fixed charges . . . . . . . . . . . . . . . . . . . . . . . . $ 26,741 $ 22,879 ========= ========= RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS . . . . . . . . . . . . . . . . . 1.87 1.97 ========= ========= Net income available to common shareholders . . . . . . . . . . . $ 24,969 $ 24,478 Depreciation and amortization . . . . . . . . . . . . . . . . . . 19,826 17,951 Gain on sale of properties. . . . . . . . . . . . . . . . . . . . (880) (1,221) --------- --------- Funds from operations . . . . . . . . . . . . . . . . . . . . 43,915 41,208 Add: Portion of rents representative of the interest factor. . . . . . 236 228 Preferred dividends . . . . . . . . . . . . . . . . . . . . . . . 4,922 4,939 Interest on indebtedness. . . . . . . . . . . . . . . . . . . . . 19,439 14,996 Amortization of debt cost . . . . . . . . . . . . . . . . . . . . 328 334 --------- --------- Funds from operations as adjusted . . . . . . . . . . . . . . $ 68,840 $ 61,705 ========= ========= RATIO OF FUNDS FROM OPERATIONS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS . . . . . . . . . . . . . . 2.57 2.70 ========= =========
EX-99.1 4 doc3.txt EXHIBIT 99.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Weingarten Realty Investors (the "Company") on Form 10-Q for the period ended March 31, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Andrew M. Alexander, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. BY: /s/ Andrew M. Alexander --------------------------------- Andrew M. Alexander President/Chief Executive Officer May 13, 2003 A signed original of this written statement required by Section 906 has been provided to Weingarten Realty Investors and will be retained by Weingarten and furnished to the Securities and Exchange Commission or its staff upon request. EX-99.2 5 doc4.txt EXHIBIT 99.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Weingarten Realty Investors (the "Company") on Form 10-Q for the period ended March 31, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Stephen C. Richter, Sr. Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. BY: /s/ Stephen C. Richter ------------------------------------------ Stephen C. Richter Sr. Vice President/Chief Financial Officer May 13, 2003 A signed original of this written statement required by Section 906 has been provided to Weingarten Realty Investors and will be retained by Weingarten and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----