-----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, DlbrOqWvwjCiaAqsCsYOmS+3up2M0YgdPqXBh5YMiG4NDRZQq4l6Fzewq0eR4YJQ ztgGKSicL90oPompekG96w== 0000828916-98-000011.txt : 19980311 0000828916-98-000011.hdr.sgml : 19980311 ACCESSION NUMBER: 0000828916-98-000011 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980310 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEINGARTEN REALTY INVESTORS /TX/ CENTRAL INDEX KEY: 0000828916 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 741464203 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-09876 FILM NUMBER: 98561332 BUSINESS ADDRESS: STREET 1: 2600 CITADEL PLAZA DR CITY: HOUSTON STATE: TX ZIP: 77008 BUSINESS PHONE: 7138666000 MAIL ADDRESS: STREET 1: P O BOX 924133 STREET 2: P O BOX 924133 CITY: HOUSTON STATE: TX ZIP: 77292-4133 10-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] 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 incorporation or organization) (IRS Employer Identification No.) 2600 Citadel Plaza Drive P.O. Box 924133 Houston, Texas 77292-4133 (Address of principal executive offices) (Zip Code) (713) 866-6000 (Registrant's telephone number) Securities registered pursuant to Section 12(b) of the Act. Title of Each Class Name of each exchange on which registered ------------------- ----------------------------------------- Common Shares of Beneficial Interest, New York Stock $0.03 par value Exchange Series A Cumulative Redeemable Preferred New York Stock Shares, $0.03 par value Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE 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 [ ]. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the common shares held by non-affiliates (based upon the closing sale price on the New York Stock Exchange) on February 25, 1998 was approximately $1,204,961,470. As of February 25, 1998, there were 26,665,814 shares of beneficial interest, $.03 par value, outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's Proxy Statement in connection with its Annual Meeting of Shareholders to be held May 8, 1998 are incorporated by reference in Part III. Exhibit Index beginning on Page 35
TABLE OF CONTENTS ITEM NO PAGE NO. - -------- -------- PART I 1. Business 1 2. Properties 3 3. Legal Proceedings 12 4. Submission of Matters to a Vote of Shareholders 12 Executive Officers of the Registrant 13 PART II 5. Market for Registrant's Common Shares of Beneficial Interest and Related Shareholder Matters 14 6. Selected Financial Data 15 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 16 8. Financial Statements and Supplementary Data 19 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 34 PART III 10. Trust Managers and Executive Officers of the Registrant 35 11. Executive Compensation 35 12. Security Ownership of Certain Beneficial Owners and Management 35 13. Certain Relationships and Related Transactions 35 PART IV 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 35
PART I ITEM 1. BUSINESS General. Weingarten Realty Investors (the "Company"), an unincorporated trust organized under the Texas Real Estate Investment Trust Act, and its predecessor entity began the ownership and development of shopping centers and other commercial real estate in 1948. The Company is self-advised and self-managed and, as of December 31, 1997, owned or had interests in 194 developed income-producing real estate projects, 169 of which were shopping centers, located in the Houston metropolitan area and in other parts of Texas and in Louisiana, Arizona, Nevada, New Mexico, Oklahoma, Arkansas, Kansas, Colorado, Missouri, Tennessee and Maine. The Company's other commercial real estate projects included 23 industrial projects, one multi-family housing property and one office building, which serves, in part, as the Company's headquarters. The Company's interests in these projects aggregated approximately 22.2 million square feet of building area and 85.4 million square feet of land area. The Company also owned interests in 25 parcels of unimproved land under development or held for future development which aggregated approximately 8.1 million square feet. The Company currently employs 171 persons and its principal executive offices are located at 2600 Citadel Plaza Drive, Houston, Texas 77008, and its phone number is (713) 866-6000. Reorganizations. In December 1984, the Company engaged in a series of transactions primarily designed to enable it to qualify as a real estate investment trust ("REIT") for federal income tax purposes for the 1985 calendar year and subsequent years. The Company contributed certain assets considered unsuitable for ownership by the Company as a REIT and $3.5 million in cash to WRI Holdings, Inc. ("Holdings"), a Texas corporation and a newly-formed subsidiary of the Company, in exchange for voting and non-voting common stock of Holdings (which was subsequently distributed to the Company's shareholders) and $26.8 million of mortgage bonds. For additional information concerning Holdings, refer to Note 6 of the Notes to Consolidated Financial Statements at page 29. On March 22, 1988, the Company's shareholders approved the conversion of the Company's form of organization from a Texas corporation to an unincorporated trust organized under the Texas Real Estate Investment Trust Act. The conversion was effected by the Company's predecessor entity, Weingarten Realty, Inc., transferring substantially all of its assets and liabilities to the newly-formed Company in exchange for common shares of beneficial interest, $.03 par value ("Common Shares"), of the Company. The shareholders of the corporation received Common Shares for their shares of Common Stock of the corporation (on a share-for-share basis), and the Company continues the business that was previously conducted by the corporation. The change did not affect the registrant's assets, liabilities, management or federal income tax status as a REIT. Location of Properties. Historically, the Company has emphasized investments in properties located primarily in the Houston area. Since 1987, the Company has actively acquired properties outside of Houston. Of the Company's 219 properties which were owned as of December 31, 1997, 93 of its 194 developed properties and 16 of its 25 parcels of unimproved land were located in the Houston metropolitan area. In addition to these properties, the Company owned 54 developed properties and 5 parcels of unimproved land located in other parts of Texas. Because of the Company's investments in the Houston area, as well as in other parts of Texas, the Houston and Texas economies affect, to some degree, the business and operations of the Company. In 1997, the economies in Houston and Texas continued to grow, exceeding the national average; the economy of the entire southwestern United States, where the Company has its primary operations, also remained strong relative to the national average. A deterioration in the Houston or Texas economies could adversely affect the Company. However, the Company's centers are generally anchored by grocery and drug stores under long-term leases, and such types of stores, which deal in basic necessity-type items, tend to be less affected by economic change. Competition. There are other developers and owner-operators engaged in the development, acquisition and operation of shopping centers and commercial property who compete with the Company in its trade areas. This results in competition for both acquisitions of existing income-producing properties and also for prime development sites. There is also competition for tenants to occupy the space that the Company and its competitors develop, acquire and manage. The Company believes that the principal competitive factors in attracting tenants in its market areas are location, price, anchor tenants and maintenance of properties and that the Company's competitive advantages include the favorable locations of its properties, its ability to provide a retailer with multiple locations in the Houston area with anchor tenants and its practice of continuous maintenance and renovation of its properties. Financial Information. Certain additional financial information concerning the Company is included in the Company's Consolidated Financial Statements located on pages 20 through 34 herein. ITEM 2. PROPERTIES At December 31, 1997, the Company's real estate properties consisted of 219 locations in twelve states. A complete listing of these properties, including the name, location, building area and land area (in square feet), as applicable, is as follows:
SHOPPING CENTERS Building Name and Location Area Land Area - ----------------------------------------------------- --------- ---------- HOUSTON AND HARRIS COUNTY, TOTAL. . . . . . . . . . . 7,030,000 28,038,000 Alabama-Shepherd, S. Shepherd at W. Alabama . . . . . 28,000 * 88,000 * Almeda Road, Almeda at Cleburne . . . . . . . . . . . 34,000 147,000 Bayshore Plaza, Spencer Hwy. at Burke Rd. . . . . . . 36,000 196,000 Bellaire Boulevard, Bellaire at S. Rice . . . . . . . 35,000 137,000 Bellfort, Bellfort at Southbank . . . . . . . . . . . 48,000 167,000 Bellfort Southwest, Bellfort at Gessner . . . . . . . 30,000 89,000 Bellwood, Bellaire at Kirkwood. . . . . . . . . . . . 136,000 655,000 Bingle Square, U.S. Hwy. 290 at Bingle. . . . . . . . 46,000 168,000 Braeswood Square, N. Braeswood at Chimney Rock. . . . 103,000 422,000 Centre at Post Oak, Westheimer at Post Oak Blvd.. . . 184,000 505,000 Copperfield Village, Hwy. 6 at F.M. 529 . . . . . . . 153,000 712,000 Crestview, Bissonnet at Wilcresty . . . . . . . . . . 9,000 35,000 Crosby, F.M. 2100 at Kenning Road (61%) . . . . . . . 36,000 * 124,000 * Cullen Place, Cullen at Reed. . . . . . . . . . . . . 7,000 30,000 Cullen Plaza, Cullen at Wilmington. . . . . . . . . . 81,000 318,000 Cypress Pointe, F.M. 1960 at Cypress Station. . . . . 191,000 737,000 Cypress Village, Louetta and Grant Road . . . . . . . 19,000 98,000 Del Sol Market Place, Telephone at Monroe . . . . . . 26,000 87,000 Eastpark, Mesa Rd. at Tidwell . . . . . . . . . . . . 140,000 665,000 Edgebrook, Edgebrook at Gulf Fwy. . . . . . . . . . . 78,000 360,000 Fiesta Village, Quitman at Fulton . . . . . . . . . . 30,000 80,000 Fondren Southwest Village, Fondren at W. Bellfort . . 225,000 1,014,000 Fondren/West Airport, Fondren at W. Airport . . . . . 62,000 223,000 45/York Plaza, I-45 at W. Little York . . . . . . . . 210,000 840,000 Glenbrook Square, Telephone Road. . . . . . . . . . . 71,000 320,000 Griggs Road, Griggs at Cullen . . . . . . . . . . . . 85,000 422,000 Harrisburg Plaza, Harrisburg at Wayside . . . . . . . 95,000 334,000 Heights Plaza, 20th St. at Yale . . . . . . . . . . . 72,000 228,000 Humblewood Shopping Plaza, Eastex Fwy. at F.M. 1960 . 180,000 784,000 I-45/Telephone Rd. Center, I-45 at Maxwell Street . . 126,000 819,000 Inwood Village, W. Little York at N. Houston-Rosslyn. 68,000 305,000 Jacinto City, Market at Baca. . . . . . . . . . . . . 24,000 * 67,000 * Kingwood, Kingwood Dr. at Chesnut Ridge . . . . . . . 155,000 648,000 Landmark, Gessner at Harwin . . . . . . . . . . . . . 56,000 228,000 Lawndale, Lawndale at 75th St.. . . . . . . . . . . . 53,000 177,000 Little York Plaza, Little York at E. Hardy. . . . . . 115,000 486,000 Long Point, Long Point at Wirt (77%). . . . . . . . . 58,000 * 257,000 * Lyons Avenue, Lyons at Shotwell . . . . . . . . . . . 63,000 179,000 Market at Westchase, Westheimer at Wilcrest . . . . . 84,000 333,000 Miracle Corners, S. Shaver at Southmore . . . . . . . 87,000 386,000 Northbrook, Northwest Fwy. at W. 34th . . . . . . . . 204,000 656,000 North Main Square, Pecore at N. Main. . . . . . . . . 18,000 64,000
Table continued on next page
Building Name and Location Area Land Area - -------------------------------------------------------------- --------- ---------- North Oaks, F.M. 1960 at Veterans Memorial . . . . . . . . . . 322,000 1,246,000 North Triangle, I-45 at F.M. 1960. . . . . . . . . . . . . . . 16,000 113,000 Northway, Northwest Fwy. at 34th . . . . . . . . . . . . . . . 212,000 793,000 Northwest Crossing, N.W. Fwy. at Hollister (75%) . . . . . . . 135,000 * 671,000 * Northwest Park Plaza, F.M. 149 at Champions Forest . . . . . . 32,000 268,000 Oak Forest, W. 43rd at Oak Forest. . . . . . . . . . . . . . . 124,000 541,000 Orchard Green, Gulfton at Renwick. . . . . . . . . . . . . . . 64,000 257,000 Randall's/Cypress Station, F.M. 1960 at I-45 . . . . . . . . . 141,000 618,000 Randall's/El Dorado, El Dorado at Hwy. 3 . . . . . . . . . . . 119,000 429,000 Randall's/Kings Crossing, Kingwood Dr. at Lake Houston Pkwy. . 128,000 624,000 Randall's/Norchester, Grant at Jones . . . . . . . . . . . . . 109,000 475,000 Richmond Square, Richmond Ave. at W. Loop 610. . . . . . . . . 33,000 136,000 River Oaks, East, W. Gray at Woodhead. . . . . . . . . . . . . 65,000 206,000 River Oaks, West, W. Gray at S. Shepherd . . . . . . . . . . . 235,000 609,000 Sheldon Forest, North, I-10 at Sheldon . . . . . . . . . . . . 22,000 131,000 Sheldon Forest, South, I-10 at Sheldon . . . . . . . . . . . . 38,000 * 164,000 * Shops at Three Corners, S. Main at Old Spanish Trail (70%) . . 183,000 * 803,000 * Southgate, W. Fuqua at Hiram Clark . . . . . . . . . . . . . . 115,000 533,000 Spring Plaza, Hammerly at Campbell . . . . . . . . . . . . . . 56,000 202,000 Steeplechase, Jones Rd. at F.M. 1960 . . . . . . . . . . . . . 193,000 849,000 Stella Link, North, Stella Link at S. Braeswood (77%). . . . . 40,000 * 156,000 * Stella Link, South, Stella Link at S. Braeswood. . . . . . . . 15,000 56,000 Studemont, Studewood at E. 14th St . . . . . . . . . . . . . . 28,000 91,000 Ten Blalock Square, I-10 at Blalock. . . . . . . . . . . . . . 97,000 321,000 10/Federal, I-10 at Federal. . . . . . . . . . . . . . . . . . 132,000 474,000 University Plaza, Bay Area At Space Center . . . . . . . . . . 96,000 424,000 The Village Arcade, University at Kirby. . . . . . . . . . . . 192,000 414,000 West Junction, Hwy. 6 at Kieth Harrow Dr. . . . . . . . . . . 67,000 264,000 Westbury Triangle, Chimney Rock at W. Bellfort . . . . . . . . 67,000 257,000 Westchase, Westheimer at Wilcrest. . . . . . . . . . . . . . . 236,000 766,000 Westhill Village, Westheimer at Hillcroft. . . . . . . . . . . 131,000 480,000 Wilcrest Southwest, Wilcrest at Southwest Fwy. . . . . . . . . 26,000 77,000 TEXAS (EXCLUDING HOUSTON & HARRIS CO.), TOTAL. . . . . . . . . 5,061,000 22,038,000 Coronado, S.W. 34th St. at Wimberly Dr., Amarillo. . . . . . . 49,000 201,000 Grand Plaza, Interstate Hwy 40 at Grand Ave., Amarillo . . . . 157,000 637,000 Puckett Plaza, Bell Road, Amarillo . . . . . . . . . . . . . . 133,000 621,000 Spanish Crossroads, Bell St. at Atkinson St., Amarillo . . . . 72,000 275,000 Wolflin Village, Wolflin Ave. at Georgia St., Amarillo . . . . 191,000 513,000 Southridge Plaza, William Cannon Dr. at S. 1st St., Austin . . 143,000 565,000 Baywood, State Hwy. 60 at Baywood Dr., Bay City. . . . . . . . 40,000 169,000 Calder, Calder at 24th St., Beaumont . . . . . . . . . . . . . 34,000 129,000 North Park Plaza, Eastex Fwy. at Dowlen, Beaumont. . . . . . . 70,000 * 318,000 * Phelan West, Phelan at 23rd St., Beaumont (67%). . . . . . . . 16,000 * 59,000 * Southgate, Calder Ave. at 6th St., Beaumont. . . . . . . . . . 34,000 118,000 Westmont, Dowlen at Phelan, Beaumont . . . . . . . . . . . . . 95,000 507,000 Bryan Village, Texas at Pease, Bryan . . . . . . . . . . . . . 29,000 98,000 Parkway Square, Southwest Pkwy at Texas Ave., College Station. 158,000 685,000
Table continued on next page
Building Name and Location Area Land Area - -------------------------------------------------------------------- --------- --------- Montgomery Plaza, Loop 336 West, Conroe. . . . . . . . . . . . . . . 233,000 911,000 River Pointe, I-45 at Loop 336, Conroe . . . . . . . . . . . . . . . 42,000 329,000 Portairs, Ayers St. at Horne Rd., Corpus Christi . . . . . . . . . . 121,000 416,000 Dickinson, I-45 at F.M. 517, Dickinson (72%) . . . . . . . . . . . . 55,000 * 225,000 * Coronado Hills, Mesa at Balboa, El Paso. . . . . . . . . . . . . . . 128,000 575,000 Southcliff, I-20 and Grandbury Rd., Ft. Worth. . . . . . . . . . . . 116,000 * 568,000 * Broadway, Broadway at 59th St., Galveston (77%). . . . . . . . . . . 58,000 * 167,000 * Food King Place, 25th St. at Avenue P, Galveston . . . . . . . . . . 28,000 78,000 Galveston Place, Central City Blvd. at 61st St., Galveston . . . . . 123,000 527,000 Cedar Bayou, Bayou Rd., La Marque. . . . . . . . . . . . . . . . . . 15,000 51,000 Corum South, Gulf Fwy., League City. . . . . . . . . . . . . . . . . 112,000 680,000 Caprock Center, 50th at Boston Ave., Lubbock . . . . . . . . . . . . 375,000 1,255,000 Town & Country, 4th St. at University, Lubbock . . . . . . . . . . . 134,000 339,000 Angelina Village, Hwy. 59 at Loop 287, Lufkin. . . . . . . . . . . . 229,000 1,835,000 Independence Plaza, Town East Blvd., Mesquite. . . . . . . . . . . . 179,000 787,000 McKinney Centre, NEC of US Hwy 380 & U.S Hwy 75, McKinney . . . . . 13,000 69,000 University Park Plaza, University Dr. at E. Austin St., Nacogdoches. 78,000 283,000 Mid-County, Twin Cities Hwy. at Nederland Ave., Nederland. . . . . . 107,000 611,000 Gillham Circle, Gillham Circle at Thomas, Port Arthur. . . . . . . . 33,000 94,000 Village, 9th Ave. at 25th St., Port Arthur (77%) . . . . . . . . . . 39,000 * 185,000 * Porterwood, Eastex Fwy. at F.M. 1314, Porter . . . . . . . . . . . . 99,000 487,000 Plaza, Ave. H at U.S. Hwy. 90A, Rosenberg. . . . . . . . . . . . . . 41,000 * 135,000 * Rose-Rich, U.S. Hwy. 90A at Lane Dr., Rosenberg. . . . . . . . . . . 104,000 386,000 Bandera Village, Bandera at Hillcrest, San Antonio . . . . . . . . . 57,000 607,000 Oak Park Village, Nacogdoches at New Braunfels, San Antonio. . . . . 65,000 221,000 Parliament Square, W. Ave. at Blanco, San Antonio. . . . . . . . . . 65,000 260,000 San Pedro Court, San Pedro at Hwy. 281N., San Antonio. . . . . . . . 2,000 18,000 Valley View, West Ave. at Blanco Rd., San Antonio. . . . . . . . . . 89,000 341,000 Market at Town Center, Town Center Blvd., Sugar Land . . . . . . . . 392,000 1,732,000 Williams Trace, Hwy. 6 at Williams Trace, Sugar Land . . . . . . . . 263,000 1,187,000 New Boston Road, New Boston at Summerhill, Texarkana . . . . . . . . 90,000 335,000 Island Market Place, 6th St. at 9th Ave., Texas City . . . . . . . . 27,000 90,000 Mainland, Hwy. 1765 at Hwy. 3, Texas City. . . . . . . . . . . . . . 69,000 279,000 Palmer Plaza, F.M. 1764 at 34th St., Texas City. . . . . . . . . . . 97,000 367,000 Broadway, S. Broadway at W. 9th St., Tyler (77%) . . . . . . . . . . 46,000 * 197,000 * Crossroads, I-10 at N. Main, Vidor . . . . . . . . . . . . . . . . . 116,000 516,000 LOUISIANA, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . 1,337,000 5,504,000 Park Terrace, U.S. Hwy. 171 at Parish, DeRidder. . . . . . . . . . . 137,000 520,000 Town & Country Plaza, U.S. Hwy. 190 West, Hammond. . . . . . . . . . 215,000 915,000 Westwood Village, W. Congress at Bertrand, Lafayette . . . . . . . . 141,000 942,000 East Town, 3rd Ave. at 1st St., Lake Charles . . . . . . . . . . . . 33,000 * 117,000 * 14/Park Plaza, Hwy. 14 at General Doolittle, Lake Charles. . . . . . 207,000 654,000 Kmart Plaza, Ryan St., Lake Charles. . . . . . . . . . . . . . . . . 105,000 * 406,000 * Southgate, Ryan at Eddy, Lake Charles. . . . . . . . . . . . . . . . 171,000 628,000 Danville Plaza, Louisville at 19th, Monroe . . . . . . . . . . . . . 143,000 539,000 Orleans Station, Paris, Robert E. Lee & Chatham, New Orleans . . . . 5,000 31,000 Southgate, 70th at Mansfield, Shreveport . . . . . . . . . . . . . . 73,000 359,000 Westwood, Jewella at Greenwood, Shreveport.. . . . . . . . . . . . . 107,000 393,000
Table continued on next page
Building Name and Location Area Land Area - ------------------------------------------------------------------- --------- --------- ARIZONA, TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,026,000 4,545,000 University Plaza, Plaza Way at Milton Rd., Flagstaff. . . . . . . . 166,000 918,000 Camelback Village Square, Camelback at 7th Avenue, Phoenix. . . . . 135,000 543,000 Squaw Peak Plaza, 16th Street at Glendale Ave., Phoenix . . . . . . 61,000 220,000 Fountain Plaza, 77th St. at McDowell, Scottsdale. . . . . . . . . . 112,000 460,000 Rancho Encanto, 35th Avenue and Greenway Rd., Phoenix . . . . . . . 71,000 259,000 Broadway Marketplace, Broadway at Rural, Tempe. . . . . . . . . . . 86,000 347,000 Fry's Valley Plaza, S. McClintock at E. Southern, Tempe . . . . . . 145,000 570,000 Pueblo Anozira, McClintock Dr. at Guadalupe Rd., Tempe. . . . . . . 152,000 769,000 Desert Square Shopping Center, Golf Links at Kolb, Tucson . . . . . 98,000 459,000 NEVADA, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 730,000 2,722,000 Mission Center, Flamingo Rd. at Maryland Pkwy, Las Vegas. . . . . . 71,000 254,000 Paradise Marketplace, Flamingo Rd. at Sandhill, Las Vegas . . . . . 149,000 536,000 Rainbow Plaza, Rainbow Blvd. at Charleston Blvd., Las Vegas . . . . 280,000 1,063,000 Rancho Towne & Country, Rancho Dr. at Charleston Blvd., Las Vegas . 87,000 350,000 Tropicana Marketplace, Tropicana at Jones Blvd., Las Vegas. . . . . 143,000 519,000 NEW MEXICO, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . 700,000 3,177,000 Eastdale, Candelaria Rd. at Eubank Blvd., Albuquerque . . . . . . . 111,000 601,000 North Towne Plaza, Academy Rd. @ Wyoming Blvd., Albuquerque . . . . 103,000 607,000 Valle del Sol, Isleta Blvd. at Rio Bravo, Albuquerque . . . . . . . 106,000 475,000 Wyoming Mall, Academy Rd. at Northeastern, Albuquerque. . . . . . . 323,000 1,309,000 DeVargas, N. Guadalupe at Paseo de Peralta, Santa Fe (23%). . . . . 57,000 * 185,000 * OKLAHOMA, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . 687,000 3,173,000 Bryant Square, Bryant Ave. at 2nd St., Edmond . . . . . . . . . . . 268,000 1,259,000 Market Boulevard, E. Reno Ave. at N. Douglas Ave., Midwest City . . 36,000 142,000 Town & Country, Reno Ave at North Air Depot, Midwest City . . . . . 137,000 540,000 Windsor Hills Center, Meridian at Windsor Place, Oklahoma City. . . 246,000 1,232,000 ARKANSAS, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . 534,000 2,054,000 Evelyn Hills, College Ave. at Abshier, Fayetteville . . . . . . . . 154,000 750,000 Broadway Plaza, Broadway at W. Roosevelt, Little Rock . . . . . . . 43,000 148,000 Geyer Springs, Geyer Springs at Baseline, Little Rock . . . . . . . 153,000 415,000 Markham Square, W. Markham at John Barrow, Little Rock. . . . . . . 134,000 535,000 Westgate, Cantrell at Bryant, Little Rock . . . . . . . . . . . . . 50,000 206,000 KANSAS, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 466,000 2,231,000 West State Plaza, State Ave. at 78th St., Kansas City . . . . . . . 94,000 401,000 Westbrooke Village, Quivira Road at 75th St., Shawnee . . . . . . . 237,000 1,269,000 Shawnee Village, Shawnee Mission Pkwy. at Quivera Rd., Shawnee. . . 135,000 561,000 COLORADO, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . 211,000 867,000 Carefree, Academy Blvd. at N. Carefree Circle, Colorado Springs . . 127,000 460,000 Academy Place, Academy Blvd. at Union Blvd., Colorado Springs . . . 84,000 407,000 MISSOURI, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . 135,000 448,000 PineTree Plaza, U.S. Hwy. 150 at Hwy. 291, Lee's Summit . . . . . . 135,000 448,000
Table continued on next page
Building Name and Location Area Land Area - -------------------------------------------------------------- --------- --------- MAINE, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . 124,000 482,000 The Promenade, Essex at Summit, Lewiston . . . . . . . . . . . 124,000 * 482,000 TENNESSEE, TOTAL . . . . . . . . . . . . . . . . . . . . . . . 20,000 84,000 Highland Square, Summer at Highland, Memphis . . . . . . . . . 20,000 84,000 Building INDUSTRIAL Area Land Area --------- --------- HOUSTON AND HARRIS COUNTY, TOTAL. . . . . . . . . . . . . . . 3,723,000 9,061,000 Brookhollow Business Center, Dacoma at Directors Row. . . . . 133,000 405,000 Cannon/So. Loop Business Park, Cannon Street (75%). . . . . . 221,000 * 362,000 * Central Park North, W. Hardy Rd. at Kendrick Dr.. . . . . . . 155,000 465,000 Central Park Northwest VI, Central Pkwy. at Dacoma. . . . . . 175,000 518,000 Central Park Northwest VII, Central Pkwy. at Dacoma . . . . . 104,000 283,000 Jester Plaza, West T.C. Jester. . . . . . . . . . . . . . . . 101,000 244,000 Kempwood Industrial, Kempwood Dr. at Blankenship Dr.. . . . . 320,000 778,000 Lathrop Warehouse, Lathrop St. at Larimer St. . . . . . . . . 252,000 436,000 Little York Mini-Storage, West Little York. . . . . . . . . . 32,000 * 124,000 * Navigation Business Park, Navigation At N. York . . . . . . . 238,000 555,000 Northway Park II, Loop 610 East at Homestead. . . . . . . . . 303,000 745,000 Park Southwest, Stancliff at Brooklet . . . . . . . . . . . . 52,000 159,000 Railwood Industrial Park, Mesa at U.S. 90 . . . . . . . . . . 805,000 2,070,000 South Loop Business Park, S. Loop at Long Dr. . . . . . . . . 46,000 * 103,000 * Southwest Park II, Rockley Road . . . . . . . . . . . . . . . 68,000 216,000 Stonecrest Business Center, Wilcrest at Fallstone . . . . . . 111,000 308,000 West-10 Business Center, Wirt Rd. at I-10 . . . . . . . . . . 141,000 330,000 West-10 Business Center II, Wirt Rd. at I-10. . . . . . . . . 83,000 150,000 West Loop Commerce Center, W. Loop N. at I-10 . . . . . . . . 34,000 91,000 610 and 11th St. Warehouse, Loop 610 at 11th St.. . . . . . . 349,000 719,000 TEXAS (EXCLUDING HOUSTON & HARRIS CO.), TOTAL . . . . . . . . 260,000 751,000 Corporate Center I & II, Putnam Dr. at Research Blvd., Austin 117,000 326,000 River Pointe Mini-Storage, I-45 at Hwy. 336, Conroe . . . . . 32,000 * 97,000 * Nasa One Business Center, Nasa Road One at Hwy. 3, Webster. . 111,000 328,000 MULTI-FAMILY RESIDENTIAL TEXAS (EXCLUDING HOUSTON & HARRIS CO.), TOTAL . . . . . . . . 37,000 95,000 Summer Place Apartments, Hillcrest at Quill Dr., San Antonio. 37,000 * 95,000 * OFFICE BUILDING HOUSTON & HARRIS COUNTY, TOTAL. . . . . . . . . . . . . . . . 121,000 171,000 Citadel Plaza, N. Loop 610 at Citadel Plaza Dr. . . . . . . . 121,000 171,000
Table continued on next page
Building Name and Location Area Land Area - ------------------------------------------------------ -------- --------- UNIMPROVED LAND HOUSTON & HARRIS COUNTY, TOTAL . . . . . . . . . . . . . . . . . 4,970,000 Bissonnet at Wilcrest. . . . . . . . . . . . . . . . . . . . . . 773,000 Citadel Plaza at 610 N. Loop . . . . . . . . . . . . . . . . . . 137,000 East Orem. . . . . . . . . . . . . . . . . . . . . . . . . . . . 122,000 Kirkwood at Dashwood Dr. . . . . . . . . . . . . . . . . . . . . 322,000 Lockwood at Navigation . . . . . . . . . . . . . . . . . . . . . 163,000 Louetta at Grant Rd. . . . . . . . . . . . . . . . . . . . . . . 37,000 Mesa Rd. at Tidwell. . . . . . . . . . . . . . . . . . . . . . . 901,000 Mesa Rd. at Spikewood. . . . . . . . . . . . . . . . . . . . . . 1,374,000 Mowery at Cullen . . . . . . . . . . . . . . . . . . . . . . . . 118,000 Northwest Fwy. at Gessner. . . . . . . . . . . . . . . . . . . . 484,000 Redman at W. Denham. . . . . . . . . . . . . . . . . . . . . . . 17,000 Renwick at Gulfton . . . . . . . . . . . . . . . . . . . . . . . 17,000 Sheldon at I-10. . . . . . . . . . . . . . . . . . . . . . . . . 19,000 W. Little York at I-45 . . . . . . . . . . . . . . . . . . . . . 322,000 W. Little York at N. Houston-Rosslyn.. . . . . . . . . . . . . . 19,000 W. Loop N. at I-10 . . . . . . . . . . . . . . . . . . . . . . . 145,000 TEXAS (EXCLUDING HOUSTON & HARRIS CO.), TOTAL. . . . . . . . . . 1,200,000 US Hwy 380 (University Drive) and US Hwy 75, McKinney. . . . . . 265,000 River Pointe Dr. at I-45, Conroe . . . . . . . . . . . . . . . . 186,000 Hillcrest, Sunshine at Quill, San Antonio. . . . . . . . . . . . 171,000 Hwy. 3 at Hwy. 1765, Texas City. . . . . . . . . . . . . . . . . 184,000 Hwy 377 and Bursey Road, Watauga . . . . . . . . . . . . . . . . 394,000 LOUISIANA, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . 1,284,000 U.S. Hwy. 171 at Parish, DeRidder. . . . . . . . . . . . . . . . 462,000 Woodland Hwy., Plaquemines Parish (5%) . . . . . . . . . . . . . 822,000 * ARIZONA, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . 157,000 75th Avenue ar W Bell Rd, Glendale . . . . . . . . . . . . . . . 157,000 ILLINOIS, TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . 503,000 S.B.I. Rt. 159 at Matilda Rd., Fairview Heights (99%). . . . . . 503,000 *
Table continued on next page
Building Area Land Area ---------- ---------- ALL PROPERTIES-BY LOCATION GRAND TOTAL . . . . . . . . . . . . . . . 22,202,000 93,555,000 Houston & Harris County . . . . . . . . . 10,874,000 42,240,000 Texas (excluding Houston & Harris County) 5,358,000 24,084,000 Louisiana . . . . . . . . . . . . . . . . 1,337,000 6,788,000 Arizona . . . . . . . . . . . . . . . . . 1,026,000 4,702,000 Nevada. . . . . . . . . . . . . . . . . . 730,000 2,722,000 New Mexico. . . . . . . . . . . . . . . . 700,000 3,177,000 Oklahoma. . . . . . . . . . . . . . . . . 687,000 3,173,000 Arkansas. . . . . . . . . . . . . . . . . 534,000 2,054,000 Kansas. . . . . . . . . . . . . . . . . . 466,000 2,231,000 Colorado. . . . . . . . . . . . . . . . . 211,000 867,000 Missouri. . . . . . . . . . . . . . . . . 135,000 448,000 Maine . . . . . . . . . . . . . . . . . . 124,000 482,000 Tennessee . . . . . . . . . . . . . . . . 20,000 84,000 Illinois. . . . . . . . . . . . . . . . . 503,000 ALL PROPERTIES-BY CLASSIFICATION GRAND TOTAL . . . . . . . . . . . . . . . 22,202,000 93,555,000 Shopping Centers. . . . . . . . . . . . . 18,061,000 75,363,000 Industrial . . . . . . . . . . . . . . . 3,983,000 9,812,000 Office Building . . . . . . . . . . . . . 121,000 171,000 Multi-Family Residential. . . . . . . . . 37,000 95,000 Unimproved Land . . . . . . . . . . . . . 8,114,000
Note: Total square footage includes 6,700,000 square feet of land leased and 170,000 square feet of building leased from others. * Denotes partial ownership. The Company's interest is 50% except where noted. The square feet figures represent the Company's proportionate ownership of the entire property. General. In 1997, no single property accounted for more than 3.9% of the Company's total assets or 3.4% of gross revenues. Four properties, in the aggregate, represented approximately 11.4% of the Company's gross revenues for the year ended December 31, 1997; otherwise, none of the remaining properties accounted for more than 2.0% of the Company's gross revenues during the same period. The occupancy rate for all of the Company's improved properties as of December 31, 1997 was 92.0%. Substantially all of the Company's properties are owned directly by the Company (subject in certain cases to mortgages), although the Company's interests in certain of its properties are held indirectly through its interests in joint ventures or under long-term leases. In the opinion of management of the Company, its properties are well maintained and in good repair, suitable for their intended uses, and adequately covered by insurance. Shopping Centers. As of December 31, 1997, the Company owned, either directly or through its interests in joint ventures, 169 shopping centers with approximately 18.1 million square feet of building area. The shopping centers were located predominantly in Texas with other locations in Louisiana, Oklahoma, Arkansas, Arizona, New Mexico, Maine, Tennessee, Nevada, Kansas, Missouri and Colorado. The Company's shopping centers are primarily community shopping centers which range in size from 100,000 to 400,000 square feet, as distinguished from small strip centers which generally contain 5,000 to 25,000 square feet and from large regional enclosed malls which generally contain over 500,000 square feet. Most of the centers do not have climatized common areas but are designed to allow retail customers to park their automobiles in close proximity to any retailer in the center. The Company's centers are customarily constructed of masonry, steel and glass and all have lighted, paved parking areas which are typically landscaped with berms, trees and shrubs. They are generally located at major intersections in close proximity to neighborhoods which have existing populations sufficient to support retail activities of the types conducted in the Company's centers. The Company has approximately 3,300 separate leases with 2,500 different tenants in its portfolio, including national and regional supermarket chains, other nationally or regionally known stores (including drug stores, discount department stores, junior department stores and catalog stores) and a great variety of other regional and local retailers. The large number of locations offered by the Company and the types of traditional anchor tenants help attract prospective new tenants. Some of the national and regional supermarket chains which are tenants in the Company's centers include Albertson's, Fiesta, Smith's, Fleming Foods, H.E.B., Kroger Company, Randall's Food Markets, Fry's Food Stores and Super Value Holdings. In addition to these supermarket chains, the Company's nationally and regionally known retail store tenants include Eckerd, Walgreen and Osco drugstores; Kmart discount stores; Bealls, Palais Royal and Weiner's junior department stores; Marshall's, Office Depot, 50-Off, Office Max, Babies 'R' Us, Ross and T.J. Maxx off-price specialty stores; Luby's, Piccadilly and Furr's cafeterias; Academy sporting goods; Service Merchandise catalog stores; FAO Schwarz toy store; Cost Plus Imports; Linens 'N Things; Barnes & Noble bookstore; Home Depot; and the following restaurant chains: Arby's, Burger King, Champ's, Church's Fried Chicken, Dairy Queen, Domino's, Jack-in-the-Box, CiCi Pizza, Long John Silver's, McDonald's, Olive Garden, Outback Steakhouse, Pizza Hut, Shoney's, Steak & Ale, Taco Bell and Whataburger. The Company also leases space in 3,000 to 10,000 square foot areas to national chains such as the Limited Store, The Gap, One Price Stores, Tempo, Eddie Bauer and Radio Shack. The Company's shopping center leases have lease terms generally ranging from three to five years for tenant space under 5,000 square feet and from 10 to 35 years for tenant space over 10,000 square feet. Leases with primary lease terms in excess of 10 years, generally for anchor and out-parcels, frequently contain renewal options which allow the tenant to extend the term of the lease for one or more additional periods, each such period generally being of a shorter duration than the primary lease term. The rental rates paid during a renewal period are generally based upon the rental rate for the primary term, sometimes adjusted for inflation or for the amount of the tenant's sales during the primary term. Most of the Company's leases provide for the monthly payment in advance of fixed minimum rentals, the tenants' pro rata share of ad valorem taxes, insurance (including fire and extended coverage, rent insurance and liability insurance) and common area maintenance for the center (based on estimates of the costs for such items) and for the payment of additional rentals based on a percentage of the tenants' sales ("percentage rentals"). Utilities are generally paid directly by tenants except where common metering exists with respect to a center, in which case the Company makes the payments for the utilities and is reimbursed by the tenants on a monthly basis. Generally, the Company's leases prohibit the tenant from assigning or subletting its space and require the tenant to use its space for the purpose designated in its lease agreement and to operate its business on a continuous basis. Certain of the lease agreements with major tenants contain modifications of these basic provisions in view of the financial condition, stability or desirability of such tenants. Where a tenant is granted the right to assign its space, the lease agreement generally provides that the original lessee will remain liable for the payment of the lease obligations under such lease agreement. During 1997, the Company added approximately 1.6 million square feet to its portfolio of shopping center properties through the acquisition of properties and another .2 million square feet of space through developmentThe Company added two centers in the Arizona market totaling 169,000 square feet and purchased its fourth property in the Kansas City area, a 94,000 square foot shopping center. The Company purchased a 280,000 square foot shopping center anchored by Home Depot in Las Vegas, its fifth property in this city and added an 84,000 square foot center in Colorado Springs, its second center in that market. The Company purchased a 126,000 square foot shopping center in Houston and added an additional 336,000 square feet in other Texas markets. Lastly, the Company purchased its joint venture partner's 85% interest in four shopping centers, adding 478,000 square feet. These centers are located in Mesquite and El Paso, Texas, Albuquerque, New Mexico and Tempe, Arizona. Industrial Properties. The Company currently owns a total of 23 industrial projects. All of these projects are located in the greater Houston area, except for a 117,000 square foot office/service center located in Austin, Texas, which was purchased during 1997. Two additional properties totaling 193,000 square feet located in Houston were also purchased during 1997. The industrial portfolio has a total of 4.0 million square feet of building area situated on 9.8 million square feet of land. These figures include the Company's interests in four joint ventures. Major tenants of the Company's industrial properties include Advo (a leading direct mail advertising company), Pepsico's PFS division, Stone Container Corporation and Iron Mountain Records Storage. During 1997, the Company completed the development of a 110,000 square foot build-to-suit office/distribution on a tract of the Company's undeveloped land. The Company also began construction on a 162,000 square foot speculative bulk warehouse facility on a tract of undeveloped land located in the Company's Railwood Industrial Park, a master-planned industrial park in northeast Houston. Office Building. The Company owns a seven-story, 121,000 square foot masonry office building with a detached, covered, three-level parking garage situated on 171,000 square feet of land fronting on North Loop 610 West in Houston. The building serves as the Company's headquarters. Other than the Company, the major tenant of the building is Nations Bank, which currently occupies 12% of the office space. Multi-family Residential Properties. At December 31, 1997, the Company owned, through a joint venture interest, one apartment project located in San Antonio, Texas. The Company's percentage ownership represents approximately 79 units of the project's aggregate 159 units. This project is a garden-type project complemented by landscaping, recreational areas and adequate parking. This project is managed by our joint venture partner, who is an experienced apartment operator. Subsequent to year-end, the Company announced the development of a 260-unit luxury apartment complex on land within a multi-use master-planned project developed by the Company in a suburb north of Houston. An unrelated Houston-based developer will build and lease the property on the Company's behalf. Construction is scheduled for completion in the spring of 1999. Unimproved Land. The Company owns, directly or through its interest in a joint venture, 25 parcels of unimproved land aggregating approximately 8.1 million square feet of land area located in Texas, Arizona, Illinois and Louisiana. These properties include approximately 4.0 million square feet of land adjacent to certain of the Company's existing developed properties, which may be used for expansion of these developments, as well as approximately 4.0 million square feet of land, which may be used for new development. Almost all of these unimproved properties are served by roads and utilities and are ready for development. Most of these parcels are suitable for development as shopping centers or industrial projects, and the Company intends to emphasize the development of these parcels for such purpose. ITEM 3. LEGAL PROCEEDINGS There are no material pending legal proceedings, other than ordinary routine litigation incidental to its business, to which the Company is a party or to which any of its properties are subject. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS None. EXECUTIVE OFFICERS OF THE REGISTRANT The following table sets forth certain information with respect to the executive officers of the Company as of February 25, 1998. All executive officers of the Company are elected annually by the Board of Trust Managers and serve until the successors are elected and qualified.
Name Age Position Stanford Alexander 69 Chairman/Chief Executive Officer Martin Debrovner 61 Vice Chairman Andrew M. Alexander 41 President Joseph W. Robertson, Jr. 50 Executive Vice President/ Chief Financial Officer Stephen C. Richter 43 Senior Vice President/Financial Administration and Treasurer
Mr. S. Alexander is the Company's Chairman and its Chief Executive Officer. He has been employed by the Company since 1955 and has served in his present capacity since January 1, 1993. Prior to becoming Chairman, Mr. Alexander served as President and Chief Executive Officer of the Company since 1962. Mr. Alexander is President, Chief Executive Officer and a Trust Manager of Weingarten Properties Trust and a member of the Houston Regional Advisory Board of Chase Bank of Texas, National Association, Houston, Texas. Mr. Debrovner became Vice Chairman of the Company on February 25, 1997. Prior to assuming such position Mr. Debrovner served as President and Chief Operating Officer since January 1, 1993. Mr. Debrovner served as President of Weingarten Realty Management Company (the "Management Company") since the Company's reorganization in December 1984. Prior to such time, Mr. Debrovner was an employee of the Company for 17 years, holding the positions of Senior Vice President from 1980 until March 1984 and Executive Vice President until December 1984. As Executive Vice President, Mr. Debrovner was generally responsible for the Company's operations. Mr. Debrovner is also a Trust Manager of Weingarten Properties Trust. Mr. A. Alexander became President of the Company on February 25, 1997. Prior to his present position, Mr. Alexander was Executive Vice President/Asset Management of the Company and President of the Management Company. Prior to such time, Mr. Alexander was Senior Vice President/Asset Management of the Management Company. He also served as Vice President of the Management Company and, prior to the Company's reorganization in December 1984, was Vice President and an employee of the Company since 1978. Mr. Alexander has been primarily involved with leasing operations at both the Company and the Management Company. Mr. Alexander is also a Trust Manager of Weingarten Properties Trust. Mr. Robertson became Executive Vice President of the Company and its Chief Financial Officer on January 1, 1993. Prior to becoming Executive Vice President, Mr. Robertson served as Senior Vice President and Chief Financial Officer since 1980. He has been with the Company since 1971. Mr. Robertson is also a Trust Manager of Weingarten Properties Trust. Mr. Richter became Senior Vice President/Financial Administration and Treasurer on January 1, 1997. Prior to his present position, Mr. Richter served as Vice President/Financial Administration and Treasurer of the Company since January 1, 1993. For the five years prior to that time, he served as Vice President/Financial Administration and Treasurer of the Management Company. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON SHARES OF BENEFICIAL INTEREST AND RELATED SHAREHOLDER MATTERS The Company's Common Shares are listed and traded on the New York Stock Exchange under the symbol "WRI". The number of holders of record of the Company's Common Shares as of February 25, 1998 was 3,221. The high and low sale prices per share of the Company's Common Shares, as reported on the New York Stock Exchange composite tape, and dividends per share paid for the fiscal quarters indicated were as follows:
HIGH LOW DIVIDENDS ------ ------- --------- 1997: Fourth $ 45 $ 38 7/8 $ 0.64 Third 44 1/8 39 7/16 0.64 Second 45 5/8 41 3/8 0.64 First 44 3/4 40 0.64 1996: Fourth $ 40 3/4 $ 36 $ 0.62 Third. 40 1/2 37 3/8 0.62 Second 38 7/8 34 1/4 0.62 First. 38 7/8 35 5/8 0.62
ITEM 6. SELECTED FINANCIAL DATA The following table sets forth selected consolidated financial data with respect to the Company and should be read in conjunction with "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," the Consolidated Financial Statements and accompanying Notes in "Item 8. Financial Statements and Supplementary Data" and the financial schedules included elsewhere in this Form 10-K.
(Amounts in thousands, except per share amounts) Years Ended December 31, 1997 1996 1995 1994 1993 Revenues (primarily real estate rentals) $ 174,512 $151,123 $134,197 $120,793 $103,282 ----------- --------- --------- --------- --------- Expenses: Depreciation and amortization . . . . 37,976 33,769 30,060 26,842 23,382 Interest. . . . . . . . . . . . . . . 30,009 21,975 16,707 10,694 10,046 Other . . . . . . . . . . . . . . . . 54,888 47,004 42,614 39,235 35,236 Total . . . . . . . . . . . . . . . . 122,873 102,748 89,381 76,771 68,664 ----------- --------- --------- --------- --------- Income from operations. . . . . . . . 51,639 48,375 44,816 44,022 34,618 Gain (loss) on sales of property and securities. . . . . . . . . . . . . 3,327 5,563 (14) (234) 1,631 Net Income. . . . . . . . . . . . . . $ 54,966 $ 53,938 $ 44,802 $ 43,788 $ 36,249 =========== ========= ========= ========= ========= Weighted average number of common shares outstanding. . . . . . . . . 26,638 26,555 26,464 26,190 24,211 Net income per common share . . . . . $ 2.06 $ 2.03 $ 1.69 $ 1.67 $ 1.50 Cash dividends per common share . . . $ 2.56 $ 2.48 $ 2.40 $ 2.28 $ 2.16 Property (at cost). . . . . . . . . . $1,118,758 $970,418 $849,894 $735,134 $634,814 Total assets. . . . . . . . . . . . . $ 946,793 $831,097 $734,824 $682,037 $602,042 Debt. . . . . . . . . . . . . . . . . $ 507,366 $389,225 $289,339 $229,597 $147,652 Other Data: Funds from Operations (1) Net income. . . . . . . . . . . . . . $ 54,966 $ 53,938 $ 44,802 $ 43,788 $ 36,249 Depreciation and amortization (2) . . 37,544 33,414 29,813 26,842 23,382 (Gain) loss on sales of property and securities (3,327) (5,563) 14 234 (1,631) Total . . . . . . . . . . . . . . . . $ 89,183 $ 81,789 $ 74,629 $ 70,864 $ 58,000 =========== ========= ========= ========= ========= Cash Flows from Operations. . . . . . $ 89,902 $ 76,299 $ 72,498 $ 64,305 $ 56,737 (1) Funds from operations does not represent cash flows from operations as defined by generally accepted accounting principles and should not be considered as an alternative to net income as an indicator of the Company's operating performance or to cash flows as a measure of liquidity. (2) In accordance with the NAREIT definition of funds from operations adopted during the year ended December 31, 1995, debt cost amortization is not included beginning with that year.
ITEM 7. 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 169 shopping centers, 23 industrial properties, one multi-family residential project and one office building at December 31, 1997. Of the Company's 194 developed properties, 147 are located in Texas (including 93 in Houston and Harris County). The Company's remaining properties are located in Louisiana (11), Arizona (9), Nevada (5), New Mexico (5), Oklahoma (4), Arkansas (5), Kansas (3), Colorado (2), Missouri (1), Tennessee (1) and Maine (1). The Company has nearly 3,300 leases and 2,500 different tenants. Leases for the Company's properties range from less than a year for smaller spaces to over 25 years for larger tenants; leases generally include minimum lease payments and contingent rentals for payment of taxes, insurance and maintenance and for an amount based on a percentage of the tenants' sales. The majority of the Company's anchor tenants are supermarkets, drugstores and other retailers which generally sell basic necessity-type items. CAPITAL RESOURCES AND LIQUIDITY The Company anticipates that cash flows from operating activities will continue to provide adequate capital for all dividend payments in accordance with REIT requirements and that cash on hand, borrowings under its existing credit facility, issuance of unsecured debt and the use of project financing, as well as other debt and equity alternatives, will provide the necessary capital to achieve growth. Cash flow from operating activities as reported in the Statements of Consolidated Cash Flows increased to $89.9 million for 1997 from $76.3 million for 1996 and $72.5 million for 1995. Cash dividends increased to $68.2 million in 1997, compared to $65.9 million in 1996 and $63.5 million in 1995. The Company satisfied its REIT requirement of distributing at least 95% of ordinary taxable income for each of the three years ended December 31, 1997, and, accordingly, federal income taxes were not provided in these years. The Company's dividend payout ratio for 1997, 1996 and 1995 approximated 76.4%, 80.5% and 85.1%, respectively, based on funds from operations for the applicable year. The Company continued to expand its portfolio of income-producing properties in 1997. This growth resulted primarily from the acquisition of properties, both shopping centers and industrial properties. During the year, the Company purchased eight shopping centers, three industrial projects, and its joint venture partner's interest in four other shopping centers. These acquisitions added 1.9 million square feet to the Company's portfolio at a combined cost of $111.0 million. The Company expanded its presence in many of its newer markets, with purchases in Dallas/Fort Worth, Phoenix, Tucson, Las Vegas, Kansas City and Colorado Springs. The Company completed the development of a .1 million square foot build-to-suit office/distribution facility on a tract of the Company's undeveloped land and also substantially completed development of two shopping centers which added less than .1 million square feet. Additionally, the Company has an ongoing program for maintaining and renovating its existing portfolio of properties. Capitalized expenditures for acquisitions, new development and additions to the existing portfolio were, in millions, $152.6, $131.6 and $114.7 during 1997, 1996 and 1995, respectively. All of the acquisitions and new development during 1997 were initially financed under the Company's revolving credit facility. Capital expenditures in 1998 are expected to equal, if not exceed, the total for 1997. Total debt outstanding increased to $507.4 million at December 31, 1997 from $389.2 million at December 31, 1996, primarily to fund acquisitions and new development. The Company's ratio of debt to total market capitalization was 30% at December 31, 1997, as compared to 27% at year-end 1996. During the year, the Company issued an additional $97 million in unsecured Medium Term Notes ("MTNs"). These MTNs were issued with an average life of 8.7 years at an average interest rate of 6.8%, and the proceeds were used to pay down balances outstanding under the Company's revolving credit facilities. The Company also completed several financing transactions subsequent to year-end. First, the Company entered into a forward Treasury lock in January of 1998, whereby the Company locked a ten-year Treasury rate of 5.49% until August of 1998 for a notional amount of $35 million. In February of 1998, the Company issued $75 million of 7.44% cumulative preferred shares with a liquidation preference of $25 per share in an underwritten public offering. The shares are callable at the Company's option any time after March 31, 2003 and have no stated maturity. The proceeds of the offering were used to pay down amounts outstanding under the Company's revolving credit facility and to retire $35 million of 9.11% secured notes payable to an insurance company. The early extinguishment of these notes that were scheduled to mature in August of 2001 will result in an extraordinary loss of $1.2 million in 1998. Continued growth through acquisitions and new development will eventually necessitate the issuance of additional equity securities; however, the Company's current capital structure should allow the issuance of additional debt before this is required. In the interim, the Company will continue to closely monitor both the debt and equity markets and carefully consider its available alternatives, including both public and private placements. During 1996, the Company's $200 million unsecured revolving credit facility was amended to improve the pricing and, effectively, extend the term of the commitment. In addition, the Company executed an agreement with a bank for an unsecured and uncommitted overnight credit facility totaling $20 million to be used for cash management purposes. The Company will maintain adequate funds available under the $200 million revolving credit facility at all times to cover the outstanding balance under the $20 million facility. At December 31, 1997, the Company had approximately $91 million of funds available under the revolving credit facilities. In the third quarter of 1996, the Company filed a $250 million shelf registration statement with the Securities and Exchange Commission (which includes $23.5 million from the Company's prior shelf registration), which allows for the issuance of debt, equity securities or warrants. At December 31, 1997, amounts available under the shelf registration totaled $134 million, however this amount was reduced by $75 million due to the issuance of perpetual preferred shares subsequent to year-end. The Company expects to continue to issue debt or equity under its shelf registration and to continually seek and evaluate other sources of capital. Subsequent to year-end, the Company sold its investment in U.S. government agency guaranteed pass-through certificates for $12.2 million, resulting in a gain of less than $.1 million. The proceeds from the sale were used primarily to retire overnight repurchase agreements which were collateralized by these marketable debt securities. FUNDS FROM OPERATIONS Funds from operations is 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. Funds from operations does not represent cash flows from operations as defined by generally accepted accounting principles and should not be considered as an alternative to net income as an indicator of the Company's operating performance or to cash flows as a measure of liquidity. Funds from operations increased to $89.2 million in 1997, as compared to $81.8 million in 1996 and $74.6 million in 1995. These increases relate primarily to the impact of the Company's acquisitions and new developments and, to a lesser degree, the activity at its existing properties. For further information on changes between years, see "Results of Operations" below. RESULTS OF OPERATIONS Rental revenues increased 16.3% or $23.7 million from $145.3 million in 1996 to $169.0 million in 1997 and by 15.9% or $19.9 million from $125.4 million in 1995. These increases are primarily the result of the Company's acquisition and new development programs. Occupancy of the Company's shopping centers and total portfolio decreased to 92% at December 31, 1997 from 93% at the end of 1996. The Company's industrial portfolio occupancy decreased from 94% at December 31, 1996 to 93% at the end of 1997. The Company completed 582 renewals or leases comprising 2.0 million square feet of retail space at an average rental rate increase of 8.1%. Net of capital costs for tenant improvements, the increase averaged 3.9%. Interest income totaled $2.5 million in 1997, $3.1 million in 1996 and $5.3 million in 1995. This decrease in income is primarily the result of the Company selling $31.8 million of its investment in marketable debt securities during the fourth quarter of 1995. The sale resulted in a gain of $.1 million. Interest income recognized on the marketable debt securities sold by the Company subsequent to year-end 1997 totaled $.8 million during 1997. Equity in earnings of real estate joint ventures and partnerships totaled $1.0 million in 1997, $1.2 million in 1996 and $1.5 million in 1995. The decreases in 1997 and 1996 are due to the sale in the third quarter of 1996 of the Company's 26% interest in an apartment complex accounted for under the equity method. This sale resulted in a gain of $4.2 million. The Company has accounted for its 15% interest in a joint venture, which owned four shopping centers, under the equity method. On December 31, 1997, the Company purchased its joint venture partner's 85% interest and, accordingly, has consolidated the operating results of these four centers since the date of acquisition. Income recognized in 1997 related to this joint venture totaled $.6 million. Direct costs and expenses of operating the Company's properties (i.e., operating and ad valorem tax expenses) increased to $49.2 million in 1997 from $41.9 million in 1996 and $37.7 million in 1995. These increases are primarily due to property acquired and developed during these periods. Overall, direct operating costs and expenses as a percentage of rental revenues were 30% in 1995 and 29% in 1996 and 1997. Depreciation and amortization have increased to $38.0 million in 1997 from $33.8 million in 1996 and $30.1 million in 1995, also as a result of the properties acquired and developed during these periods. Gross interest costs, before capitalization of interest to development projects, increased by $7.5 million from $23.3 million in 1996 to $30.8 million in 1997. This increase in interest cost was due mainly to the increase in the average debt outstanding from $314.4 million for 1996 to $422.9 million for 1997. The weighted-average interest rate decreased slightly from 7.36% in 1996 to 7.27% in 1997. Interest expense, net of amounts capitalized, increased $8.0 million from 1996. The amount of interest capitalized decreased to $.8 million in 1997 from $1.3 million in 1996 due to a decrease in the amount of development activity during the year. Included in interest expense during 1997 was $.7 million related to repurchase agreements which were collateralized by the Company's investment in marketable debt securities which were sold subsequent to year-end. Comparing 1996 to 1995, gross interest costs increased from $19.6 million in 1995 to $23.3 million in 1996. This was due to an increase in the average debt outstanding from $261.3 million in 1995 to $314.4 million in 1996. The weighted-average interest rate decreased slightly between the two periods from 7.44% in 1995 to 7.36% in 1996. Interest expense, net of amounts capitalized, increased $5.3 million from 1995 due to the decrease in interest capitalization from $2.9 million in 1995 to $1.3 million in 1996 as a result of the completion in 1996 of two of the Company's significant development projects. The gain on sale of $3.3 million in 1997 was primarily due to the condemnation of a shopping center by the State of Texas during the third quarter. The Company has leased back the portion of the shopping center purchased by the state, and will continue to operate the center. The gain on sales of property and securities of $5.6 million in 1996 is due primarily to the sale of two properties and the receipt of insurance proceeds from fires which destroyed parts of two shopping centers. EFFECTS OF INFLATION The rate of inflation was relatively unchanged in 1997. The Company has structured its leases, however, in such a way as to remain largely unaffected should significant inflation occur. Most of the leases contain percentage rent provisions whereby the Company receives rentals based on the tenants' gross sales. Many leases provide for increasing minimum rentals during the terms of the leases through escalation provisions. In addition, many of the Company's leases are for terms of less than ten years, which allows the Company to adjust rentals to changing market conditions when the leases expire. Most of the Company's leases require the tenants to pay their proportionate share of operating expenses and ad valorem taxes. As a result of these lease provisions, increases due to inflation, as well as ad valorem tax rate increases, generally do not have a significant adverse effect upon the Company's operating results. NEW ACCOUNTING PRONOUNCEMENTS Effective January 1, 1998, the Company will adopt Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income." This statement requires the presentation of total nonowner changes in equity, including items not currently reflected in net income. Also effective January 1, 1998, the Company will adopt SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." This statement requires that segments of a business be disclosed in interim and annual financial statements. The Company is currently evaluating the effect, if any, these statements will have on the Company's financial presentation. FORWARD-LOOKING STATEMENTS This Annual Report includes certain forward-looking statements reflecting the Company's expectations in the near term; however, many factors which may affect the actual results, especially the everchanging retail environment, are difficult to predict. Accordingly, there is no assurance that the Company's expectations will be realized. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEPENDENT AUDITORS' REPORT To the Board of Trust Managers and Shareholders of Weingarten Realty Investors: We have audited the accompanying consolidated balance sheets of Weingarten Realty Investors (the "Company") as of December 31, 1997 and 1996, and the related statements of consolidated income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1997. Our audits also included the financial statement schedules listed in the Index at Item 14. These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedules 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, such consolidated financial statements present fairly, in all material respects, the financial position of Weingarten Realty Investors 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. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein. DELOITTE & TOUCHE LLP Houston, Texas February 20, 1998, except for Note 13, as to which the date is February 24, 1998
STATEMENTS OF CONSOLIDATED INCOME (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Years Ended December 31, ------------------------ 1997 1996 1995 -------- -------- --------- Revenues: Rentals $169,041 $145,307 $125,400 Interest (including amounts from related parties of $1,434 in 1997, $1,576 in 1996 and $2,304 in 1995) 2,487 3,148 5,338 Equity in earnings of real estate joint ventures and partnerships 1,003 1,232 1,549 Other 1,981 1,436 1,910 -------- -------- --------- Total 174,512 151,123 134,197 -------- -------- --------- Expenses: Depreciation and amortization 37,976 33,769 30,060 Interest 30,009 21,975 16,707 Operating 27,131 23,021 20,890 Ad valorem taxes 22,110 18,874 16,776 General and administrative 5,647 5,109 4,948 -------- -------- --------- Total 122,873 102,748 89,381 -------- -------- --------- Income from Operations 51,639 48,375 44,816 Gain (Loss) on Sales of Property and Securities 3,327 5,563 (14) -------- -------- --------- Net Income $ 54,966 $ 53,938 $ 44,802 Net Income Per Common Share $ 2.06 $ 2.03 $ 1.69 ======== ======== ========= Net Income Per Common Share- Assuming Dilution $ 2.05 $ 2.03 $ 1.69 ======== ======== =========
See Notes to Consolidated Financial Statements.
CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) December 31, ------------ 1997 1996 ----------- ---------- ASSETS Property $1,118,758 $ 970,418 Accumulated Depreciation (262,551) (233,514) ----------- ---------- Property - net 856,207 736,904 Investment in Real Estate Joint Ventures and Partnerships 2,824 7,282 ----------- ---------- Total 859,031 744,186 Mortgage Bonds and Notes Receivable from: Affiliate (net of deferred gain of $4,487 in 1997 and 1996) 14,752 14,550 Real Estate Joint Ventures and Partnerships 15,250 15,235 Marketable Debt Securities 12,345 13,806 Unamortized Debt and Lease Costs 23,536 23,411 Accrued Rent and Accounts Receivable (net of allowance for doubtful accounts of $1,000 in 1997 and $1,236 in 1996) 14,583 13,164 Cash and Cash Equivalents 2,754 169 Other 4,542 6,576 ----------- ---------- Total $ 946,793 $ 831,097 =========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Debt $ 507,366 $ 389,225 Accounts Payable and Accrued Expenses 43,305 36,949 Other 6,136 3,925 ----------- ---------- Total 556,807 430,099 ----------- ---------- Commitments and Contingencies Shareholders' Equity: Preferred Shares of Beneficial Interest - par value, $.03 per share; shares authorized: 10,000; shares issued and outstanding: none Common Shares of Beneficial Interest - par value, $.03 per share; shares authorized: 150,000; shares issued and outstanding: 26,660 in 1997 and 26,576 in 1996 800 797 Capital Surplus 389,186 400,201 ----------- ---------- Shareholders' Equity 389,986 400,998 ----------- ---------- Total $ 946,793 $ 831,097 =========== ==========
See Notes to Consolidated Financial Statements.
STATEMENTS OF CONSOLIDATED CASH FLOWS (AMOUNTS IN THOUSANDS) Years Ended December 31, ------------------------ 1997 1996 1995 ---------- ---------- ---------- Cash Flows from Operating Activities: Net income $ 54,966 $ 53,938 $ 44,802 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 37,976 33,769 30,060 Equity in earnings of real estate joint ventures and partnerships (1,003) (1,232) (1,549) (Gain) loss on sales of property and securities (3,327) (5,563) 14 Amortization of direct financing leases 659 639 664 Changes in accrued rent and accounts receivable (2,462) (1,836) (526) Changes in other assets (6,105) (7,507) (7,087) Changes in accounts payable and accrued expenses 9,113 4,032 6,187 Other, net 85 59 (67) ---------- ---------- ---------- Net cash provided by operating activities 89,902 76,299 72,498 ---------- ---------- ---------- Cash Flows from Investing Activities: Investment in properties (136,632) (121,379) (105,438) Mortgage bonds and notes receivable: Advances (1,501) (3,151) (6,691) Collections 2,090 6,188 12,468 Proceeds from sales and disposition of property 11,741 7,231 444 Proceeds from sales of marketable debt securities 31,836 Real estate joint ventures and partnerships: Investments (59) (69) (66) Distributions 808 1,032 1,337 Other, net 2,517 3,291 2,672 ---------- ---------- ---------- Net cash used in investing activities (121,036) (106,857) (63,438) ---------- ---------- ---------- Cash Flows from Financing Activities: Proceeds from issuance of: Debt 104,526 95,770 144,500 Common shares of beneficial interest 1,325 231 398 Principal payments of debt (3,644) (2,350) (89,406) Dividends paid (68,200) (65,851) (63,478) Other, net (288) (428) (1,014) ---------- ---------- ---------- Net cash provided by (used in) financing activities 33,719 27,372 (9,000) ---------- ---------- ---------- Net increase (decrease) in cash and cash equivalents 2,585 (3,186) 60 Cash and cash equivalents at January 1 169 3,355 3,295 ---------- ---------- ---------- Cash and cash equivalents at December 31 $ 2,754 $ 169 $ 3,355 ========== ========== ==========
See Notes to Consolidated Financial Statements.
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Years Ended December 31, 1997, 1996 and 1995 Common Shares of Beneficial Capital Retained Interest Surplus Earnings ----------- --------- ---------- Balance, January 1, 1995 $ 791 $422,602 Net income $ 44,802 Shares exchanged for property 5 6,342 Shares issued under benefit plans 679 Unrealized loss on marketable securities transferred to available for sale (144) Cash dividends ($2.40 per share) (18,676) (44,802) ----------- --------- ---------- Balance, December 31, 1995 796 410,803 ---- Net income 53,938 Shares exchanged for property 1 968 Shares issued under benefit plans 469 Unrealized loss on marketable securities (125) Cash dividends ($2.48 per share) (11,914) (53,938) ----------- --------- ---------- Balance, December 31, 1996 797 400,201 ---- Net income 54,966 Shares exchanged for property 1 275 Shares issued under benefit plans 2 1,733 Unrealized gain on marketable securities 211 Cash dividends ($2.56 per share) (13,234) (54,966) ----------- --------- ---------- Balance, December 31, 1997 $ 800 $389,186 $ ---- =========== ========= ==========
See Notes to Consolidated Financial Statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Weingarten Realty Investors (the "Company"), a Texas real estate investment trust, is engaged in the acquisition, development and management of real estate, primarily anchored neighborhood and community shopping centers. Over 75% of the Company's properties are located in Texas, with the remainder located throughout the southwestern part of the United States. The Company's major tenants include supermarkets, drugstores and other retailers who generally sell basic necessity-type commodities. The Company currently operates and intends to operate in the future as a real estate investment trust ("REIT"). Basis of Presentation The consolidated financial statements include the accounts of the Company, its subsidiaries and its interest in 50% or more-owned joint ventures and partnerships over which the Company exercises control. All significant intercompany balances and transactions have been eliminated. Investments in less than 50%-owned joint ventures and partnerships are accounted for using the equity method. Revenue Recognition Rental revenue is generally recognized on a straight-line basis over the life of the lease for operating leases and over the lease terms using the interest method for direct financing leases. Contingent rentals (payments for taxes, maintenance and insurance by the lessees and for an amount based on a percentage of the tenants' sales) are estimated and accrued over the lease year. Property Real estate assets are stated at cost less accumulated depreciation, which, in the opinion of management, is not in excess of the individual property's estimated undiscounted future cash flows, including estimated proceeds from disposition. Depreciation is computed using the straight-line method, generally over estimated useful lives of 18-50 years for buildings and 10-20 years for parking lot surfacing and equipment. Major replacements are capitalized and the replaced asset and corresponding accumulated depreciation are removed from the accounts. All other maintenance and repair items are charged to expense as incurred. Capitalization Carrying charges, principally interest and ad valorem taxes, on land under development and buildings under construction are capitalized as part of land under development and buildings and improvements. Deferred Charges Unamortized debt and lease costs are amortized primarily on a straight-line basis over the terms of the debt and over the lives of leases, respectively. Marketable Debt Securities The Company's investment in marketable securities is classified as "available for sale." The securities are carried at market with any unrealized gains or losses included as a component of shareholders' equity. Premiums and discounts are amortized (accreted) to operations over the estimated remaining lives of the securities using the constant yield method. Use of Estimates The preparation of financial statements requires management to make use of estimates and assumptions that affect amounts reported in the financial statements as well as certain disclosures. Actual results could differ from those estimates. Per Share Data The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share" as of December 31, 1997, and amounts for 1996 and 1995 were restated to conform with such presentation. Net income per common share ("Basic EPS") is computed using net income and the weighted average shares outstanding. Net income per common share-assuming dilution ("Diluted EPS") is also computed using net income, however, the weighted average shares outstanding are adjusted for potentially dilutive securities for the periods indicated, as follows (in thousands):
Weighted Average Shares: . . . . . 1997 1996 1995 ------ ------ ------ Basic EPS. . . . . . . . . . . . . 26,638 26,555 26,464 Effect of dilutive securities: Employee share options . . . . . 132 43 29 Convertible partnership interest 1 ------ ------ ------ Diluted EPS. . . . . . . . . . . . 26,771 26,598 26,493 ====== ====== ======
Options to purchase 25,000 and 533,000 shares in 1996 and 1995, respectively, were not included in the calculation of Diluted EPS as the exercise prices were greater than the average market price for the year. Statements of Cash Flows The Company considers all highly liquid investments with original maturities of three months or less as cash equivalents. The Company issued .1 million, .1 million and .2 million common shares of beneficial interest valued at $.2 million, $1.0 million and $6.3 million in 1997, 1996 and 1995, respectively, in connection with the purchases of property. The Company assumed debt and/or capital lease obligations totaling $17.3 million, $6.6 million and $2.9 million in connection with the purchases of property during 1997, 1996 and 1995, respectively. During 1997, the Company issued a limited partnership interest in exchange for property valued at $1.7 million. New Accounting Pronouncements Effective January 1, 1998, the Company will adopt SFAS No. 130, "Reporting Comprehensive Income." This statement requires the presentation of total non-owner changes in equity, including items not currently reflected in net income. Also effective January 1, 1998, the Company will adopt SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." This statement requires that segments of a business be disclosed in interim and annual financial statements. The Company is currently evaluating the effect, if any, these statements will have on the Company's financial presentation. Reclassifications Certain reclassifications of prior years' amounts have been made to conform with the current year presentation. NOTE 2. DEBT The Company's debt consists of the following (in thousands):
DECEMBER 31, ------------ 1997 1996 -------- -------- Fixed-rate debt payable to 2015 at 6.0% to 10.5% $379,749 $266,810 Notes payable under revolving credit agreements. . . . . 94,400 87,120 Obligations under capital leases . . . . . . . . . . . . 12,467 12,467 Repurchase agreements, due daily and collateralized by $12.3 million of marketable debt securities 12,176 13,475 Industrial revenue bonds payable to 2015 at 4.7% to 6.8% at December 31, 1997 7,437 7,558 Other. . . . . . . . . . . . . . . . . . . . . . . . . . 1,137 1,795 -------- -------- Total. . . . . . . . . . . . . . . . . . . . . . . . . . $507,366 $389,225 ======== ========
The Company has an unsecured $200 million revolving credit agreement with a bank syndicate. The agreement expires in November 2000, but the Company has an annual option to request a one-year extension of the agreement. All members of the bank syndicate must agree to the requested extension or the agreement expires on the scheduled date, at which time all loans outstanding under the credit agreement become payable over a two-year period. The Company intends to request an extension of the agreement in 1998 and expects that the bank syndicate will agree to its request. The Company also has an agreement for an unsecured and uncommitted overnight credit facility totaling $20 million with a bank to be used for cash management purposes. The Company will maintain adequate funds available under the $200 million revolving credit facility at all times to cover the outstanding balance under the $20 million facility. The Company also has letters of credit totaling $14.9 million outstanding under the $200 million revolving credit facility at December 31, 1997. The revolving credit agreements are subject to normal banking terms and conditions and do not adversely restrict the Company's operations or liquidity. At December 31, 1997, the variable interest rate for notes payable under the $200 million revolving credit agreement, including the cost of the related commitment fee, was 6.9% and the variable interest rates under the $20 million revolving credit agreement and the repurchase agreements were 6.9% and 6.7%, respectively. During 1997, the maximum balance and weighted-average balance outstanding under these agreements were $125.7 million and $84.5 million, respectively, at an average interest rate of 6.2%. The Company made cash payments for interest on debt, net of amounts capitalized, of $27.4 million in 1997, $21.3 million in 1996 and $13.9 million in 1995. Certain debt is collateralized by various direct financing leases or other property and current and future rentals from these leases and properties. At December 31, 1997 and 1996, the carrying value of such property aggregated $209 million and $173 million, respectively. 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 Company intends to hold such contracts through their expiration date and to use them as a means of managing interest rate risk by fixing the interest rate on a portion of the Company's variable-rate debt. The interest rate swaps have an effective interest rate of 8.1%. The difference between the interest received and paid on the interest rate swaps is recognized as interest expense as incurred. The interest rate swaps increased interest expense and decreased net income as follows, in millions: $.9 in 1997 and 1996 and $.8 in 1995. The interest rate swaps increased the average interest rate for the Company's debt by the following amounts: .2% for 1997, .3% for 1996 and .2% for 1995. The Company could be exposed to credit losses in the event of non-performance by the counterparty; however, the likelihood of such non-performance is remote. The Company's debt can be summarized as follows (in thousands):
DECEMBER 31, ------------ 1997 1996 -------- -------- As to interest rate: Fixed-rate debt (including amounts fixed through interest rate swaps) $419,792 $306,853 Variable-rate debt . . . . . . . . . . . . . . . . . . . . 87,574 82,372 -------- -------- Total. . . . . . . . . . . . . . . . . . . . . . . . . . . $507,366 $389,225 ======== ========
DECEMBER 31, ------------ 1997 1996 -------- -------- As to collateralization: Secured debt . . . . . . $107,152 $ 91,334 Unsecured debt . . . . . 400,214 297,891 -------- -------- Total. . . . . . . . . . $507,366 $389,225 ======== ========
Scheduled principal payments on the Company's debt (excluding $94.4 million potentially due under the Company's revolving credit agreements in 1998 and 2000 and $12.2 million of repurchase agreements) are due during the following years (in thousands):
1998. . . . . . . $ 6,135 1999. . . . . . . 1,861 2000. . . . . . . 29,430 2001. . . . . . . 50,061 2002. . . . . . . 26,695 2003 through 2007 206,995 2008 through 2012 71,183 Thereafter. . . . 8,430
Various debt agreements contain restrictive covenants, the most restrictive of which requires the Company to produce annual consolidated distributable cash flow, as defined by the agreements, of not less than 250% of interest payments, to limit the payment of dividends to no more than 100% of the Company's annual consolidated cash flow (as defined), to limit short-term debt (as defined) to the greater of 33% of total debt or $200 million (exclusive of repurchase agreements) and to maintain uncollateralized assets equal to at least 150% of unsecured debt. Management believes that the Company is in compliance with all restrictive covenants. During 1997, the Company issued $97 million of unsecured Medium Term Notes ("MTNs") with an average life of 8.7 years at an average interest rate of 6.8%. As of December 31, 1997, the Company had issued a total of $292.5 million of MTNs. In the third quarter of 1996, the Company filed a $250 million shelf registration statement with the Securities and Exchange Commission, which allows for the issuance of debt or equity securities or warrants. At December 31, 1997, the unused portion of the shelf registration totaled $134 million. NOTE 3. PROPERTY The Company's property consists of the following (in thousands):
DECEMBER 31, ------------ 1997 1996 ---------- -------- Land . . . . . . . . . . . . . . . . . $ 208,512 $183,431 Land held for development. . . . . . . 31,679 32,228 Land under development . . . . . . . . 5,958 912 Buildings and improvements . . . . . . 863,567 743,688 Construction in-progress . . . . . . . 1,940 1,897 Property under direct financing leases 7,102 8,262 ---------- -------- Total. . . . . . . . . . . . . . . . . $1,118,758 $970,418 ========== ========
The following carrying charges were capitalized (in thousands):
DECEMBER 31, ------------ 1997 1996 1995 ----- ------ ------ Interest . . . . $ 812 $1,285 $2,878 Ad valorem taxes 33 269 486 ----- ------ ------ Total. . . . . . $ 845 $1,554 $3,364 ===== ====== ======
In December 1997, the Company formed a limited partnership to acquire certain property. The Company controls the partnership and consolidates its operations in the accompanying consolidated financial statements. The partnership agreement allows for the outside limited partner to put its interest to the partnership after the second anniversary of the agreement for the $1.7 million value of the original consideration, payable in cash or 39,200 common shares of the Company, at the option of the Company. NOTE 4. LEASING OPERATIONS The Company's lease terms range from less than one year for smaller tenant spaces to over twenty-five years for larger tenant spaces. In addition to minimum lease payments, most of the leases provide for contingent rentals. Future minimum rental income from non-cancelable operating leases at December 31, 1997, in millions, is: $132.1 in 1998; $117.8 in 1999; $100.4 in 2000; $86.0 in 2001; $71.5 in 2002 and $516.5 thereafter. The future minimum rental amounts do not include estimates for contingent rentals. Such contingent rentals, in millions, aggregated $36.2 in 1997, $31.2 in 1996 and $26.8 in 1995. Property under Direct Financing Leases Leases that are, in substance, the financing of an asset purchase by the party leasing the property are recorded as property under direct financing leases. The Company, in its capacity as lessor, has removed the leased property from its books and recorded the future lease payments receivable using the following components (in thousands):
DECEMBER 31, ------------ 1997 1996 -------- -------- Total minimum lease payments to be received. $10,478 $13,052 Estimated residual values of leased property 1,951 1,984 Unearned income (5,327) (6,774) -------- -------- Property under direct financing leases . . . $ 7,102 $ 8,262 ======== ========
The Company recognized rental revenue from direct financing leases as follows, in millions: $1.7 in 1997 and 1996 and $1.9 in 1995. At December 31, 1997, minimum lease payments to be received in each of the five succeeding years, in millions, are: $1.8 in 1998; $1.6 in 1999; $1.2 in 2000; $1.0 in 2001; $.9 in 2002 and $4.7 thereafter. The future minimum lease payments do not include amounts for contingent rentals. Contingent rental income on properties leased under direct financing leases, in millions, was $.6 in 1997, $.8 in 1996 and $.7 in 1995. NOTE 5. LEASE COMMITMENTS The Company leases land and a shopping center from the owners and then subleases these properties to other parties. Future minimum rental payments under these operating leases, in millions, are: $1.6 in 1998; $1.5 in 1999, 2000 and 2001; $1.3 in 2002 and $19.6 thereafter. Future minimum rental payments on these leases have not been reduced by future minimum sublease rentals aggregating $15.4 million through 2017 that are due under various non-cancelable subleases. Rental expense (including insignificant amounts for contingent rentals) for operating leases aggregated, in millions: $2.0 in 1997 and $1.8 in 1996 and 1995. Sublease rental revenue (excluding amounts for improvements constructed by the Company on the leased land) from these leased properties was as follows, in millions: $2.4 in 1997; $2.0 in 1996 and $2.2 in 1995. Property under capital leases, consisting of two shopping centers, aggregated $12.3 million at December 31, 1997 and 1996 and is included in buildings and improvements. Future minimum lease payments under these capital leases total $18.7 million, with annual payments due of $.5 million in each of 1998 through 2002, and $16.0 million thereafter. The amount of these total payments representing interest is $6.2 million. Accordingly, the present value of the net minimum lease payments is $12.5 million at December 31, 1997. NOTE 6. RELATED PARTY TRANSACTIONS The Company has mortgage bonds and notes receivable of $14.8 million and $14.6 million, net of deferred gain of $4.5 million, at December 31, 1997 and 1996, respectively, from WRI Holdings, Inc. ("Holdings"). The Company and Holdings share certain directors and are under common management. These receivables are collateralized by unimproved land and an investment in a joint venture which owns and manages a motor hotel ("Hospitality"). The bonds and notes bear interest at rates of 16% and prime plus 1%, respectively. However, due to its poor financial condition, Holdings reduced the payment of interest to the Company in 1988 to the cash flow received from Hospitality and, accordingly, the Company limited the recognition of interest income for financial statement purposes to the same amount. The Company does not anticipate receiving interest payments in excess of this cash flow in the near term. Interest income recognized for financial reporting purposes was $.1 million, $.3 million and $1.2 million in 1997, 1996 and 1995, respectively. In 1996, Hospitality obtained secured financing on its motor hotel. Proceeds from the borrowings were used to repay $.6 million of the net investment in the mortgage bonds and $1.3 million of notes receivable. The Company did not recognize any of the previously deferred gain on this transaction. The Company's unrecorded receivable for interest on the mortgage bonds was $26.4 million and $22.4 million at December 31, 1997 and 1996, respectively. Interest income not recognized by the Company for financial reporting purposes aggregated, in millions, $4.0, $3.7 and $3.6 for 1997, 1996 and 1995, respectively. Management of the Company believes that the fair market value of the security collateralizing debt from Holdings is greater than the net investment in such debt and that there would not be a charge to operations if the Company were to foreclose on the debt. If foreclosure were required, the net investment in such debt would become the Company's basis of the repossessed assets. However, the Company does not currently anticipate foreclosure on Holdings' properties due to certain restrictions imposed on such assets in connection with the Company's REIT status. The Company's management does not presently believe that the net investment in the mortgage bonds and notes receivable from Holdings has been impaired. The Company owns interests in several joint ventures and partnerships. Notes receivable from these entities bear interest at 8.5% to 10.5% at December 31, 1997 and are due at various dates through 2020. The Company recognized interest income on these notes as follows, in millions: $1.4 in 1997; $1.3 in 1996 and $1.1 in 1995. During 1997, the Company purchased its joint venture partner's 85% interest in four shopping centers for $26 million. Chase Bank of Texas, National Association ("Chase") is a significant participant in and the agent for the banks that provide the Company's $200 million revolving credit agreement. The Company and Chase have two common directors. NOTE 7. COMMITMENTS AND CONTINGENCIES The Company has guaranteed $1.1 million of notes payable executed by various joint ventures and partnerships at December 31, 1997. The Company is involved in various matters of litigation arising in the normal course of business. While the Company is unable to predict with certainty the amounts involved, the Company's management and counsel are of the opinion that, when such litigation is resolved, the Company's resulting liability, if any, will not have a material effect on the Company's consolidated financial statements. In connection with the acquisition of a shopping center in 1996, the Company was obligated to pay additional acquisition costs to the seller during 1997 upon the execution of new leases at the property and the satisfaction of other conditions. All required additional payments were funded in 1997 and totaled $11.3 million. NOTE 8. FEDERAL INCOME TAX CONSIDERATIONS Federal income taxes are not provided because the Company believes it qualifies as a REIT under the provisions of the Internal Revenue Code. Shareholders of the Company include their proportionate taxable income in their individual tax returns. As a REIT, the Company must distribute at least 95% of its ordinary taxable income to its shareholders and meet certain income source and investment restriction requirements. Taxable income differs from net income for financial reporting purposes principally because of differences in the timing of recognition of interest, ad valorem taxes, depreciation, rental revenue, pension expense and installment gains on sales of property. As a result of these differences, the book value of the Company's net assets exceeds its tax basis by $49.8 million at December 31, 1997. For federal income tax purposes, the cash dividends distributed to shareholders are characterized as follows:
1997 1996 1995 ------ ------ ------ Ordinary income. . . . . 95.9% 87.1% 76.4% Return of capital (generally non-taxable) 2.9 4.0 20.1 Long-term capital gains 1.2 8.9 3.5 ------ ------ ------ Total 100.0% 100.0% 100.0% ====== ====== ======
NOTE 9. SHARE OPTIONS AND AWARDS The Company has an incentive Share Option Plan which provides for the issuance of options and share awards up to a maximum of 700,000 common shares and expires in December 1997. Options granted under this plan become exercisable in equal increments over a three-year period. The Company has an additional share option plan which grants 100 share options to every employee of the Company, excluding officers, upon completion of each five-year interval of service. This plan, which expires in 2002, provides options for a maximum of 100,000 common shares. Options granted under this plan are exercisable immediately. For both of these share option plans, options are granted to employees of the Company at an exercise price equal to the quoted fair market value of the common shares on the date the options are granted and expire upon termination of employment or ten years from the date of grant. In January 1997, the Company issued 29,400 restricted shares and granted 314,200 share options under a compensatory Incentive Share Plan for key officers of the Company. This plan, which expires in 2003, provides for the issuance of up to 1,000,000 shares, either in the form of restricted shares or share options. The restricted shares generally vest over a ten-year period, with potential acceleration of vesting due to appreciation in the market value of the Company's shares. The share options vest over a five-year period beginning three years after the date of grant. Share options were granted at the quoted fair market value on the date of grant. The Company recognized compensation expense relating to restricted shares as follows, in millions: $.3 in 1997 and $.2 in 1996 and 1995. The Company does not recognize compensation cost for share options when the option exercise price equals or exceeds the quoted fair market value on the date of the grant. Had the Company determined compensation cost for its share option and award plans based on the fair value of the options granted at the grant dates, the Company's proforma net income would have been as follows, in millions: $54.3, $53.9 and $44.8 in 1997, 1996 and 1995, respectively. Proforma net income per common share would have been $2.04, $2.03 and $1.69 in 1997, 1996 and 1995, respectively. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing method with the following weighted-average assumptions: dividend yield of 6.0% for both 1997 and 1996; expected volatility of 18.0% and 18.3%; expected lives of 6.9 years and 7.1 years and risk-free interest rates of 6.5% and 6.4% in 1997 and 1996, respectively. Following is a summary of the option activity for the three years ended December 31, 1997:
SHARES WEIGHTED UNDER AVERAGE OPTION EXERCISE PRICE ---------- --------------- Outstanding, January 1, 1995 . 747,250 $ 35.10 Granted. . . . . . . . . . . . 3,510 35.75 Canceled . . . . . . . . . . . (26,500) 34.25 Exercised. . . . . . . . . . . (15,610) 29.25 ---------- Outstanding, December 31,1995 708,650 35.25 Granted. . . . . . . . . . . . 24,260 38.10 Canceled . . . . . . . . . . . (34,300) 37.00 Exercised. . . . . . . . . . . (10,875) 27.00 ---------- Outstanding, December 31,1996 687,735 35.40 Granted. . . . . . . . . . . . 558,600 40.25 Canceled . . . . . . . . . . . (9,400) 37.60 Exercised. . . . . . . . . . . (61,910) 32.00 ---------- Outstanding, December 31, 1997 1,175,025 $ 37.85 ==========
The number of share options exercisable at December 31, 1997, 1996 and 1995 were 296,000, 243,000 and 189,000, respectively. Options exercisable at year-end 1997 had a weighted-average exercise price of $33.40. The weighted-average fair value of share options granted during 1997 and 1996 were $5.35 and $5.10, respectively. Share options outstanding at December 31, 1997 had exercise prices ranging from $25.00 to $43.50 and a weighted-average remaining contractual life of 7.6 years. Approximately 88% of the options outstanding at year-end 1997 have exercise prices between $37.00 and $40.25 and a weighted-average contractual life of 7.1 years. There were 235,000 common shares available for the future grant of options or awards at December 31, 1997. NOTE 10. MARKETABLE SECURITIES The Company's investment in marketable debt securities at December 31, 1997, which is classified as "available for sale", consists of U.S. government agency guaranteed pass-through certificates which mature through 2008. At December 31, 1997 and 1996, the fair value of these investments totaled $12.3 million and $13.8 million, respectively. The amortized cost of the investments at December 31, 1997 and 1996 was $12.4 million and $14.1 million, respectively, and the related unrealized losses were $.1 million and $.3 million at December 31, 1997 and 1996, respectively. Subsequent to year-end, the Company sold its investment in these securities for $12.2 million, resulting in a gain of less than $.1 million. NOTE 11. FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value of the Company's financial instruments was determined using available market information and appropriate valuation methodologies as of December 31, 1997. Unless otherwise described below, all other financial instruments are carried at amounts which approximate their fair values. Based on rates currently available to the Company for debt with similar terms and average maturities, fixed-rate debt with carrying values of $419.8 million and $306.9 million have fair values of approximately $437.9 million and $309.6 million at December 31, 1997 and 1996, respectively. The fair value of the Company's variable-rate debt approximates its carrying values of $87.6 million and $82.4 million at year-end 1997 and 1996, respectively. The fair value of the interest rate swap agreements is based on the estimated amounts the Company would receive or pay to terminate the contracts. If the Company had terminated these agreements at December 31, 1997 and 1996, the Company would have paid $3.1 million at each year-end. The fair value of the mortgage bonds and notes receivable from Holdings was not determined because it is not practical to reasonably assess the credit adjustment that would be applied in the marketplace for such bonds and notes receivable. NOTE 12. EMPLOYEE BENEFIT PLANS The Company has a Savings and Investment Plan to which eligible employees may elect to contribute from 1% to 12% of their salaries. Employee contributions are matched by the Company at the rate of $.50 per $1.00 for the first 6% of the employee's salary. The employees vest in the employer contributions ratably over a six-year period. Compensation expense related to the plan was $.2 million per year for 1997, 1996 and 1995. The Company has a defined benefit pension plan covering substantially all of its employees. The benefits are based on years of service and the employee's compensation during the last five years of service. The Company's funding policy is to make annual contributions as required by applicable regulations, however, the Company has not been required to make contributions for any of the past three years. The following table sets forth the plan's funded status and amounts recognized in the Company's balance sheet (in thousands):
1997 1996 -------- -------- Actuarial present value of: Vested benefit obligation. . . . . . . . . . . . . . . . . . $ 7,308 $ 6,263 Accumulated benefit obligation . . . . . . . . . . . . . . . $ 7,480 $ 6,368 ======== ======== Projected benefit obligation . . . . . . . . . . . . . . . . $ 9,318 $ 7,943 Plan assets at fair value, primarily common stocks and bonds 10,348 8,677 -------- -------- Plan assets in excess of projected benefit obligation 1,030 734 Unrecognized prior service cost 55 102 Unrecognized net gain (2,447) (1,882) Unrecognized net transition asset (53) -------- -------- Pension liability. . . . . . . . . . . . . . . . . . . . . . $(1,362) $(1,099) ======== ========
The components of net periodic pension cost are as follows (in thousands): 1997 1996 1995 -------- -------- -------- Service cost of benefits earned during the year $ 430 $ 361 $ 300 Interest cost on projected benefit obligation 587 506 478 Actual return on plan assets (1,918) (1,295) (1,499) Net amortization and deferral 1,164 688 1,047 -------- -------- -------- Total $ 263 $ 260 $ 326 ======== ======== ========
Assumptions used to develop periodic expense and the actuarial present value of projected benefit obligations were:
1997 1996 1995 ----- ----- ----- Weighted average discount rate 7.0% 7.0% 7.0% Expected long-term rate of return on plan assets 9.0% 8.0% 8.0% Rate of increase in compensation levels 5.0% 5.0% 5.5%
NOTE 13. SUBSEQUENT EVENTS On January 20, 1998, the Company sold its investment in U.S. government agency guaranteed pass-through certificates for $12.2 million, resulting in a gain of less than $.1 million. The proceeds were used to retire overnight repurchase agreements which were collateralized by these marketable debt securities. On February 23, 1998, the Company issued $75 million of 7.44% cumulative preferred shares with no stated maturity and a liquidation preference of $25 per share, which are callable at the Company's option on or after March 31, 2003. Net proceeds of $72.5 million were used to pay down amounts outstanding under the Company's revolving credit facilities and to retire $35 million of 9.11% secured notes payable to an insurance company. The early extinguishment of these notes that were scheduled to mature in August of 2001 will result in an extraordinary loss of $1.2 million in 1988. The issuance of the preferred shares reduced the unused portion of the Company's shelf registration to $59 million. NOTE 14. PRO FORMA FINANCIAL INFORMATION (UNAUDITED) During the year ended December 31, 1997, the Company acquired eight retail centers, three industrial projects and its joint venture partner's 85% interest in four other retail centers for a total of $111 million. The pro forma financial information for the years ended December 31, 1997 and 1996 is based on the historical statements of the Company after giving effect to the acquisitions as if such acquisitions took place on January 1, 1997 and 1996, respectively. The pro forma financial information shown below is presented for informational purposes only and may not be indicative of results that would have actually occurred if the acquisitions had been in effect at the dates indicated, nor does it purport to be indicative of the results that may be achieved in the future (in thousands, except per share amounts). .
DECEMBER 31, ------------ 1997 1996 -------- -------- Pro forma revenues $179,756 $160,267 ======== ======== Pro forma net income $ 55,055 $ 54,636 ======== ======== Pro forma net income per common share $ 2.07 $ 2.07 ======== ========
NOTE 15. QUARTERLY FINANCIAL DATA (UNAUDITED) Summarized quarterly financial data for the years ended December 31, 1997 and 1996 is as follows:
FIRST SECOND THIRD FOURTH ------- ------- ------- ------- 1997: Revenues $41,673 $42,843 $44,000 $45,996 Net Income 12,776 12,755 16,177 (1) 13,258 Net Income per Common Share 0.48 0.48 0.61 (1) 0.50 1996: Revenues $36,762 $37,178 $37,956 $39,227 Net Income 12,625 12,910 16,325 (1) 12,078 Net Income per Common Share 0.48 0.48 0.61 (1) 0.46
(1) Increase is primarily the result of a gain on the sale of property during the quarter. NOTE 16. PRICE RANGE OF COMMON SHARES (UNAUDITED) The high and low sale prices per share of the Company's common shares, as reported on the New York Stock Exchange composite tape, and dividends per share paid for the fiscal quarters indicated were as follows:
HIGH LOW DIVIDENDS ------ ------- --------- 1997: Fourth $ 45 $ 38 7/8 $ 0.64 Third 44 1/8 39 7/16 0.64 Second 45 5/8 41 3/8 0.64 First 44 3/4 40 0.64 1996: Fourth $ 40 3/4 $ 36 $ 0.62 Third. 40 1/2 37 3/8 0.62 Second 38 7/8 34 1/4 0.62 First. 38 7/8 35 5/8 0.62
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. TRUST MANAGERS AND EXECUTIVE OFFICERS OF THE REGISTRANT (a) Information with respect to the Company's Trust Managers is incorporated herein by reference to the "Election of Trust Managers" section of the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 8, 1998. ITEM 11. EXECUTIVE COMPENSATION Incorporated herein by reference to the "Executive Compensation" and "Pension Plan" sections of the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 8, 1998. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Incorporated herein by reference to the "Election of Trust Managers" section of the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 8, 1998. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Incorporated herein by reference to the "Compensation Committee Interlocks and Insider Participation" section of the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 8, 1998. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) Financial Statements and Financial Statement Schedules: PAGE ---- (1) (A) Independent Auditors' Report 19 (B) Financial Statements (i) Statements of Consolidated Income for the years ended December 31, 1997, 1996 and 1995 20 (ii) Consolidated Balance Sheets as of December 31, 1997 and 1996 21 (iii) Statements of Consolidated Cash Flows for the years ended December 31, 1997, 1996 and 1995 22 (iv) Statements of Consolidated Shareholders' Equity for the years ended December 31, 1997, 1996 and 1995. 23 (v) Notes to Consolidated Financial Statements 24 (2) Financial Statement Schedules: SCHEDULE PAGE -------- ---- II Valuation and Qualifying Accounts 40 III Real Estate and Accumulated Depreciation 41 IV Mortgage Loans on Real Estate 43 All other schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule or because the information required is included in the consolidated financial statements and notes hereto. (b) No reports on Form 8-K were filed during the last quarter of the period covered by this annual report. (c) Exhibits:
3.1 - Restated Declaration of Trust, with all amendments thereto (filed as Exhibit 3.1 to the Company's Registration Statement on Form S-3 (No. 33-49206) and incorporated herein by reference). 3.2 - Bylaws of the Company (filed as Exhibit 3.2 to the Company's Registration Statement on Form S-3 (No. 33-49206) and incorporated herein by reference). 10.1 - 1988 Share Option Plan of the Company, as amended (filed as Exhibit 10.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 1990 and incorporated herein by reference). 10.2**- Weingarten Realty Investors Supplemental Retirement Account Plan, as amended and restated (filed as Exhibit 10.26 to the Company's Annual Report on Form 10-K for the year ended December 31, 1992 and incorporated herein by reference). 10.3 - 16% Mortgage Bonds Due 1994 of WRI Holdings, Inc. dated December 28, 1984, payable to the Company in the original principal amount of $3,150,000 (filed as Exhibit 10.8 to the Company's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by reference). 10.3.1* - Fourth Bonds Renewal and Extension Agreement, effective December 28, 1997, for the 16% Mortgage Bonds of WRI Holdings, Inc., payable to the Company in the original principal amount of $3,150,000. 10.4 - Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Texas Commerce Bank National Association, as Trustee, relating to the 16% Mortgage Bonds Due 1994 of WRI Holdings, Inc. in the original principal amount of $3,150,000 (filed as Exhibit 10.9 to the Company's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by reference). 10.4.1 - Supplemental Indenture of Trust, dated February 22, 1995, between WRI Holdings, Inc. and Texas Commerce Bank National Association relating to the 16% Mortgage Bonds due December 28, 1994 of WRI Holdings, Inc. in the original principal amount of $3,150,000 (filed as exhibit 10.4.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated herein by reference). 10.5* - Fourth Supplemental Indenture of Trust between WRI Holdings, Inc. and Texas Commerce Trust Company of New York, as Trustee, amending Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Texas Commerce Bank National Association, as Trustee, relating to the 16% Mortgage Bonds Due 1994 of WRI Holdings, Inc. in the original principal amount of $3,150,000 10.6 - 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc., dated December 28, 1984, payable to the Company in the original principal amount of $16,682,000 (filed as Exhibit 10.10 to the Company's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by reference). 10.7 - Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Texas Commerce Bank National Association, as Trustee, relating to the 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc. in the original principal amount of $16,682,000 (filed as Exhibit 10.11 to the Company's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by reference). 10.7.1 - First Supplemental Indenture of Trust between WRI Holdings, Inc. and Texas Commerce Trust Company of New York, as Trustee, amending Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Texas Commerce Bank National Association, as Trustee, relating to the 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc. in the original principal amount of $16,682,000 (filed as Exhibit 10.7.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 1989 and incorporated herein by reference). 10.8 - Third Amended Promissory Note, as restated, effective as of January 1, 1992, executed by WRI Holdings, Inc., pursuant to which it may borrow up to the principal sum of $40,000,000 from the Company.
10.9 - 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc., dated December 28, 1984, payable to the Company in the original principal amount of $7,000,000 (filed as Exhibit 10.13 to the Company's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by reference). 10.10 - Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Texas Commerce Bank National Association, as Trustee, relating to the 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc. in the original principal amount of $7,000,000 (filed as Exhibit 10.14 to the Company's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by reference). 10.10.1 - First Supplemental Indenture of Trust between WRI Holdings, Inc. and Texas Commerce Trust Company of New York, as Trustee, amending Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Texas Commerce Bank National Association, as Trustee, relating to the 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc. in the original principal amount of $7,000,000 (filed as Exhibit 10.10.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 1989 and incorporated herein by reference). 10.11 - Agreement Correcting Trust Indenture, dated February 11, 1985, relating to 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc. in the original principal amount of $7,000,000 (filed as Exhibit 10.15 to the Company's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by reference). 10.12 - Amendment to Note Purchase Agreement, dated March 31, 1991, amending loan agreement, dated August 6, 1987, Life and Accident Insurance Company for 5,000,000, American General Life Insurance Company of Delaware for 5,000,000, Republic National Life Insurance Company for $3,000,000 and American Amicable Life Insurance Company of Texas for $2,000,000 (filed as Exhibit 10.15.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 1992 and incorporated herein by reference). 10.13**- The Savings and Investment Plan for Employees of the Company, as amended (filed as Exhibit 4.1 to the Company's Registration Statement on Form S-8 (No. 33-25581) and incorporated herein by reference). 10.14**- The Fifth Amendment to Savings and Investment Plan for Employees of the Company (filed as Exhibit 4.1.1 to the Company's Post-Effective Amendment No. 1 to Registration Statement on Form S-8 (No. 33-25581) and incorporated herein by reference). 10.15 - Promissory Note in the amount of $12,000,000 between the Company, as payee, and Plaza Construction, Inc., as maker (filed as Exhibit 10.23 to the Company's Annual Report on Form 10-K for the year ended December 31, 1991 and incorporated herein by reference). 10.15.1* - Ninth Renewal and Extension of Promissory Note in the amount of $12,000,000, effective as of December 1, 1997, between the Company, as payee, and Plaza Construction, Inc., as maker. 10.16 - Amended and Restated Master Swap Agreement dated as of January 29, 1992, between the Company and Texas Commerce Bank National Association, (filed as Exhibit 10.24 to the Company's Annual Report on Form 10-K for the year ended December 31, 1992 and incorporated herein by reference). 10.16.1 - Rate Swap Transaction, dated as of May 15, 1992, between the Company and Texas Commerce Bank National Association (filed as Exhibit 10.24.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 1992 and incorporated herein by reference).
10.16.2 - Rate Swap Transaction, dated as of June 24, 1992, between the Company and Texas Commerce Bank National Association (filed as Exhibit 10.24.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 1992 and incorporated herein by reference). 10.16.3 - Rate Swap Transaction, dated as of July 2, 1992, between the Company and Texas Commerce Bank National Association (filed as Exhibit 10.24.3 to the Company's Annual Report on Form 10 K for the year ended December 31, 1992 and incorporated herein by reference). 10.17 - Amended and Restated Credit Agreement dated as of November 21, 1996 between the Company and Texas Commerce Bank National Association, as Agent, and individually as a Bank, and the Banks defined therein. 10.17.1* - First, Second and Third Amendments to the Amended and Restated Credit Agreement dated November 21, 1996 between the Company and Texas Commerce Bank National Association. 10.18 - Note Purchase Agreement, dated April 1, 1994, between The Variable Annuity Life Insurance Company, American General Life Insurance Company and the Company in the amount of $30,000,000 (filed as Exhibit 10.25 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated herein by reference). 10.19** - The 1993 Incentive Share Plan of the Company (filed as Exhibit 4.1 to the Company's Registration Statement on Form S-8 (No. 33-52437) and incorporated herein by reference). 10.20* - Master Promissory Note in the amount of $20,000,000 between the Company, as payee, and Texas Commerce Bank National Association, as maker, effective December 30, 1997. 10.21 - Distribution Agreement among the Company and the Agents dated November 15, 1996 relating to the MTN's (filed as Exhibit 1.1 to the Company's Current Report of Form 8-K dated November 15, 1996 and incorporated herein by reference). 10.22 - Senior Indenture dated as of May 1, 1995 between the Company and Texas Commerce Bank, National Association, as trustee (filed as Exhibit 4(a) to the Company's Registration Statement on Form S-3 (No. 33-57659) and incorporated herein by reference). 10.23 - Subordinated Indenture dated as of May 1, 1995 between the Company and Texas Commerce Bank, National Association (filed as Exhibit 4(b) to the Company's Registration Statement on Form S-3 (No. 33-57659) and incorporated herein by reference). 12.1* - Computation of Fixed Charges Ratios. 21.1* - Subsidiaries of the Registrant. 23.1* - Consent of Deloitte & Touche llp. 27.1* - Financial Data Schedule. * Filed with this report. ** Management contract or compensatory plan or arrangement.
SIGNATURE Pursuant to the requirements of Section 13 or 15(d) of the Securities and 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 By: Stanford Alexander ------------------- Stanford Alexander Chairman/Chief Executive Officer Date: March 9, 1998 Pursuant to the requirement of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: SIGNATURE TITLE DATE --------- ----- ----
By: Stanford Alexander Chairman and Trust Manager March 9, 1998 ------------------------ Stanford Alexander (Chief Executive Officer) By: Andrew M. Alexander President March 9, 1998 ------------------------ Andrew M. Alexander and Trust Manager By: Robert J. Cruikshank Trust Manager March 9, 1998 ------------------------ Robert J. Cruikshank By: Martin Debrovner Vice Chairman March 9, 1998 ------------------------ Martin Debrovner and Trust Manager By: Melvin Dow Trust Manager March 9, 1998 ------------------------ Melvin Dow By: Stephen A. Lasher Trust Manager March 9, 1998 ------------------------ Stephen A. Lasher By: Joseph W. Robertson, Jr. Executive Vice President and March 9, 1998 ------------------------ Joseph W. Robertson, Jr. Trust Manager (Chief Financial Officer) By: Douglas W. Schnitzer Trust Manager March 9, 1998 ------------------------ Douglas W. Schnitzer By: Marc J. Shapiro Trust Manager March 9, 1998 ------------------------ Marc J. Shapiro By: J.T. Trotter Trust Manager March 9, 1998 ------------------------ J.T. Trotter By: Stephen C. Richter Senior Vice President/ March 9, 1998 ------------------------ Stephen C. Richter Financial Administration and Treasurer (Principal Accounting Officer)
SCHEDULE II
WEINGARTEN REALTY INVESTORS VALUATION AND QUALIFYING ACCOUNTS DECEMBER 31, 1997, 1996 AND 1995 (AMOUNTS IN THOUSANDS) CHARGED BALANCE AT TO COSTS CHARGED BALANCE BEGINNING AND TO OTHER DEDUCTIONS AT END OF DESCRIPTION OF PERIOD EXPENSES ACCOUNTS (A) PERIOD - ------------------------------- ----------- --------- -------- ------------ ---------- 1997: Allowance for Doubtful Accounts $ 1,236 $ 877 $ 1,113 $ 1,000 1996: Allowance for Doubtful Accounts 1,436 1,014 1,214 1,236 1995: Allowance for Doubtful Accounts 1,007 1,126 697 1,436
- ------- Note A -- Write-offs of accounts receivable previously reserved.
SCHEDULE III WEINGARTEN REALTY INVESTORS REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1997 (AMOUNTS IN THOUSANDS) Total Cost --------------------------------------------------- Property Under Buildings Projects Direct and Under Financing Total Land Improvements Development Leases Cost -------- ------------- ------------ ---------- ---------- SHOPPING CENTERS: Texas. . . . . . . . . . . . . . . . . . . . . . $141,170 $ 518,228 $ 5,136 $ 664,534 Other States . . . . . . . . . . . . . . . . . . 49,073 239,549 1,966 290,588 -------- ------------- ------------ ---------- ---------- Total Shopping Centers . . . . . . . . . . . . . 190,243 757,777 7,102 955,122 INDUSTRIAL PROPERTIES: Texas. . . . . . . . . . . . . . . . . . . . . . 17,336 84,873 102,209 OFFICE BUILDING: Texas. . . . . . . . . . . . . . . . . . . . . . 534 13,429 13,963 MULTI-FAMILY RESIDENTIAL PROPERTIES: Texas. . . . . . . . . . . . . . . . . . . . . . 399 1,098 1,497 -------- ------------- ------------ ---------- ---------- Total Improved Properties. . . . . . . . . . . . . . . . . . . 208,512 857,177 7,102 1,072,791 -------- ------------- ------------ ---------- ---------- LAND UNDER DEVELOPMENT OR HELD FOR DEVELOPMENT: Texas $ 31,228 $ 31,228 Other States 6,409 6,409 -------- ------------- ------------ ---------- ---------- Total Land Under Development 37,637 37,637 -------- ------------- ------------ ---------- ---------- LEASED PROPERTY (SHOPPING CENTER) UNDER CAPITAL LEASE: Louisiana 6,390 6,390 -------- ------------- ------------ ---------- ---------- CONSTRUCTION IN PROGRESS: Texas 1,424 1,424 Other States 516 516 -------- ------------- ------------ ---------- ---------- Total Construction in Progress 1,940 1,940 TOTAL OF ALL PROPERTIES . . . . . . . . . . . . . . . . . . . $208,512 $ 863,567 $ 39,577 $ 7,102 $1,118,758 -------- ------------- ------------ ---------- ---------- Accumulated Encumbrances Depreciation (A) -------------- -------------- SHOPPING CENTERS: Texas. . . . . . . . . . . . . . . . . . . . . . $ 188,418 $ 4,830 Other States . . . . . . . . . . . . . . . . . . 42,796 25,173 -------------- -------------- Total Shopping Centers . . . . . . . . . . . . . 231,214 30,003 INDUSTRIAL PROPERTIES: Texas. . . . . . . . . . . . . . . . . . . . . . 22,276 3,369 OFFICE BUILDING: Texas. . . . . . . . . . . . . . . . . . . . . . 5,262 MULTI-FAMILY RESIDENTIAL PROPERTIES: Texas. . . . . . . . . . . . . . . . . . . . . . 716 1,065 -------------- -------------- Total Improved Properties. . . . . . . . . . . . . . . . . . . 259,468 34,437 -------------- -------------- LAND UNDER DEVELOPMENT OR HELD FOR DEVELOPMENT: Texas Other States Total Land Under Development LEASED PROPERTY (SHOPPING CENTER) UNDER CAPITAL LEASE: Louisiana . . . . . . . . . . . . . . . . . . . 3,083 5,857 -------------- -------------- CONSTRUCTION IN PROGRESS: Texas Other States Total Construction in Progress TOTAL OF ALL PROPERTIES . . . . . . . . . . . . . . . . . . . $ 262,551 $ 40,294 ============== ==============
Note -- A -Encumbrances do not include $61.4 million outstanding under a $35 million 14-year term loan and a $30 million 20-year term loan, both payable to a group of insurance companies secured by a property collateral pool including all or part of eight shopping centers. SCHEDULE III (CONTINUED) The changes in total cost of the properties for the years ended December 31, 1997, 1996 and 1995 were as follows:
1997 1996 1995 ----------- --------- --------- Balance at beginning of year $ 970,418 $849,894 $735,134 Additions at cost 157,757 131,814 115,687 Retirements or sales (9,918) (11,585) (1,433) Other changes (B) 501 295 506 ----------- --------- --------- Balance at end of year $1,118,758 $970,418 $849,894 =========== ========= =========
The changes in accumulated depreciation for the years ended December 31, 1997, 1996 and 1995 were as follows:
1997 1996 1995 --------- --------- --------- Balance at beginning of year $233,514 $216,657 $191,427 Additions at cost 32,226 27,732 25,541 Retirements or sales (3,189) (10,875) (311) --------- --------- --------- Balance at end of year $262,551 $233,514 $216,657 ========= ========= ========= Note B - Transferred from net investment in direct financing leases.
SCHEDULE IV
WEINGARTEN REALTY INVESTORS MORTGAGE LOANS ON REAL ESTATE DECEMBER 31, 1997 (AMOUNTS IN THOUSANDS) FINAL PERIODIC FACE CARRYING INTEREST MATURITY PAYMENT AMOUNT OF AMOUNT OF RATE DATE TERMS MORTGAGES MORTGAGES(B) --------- -------- ---------------- ---------- ------------- SHOPPING CENTERS: FIRST MORTGAGES: Phelan Boulevard Beaumont, TX Prime 06-01-98 Varying ($32 $ 733 $ 32 +2% balloon) Eastex Venture Beaumont, TX Prime 12-31-98 Varying 3,500 2,338 +1 ($2,338 balloon) Main/O.S.T., Ltd. Houston, TX 9.3% 02-01-20 $476 4,800 4,620 Annual P & I ($1,241 balloon) INDUSTRIAL: FIRST MORTGAGES: Railwood Houston, TX 10% 12-28-04 Varying 7,000 6,223 ($6,223 balloon) River Pointe, Conroe,TX (Note C) 9% 11-30-03 Varying 2,133 1,891 Little York, Houston, TX (Note C) 9% 12-31-03 Varying 1,922 1,760
SCHEDULE IV (CONTINUED)
WEINGARTEN REALTY INVESTORS MORTGAGE LOANS ON REAL ESTATE DECEMBER 31, 1997 (AMOUNTS IN THOUSANDS) FINAL PERIODIC FACE CARRYING INTEREST MATURITY PAYMENT AMOUNT OF AMOUNT OF RATE DATE TERMS MORTGAGES MORTGAGES(B) --------- -------- --------- ---------- ------------- UNIMPROVED LAND: SECOND MORTGAGE: River Pointe Conroe, TX Prime 12-01-98 Varying 12,000 8,789 +1% ($8,789 balloon) ---------- ------------- TOTAL MORTGAGE LOANS ON REAL ESTATE (Note A) $ 32,088 $ 25,653 ========== =============
Note A - Changes in mortgage loans for the years ended December 31, 1997, 1996 and 1995 are summarized below:
1997 1996 1995 -------- -------- -------- Balance, Beginning of year $27,157 $31,292 $28,719 New Mortgage Loans 3,500 Additions to Existing Loans 589 1,075 1,041 Collections of Principal (2,093) (5,210) (1,968) -------- -------- -------- Balance, End of Year $25,653 $27,157 $31,292 ======== ======== ========
Note B - The aggregate cost at December 31, 1997 for federal income tax purposes is $25,189. Note C - Principal payments are due monthly to the extent of cash flow generated by the underlying property. EX-10 2 NINTH RENEWAL AND EXTENSION AGREEMENT ------------------------------------- THE STATE OF TEXAS COUNTY OF MONTGOMERY This NINTH RENEWAL AND EXTENSION AGREEMENT (the "Ninth Renewal") is executed this 15th day of December, 1997 (the "Execution Date"), but effective as of December 1, 1997, by and between PLAZA CONSTRUCTION, INC. ("Maker"), a Texas corporation, and WEINGARTEN REALTY INVESTORS ("Payee") a Texas real estate investment trust. WITNESSETH: ---------- WHEREAS, the Payee is the present legal owner and holder of that certain Promissory Note (the "Original Note") dated November 29, 1982, in the original principal sum of Twelve Million and No/100 Dollars ($12,000,000.00) executed by River Pointe Venture I ("River Pointe"), a Texas joint venture, payable to the order of Weingarten Realty, Inc. "WRI" a Texas corporation, payable as therein provided, which Note is secured by (i) a Deed of Trust and Security Agreement (the "Original Deed of Trust") dated November 29, 1982, executed by River Pointe to Melvin A. Dow, Trustee, filed under Clerk's File No. 8254156 and under Film Code Reference No. 171-01-0638 in the Real Property Records of Montgomery County, Texas, covering and affecting certain property situated in Montgomery County, Texas, more particularly described therein (the "Property"), and (ii) any and all other liens, security instruments, and documents executed by River Pointe and/or Maker, securing or governing the payment of the Original Note including, but not limited to, that certain Loan Agreement ("Original Loan Agreement") dated November 29, 1982 executed by WRl and River Pointe; and WHEREAS, by that certain River Pointe Venture I Assignment of Interest and Dissolution, dated October 16, 1987, filed on October 19, 1987, under Clerk's File No. 8747284, in the Real Property Records of Montgomery County, Texas, River Pointe was dissolved and Maker assumed all of the debts and obligations of River Pointe, and obtained ownership of all of the assets of River Pointe, including, but not limited to, the Property; and WHEREAS, WRI assigned and conveyed all of its property, both real and personal including, without limitation, the Original Note, to Payee, a evidenced by that certain Master Deed and General Conveyance, by and between WRI and Payee, a counterpart of which was filed under Clerk's File No. 8815730 and under Film Code Reference No. 520-01-0704, in the Real Property Records of Montgomery County, Texas; and WHEREAS, by instrument entitled Renewal and Extension Agreement (the "First Renewal") entered into as of November 1, 1989, executed by Maker and Payee, the Original Note, Original Deed of Trust, Original Loan Agreement and all other documents evidencing, governing, or securing the payment of the Note were renewed and extended; and WHEREAS, by instrument entitled Second Renewal and Extension Agreement (the "Second Renewal") dated March 12, 1991, but effective as of December 1, 1990, filed on March 21, 1991, under Clerk's File No. 9111519 and under Film Code Reference No. ###-##-#### in the Official Public Records of Real Property of Montgomery County, Texas, Maker and Payee further modified and extended the Original Note, Original Deed of Trust, Original Loan Agreement, and all other documents evidencing, governing or securing payment of the Original Note; and WHEREAS, by instrument entitled Third Renewal and Extension Agreement (the "Third Renewal") dated February 28, 1992, but effective as of December 1, 1991, filed on May 14, 1992, under Clerk's File No. 9222962, and under Film Code Reference No. ###-##-#### in the Official Public Records of Real Property of Montgomery County, Texas, Maker and Payee further modified and extended the Original Note, Original Deed of Trust Original Loan Agreement and d1 other documents evidencing, governing or securing payment of the Original Note; and WHEREAS, by instrument entitled Fourth Renewal and Extension Agreement (the "Fourth Renewal") dated February 19, 1993, but effective as of December 1, 1992, Maker and Payee further modified and extended the Original Note, Original Deed of Trust Original Loan Agreement, and all other documents evidencing, governing or securing payment of the Original Note; and WHEREAS, by instrument entitled Fifth Renewal and Extension Agreement (the "Fifth Renewal") dated March 9, 1994, but effective as of December 1, 1993, filed on March 18, 1994 under Clerk's File No. 9415326 and under Film Code Reference No. ###-##-#### in the Official Public Records of Real Property of Montgomery County, Texas, Maker and Payee further modified and extended the Original Note, Original Deed of Trust, Original Loan Agreement and all other documents evidencing, governing, or securing payment of the Original Note; and WHEREAS, by instrument entitled Sixth Renewal and Extension Agreement (the "Sixth Renewal") dated February 22, 1995, but effective as of December 1, 1994, filed on March 1, 1995 under Clerk's File No. 09511049 and under Film Code Reference No. 046-00-0785 in the Official Public Records of Real Property of Montgomery County, Texas, Maker and Payee further modified and extended the Original Note, Original Deed of Trust Original Loan Agreement, and all other documents evidencing, governing, or securing payment of the Original Note; and WHEREAS, by instrument entitled Seventh Renewal and Extension Agreement (the "Seventh Renewal") dated February 7, 1996, but effective a of December 1, 1995, filed on February 23, 1996 under Clerk's File No. 9611331 and under Film Code Reference No. 135-00-0887 in the Official Public Records of Red Property of Montgomery County, Texas, Maker and Payee further modified and extended the Original Note, Original Deed of Trust Original Loan Agreement, and all other documents evidencing, governing, or securing payment of the Original Note; and WHEREAS, by instrument entitled Eighth Renewal and Extension Agreement (the "Eighth Renewal") dated February 21, 1997, but effective as of December 1, 1996, filed on November 5, 1997 under Clerk's File No. 9771746 and under Film Code Reference No. 316-00-0327 in the Official File Records of Real property of Montgomery County, Texas, Maker and payee further modified and extended the Original Note, Original Deed of Trust, Original Loan Agreement, and all other documents evidencing, governing, or securing payment of the Original Note. The Original Note, the Original Deed of Trust and Original Loan Agreement, together with any and all other liens, security interests, and documents evidencing, securing or governing payment of the Original Note, a modified by the first Renewal, Second Renewal, Third Renewal, Fourth Renewal, Fifth Renewal, Sixth Renewal, Seventh Renewal, and Eighth Renewal are herein referred to a the "Note" and "Security Instruments" respectively; and WHEREAS, Maker and payee now propose to modify the Note in certain respects and to continue the lien and priority of the Security Instruments a security for the payment of the Note, a set forth more particularly herein. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Maker and payee hereby agree as follows: 1. The Maker reaffirms its promise to pay to the order of the payee, at 2600 Citadel plaza Drive, Suite 300, Houston, Texas 77008, the principal balance due and owing on the Note, with accrued interest thereon, as provided in the Note, except that the maturity date of the Note is hereby amended and extended until December 1, 1998, at which time the unpaid principal balance of the Note, together with all accrued but unpaid interest, shall be due and payable. All liens securing the Note, including, but not limited to, the lien created by the Original Deed of Trust, are hereby renewed, extended and carried forward to secure payment of the Note, as hereby amended, and the Original Deed of Trust is hereby amended to reflect that the maturity date of the Note is December 1, 1998. All other Security Instruments including, but not limited to, the Original Loan Agreement, are likewise hereby modified and amended to reflect the renewal and extension of the maturity date of the Note to December 1, 1998. 2. Maker hereby represents and warrants to payee that (a) Maker is the sole legal and beneficial owner of the property; (b) Maker has the full power and authority to make the agreements contained in this Ninth Renewal without joinder and consent of any other party; and (c) the execution, delivery and performance of this Ninth Renewal will not contravene or constitute a event which itself or which with the passing of time or giving of notice or both would constitute a default under any trust deed, deed of trust loan agreement, indenture or other agreement to which Maker is a party or by which Maker or any of its property is bound. Maker hereby agrees to indemnify and hold harmless payee against any loss, claim, damage, liability or expense (including, without limitation, attorneys' fees) incurred as a result of any representation or warranty made by Maker in this Section 2 proving to be untrue in any material respect. 3. To the extent that the Note is inconsistent with the terms of this Ninth Renewal, the Note is hereby modified and amended. Except a modified, renewed and extended by this Ninth Renewal, the Note and the Security Instruments remain unchanged and continue unabated and in full force and effect as a valid and binding obligation of the Maker. 4. In conjunction with the extension, renewal and modification of the Note and the Security Instruments, Maker hereby extends and mar the hens, security interests, and assignments created and granted in the Security Instruments until the indebtedness secured thereby, as so extended, renewed and modified, has been fully paid, and agrees that such extension, renewal and modification shall in no manner affect or impair the Note, the liens or security interests securing same, and that said liens, security interests, and assignments shall not in any manner be waived. The purpose of this Ninth Renewal is simply to extend the time of payment of the loan evidenced by the Note and any indebtedness secured by the Security Instruments, as modified by this Ninth Renewal, and to carry forward all liens and security interests securing the same, which are acknowledged by Maker to be valid and subsisting. 5. Maker covenants and warrants that the payee is not in default under the Note or Security Instruments, each a modified by this Ninth Renewal (collectively referred to as the "Loan Instruments") that there are no defenses, counterclaims or offsets to such Loan Instruments; and that all of the provisions of the Loan Instruments, as amended hereby, are in full force and effect. 6. Maker agrees to pay all costs incurred in connection with the execution and consummation of this Ninth Renewal, including but not limited to, all recording costs, the premium for an endorsement to the Mortgagee Policy of Title Insurance insuring the validity and priority of the Original Deed of Trust in form satisfactory to Payee, and the reasonable fees and expenses of Payee's counsel. 7. If any covenant, condition, or provision herein contained is held to be invalid by final judgment of any court of competent jurisdiction, the invalidity of such covenant, condition, or provision shall not in any way affect any other covenant, condition, or provision herein contained. 8. Payee is an unincorporated trust organized under the Texas Real Estate Investment Trust Act. Neither the shareholders of Payee, nor its Trust Managers, officers, employees, or other agents shall be personally, corporately, or individually liable, in any manner whatsoever for any debt, act, omission, or obligation of Payee, and all persons having claims of any kind whatsoever against Payee shall look solely to the property of Payee for the enforcement of their rights (whether monetary or nonmonetary) against Payee. [END OF PAGE 3 - SIGNATURES ON FOLLOWING PAGE] EXECUTED this day and year first above written, but effective for all purposes as of December 1, 1997. PLAZA CONSTRUCTION, INC., a Texas corporation By:____________________________________ Stanford Alexander President "Maker" WEINGARTEN REALTY INVESTORS, a Texas real estate investment trust By:____________________________________ Bill Robertson, Jr. Executive Vice President "Payee" EX-10 3 FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT This First Amendment to Amended and Restated Credit Agreement (the "Amendment"), effective as of January 1, 1997, is by and among Weingarten Realty Investors, a Texas real estate investment trust (the "Borrower"), -------- Texas Commerce Bank National Association, a national banking association (in its individual capacity, "TCB"), NationsBank of Texas, N.A., a national --- banking association, ("NationsBank"), Signet Bank (formerly Signet Bank/Virginia) ("Signet"), Commerzbank, A.G., a domestic branch of a bank organized under the laws of Germany ("Commerzbank"), The Sumitomo Bank, Limited, a Japanese banking corporation ("Sumitomo") and any bank that may hereafter become a party to the Credit Agreement (as defined below) in accordance with the provisions thereof (each individually, a "Bank" and ---- collectively, the "Banks"), TCB as Agent hereunder (in such capacity, the ----- "Agent") for the Banks hereunder, NationsBank, in its capacity as Documentary ----- Agent hereunder, and Commerzbank, in its capacity as Co-Agent hereunder. WHEREAS, the Agent, the Documentary Agent, the Co-Agent, the Banks and the Borrower have entered into that certain Amended and Restated Credit Agreement dated and effective as of November 21, 1996 (as it may be hereafter amended or otherwise modified and in effect from time to time, the "Credit Agreement"); WHEREAS, the Banks and the Borrower wish to amend the Credit Agreement to permit the Borrower to request and maintain from time to time, three seven (7) day Interest Periods in effect at any one time with respect to Borrowings under the Notes, instead of limiting such Borrowings to two such seven (7) day Interest Periods at any one time; NOW THEREFORE, in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, the Banks, the Agent, the Documentary Agent, the Co-Agent and the Borrower hereby agree as follows: 1.01 AMENDMENT. Section 2.02(a) of the Credit Agreement is hereby --------- amended by deleting the proviso in the third sentence thereof, and substituting in lieu thereof the following: ;provided that, there shall not be more than three (3) Interest Periods for a period of seven (7) days in effect at any one time with respect to any Note, and no more than seven (7) Interest Periods in effect in the aggregate at any one time with respect to any Note. 1.02. CONDITIONS TO EFFECTIVENESS OF AMENDMENT. This Amendment shall ---------------------------------------- become effective upon execution of this Amendment by each of the Agent, the Documentary Agent, the Co-Agent, each Bank and the Borrower on the signature pages hereof, and receipt by the Agent of such executed signature pages. 1.03. REPRESENTATIONS OF BORROWER. The Borrower hereby represents --------------------------- and warrants to the Banks the following: (a) All of the representations and warranties contained in Article V of the Credit Agreement are true and correct on and as of the date hereof and will be true and correct after giving effect to this Amendment. (b) No event which constitutes a Default or an Event of Default under the Credit Agreement, as amended hereby, has occurred and is continuing, or would result from the execution and delivery of this Amendment. 1.04 CAPITALIZED TERMS. The capitalized terms used herein which are ----------------- defined in the Credit Agreement and not otherwise defined herein shall have the meaning specified therein. 1.05 RATIFICATION. The Credit Agreement, as hereby amended, is in ------------ all respects ratified and confirmed, and all other rights and powers created thereby or thereunder shall be and remain in full force and effect. 1.06 COUNTERPARTS. This Amendment may be executed in several ------------ counterparts, and each counterpart, when so executed and delivered, shall constitute an original instrument, and all such separate counterparts shall constitute but one and the same instrument. 1.07. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND -------------- CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. 1.08. PRIOR AGREEMENTS. THE CREDIT AGREEMENT, THE NOTES AND THIS ---------------- AMENDMENT CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN SECTION 26.02(A) OF THE TEXAS BUSINESS & COMMERCE CODE, AND REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the day and year first above written. WEINGARTEN REALTY INVESTORS By:_____________________________________ Title:____________________________________ TEXAS COMMERCE BANK NATIONAL ASSOCIATION, AS AGENT, AND INDIVIDUALLY AS A BANK By:_____________________________________ Title:____________________________________ NATIONSBANK OF TEXAS, N.A., AS Documentary Agent, and INDIVIDUALLY AS A BANK By:_____________________________________ Title:____________________________________ COMMERZBANK, A.G., AS CO-AGENT, AND INDIVIDUALLY AS BANK By:_____________________________________ Title:____________________________________ SIGNET BANK By:_____________________________________ Title:____________________________________ THE SUMITOMO BANK, LIMITED By:_____________________________________ Title:____________________________________ - ------ APPROVED AND CONSENTED TO BY EACH OF THE FOLLOWING GUARANTORS: WEINGARTEN/LUFKIN, INC. By:_____________________________________ Title:____________________________________ WEINGARTEN/NOSTAT INC. By:_____________________________________ Title:____________________________________ WEINGARTEN REALTY MANAGEMENT COMPANY By:_____________________________________ Title:____________________________________ WRI/POST OAK, INC. By:_____________________________________ Title:____________________________________ Signature page of First Amendment to Amended and Restated Credit Agreement effective January 1, 1997 SECOND AMENDMENT TO CREDIT AGREEMENT THIS SECOND AMENDMENT TO CREDIT AGREEMENT (the "Amendment") dated and effective as of September 12, 1997, is by and among Weingarten Realty Investors, a Texas real estate investment trust (the "Borrower") and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking association (in its individual capacity, "TCB"), NationsBank of Texas, N.A., as Syndication Agent (in its individual capacity, "NationsBank"), Signet Bank ("Signet"), Commerzbank, A.G., a domestic branch of a bank organized under the laws of Germany ("Commerzbank"), The Sumitomo Bank, Limited, a Japanese banking corporation ("Sumitomo"), and Bank of America National Trust and Savings Association, a national banking association, a Documentation Agent (In its individual capacity, "Bank of America") and each other bank which is a party to the Credit Agreement (collectively, with TCB, NationsBank, Bank of America, Signet, Commerzbank and Sumitomo, the "Banks") and TCB as Agent for the Banks (in such capacity, the "Agent"). WHEREAS, the Agent, TCB, NationsBank, Signet, Commerzbank, Sumitomo, and the Borrower have entered into that certain Credit Agreement dated and effective as of November 21, 1996 (as it has been and may be hereafter amended or otherwise modified and in effect from time to time, the "Credit Agreement"); WHEREAS, the Agent, TCB, NationsBank, Signet, Commerzbank, Sumitomo and the Borrower have entered into that certain First Amendment to Credit Agreement dated and effective as of January 1, 1997; and; WHEREAS, the Banks and the Borrower wish to amend the Credit Agreement to revise the principal amount of the Commitments, and to add Bank of America as a signatory and party thereto, and as Documentation Agent; provided that, the Documentation Agent shall have no responsibilities in its capacity as such; NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, the Banks, the Agent and the Borrower agree as follows: SECTION 1. AMENDMENTS ---------- (a) On and after the date of this Amendment Bank of America shall be, and shall be deemed to be a party to the Credit Agreement, and the term "Banks" shall include Bank of America for all purposes of the Credit Agreement and each other Loan Document and, accordingly, Bank of America shall have the rights and obligations of a Bank under the Loan Documents. Since Bank of America is deemed to be a party to the Credit Agreement, the mechanism set out in Section 10.08 shall not be applicable to the addition of Bank of America hereunder; however, such mechanism shall be applicable as to any future assignment (or participation) of any Bank's rights or obligations under the Credit Agreement. After giving effect to the addition of Bank of America as a Bank under the Loan Documents, each Bank (including the Issuing Bank) shall be deemed, without further action by any party to this Amendment, to have sold to each other Bank, and each other Bank shall be deemed, without further action by any party to this Amendment, to have purchased from the other Banks, an assignment of a portion of each Note and Advance, and a participation in each Letter of Credit issued and outstanding as of the date of this Amendment, if any, to the effect that each Bank shall hold an interest in such Note and Advance, and in each Letter of Credit and in the reimbursement obligations of Borrower due in respect of drawings made under such Letter of Credit equal to such Bank's Pro Rata Percentage as provided in subsection 1(b) below. (b) On the date of this Amendment, each Bank's Commitment shall equal the principal amount shown on Exhibit A, attached hereto, and the Borrower shall issue to each Bank a Note in an original principal amount equal to the principal amount set forth on Exhibit A; provided that Notes so issued to each of TCB, NationsBank, Signet, Commerzbank and Sumitomo are issued in substitution for existing Notes issued by the Borrower on November 21, 1996 to such Banks (the "Original Notes"), and not in extinguishment of the obligations of the Borrower under the Original Notes, and all amounts outstanding or otherwise due and payable under such Original Notes, to the extent of each Bank's Commitment on and as of the date hereof, including without limitation, principal of, accrued and unpaid interest on, and fees and expenses remaining unpaid, shall not be deemed to have been paid as a result of substitution of such Original Notes. (c) Section 2.02(c) of the Credit Agreement is hereby amended by deleting the words "dated as of the Closing Date" from said Section 2.02(c) and substituting in lieu thereof the words: dated as of the date of the Second Amendment, dated as of September 12, 1997, by and among the Agent, the Borrower and the Banks, parties to this Agreement, SECTION 2. CONDITIONS TO EFFECTIVENESS OF AMENDMENT. This ---------------------------------------- Amendment shall become effective upon satisfaction of the following conditions: (a) Each Bank shall have received on or before the effective date of this Amendment (the "Effective Date") the Notes described in Section 1(b) of this Amendment, executed by the Borrower, and the Amendment, duly executed by the Borrower, the Agent and the Banks, and acknowledged by each Guarantor; (b) Each Bank shall have delivered to the Agent, for delivery by the Agent to the Borrower, its Original Note; and (c) Each Bank shall have received a legal opinion from counsel for the Borrower, in form and substance satisfactory to the Banks. SECTION 3. REPRESENTATIONS OF BORROWER. The Borrower hereby represents and --------------------------- warrants to the Banks the following: (a) All of the representations and warranties contained in Article V of the Credit Agreement are true and correct on and as of the date hereof and will be true and correct after giving effect to this Amendment. (b) No event which constitutes a Default or an Event of Default under the Credit Agreement, as amended hereby, has occurred and is continuing, or would result from the execution and delivery of this Amendment. (c) The Borrower has the power and authority under the Act to execute and deliver this Amendment and to perform its obligations under the Credit Agreement, as amended hereby, and under the Notes; and all such action has been duly authorized by all necessary proceeding on its part. Each of the Credit Agreement, this Amendment and each Note has been duly and validly executed and delivered by the Borrower and constitute a valid and legally binding obligation of the Borrower enforceable in accordance with its terms, except as limited by Debtor Laws. (d) The Borrower has delivered to Bank of America true, correct and complete copies of each of the Loan Documents (including copies of the outstanding Letters of Credit), the Interest Rate Agreements, and such other information as Bank of America has requested. SECTION 4. NOTICES. Bank of America hereby designate its current ------- address for notices pursuant to Section 10.02 of the Credit Agreement as follows: Bank of America National Trust and Savings Association 5 Park Plaza, Suite 500 Irvine, California 92614-8525 Attention: William D. Balfour III SECTION 5. CAPITALIZED TERMS. The capitalized terms used herein ----------------- which are defined in the Credit Agreement and not otherwise defined herein shall have the meanings specified therein. SECTION 6. RATIFICATION. The Credit Agreement, as hereby ------------ amended, is in all respects ratified and confirmed, and all other rights and powers created thereby or thereunder shall be and remain in full force and effect. SECTION 7. COUNTERPARTS. This Amendment may be executed in ------------ several counterparts, and each counterpart, when so executed and delivered, shall constitute an original instrument, and all such separate counterparts shall constitute but one and the same instrument. SECTION 8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, ------------- AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS. SECTION 9. PRIOR AGREEMENTS. THE CREDIT AGREEMENT, THE NOTES, ---------------- THIS AMENDMENT AND THE OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN SECTION 26.02(A) OF THE TEXAS BUSINESS & COMMERCE CODE, AND REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the day and year first above written. BORROWER: WEINGARTEN REALTY INVESTORS By:_____________________________________ Title:____________________________________ AGENTS: TEXAS COMMERCE BANK NATIONAL ASSOCIATION, AGENT By:_____________________________________ Title:____________________________________ NATIONSBANK OF TEXAS, N.A., Syndication Agent By:_____________________________________ Title:____________________________________ BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION Documentation Agent By:_____________________________________ Title:____________________________________ BANKS: TEXAS COMMERCE BANK NATIONAL ASSOCIATION By:_____________________________________ Title:____________________________________ SIGNET BANK By:_____________________________________ Title:____________________________________ NATIONSBANK OF TEXAS, N.A. By:_____________________________________ Title:____________________________________ COMMERZBANK, A.G. By:_____________________________________ Title:____________________________________ THE SUMITOMO BANK, LIMITED By:_____________________________________ Title:____________________________________ BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By:_____________________________________ Title:____________________________________ CONSENT OF GUARANTORS: - ------------------------ WEINGARTEN/LUFKIN, INC. By:_____________________________________ Title:____________________________________ WEINGARTEN NOSTAT INC. By:_____________________________________ Title:____________________________________ WRI/POST OAK, INC. By:_____________________________________ Title:____________________________________ WEINGARTEN REALTY MANAGEMENT COMPANY By:_____________________________________ Title:____________________________________ ATDNL, INC. By:_____________________________________ Title:____________________________________ Signature page of Second Amendment to Credit Agreement dated as of September 12, 1997 EXHIBIT A
BANK . . . . . . . . . PRO RATA PERCENTAGE COMMITMENT 1. Texas Commerce 21.25% $42,500,000 Bank National Association 2. NationsBank of 21.25% $42,500,000 Texas, N.A. 3. Signet Bank 12.5% $25,000,000 4. Commerzbank, A.G. 16.25% $32,500.000 5. The Sumitomo Bank, 7.5% $15,000,000 Limited 6. Bank of America 21.25% $42,500.000 National Trust and Savings Association
THIRD AMENDMENT AND RESTATEMENT TO CREDIT AGREEMENT THIS THIRD AMENDMENT AND RESTATEMENT TO CREDIT AGREEMENT (the "Amendment and Restatement") dated as of October __, 1997, is by and among Weingarten Realty Investors, a Texas real estate investment trust (the "Borrower") and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking association (in its individual capacity, "TCB"), NationsBank of Texas, N.A., as Syndication Agent (in its individual capacity, "NationsBank"), Signet Bank ("Signet"), Commerzbank, A.G., a domestic branch of a bank organized under the laws of Germany ("Commerzbank"), The Sumitomo Bank, Limited, a Japanese banking corporation ("Sumitomo"), and Bank of America National Trust and Savings Association, a national banking association, as Documentation Agent (in its individual capacity, "Bank of America") and each other bank which is a party to the Credit Agreement (collectively, with TCB, NationsBank, Bank of America, Signet, Commerzbank and Sumitomo, the "Banks") and TCB as Agent for the Banks (in such capacity, the "Agent"). WHEREAS, the Agent, TCB, NationsBank, Signet, Commerzbank, Sumitomo, and the Borrower have entered into that certain Credit Agreement dated and effective as of November 21, 1996; WHEREAS, the Agent, TCB, NationsBank, Signet, Commerzbank, Sumitomo (together referred to as the "Prior Banks" and the Borrower have entered into that certain First Amendment to Credit Agreement dated and effective as of January 1, 1997, and the Agent, the Prior Banks and Bank of America and the Borrower have entered into that certain Second Amendment to Credit Agreement dated and effective as of September 12, 1997 (such Credit Agreement as it has been and may be hereafter amended or otherwise modified and in effect from time to time, the "Credit Agreement"); and; WHEREAS, the Banks and the Borrower wish to extend the Revolving Credit Termination Date from November 21, 1999 to November 21, 2000; NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, the Banks, the Agent and the Borrower agree as follows: SECTION 1. AMENDMENTS ---------- (a) The definition of "Revolving Credit Termination Date" in Section 1.01 of the Credit Agreement is hereby amended by deleting the date "November 21, 1999", from clause (i) thereof, and substituting in lieu thereof the date "November 21, 2000". (b) The definition of "Termination Date" under Section 1.01 of the Credit Agreement is hereby amended by deleting the date "November 21, 1999" and substituting in lieu thereof the date "November 21, 2000." (c) Section 2.11 of the Credit Agreement is hereby amended by deleting the date "November 21, 1999", from the second line thereof, and substituting in lieu thereof the date "November 21, 2000". SECTION 2. CONDITIONS TO EFFECTIVENESS OF AMENDMENT AND ----------------------------------------------- RESTATEMENT. This Amendment and Restatement shall become effective on and as - ----------- of the date first written above (the "Effective Date") upon receipt by the Agent, on behalf of each Bank, of an original counterpart of this Amendment and Restatement for each Bank, duly executed by the Borrower, the Agent and the Banks, and acknowledged by each Guarantor. SECTION 3. REPRESENTATIONS OF BORROWER. The Borrower hereby ----------------------------- represents and warrants to the Banks the following: (a) All of the representations and warranties contained in Article V of the Credit Agreement are true and correct on and as of the date hereof and will be true and correct after giving effect to this Amendment and Restatement. (b) No event which constitutes a Default or an Event of Default under the Credit Agreement, as amended hereby, has occurred and is continuing, or would result from the execution and delivery of this Amendment and Restatement. (c) The Borrower has the power and authority under the Act to execute and deliver this Amendment and Restatement and to perform its obligations under the Credit Agreement, as amended hereby, and under the Notes; and all such action has been duly authorized by all necessary proceeding on its part. Each of the Credit Agreement, this Amendment and Restatement and each Note has been duly and validly executed and delivered by the Borrower and constitute a valid and legally binding obligation of the Borrower enforceable in accordance with its terms, except as limited by Debtor Laws. SECTION 4. CAPITALIZED TERMS. The capitalized terms used herein ----------------- which are defined in the Credit Agreement and not otherwise defined herein shall have the meanings specified therein. SECTION 5. RATIFICATION. The Credit Agreement, as hereby ------------ amended, is in all respects ratified and confirmed, and all other rights and powers created thereby or thereunder shall be and remain in full force and effect. SECTION 6. COUNTERPARTS. This Amendment and Restatement may be ------------ executed in several counterparts, and each counterpart, when so executed and delivered, shall constitute an original instrument, and all such separate counterparts shall constitute but one and the same instrument. SECTION 7. GOVERNING LAW. THIS AMENDMENT AND RESTATEMENT SHALL ------------- BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS. SECTION 8. PRIOR AGREEMENTS. THE CREDIT AGREEMENT, THE NOTES, ---------------- THIS AMENDMENT AND RESTATEMENT AND THE OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN SECTION 26.02(A) OF THE TEXAS BUSINESS & COMMERCE CODE, AND REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the day and year first above written. BORROWER: WEINGARTEN REALTY INVESTORS By:_____________________________________ Title:____________________________________ AGENTS: TEXAS COMMERCE BANK NATIONAL ASSOCIATION, AGENT By:_____________________________________ Title:____________________________________ NATIONSBANK OF TEXAS, N.A., Syndication Agent By:_____________________________________ Title:____________________________________ BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION Documentation Agent By:_____________________________________ Title:____________________________________ BANKS: TEXAS COMMERCE BANK NATIONAL ASSOCIATION By:_____________________________________ Title:____________________________________ SIGNET BANK By:_____________________________________ Title:____________________________________ NATIONSBANK OF TEXAS, N.A. By:_____________________________________ Title:____________________________________ COMMERZBANK, A.G. By:_____________________________________ Title:____________________________________ THE SUMITOMO BANK, LIMITED By:_____________________________________ Title:____________________________________ BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By:_____________________________________ Title:____________________________________ - ------ CONSENT OF GUARANTORS: - ------------------------ WEINGARTEN/LUFKIN, INC. By:_____________________________________ Title:____________________________________ WEINGARTEN NOSTAT INC. By:_____________________________________ Title:____________________________________ WRI/POST OAK, INC. By:_____________________________________ Title:____________________________________ WEINGARTEN REALTY MANAGEMENT COMPANY By:_____________________________________ Title:____________________________________ ATDNL, INC. By:_____________________________________ Title:____________________________________ EX-10 4 MASTER PROMISSORY NOTE --------------- (this "Note") $20,000,000.00 December 15, 1997 FOR VALUE RECEIVED, the undersigned, WEINGARTEN REALTY INVESTORS ("Company") promises to pay to the order of TEXAS COMMERCE BANK NATIONAL ASSOCIATION ("Bank"), on or before December 14, 1998, ("Final Maturity Date") at its offices located at 717 Main Street, Houston, Texas 77002 in lawful money of the United States of America and in immediately available funds, the principal amount of each loan (a "Loan") shown in Bank's records to have been made by bank and on the relative maturity date set forth by Bank's records. Each Loan shall also have its own date of maturity agreed by Company and Bank which will occur prior to the Final Maturity Date. The rate of interest on each loan evidenced hereby from time to time shall be the interest rate which shall be determined for each Loan by agreement between Company and Bank but, in no event, shall exceed the maximum interest rate permitted under applicable law ("Highest Lawful Rate"). If Texas law determines the Highest Lawful Rate, Bank has elected the "indicated" (weekly) ceiling as defined in the Texas Credit Code or any successor statute. All past due amounts shall bear interest at a per annum interest rate equal to the Prime Rate plus one percent (1%). The term "Prime Rate" shall mean the prime rate as determined from time to time by Bank and thereafter entered in the minutes of Bank's Loan and Discount Committee, fluctuating upward or downward automatically without notice to Company on the business day of each such determination. THE PRIME RATE IS A REFERENCE RATE AND BANK MAY MAKE LOANS AT RATES OF INTEREST AT, ABOVE OR BELOW THE PRIME RATE. Interest on each Loan shall be: (i) computed on the unpaid principal amount of the Loan outstanding from the date of advance until paid; (ii) payable at maturity and there after on demand, and (iii) shall be calculated on the basis of a year of 360 days for the actual days elapsed. The total amount of interest (as defined under applicable law) contracted for, charged or collected under this Note will never exceed the Highest Lawful Rate. If Bank contracts for, charges or receives any excess interest, it will be deemed a mistake. Bank will automatically reform the contract or charge to conform to applicable law, and if excess interest has been received, Bank will either refund the excess or credit the excess on the unpaid principal amount of this Note. All amounts constituting interest will be spread throughout the full term of this Note in determining whether interest exceeds lawful amounts. Each of the following is an event of default ("Events of Default"): (a) Company shall fail to pay any amount of principal of or interest on this Note when due; (b) Company shall fail to pay when due any amount of principal or interest with respect to any obligation to Bank (other that this Note); or (c) Company shall fail to pay any amount relating to any other recourse indebtedness in excess of $10,000,000.00 for borrowed money or other pecuniary obligation (including any contingent such obligation) or an event or condition shall occur or exist which give the holder of any such indebtedness or obligation the right or option to accelerate the maturity thereof. (d) Company shall commence any bankruptcy, reorganization or similar case or proceeding relating to it or its property under the law of any jurisdiction, or a trustee or receiver shall be appointed for itself or any substantial part of its property; (e) any involuntary bankruptcy, reorganization or similar case proceeding under the law of any jurisdiction shall have been commenced against Company or any substantial part of its property and such case or proceeding shall not have been dismissed within 60 days, or Company shall have consented to such case or proceeding; or (f) Company shall admit in writing its inability to pay its debts as they become due. Upon the happening of any Event of Default specified in paragraphs (d), (e) or (f) above, automatically the Loans evidenced by this Note (with accrued interest thereon) shall immediately become due and payable, and upon the happening of an Event of Default specified in paragraphs (a), (b) or (c) above, Bank may by notice to Company, declare the Loans evidenced by this Note (with accrued interest thereon) shall be due and payable, whereupon the same shall immediately become due and payable. Except as expressly provided above, presentment, demand, protest, notice of intent to accelerate, acceleration and all other notices of any kind are hereby expressly waived. The Company hereby agrees to pay on demand, in addition to unpaid principal and interest, all Bank's costs and expenses incurred in attempting or effecting collection hereunder, including the reasonable fees and expenses of counsel (which may include, to the extent permitted by applicable law, allocated costs of in-house counsel), whether or not suit is instituted. This Note is executed and delivered by Company to evidence Loans which may be made by Bank to Company not to exceed $20,000,000.00 COMPANY UNDERSTANDS THAT BANK HAS NO OBLIGATION TO MAKE ANY LOAN TO COMPANY UNDER THIS NOTE. All Loans evidenced by this Note are and will be for business and commercial purposes and no Loan will be used for the purpose of purchasing or carrying any margin stock as that term is defined in Regulation U of the Board of Governors of the Federal Reserve System (the "Board"). ----- Chapter 15 of the Texas Credit Code does not apply to this Note or to any Loan evidenced by this Note. This Note shall be governed by the laws of the State of Texas and the laws of the United States as applicable. Bank shall, and is hereby authorized by Company, to record in its records the date, amount, interest rate and due date of each Loan as well as the date and amount of each payment by the undersigned in respect thereof. Payments may be applied to accrued interest or principal in whatever order Bank chooses. Loans evidenced by this Note may not be prepaid. In the event any such prepayment occurs, Company shall indemnify Bank against any loss, liability, damage, cost or expense which Bank may sustain or incur as a consequence thereof, including without limitation any loss liability, damage, cost or expense sustained or incurred in liquidating or employing deposits from third parties acquired to effect or maintain such Loan or any part thereof. Bank shall provide to Company a written statement explaining the amount of any such loss or expense, which statement shall be conclusive absent manifest error. No waiver of any default shall be deemed to be a waiver of any other default. No failure to exercise or delay in exercising any right or power under this Note shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power preclude any further or other exercise thereof or the exercise of any other right or poser. No amendment, modification or waiver of this Note shall be effective unless the same is in writing and signed by the person against whom such amendment, modification or waiver is sought to be enforced. No notice to or demand on any person shall entitle any a person to any other or further notice or demand in similar of other circumstances. This Note shall be binding upon the successors and assigns of Company and inure to the benefit of Bank, its successors, endorsees and assigns (furthermore, Bank may assign or pledge this Note or any interest therein to any Federal Reserve Bank). If any term or provision of this Note shall be held invalid, illegal or unenforceable the validity of all other terms and provisions will not be affected. This note renews and extends that certain Master Promissory Note dated December 30, 1996, in the original principal sum of $20,000,000.00, executed by this Company, payable to the order of the Bank. THIS NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NOT UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. WEINGARTEN REALTY INVESTORS By:________________________________ Name:______________________________ Title:_____________________________ Weingarten Realty Investors (the "trust") is an unincorporated trust organized under the Texas Real Estate Investment Trust Act. Neither the shareholders of the trust nor its trust managers, officers, employees or other agents are personally, corporately or individually liable for any debt, act omission or obligation of the trust, and all persons having claims of any king against the trust must look solely to the property of the trust for the enforcement of their rights. (The Bank's signature is provided as its acknowledgment of the above as the final written agreement between the parties.) TEXAS COMMERCE BANK NATIONAL ASSOCIATION By:________________________________________ Name:______________________________________ Title:_____________________________________ EX-10 5 FOURTH BONDS RENEWAL AN EXTENSION AGREEMENT ------------------------------------------- This FOURTH BONDS RENEWAL AND EXTENSION AGREEMENT (this "Fourth Renewal") is executed this 1lth day of February, 1998 (the "Execution Date"), but effective as of December 28, 1997, by and between WRI HOLDINGS, INC. ("Maker"), a Texas corporation, and WEINGARTEN REALTY INVESTORS ("Payee"), a Texas real estate investment trust. W I T N E S S E T H: -------------------- WHEREAS, the Payee is the sole legal owner and holder of those certain 16% Mortgage Bonds Due 1994, dated December 28, 1984 (the "Original Bonds"), in the face principal sum of THREE MILLION ONE HUNDRED FIFTY THOUSAND and 10/100 DOLLARS ($3,150,000.00) executed by Maker payable to the order of Weingarten Realty, Inc. ("WRI"), a Texas corporation, payable as therein provided, which Bonds are secured by (i) that certain Trust Indenture, dated December 18, 1984 (the "Original Trust Indenture") executed by Maker and Texas Commerce Bank National Association (the "Trustee"), a national banking association; (ii) that certain River Pointe Negative Pledge Agreement, dated December 28, 1984 (the "Original Negative Pledge") executed by Maker, WRI, and Plaza Construction, Inc. ("Plaza"); and (iii) such other documents, instruments, and agreements executed in connection with, as security for, or as evidence of the obligations evidenced by the Original Bonds (collectively, the Original Trust Indenture, the Original Negative Pledge, and such other documents, instruments, and agreements being herein called the "Original Security Instruments"); and WHEREAS, WRI assigned and conveyed all of its property, both real and personal, including, without limitation, the Original Bonds, to Payee, as evidenced by that certain Master Deed and General Conveyance dated April 5, 1988 from WRI to Payee; and WHEREAS, effective as of December 28, 1994, Maker and Payee renewed and extended the maturity date of the Original Bonds to December 28, 1995 pursuant to the terms of that certain Bonds Renewal and Extension Agreement, dated as of December 28, 1994 ("First Renewal"); and WHEREAS, effective as of December 28, 1995, Maker and Payee renewed and extended the maturity date of the Original Bonds to December 28, 1996 pursuant to the terms of that certain Bonds Second Renewal and Extension Agreement dated as of December 28, 1995 ("Second Renewal"); and WHEREAS, effective as of December 28, 1996, Maker and Payee renewed and extended the maturity date of the Original Bonds to December 28, 1997 pursuant to the terms of that certain Bonds Third Renewal and Extension Agreement, dated as of December 28, 1996 ("Third Renewal") (the Original Bonds, Original Negative Pledge, and Original Security Instruments, each as modified, renewed, and extended by the First Renewal, Second Renewal, and Third Renewal, being herein called the "Bonds," the "Negative Pledge," and the "Security Instruments," respectively); and WHEREAS, Maker and Payee amended and supplemented the terms of the Original Trust Indenture to reflect the renewal and extension of the Bonds, as provided in the First Renewal, Second Renewal, and Third Renewal, such amendments being evidenced by (i) that certain Supplemental Trust Indenture dated as of December 28, 1994 between Maker, Trustee, and Payee, (ii) that certain second Supplemental Trust Indenture dated as of December 28, 1995, between Maker, Trustee and Payee, (iii) that certain Third Supplemental Trust Indenture dated as of December 28, 1996, between Maker, Trustee and Payee; and WHEREAS, of even date herewith, Maker, the Trustee (now known as Chase Bank of Texas, N.A.) and Payee have further amended and supplemented the terms of the Trust Indenture pursuant to that certain Fourth Supplemental Trust Indenture (the Original Trust Indenture, as amended and supplemented by the Supplemental Trust Indenture, the Second Supplemental Trust Indenture, the Third Supplemental Trust Indenture, and the Fourth Supplemental Trust Indenture, being called the "Trust Indentures"); and WHEREAS, the Bonds mature on December 28, 1997, and Maker and Payee now propose to renew and extend the maturity date of the Bonds and to continue the liens and priority of the Security Instruments as security for the payment of the Bonds, as set forth more particularly herein. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and For other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Maker and Payee hereby agree as follows: 1. The Maker reaffirms its promise to pay to the order of the Payee, at 2600 Citadel Plaza Drive, Suite 300, Houston, Harris County, Texas 77008, the principal balance due and owing on the Bonds, with interest accrued thereon, as provided in the Bonds, except that the maturity date of the Bonds is hereby renewed and extended to December 28, 1998, at which time the unpaid principal balance of the Bonds, plus all accrued and unpaid interest thereon, shall be due and payable. All liens, pledges, and security interests securing the payment of the Bonds, including but not limited to, the liens, pledges and security interests granted in the Trust Indenture and the Negative Pledge, are hereby renewed, extended and carried forward to secure payment of the Bonds, as hereby amended, and the Security Instruments are hereby amended to reflect that the maturity date of the Bonds is December 28, 1998. 2. Maker hereby represents and warrants to payee that (a) Maker is the sole legal and beneficial owner of the Trust Estate (a- that term is defined in the Trust Indenture); (b) Maker has the full power and authority to make the agreements contained in this Fourth Renewal without joinder and consent of any other party; and (c) the execution, delivery and performance of this Fourth Renewal will not contravene or constitute an event which itself or which with the passing of time or giving of notice or both would constitute a default under any trust deed, deed of trust, loan agreement, indenture or other agreement to which Maker is a party or by which Maker or any of its property is bound. Maker hereby agrees to indemnify and hold harmless payee against any loss, claim, damage, liability or expense (including, without limitation, attorneys' fees) incurred as a result of any representation or warranty made by Maker in this Section 1 proving to be untrue in any material respect. 3. To the extent that the Bonds are inconsistent with the terms of this Fourth Renewal, the Bonds are hereby modified and amended to conform with this Fourth Renewal. Except as modified, renewed and extended by this Fourth Renewal, the Bonds remain unchanged and continue unabated and in full force and effect as the valid and binding obligation of the Maker. 4. In conjunction with the extension and renewal of the Bonds and the Security Interests, Maker hereby extends and renews the liens, pledges, and security interests as created and granted in the Security Instruments until the indebtedness secured thereby, as so extended and renewed, has bean Fully paid, and agrees that such extension and renewal shall, in no manner, affect or impair the Bonds or the liens, pledges, and security interests securing same, and that said liens, pledges, and security interests shall not in any manner be waived. The purpose of this Fourth Renewal is simply to extend the time of payment of the obligation evidenced by the Bonds and any indebtedness secured by the Security Instruments, as modified by this Fourth Renewal, and to carry forward all liens, pledges, and security interests securing the care, which are acknowledged by Maker to be valid and subsisting. 5. Maker covenants and warrants that the payee is not in default under the Bonds or the Security Instruments, or this Fourth Renewal (collectively referred to as the "Loan Instruments"), that there are no defenses, counterclaims or offsets to such Loan Instruments; and that all of the provisions of the Loan Instruments, as amended hereby, are in full force and effect. 6. Maker agrees to pay all costs incurred in connection with the execution and consummation of this Fourth Renewal, including but not limited to, all recording costs and the reasonable fees and expenses of Payee's counsel. 7. If any covenant, condition, or provision herein contained is held to be invalid by final judgment of any court of competent jurisdiction, the invalidity of such covenant, condition, or provision shall not in any way affect any other covenant, condition, or provision herein contained. 8. Payee is the sole owner and holder of the Bonds. Maker and Payee acknowledge and agree that the outstanding principal balance of the Bonds as of December 28, 1997 is $3,150,000.00. 9. Payee is an unincorporated trust organized under the Texas Peal Estate Investment Trust Act. Neither the shareholders of Payee, nor its Trust Managers, officers, employees, or other agents shall be personally, corporately, or individually liable, in any manner whatsoever, for any debt, act, omission, or obligation of Payee, and all persons having claims or any kind whatsoever against Payee shall look solely to the property of Payee for the enforcement of their rights (whether monetary or non-monetary) against Payee. EXECUTED this day and year first above written, but effective for all purposes as of December 28, 1997. WRI HOLDINGS, INC., a Texas corporation By:____________________________________ Martin Debrovner, Vice President "Maker" WEINGARTEN REALTY INVESTORS, a Texas real estate investment trust By:____________________________________ Bill Robertson, Jr. Executive Vice President "Payee" EX-10 6 FOURTH SUPPLEMENTAL TRUST INDENTURE ----------------------------------- This FOURTH SUPPLEMENTAL INDENTURE ("Fourth Supplemental Indenture") is executed this 11th day of February, 1998 (the "Execution Date") but effective as of December 28, 1997, by and between WRI HOLDINGS, INC. (the "Company"). A Texas corporation, and CHASE BANK OF TEXAS, N.A. (formerly known as TEXAS COMMERCE BANK NATIONAL ASSOCIATION) (the "Trustee"), a national banking association. WITNESSETH: ---------- WHEREAS, the Company and the Trustee executed that certain Trust Indenture dated December 28, 1984 ("the Original Trust Indenture") to secure the performance of the Company under the terms of that certain 16% Mortgage Bonds Due 1994 (the "Original Bonds") executed by the Company payable to the order of Weingarten Realty, Inc. ("WRI") dated December 28, 1984 in the face principal amount of THREE MILLION ONE HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($3,150,000.00), payable as therein provided; and WHEREAS, WRI assigned and conveyed all of its property, both real and personal, including, without limitation, the Original Bonds, to Weingarten Realty Investors ("Weingarten"), a Texas real estate investment trust, as evidenced by that certain Master Deed and General Conveyance dated April 5, 1988, from WRI to Weingarten; and WHEREAS, effective as of December 28, 1994, the Company and Weingarten renewed and extended the maturity date of the Original Bonds, to December 28, 1995 pursuant to the terms of that certain Bonds Renewal and Extension Agreement dated as of December 28, 1994 ("First Renewal"); and WHEREAS, effective as of December 28, 1995, the Company and Weingarten renewed and extended the maturity date of the Original Bonds, to December 28, 1996 pursuant to the terms of that certain Bonds Renewal and Extension Agreement dated as of December 28, 1995 ("Second Renewal"); and WHEREAS, effective as of December 28, 1996, the Company and Weingarten again renewed and extended the maturity date of the Original Bonds, to December 28, 1997 pursuant to the terms of that certain Bonds Third Renewal and Extension Agreement dated as of December 28, 1996 ("Third Renewal"); the Original Bonds, as renewed and extended by the first renewal, Second Renewal, and Third Renewal, being herein called the "Bonds"); and and extension of the Bonds as provided in the First Renewal, Second Renewal, and Third Renewal, such amendments being evidenced by (i) that certain Supplemental Trust Indenture dated as of December 78, 1994 between the Company, the Trustee and Weingarten, (ii) that certain Second Supplemental Trust Indenture dated as of December 78, 1995, between the Company, the Trustee, and Weingarten, and (iii) that certain Third Supplemental Trust Indenture dated as of December 28, 1996 between the Company, the Trustee, and Weingarten (the Original Trust Indenture, as amended and supplemented by the Supplemental Trust Indenture, Second Supplemental Trust Indenture, and Third Supplemental Trust Indenture, being herein called the "Trust Indenture"); and WHEREAS, the Bonds mature on December 28, 1997, and the Company and Weingarten have agreed to renew and extend the maturity date of the Bonds and to continue the liens, pledges, and security interests securing the payment of the Bonds, as set forth in that certain Fourth Bonds Renewal and Extension Agreement ("Fourth Renewal") dated effective as of December 28, 1997, executed by the Company and Weingarten, Weingarten being the sole legal owner and holder of the Bonds; and WHEREAS, the Company and the Trustee desire to amend and supplement the Trust Indenture to reflect the renewal and extension of the maturity date of the Bonds to December 28, 1998. NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Trustee hereby agree as follows: 1. Except as otherwise provided in this Fourth Supplemental Indenture, all capitalized terms used in this Fourth Supplemental Indenture shall have the meanings ascribed to those terms in the Trust Indenture. 1. The Company and the Trustee acknowledge that the Company has re-affirmed its promise to pay to the order of the Payee, at 2600 Citadel Plaza Drive, Suite 300, Houston, Harris County, Texas 77008, the principal balance due and owing on the Bonds, with interest accrued thereon, as provided in the Bonds, except that the maturity date of the Bonds has been renewed and extended to December 28, 1998, at which time the unpaid principal balance of the Bonds, plus all accrued and unpaid interest thereon, shall be due and payable. All liens, pledges, and security interests securing the Bonds granted under the terms of the Trust Indenture, are hereby renewed, extended and carried forward to secure payment of the Bonds, as hereby amended, and the Trust Indenture is hereby amended to reflect that the maturity date of the Bonds is December 28, 1998. 3. The Company hereby represents and warrants to the Trustee that (a) the Company is the sole legal and beneficial owner of the Trust Estate; (b) the Company has the full power and authority to make the agreements contained in this Fourth Supplemental Indenture without joinder and consent of any other party; and (c) the execution, delivery and performance of this Fourth Supplemental Indenture will not contravene or constitute an event which itself or which with the passing of time or giving of notice or both would constitute a default under any trust deed, deed of trust, loan agreement, indenture or other agreement to which the Company is a party or by which the Company or any of its property is bound. The Company hereby agrees to indemnify and hold harmless the Trustee against any loss, claim, damage, liability or expense (including, without limitation, attorneys' fees) incurred as a result of any representation or warranty made by the Company in this Section 3 proving to be untrue in any material respect. 4. To the extent that the Trust Indenture is inconsistent with the terms of this Fourth Supplemental Indenture, the Trust Indenture is hereby modified and amended to conform with this Fourth Supplemental Trust Indenture. Except as modified, renewed and supplemented by this Fourth Supplemental Indenture, the Trust Indenture remains unchanged and continues unabated and in full force and effect as the valid and binding obligation of the Company. 5. The Company covenants and warrants that the Trustee is not in default under the Trust Indenture, as supplemented by this Fourth Supplemental Indenture (collectively referred to as the "Indenture"), that there are no defenses, counterclaims or offsets to the Bonds or the Indenture, and that all of the provisions of the Bonds and the Indenture are in full force and effect. 6. The Company agrees to pay all costs incurred in connection with the execution and consummation of this Fourth Supplemental Indenture, including but not limited to, all recording costs and the reasonable fees and expenses of Trustee's counsel. 7. If any covenant, condition, or provision herein contained is held to be invalid by final judgment of any court of competent jurisdiction, the invalidity of such covenant, condition, or provision shall not in any way affect any other covenant, condition, or provision herein contained. 8. The Company acknowledges and agrees that the outstanding principal balance of the Funds as of December 28, 1997 is $3,150,000.00. 9. Weingarten joins herein to consent to the amendment and supplement of the terms of the Trust Indenture, as set forth in this Fourth Supplemental Indenture and to acknowledge and represent that Weingarten is the sole owner and holder of the Bonds. Weingarten is an unincorporated trust organized under the Texas Real Estate Investment Trust Act. Neither the shareholders of Weingarten, nor its Trust Managers, Officers, employees, or other agents shall be personally, corporately, or individually liable, in any manner whatsoever, for any debt, act omission, or obligation of Weingarten, and all persons having claims of any kind whatsoever against Weingarten shall look solely the property of Weingarten for the enforcement of their rights (whether monetary or non-monetary) against Weingarten. EXECUTED this day and year first above written, but effective for all purposes as of December 28, 1997. WRI HOLDINGS, INC., A TEXAS CORPORATION By:______________________________________________ Martin Debrovner, Vice President "Company" CHASE BANK OF TEXAS, N.A. By:______________________________________________ Assistant Vice President & Trust Officer "Trustee" WEINGARTEN REALTY INVESTORS By:______________________________________________ Bill Robertson, Jr. Executive Vice President "Payee" EX-12 7 EXHIBIT 12.1
WEINGARTEN REALTY INVESTORS COMPUTATION OF FIXED CHARGES RATIOS The following table sets forth the Company's consolidated ratios of earnings to fixed charges and of funds from operations before interest expense to fixed charges for the periods shown: YEARS ENDED DECEMBER 31, 1997 1996 1995 ----- ----- ----- Ratio of Earnings to Fixed Charges . . . . . . 2.70x 3.17x 3.05x Ratio of Funds from Operations Before Interest Expense to Fixed Charges . . . . . . . . . . 3.77x 4.28x 4.48x
The ratios of earnings to fixed charges were computed by dividing earnings by fixed charges. The ratios of funds from operations before interest expense to fixed charges were computed by dividing funds from operations before interest expense by fixed charges. For these purposes, earnings is defined as income before extraordinary charge plus fixed charges (excluding interest costs capitalized). Funds from operations before interest expense is defined as net income plus depreciation and amortization of real estate assets and extraordinary charge, less gain (loss) on sales of property and securities plus interest on indebtedness. Fixed charges consist of interest on indebtedness (including interest costs capitalized), amortization of debt costs and the portion of rent expense representing an interest factor. Note: In accordance with the NAREIT definition of funds from operations adopted during the year ended December 31, 1995, debt amortization is not included beginning with that year. EX-21 8 EXHIBIT 21.1
WEINGARTEN REALTY INVESTORS LIST OF SUBSIDIARIES OF THE REGISTRANT STATE OF INCORPORATION ---------------------- SUBSIDIARY - ------------------------------------ Weingarten Realty Management Company Texas Weingarten/Nostat, Inc.. . . . . . . Texas Weingarten/Lufkin, Inc.. . . . . . . Texas WRI/Post Oak, Inc. . . . . . . . . . Texas A.T.D.N.L., Inc. . . . . . . . . . . Texas WRI/Central Plaza, Inc.. . . . . . . Texas Weingarten Properties Trust. . . . . N/A Main/O.S.T., Ltd.. . . . . . . . . . N/A Phelan Boulevard Venture . . . . . . N/A Northwest Hollister Venture. . . . . N/A WRI/Interpak Venture . . . . . . . . N/A East Town Lake Charles Co. . . . . . N/A Alabama-Shepherd Shopping Center . . N/A Sheldon Center, Ltd. . . . . . . . . N/A Jacinto City, Ltd. . . . . . . . . . N/A Weingarten/Finger Venture. . . . . . N/A Rosenberg, Ltd.. . . . . . . . . . . N/A Eastex Venture . . . . . . . . . . . N/A GJR/Weingarten River Pointe Venture. N/A GJR/Weingarten Little York Venture . N/A WRI/Palans Joint Venture . . . . . . N/A South Loop Long Wayside Company. . . N/A Lisbon St. Shopping Trust. . . . . . N/A WRI/Crosby . . . . . . . . . . . . . N/A WRI/Dickinson. . . . . . . . . . . . N/A Market at Town Center-Sugarland. . . N/A Lincoln Place Limited Partnership. . N/A
EX-23 9 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 our report dated February 20, 1998 except for Note 13, as to which the date is February 24, 1998, appearing in this Annual Report on Form 10-K of Weingarten Realty Investors for the year ended December 31, 1997. DELOITTE & TOUCHE LLP Houston, Texas March 4,1998 EX-27 10
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WEINGARTEN REALTY INVESTORS' ANNUAL REPORT FOR THE PERIOD ENDED DECEMBER 31, 1997. 1,000 YEAR DEC-31-1997 DEC-01-1997 DEC-30-1997 2,754 12,345 15,583 1,000 0 0 1,018,758 262,511 946,793 0 0 0 0 800 389,186 946,793 0 174,512 0 54,888 37,976 0 30,009 54,966 0 54,966 0 0 0 54,966 2.06 2.06
-----END PRIVACY-ENHANCED MESSAGE-----