-----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, HZf2aqz6Yt4n7Q0D/DHDeBQc3P5e3zjQ//bMoxlS17C6H2B3q6QdvcQPHJ3Z6unP LQjJurOY1tUj4T076PV2LA== 0000828916-99-000032.txt : 19991103 0000828916-99-000032.hdr.sgml : 19991103 ACCESSION NUMBER: 0000828916-99-000032 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991102 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEINGARTEN REALTY INVESTORS /TX/ CENTRAL INDEX KEY: 0000828916 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 741464203 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09876 FILM NUMBER: 99739483 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: P O BOX 924133 STREET 2: P O BOX 924133 CITY: HOUSTON STATE: TX ZIP: 77292-4133 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1999 ------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from____________________ to ____________________ Commission file number 1-9876 ------ WEINGARTEN REALTY INVESTORS --------------------------- (Exact name of registrant as specified in its charter) Texas 74-1464203 - ---------------------------------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2600 Citadel Plaza Drive, P.O. Box 924133, Houston, Texas 77292-4133 - ---------------------------------------------------------- ------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (713) 866-6000 -------------- ____________________________________________ (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes. No. APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of November 1, 1999, there were 26,692,018 common shares of beneficial interest of Weingarten Realty Investors, $.03 par value, outstanding. PART 1 FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
WEINGARTEN REALTY INVESTORS STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED) (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Three Months Ended Nine Months Ended September 30, September 30, ---------------------- ---------------------- 1999 1998 1999 1998 ---------- ---------- ---------- ---------- Revenues: Rentals. . . . . . . . . . . . . . . . . . . . . $ 57,171 $ 49,169 $ 165,593 $ 143,192 Interest: Affiliates . . . . . . . . . . . . . . . . . . 529 356 1,627 1,040 Securities and Other . . . . . . . . . . . . . 125 65 649 143 Equity in earnings of real estate joint ventures and partnerships . . . . . . . . . . . . . . . 43 89 211 275 Other. . . . . . . . . . . . . . . . . . . . . . 519 276 1,383 1,075 ---------- ---------- ---------- ---------- Total . . . . . . . . . . . . . . . . . . . 58,387 49,955 169,463 145,725 ---------- ---------- ---------- ---------- Expenses: Depreciation and amortization. . . . . . . . . . 12,640 10,493 35,804 30,798 Operating. . . . . . . . . . . . . . . . . . . . 9,026 7,439 26,386 21,727 Interest . . . . . . . . . . . . . . . . . . . . 8,155 8,479 23,679 24,899 Ad valorem taxes . . . . . . . . . . . . . . . . 7,146 6,530 20,909 18,588 General and administrative . . . . . . . . . . . 1,843 1,662 5,633 5,058 ---------- ---------- ---------- ---------- Total . . . . . . . . . . . . . . . . . . . 38,810 34,603 112,411 101,070 ---------- ---------- ---------- ---------- Income from Operations . . . . . . . . . . . . . . 19,577 15,352 57,052 44,655 Gain (Loss) on Sales of Property and Securities. . (5) 347 (60) 417 ---------- ---------- ---------- ---------- Income Before Extraordinary Charge . . . . . . . . 19,572 15,699 56,992 45,072 Extraordinary Charge (early retirement of debt). . (149) (1,392) ---------- ---------- ---------- ---------- Net Income . . . . . . . . . . . . . . . . . . . . 19,572 15,699 56,843 43,680 Dividends on Preferred Shares. . . . . . . . . . . 5,010 1,395 14,583 3,364 ---------- ---------- ---------- ---------- Net Income Available to Common Shareholders. . . . $ 14,562 $ 14,304 $ 42,260 $ 40,316 ========== ========== ========== ========== Net Income Per Common Share - Basic: Income Before Extraordinary Charge. . . . . $ .55 $ .54 $ 1.59 $ 1.56 Extraordinary Charge. . . . . . . . . . . . (.01) (.05) ---------- ---------- ---------- ---------- Net Income. . . . . . . . . . . . . . . . . $ .55 $ .54 $ 1.58 $ 1.51 ========== ========== ========== ========== Net Income Per Common Share - Diluted: Income Before Extraordinary Charge. . . . . $ .54 $ .53 $ 1.58 $ 1.55 Extraordinary Charge. . . . . . . . . . . . (.01) (.05) ---------- ---------- ---------- ---------- Net Income. . . . . . . . . . . . . . . . . $ .54 $ .53 $ 1.57 $ 1.50 ========== ========== ========== ==========
See Notes to Consolidated Financial Statements.
WEINGARTEN REALTY INVESTORS CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) September 30, December 31, 1999 1998 ------------- ------------- (unaudited) ASSETS Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,468,274 $ 1,294,632 Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . (328,876) (296,989) ------------- ------------- Property - net . . . . . . . . . . . . . . . . . . . . . . . . . 1,139,398 997,643 Investment in Real Estate Joint Ventures and Partnerships. . . . . . 1,688 2,741 ------------- ------------- Total. . . . . . . . . . . . . . . . . . . . . . . . . . 1,141,086 1,000,384 Mortgage Bonds and Notes Receivable from: Affiliate (net of deferred gain of $4,487 in 1999 and 1998). . . 11,960 13,444 Real Estate Joint Ventures and Partnerships. . . . . . . . . . . 41,968 23,388 Marketable Debt Securities . . . . . . . . . . . . . . . . . . . . . 14,951 Unamortized Debt and Lease Costs . . . . . . . . . . . . . . . . . . 28,003 25,612 Accrued Rent and Accounts Receivable (net of allowance for doubtful accounts of $1,346 in 1999 and $888 in 1998) . . . . . . . . . . . 12,848 15,197 Cash and Cash Equivalents. . . . . . . . . . . . . . . . . . . . . . 3,234 1,672 Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,039 12,395 ------------- ------------- Total. . . . . . . . . . . . . . . . . . . . . . . $ 1,250,138 $ 1,107,043 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 564,296 $ 516,366 Accounts Payable and Accrued Expenses. . . . . . . . . . . . . . . . 44,748 49,269 Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,555 8,229 ------------- ------------- Total. . . . . . . . . . . . . . . . . . . . . . . . . . 619,599 573,864 ------------- ------------- Commitments and Contingencies Shareholders' Equity: Preferred Shares of Beneficial Interest - par value, $.03 per share; shares authorized: 10,000 7.44% Series A cumulative redeemable preferred shares of beneficial interest; 3,000 shares issued and outstanding; liquidation preference $25 per share . . . . . . . . . . . . . 90 90 7.125% Series B cumulative redeemable preferred shares of beneficial interest; 3,600 shares issued and outstanding; liquidation preference $25 per share . . . . . . . . . . . . . 108 108 7.0% Series C cumulative redeemable preferred shares of beneficial interest; 2,300 shares issued and outstanding; liquidation preference $50 per share . . . . . . . . . . . . . 69 Common Shares of Beneficial Interest - par value, $.03 per share; shares authorized: 150,000; shares issued and outstanding: 26,692 in 1999 and 26,673 in 1998. . . . . . . . . . . . . . . . 801 800 Capital Surplus. . . . . . . . . . . . . . . . . . . . . . . . . . 629,509 532,254 Deferred Compensation Obligation . . . . . . . . . . . . . . . . . (38) (73) ------------- ------------- Shareholders' Equity . . . . . . . . . . . . . . . . . . . . . 630,539 533,179 ------------- ------------- Total. . . . . . . . . . . . . . . . . . . . . . . $ 1,250,138 $ 1,107,043 ============= =============
See Notes to Consolidated Financial Statements.
WEINGARTEN REALTY INVESTORS STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED) (AMOUNTS IN THOUSANDS) Nine Months Ended September 30, ----------------------- 1999 1998 ---------- ---------- Cash Flows from Operating Activities: Net income. . . . . . . . . . . . . . . . . . . . . . . . $ 56,843 $ 43,680 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization . . . . . . . . . . . . 35,804 30,798 Equity in earnings of real estate joint ventures and partnerships. . . . . . . . . . . . . . . . . . . . (211) (204) (Gain) loss on sales of property and securities . . . 60 (418) Extraordinary charge (early retirement of debt) . . . 149 1,392 Changes in accrued rents and accounts receivable. . . 2,603 (560) Changes in other assets . . . . . . . . . . . . . . . (7,542) (8,125) Changes in accounts payable and accrued expenses. . . (7,208) (3,362) Other, net. . . . . . . . . . . . . . . . . . . . . . 729 394 ---------- ---------- Net cash provided by operating activities . . . . . 81,227 63,595 ---------- ---------- Cash Flows from Investing Activities: Investment in properties. . . . . . . . . . . . . . . . . (150,547) (103,714) Mortgage bonds and notes receivable: Advances. . . . . . . . . . . . . . . . . . . . . . . (6,031) (7,298) Collections . . . . . . . . . . . . . . . . . . . . . 1,284 884 Proceeds from sales and disposition of property . . . . . 3 371 Proceeds from marketable debt securities. . . . . . . . . 15,000 12,229 Real estate joint ventures and partnerships: Investments . . . . . . . . . . . . . . . . . . . . . (1,321) Distributions . . . . . . . . . . . . . . . . . . . . 216 279 Other, net. . . . . . . . . . . . . . . . . . . . . . . . (7) 241 ---------- ---------- Net cash used in investing activities . . . . . . . (141,403) (97,008) ---------- ---------- Cash Flows from Financing Activities: Proceeds from issuance of: Debt. . . . . . . . . . . . . . . . . . . . . . . . . 105,658 138,528 Common shares of beneficial interest. . . . . . . . . 475 124 Preferred shares of beneficial interest . . . . . . . 111,263 72,512 Principal payments of debt. . . . . . . . . . . . . . . . (83,993) (120,847) Common and preferred dividends paid . . . . . . . . . . . (71,435) (56,962) Other, net. . . . . . . . . . . . . . . . . . . . . . . . (230) (245) ---------- ---------- Net cash provided by financing activities . . . . . 61,738 33,110 ---------- ---------- Net increase/(decrease) in cash and cash equivalents. . . . 1,562 (303) Cash and cash equivalents at January 1. . . . . . . . . . . 1,672 2,754 ---------- ---------- Cash and cash equivalents at September 30 . . . . . . . . . $ 3,234 $ 2,451 ========== ==========
See Notes to Consolidated Financial Statements. WEINGARTEN REALTY INVESTORS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (AMOUNTS IN THOUSANDS) 1. INTERIM FINANCIAL STATEMENTS The consolidated financial statements included in this report are unaudited, except for the balance sheet as of December 31, 1998. In the opinion of the Company, all adjustments necessary for a fair presentation of such financial statements have been included. Such adjustments consisted of normal recurring items. Interim results are not necessarily indicative of results for a full year. The consolidated financial statements and notes are presented as permitted by Form 10-Q, and do not contain certain information included in the Company's annual financial statements and notes. 2. PER SHARE DATA Net income per common share - basic is computed using net income available to common shareholders and the weighted average shares outstanding. Net income per common share - diluted includes the effect of potentially dilutive securities for the periods indicated, as follows (in thousands):
Three Months Ended Nine Months Ended September 30, September 30, -------------------- -------------------- 1999 1998 1999 1998 --------- --------- --------- --------- Numerator: Net income available to common shareholders - basic . . $ 14,562 $ 14,304 $ 42,260 $ 40,316 Income attributable to operating partnership units. . . 35 5 111 5 --------- --------- --------- --------- Net income available to common shareholders - diluted . $ 14,597 $ 14,309 $ 42,371 $ 40,321 ========= ========= ========= ========= Denominator: Weighted average shares outstanding - basic . . . . . . 26,692 26,667 26,688 26,666 Effect of dilutive securities: Share options and awards. . . . . . . . . . . . . . 57 65 77 124 Operating partnership units . . . . . . . . . . . . 142 54 142 44 --------- --------- --------- --------- Weighted average shares outstanding - diluted . . . . . 26,891 26,786 26,907 26,834 ========= ========= ========= =========
3. DEBT The Company's debt consists of the following (in thousands):
September 30, December 31, 1999 1998 ------------- ------------- Fixed-rate debt payable to 2015 at 6.0% to 10.5% . . $ 423,987 $ 404,061 Variable-rate unsecured notes payable to 2000. . . . 82,000 Notes payable under revolving credit agreements. . . 95,687 10,250 Obligations under capital leases . . . . . . . . . . 36,949 12,467 Industrial revenue bonds to 2015 at 3.8% to 6.2% at September 30, 1999. . . . . . . . . . . . . . 6,171 6,262 Other. . . . . . . . . . . . . . . . . . . . . . . . 1,502 1,326 ------------- ------------- Total. . . . . . . . . . . . . . . . . . . . . . $ 564,296 $ 516,366 ============= =============
At September 30, 1999, the variable interest rate for notes payable under the $200 million revolving credit agreement was 5.8%, and the variable interest rate under the $20 million revolving credit agreement was 5.6%. In February 1999, the Company retired $82 million of variable-rate unsecured Medium Term Notes resulting in an extraordinary charge to earnings of $.1 million. The Company has three interest rate swap contracts with an aggregate notional amount of $40 million. Such contracts, which expire through 2004, have been outstanding since their purchase in 1992. The interest rate swaps have an effective interest rate of 8.1%. The Company's debt can be summarized as follows (in thousands):
September 30, December 31, 1999 1998 ------------- ------------ As to interest rate: Fixed-rate debt (including amounts fixed through interest rate swaps). . . . . . . $ 488,469 $ 444,060 Variable-rate debt. . . . . . . . . . . . . 75,827 72,306 ------------- ------------ Total . . . . . . . . . . . . . . . . . . . $ 564,296 $ 516,366 ============= ============ As to collateralization: Unsecured debt. . . . . . . . . . . . . . . $ 462,721 $ 440,433 Secured debt. . . . . . . . . . . . . . . . 101,575 75,933 ------------- ------------ Total . . . . . . . . . . . . . . . . . . . $ 564,296 $ 516,366 ============= ============
4. PROPERTY The Company's property consists of the following (in thousands):
September 30, December 31, 1999 1998 -------------- -------------- Land . . . . . . . . . . . . . $ 269,751 $ 236,221 Land held for development. . . 29,616 30,156 Land under development . . . . 15,025 13,024 Buildings and improvements . . 1,139,769 1,009,166 Construction in-progress . . . 14,113 6,065 -------------- -------------- Total. . . . . . . . . . . . . $ 1,468,274 $ 1,294,632 ============== ==============
Interest and ad valorem taxes capitalized to land under development or buildings under construction was $1.0 million and $.4 million for the quarter ending September 30, 1999 and 1998 and $2.3 and $1.0 million for the nine months ended September 30, 1999 and 1998. 5. SEGMENT INFORMATION The operating segments presented are the segments of the Company for which separate financial information is available and operating performance is evaluated regularly by senior management in deciding how to allocate resources and in assessing performance. The Company evaluates the performance of its operating segments based on net operating income that is defined as total revenues less operating expenses and ad valorem taxes. The shopping center segment is engaged in the acquisition, development and management of real estate, primarily anchored neighborhood and community shopping centers located in Texas, Louisiana, Arizona, Nevada, New Mexico, Oklahoma, Arkansas, Kansas, Colorado, Missouri, Illinois, Maine and Tennessee. The customer base includes supermarkets, drugstores and other retailers who generally sell basic necessity-type commodities. The industrial segment is engaged in the acquisition, development and management of bulk warehouses and office/service centers. Its properties are located in Texas, Nevada and Tennessee, and the customer base is diverse. Included in "Other" are corporate-related items, insignificant operations and costs that are not allocated to the reportable segments. Information concerning the Company's reportable segments is as follows (in thousands):
SHOPPING CENTER INDUSTRIAL OTHER TOTAL --------- ---------- --------- ---------- Three Months Ended September 30, 1999: Revenues . . . . . . . . $ 49,514 $ 7,745 $ 1,128 $ 58,387 Net operating income . . 35,449 5,538 1,228 42,215 Total assets . . . . . . 983,697 185,717 80,724 1,250,138 Three Months Ended September 30, 1998: Revenues . . . . . . . . $ 44,259 $ 4,923 $ 773 $ 49,955 Net operating income . . 31,394 3,571 1,021 35,986 Total assets . . . . . . 872,385 113,737 39,130 1,025,252 Nine Months Ended September 30, 1999: Revenues . . . . . . . . $ 145,587 $ 20,391 $ 3,485 $ 169,463 Net operating income . . 103,753 14,679 3,736 122,168 Nine Months Ended September 30, 1998: Revenues . . . . . . . . $ 130,168 $ 13,189 $ 2,368 $ 145,725 Net operating income . . 93,135 9,574 2,701 105,410
Net operating income reconciles to income from operations as shown on the Statements of Consolidated Income as follows (in thousands):
Three Months Ended Nine Months Ended September 30, September 30, -------------------- ---------------------- 1999 1998 1999 1998 --------- --------- ---------- ---------- Total segment net operating income . . $ 42,215 $ 35,986 $ 122,168 $ 105,410 Less: Depreciation and amortization. . . 12,640 10,493 35,804 30,798 Interest . . . . . . . . . . . . . 8,155 8,479 23,679 24,899 General and administrative . . . . 1,843 1,662 5,633 5,058 --------- --------- ---------- ---------- Income from operations . . . . . . . . $ 19,577 $ 15,352 $ 57,052 $ 44,655 ========= ========= ========== ==========
Equity in earnings of real estate joint ventures and partnerships as shown on the Statements of Consolidated Income and the corresponding investment balances relate exclusively to the shopping center segment. PART I FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the consolidated financial statements and notes thereto and the comparative summary of selected financial data appearing elsewhere in this report. Historical results and trends which might appear should not be taken as indicative of future operations. Weingarten Realty Investors owned and operated 184 anchored shopping centers, 50 industrial properties, one office building and one apartment complex at September 30, 1999. Of the Company's 236 developed properties, 179 are located in Texas (including 101 in Houston and Harris County). The Company's remaining properties are located in Louisiana (11), Arizona (11), Nevada (8), Arkansas (6), New Mexico (5), Oklahoma (4), Tennessee (4), Kansas (3), Colorado (2), Missouri (1), Illinois (1), and Maine (1). The Company has nearly 4,200 leases and 3,200 different tenants. Leases for the Company's properties range from less than a year for smaller spaces to over 25 years for larger tenants; leases generally include minimum lease payments and contingent rentals for payment of taxes, insurance and maintenance and for an amount based on a percentage of the tenants' sales. The majority of the Company's anchor tenants are supermarkets, drugstores and other retailers which generally sell basic necessity-type items. CAPITAL RESOURCES AND LIQUIDITY The Company anticipates that cash flows from operating activities will continue to provide adequate capital for all dividend payments in accordance with REIT requirements, and that cash on hand, borrowings under its existing credit facilities, issuance of unsecured debt and the use of project financing, as well as other debt and equity alternatives, will provide the necessary capital to achieve growth. Cash flow from operating activities as reported in the Statements of Consolidated Cash Flows was $81.2 million for the first nine months of 1999 as compared to $63.6 million for the same period of 1998. The increase was due primarily to the Company's acquisition and new development programs and improvements in the performance of its existing portfolio of properties. The Company's Board of Trust Managers approved a quarterly dividend per common share of $.71 for the third quarter. The Company's dividend payout ratio on common equity was 73% and 74% for the third quarters of 1999 and 1998 based on funds from operations for the applicable period. The Company invested an additional $50.7 million in the portfolio through acquisitions and new development. Acquisitions during the quarter added .9 million square feet to the portfolio, representing an investment of $39.5 million. The Company acquired its joint venture partner's 77% interest in a 245,000 square foot shopping center in Santa Fe, New Mexico and executed a lease on six industrial projects that has been recorded as a capital lease. The six office/distribution facilities in Dallas, Texas totaled 755,000 square feet and were 89% occupied when acquired. With the addition of these facilities, the Company owns seven retail and fourteen industrial properties in the Dallas/Fort Worth metroplex totaling 2.3 million square feet of building space. Three of the seven retail centers are currently under construction with anchor retailers in place. With respect to new development, the Company acquired land for two additional development projects in Louisiana and Arizona. The Company currently has ten retail centers and one industrial facility under construction. These projects will total about 700,000 square feet upon completion and will represent an investment of approximately $62 million. At the end of August, construction was completed on the 260-unit luxury apartment complex, representing an investment of about $14 million. The Company views this development as an opportunistic use of land inventory rather than a programmed expansion into the multi-family sector. At quarter-end, the complex was 78% leased. Total debt outstanding increased to $564.3 million at quarter-end from $516.4 at December 31, 1998. This increase was primarily due to acquisitions in the first nine months of this year and the Company's ongoing development and redevelopment efforts, offset by the retirement of debt with the $111.3 million of net proceeds from the Company's first quarter preferred share offering. Included in total debt outstanding of $564.3 at September 30, 1999 is floating-rate debt of $75.8 million, after recognizing the offsetting effect of $40 million of interest rate swaps. Additionally, our exposure to interest rate increases is further reduced by $9.6 of floating-rate notes receivable from various joint venture partners. The Company's debt to total capitalization is a conservative 30.6% and the interest coverage and the fixed charge coverage ratios are 4.3 to 1 and 2.9 to 1, respectively, for the four quarters ended September 30, 1999. In July 1999, the Company issued $20 million of ten-year 7.35% fixed-rate, unsecured Medium Term Notes. Including the effect of a loss of $1.2 million on the sale of Treasury locks which were designated as a hedge against the future issuance of fixed-rate notes, the effective interest rate is 8.2%. During the second quarter, the Company announced that it was negotiating the sale of 130 acres of unimproved land at Railwood, the Company's master-planned industrial park, and an 80% interest in nearly two million square feet of bulk warehouse facilities. The Company will continue to provide leasing and property management services for the improved properties and also retain the right to develop the unimproved land in joint ventures with the purchaser. This transaction is expected to close in the fourth quarter and the total cash proceeds to the Company are projected to be approximately $59 million. The effect of this transaction on funds from operations will be neutral in 1999, but will be accretive over the long-term as the proceeds are reinvested. FUNDS FROM OPERATIONS The Company considers funds from operations to be an alternate measure of the performance of an equity REIT since such measure does not recognize depreciation and amortization of real estate assets as operating expenses. Management believes that reductions for these charges are not meaningful in evaluating income-producing real estate, which historically has not depreciated. The National Association of Real Estate Investment Trusts defines funds from operations as net income plus depreciation and amortization of real estate assets, less gains and losses on sales of properties and securities. Funds from operations does not represent cash flows from operations as defined by generally accepted accounting principles and should not be considered as an alternative to net income as an indicator of the Company's operating performance or to cash flows from operations as a measure of liquidity. Funds from operations increased to $27.1 million for the third quarter of 1999, as compared to $24.4 million for the same period of 1998. For the nine months ended September 30, 1999, funds from operations increased to $78.0 million from $71.8 million. These increases primarily relate to the impact of the Company's acquisitions and, to a lesser degree, new development and activity at its existing properties. RESULTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 1999 Net income available to common shareholders increased to $14.6 million from $14.3 million for the third quarter of 1999 as compared with the same quarter of 1998. Net income per common share-basic increased to $.55 in 1999 from $.54 in 1998, while net income per share-diluted also increased to $.54 in 1999 from $.53 in 1998. Rental revenues were $57.2 million in 1999, as compared to $49.2 million in 1998, representing an increase of approximately $8.0 million or 16.3%. This increase relates primarily to acquisitions and, to a lesser degree, new development and activity at the Company's existing properties. Occupancy of the Company's retail and industrial properties was 92.1% and 93.9%, respectively, at the end of the third quarter of 1999 as compared to 93.2% and 92.6%, respectively, at September 30, 1998. Occupancy of the Company's total portfolio was 92.7% at September 30, 1999 as compared to 93.1% at the end of the third quarter of the prior year. During the first nine months of 1999, the Company completed 633 renewals or leases comprising 3.4 million square feet of space. Rental rates increased an average of 9.6% over the rates charged to the prior tenants. Net of capital costs for tenant improvements, the increase averaged 6.4%. Retail sales on a same-store basis increased by 2.1% based on sales reported during the last twelve months. Gross interest costs, before capitalization of interest, increased by $.2 million from $8.8 million in the third quarter of 1998 to $9.0 million in the third quarter of 1999. The increase was due primarily to an increase in the average debt outstanding between periods from $500.3 million in 1998 to $512.5 million in 1999. The average interest rate remained unchanged at 7.1%. The amount of interest capitalized during the period increased from $.4 million in 1998 to $.9 million in 1999 due to an increase in new development activity. The increases in depreciation and amortization, operating expenses and ad valorem taxes were primarily the result of the Company's acquisition and new development programs. NINE MONTHS ENDED SEPTEMBER 30, 1999 Net income available to common shareholders increased by $2.0 million to $42.3 million for the first nine months of 1999 from $40.3 million for the comparable period in 1998. Net income per common share-basic increased to $1.58 in 1999 from $1.51 in 1998, while net income per share-diluted increased to $1.57 in 1999 from $1.50 in 1998. Included in net income for 1998 is an extraordinary loss of $1.4 million, or $.05 per share, on the early retirement of debt. Rental revenues increased 15.6% to $165.6 million, compared with $143.2 million for the same period of the prior year. This increase relates primarily to acquisitions and, to a lesser degree, new development and activity at the Company's existing properties. Gross interest costs, before capitalization of interest, decreased by $.1 million to $25.8 million in the first nine months of 1999 from $25.9 million in the same period of 1998. The average interest rate remained unchanged at 7.1%. The amount of interest capitalized during the period increased from $1.0 million in 1998 to $2.1 million in 1999 due to an increase in new development activity. General and administrative expenses increased by $.5 million to $5.6 million for the first nine months of 1999 from $5.1 million for the comparable period of 1998. The increase is due to the Company's adoption of the new Emerging Issues Task Force Consensus decision which provides that internal costs of identifying and acquiring operating property incurred subsequent to March 19, 1998 should be expensed. Also, contributing to the increase is an increase in staffing necessitated by the growth in the portfolio. The increases in depreciation and amortization, operating expenses and ad valorem taxes were primarily the result of the Company's acquisition and new development programs. YEAR 2000 COMPLIANCE Many currently installed computer systems and software products are coded to accept only two-digit entries in the date code field. These date code fields will need to be amended to allow the system to distinguish 21st century dates from the 20th century dates. The use of software and computer systems that are not Year 2000 compliant could result in system failures or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions or engage in normal business activities. As a result, many companies' software and computer systems may need to be upgraded or replaced in order to comply with Year 2000 requirements. The Company has completed a review of its software and hardware and determined that all mission-critical systems are Year 2000 compliant. Non-mission critical software and hardware have also been reviewed, and the Company has identified certain personal computers, local area networks and file servers which are scheduled for upgrades or replacement as part of the Company's ongoing maintenance of its information system technology. The Company has also completed a review of Year 2000 issues not related to information technology including, but not limited to, the use of imbedded chips or internal clocks in machinery or equipment. As the Company owns primarily single-story industrial buildings and neighborhood retail centers without enclosed common areas, the use of this technology is very limited and, accordingly, the Company believes that it is Year 2000 compliant. The Company has no incremental costs in addressing these Year 2000 issues. The Company has communicated with its major tenants, financial institutions and utility companies to determine the extent to which the Company is vulnerable to third parties' failures to resolve their Year 2000 issues. Based on the representations received from these third parties, the Company does not believe this represents a material risk to the Company. Nevertheless, the Company has no guarantee that such third party systems will operate as represented. In the event significant systems of one of these third parties fails, the operating results and financial condition of the Company could be adversely effected. Based on the Company's assessment of the readiness of its own systems and those of significant third parties, it has not deemed it necessary to develop a formal contingency plan. In the event additional information comes to the Company's attention which would change its current assessment, it will consider the need for a contingency plan at that time. PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (numbered in accordance with Item 601 of Regulation S-K) (12) A statement of computation of ratios of earnings and funds from operations to combined fixed charges and preferred dividends. (27) Article 5 Financial Data Schedule (EDGAR filing only). (b) Reports on Form 8-K A Form 8-K, dated August 13, 1999, was filed to report significant acquisitions in response to Item 2., Acquisitions or Disposition of Assets and Item 7., Financial Statements, Pro Forma Financial Information and Exhibits. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WEINGARTEN REALTY INVESTORS ----------------------------- (Registrant) BY: /s/ Stanford Alexander ----------------------------- Stanford Alexander Chairman/Chief Executive Officer (Principal Executive Officer) BY: /s/ Stephen C. Richter ----------------------------- Stephen C. Richter Senior Vice President/Financial Administration and Treasurer (Principal Accounting Officer) DATE: November 2, 1999 ------------------ EX-12 2 EXHIBIT 12
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 Nine Months Ended September 30, September 30, ---------------------- ---------------------- 1999 1998 1999 1998 ---------- ---------- ---------- ---------- Net income available to common shareholders . . . . . . . $ 14,562 $ 14,304 $ 42,260 $ 40,316 Add: Portion of rents representative of the interest factor. . 363 207 692 609 Interest on indebtedness. . . . . . . . . . . . . . . . . 8,155 8,479 23,679 24,899 Preferred dividends . . . . . . . . . . . . . . . . . . . 5,010 1,395 14,583 3,364 Amortization of debt cost . . . . . . . . . . . . . . . . 86 87 260 279 ---------- ---------- ---------- ---------- Net income as adjusted. . . . . . . . . . . . . . . . $ 28,176 $ 24,472 $ 81,474 $ 69,467 ========== ========== ========== ========== Fixed charges: Interest on indebtedness. . . . . . . . . . . . . . . . . $ 8,155 $ 8,479 $ 23,679 $ 24,899 Capitalized interest. . . . . . . . . . . . . . . . . . . 890 361 2,145 1,010 Preferred dividends . . . . . . . . . . . . . . . . . . . 5,010 1,395 14,583 3,364 Amortization of debt cost . . . . . . . . . . . . . . . . 86 87 260 279 Portion of rents representative of the interest factor. . 363 207 692 609 ---------- ---------- ---------- ---------- Fixed charges . . . . . . . . . . . . . . . . . . . . $ 14,504 $ 10,529 $ 41,359 $ 30,161 ========== ========== ========== ========== RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS . . . . . . . . . . . . . 1.94 2.32 1.97 2.30 ========== ========== ========== ========== Net income available to common shareholders . . . . . . . $ 14,562 $ 14,304 $ 42,260 $ 40,316 Depreciation and amortization . . . . . . . . . . . . . . 12,554 10,406 35,544 30,519 (Gain) loss on sales of property and securities . . . . . 5 (347) 60 (417) Extraordinary charge (early retirement of debt) . . . . . 149 1,392 ---------- ---------- ---------- ---------- Funds from operations . . . . . . . . . . . . . . . . 27,121 24,363 78,013 71,810 Add: Portion of rents representative of the interest factor. . 363 207 692 609 Preferred dividends . . . . . . . . . . . . . . . . . . . 5,010 1,395 14,583 3,364 Interest on indebtedness. . . . . . . . . . . . . . . . . 8,155 8,479 23,679 24,899 Amortization of debt cost . . . . . . . . . . . . . . . . 86 87 260 279 ---------- ---------- ---------- ---------- Funds from operations as adjusted . . . . . . . . . . $ 40,735 $ 34,531 $ 117,227 $ 100,961 ========== ========== ========== ========== RATIO OF FUNDS FROM OPERATIONS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS . . . . . . . . . . 2.81 3.28 2.83 3.35 ========== ========== ========== ==========
EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WEINGARTEN REALTY INVESTORS' QUARTERLY REPORT FOR THE PERIOD ENDED SEPTEMBER 30, 1999. 1 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 3234 0 14194 1346 0 0 1468274 328876 1250138 0 0 801 0 267 629471 1250138 0 169463 0 47295 41437 0 23679 57052 0 57052 0 149 0 56843 1.58 1.57
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