-----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, HkN01abMIAJZA/lkgLF9K+T7UkXdZJOmClyf0zuWol0p5gCStxKROoa4k4k339RO vetDKbd90cTW/D+aR+keUQ== 0000828916-98-000014.txt : 19980427 0000828916-98-000014.hdr.sgml : 19980427 ACCESSION NUMBER: 0000828916-98-000014 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971231 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980424 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: 8-K SEC ACT: SEC FILE NUMBER: 001-09876 FILM NUMBER: 98600508 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 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 ------------------------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): December 31, 1997 WEINGARTEN REALTY INVESTORS ------------------------------------------------------ (Exact name of registrant as specified in its charter) ____________________________________ (Commission File Number) 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 -------------- ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS During the year ended December 31, 1997, Weingarten Realty Investors (the "Company") acquired eight retail centers, three industrial projects and its joint venture partner's 85% interest in four other retail centers. Additionally, the Company acquired the second phase of a retail center it already owned and completed the funding of acquisition costs for a retail center upon execution of leases and satisfaction of other conditions. Material factors considered in each of the acquisitions made by the Company include historical and prospective financial performance of the center, credit quality of the tenancy, local and regional demographics, location and competition, ad valorem tax rates, condition of the property and the related anticipated level of capital expenditures required. The total investment in acquisitions during 1997 was $111.0 million. Audited financial statements and unaudited pro forma financial information on these properties are submitted in ITEM 7. below. ITEM 7. FINANCIAL STATEMENTS, PROFORMA FINANCIAL INFORMATION AND EXHIBITS The following financial statements, pro forma financial statements and exhibits are filed as part of this report: (a) and (b) Financial statements of businesses acquired and pro forma financial information: 1. Rainbow Plaza Shopping Center (i) Independent Auditors' Report (ii) Statement of Revenue and Certain Expenses for the period from January 1, 1997 to October 22, 1997 (iii) Notes to Statement of Revenue and Certain Expenses 2. AMRESCO/Weingarten Joint Venture i. Mesquite Center, Ltd. (A Joint Venture) (a) Report of Independent Auditors (b) Financial Statements for the Three Years Ended December 31, 1997 (c) Notes to Financial Statements ii. Eastdale Center, Ltd. (A Joint Venture) (a) Report of Independent Auditors (b) Financial Statements for the Three Years Ended December 31, 1997 (c) Notes to Financial Statements iii. Coronado Center, Ltd. (A Joint Venture) (a) Report of Independent Auditors (b) Financial Statements for the Three Years Ended December 31, 1997 (c) Notes to Financial Statements iv. Tempe Valley Plaza, Ltd. (A Joint Venture) (a) Report of Independent Auditors (b) Financial Statements for the Three Years Ended December 31, 1997 (c) Notes to Financial Statements 3. Pro Forma Condensed Financial Statement (unaudited) of Weingarten Realty Investors, the Acquired Properties and Other Acquisitions.* (a) Pro Forma Condensed Statement of Consolidated Income for the Year Ended December 31, 1997 (b) Notes and Significant Assumptions - --------------- * A Pro Forma Consolidated Balance Sheet as of December 31, 1997 is not presented as all acquisitions covered by this Current Report on Form 8-K were completed prior to December 31, 1997 and, accordingly, are reflected in the Consolidated Balance Sheet included in the Company's Annual Report on Form 10-K for the year then ended. RAINBOW PLAZA SHOPPING CENTER STATEMENT OF REVENUE AND CERTAIN EXPENSES FOR THE PERIOD FROM JANUARY 1, 1997 TO OCTOBER 22, 1997 AND INDEPENDENT AUDITORS' REPORT INDEPENDENT AUDITORS' REPORT To the Board of Trust Managers and Shareholders of Weingarten Realty Investors: We have audited the accompanying statement of revenue and certain expenses of Rainbow Plaza Shopping Center (the "Plaza") for the period from January 1, 1997 to October 22, 1997. This statement of revenue and certain expenses is the responsibility of Plaza's management. Our responsibility is to express an opinion on the statement of revenue and certain expenses based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of revenue and certain expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. The accompanying statement of revenue and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in the current report on Form 8-K of Weingarten Realty Investors. Certain expenses (described in Note 1) that would not be comparable to those resulting from the proposed future operations of the property are excluded and the statement is not intended to be a complete presentation of the revenue and expenses of the property. In our opinion, the statement of revenue and certain expenses presents fairly, in all material respects, the revenue and certain expenses, as defined above, of Rainbow Plaza Shopping Center for the period from January 1, 1997 to October 22, 1997. Deloitte & Touche LLP Houston, Texas April 2, 1998 RAINBOW PLAZA SHOPPING CENTER STATEMENT OF REVENUE AND CERTAIN EXPENSES FOR THE PERIOD FROM JANUARY 1, 1997 TO OCTOBER 22,1997
REVENUE: Rental. . . . . . . . . . . . . . . . . $2.308,428 Tenant reimbursements . . . . . . . . . 337,589 Other income. . . . . . . . . . . . . . 2,735 ---------- Total revenue . . . . . . . . . . . . . 2,648,752 ---------- CERTAIN EXPENSES: Property operating and maintenance. . . 101,038 Ad valorem Taxes. . . . . . . . . . . . 109,361 ---------- Total certain expenses. . . . . . . . . 210,399 ---------- EXCESS OF REVENUE OVER CERTAIN EXPENSES $2,438,353 ==========
See accompanying notes to statement of revenue and certain expenses. RAINBOW PLAZA SHOPPING CENTER NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES FOR THE PERIOD FROM JANUARY 1, 1997 TO OCTOBER 22, 1997 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION - The accompanying statement of revenue and certain expenses includes the operations of Rainbow Plaza Shopping Center (the "Plaza"), a 280,000 square foot shopping center in Las Vegas, Nevada. The Plaza was acquired by Weingarten Realty Investors (the "Company") on October 22, 1997 for $30,300,000. The Company is a Texas real estate investment trust, which is primarily involved in the acquisition, development, and management of real estate, consisting mostly of neighborhood and community shopping centers. BASIS OF PRESENTATION - The accompanying statement was prepared to comply with the rules and regulations of the Securities and Exchange Commission for inclusion on the Current Report on Form 8-K of the Company. The accompanying statement of revenue and certain expenses is not representative of the actual operations for the period presented as certain expenses that may not be comparable to the expenses expected to be incurred by the Company in the future operations of the Plaza have been excluded. Excluded expenses consist of interest, depreciation and amortization, and general and administrative costs not directly comparable to the future operations of the Plaza. REVENUE RECOGNITION - Rental revenue is generally recognized on a straight-line basis over the life of the lease for operating leases. Tenant reimbursements (payments for taxes, maintenance and insurance by the lessees and for an amount based on a percentage of tenants' sales) are estimated and accrued over the lease year. USE OF ESTIMATES - The preparation of the financial statement requires management to make use of estimates and assumptions that affect amounts reported in the financial statement as well as certain disclosures. Actual results could differ from those estimates. 2. RENTALS UNDER OPERATING LEASES Future minimum rental income for non-cancelable operating leases at October 22, 1997, is: $2,888,759 in 1998; $2,872,626 in 1999; $2,833,313 in 2000; $2,814,030 in 2001; $2,872,903 in 2002; and $25,841,745 thereafter. REPORT OF INDEPENDENT AUDITORS Venturers Coronado Center, Ltd. We have audited the accompanying balance sheets of Coronado Center, Ltd. (the "Joint Venture"), as of December 31, 1997 and 1996, and the related statements of income, venturers' capital, and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Joint Venture's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Coronado Center, Ltd., at December 31, 1997 and 1996, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. Ernst & Young LLP Houston, Texas February 20, 1998
Coronado Center, Ltd. (A Joint Venture) Balance Sheets DECEMBER 31, 1997 1996 ---------- ---------- ASSETS Property: Land . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,011,840 $1,011,840 Buildings and improvements . . . . . . . . . . . . . . . . 4,726,643 4,667,712 5,738,483 5,679,552 Less accumulated depreciation. . . . . . . . . . . . . . . 715,379 531,820 ---------- ---------- 5,023,104 5,147,732 Accrued rent and accounts receivable, net of allowance for doubtful accounts of $1,736 in 1996. . . . . . . . . . . 83,139 153,142 Lease costs, net of accumulated amortization of $18,672 in 1997 and $10,759 in 1996 . . . . . . . . . . . . . . . . 18,582 13,113 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . 242,578 316,301 Other. . . . . . . . . . . . . . . . . . . . . . . . . . . 2,068 2,964 ---------- ---------- Total assets . . . . . . . . . . . . . . . . . . . . . . . $5,369,471 $5,633,252 ========== ========== LIABILITIES AND VENTURERS' CAPITAL Accounts payable and accrued expenses: Affiliates . . . . . . . . . . . . . . . . . . . . . . . . $ 23,165 $ 30,402 Other. . . . . . . . . . . . . . . . . . . . . . . . . . . 137,992 147,417 Rentals collected in advance . . . . . . . . . . . . . . . 9,376 8,921 Tenants' security deposits . . . . . . . . . . . . . . . . 13,620 16,592 ---------- ---------- Total liabilities. . . . . . . . . . . . . . . . . . . . . 184,153 203,332 Venturers' capital . . . . . . . . . . . . . . . . . . . . 5,185,318 5,429,920 ---------- ---------- Total liabilities and Venturers' capital . . . . . . . . . $5,369,471 $5,633,252 ========== ==========
See accompanying notes.
Coronado Center, Ltd. (A Joint Venture) Statements of Income YEAR ENDED DECEMBER 31, 1997 1996 1995 --------- -------- -------- Revenues: Rents . . . . . . . . . . . . . . . . . . . $696,640 $854,573 $919,764 Interest income . . . . . . . . . . . . . . 3,736 3,992 3,523 --------- -------- -------- Total revenues. . . . . . . . . . . . . . . 700,376 858,565 923,287 Operating expenses: Ad valorem taxes. . . . . . . . . . . . . . 126,078 136,862 136,721 Repairs and maintenance . . . . . . . . . . 82,117 66,996 69,725 Management fees - Weingarten Realty Management Company. . . . . . . . . . . . . 35,019 42,929 46,165 Insurance . . . . . . . . . . . . . . . . . 8,593 10,056 10,784 General and administrative. . . . . . . . . 12,473 10,532 10,246 --------- -------- -------- Total operating expenses. . . . . . . . . . 264,280 267,375 273,641 --------- -------- -------- Income before depreciation and amortization 436,096 591,190 649,646 Depreciation and amortization . . . . . . . 192,724 185,590 177,409 --------- -------- -------- Net income. . . . . . . . . . . . . . . . . $243,372 $405,600 $472,237 ========= ======== ========
See accompanying notes
Coronado Center, Ltd. (A Joint Venture) Statements of Venturers' Capital AMRESCO/ WEINGARTEN WEINGARTEN RETAIL TOTAL NOSTAT, INC. PARTNERS, L.P. Balance at December 31, 1994 $5,526,325 $ 828,556 $ 4,697,769 Distributions to Venturers . (620,840) (131,817) (489,023) Contributions from Venturers 213,544 32,032 181,512 Net income for 1995. . . . . 472,237 99,307 372,930 ----------- -------------- ---------------- Balance at December 31, 1995 5,591,266 828,078 4,763,188 Distributions to Venturers . (595,657) (129,328) (466,329) Contributions from Venturers 28,711 4,307 24,404 Net income for 1996. . . . . 405,600 86,344 319,256 ----------- -------------- ---------------- Balance at December 31, 1996 5,429,920 789,401 4,640,519 Distributions to Venturers . (526,412) (96,468) (429,944) Contributions from Venturers 38,438 5,766 32,672 Net income for 1997. . . . . 243,372 44,561 198,811 ----------- -------------- ---------------- Balance at December 31, 1997 $5,185,318 $ 743,260 $ 4,442,058 =========== ============== ================
See accompanying notes
Coronado Center, Ltd. (A Joint Venture) Statements of Cash Flows YEAR ENDED DECEMBER 31, 1997 1996 1995 ---------- ---------- ---------- OPERATING ACTIVITIES Net income. . . . . . . . . . . . . . . . . . . $ 243,372 $ 405,600 $ 472,237 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization . . . . . . . . . 192,724 185,590 177,409 Net effect of changes in operating accounts . . 37,086 36,601 (31,402) ---------- ---------- ---------- Net cash provided by operating activities . . . 473,182 627,791 618,244 INVESTING ACTIVITIES Property additions. . . . . . . . . . . . . . . (58,931) (21,902) (93,100) ---------- ---------- ---------- Net cash used in investing activities . . . . . (58,931) (21,902) (93,100) FINANCING ACTIVITIES Distributions to Venturers. . . . . . . . . . . (526,412) (595,657) (620,840) Capital contribution from Venturers . . . . . . 38,438 28,711 213,544 ---------- ---------- ---------- Net cash used in financing activities . . . . . (487,974) (566,946) (407,296) ---------- ---------- ---------- Net (decrease) increase in cash . . . . . . . . (73,723) 38,943 117,848 Cash at beginning of year . . . . . . . . . . . 316,301 277,358 159,510 ---------- ---------- ---------- Cash at end of year . . . . . . . . . . . . . . $ 242,578 $ 316,301 $ 277,358 ========== ========== ==========
See accompanying notes Coronado Center, Ltd. (A Joint Venture) Notes to Financial Statements December 31, 1997 1. NATURE OF JOINT VENTURE AND TERMS OF JOINT VENTURE AGREEMENT Coronado Center, Ltd. (the "Joint Venture"), was organized on August 23, 1993 by predecessor partners to Amresco/Weingarten Retail Partners, L.P. ("Amresco"), a Delaware limited partnership, as limited partner and Weingarten Nostat, Inc. ("Nostat"), a Texas corporation, as general partner. Amresco and Nostat are, collectively, the "Venturers." The business purposes of the Joint Venture include, but are not limited to, owning, refurbishing, operating, managing, and leasing a shopping center (the "Center") located in El Paso, Texas. The ownership interests of Amresco and Nostat in the Joint Venture are 85% and 15%, respectively. For financial reporting and federal income tax purposes, net income is generally allocated to the Venturers in amounts equal to distributable funds (as defined in the Joint Venture Agreement (the "Agreement")) received by each of the Venturers during the period. Net losses shall be allocated 60% to Amresco and 40% to Nostat. Distributable funds are determined quarterly and distributed in the following priority: (a) A cumulative return of 8% annual simple interest on Amresco's capital contributions. (b) A cumulative return of 8% annual simple interest on Nostat's capital contributions. (c) Remaining distributable funds shall be distributed 60% to Amresco and 40% to Nostat. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet dates. PROPERTY Property is carried at cost. Depreciation is computed using the straight-line method based on estimated useful lives of 5 to 40 years. Repairs and maintenance are charged to expense. LEASE COSTS Lease costs are amortized primarily on a straight-line basis over the lives of leases. Rental Revenue Rental revenue is generally recognized on a straight-line basis over the life of the lease. Contingent rentals (payments for taxes, insurance, and maintenance by the lessees and for an amount based on a percentage of the tenants' sales) are estimated and accrued over the lease year. INCOME TAXES Income taxes are not provided because each of the Venturers reports its share of taxable income or loss in its tax return. 3. RENTALS UNDER OPERATING LEASES The Center's lease terms range from 3 years for smaller tenant spaces to 30 years for larger tenant spaces. In addition to minimum lease payments, most of the leases provide for contingent rentals. Minimum future rental income on noncancelable operating leases as of December 31, 1997 is: $504,087 in 1998; $234,847 in 1999; $165,955 in 2000; $108,560 in 2001; $68,109 in 2002; and $110,427 thereafter. The future minimum lease payments do not include estimates for contingent rentals. Such contingent rentals aggregated $103,386, $223,587 and $268,095 in 1997, 1996 and 1995, respectively. 4. DISTRIBUTIONS TO VENTURERS As described in Note 1, the Agreement provides for preferential distribution of distributable funds to Amresco, which is cumulative from year to year. Required distributions to Nostat, after satisfaction of Amresco's preference, are also cumulative. In accordance with the Agreement, Amresco and Nostat received a distribution of $94,327 and $15,156, respectively, in 1997 based on distributable funds of the Joint Venture at December 31, 1996. See Note 8 for additional information. 5. RELATED PARTY TRANSACTIONS Weingarten Realty Management Company ("WRMC") is the manager of the shopping center. WRMC is an affiliate of Nostat because both WRMC and Nostat are wholly owned subsidiaries of Weingarten Realty Investors ("WRI"). The Joint Venture pays WRMC a monthly management fee equal to 5% of gross income and a lump-sum leasing fee generally equal to 4% of net minimum rental, less certain exclusions defined in the Agreement. WRMC also receives fees for performing certain other operating and administrative functions, including in-house legal services. In addition, the Joint Venture reimbursed WRI for development costs. The total paid to WRMC and WRI during 1997, 1996 and 1995 was $65,791, $36,305 and $58,054, respectively. 6. MAJOR TENANT Walgreens, C.R. Anthony's, and Furr's Supermarket, the major tenants of the shopping center, lease a total of 66,014 square feet or approximately 52% of the lease premises. Revenues for the years ended December 31, 1997, 1996 and 1995 were, respectively, $6,813, $120,330 and $132,922 for Walgreens, $176,278, $150,867 and $151,480 for C.R. Anthony's, and $147,986, $117,781 and $131,507 for Furr's Supermarket. Receivables at December 31, 1997 and 1996 were, respectively, $7,639 and $400 for Walgreens, $23,329 and $1,814 for C.R. Anthony's, and $22,904 and $887 for Furr's Supermarket. 7. CHANGES IN OPERATING ACCOUNTS The effect of changes in the operating accounts on cash flows from operating activities is as follows:
YEAR ENDED DECEMBER 31, 1997 1996 1995 --------- -------- --------- Decrease (increase) in: Accrued rent and accounts receivable. . . . $ 70,003 $14,179 $(41,612) Other assets - primarily lease costs. . . . (13,738) (8,767) (6,808) Increase (decrease) in: Accounts payable and accrued expenses . . . (16,662) 24,969 18,818 Other liabilities . . . . . . . . . . . . . (2,517) 6,220 (1,800) --------- -------- --------- Net effect of changes in operating accounts $ 37,086 $36,601 $(31,402) ========= ======== =========
8. SUBSEQUENT EVENT At the close of business on December 31, 1997, WRI purchased Amresco's interest in four joint ventures, including Amresco's interest in this Joint Venture for $4,872,600. Also, WRI funded $400,000 to Amresco as the 1997 estimated quarterly distribution of distributable funds for all four joint ventures. The purchase agreement allows for final adjustments to the purchase price based on actual cash proceeds from the liquidation of year-end working capital items. This transaction is not reflected in the financial statements. REPORT OF INDEPENDENT AUDITORS Venturers Eastdale Center, Ltd. We have audited the accompanying balance sheets of Eastdale Center, Ltd. (the "Joint Venture"), as of December 31, 1997, and the related statements of income, Venturers' capital, and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Joint Venture's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Eastdale Center, Ltd., at December 31, 1997, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. Ernst & Young LLP Houston, Texas February 20, 1998
Eastdale Center, Ltd. (A Joint Venture) Balance Sheets DECEMBER 31, 1997 1996 ---------- ---------- ASSETS Property: Land . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,355,623 $1,355,623 Buildings and improvements . . . . . . . . . . . . . . . . 5,866,644 5,773,812 7,222,267 7,129,435 Less accumulated depreciation. . . . . . . . . . . . . . . 819,479 634,821 ---------- ---------- 6,402,788 6,494,614 Accrued rent and accounts receivable, net of allowance for doubtful accounts of $4,994 in 1997. . . . . . . . . . 63,584 61,264 Lease costs, net of accumulated amortization of $31,551 in 1997 and $21,751 in 1996 . . . . . . . . . . . . . . . 34,255 37,396 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . 241,611 257,546 Other. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,865 2,732 ---------- ---------- Total assets . . . . . . . . . . . . . . . . . . . . . . . $6,744,103 $6,853,552 ========== ========== LIABILITIES AND VENTURERS' CAPITAL Accounts payable and accrued expenses: Affiliates . . . . . . . . . . . . . . . . . . . . . . . . $ 19,490 $ 27,592 Other. . . . . . . . . . . . . . . . . . . . . . . . . . . 20,114 12,591 Rentals collected in advance . . . . . . . . . . . . . . . 37,165 36,842 Tenants' security deposits . . . . . . . . . . . . . . . . 22,936 23,287 Notes payable to affiliates. . . . . . . . . . . . . . . . 124,316 44,555 Total liabilities. . . . . . . . . . . . . . . . . . . . . 224,021 144,867 Venturers' capital . . . . . . . . . . . . . . . . . . . . 6,520,082 6,708,685 ---------- ---------- Total liabilities and Venturers' capital . . . . . . . . . $6,744,103 $6,853,552 ========== ==========
See accompanying notes.
Eastdale Center, Ltd. (A Joint Venture) Statements of Income YEAR ENDED DECEMBER 31, 1997 1996 1995 -------- -------- -------- Revenues: Rents . . . . . . . . . . . . . . . $928,429 $984,006 $921,792 Interest income . . . . . . . . . . 3,363 3,186 3,126 -------- -------- -------- Total revenues. . . . . . . . . . . 931,792 987,192 924,918 Operating expenses: Ad valorem taxes. . . . . . . . . . 64,887 65,058 63,377 Repairs and maintenance . . . . . . 81,636 67,464 67,460 Management fees - Weingarten Realty Management Company . . . . . . . 46,590 49,360 46,246 Insurance . . . . . . . . . . . . . 7,816 9,548 10,107 Advertising and promotion . . . . . 12,340 12,000 12,000 General and administrative. . . . . 9,838 11,399 12,053 Interest. . . . . . . . . . . . . . 7,664 2,208 - -------- -------- -------- Total operating expenses. . . . . . 230,771 217,037 211,243 -------- -------- -------- Income before depreciation and amortization. . . . . . . . . 701,021 770,155 713,675 Depreciation and amortization . . . 202,179 190,787 167,751 -------- -------- -------- Net income. . . . . . . . . . . . . $498,842 $579,368 $545,924 ======== ======== ========
See accompanying notes.
Eastdale Center, Ltd. (A Joint Venture) Statements of Venturers' Capital AMRESCO/ WEINGARTEN WEINGARTEN RETAIL TOTAL NOSTAT, INC. PARTNERS, L.P. ----------- -------------- ---------------- Balance at December 31, 1994 $6,887,640 $ 1,024,368 $ 5,863,272 Distributions to Venturers . (727,807) (151,731) (576,076) Contributions from Venturers 77,602 11,640 65,962 Net income for 1995. . . . . 545,924 113,140 432,784 ----------- -------------- ---------------- Balance at December 31, 1995 6,783,359 997,417 5,785,942 Distributions to Venturers . (763,205) (163,134) (600,071) Contributions from Venturers 109,163 16,374 92,789 Net income for 1996. . . . . 579,368 123,547 455,821 ----------- -------------- ---------------- Balance at December 31, 1996 6,708,685 974,204 5,734,481 Distributions to Venturers . (719,267) (144,722) (574,545) Contributions from Venturers 31,822 4,773 27,049 Net income for 1997. . . . . 498,842 98,172 400,670 Balance at December 31, 1997 $6,520,082 $ 932,427 $ 5,587,655 =========== ============== ================
See accompanying notes.
Eastdale Center, Ltd. (A Joint Venture) Statements of Cash Flows YEAR ENDED DECEMBER 31, 1997 1996 1995 ---------- ---------- ---------- OPERATING ACTIVITIES Net income. . . . . . . . . . . . . . . . . . . $ 498,842 $ 579,368 $ 545,924 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization . . . . . . . . . 202,179 190,787 167,751 Net effect of changes in operating accounts . . (16,440) 35,745 (67,392) ---------- ---------- ---------- Net cash provided by operating activities . . . 684,581 805,900 646,283 INVESTING ACTIVITIES Property additions. . . . . . . . . . . . . . . (92,832) (39,446) (137,547) ---------- ---------- ---------- Net cash used in investing activities . . . . . (92,832) (39,446) (137,547) FINANCING ACTIVITIES Distributions to Venturers. . . . . . . . . . . (719,267) (763,205) (727,807) Capital contribution from Venturers . . . . . . 31,822 109,163 77,602 Proceeds from debt - affiliate. . . . . . . . . 79,761 36,090 8,465 ---------- ---------- ---------- Net cash used in financing activities . . . . . (607,684) (617,952) (641,740) ---------- ---------- ---------- Net increase (decrease) in cash . . . . . . . . (15,935) 148,502 (133,004) Cash at beginning of year . . . . . . . . . . . 257,546 109,044 242,048 ---------- ---------- ---------- Cash at end of year . . . . . . . . . . . . . . $ 241,611 $ 257,546 $ 109,044 ========== ========== ==========
See accompanying notes. Eastdale Center, Ltd. (A Joint Venture) Notes to Financial Statements December 31, 1997 1. NATURE OF JOINT VENTURE AND TERMS OF JOINT VENTURE AGREEMENT Eastdale Center, Ltd. (the "Joint Venture"), was organized December 28, 1992 by predecessor partners to Amresco/Weingarten Retail Partners, L.P. ("Amresco"), a Delaware limited partnership, as limited partner, and Weingarten Nostat, Inc. ("Nostat"), a Texas corporation, as general partner. Amresco and Nostat are, collectively, the "Venturers." The business purposes of the Joint Venture include, but are not limited to, owning, refurbishing, operating, managing, and leasing a shopping center (the "Center") located in Albuquerque, New Mexico. The ownership interests of Amresco and Nostat in the Joint Venture are 85% and 15%, respectively. For financial reporting and federal income tax purposes, net income is generally allocated to the Venturers in amounts equal to distributable funds (as defined in the Joint Venture Agreement) received by each of the Venturers during the period. Net losses shall be allocated 60% to Amresco and 40% to Nostat. Distributable funds are determined quarterly and distributed in the following priority: (a) The repayment of any accrued interest on loans. (b) A cumulative return of 8% annual simple interest on Amresco's capital contributions. (c) A cumulative return of 8% annual simple interest on Nostat's capital contributions. (d) Remaining distributable funds shall be distributed 60% to Amresco and 40% to Nostat. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet dates. PROPERTY Property is carried at cost. Depreciation is computed using the straight-line method based on estimated useful lives of 5 to 40 years. Repairs and maintenance are charged to expense. LEASE COSTS Lease costs are amortized primarily on a straight-line basis over the lives of the leases. RENTAL REVENUE Rental revenue is generally recognized on a straight-line basis over the lives of the leases. Contingent rentals (payments for taxes, insurance, and maintenance by the lessees and for an amount based on a percentage of the tenants' sales) are estimated and accrued over the lease year. INCOME TAXES Income taxes are not provided because each of the Venturers reports its share of taxable income or loss in its tax return. 3. RENTALS UNDER OPERATING LEASES The Center's lease terms range from 3 years for smaller tenant spaces to 25 years for larger tenant spaces. In addition to minimum lease payments, most of the leases provide for contingent rentals. Minimum future rental income on noncancelable operating leases as of December 31, 1997 is: $749,763 in 1998; $724,780 in 1999; $701,353 in 2000; $606,899 in 2001; $432,451 in 2002; and $2,355,504 thereafter. The future minimum lease payments do not include estimates for contingent rentals. Such contingent rentals aggregated $146,603, $151,734, and $147,948 in 1997, 1996 and 1995, respectively. 4. DISTRIBUTIONS TO VENTURERS As described in Note 1, the Joint Venture Agreement (the "Agreement") provides for preferential distribution, as defined, to Amresco, which is cumulative from year to year. Required distributions to Nostat, after satisfaction of Amresco's preference, are also cumulative. In accordance with the Agreement, Amresco and Nostat received a distribution of $137,421 and $31,802, respectively, in 1997 based on distributable funds of the Joint Venture at December 31, 1996. See Note 9 for additional information. 5. NOTES PAYABLE TO AFFILIATES At December 31, 1997, notes payable to affiliates were as follows:
AMRESCO/ WEINGARTEN WEINGARTEN RETAIL TOTAL NOSTAT, INC. PARTNERS, L.P. -------- ------------- --------------- Mandatory loans, bearing interest at 8 % $124,316 $ 49,726 $ 74,590
6. RELATED PARTY TRANSACTIONS Weingarten Realty Management Company ("WRMC") is the manager of the Center. WRMC is an affiliate of Nostat because both WRMC and Nostat are wholly owned subsidiaries of Weingarten Realty Investors ("WRI"). The Joint Venture pays WRMC a monthly management fee equal to 5% of gross income and a lump-sum leasing fee generally equal to 4% of net minimum rental, less certain exclusions defined in the Agreement. WRMC also receives fees for performing certain other operating and administrative functions, including in-house legal services. In addition, the Joint Venture reimbursed WRI for performing certain operating and administrative functions, including development costs. Total payments to WRI and its subsidiary during 1997, 1996, and 1995 were $78,774, $51,235, and $85,814, respectively. 7. MAJOR TENANT Skaggs Companies, Inc. ("Skaggs"), the major tenant of the Center, leases a total of 54,250 square feet, or approximately 49% of the leased premises. Revenues from Skaggs for the years ended December 31, 1997 and 1996, and 1995 were $462,770, $459,869, and $467,529, respectively, and receivables at December 31, 1997 and 1996 were $33,560 and $33,822, respectively. 8. CHANGES IN OPERATING ACCOUNTS The effect of changes in the operating accounts on cash flows from operating activities is as follows:
YEAR ENDED DECEMBER 31, 1997 1996 1995 --------- --------- --------- Decrease (increase) in: Accrued rent and accounts receivable $ (2,320) $ (4,408) $ 3,138 Other assets - primary lease costs (13,513) (20,038) (30,107) Increase (decrease) in: Accounts payable and accrued expenses (579) 21,024 (9,466) Other liabilities (28) 39,167 (30,957) --------- --------- Net effect of changes in operating accounts $(16,440) $ 35,745 $(67,392) ========= ========= =========
9. SUBSEQUENT EVENT At the close of business on December 31, 1997, WRI purchased Amresco's interest in four joint ventures, including Amresco's interest in this Joint Venture for $6,117,400. Also, WRI funded $400,000 to Amresco as the 1997 estimated quarterly distribution of distributable funds for all four joint ventures. The purchase agreement allows for final adjustments to the purchase price based on actual cash proceeds from the liquidation of year-end working capital items. This transaction is not reflected in the financial statements. Report of Independent Auditors Venturers Mesquite Center, Ltd. We have audited the accompanying balance sheets of Mesquite Center, Ltd (the "Joint Venture"), as of December 31, 1997, and the related statements of income, Venturers' capital, and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Joint Venture's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Mesquite Center, Ltd, at December 31, 1997, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. Ernst & Young LLP Houston, Texas February 20, 1998
Mesquite Center, Ltd. (A Joint Venture) Balance Sheets DECEMBER 31, 1997 1996 ----------- ----------- ASSETS Property: Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,715,197 $ 1,715,197 Buildings and improvements. . . . . . . . . . . . . . . . . . 8,479,368 8,456,879 Construction-in-progress. . . . . . . . . . . . . . . . . . . 800 750 ----------- ----------- 10,195,365 10,172,826 Less accumulated depreciation . . . . . . . . . . . . . . . . 1,346,489 1,048,054 ----------- ----------- 8,848,876 9,124,772 Accrued rent and accounts receivable, net of allowance for doubtful accounts of $143,615 in 1997 and $106,000 in 1996 28,404 159,683 Lease costs, net of accumulated amortization of $143,185 in 1997 and $109,220 in 1996. . . . . . . . . . . . . . . . . 175,570 199,261 Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 749,514 642,068 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,285 4,595 ----------- ----------- Total assets. . . . . . . . . . . . . . . . . . . . . . . . . $ 9,806,649 $10,130,379 =========== =========== LIABILITIES AND VENTURERS' CAPITAL Accounts payable and accrued expenses: Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . $ 39,067 $ 40,243 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380,540 341,479 Rentals collected in advance. . . . . . . . . . . . . . . . . 44,058 53,951 Tenants' security deposits. . . . . . . . . . . . . . . . . . 25,556 31,815 Notes payable to affiliates . . . . . . . . . . . . . . . . . 154,967 102,347 Total liabilities . . . . . . . . . . . . . . . . . . . . . . 644,188 569,835 Venturers' capital. . . . . . . . . . . . . . . . . . . . . . 9,162,461 9,560,544 ----------- ----------- Total liabilities and Venturers' capital. . . . . . . . . . . $ 9,806,649 $10,130,379 =========== ===========
See accompanying notes.
Mesquite Center, Ltd. (A Joint Venture) Statements of Income YEAR ENDED DECEMBER 31, 1997 1996 1995 ---------- ---------- ---------- Revenues: Rents . . . . . . . . . . . . . . . $1,659,727 $1,767,347 $1,711,678 Interest income . . . . . . . . . . 7,807 8,413 8,466 Total revenues. . . . . . . . . . . 1,667,534 1,775,760 1,720,144 Operating expenses: Ad valorem taxes. . . . . . . . . . 317,169 303,939 273,608 Repairs and maintenance . . . . . . 138,502 123,785 106,306 Management fees - Weingarten Realty Management Company. . . . . . . . 83,377 88,788 86,007 Insurance . . . . . . . . . . . . . 12,555 13,680 12,609 General and administrative. . . . . 9,634 10,690 9,227 Interest. . . . . . . . . . . . . . 12,561 8,465 7,573 Total operating expenses. . . . . . 573,798 549,347 495,330 ---------- ---------- ---------- Income before depreciation and amortization. . . . . . . . . . . 1,093,736 1,226,413 1,224,814 Depreciation and amortization . . . 342,100 344,954 319,245 ---------- ---------- ---------- Net income. . . . . . . . . . . . . $ 751,636 $ 881,459 $ 905,569 ========== ========== ==========
See accompanying notes.
Mesquite Center, Ltd. (A Joint Venture) Statements of Venturers' Capital AMRESCO/ WEINGARTEN WEINGARTEN/ RETAIL TOTAL NOSTAT, INC. PARTNERS, L.P. ------------ -------------- ---------------- Balance at December 31, 1994 $10,187,445 $ 1,520,663 $ 8,666,782 Distributions to Venturers . (1,223,183) (284,250) (938,933) Contributions from Venturers 13,384 2,018 11,366 Net income for 1995. . . . . 905,569 211,407 694,162 ------------ -------------- ---------------- Balance at December 31, 1995 9,883,215 1,449,838 8,433,377 Distributions to Venturers . (1,243,075) (290,372) (952,703) Contributions from Venturers 38,945 5,842 33,103 Net income for 1996. . . . . 881,459 205,603 675,856 ------------ -------------- ---------------- Balance at December 31, 1996 9,560,544 1,370,911 8,189,633 Distributions to Venturers . (1,171,876) (261,664) (910,212) Contributions from Venturers 22,157 3,323 18,834 Net income for 1997. . . . . 751,636 174,605 577,031 Balance at December 31, 1997 $ 9,162,461 $ 1,287,175 $ 7,875,286 ============ ============== ================
See accompanying notes.
Mesquite Center, Ltd. (A Joint Venture) Statements of Cash Flows YEAR ENDED DECEMBER 31, 1997 1996 1995 ------------ ------------ ------------ OPERATING ACTIVITIES Net income. . . . . . . . . . . . . . . . . . . $ 751,636 $ 881,459 $ 905,569 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization . . . . . . . . . 342,100 344,954 319,245 Net effect of changes in operating accounts . . 133,348 49,901 (60,319) ------------ ------------ ------------ Net cash provided by operating activities . . . 1,227,084 1,276,314 1,164,495 INVESTING ACTIVITIES Property additions. . . . . . . . . . . . . . . (22,539) (51,721) (81,623) ------------ ------------ ------------ Net cash used in investing activities . . . . . (22,539) (51,721) (81,623) FINANCING ACTIVITIES Distributions to Venturers. . . . . . . . . . . (1,171,876) (1,243,075) (1,223,183) Capital contribution from Venturers . . . . . . 22,157 38,945 13,384 Proceeds from debt - affiliate. . . . . . . . . 52,620 16,836 85,511 Net cash used in financing activities . . . . . (1,097,099) (1,187,294) (1,124,288) ------------ ------------ ------------ Net increase (decrease) in cash . . . . . . . . 107,446 37,299 (41,416) Cash at beginning of year . . . . . . . . . . . 642,068 604,769 646,185 ------------ ------------ ------------ Cash at end of year . . . . . . . . . . . . . . $ 749,514 $ 642,068 $ 604,769 ============ ============ ============
See accompanying notes. Mesquite Center, Ltd. (A Joint Venture) Notes to Financial Statements December 31, 1997 1. NATURE OF JOINT VENTURE AND TERMS OF JOINT VENTURE AGREEMENT Mesquite Center, Ltd. (the "Joint Venture"), was organized on October 27, 1992 by predecessor partners to Amresco/Weingarten Retail Partners, L.P. ("Amresco"), a Delaware limited partnership, as limited partner, and Weingarten/Nostat, Inc. ("Nostat"), a Texas corporation, as general partner. Amresco and Nostat are, collectively, the "Venturers." The business purposes of the Joint Venture include, but are not limited to, owning, refurbishing, operating, managing, and leasing a shopping center located in Mesquite, Texas (the "Center"). The ownership interests of Amresco and Nostat in the Joint Venture are 85% and 15%, respectively. For financial reporting and federal income tax purposes, net income is generally allocated to the Venturers in amounts equal to distributable funds (as defined in the Joint Venture Agreement (the "Agreement")) received by each of the Venturers during the period. Net losses shall be allocated 60% to Amresco and 40% to Nostat. Distributable funds are determined quarterly and distributed in the following priority: (a) The repayment of any accrued interest on loans. (b) A cumulative return of 8% annual simple interest on Amresco's capital contributions. (c) A cumulative return of 8% annual simple interest on Nostat's capital contributions. (d) Remaining distributable funds shall be distributed 60% to Amresco and 40% to Nostat. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet dates. PROPERTY Property is carried at cost. Depreciation is computed using the straight-line method based on estimated useful lives of 5 to 40 years. Repairs and maintenance are charged to expense. LEASE COSTS Lease costs are amortized primarily on a straight-line basis over the lives of leases RENTAL REVENUE Rental revenue is generally recognized on a straight-line basis over the life of the lease. Contingent rentals (payments for taxes, insurance, and maintenance by the lessees and for an amount based on a percentage of the tenants' sales) are estimated and accrued over the lease year. INCOME TAXES Income taxes are not provided because each of the Venturers reports its share of taxable income or loss in its tax return. 3. RENTALS UNDER OPERATING LEASES The Center's lease terms range from 3 years for smaller tenant spaces to 20 years for larger tenant spaces. In addition to minimum lease payments, most of the leases provide for contingent rentals. Minimum future rental income on noncancelable operating leases as of December 31, 1997 is: $1,232,381 in 1998, $1,187,606 in 1999, $1,165,220 in 2000, $1,028,414 in 2001, $947,415 in 2002, and $2,455,378 thereafter. The future minimum lease payments do not include estimates for contingent rentals. Such contingent rentals aggregated $415,289, $425,079, and $379,175 in 1997, 1996, and 1995, respectively. 4. DISTRIBUTIONS TO VENTURERS As described in Note 1, the Agreement provides for preferential distribution of distributable funds to Amresco, which is cumulative from year to year. Required distributions to Nostat, after satisfaction of Amresco's preference, are also cumulative. In accordance with the Agreement, Amresco and Nostat received distributions of $214,680 and $56,436, respectively, in 1997 based on distributable funds of the Joint Venture at December 31, 1996. See Note 9 for additional information. 5. NOTES PAYABLE TO AFFILIATES At December 31, 1997, notes payable to affiliates were as follows:
AMRESCO/ WEINGARTEN WEINGARTEN/ RETAIL TOTAL NOSTAT, INC. PARTNERS, L.P. Mandatory loans, bearing interest at 8 % $154,967 $ 61,987 $ 92,980
6. RELATED PARTY TRANSACTIONS Weingarten Realty Management Company ("WRMC") is the manager of the Center. WRMC is an affiliate of Nostat because both WRMC and Nostat are wholly owned subsidiaries of Weingarten Realty Investors ("WRI"). The Joint Venture pays WRMC a monthly management fee equal to 5% of gross income and a lump-sum leasing fee generally equal to 4% of net minimum rental, less certain exclusions defined in the Agreement. WRMC also receives fees for performing certain other operating and administrative functions including in-house legal services. In addition, the Joint Venture reimbursed WRI for development and insurance costs. Total payments to WRMC and WRI during 1997, 1996, and 1995 were $105,261, $88,790, and $107,768, respectively. 7. MAJOR TENANT Minyards Food Stores, Inc. ("Minyards"), and Baby Superstore, major tenants of the Center, lease a total of 102,963 square feet, or approximately 57% of the leased premises. Revenues for the years ended December 31, 1997, 1996 and 1995 were $519,803, $507,301, and $495,479, respectively, for Minyards and $332,880, $327,219, and $316,912, respectively, for Baby Superstore. Receivables at December 31, 1997 and 1996 were $2,929 and $114,931, respectively, for Minyards and $1,401 for Baby Superstore at December 31, 1997. 8. CHANGES IN OPERATING ACCOUNTS The effect of changes in the operating accounts on cash flows from operating activities is as follows:
YEAR ENDED DECEMBER 31, 1997 1996 1995 --------- --------- --------- (Increase) decrease in: Accrued rent and accounts receivable $131,279 $(18,141) $ 8,471 Other assets - primarily lease costs (19,664) (37,079) (38,335) Increase (decrease) in: Accounts payable and accrued expenses 37,885 54,261 6,544 Other liabilities (16,152) 50,860 (36,999) --------- --------- --------- Net effect of changes in operating accounts $133,348 $ 49,901 $(60,319) ========= ========= =========
9. SUBSEQUENT EVENT At the close of business on December 31, 1997, WRI purchased Amresco's interest in four joint ventures, including Amresco's interest in this Joint Venture for $8,814,500. Also, WRI funded $400,000 to Amresco as the 1997 estimated quarterly distribution of distributable funds for all four joint ventures. The purchase agreement allows for final adjustments to the purchase price based on actual cash proceeds from the liquidation of year-end working capital items. This transaction is not reflected in the financial statements. 44 REPORT OF INDEPENDENT AUDITORS Venturers Tempe Valley Plaza, Ltd. We have audited the accompanying balance sheets of Tempe Valley Plaza, Ltd. (the "Joint Venture"), as of December 31, 1997, and the related statements of income, Venturers' capital, and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Joint Venture's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Tempe Valley Plaza, Ltd., at December 31, 1997, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. Ernst & Young LLP Houston, Texas February 20, 1998
Tempe Valley Plaza, Ltd. (A Joint Venture) Balance Sheets DECEMBER 31, 1997 1996 ---------- ---------- ASSETS Property: Land . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,233,837 $1,233,837 Building and improvements. . . . . . . . . . . . . . . . . 5,980,146 5,405,499 Construction-in-progress . . . . . . . . . . . . . . . . . - 249,472 ---------- ---------- 7,213,983 6,888,808 Less accumulated depreciation. . . . . . . . . . . . . . . 739,205 518,103 ---------- ---------- 6,474,778 6,370,705 Accrued rent and accounts receivable, net of allowance for doubtful accounts of $4,300 in 1997 and $67 in 1996 . . 95,610 129,080 Lease costs, net of accumulated amortization of $72,908 in 1997 and $43,151 in 1996. . . . . . . . . . . . . . . . 165,344 79,135 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,626 259,009 Other. . . . . . . . . . . . . . . . . . . . . . . . . . . 4,851 5,967 ---------- Total assets . . . . . . . . . . . . . . . . . . . . . . . $7,041,209 $6,843,896 ========== ========== LIABILITIES AND VENTURERS' CAPITAL Accounts payable and accrued expenses: Affiliates . . . . . . . . . . . . . . . . . . . . . . . . $ 23,341 $ 35,132 Other. . . . . . . . . . . . . . . . . . . . . . . . . . . 120,934 173,097 Rentals collected in advance . . . . . . . . . . . . . . . 21,462 8,762 Tenants' security deposits . . . . . . . . . . . . . . . . 27,961 23,511 Notes payable to affiliates. . . . . . . . . . . . . . . . 160,868 - Total liabilities. . . . . . . . . . . . . . . . . . . . . 354,566 240,502 Venturers' capital . . . . . . . . . . . . . . . . . . . . 6,686,643 6,603,394 Total liabilities and Venturers' capital . . . . . . . . . $7,041,209 $6,843,896 ========== ==========
See accompanying notes.
Tempe Valley Plaza, Ltd. (A Joint Venture) Statements of Income YEAR ENDED DECEMBER 31, 1997 1996 1995 ---------- -------- ---------- Revenues: Rents . . . . . . . . . . . . . . . $1,096,535 $994,836 $1,035,027 Interest income . . . . . . . . . . 4,488 4,566 4,380 ---------- -------- Total revenues. . . . . . . . . . . 1,101,023 999,402 1,039,407 Operating expenses: Ad valorem taxes. . . . . . . . . . 189,424 192,438 193,803 Repairs and maintenance . . . . . . 112,061 101,032 82,185 Management fees - Weingarten Realty Management Company. . . . . . . . 55,051 49,970 51,803 Insurance . . . . . . . . . . . . . 9,592 11,240 11,626 General and administrative. . . . . 10,456 11,649 11,875 Interest. . . . . . . . . . . . . . 5,546 - - ---------- -------- ---------- Total operating expenses. . . . . . 382,130 366,329 351,292 ---------- -------- ---------- Income before depreciation and amortization. . . . . . . . . . . 718,893 633,073 688,115 Depreciation and amortization . . . 254,339 204,385 192,118 Net income. . . . . . . . . . . . . $ 464,554 $428,688 $ 495,997 ========== ======== ==========
See accompanying notes.
Tempe Valley Plaza, Ltd. (A Joint Venture) Statements of Venturers' Capital AMRESCO/ WEINGARTEN WEINGARTEN/ RETAIL TOTAL NOSTAT, INC. PARTNERS, L.P. Balance at December 31, 1994 $6,587,656 $ 979,108 $ 5,608,548 Distributions to Venturers . (609,851) (145,264) (464,587) Contributions from Venturers 81,870 12,280 69,590 Net income for 1995. . . . . 495,997 133,227 362,770 ----------- -------------- --------------- Balance at December 31, 1995 6,555,672 979,351 5,576,321 Distributions to Venturers . (663,831) (132,316) (531,515) Contributions from Venturers 282,865 42,429 240,436 Net income for 1996. . . . . 428,688 79,571 349,117 ----------- -------------- --------------- Balance at December 31, 1996 6,603,394 969,035 5,634,359 Distributions to Venturers . (680,786) (132,045) (548,741) Contributions from Venturers 299,481 44,922 254,559 Net income for 1997. . . . . 464,554 106,244 358,310 ----------- -------------- --------------- Balance at December 31, 1997 $6,686,643 $ 988,156 $ 5,698,487 =========== ============== ===============
See accompanying notes.
Tempe Valley Plaza, Ltd. (A Joint Venture) Statements of Cash Flows YEAR ENDED DECEMBER 31, 1997 1996 1995 ---------- ---------- ---------- OPERATING ACTIVITIES Net income. . . . . . . . . . . . . . . . . . . $ 464,554 $ 428,688 $ 495,997 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization . . . . . . . . . 254,339 204,385 192,118 Net effect of changes in operating accounts (74,140) (15,646) 51,629 ---------- ---------- ---------- Net cash provided by operating activities . . . 644,753 617,427 739,744 INVESTING ACTIVITIES Property additions. . . . . . . . . . . . . . . (382,699) (301,997) (60,051) ---------- ---------- ---------- Net cash used in investing activities . . . . . (382,699) (301,997) (60,051) FINANCING ACTIVITIES Distributions to Venturers. . . . . . . . . . . (680,786) (663,831) (609,851) Capital contribution from Venturers . . . . . . 299,481 282,865 81,870 Proceeds from debt - affiliate. . . . . . . . . 160,868 - - ---------- ---------- ---------- Net cash used in financing activities . . . . . (220,437) (380,966) (527,981) ---------- ---------- ---------- Net increase (decrease) in cash . . . . . . . . 41,617 (65,536) 151,712 Cash at beginning of year . . . . . . . . . . . 259,009 324,545 172,833 Cash at end of year . . . . . . . . . . . . . . $ 300,626 $ 259,009 $ 324,545 ========== ========== ==========
See accompanying notes. Tempe Valley Plaza, Ltd. (A Joint Venture) Notes to Financial Statements December 31, 1997 1. NATURE OF JOINT VENTURE AND TERMS OF JOINT VENTURE AGREEMENT Tempe Valley Plaza, Ltd. (the "Joint Venture"), was organized December 13, 1993 by predecessor partners to Amresco/Weingarten Retail Partners, L.P. ("Amresco"), a Delaware limited partnership, as limited partner, and Weingarten/Nostat, Inc. ("Nostat"), a Texas corporation, as general partner. Amresco and Nostat are, collectively, the "Venturers." The business purposes of the Joint Venture include, but are not limited to, owning, refurbishing, operating, managing, and leasing a shopping center (the "Center") located in Tempe, Arizona. The ownership interests of Amresco and Nostat in the Joint Venture are 85% and 15%, respectively. For financial reporting and federal income tax purposes, net income is generally allocated to the Venturers in amounts equal to distributable funds (as defined in the Joint Venture Agreement) received by each of the Venturers during the period. Net losses shall be allocated 60% to Amresco and 40% to Nostat. Distributable funds are determined quarterly and distributed in the following priority: (a) The repayment of any accrued interest on loans. (b) A cumulative return of 8% annual simple interest on Amresco's capital contributions. (c) A cumulative return of 8% annual simple interest on Nostat's capital contributions. (d) Remaining distributable funds shall be distributed 60% to Amresco and 40% to Nostat. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet dates. PROPERTY Property is carried at cost. Depreciation is computed using the straight-line method based on estimated useful lives of 5 to 40 years. Repairs and maintenance are charged to expense. LEASE COSTS Lease costs are amortized primarily on a straight-line basis over the lives of the leases. RENTAL REVENUE Rental revenue is generally recognized on a straight-line basis over the life of the lease. Contingent rentals (payments for taxes, insurance, and maintenance by the lessees and for an amount based on a percentage of the tenants' sales) are estimated and accrued over the lease year. INCOME TAXES Income taxes are not provided because each of the Venturers reports its share of taxable income or loss in its tax return. 3. RENTALS UNDER OPERATING LEASES The Center's lease terms range from 3 years for smaller tenant spaces to 25 years for larger tenant spaces. In addition to minimum lease payments, most of the leases provide for contingent rentals. Minimum future rental income on noncancelable operating leases as of December 31, 1997 is: $929,650 in 1998; $847,573 in 1999; $740,458 in 2000; $710,190 in 2001; $534,358 in 2002; and $6,989,032 thereafter. The future minimum lease payments do not include estimates for contingent rentals. Such contingent rentals aggregated $287,285, $276,749, and $298,675 in 1997, 1996, and 1995, respectively. 4. DISTRIBUTIONS TO VENTURERS As described in Note 1, the Joint Venture Agreement (the "Agreement") provides for preferential distribution of distributable funds to Amresco, which is cumulative from year to year. Required distributions to Nostat, after satisfaction of Amresco's preference, are also cumulative. In accordance with the Agreement, Amresco and Nostat received a distribution of $125,378 and $27,014, respectively, in 1997 based on distributable funds of the Joint Venture at December 31, 1996. See Note 9 for additional information. 5. NOTES PAYABLE TO AFFILIATES At December 31, 1997, notes payable to affiliates were as follows:
AMRESCO/ WEINGARTEN WEINGARTEN RETAIL TOTAL NOSTAT, INC. PARTNERS, L.P. -------- ------------- ----------------- Mandatory loans, bearing interest at 8 % $160,868 $ 64,347 $ 96,521
6. RELATED PARTY TRANSACTIONS Weingarten Realty Management Company ("WRMC") is the manager of the Center. WRMC is an affiliate of Nostat because both WRMC and Nostat are wholly owned subsidiaries of Weingarten Realty Investors ("WRI"). The Joint Venture pays WRMC a monthly management fee equal to 5% of gross income and a lump-sum leasing fee generally equal to 4% of net minimum rental, less certain exclusions defined in the Agreement. WRMC also receives fees for performing certain other operating and administrative functions including in-house legal services. In addition, the Joint Venture reimbursed WRI for development costs. The total paid to WRI and its subsidiary during 1997, 1996, and 1995 was $193,512, $72,019, and $53,626, respectively. 7. MAJOR TENANT Fry's Food Store ("Fry's"), the major tenant of the Center, leases a total of 60,145 square feet, or approximately 44% of the leased premises. Revenues from Fry's for the years ended December 31, 1997, 1996, and 1995 were $327,424, $326,642, and $324,118, respectively, and receivables at December 31, 1997 and 1996 were $9,069 and $43,804, respectively. 8. CHANGES IN OPERATING ACCOUNTS The effect of changes in the operating accounts on cash flows from operating activities is as follows:
YEAR ENDED DECEMBER 31, 1997 1996 1995 ---------- --------- -------- Decrease (increase) in: Accrued rent and accounts receivable $ 33,470 $ (9,333) $ 4,346 Other assets - primarily lease costs (118,330) (25,010) (8,013) Increase (decrease) in: Accounts payable and accrued expenses (6,430) 13,149 59,231 Other liabilities 17,150 5,548 (3,935) ---------- --------- -------- Net effect of changes in operating accounts $ (74,140) $(15,646) $51,629 ========== ========= ========
9. SUBSEQUENT EVENT At the close of business on December 31, 1997, WRI purchased Amresco's interest in four joint ventures, including Amresco's interest in the Joint Venture for $6,195,500. Also, WRI funded $400,000 to Amresco as the 1997 estimated quarterly distribution of distributable funds for all four joint ventures. The purchase agreement allows for final adjustments to the purchase price based on actual cash proceeds from the liquidation of year-end working capital items. This transaction is not reflected in the financial statements. WEINGARTEN REALTY INVESTORS PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED INCOME YEAR ENDED DECEMBER 31, 1997 (Unaudited) (in thousands, except per share amounts) This unaudited Pro Forma Condensed Statement of Consolidated Income is presented as if (A) the acquisitions of Rainbow Plaza Shopping Center and the AMRESCO/Weingarten Joint Venture Interests, and (B) the acquisition of other properties as set forth in the Notes and Significant Assumptions, has occurred as of January 1, 1997. In management's opinion, all adjustments necessary to reflect the effects of these transactions have been made. This unaudited Pro Forma Condensed Statement of Consolidated Income is not necessarily indicative of what actual results of operations would have been had these transactions occurred on January 1, 1997, nor does it purport to represent the results of operations for future periods.
Adjustments for Acquisition Adjustment of Acquired for Other Pro Historical Properties(A) Acquisitions(B) Forma ----------- ----------------- ---------------- -------- Revenue: Rentals $ 169,041 $ 7,028 $ 2,926 $178,995 Interest 2,487 22 0 2,509 Other 2,984 (613) 13 2,384 Total Revenue 174,512 6,437 2,939 183,888 ----------- ----------------- ---------------- -------- Expenses: Operating 27,131 829 487 28,447 Ad Valorem Taxes 22,110 807 381 23,298 Depreciation & Amortization 37,976 1,796 434 40,206 Interest 30,009 3,575 1,367 34,951 General & Administrative 5,647 5,647 Total Expenses 122,873 7,007 2,669 132,549 ----------- ----------------- ---------------- -------- Income (Loss) From Operations 51,639 (570) 270 51,339 Gain on Sales of Property and Securities 3,327 3,327 Net Income $ 54,966 $ (570) $ 270 $ 54,666 =========== ================= ================ ======== Net Income per Common Share $ 2.06 $ 2.05 =========== ======== Net Income per Common Share Assuming Dilution $ 2.06 $ 2.05 =========== ======== Weighted Average Number of Common Shares Outstanding 26,638 26,638 =========== ======== Weighted Average Number of Common Shares Outstanding Assuming Dilution 26,671 26,671 =========== ========
WEINGARTEN REALTY INVESTORS NOTES AND SIGNIFICANT ASSUMPTIONS YEAR ENDED DECEMBER 31,1997 (Unaudited) (A) ACQUISITION OF RAINBOW PLAZA SHOPPING CENTER AND AMRESCO/WEINGARTEN JOINT VENTURE INTEREST On October 22, 1997, the Company acquired Phases II and III of Rainbow Plaza, a 280,000 square foot shopping center located in Las Vegas, Nevada for $30.3 million. The purchase price was funded with $12.9 million borrowed under the Company's revolving credit facility (average rate of 6.3%) and the assumption of $17.4 million of debt (rate of 8.75%). Rainbow Plaza is located at Rainbow and Charleston Boulevards and is situated on 24.3 acres. Developed between 1992 and 1995, Rainbow is anchored by Home Depot, JCPenney Home Store, Ultimate Electronics and the Q-Club and is currently 100% leased. The purchase price was allocated between land and buildings, with the buildings depreciated over a period of forty years. Pro forma revenue and expenses, other than interest and depreciation, represent the historical amounts of Rainbow Plaza. On December 31, 1997, the Company completed the purchase of its joint venture partner's interest in four shopping centers located in Texas, New Mexico and Arizona. The partner's previous interest was 85% of each property. The seller was AMRESCO/Weingarten Retail Partnership L.P. and the sales price was $26.4 million, which was borrowed under the Company's revolving credit facilities (average rate of 6.3%). AMRESCO is an advisor to pension funds who sold the properties on behalf of several clients. The properties included in the purchase are as follows: 1) Independence Plaza located at Independence and Town East Boulevard in Mesquite, Texas, a suburb of Dallas. Independence contains 179,100 square feet and is anchored by Baby Superstore and Sak 'N Sav Grocery. 2) Eastdale Shopping Center located at Candelaria Road and Eubanks Boulevard in Albuquerque, New Mexico. Eastdale contains 111,000 square feet and is anchored by Skaggs Supermarket. 3) Coronado Hills Shopping Center located at Mesa Street and Balboa Drive in El Paso, Texas. Coronado contains 127,100 square feet and is anchored by Anthony's, Cloth World, Furr's Supermarket and AutoZone. 4) Frys Valley Shopping Center located at Southern and McClintock Streets in Tempe, Arizona. Frys Valley contains 145,100 square feet and is anchored by Fry's Foods, Hancock Fabrics and Paddock Pools. Collectively, the four properties add an additional 478,000 square feet to the portfolio and have an average occupancy of 91.5%. The purchase price was allocated between land and buildings, with the buildings depreciated over a period of forty years. Pro forma revenue and expenses, other than interest and depreciation, represent the historical amounts of the AMRESCO/Weingarten Joint Venture properties on a fully consolidated basis, adjusted for the elimination of the equity in the income of the joint venture which was previously accounted for under the equity method. B) OTHER ACQUISITIONS All of the acquisitions described below (the "Other Acquisitions") were purchased with borrowings under the Company's revolving credit facilities (average rate of 6.3%) and the aggregate purchase price of $54.3 million was allocated between land and buildings, with buildings depreciated over a period of forty years. Pro forma revenues and expenses other than interest and depreciation for the Other Acquisitions through the date of acquisition are based on unaudited information provided by the sellers of the properties. Unaudited financial information has been prepared on a basis consistent with the historical information. On March 19, 1997, the Company purchased Southcliff Shopping Center located in Fort Worth, Texas. Developed in 1968, the center is located on 13.0 acres and was 95% leased at the date of purchase. Located at the intersection of Interstate 20 and Granbury Road, this 116,000 square foot shopping center is anchored by Pancho's Mexican Restaurant, Cloth World and Armbrister's Hardware. On April 28, 1997, the Company purchased Rancho Encanto Plaza located in Phoenix, Arizona. Developed in 1988, the center contains 71,000 square feet and is situated on 5.95 acres. The center was 94.7% leased at the date of purchase and is anchored by ABCO Supermarket and Berean Book Store. On May 12, 1997, the Company purchased West State Plaza located in Kansas City, Kansas. Located at the intersection of 75th Street and State Avenue, West State contains 94,000 square feet and was 69% leased when purchased. Developed in 1985, the center is situated on 9.3 acres and is anchored by Big Lots, a popular discount store, and Westlake Hardware. On May 14, 1997, the Company acquired Desert Square Shopping Center in Tucson, the Company's seventh property in Arizona. Located on the northeast corner of Golf Links and Kolb Road, the center contains 98,000 square feet and is situated on 10.5 acres. Anchored by Safeway, Wells Fargo, Auto Zone and Salvation Army, Desert Square was 97% leased. On May 23, 1997, the Company acquired the Corporate I and II office/service center in Austin, Texas. Located on Research Boulevard (Highway 183) at Putnam Drive, the project contains 117,000 square feet and is situated on 7.5 acres. Corporate I was developed in 1979 while Corporate II was built in 1983. The total project contains five separate one-story buildings and was 94.3% leased when acquired. Major tenants include Windsport, Pitney Bowes, Inc. and a division of the State Highway and Public Transportation Department. On June 3, 1997, the Company purchased Stonecrest Business Center located in Houston, Texas. This office/service center contains five separate one-story buildings totaling 111,000 square feet and was 77% leased when purchased. Stonecrest was developed in 1979 and is situated on 7.1 acres. Major tenants include Carrousel Production, Flintlock, Ltd. and RLPH Development. On June 20, 1997, the Company purchased the Grand Plaza Shopping Center in Amarillo, Texas. Located on the southwest corner of Interstate 40 and Grand Street, the center contains 75,000 square feet and is situated on 7.08 acres. Developed in 1985, Grand Plaza is anchored by United Supermarket and Dollar General. The center was 82% leased when purchased. On November 7, 1997, the Company purchase the second phase of this shopping center. This 82,000 square foot building is located on 7.5 acres and was 80% leased when purchased. Major tenants are Country General and Beall's. On July 9, 1997, the Company acquired Phase II of League City Plaza, located adjacent to Phase I which the Company acquired in 1993. Located in League City, just south of Houston, Phase II contains 20,000 square feet and is situated on 2.44 acres of which 1.44 acres are undeveloped. Phase II is 100% leased and anchored by Pancho's Mexican Restaurant. On August 20, 1997, the Company purchased West Ten Business Center II. The 83,000 square foot warehouse is located on Interstate 10 in Houston and is situated on 3.4 acres adjacent to the Company's West Ten Business Center. This project was vacant when purchased. On August 22, 1997, the Company purchased a Kmart center in Houston, Texas. The Company will redevelop the site by expanding the Kmart store and building a new supermarket along with some additional retail space. The center will contain about 200,000 square feet when complete and is expected to be open in the fall of 1998. On December 10, 1997, the Company purchased a 5,460 square foot building located on a pad site adjacent to this center. The building is leased to Monterey House restaurant. On October 22, 1997, the Company acquired Academy Place, a 84,000 square foot shopping center in Colorado Springs, Colorado. Located at the intersection of Academy and Union Boulevards, the center is situated on 9.34 acres and is anchored by Ross Dress for Less and Famous Footwear. It is also strategically placed between a Safeway supermarket and a Target store, both of which are owned by others. Developed in 1982, Academy Place was 97.4% leased when purchased.
WEINGARTEN REALTY INVESTORS STATEMENT OF ESTIMATED TAXABLE OPERATING RESULTS AND CASH TO BE MADE AVAILABLE BY OPERATIONS FOR A TWELVE MONTH PERIOD ENDING DECEMBER 31, 1997 (Unaudited) Revenue:. . . . . . . . . . . . . . . . . . . . . . $9,954 Expenses: Operating . . . . . . . . . . . . . . . . . . . . . 1,316 Ad Valorem Taxes. . . . . . . . . . . . . . . . . . 1,188 Depreciation & Amortization . . . . . . . . . . . . 2,230 Interest. . . . . . . . . . . . . . . . . . . . . . 4,942 Total Expenses. . . . . . . . . . . . . . . . . . . 9,676 ------- Estimated Taxable Operating Loss. . . . . . . . . . (278) Add back depreciation and amortization. . . . . . . 2,230 Estimated Cash to be Made Available from Operations $1,952 ======= Note: This statement of estimated taxable operating results and estimated cash to be made available from operations is an estimate of operating results for all properties acquired by the Company during the year ended December 31, 1997 and does not purport to reflect actual results for any period.
(c) Exhibits Exhibit Number Description --------------- ----------- 23.1 Consent of Deloitte & Touche LLP 23.2 Consent of Ernst & Young LLP 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/ Stephen C. Richter -------------------------------- Stephen C. Richter Senior Vice President/Financial Administration and Treasurer (Principal Accounting Officer) DATE: April 24, 1998 ---------------- EX-23 2 Exhibit 23.1 Independent Auditors' Consent We consent to the incorporation by reference in Registration Statements No. 33-20964, No. 33-24364, No. 33-41604, No. 33-52473, No. 33-54402 and No. 33-54404 on Form S-8, in Post-Effective Amendment No. 1 to Registration Statement No. 33-25581 on Form S-8 and in Registration Statements No. 33-57659, No. 33-54529 and No. 333-12179 on Form S-3 of Weingarten Realty Investors of our report dated April 2, 1998, relating to the statement of revenues and certain expenses of Rainbow Plaza Shopping Center, appearing in this Current Report on Form 8-K (Date of Event: December 31, 1997) of Weingarten Realty Investors. Deloitte & Touche LLP Houston, Texas April 23, 1998 EX-23 3 Exhibit 23.2 Independent Auditors' Consent We consent to the incorporation by reference in Registration Statements No. 33-20964, No. 33-24364, No. 33-41604, No. 33-52473, No. 33-54402 and No. 33-54404 on Form S-8, in Post-Effective Amendment No. 1 to Registration Statement No. 33-25581 on Form S-8 and in Registration Statements No. 33-57659, No. 33-54529 and No. 333-12179 on Form S-3 Weingarten Realty Investors of our reports dated February 20, 1998, relating to the balance sheets of Coronado Center, Ltd., Eastdale Center, Ltd., Mesquite Center, Ltd. and Tempe Valley Plaza, Ltd., and the related statements of income, Venturers' capital, and cash flows, appearing in this Current Report on Form 8-K (Date of Event: December 31, 1997) of Weingarten Realty Investors. Ernst & Young LLP Houston, Texas April 23, 1998 -----END PRIVACY-ENHANCED MESSAGE-----