UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)
x   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended December 31, 2006
OR
¨   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from [__________________] to [________________]

Commission file number 1-9876
 

WEINGARTEN REALTY INVESTORS
(Exact name of registrant as specified in its charter)

TEXAS
 
74-1464203
(State or other jurisdiction of 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, $0.03 par value
 
New York Stock Exchange
Series D Cumulative Redeemable Preferred Shares, $0.03 par value
 
New York Stock Exchange
Series E Cumulative Redeemable Preferred Shares, $0.03 par value
 
New York Stock Exchange
Series F Cumulative Redeemable Preferred Shares, $0.03 par value
 
New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer (as defined in Rule 405 of the Securities Act).   YES x   NO ¨ .

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.   YES ¨   NO x .


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 .

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer x         Accelerated filer ¨         Non-accelerated filer ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES ¨         NO 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 of $38.28) on June 30, 2006 was $3,003,015,509. As of June 30, 2006, there were 89,704,771 common shares of beneficial interest, $.03 par value, outstanding.

As of February 2, 2007 there were 85,857,373 common shares outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Proxy Statement relating to its Annual Meeting of Shareholders to be held May 3, 2007 are incorporated by reference in Part III.





TABLE OF CONTENTS

Item No.
 
Page No.
     
 
PART I
 
     
1.
2
1A.
4
1B.
9
2.
10
3.
23
4.
23
     
     
 
PART II
 
     
5.
24
6.
26
7.
27
7A.
44
8.
45
9.
74
9A.
74
9B.
77
     
     
 
PART III
 
     
10.
77
11.
77
12.
78
13.
78
14.
78
     
     
 
PART IV
 
     
15.
79





Forward-Looking Statements

This annual report on Form 10-K, together with other statements and information publicly disseminated by us, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar expressions. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect actual results, performances or achievements. Factors which may cause actual results to differ materially from current expectations include, but are not limited to, (i) general economic and local real estate conditions, (ii) the inability of major tenants to continue paying their rent obligations due to bankruptcy, insolvency or general downturn in their business, (iii) financing risks, such as the inability to obtain equity, debt, or other sources of financing on favorable terms, (iv) changes in governmental laws and regulations, (v) the level and volatility of interest rates, (vi) the availability of suitable acquisition opportunities and (vii) changes in operating costs. Accordingly, there is no assurance that our expectations will be realized.

For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date of this annual report on Form 10-K or the date of any document incorporated by reference. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances after the date of this Form 10-K.

PART I

ITEM 1.   Business

General . Weingarten Realty Investors is a real estate investment trust organized under the Texas Real Estate Investment Trust Act. We, and our predecessor entity, began the ownership and development of shopping centers and other commercial real estate in 1948. Our primary business is leasing space to tenants in the shopping and industrial centers we own or lease. We also manage centers for joint ventures in which we are partners or for other outside owners for which we charge fees.

At December 31, 2006, we owned or operated under long-term leases, either directly or through our interest in joint ventures or partnerships, a total of 363 developed income-producing properties and 26 properties under various stages of construction and development. The total number of centers includes 322 neighborhood and community shopping centers located in Arizona, Arkansas, California, Colorado, Florida, Georgia, Illinois, Kansas, Kentucky, Louisiana, Maine, Missouri, Nevada, New Mexico, North Carolina, Oklahoma, Oregon, Tennessee, Utah, Texas, South Carolina and Washington. We also owned 67 industrial projects located in California, Florida, Georgia, Tennessee and Texas. The portfolio of properties is approximately 65 million square feet.

We also owned interests in 15 parcels of unimproved land held for future development that totaled approximately 5.7 million square feet.

At December 31, 2006, we employed 457 full-time persons and our principal executive offices are located at 2600 Citadel Plaza Drive, Houston, Texas 77008, and our phone number is (713) 866-6000. We also have 13 regional offices located in various parts of the United States.


Investment and Operating Strategy. Our investment strategy is to increase cash flow and the value of our portfolio through intensive hands-on management of our existing portfolio of assets, selective remerchandising and renovation of properties and the acquisition and development of income-producing real estate assets where the returns on such investments exceed our blended long-term cost of capital. We have expanded our new development program to include both operating properties and a merchant developer component where we will build, lease and then sell the developed real estate. Our estimated gross investment in the 26 properties currently under development or predevelopment is $657 million.

To help fund our growth strategy we pursue the disposition of selective noncore assets as circumstances warrant when we believe the sales proceeds can be effectively redeployed into assets with higher growth potential.

At December 31, 2006, neighborhood and community shopping centers generated 89.7% of total revenue and industrial properties accounted for 9.8%. We expect to continue to focus the future growth of the portfolio in neighborhood and community centers and bulk and office/service industrial properties in markets where we currently operate as well as other markets primarily throughout the United States. While we do not anticipate significant investment in other classes of real estate such as multi-family or office assets, we remain open to opportunistic uses of our undeveloped land.

We may either purchase or lease income-producing properties in the future, and may also participate with other entities in property ownership through partnerships, joint ventures or similar types of co-ownership. Equity investments may be subject to existing mortgage financing and other indebtedness or such financing or indebtedness may be incurred in connection with acquiring such investments.

We may invest in mortgages; however, we currently have only invested in first mortgages to joint ventures or partnerships in which we own an equity interest. We may also invest in securities of other issuers for the purpose, among others, of exercising control over such entities, subject to the gross income and asset tests necessary for REIT qualification.

Our operating strategy consists of intensive hands-on management and leasing of our properties. In acquiring and developing properties, we attempt to accumulate enough properties in a geographic area to allow for the establishment of a regional office, which enables us to obtain in-depth knowledge of the market from a leasing perspective and to have easy access to the property and our tenants from a management viewpoint.

Diversification from both a geographic and tenancy perspective is a critical component of our operating strategy. While over 38% of the building square footage of our properties is located in the State of Texas, we continue to expand our holdings outside the state. With respect to tenant diversification, our two largest merchants accounted for 3.0% and 1.6%, respectively, of our total rental revenues for the year-end December 31, 2006. No other tenant accounted for more than 1.5% of our total rental revenues.

We finance our growth and working capital needs in a conservative manner. We have a credit rating of A- from Standard & Poors and Baa1 from Moody's Investor Services. We intend to maintain a conservative approach to managing our balance sheet, which, in turn, gives us many options to raising debt or equity capital when needed. At December 31, 2006, our fixed charge coverage ratio was 2.4 to 1 and our debt to total market capitalization was 40.6%.

Our policies with respect to the investment and operating strategies discussed above are reviewed by our Board of Trust Managers periodically and may be modified without a vote of our shareholders.

Location of Properties .   Our properties are located in 22 states, primarily throughout the southern half of the country. Of our 389 properties that were owned or operated under long-term leases, either directly or through our interest in joint ventures or partnerships, as of December 31, 2006, 77 are located in the Houston metropolitan area and an additional 96 properties are located in other parts of Texas. We also have 15 parcels of unimproved land, nine of which are located in the Houston area and four of which are located in other parts of Texas. Because of our investments in the Houston area, as well as in other parts of Texas, the Houston and Texas economies affect, to a degree, our business and operations.


Economic Factors. The national economy remained strong in 2006. The US economy is expected to continue to grow in 2007, although at a more moderate pace. While the housing market and energy prices may indicate economic uncertainty, we are strategically positioned in markets that are forecasted to exceed the national average according to many economic measures. Many of our operating areas throughout the United States are showing high employment growth and higher than average rent growth among larger metropolitan areas. Any downturn in the economy could adversely affect us; however, the vast majority of our properties are located in densely populated metropolitan areas and are anchored by supermarkets and discount stores, which generally provide basic necessity-type items and tend to be less affected by economic changes.

Competition . We compete with numerous other developers and real estate companies (both public and private), financial institutions and other investors engaged in the development, acquisition and operation of shopping centers and commercial property in our trade areas. This results in competition for the acquisition of both existing income-producing properties and prime development sites. There is also competition for tenants to occupy the space that is developed, acquired and managed by our competitors or us.

We believe that the principal competitive factors in attracting tenants in our market areas are location, price, anchor tenants and maintenance of properties. We also believe that our competitive advantages include the favorable locations of our properties, knowledge of markets and customer bases, our ability to provide a retailer with multiple locations with anchor tenants and the practice of continuous maintenance and renovation of our properties.

Materials Available on Our Website . Copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports, as well as Reports on Forms 3, 4 and 5 regarding Officers, Trustees or 10% Beneficial Owners of the Company, filed or furnished pursuant to Section 13(a), 15(d) or 16(a) of the Securities Exchange Act of 1934 are available free of charge through our website ( www.weingarten.com ) as soon as reasonably practicable after we electronically file the material with, or furnish it to, the Securities and Exchange Commission. We have also made available on our website copies of our Audit Committee Charter, Management Development and Compensation Committee Charter, Governance Committee Charter, Code of Conduct and Ethics and Governance Policies. In the event of any changes to these charters or the code or guidelines, changed copies will also be made available on our website. You may also read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549.

Financial Information . Additional financial information concerning us is included in the Consolidated Financial Statements located on pages 45 through 72 herein.

ITEM 1A.   Risk Factors

The economic performance and value of our shopping centers depend on many factors, each of which could have an adverse impact on our cash flows and operating results.

The economic performance and value of our properties can be affected by many factors, including the following:

§  
Changes in the national, regional and local economic climate;
§  
Local conditions such as an oversupply of space or a reduction in demand for real estate in the area;
§  
The attractiveness of the properties to tenants;
§  
Competition from other available space;
§  
Our ability to provide adequate management services and to maintain our properties;
§  
Increased operating costs, if these costs cannot be passed through to tenants; and
§  
The expense of periodically renovating, repairing and releasing spaces.


Our properties consist primarily of neighborhood and community shopping centers and, therefore, our performance is linked to general economic conditions in the market for retail space. The market for retail space has been and may continue to be adversely affected by weakness in the national, regional and local economies where our properties are located, the adverse financial condition of some large retailing companies, the ongoing consolidation in the retail sector, the excess amount of retail space in a number of markets and increasing consumer purchases through catalogues and the Internet. To the extent that any of these conditions occur, they are likely to affect market rents for retail space. In addition, we may face challenges in the management and maintenance of the properties or encounter increased operating costs, such as real estate taxes, insurance and utilities, which may make our properties unattractive to tenants.

Our acquisition activities may not produce the cash flows that we expect and may be limited by competitive pressures or other factors.

We intend to acquire existing retail properties to the extent that suitable acquisitions can be made on advantageous terms. Acquisitions of commercial properties involve risks such as:

§  
Our estimates on expected occupancy and rental rates may differ from actual conditions;
§  
Our estimates of the costs of any redevelopment or repositioning of acquired properties may prove to be inaccurate;
§  
We may be unable to operate successfully in new markets where acquired properties are located, due to a lack of market knowledge or understanding of local economies;
§  
We may be unable to successfully integrate new properties into our existing operations; or
§  
We may have difficulty obtaining financing on acceptable terms or paying the operating expenses and debt service associated with acquired properties prior to sufficient occupancy.

In addition, we may not be in a position or have the opportunity in the future to make suitable property acquisitions on advantageous terms due to competition for such properties with others engaged in real estate investment. Our inability to successfully acquire new properties may have an adverse effect on our results of operations.

Our dependence on rental income may adversely affect our ability to meet our debt obligations and make distributions to our shareholders.

The substantial majority of our income is derived from rental income from real property. As a result, our performance depends on our ability to collect rent from tenants. Our income and funds for distribution would be negatively affected if a significant number of our tenants, or any of our major tenants (as discussed in more detail below):

§  
Delay lease commencements;
§  
Decline to extend or renew leases upon expiration;
§  
Fail to make rental payments when due; or
§  
Close stores or declare bankruptcy.

Any of these actions could result in the termination of the tenant’s leases and the loss of rental income attributable to the terminated leases. Lease terminations by an anchor tenant or a failure by that anchor tenant to occupy the premises could also result in lease terminations or reductions in rent by other tenants in the same shopping centers under the terms of some leases. In addition, we cannot be sure that any tenant whose lease expires will renew that lease or that we will be able to re-lease space on economically advantageous terms. The loss of rental revenues from a number of our tenants and our inability to replace such tenants may adversely affect our profitability and our ability to meet debt and other financial obligations and make distributions to the shareholders.



Our development and construction activities could affect our operating results.

We intend to continue the selective development and construction of retail properties in accordance with our development and underwriting policies as opportunities arise. Our development and construction activities include risks that:

§  
We may abandon development opportunities after expending resources to determine feasibility;
§  
Construction costs of a project may exceed our original estimates;
§  
Occupancy rates and rents at a newly completed property may not be sufficient to make the property profitable;
§  
Rental rates per square foot could be less than projected;
§  
Financing may not be available to us on favorable terms for development of a property;
§  
We may not complete construction and lease-up on schedule, resulting in increased debt service expense and construction costs; and
§  
We may not be able to obtain, or may experience delays in obtaining necessary zoning, land use, building, occupancy and other required governmental permits and authorizations.

Additionally, the time frame required for development, construction and lease-up of these properties means that we may have to wait years for a significant cash return. If any of the above events occur, the development of properties may hinder our growth and have an adverse effect on our results of operations. In addition, new development activities, regardless of whether or not they are ultimately successful, typically require substantial time and attention from management.

Real estate property investments are illiquid, and therefore we may not be able to dispose of properties when appropriate or on favorable terms.

Real estate property investments generally cannot be disposed of quickly. In addition, the federal tax code imposes restrictions on the ability of a REIT to dispose of properties that are not applicable to other types of real estate companies. Therefore, we may not be able to vary our portfolio in response to economic or other conditions promptly or on favorable terms, which could cause us to incur extended losses and reduce our cash flows and adversely affect distributions to shareholders.

Our cash flows and operating results could be adversely affected by required payments of debt or related interest and other risks of our debt financing.

We are generally subject to risks associated with debt financing. These risks include:

§  
Our cash flow may not satisfy required payments of principal and interest;
§  
We may not be able to refinance existing indebtedness on our properties as necessary or the terms of the refinancing may be less favorable to us than the terms of existing debt;
§  
Required debt payments are not reduced if the economic performance of any property declines;
§  
Debt service obligations could reduce funds available for distribution to our shareholders and funds available for acquisitions;
§  
Any default on our indebtedness could result in acceleration of those obligations and possible loss of property to foreclosure; and
§  
The risk that necessary capital expenditures for purposes such as re−leasing space cannot be financed on favorable terms.

If a property is mortgaged to secure payment of indebtedness and we cannot make the mortgage payments, we may have to surrender the property to the lender with a consequent loss of any prospective income and equity value from such property. Any of these risks can place strains on our cash flows, reduce our ability to grow and adversely affect our results of operations.



Property ownership through partnerships and joint ventures could limit our control of those investments and reduce our expected return.

Partnership or joint venture investments may involve risks not otherwise present for investments made solely by us, including the possibility that our partner or co-venturer might become bankrupt, that our partner or co-venturer might at any time have different interests or goals than us, and that our partner or co-venturer may take action contrary to our instructions, requests, policies or objectives. Other risks of joint venture investments could include impasse on decisions, such as a sale, because neither our partner or co-venturer nor we would have full control over the partnership or joint venture. These factors could limit the return that we receive from those investments or cause our cash flows to be lower than our estimates.

Our financial condition could be adversely affected by financial covenants.

Our credit facilities and public debt indentures under which our indebtedness is, or may be, issued contain certain financial and operating covenants, including, among other things, certain coverage ratios, as well as limitations on our ability to incur secured and unsecured indebtedness, sell all or substantially all of our assets and engage in mergers and consolidations and certain acquisitions. These covenants could limit our ability to obtain additional funds needed to address cash shortfalls or pursue growth opportunities or transactions that would provide substantial return to our shareholders. In addition, a breach of these covenants could cause a default under or accelerate some or all of our indebtedness, which could have a material adverse effect on our financial condition.
 
If we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal income tax as a regular corporation and could have significant tax liability.

We intend to operate in a manner that allows us to qualify as a REIT for U.S. federal income tax purposes. However, REIT qualification requires us to satisfy numerous requirements (some on an annual or quarterly basis) established under highly technical and complex provisions of the Internal Revenue Code, for which there are a limited number of judicial or administrative interpretations. Our status as a REIT requires an analysis of various factual matters and circumstances that are not entirely within our control. Accordingly, it is not certain we will be able to qualify and remain qualified as a REIT for U.S. federal income tax purposes. Even a technical or inadvertent violation of the REIT requirements could jeopardize our REIT qualification. Furthermore, Congress or the IRS might change the tax laws or regulations and the courts might issue new rulings, in each case potentially having retroactive effect that could make it more difficult or impossible for us to qualify as a REIT. If we fail to qualify as a REIT in any tax year, then:

§  
We would be taxed as a regular domestic corporation, which, among other things, means that we would be unable to deduct distributions to our shareholders in computing our taxable income and would be subject to U.S. federal income tax on our taxable income at regular corporate rates;
§  
Any resulting tax liability could be substantial and would reduce the amount of cash available for distribution to shareholders, and could force us to liquidate assets or take other actions that could have a detrimental effect on our operating results; and
§  
Unless we were entitled to relief under applicable statutory provisions, we would be disqualified from treatment as a REIT for the four taxable years following the year during which we lost our qualification, and our cash available for distribution to our shareholders therefore would be reduced for each of the years in which we do not qualify as a REIT.

Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow. We may also be subject to certain U.S. federal, state and local taxes on our income and property either directly or at the level of our subsidiaries. Any of these taxes would decrease cash available for distribution to our shareholders.

Compliance with REIT requirements may negatively affect our operating decisions.

To maintain our status as a REIT for U.S. federal income tax purposes, we must meet certain requirements, on an ongoing basis, including requirements regarding our sources of income, the nature and diversification of our assets, the amounts we distribute to our shareholders and the ownership of our shares. We may also be required to make distributions to our shareholders when we do not have funds readily available for distribution or at times when our funds are otherwise needed to fund capital expenditures.


As a REIT, we must distribute at least 90% of our annual net taxable income (excluding net capital gains) to our shareholders. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our net taxable income, we will be subject to U.S. federal corporate income tax on our undistributed taxable income. From time to time, we may generate taxable income greater than our income for financial reporting purposes, or our net taxable income may be greater than our cash flow available for distribution to our shareholders. If we do not have other funds available in these situations, we could be required to borrow funds, sell a portion of our securities at unfavorable prices or find other sources of funds in order to meet the REIT distribution requirements.

Dividends paid by REITs generally do not qualify for reduced tax rates.

In general, the maximum U.S. federal income tax rate for dividends paid to individual U.S. shareholders is 15% (through 2008). Unlike dividends received from a corporation that is not a REIT, our distributions to individual shareholders generally are not eligible for the reduced rates.

Our real estate investments may contain environmental risks that could adversely affect our operating results.

The acquisition of certain assets may subject us to liabilities, including environmental liabilities. Our operating expenses could be higher than anticipated due to the cost of complying with existing or future environmental laws and regulations. In addition, under various federal, state and local laws, ordinances and regulations, we may be considered an owner or operator of real property or to have arranged for the disposal or treatment of hazardous or toxic substances. As a result, we may become liable for the costs of removal or remediation of certain hazardous substances released on or in our property.

We may also be liable for other potential costs that could relate to hazardous or toxic substances (including governmental fines and injuries to persons and property). We may incur such liability whether or not we knew of, or were responsible for, the presence of such hazardous or toxic substances. Any liability could be of substantial magnitude and divert management’s attention from other aspects of our business and, as a result, could have a material adverse effect on our operating results and financial condition, as well as our ability to make distributions to the shareholders.

An uninsured loss or a loss that exceeds the policies on our properties could subject us to lost capital or revenue on those properties.

Under the terms and conditions of the leases currently in force on our properties, tenants generally are required to indemnify and hold us harmless from liabilities resulting from injury to persons, air, water, land or property, on or off the premises, due to activities conducted on the properties, except for claims arising from our negligence or intentional misconduct or that of our agents. Tenants are generally required, at the tenant’s expense, to obtain and keep in full force during the term of the lease, liability and property damage insurance policies. We have obtained comprehensive liability, casualty, property, flood and rental loss insurance policies on our properties. All of these policies may involve substantial deductibles and certain exclusions. In addition, we cannot assure the shareholders that the tenants will properly maintain their insurance policies or have the ability to pay the deductibles. Should a loss occur that is uninsured or in an amount exceeding the combined aggregate limits for the policies noted above, or in the event of a loss that is subject to a substantial deductible under an insurance policy, we could lose all or part of our capital invested in, and anticipated revenue from, one or more of the properties, which could have a material adverse effect on our operating results and financial condition, as well as our ability to make distributions to the shareholders.



Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make unintended expenditures that adversely affect our cash flows.

All of our properties are required to comply with the Americans with Disabilities Act (ADA). The ADA has separate compliance requirements for “public accommodations” and “commercial facilities,” but generally requires that buildings be made accessible to people with disabilities. Compliance with the ADA requirements could require removal of access barriers, and noncompliance could result in imposition of fines by the U.S. government or an award of damages to private litigants, or both. While the tenants to whom we lease properties are obligated by law to comply with the ADA provisions, and typically under tenant leases are obligated to cover costs associated with compliance, if required changes involve greater expenditures than anticipated, or if the changes must be made on a more accelerated basis than anticipated, the ability of these tenants to cover costs could be adversely affected. As a result, we could be required to expend funds to comply with the provisions of the ADA, which could adversely affect the results of operations and financial condition and our ability to make distributions to shareholders. In addition, we are required to operate the properties in compliance with fire and safety regulations, building codes and other land use regulations, as they may be adopted by governmental agencies and bodies and become applicable to the properties. We may be required to make substantial capital expenditures to comply with those requirements, and these expenditures could have a material adverse effect on our ability to meet the financial obligations and make distributions to our shareholders.

ITEM 1B.   Unresolved Staff Comments

None.


ITEM 2.   Properties

At December 31, 2006, our real estate properties consisted of 389 locations in 22 states. A complete listing of these properties, including the name, location, building area and land area:

       
Building
 
Land
 
Center and Location
     
Total
 
Total
 
               
Houston and Harris County, Total
         
6,804,000
   
23,395,000
 
Alabama-Shepherd, S. Shepherd at W. Alabama
         
56,000
   
176,000
 
Bayshore Plaza, Spencer Hwy. at Burke Rd.
         
122,000
   
196,000
 
Bellaire Boulevard, Bellaire at S. Rice
         
35,000
   
137,000
 
Braeswood Square, N. Braeswood at Chimney Rock
         
103,000
   
422,000
 
Centre at Post Oak, Westheimer at Post Oak Blvd.
         
184,000
   
505,000
 
Champions Village, F.M. 1960 at Champions Forest Dr.
         
408,000
   
1,391,000
 
Crestview, Bissonnet at Wilcrest
         
9,000
   
35,000
 
Cullen Place, Cullen at Reed
         
7,000
   
30,000
 
Cullen Plaza, Cullen at Wilmington
         
85,000
   
318,000
 
Cypress Pointe, F.M. 1960 at Cypress Station
         
288,000
   
737,000
 
Eastpark, Mesa Rd. at Tidwell
         
113,000
   
664,000
 
Edgebrook, Edgebrook at Gulf Fwy.
         
78,000
   
360,000
 
Fiesta Village, Quitman at Fulton
         
30,000
   
80,000
 
Fondren/West Airport, Fondren at W. Airport
         
62,000
   
223,000
 
Glenbrook Square, Telephone Road
         
76,000
   
320,000
 
Griggs Road, Griggs at Cullen
         
80,000
   
382,000
 
Harrisburg Plaza, Harrisburg at Wayside
         
93,000
   
334,000
 
Heights Plaza, 20th St. at Yale
         
72,000
   
228,000
 
Humblewood Shopping Plaza, Eastex Fwy. at F.M. 1960
         
279,000
   
784,000
 
I-45/Telephone Rd. Center, I-45 at Maxwell Street
         
164,000
   
819,000
 
Jacinto City, Market at Baca
   
*
   
50,000
   
134,000
 
Landmark, Gessner at Harwin
         
56,000
   
228,000
 
Lawndale, Lawndale at 75th St.
         
54,000
   
177,000
 
Little York Plaza, Little York at E. Hardy
         
117,000
   
483,000
 
Lyons Avenue, Lyons at Shotwell
         
68,000
   
178,000
 
Market at Westchase, Westheimer at Wilcrest
         
87,000
   
318,000
 
Northbrook Center, Northwest Fwy. at W. 34 th
         
174,000
   
655,000
 
North Main Square, Pecore at N. Main
         
19,000
   
64,000
 
North Oaks, F.M. 1960 at Veterans Memorial
         
425,000
   
1,646,000
 
North Triangle , I-45 at F.M. 1960
         
16,000
   
113,000
 
Northway, Northwest Fwy. at 34 th
         
209,000
   
793,000
 
Northwest Crossing, N.W. Fwy. at Hollister (75%)
   
* !
   
299,000
   
884,000
 
Oak Forest, W. 43rd at Oak Forest
         
164,000
   
541,000
 
Orchard Green, Gulfton at Renwick
         
74,000
   
273,000
 
Randall's /Cypress Station, F.M. 1960 at I-45
         
141,000
   
618,000
 
Randall's /Kings Crossing, Kingwood Dr. at Lake Houston Pkwy.
         
128,000
   
624,000
 
Randall's /Norchester, Grant at Jones
         
108,000
   
475,000
 
Richmond Square, Richmond Ave. at W. Loop 610
         
91,000
   
135,000
 
River Oaks East, W. Gray at Woodhead
         
71,000
   
206,000
 
River Oaks West, W. Gray at S. Shepherd
         
235,000
   
609,000
 
Sheldon Forest North , North, I-10 at Sheldon
   
*
   
22,000
   
131,000
 
Sheldon Forest South , North, I-10 at Sheldon
   
*
   
76,000
   
328,000
 
Shops at Three Corners, S. Main at Old Spanish Trail (70%)
   
*
   
252,000
   
1,007,000
 
Southgate, W. Fuqua at Hiram Clark
         
125,000
   
533,000
 
Spring Plaza, Hammerly at Campbell
         
56,000
   
202,000
 
Steeplechase, Jones Rd. at F.M. 1960
         
293,000
   
849,000
 
Stella Link , Stella Link at S. Braeswood
         
68,000
   
261,000
 
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
 
Village Arcade, University at Kirby
         
191,000
   
413,000
 
Westbury Triangle, Chimney Rock at W. Bellfort
         
67,000
   
257,000
 




Westchase Center, Westheimer at Wilcrest
         
336,000
   
754,000
 
Westhill Village, Westheimer at Hillcroft
         
131,000
   
479,000
 
                     
Texas (Excluding Houston & Harris Co.), Total
         
9,628,000
   
45,481,000
 
Bell Plaza, 45th Ave. at Bell St., Amarillo
         
129,000
   
682,000
 
Coronado, 34th St. at Wimberly Dr., Amarillo
         
48,000
   
201,000
 
Puckett Plaza, Bell Road, Amarillo
         
133,000
   
621,000
 
Wolflin Village, Wolflin Ave. at Georgia St., Amarillo
         
193,000
   
421,000
 
Brodie Oaks, South Lamar Blvd. at Loop 360, Austin
         
354,000
   
1,050,000
 
Southrigde Plaza, William Cannon Dr. at S. 1st St., Austin
         
143,000
   
565,000
 
Calder, Calder at 24th St., Beaumont
         
34,000
   
95,000
 
North Park Plaza, Eastex Fwy. at Dowlen, Beaumont
   
* !
   
238,000
   
636,000
 
Phelan West, Phelan at 23rd St., Beaumont (67%)
   
* !
   
83,000
   
89,000
 
Phelan, Phelan at 23rd St, Beaumont
         
12,000
   
63,000
 
Southgate, Calder Ave. at 6th St., Beaumont
         
34,000
   
118,000
 
Westmont, Dowlen at Phelan, Beaumont
         
98,000
   
507,000
 
North Towne Plaza, U.S. 77 and 83 at SHFM 802, Brownsville (75%)
   
# *
   
-
   
1,629,000
 
Gateway Station, I-35W and McAlister Rd., Burleson (70%)
   
# *
   
-
   
344,000
 
Lone Star Pavilions, Texas at Lincoln Ave., College Station
         
107,000
   
439,000
 
Rock Prairie Marketplace, Rock Prairie Rd. at Hwy. 6, College Station
   
#
   
-
   
2,590,000
 
Montgomery Plaza, Loop 336 West at I-45, Conroe
         
317,000
   
1,179,000
 
River Pointe, I-45 at Loop 336, Conroe
         
190,000
   
310,000
 
Moore Plaza, S. Padre Island Dr. at Staples, Corpus Christi
         
535,000
   
1,491,000
 
Portairs, Ayers St. at Horne Rd., Corpus Christi
         
117,000
   
416,000
 
Shoppes at Deer Creek, FM 731 at FM 1137, Crowley
         
75,000
   
635,000
 
Golden Beach Market Place, Golden Triangle Blvd. at N. Beach St., Ft. Worth
         
83,000
   
340,000
 
Overton Park Plaza, SW Loop 820/Interstate 20 at South Hulen St., Ft. Worth
         
463,000
   
1,636,000
 
Southcliff, I-20 at Grandbury Rd., Ft. Worth
         
116,000
   
568,000
 
Broadway , Broadway at 59th St., Galveston
         
76,000
   
220,000
 
Galveston Place, Central City Blvd. at 61st St., Galveston
         
210,000
   
828,000
 
Food King Place, 25th St. at Avenue P, Galveston
         
28,000
   
78,000
 
Festival Plaza, Helotes, TX
   
#
   
-
   
75,000
 
Killeen Marketplace, 3200 E. Central Texas Expressway, Killeen
         
251,000
   
512,000
 
Cedar Bayou, Bayou Rd., La Marque
         
46,000
   
51,000
 
North Creek Plaza, Del Mar Blvd. at Hwy. I-35, Laredo
         
451,000
   
1,251,000
 
Plantation Centre, Del Mar Blvd. at McPherson Rd., Laredo
         
135,000
   
596,000
 
League City Plaza, I-45 at F.M. 518, League City
         
127,000
   
680,000
 
Central Plaza, Loop 289 at Slide Rd., Lubbock
         
151,000
   
529,000
 
Northtown Plaza, 1st St. at University Plaza, Lubbock
         
74,000
   
308,000
 
Town and Country, 4th St. at University, Lubbock
         
51,000
   
339,000
 
Angelina Village, Hwy. 59 at Loop 287, Lufkin
         
257,000
   
1,835,000
 
Independence Plaza, Town East Blvd., Mesquite
         
179,000
   
787,000
 
South 10th St. HEB, S. 10th St. at Houston St., McAllen
   
* !
   
104,000
   
368,000
 
Las Tiendas Plaza, Expressway 83 at McColl Rd., McAllen
   
* !
   
530,000
   
910,000
 
Market at Nolana, Nolana Ave and 29th St., McAllen
   
# * !
   
-
   
508,000
 
Northcross, N. 10th St. at Nolana Loop, McAllen
   
* !
   
76,000
   
218,000
 
Old Navy Building, 1815 10th Street, McAllen
   
* !
   
16,000
   
62,000
 
Market at Sharyland Place, U.S. Expressway 83 and Shary Road, Mission
   
# * !
   
-
   
543,000
 
Sharyland Towne Crossing, U.S. Expressway 83 and Shary Road, Mission
   
* ! #
   
7,000
   
2,008,000
 
North Sharyland Crossing, Shary Rd. at North Hwy. 83, Mission
   
# * !
   
-
   
966,000
 
Custer Park, SWC Custer Road at Parker Road, Plano
         
181,000
   
376,000
 
Pitman Corners, Custer Road at West 15th, Plano
         
190,000
   
699,000
 
Gillham Circle, Gillham Circle at Thomas, Port Arthur
         
33,000
   
94,000
 
Starr Plaza, U.S. Hwy. 83 at Bridge St., Rio Grande City
   
* ! #
   
170,000
   
742,000
 
Rockwall, I-30 at Market Center Street, Rockwall
         
209,000
   
933,000
 
Plaza, Ave. H at Eighth Street, Rosenberg
   
*
   
82,000
   
270,000
 
Rose-Rich, U.S. Hwy. 90A at Lane Dr., Rosenberg
         
104,000
   
386,000
 
Lake Pointe Market Center, Dalrock Rd. at Lakeview Pkwy., Rowlett
         
121,000
   
294,000
 
Boswell Towne Center, Highway 287 at Bailey Boswell Rd., Saginaw
         
88,000
   
176,000
 
Fiesta Trails, I-10 at DeZavala Rd., San Antonio
         
488,000
   
1,589,000
 
Oak Park Village, Nacogdoches at New Braunfels, San Antonio
         
66,000
   
221,000
 




Parliament Square, W. Ave. at Blanco, San Antonio
         
120,000
   
484,000
 
Thousand Oaks, Thousand Oaks Dr. at Jones Maltsberger Rd., San Antonio
         
163,000
   
730,000
 
Valley View, West Ave. at Blanco Rd., San Antonio
         
90,000
   
341,000
 
Westover Square, 151 and Ingram, San Antonio (67%)
   
# *
   
-
   
501,000
 
First Colony Commons, Hwy. 59 at Williams Trace Blvd., Sugar Land
         
410,000
   
1,649,000
 
Market at Town Center, Town Center Blvd., Sugar Land
         
345,000
   
1,733,000
 
New Boston Road, New Boston at Summerhill, Texarkana
         
97,000
   
335,000
 
Island Market Place, 6th St. at 9th Ave., Texas City
         
27,000
   
90,000
 
Palmer Plaza, F.M. 1764 at 34th St., Texas City
         
197,000
   
367,000
 
Tomball Marketplace, FM 2920 and Future 249, Tomball
   
#
   
-
   
2,431,000
 
Broadway, S. Broadway at W. 9th St., Tyler
         
60,000
   
259,000
 
Crossroads, I-10 at N. Main, Vidor
         
116,000
   
484,000
 
                     
Florida, Total
         
7,217,000
   
30,934,000
 
Boca Lyons, Glades Rd. at Lyons Rd., Boca Raton
         
117,000
   
545,000
 
Sunset 19, US Hwy. 19 at Sunset Pointe Rd., Clearwater
         
273,000
   
1,078,000
 
Embassy Lakes, Sheraton St. at Hiatus Rd., Cooper City
         
180,000
   
618,000
 
Shoppes at Paradise Isle, 34940 Emerald Coast Pkwy, Destin (25%)
   
* !
   
172,000
   
765,000
 
Hollywood Hills Plaza, Hollywood Blvd. at North Park Rd., Hollywood
         
365,000
   
1,429,000
 
Indian Harbour Place, East Eau Gallie Boulevard, Indian Harbour Beach (25%)
   
* !
   
164,000
   
637,000
 
Argyle Village, Blanding at Argyle Forest Blvd., Jacksonville
         
305,000
   
1,329,000
 
TJ Maxx Plaza, 117th Avenue at Sunset Blvd., Kendall
         
162,000
   
540,000
 
Largo Mall, Ulmerton Rd. at Seminole Ave., Largo
         
576,000
   
1,888,000
 
Palm Lakes Plaza, Atlantic Boulevard and Rock Island Road, Maragate (20%)
   
* !
   
114,000
   
548,000
 
Lake Washington Crossing, Wickham Rd. at Lake Washington Rd., Melbourne (25%)
   
* !
   
119,000
   
580,000
 
Lake Washington Square, Wickham Rd. at Lake Washington Rd., Melbourne
         
112,000
   
688,000
 
Kendall Corners, Kendall Drive and SW 127th Avenue, Miami (20%)
   
* !
   
96,000
   
363,000
 
South Dade, South Dixie Highway and Eureka Drive, Miami (20%)
   
* !
   
220,000
   
1,229,000
 
Tamiami Trail Shops, S.W. 8th St. at S.W. 137th Ave., Miami
         
111,000
   
515,000
 
Northridge, E. Commercial Blvd. at Dixie Hwy., Oakland Park
         
235,000
   
901,000
 
Colonial Plaza, E. Colonial Dr. at Primrose Dr., Orlando
         
488,000
   
2,009,000
 
Colonial Landing, East Colonial Dr. at Maguire Boulevard, Orlando
   
* #
   
266,000
   
980,000
 
International Drive Value Center, International Drive and Touchstone Drive, Orlando (20%)
   
* !
   
186,000
   
985,000
 
Market at Southside, Michigan Ave. at Delaney Ave., Orlando
         
162,000
   
349,000
 
Phillips Crossing, Interstate 4 and Sand Lake Road, Orlando
   
#
   
-
   
697,000
 
Phillips Landing, Turkey Lake Rd., Orlando
   
#
   
-
   
311,000
 
The Marketplace at Dr. Phillips, Dr. Phillips Boulevard and Sand Lake Road, Orlando (20%)
   
* !
   
328,000
   
1,496,000
 
Westland Terrace Plaza, SR 50 at Apopka Vineland Rd., Orlando
         
251,000
   
361,000
 
Alafaya Square, Alafaya Trail, Oviedo (20%)
   
* !
   
176,000
   
917,000
 
University Palms, Alafaya Trail at McCullough Rd., Oviedo
         
99,000
   
522,000
 
East Lake Woodlands, East Lake Road and Tampa Road, Palm Harbor (20%)
   
* !
   
145,000
   
730,000
 
Shoppes at Parkland, Hillsboro Boulevard at State Road #7, Parkland
         
146,000
   
905,000
 
Flamingo Pines, Pines Blvd. at Flamingo Rd., Pembroke Pines
         
362,000
   
1,447,000
 
Pembroke Commons, University at Pines Blvd., Pembroke Pines
         
316,000
   
1,394,000
 
Publix at Laguna Isles, Sheridan St. at SW 196th Ave., Pembroke Pines
         
69,000
   
400,000
 
Vizcaya Square, Nob Hill Rd. at Cleary Blvd., Plantation
         
108,000
   
521,000
 
Quesada Commons, Quesada Avenue and Toledo Blade Boulevard, Port Charlotte (25%)
   
* !
   
59,000
   
313,000
 
Shoppes of Port Charlotte, Toledo Blade Boulevard and Tamiami Trail, Port Charlotte (25%)
   
* !
   
41,000
   
276,000
 
Marketplace at Seminole Towne Center, Central Florida Greenway and Rinehart Rd, Sanford
         
494,000
   
1,743,000
 
Venice Pines, Center Rd. at Jacaranda Blvd., Venice
         
97,000
   
525,000
 
Winter Park Corners, Aloma Ave. at Lakemont Ave., Winter Park
         
103,000
   
400,000
 
                     
California, Total
         
4,013,000
   
14,451,000
 
Jess Ranch Marketplace, Bear Valley Road at Jess Ranch Parkway, Apple Valley
   
* ! #
   
-
   
-
 
Centerwood Plaza, Lakewood Blvd. at Alondra Dr., Bellflower
         
71,000
   
333,000
 
Southampton Center, IH-780 at Southampton Rd., Benecia
         
162,000
   
596,000
 
580 Market Place, E. Castro Valley at Hwy. I-580, Castro Valley
         
100,000
   
444,000
 
Chino Hills Marketplace, Chino Hills Pkwy. at Pipeline Ave., Chino Hills
         
320,000
   
1,187,000
 
Buena Vista Marketplace, Huntington Dr. at Buena Vista St., Duarte
         
91,000
   
322,000
 
El Camino Promenade, El Camino Real at Via Molena, Encinitas
         
111,000
   
451,000
 
Freedom Centre, Freedom Blvd. At Airport Blvd., Watsonville
         
151,000
   
543,000
 




Fremont Gateway Plaza, Paseo Padre Pkwy. at Walnut Ave., Fremont
         
195,000
   
650,000
 
Hallmark Town Center, W. Cleveland Ave. at Stephanie Ln., Madera
         
85,000
   
365,000
 
Menifee Town Center, Antelope Rd. at Newport Rd., Menifee
         
248,000
   
658,000
 
Marshalls Plaza, McHenry at Sylvan Ave., Modesto
         
79,000
   
218,000
 
Prospectors Plaza, Missouri Flat Rd. at US Hwy. 50, Placerville
         
228,000
   
873,000
 
Shasta Crossroads, Churn Creek Rd. at Dana Dr., Redding
         
252,000
   
520,000
 
Ralphs Redondo, Hawthorne Blvd. at 182nd St., Redondo Beach
         
67,000
   
431,000
 
Arcade Square, Watt Ave. at Whitney Ave., Sacramento
         
76,000
   
234,000
 
Discovery Plaza, W. El Camino Ave. at Truxel Rd., Sacramento
         
93,000
   
417,000
 
Summerhill Plaza, Antelope Rd. at Lichen Dr., Sacramento
         
134,000
   
704,000
 
Valley, Franklin Boulevard and Mack Road, Sacramento
         
103,000
   
580,000
 
Silver Creek Plaza, E. Capital Expressway at Silver Creek Blvd., San Jose
         
196,000
   
573,000
 
Greenhouse Marketplace, Lewelling Blvd. at Washington Ave., San Leandro
         
238,000
   
578,000
 
Rancho San Marcos Village, San Marcos Blvd. at Rancho Santa Fe Rd., San Marcos
         
121,000
   
541,000
 
San Marcos Plaza, San Marcos Blvd. at Rancho Santa Fe Rd., San Marcos
         
81,000
   
116,000
 
Stony Point Plaza, Stony Point Rd. at Hwy. 12, Santa Rosa
         
199,000
   
619,000
 
Sunset Center, Sunset Ave. at State Hwy. 12, Suisun City
         
85,000
   
359,000
 
Creekside Center, Alamo Dr. at Nut Creek Rd., Vacaville
         
116,000
   
400,000
 
Westminster Center, Westminster Blvd. at Golden West St., Westminster
         
411,000
   
1,739,000
 
                     
Louisiana, Total
         
3,058,000
   
9,206,000
 
Seigen Plaza, Siegen Lane at Honore Lane, Baton Rouge
         
349,000
   
1,000,000
 
Park Terrace, U.S. Hwy. 171 at Parish, DeRidder
         
137,000
   
520,000
 
Town & Country Plaza, U.S. Hwy. 190 West, Hammond
         
227,000
   
645,000
 
Manhattan Place, Manhattan Blvd. at Gretna Blvd., Harvey
         
258,000
   
894,000
 
Ambassador Plaza, Ambassador Caffery at W. Congress, Lafayette
         
102,000
   
196,000
 
River Marketplace, Ambassador Caffery at Kaliste Saloom, Lafayette (20%)
   
* !
   
343,000
   
1,031,000
 
Westwood Village, W. Congress at Bertrand, Lafayette
         
141,000
   
942,000
 
Conn's Building, Ryan at 17th St., Lake Charles
         
23,000
   
36,000
 
14/Park Plaza, Hwy. 14 at General Doolittle, Lake Charles
         
207,000
   
535,000
 
K-Mart Plaza, Ryan St., Lake Charles
   
* !
   
210,000
   
126,000
 
Prien Lake Plaza, Prien Lake Rd. at Nelson Rd., Lake Charles
         
252,000
   
730,000
 
Southgate, Ryan at Eddy, Lake Charles
         
171,000
   
511,000
 
Orleans Station, Paris, Robert E. Lee at Chatham, New Orleans
         
5,000
   
31,000
 
Danville Plaza, Louisville at 19th, Monroe
         
144,000
   
539,000
 
University Place, 70th St. at Youree Dr., Shreveport (20%)
   
* !
   
376,000
   
1,077,000
 
Westwood, Jewella at Greenwood, Shreveport
         
113,000
   
393,000
 
                     
Nevada, Total
         
3,499,000
   
12,004,000
 
Eastern Horizon, Eastern Ave. at Horizon Ridge Pkwy., Henderson
         
211,000
   
478,000
 
Best in the West, Rainbow at Lake Mead Rd., Las Vegas
         
437,000
   
1,516,000
 
Charleston Commons, Charleston and Nellis, Las Vegas
         
338,000
   
1,316,000
 
Francisco Centre, E. Desert Inn Rd. at S. Eastern Ave., Las Vegas
         
148,000
   
639,000
 
Mission Center, Flamingo Rd. at Maryland Pkwy, Las Vegas
         
208,000
   
570,000
 
Paradise Marketplace, Flamingo Rd. at Sandhill, Las Vegas
         
149,000
   
537,000
 
Rainbow Plaza, Rainbow Blvd. at Charleston Blvd., Las Vegas
         
410,000
   
1,548,000
 
Rancho Towne & Country, Rainbow Blvd. at Charleston Blvd., Las Vegas
         
87,000
   
350,000
 
Tropicana Beltway, Tropicana Beltway at Fort Apache Rd., Las Vegas
   
* !
   
638,000
   
1,466,000
 
Tropicana Marketplace, Tropicana at Jones Blvd., Las Vegas
         
143,000
   
519,000
 
Westland Fair North, Charleston Blvd. At Decatur Blvd., Las Vegas
         
566,000
   
2,344,000
 
College Park S.C., E. Lake Mead Blvd. at Civic Ctr. Dr., North Las Vegas
         
164,000
   
721,000
 
                     
North Carolina, Total
         
3,366,000
   
18,880,000
 
Capital Square, Capital Blvd. at Huntleigh Dr., Cary
         
157,000
   
607,000
 
Harrison Pointe, Harrison Ave. at Maynard Rd., Cary
         
124,000
   
1,343,000
 
High House Crossing, NC Hwy 55 at Green Level W. Rd., Cary
         
90,000
   
606,000
 
Northwoods Market, Maynard Rd. at Harrison Ave., Cary
         
78,000
   
431,000
 
Parkway Pointe, Cory Parkway at S. R. 1011, Cary
         
80,000
   
461,000
 
Chatham Crossing, US 15/501 at Plaza Dr., Chapel Hill (25%)
   
* !
   
96,000
   
425,000
 
Galleria, Galleria Boulevard and Sardis Road, Charlotte
         
316,000
   
799,000
 
Johnston Road Plaza, Johnston Rd. at McMullen Creek Pkwy., Charlotte
         
80,000
   
466,000
 




Steele Creek Crossing, York Rd. at Steele Creek Rd., Charlotte
         
77,000
   
491,000
 
Whitehall Commons, NWC of Hwy. 49 at I-485, Charlotte
         
436,000
   
360,000
 
Bull City Market, Broad St. at West Main St., Durham
         
43,000
   
112,000
 
Durham Festival, Hillsborough Rd. at LaSalle St., Durham
         
134,000
   
487,000
 
Mineral Springs Village, Mineral Springs Rd. at Wake Forest Rd., Durham
         
58,000
   
572,000
 
Ravenstone Commons, Hwy 98 at Sherron Rd., Durham
         
60,000
   
374,000
 
Waterford Village, US Hwy 17 & US Hwy 74/76, Leland (75%)
   
# *
   
-
   
1,264,000
 
Pinecrest Plaza, Hwy. 15-501 at Morganton Rd., Pinehurst
         
250,000
   
1,438,000
 
Avent Ferry, Avent Ferry Rd. at Gorman St., Raleigh
         
117,000
   
669,000
 
Falls Pointe, Neuce Rd. at Durant Rd., Raleigh
         
189,000
   
659,000
 
Leesville Town Centre, Leesville Rd. at Leesville Church Rd., Raleigh
         
114,000
   
904,000
 
Lynnwood Collection, Creedmoor Rd at Lynn Road, Raleigh
         
86,000
   
429,000
 
Six Forks Station, Six Forks Rd. at Strickland Rd., Raleigh
         
468,000
   
1,843,000
 
Little Brier Creek, Little Brier Creek Lane and Brier Leaf Lane, Raleigh
         
63,000
   
90,000
 
Stonehenge Market, Creedmoor Rd. at Bridgeport Dr., Raleigh
         
188,000
   
669,000
 
Surf City Crossing, Highway 17 and Highway 210, Surf City
   
#
   
-
   
1,359,000
 
Heritage Station, Forestville Rd. at Rogers Rd., Wake Forest
         
62,000
   
392,000
 
The Shoppes at Caveness Farms, Capitol Blvd and Caveness Farms Ave, Wake Forest
   
#
   
-
   
1,630,000
 
                     
Arizona, Total
         
2,132,000
   
7,186,000
 
Palmilla Center, Dysart Rd. at McDowell Rd., Avondale
         
170,000
   
264,000
 
Raintree Ranch, Ray Road at Price Road, Chandler
   
#
   
60,000
   
759,000
 
University Plaza, Plaza Way at Milton Rd., Flagstaff
         
162,000
   
919,000
 
Val Vista Towne Center, Warner at Val Vista Rd., Gilbert
         
216,000
   
366,000
 
Arrowhead Festival S.C., 75th Ave. at W. Bell Rd., Glendale
         
177,000
   
157,000
 
Fry's Ellsworth Plaza, Broadway Rd. at Ellsworth Rd., Mesa
         
74,000
   
58,000
 
Monte Vista Village Center, Baseline Rd. at Ellsworth Rd., Mesa
         
104,000
   
353,000
 
Red Mountain Gateway, Power Rd. at McKellips Rd., Mesa
         
206,000
   
353,000
 
Camelback Village Square, Camelback at 7th Avenue, Phoenix
         
235,000
   
543,000
 
Laveen Village Market, Baseline Rd. at 51st St., Phoenix
   
#
   
108,000
   
773,000
 
Rancho Encanto, 35th Avenue at Greenway Rd., Phoenix
         
74,000
   
290,000
 
Squaw Peak Plaza, 16th Street at Glendale Ave., Phoenix
         
61,000
   
220,000
 
Fountain Plaza, 77th St. at McDowell, Scottsdale
         
105,000
   
445,000
 
Fry's Valley Plaza, S. McClintock at E. Southern, Tempe
         
145,000
   
570,000
 
Broadway Marketplace, Broadway at Rural, Tempe
         
83,000
   
347,000
 
Pueblo Anozira, McClintock Dr. at Guadalupe Rd., Tempe
         
152,000
   
769,000
 
                     
New Mexico, Total
         
1,473,000
   
4,489,000
 
Eastdale, Candelaria Rd. at Eubank Blvd., Albuquerque
         
118,000
   
601,000
 
North Towne Plaza, Academy Rd. at Wyoming Blvd., Albuquerque
         
103,000
   
607,000
 
Pavillions at San Mateo, I-40 at San Mateo, Albuquerque
         
196,000
   
791,000
 
Plaza at Cottonwood, Coors Bypass Blvd. at Seven Bar Loop Rd., Albuquerque
         
418,000
   
386,000
 
Wyoming Mall, Academy Rd. at Northeastern, Albuquerque
         
326,000
   
1,309,000
 
De Vargas, N. Guadalupe at Paseo de Peralta, Santa Fe
         
312,000
   
795,000
 
                     
Colorado, Total
         
2,707,000
   
13,648,000
 
Aurora City Place, E. Alameda at I225, Aurora
   
*
   
528,000
   
2,260,000
 
Bridges at Smoky Hill, Smoky Hill Rd. at S. Picadilly St., Aurora
   
*
   
59,000
   
272,000
 
Buckingham Square, Mississippi at Havana, Aurora
   
* #
   
-
   
-
 
Academy Place, Academy Blvd. at Union Blvd., Colorado Springs
         
261,000
   
404,000
 
Uintah Gardens, NEC 19th St. at West Uintah, Colorado Springs
         
212,000
   
677,000
 
Green Valley Ranch Towne Center, Tower Rd. at 48th Ave., Denver (37%)
   
* !
   
104,000
   
421,000
 
Lowry Town Center, 2nd Ave. at Lowry Ave., Denver
   
*
   
131,000
   
246,000
 
Gold Creek, Hwy. 86 at Elizabeth St., Elizabeth
   
*
   
80,000
   
160,000
 
CityCenter Englewood, S. Santa Fe at Hampden Ave., Englewood (51%)
   
*
   
307,000
   
453,000
 
Glenwood Meadows, Midland Ave. at W. Meadows, Glenwood Springs (41%)
   
* ! #
   
350,000
   
1,288,000
 
Highlands Ranch University Park, Highlands Ranch at University Blvd., Highlands Ranch (40%)
   
* !
   
88,000
   
534,000
 
Crossing at Stonegate, Jordon Rd. at Lincoln Ave., Parker (51%)
   
*
   
109,000
   
870,000
 
River Point at Sheridan, Highway 77 and Highway 88, Sheridan
   
# *
   
-
   
4,270,000
 
Thorncreek Crossing, Washington St. at 120th St., Thornton (51%)
   
*
   
386,000
   
1,157,000
 
Westminster Plaza, North Federal Blvd. at 72nd Ave., Westminster
   
*
   
92,000
   
636,000
 




Kansas, Total
         
251,000
   
454,000
 
Shawnee Village, Shawnee Mission Pkwy. at Quivera Rd., Shawnee
         
135,000
   
10,000
 
Kohl's, Wanamaker Rd. at S.W. 17th St., Topeka
         
116,000
   
444,000
 
                     
Oklahoma, Total
         
174,000
   
682,000
 
Market Boulevard , E. Reno Ave. at N. Douglas Ave., Midwest City
         
36,000
   
142,000
 
Town and Country, Reno Ave at North Air Depot, Midwest City
         
138,000
   
540,000
 
                     
Arkansas, Total
         
355,000
   
1,489,000
 
Markham Square, W. Markham at John Barrow, Little Rock
         
127,000
   
514,000
 
Markham West, 11400 W. Markham, Little Rock
         
178,000
   
769,000
 
Westgate, Cantrell at Bryant, Little Rock
         
50,000
   
206,000
 
                     
Tennessee, Total
         
656,000
   
3,396,000
 
Bartlett Towne Center, Bartlett Blvd. at Stage Rd., Bartlett
         
179,000
   
774,000
 
Mendenhall Commons, South Mendenahall Rd. and Sanderlin Avenue, Memphis
         
80,000
   
250,000
 
Commons at Dexter Lake, Dexter at N. Germantown, Memphis
         
229,000
   
1,013,000
 
Highland Square, Summer at Highland, Memphis
         
14,000
   
84,000
 
Ridgeway Trace, Memphis
   
#
   
-
   
715,000
 
Summer Center, Summer Ave. at Waring Rd., Memphis
         
154,000
   
560,000
 
                     
Missouri, Total
         
259,000
   
1,307,000
 
Ballwin Plaza, Manchester Rd. at Vlasis Dr., Ballwin
         
203,000
   
653,000
 
Western Plaza, Hwy 141 at Hwy 30, Fenton
   
* !
   
56,000
   
654,000
 
                     
Georgia, Total
         
2,167,000
   
8,199,000
 
Lakeside Marketplace, Cobb Parkway (US Hwy 41), Acworth
         
322,000
   
736,000
 
Camp Creek Marketplace II, Camp Creek Parkway and Carmia Drive, Atlanta
         
196,000
   
724,000
 
Publix at Princeton Lakes, Carmia Drive and Camp Creek Drive, Atlanta
         
68,000
   
336,000
 
Brookwood Square, East-West Connector at Austell Rd., Austell
         
253,000
   
971,000
 
Dallas Commons, US Highway 278 and Nathan Dean Boulevard, Dallas
         
95,000
   
244,000
 
Reynolds Crossing, Steve Reynolds and Old North Cross Rd., Duluth
         
116,000
   
407,000
 
Thompson Bridge Commons, Thompson Bridge Rd. at Mt. Vernon Rd., Gainesville
         
78,000
   
540,000
 
Grayson Commons, Grayson Hwy at Rosebud Rd., Grayson
         
77,000
   
510,000
 
Village Shoppes of Sugarloaf, Sugarloaf Pkwy at Five Forks Trickum Rd., Lawrenceville
         
148,000
   
831,000
 
Sandy Plains Exchange, Sandy Plains at Scufflegrit, Marietta
         
73,000
   
452,000
 
Brownsville Commons, Brownsville Road and Hiram-Lithia Springs Road, Powder Springs
         
82,000
   
205,000
 
Roswell Corners, Woodstock Rd. at Hardscrabble Rd., Roswell
         
319,000
   
784,000
 
Brookwood Marketplace, Peachtree Parkway at Mathis Airport Rd., Suwannee
         
340,000
   
1,459,000
 
                     
Utah, Total
         
633,000
   
1,660,000
 
Alpine Valley Center, Main St. at State St., American Fork (33%)
   
* !
   
200,000
   
447,000
 
Taylorsville Town Center, West 4700 South at Redwood Rd., Taylorsville
         
134,000
   
399,000
 
West Jordan Town Center, West 7000 South at S. Redwood Rd., West Jordan
         
299,000
   
814,000
 
                     
Illinois, Total
         
394,000
   
1,268,000
 
Lincoln Place, Hwy. 59, Fairview Heights
         
224,000
   
503,000
 
Lincoln Place II, Route 159 at Hwy. 50, Fairview Heights
         
170,000
   
765,000
 
                     
Maine, Total
         
205,000
   
963,000
 
The Promenade, Essex at Summit, Lewiston (75%)
   
*
   
205,000
   
963,000
 
                     
Kentucky, Total
         
683,000
   
3,176,000
 
Millpond Center, Boston at Man O’War, Lexington
         
144,000
   
773,000
 
Tates Creek, Tates Creek at Man O’ War, Lexington
         
185,000
   
660,000
 
Regency Shopping Centre, Nicholasville Rd.& West Lowry Lane, Lexington
         
136,000
   
590,000
 
Festival at Jefferson Court, Outer Loop at Jefferson Blvd., Louisville
         
218,000
   
1,153,000
 
                     
Washington, Total
         
617,000
   
1,888,000
 
Village at Liberty Lake, E. Country Vista Dr. at N. Liberty Rd., Liberty Lake
   
* ! #
   
143,000
   
142,000
 
Mukilteo Speedway Center, Mukilteo Speedway, Lincoln Way, and Highway 99, Lynnwood (20%)
   
* !
   
90,000
   
353,000
 




Meridian Town Center, Meridian Avenue East and 132nd Street East, Puyallup (20%)
 
  * !
 
  143,000
 
  535,000
 
South Hill Center, 43rd Avenue Southwest and Meridian Street South, Puyallup (20%)
   
* !
   
134,000
   
514,000
 
Rainier Square Plaza, Rainer Avenue South and South Charleston Street, Seattle (20%)
   
* !
   
107,000
   
344,000
 
                     
                     
Oregon Total
         
177,000
   
382,000
 
Clackamas Square, SE 82nd Avenue and SE Causey Avenue, Portland (20%)
   
* !
   
137,000
   
216,000
 
Raleigh Hills Plaza, SW Beaverton-Hillsdale Hwy and SW Scholls Ferry Road, Portland (20%)
   
* !
   
40,000
   
166,000
 
                     
South Carolina, Total
         
87,000
   
436,000
 
Fresh Market Shoppes, 890 William Hilton Head Pkwy, Hilton Head (25%)
   
* !
   
87,000
   
436,000
 
                     
                     
INDUSTRIAL
                   
                     
Houston and Harris County, Total
         
5,242,000
   
13,308,000
 
1919 North Loop West, Hacket Drive at West Loop 610 North
         
140,000
   
157,000
 
Beltway 8 Business Park, Beltway 8 at Petersham Dr.
         
158,000
   
499,000
 
Blankenship Building, Kempwood Drive
         
59,000
   
175,000
 
Brookhollow Business Center, Dacoma at Directors Row
         
133,000
   
405,000
 
Central Park Northwest VI, Central Pkwy. at Dacoma
         
175,000
   
518,000
 
Central Park Northwest VII, Central Pkwy. at Dacoma
         
103,000
   
283,000
 
Claywood Industrial Park, Clay at Hollister
         
330,000
   
1,761,000
 
Crosspoint Warehouse, Crosspoint
         
73,000
   
179,000
 
Jester Plaza Office Service Center, West T.C. Jester
         
101,000
   
244,000
 
Kempwood Industrial, Kempwood Dr. at Blankenship Dr.
         
113,000
   
327,000
 
Kempwood Industrial, Kempwood Dr. at Blankenship Dr. (20%)
   
* !
   
207,000
   
531,000
 
Lathrop Warehouse, Lathrop St. at Larimer St. (20%)
   
* !
   
253,000
   
435,000
 
Navigation Business Park, Navigation at N. York (20%)
   
* !
   
238,000
   
555,000
 
Northway Park II, Loop 610 East at Homestead (20%)
   
* !
   
304,000
   
746,000
 
Railwood F, Market at U.S. 90 (20%)
   
* !
   
300,000
   
559,000
 
Railwood Industrial Park, Mesa at U.S. 90
         
616,000
   
1,651,000
 
Railwood Industrial Park, Mesa at U.S. 90 (20%)
   
* !
   
498,000
   
1,061,000
 
South Loop Business Park, S. Loop at Long Dr.
   
* !
   
92,000
   
206,000
 
Southport Business Park 5, South Loop 610
         
161,000
   
358,000
 
Southwest Park II Service Center, 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
         
129,000
   
331,000
 
West 10 Business Center II, Wirt Rd. at I-10
         
83,000
   
147,000
 
Westgate Service Center, Park Row Drive at Whiteback Dr.
         
119,000
   
499,000
 
West Loop Commerce Center, W. Loop N. at I-10
         
34,000
   
91,000
 
610 and 11th St. Warehouse, Loop 610 at 11th St.
         
105,000
   
202,000
 
610 and 11th St. Warehouse, Loop 610 at 11th St. (20%)
   
* !
   
244,000
   
539,000
 
610/288 Business Park , Cannon Street (20%)
   
* !
   
295,000
   
482,000
 
                     
Texas (excluding Houston & Harris Co.), Total
         
3,879,000
   
9,515,000
 
Midpoint I-20 Distribution Center, New York Avenue and Arbrook Boulevard, Arlington
         
253,000
   
593,000
 
Randol Mill Place, Randol Mill Road, Arlington
         
55,000
   
178,000
 
Braker 2 Business Center, Kramer Ln. at Metric Blvd., Austin
         
27,000
   
93,000
 
Corporate Center Park I and II, Putnam Dr. at Research Blvd., Austin
         
117,000
   
326,000
 
Oak Hills Industrial Park, Industrial Oaks Blvd., Austin
         
90,000
   
340,000
 
Rutland 10 Business Center, Metric Blvd. At Centimeter Circle, Austin
         
54,000
   
139,000
 
Southpark A,B,C, East St. Elmo Rd. at Woodward St., Austin
         
78,000
   
238,000
 
Southpoint Service Center, Burleson at Promontory Point Dr., Austin
         
54,000
   
234,000
 
Wells Branch Corporate Center, Wells Branch Pkwy., Austin
         
59,000
   
183,000
 
1625 Diplomat Drive, SWC Diplomat Dr. at McDaniel Dr., Carrollton
         
106,000
   
199,000
 
Midway Business Center, Midway at Boyington, Carrollton
         
141,000
   
309,000
 
Manana Office Center, I-35 at Manana, Dallas
         
223,000
   
473,000
 
Newkirk Service Center, Newkirk near N.W. Hwy., Dallas
         
106,000
   
223,000
 
Northaven Business Center, Northaven Rd., Dallas
         
151,000
   
178,000
 
Northeast Crossing Office/Service Center, East N.W. Hwy. at Shiloh, Dallas
         
79,000
   
199,000
 




Northwest Crossing Office/Service Center, N.W. Hwy. at Walton Walker, Dallas
         
127,000
   
290,000
 
Redbird Distribution Center, Joseph Hardin Drive, Dallas
         
111,000
   
233,000
 
Regal Distribution Center, Leston Avenue, Dallas
         
203,000
   
318,000
 
Space Center Industrial Park, Pulaski St. at Irving Blvd., Dallas
         
265,000
   
426,000
 
McGraw Hill Distribution Center, 420 E. Danieldale Rd, DeSoto
         
418,000
   
888,000
 
Freeport Commerce Center, Sterling Street and Statesman Drive, Irving
         
51,000
   
196,000
 
Central Plano Business Park, Klein Rd. at Plano Pkwy., Plano
         
138,000
   
415,000
 
Jupiter Service Center, Jupiter near Plano Pkwy., Plano
         
78,000
   
234,000
 
Sherman Plaza Business Park, Sherman at Phillips, Richardson
         
101,000
   
312,000
 
Interwest Business Park, Alamo Downs Parkway, San Antonio
         
218,000
   
742,000
 
Isom Business Park, 919-981 Isom Road, San Antonio
         
175,000
   
462,000
 
O'Connor Road Business Park, O’Connor Road, San Antonio
         
150,000
   
459,000
 
Freeport Business Center, 13215 N. Promenade Blvd., Stafford
         
251,000
   
635,000
 
                     
Georgia, Total
         
1,568,000
   
4,343,000
 
Atlanta Industrial Park II & VI, Atlanta Industrial Pkwy. at Atlanta Industrial Dr., Atlanta
         
552,000
   
1,755,000
 
Sears Logistics, 3700 Southside Industrial Way, Atlanta (20%)
   
* !
   
403,000
   
890,000
 
Southside Industrial Parkway, Southside Industrial Pkwy at Jonesboro Rd., Atlanta
         
72,000
   
242,000
 
Kennesaw 75, 3850-3900 Kennesaw Prkwy, Kennesaw
         
178,000
   
491,000
 
6485 Crescent Drive, I-85 at Jimmy Carter Blvd., Norcross (20%)
   
* !
   
363,000
   
965,000
 
                     
Tennessee, Total
         
1,142,000
   
2,658,000
 
Crowfarn Drive Warehouse, Crowfarn Dr. at Getwell Rd., Memphis (20%)
   
* !
   
161,000
   
316,000
 
Outland Business Center, Outland Center Dr., Memphis (20%)
   
* !
   
410,000
   
1,215,000
 
Southpoint I & II, Pleasant Hill Rd. at Shelby Dr., Memphis
         
571,000
   
1,127,000
 
                     
Florida, Total
         
1,496,000
   
3,700,000
 
Lakeland Industrial Center, I-4 at County Rd., Lakeland
         
600,000
   
1,535,000
 
1801 Massaro, 1801 Massaro Blvd., Tampa
         
159,000
   
337,000
 
Hopewell Industrial Center, Old Hopewell Boulevard and U.S. Highway 301, Tampa
         
224,000
   
486,000
 
Tampa East Industrial Portfolio, 1841 Massaro Blvd., Tampa
         
513,000
   
1,342,000
 
                     
California, Total
         
1,043,000
   
2,548,000
 
1725 Dornoch, Donroch Court, San Diego
         
112,000
   
268,000
 
1855 Dornoch, Donroch Court, San Diego
         
205,000
   
520,000
 
Siempre Viva Business Park, Siempre Viva Rd. at Kerns St., San Diego (20%)
   
* !
   
726,000
   
1,760,000
 
                     
UNIMPROVED LAND
                   
                     
Houston & Harris County, Total
               
2,402,000
 
Bissonnet at Wilcrest
               
175,000
 
Citadel Plaza at 610 North Loop
               
137,000
 
East Orem
               
122,000
 
Kirkwood at Dashwood Drive
               
322,000
 
Mesa Road at Tidwell
               
901,000
 
Northwest Freeway at Gessner
               
422,000
 
Shaver at Denham
               
17,000
 
West Little York at Interstate 45
               
161,000
 
West Loop North at Interstate 10
               
145,000
 
                     
Texas (excluding Houston & Harris Co.), Total
               
1,121,000
 
River Pointe Drive at Interstate 45, Conroe
   
#
         
590,000
 
NEC of US Hwy 380 & Hwy 75, McKinney
               
87,000
 
9th Ave. at 25th St., Port Arthur
               
243,000
 
Highway 3 at Highway 1765, Texas City
               
201,000
 
                     
                     
Louisiana, Total
               
462,000
 
U.S. Highway 171 at Parish, DeRidder
               
462,000
 
 
                   
North Carolina, Total
               
1,750,000
 
The Shoppes at Caveness Farms
               
1,750,000
 



Weingarten Realty Investors
 
Property Listing at December 31, 2006
 
               
               
   
NUMBER OF
 
BUILDING
 
LAND
 
ALL PROPERTIES-BY LOCATION
 
PROPERTIES
 
TOTAL
 
TOTAL
 
               
Grand Total
   
389
   
64,925,000
   
246,781,000
 
Texas (excluding Houston and Harris County)
   
96
   
13,507,000
   
56,117,000
 
Houston & Harris County
   
77
   
12,046,000
   
39,105,000
 
Florida
   
41
   
8,713,000
   
34,634,000
 
California
   
30
   
5,056,000
   
16,999,000
 
North Carolina
   
26
   
3,366,000
   
20,630,000
 
Louisiana
   
16
   
3,058,000
   
9,668,000
 
Arizona
   
16
   
2,132,000
   
7,186,000
 
Colorado
   
15
   
2,707,000
   
13,648,000
 
Georgia
   
18
   
3,735,000
   
12,542,000
 
Nevada
   
12
   
3,499,000
   
12,004,000
 
Tennessee
   
9
   
1,798,000
   
6,054,000
 
New Mexico
   
6
   
1,473,000
   
4,489,000
 
Oklahoma
   
2
   
174,000
   
682,000
 
Arkansas
   
3
   
355,000
   
1,489,000
 
Utah
   
3
   
633,000
   
1,660,000
 
Kentucky
   
4
   
683,000
   
3,176,000
 
Kansas
   
2
   
251,000
   
454,000
 
Missouri
   
2
   
259,000
   
1,307,000
 
Illinois
   
2
   
394,000
   
1,268,000
 
Maine
   
1
   
205,000
   
963,000
 
Washington
   
5
   
617,000
   
1,888,000
 
South Carolina
   
1
   
87,000
   
436,000
 
Oregon
   
2
   
177,000
   
382,000
 
                     
                     
ALLPROPERTIES-BY CLASSIFICATION
                   
Grand Total
   
389
   
64,925,000
   
246,781,000
 
Shopping Centers
   
322
   
50,555,000
   
204,974,000
 
Industrial
   
67
   
14,370,000
   
36,072,000
 
Unimproved Land
   
0
         
5,735,000
 
                     

Total square footage includes 465,000 square feet of building area and 11,933,000   square feet of land leased from others.

_______________

 
*
 
Denotes partial ownership. Our interest is 50% except where noted. The square feet figures represent the total property amounts.
 
 
 
 
  #
Denotes property under development.

 
!
 
Denotes properties of an unconsolidated joint venture. These properties are not consolidated in our financial statements.


 

General. In 2006 no single property accounted for more than 2.1% of our total assets or 1.5% of gross revenues. Five properties, in the aggregate, represented approximately 7.0% of our gross revenues for the year ended December 31, 2006; otherwise, none of the remaining properties accounted for more than 1.3% of our gross revenues during the same period. The weighted average occupancy rate for all of our improved properties as of December 31, 2006 was 94.1% compared to 94.2% as of December 31, 2005.

Substantially all of our properties are owned directly by us (subject in some cases to mortgages), although our interests in some properties are held indirectly through interests in joint ventures or under long-term leases. In our opinion, our properties are well maintained and in good repair, suitable for their intended uses, and adequately covered by insurance.

We participate in 65 joint ventures or partnerships that hold 103 of our properties. Our ownership interest ranges from 20% to 99%; we are normally the managing or operating partner and receive a fee for acting in this capacity.

We may use a DownREIT operating partnership structure in the acquisition of some real estate properties. In these transactions, a fair value purchase price is agreed upon between us, as general partner of the DownREIT, and the seller where the seller receives operating partnership units in exchange for some or all of its ownership interest in the property. Each operating partnership unit is the equivalent of one of our common shares of beneficial interest. These units generally allow our partners the right to put their limited partnership units interest to us on or after the first anniversary of the entity’s formation. We may acquire these limited partnership units for either cash or a fixed number of our common shares at our discretion.

Shopping Centers. At December 31, 2006, we owned or operated under long-term leases, either directly or through our interest in joint ventures or partnerships, a total of 297 developed income-producing properties and 25 properties under various stages of construction and development. Our shopping centers are located Arizona, Arkansas, California, Colorado, Florida, Georgia, Illinois, Kansas, Kentucky, Louisiana, Maine, Missouri, Nevada, New Mexico, North Carolina, Oklahoma, Oregon, South Carolina, Tennessee, Texas, Utah and Washington.

Our shopping centers are primarily neighborhood and community shopping centers that range in size from 100,000 to 600,000 square feet of building area, as distinguished from small strip centers, which generally contain 5,000 to 25,000 square feet, and from large regional enclosed malls. Almost none of the centers have climatized common areas, but are designed to allow retail customers to park their automobiles in close proximity to any retailer in the center. Our 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 that have existing populations sufficient to support retail activities of the types conducted in our centers.

We have approximately 6,600 separate leases with 4,800 different tenants. Included among our top revenue-producing tenants are: The Kroger Co., T.J.X. Companies, Ross Stores, Safeway, Publix, Office Depot, Blockbuster Video, Home Depot, Barnes & Noble, and the Gap. The diversity of our tenant base is also evidenced by the fact that our largest tenant accounted for only 3.0% of rental revenues during 2006.

In the ordinary course of business, we have tenants who cease making payments under their leases or who file for bankruptcy protection. We are unable to predict or forecast the timing of store closings or unexpected vacancies; however, we believe the effect of this will not have a material impact on our financial position, results of operations, or our liquidity due to the significant diversification of our tenant base.

Our 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 25 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, with each of these periods 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, market conditions or an amount of the tenant's sales during the primary term.


Most of our 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 these items). They also provide for the payment of additional rentals based on a percentage of the tenants' sales. Utilities are generally paid directly by tenants except where common metering exists with respect to a center. In this case we make payments for the utilities, and the tenants on a monthly basis reimburse us. Generally, our leases prohibit the tenant from assigning or subletting its space. They also require the tenant to use its space for the purpose designated in its lease agreement and to operate its business on a continuous basis. Some of the lease agreements with major tenants contain modifications of these basic provisions in view of the financial condition, stability or desirability of those 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 that lease agreement.

During 2006 we invested approximately $781 million in the acquisition of operating retail properties. Approximately $402 million was invested in 17 shopping centers and $54 million was invested in two unconsolidated joint ventures to acquire 11 retail properties. We also invested $325 million in the Woolbright Properties Portfolio, 80% of which was subsequently bought from us as part of a joint venture arrangement with TIAA-CREF Global Real Estate. These combined acquisitions added 4.0 million square feet to our share of the portfolio.

In March 2006 we acquired Fresh Market Shoppes Shopping Center, an 87,000 square foot shopping center located in Hilton Head, South Carolina. Fresh Market and Bonefish Grill anchor this specialty retail center. We also acquired The Shoppes at Paradise Isle, a 172,000 shopping center located in Destin, Florida. Best Buy, Linens-N-Things, PetsMart and Office Depot anchor this property. Both of these shopping centers were acquired through a 25%-owned unconsolidated joint venture.

In April 2006 Valley Shopping Center, a 103,000 square foot shopping center anchored by Raley’s Supermarket was acquired. The center has below-market rents providing strong growth opportunities and is in close proximity to our regional office in Sacramento.

In May 2006 Brownsville Commons, an 82,000 square foot shopping center including a 54,000 square foot (corporate owned) Kroger supermarket, was acquired in Powder Springs, Georgia, a suburb of Atlanta. The Shoppes of Parkland, was also acquired, which is a 146,000 square foot shopping center located in Parkland, Florida and is anchored by BJ’s Wholesale. This center services two upper income neighborhoods, Parkland and Boca Raton.

In June 2006 we purchased a property in California and acquired a shopping center in Florida through a 25%-owned unconsolidated joint venture. Freedom Centre, anchored by Ralph’s and Rite Aid, is a 151,000 square foot shopping center located in Freedom, California. Indian Harbour Place is a 164,000 square foot shopping center located in Melbourne, Florida and is anchored by Publix.
 
In July 2006 we acquired Mendenhall Commons, an 80,000 square foot grocery-anchored neighborhood shopping center located in the affluent East Memphis submarket of Memphis, Tennessee. Kroger anchors the center. We also acquired the Regency Shopping Center, located in Lexington, Kentucky, and Little Brier Creek Lane in Raleigh, North Carolina. Regency Shopping Center is a 136,000 square foot shopping center, which is anchored by Kroger (corporate owned), Michael’s and TJ Maxx. Little Brier Creek Lane is a 63,000 square foot shopping center anchored by Pei Wei.

Quesada Commons, a 59,000 square foot shopping center, and Shoppes of Port Charlotte, a 41,000 square foot shopping center, were acquired through a 25%-owned unconsolidated joint venture in July 2006. Both centers are located in Port Charlotte, Florida and are recently constructed shopping centers. Publix, Florida’s dominant supermarket chain, anchors Quesada Commons, and Petco and Panera Bread anchor the Shoppes of Port Charlotte .


In August 2006 we acquired the North American Properties portfolio consisting of five retail properties, including four properties in metropolitan Atlanta, Georgia and one in Sanford, Florida, a suburb north of Orlando. The properties are all new construction and are anchored by strong national tenants as described in the below table:
 
Center Name
Square Feet of Property*
 
Location
Anchors
 
Occupancy at Acquisition Date
Brookwood Marketplace
253,000
 
Suwannee (Atlanta), GA
SuperTarget*, Home Depot, OfficeMax
 
96%
Camp Creek Phase II
196,000
 
Atlanta, GA
SuperTarget*, Circuit City
 
99%
Lakeside Marketplace
322,000
 
Acworth (Atlanta), GA
SuperTarget*, Circuit City, Ross Dress for Less, PETCO, OfficeMax
 
100%
Publix at Princeton Lakes
68,000
 
Atlanta, GA
Publix
 
100%
Marketplace at Seminole Towne Center
494,000
 
Sanford (Orlando), FL
SuperTarget*, Circuit City, Linens ‘n Things, Marshalls, PETCO
 
99%
*   Target owns its own property and is not part of the transaction.

The purchase agreement allows for the subsequent development and leasing of an additional phase of Brookwood Marketplace by the property seller. If the terms of the purchase agreement are met by the seller, the purchase price would be increased by approximately $6.9 million. This agreement expires in August 2008.

In September 2006 Dallas Commons and Reynolds Crossing were acquired in Atlanta, Georgia. Dallas Commons is a 95,000 square foot shopping center and Reynolds Crossing is an 116,000 square foot shopping center. Both centers are anchored by a 70,000 square foot (corporate owned) Kroger supermarket.

The Woolbright Properties Portfolio was acquired, which consisted of seven neighborhood/community anchored retail shopping centers. Five of the centers were purchased in September 2006 with Alafaya Square and the Marketplace at Dr. Phillips purchased in early October 2006. This acquisition added 1.3 million square feet to our portfolio, and represented a total investment of $325 million. All seven properties are located in highly desirable locations within Florida’s three largest metropolitan markets of South Florida, Orlando, and Tampa/St. Petersburg. The centers are leased to a diverse mix of strong national retailers as described in the table below:

Center Name
Square Feet of Property
 
Location
Anchors
 
Occupancy at Acquisition Date
Alafaya Square
176,000
 
Oviedo (Orlando), FL
Publix, Planet Fitness
 
100%
Marketplace at Dr. Phillips
328,000
 
Orlando, FL
Albertson’s, Stein Mart, HomeGoods, Office Depot
 
99%
East Lake Woodlands
145,000
 
Palm Harbor (Tampa), FL
Publix, Walgreens
 
91%
International Drive Value Center
186,000
 
Orlando, FL
Bed Bath & Beyond, Ross, TJ Maxx
 
100%
Kendall Corners
96,000
 
Miami, FL
Ashley Furniture
 
100%
Palm Lakes Plaza
114,000
 
Maragate (Ft. Lauderdale), FL
Publix, CVS
 
99%
South Dade Shopping Center
220,000
 
Miami, FL
Publix, Bed Bath & Beyond, PETCO
 
100%


In November 2006, 80% of the Woolbright Properties Portfolio was sold as part of a joint venture arrangement with TIAA-CREF Global Real Estate.

In November 2006 we purchased six properties, four in Washington and two in Oregon through a 20%-owned unconsolidated joint venture. The centers are leased to a diverse mix of strong national retailers as described in the table below:

Center Name
Square Feet of Property
 
Location
Anchors
 
Occupancy at Acquisition Date
Mukilteo Speedway Center
90,000
 
Lynnwood (Seattle), WA
Food Emporium, Bartell Drug
 
96%
Meridian Town Center
143,000
 
Puyallup (Tacoma), WA
Safeway, JoAnn’s
 
100%
Rainier Valley Square
107,000
 
Seattle, WA
Safeway, Long Drugs
 
100%
South Hill Center
134,000
 
Puyallup (Tacoma), WA
Best Buy, Bed Bath & Beyond and Ross
 
99%
Clackamas Square
137,000
 
Portland, OR
TJ Maxx
 
100%
Raleigh Hills Plaza
40,000
 
Portland, OR
Walgreen, New Season Market
 
100%

In December 2006 we acquired Galleria Shopping Center in Charlotte, North Carolina and Charleston Commons in Las Vegas, Nevada. Galleria is a 316,000 square foot shopping center anchored by Cato Corporation and Dollar Tree. Charleston Commons, a 338,000 square foot shopping center, is anchored by Walmart, Office Max, Ross and PetSmart. We also acquired our partner’s share of Heritage Station, which is located in Wake Forest, North Carolina. Heritage Station is a 62,000 square foot shopping center that is anchored by Harris Teeter.

In 2006 we sold 19 wholly-owned shopping centers totaling 2.9 million square feet of building area. We also sold two joint venture properties totaling 97,000 square feet. Sales proceeds from these dispositions totaled $300 million and generated gains of $145 million.

Industrial Properties.   At December 31, 2006, we owned, either directly or through our interest in joint ventures or partnerships, 67 industrial projects with approximately 50.6 million square feet of building area. We have approximately 690 tenants and 749 leases. Our industrial properties consist of bulk warehouse, business distribution and office-service center assets ranging in size from 27,000 to 616,000 square feet. Similar to our shopping centers, these properties are customarily constructed of masonry, steel and glass, and have lighted, concrete parking areas and are well landscaped. The national and regional tenants in our industrial centers include Hitachi Transport Systems, Sears Logistics, Publix, Shell, Rooms to Go, UPS Supply Chain Solutions, Sanderson Industries, Stone Container, General Electric Company, G.E. Polymershapes, Inc., Interline Brands, Inc., Constar International, Inc., Rooftop Systems Inc., Wells Fargo Bank, and Iron Mountain. Its properties are located in California, Florida, Georgia, Tennessee and Texas. During 2006 we invested approximately $82 million in the acquisition of seven industrial properties totaling 1.4 million square feet.

In February 2006 we acquired the McGraw Hill Distribution Center, a single tenant warehouse of 418,000 square feet located in De Soto, Texas.

In June 2006 we acquired two vacant industrial warehouse buildings in San Diego, California at 1725 and 1855 Dornoch Court. These state-of-the-art buildings, aggregating 317,000 square feet, are located within one and a half miles of our Siempre Viva Business Park. Based on the high demand for top quality space in this area, we anticipate leasing both newly acquired buildings within the next year.

In October 2006 we acquired Midpoint I-20 Distribution Center, a 253,000 square foot property located in Arlington, Texas.

In November 200 6 we acquired Hopewell Industrial Center in Tampa, Florida and Freeport Commerce Center located in Irving, Texas. These centers aggregate 224,000 and 51,000 square feet, respectively.


In December 2006 we acquired 1919 North Loop West, an office building adjacent to our corporate headquarters in Houston, Texas where we intend to relocate some of our administrative operations. The building contains 140,000 square feet.

During 2006 we sold four industrial properties totaling 616,000 square feet. We also formed an industrial joint venture where five properties totaling 2.1 million square feet were contributed to a joint venture, and we retained a 20% interest. Sales proceeds from these dispositions totaled $115 million and generated gains of $26 million.

Other . In 2005 we began development of a 224-unit apartment complex within a multi-use master planned project. This represents Phase II of a project where the initial phase was completed in 2001 and sold in 2002. We anticipate completing the project in 2007.

Unimproved Land. At December 31, 2006, we owned 15 parcels of unimproved land consisting of approximately 5.7 million square feet of land area located in Texas, Louisiana and North Carolina. These properties include approximately 2.8   million square feet of land adjacent to certain of our existing developed properties, which may be used for expansion of these developments, as well as approximately 2.9 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 we intend to emphasize the development of these parcels for such purpose.

New Development Properties. At December 31, 2006, we had 26 projects under construction or in preconstruction stages. The total square footage is approximately 7.6 million.

ITEM 3.   Legal Proceedings

We are involved in various matters of litigation arising in the normal course of business. While we are unable to predict with certainty the amounts involved, our management and counsel believe that when such litigation is resolved, our resulting liability, if any, will not have a material adverse effect on our consolidated financial statements.

ITEM 4.   Submission of Matters to a Vote of Shareholders

None.


PART II

ITEM 5.   Market for Registrant's Common Shares of Beneficial Interest, Related Shareholder Matters and Issuer Purchases of Equity Securities

Our common shares are listed and traded on the New York Stock Exchange under the symbol "WRI." The number of holders of record of our common shares as of January 31, 2007 was 3,317. The closing high and low sale prices per common share as reported on the New York Stock Exchange, and dividends per share paid for the fiscal quarters indicated were as follows:

   
High
 
Low
 
Dividends
 
               
2006:
             
Fourth
 
$
47.83
 
$
42.72
 
$
.465
 
Third
   
43.26
   
38.19
   
.465
 
Second
   
40.56
   
37.10
   
.465
 
First
   
41.76
   
38.66
   
.465
 
                     
2005:
                   
Fourth
 
$
38.98
 
$
33.99
 
$
.44
 
Third
   
40.50
   
36.83
   
.44
 
Second
   
39.32
   
34.08
   
.44
 
First
   
39.97
   
33.49
   
.44
 
 
In February 2006 our board of trust managers authorized up to $100 million for the purchase of outstanding common shares of beneficial interest in 2006. Share repurchases may be made in the open market or in privately negotiated transactions. In July 2006 our board of trust managers revised the authorized repurchase amount of our common shares of beneficial interest to a total of $207 million, and we used $167.6 million of the net proceeds from the $575 million debt offering to purchase 4.3 million common shares of beneficial interest at $39.26 per share.
 


Performance Graph

The graph below provides an indicator of cumulative total shareholder returns for us as compared with the S&P 500 Stock Index and the NAREIT All Equity Index, weighted by market value at each measurement point. The graph assumes that $100 was invested on December 31, 2001 in our common shares and that all dividends were reinvested by the shareholder.
 
Comparison of Five Year Cumulative Return


   
2002
 
2003
 
2004
 
2005
 
2006
 
                       
Weingarten
   
122.54
   
155.85
   
221.88
   
219.11
   
279.34
 
S&P 500 Index
   
77.90
   
100.24
   
111.15
   
116.61
   
135.03
 
The NAREIT All Equity Index
   
103.82
   
142.37
   
187.33
   
210.12
   
283.78
 

There can be no assurance that our share performance will continue into the future with the same or similar trends depicted in the graph above. We will not make or endorse any predications as to future share performance.
 


ITEM 6.   Selected Financial Data

The following table sets forth our selected consolidated financial data 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)
 
   
Year Ended December 31,
 
   
2006
 
2005
 
2004
 
2003
 
2002
 
                       
Revenues (primarily real estate rentals)
 
$
561,380
 
$
510,401
 
$
460,914
 
$
372,016
 
$
317,119
 
Expenses:
                               
Depreciation and amortization
   
127,613
   
117,062
   
103,870
   
80,776
   
65,803
 
Other
   
180,751
   
152,932
   
143,178
   
113,128
   
97,253
 
Total
   
308,364
   
269,994
   
247,048
   
193,904
   
163,056
 
Operating income
   
253,016
   
240,407
   
213,866
   
178,112
   
154,063
 
Interest expense
   
(146,943
)
 
(130,761
)
 
(117,096
)
 
(90,269
)
 
(67,171
)
Interest and other income
   
9,045
   
2,867
   
1,390
   
1,563
   
1,053
 
Loss on redemption of preferred shares
               
(3,566
)
 
(2,739
)
     
Equity in earnings of joint ventures, net
   
14,655
   
6,610
   
5,384
   
4,681
   
3,930
 
Income allocated to minority interests
   
(6,414
)
 
(6,060
)
 
(4,928
)
 
(2,723
)
 
(3,553
)
Gain on land and merchant development sales
   
7,166
   
804
                   
Gain on sale of properties
   
22,467
   
22,306
   
1,562
   
665
   
188
 
Provision for Income Taxes
   
(1,366
)
                       
Income from continuing operations
   
151,626
   
136,173
   
96,612
   
89,290
   
88,510
 
Income from discontinued operations (1)
   
153,384
   
83,480
   
44,769
   
26,990
   
43,357
 
Net income
  $
305,010
 
$
219,653
 
$
141,381
 
$
116,280
 
$
131,867
 
                                 
Net income available to common shareholders
 
$
294,909
 
$
209,552
 
$
133,911
 
$
97,880
 
$
112,111
 
Per share data - basic:
                               
Income from continuing operations
 
$
1.61
 
$
1.41
 
$
1.04
 
$
.92
 
$
.89
 
Net income
 
$
3.36
 
$
2.35
 
$
1.55
 
$
1.24
 
$
1.44
 
Weighted average number of shares
   
87,719
   
89,224
   
86,171
   
78,800
   
77,866
 
Per share data - diluted:
                               
Income from continuing operations
 
$
1.60
 
$
1.41
 
$
1.04
 
$
.92
 
$
.89
 
Net income
 
$
3.27
 
$
2.31
 
$
1.54
 
$
1.24
 
$
1.43
 
Weighted average number of shares
   
91,779
   
93,166
   
89,511
   
81,574
   
80,041
 
                                 
Property (at cost)
 
$
4,445,888
 
$
4,033,579
 
$
3,751,607
 
$
3,200,091
 
$
2,695,286
 
Total assets
 
$
4,375,540
 
$
3,737,741
 
$
3,470,318
 
$
2,923,094
 
$
2,423,241
 
Debt
 
$
2,900,952
 
$
2,299,855
 
$
2,105,948
 
$
1,810,706
 
$
1,330,369
 
                                 
Other data:
                               
Cash flows from operating activities
 
$
242,592
 
$
200,525
 
$
203,886
 
$
162,316
 
$
167,095
 
Cash flows from investing activities
 
$
(314,686
)
$
(105,459
)
$
(349,654
)
$
(331,503
)
$
(182,161
)
Cash flows from financing activities
 
$
100,407
 
$
(97,791
)
$
170,928
 
$
168,623
 
$
23,451
 
Cash dividends per common share
 
$
1.86
 
$
1.76
 
$
1.66
 
$
1.56
 
$
1.48
 
Funds from operations: (2)
                               
Net income available to common shareholders
 
$
294,909
 
$
209,552
 
$
133,911
 
$
97,880
 
$
112,111
 
Depreciation and amortization
   
131,792
   
125,742
   
114,342
   
90,367
   
78,111
 
Gain on sale of properties
   
(172,056
)
 
(87,561
)
 
(26,316
)
 
(7,273
)
 
(18,614
)
Total
 
$
254,645
 
$
247,733
 
$
221,937
 
$
180,974
 
$
171,608
 

______________

(1)
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" requires the operating results and gain (loss) on the sale of operating properties to be reported as discontinued operations.



(2)
The National Association of Real Estate Investment Trusts defines funds from operations as net income (loss) available to common shareholders computed in accordance with generally accepted accounting principles, excluding gains or losses from sales of operating properties and extraordinary items, plus depreciation and amortization of real estate assets, including our share of unconsolidated partnerships and joint ventures. We calculate FFO in a manner consistent with the NAREIT definition. We believe FFO is an appropriate supplemental measure of operating performance because it helps investors compare our operating performance relative to other REITs. There can be no assurance that FFO presented by us is comparable to similarly titled measures of other REITs. FFO should not be considered as an alternative to net income or other measurements under GAAP as an indicator of our operating performance or to cash flows from operating, investing or financing activities as a measure of liquidity. FFO does not reflect working capital changes, cash expenditures for capital improvements or principal payments on indebtedness.

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. Our results of operations and financial condition, as reflected in the accompanying financial statements and related footnotes, are subject to management's evaluation and interpretation of business conditions, retailer performance, changing capital market conditions and other factors which could affect the ongoing viability of our tenants.

Executive Overview

Weingarten Realty Investors is a real estate investment trust organized under the Texas Real Estate Investment Trust Act. We, and our predecessor entity, began the ownership and development of shopping centers and other commercial real estate in 1948. Our primary business is leasing space to tenants in the shopping and industrial centers we own or lease. We also manage centers for joint ventures in which we are partners or for other outside owners for which we charge fees.

We operate a portfolio of properties includes neighborhood and community shopping centers and industrial properties of approximately 65 million square feet. We have a diversified tenant base with our largest tenant comprising only 3% of total rental revenues during 2006.

We focus on increasing Funds from Operations and growing dividend payments to our common shareholders. We do this through hands-on leasing, management and selected redevelopment of the existing portfolio of properties, through disciplined growth from selective acquisitions and new developments, and through the disposition of assets that no longer meet our ownership criteria. We do this while remaining committed to maintaining a conservative balance sheet, a well-staggered debt maturity schedule and strong credit agency ratings.

We continue to maintain a strong, conservative capital structure, which provides ready access to a variety of attractive capital sources. We carefully balance obtaining low cost financing with minimizing exposure to interest rate movements and matching long-term liabilities with the long-term assets acquired or developed.

At December 31, 2006, we owned or operated under long-term leases, either directly or through our interest in joint ventures or partnerships, a total of 363 developed income-producing properties and 26 properties under various stages of construction and development. The total number of centers includes 322 neighborhood and community shopping centers located in Arizona, Arkansas, California, Colorado, Florida, Georgia, Illinois, Kansas, Kentucky, Louisiana, Maine, Missouri, Nevada, New Mexico, North Carolina, Oklahoma, Oregon, South Carolina , Tennessee, Utah, Texas, and Washington. We also owned 67 industrial projects located in California, Florida, Georgia, Tennessee and Texas.

We also owned interests in 15 parcels of unimproved land held for future development that totaled approximately 5.7 million square feet.

We have approximately 7,400 leases with 5,500 different tenants at December 31, 2006.


Leases for our properties range from less than a year for smaller spaces to over 25 years for larger tenants. Rental revenues generally include minimum lease payments, which often increase over the lease term, reimbursements of property operating expenses, including ad valorem taxes, and additional rent payments based on a percentage of the tenants' sales. The majority of our anchor tenants are supermarkets, value-oriented apparel/discount stores and other retailers or service providers who generally sell basic necessity-type goods and services. We believe stability of our anchor tenants, combined with convenient locations, attractive and well-maintained properties, high quality retailers and a strong tenant mix, should ensure the long-term success of our merchants and the viability of our portfolio.

In assessing the performance of our properties, management carefully tracks the occupancy of the portfolio. Occupancy for the total portfolio was 94.1% at December 31, 2006 compared to 94.2% at December 31, 2005. We expect occupancy to remain at this high level or improve slightly in 2007. Another important indicator of performance is the spread in rental rates on a same-space basis as we complete new leases and renew existing leases. We completed 1,264 new leases or renewals during 2006 totaling 6.1 million square feet, increasing rental rates an average of 7.5% on a cash basis.

In the first quarter of 2006, we articulated a new long-term growth strategy with a planned three-year implementation. The key elements of this strategy are as follows:

·  
A much greater focus on new development, including merchant development, with $300 million in annual new development completions beginning in 2009.

·  
Increased use of joint ventures for acquisitions including the recapitalization (or partial sale) of existing assets, which provide the opportunity to further increase returns on investment through the generation of fee income from leasing and management services we will provide to the venture.

·  
Further recycling capital through the active disposition of non-core properties and reinvesting the proceeds into properties with barriers to entry within high growth metropolitan markets. This, combined with our continuous focus on our assets, produces a higher quality portfolio with higher occupancy rates and much stronger internal revenue growth.

During 2006, we made excellent progress in the execution of this long-term growth strategy as described in the following sections on new development, acquisitions and joint ventures, and dispositions.

New Development
At December 31, 2006, we had 26 properties in various stages of development, up from 10 properties under development at the end of 2005. We have invested $204 million to-date on these projects and, at completion, we estimate our total investment to be $485 million. These properties are slated to open over the next two years with a projected return on investment of approximately 9% when completed.

In addition to these projects, we have significantly increased our development pipeline with nine development sites under contract, which will represent an investment of approximately $218 million. In addition to the nine development sites under contract, we have another 22 development sites under preliminary pursuit.

Merchant development is a new program in which we develop a project with the objective of selling all or part of it, instead of retaining it in our portfolio on a long-term basis. We generated $6.9 million (after-tax) from this program in 2006 adding $0.08 of earnings and FFO per share.

We are making excellent progress in new development including merchant development activities. During 2006, we almost tripled the number of properties under development and invested $167 million in our new development program. 

Acquisitions and Joint Ventures
In 2006, we completed a record $1 billion of acquisitions, including $194 million bought on behalf of joint venture partners. Properties acquired in 2006 included 34 shopping centers and seven industrial properties that added a total of 4.0 million square feet under management. During 2006, just over half of our acquisitions were with institutional joint ventures.


We formed the following new joint venture partnerships in 2006:

·  
We acquired seven neighborhood/community shopping centers in South Florida in a new joint venture with TIAA-CREF Global Real Estate;

·  
In partnership with AEW Capital Management, on behalf of its institutional client, we acquired four grocery-anchored centers and two power centers in Oregon and Washington, marking our entry into two desirable markets - Portland, Oregon and Seattle/Tacoma, Washington;

·  
We also formed a joint venture with Mercantile Real Estate Advisors and its client, the AFL-CIO Building Investment Trust, to acquire and operate industrial properties within target markets across the United States. We sold $123 million of our existing assets to the joint venture upon formation. Including the $123 million, the partners plan to invest up to $500 million in total capital over the next two years.

Acquisitions are critical to our growth and a key component of our strategy. However, intense competition for good quality assets has driven asset prices up and returns down. Partnering with institutional investors through joint ventures enables us to acquire high quality assets in our target markets while also meeting our financial return objectives. We benefit from access to lower-cost capital as well as leveraging our expertise to provide fee-based services, such as the acquisition, leasing, and management of properties, to the joint ventures.

Dispositions
During 2006, we sold 21 shopping centers and four industrial projects representing 3.6 million square feet from our share of the portfolio. Sale proceeds from these dispositions totaled $316 million and generated gains of $150 million. We also sold an 80% interest in two property portfolios to two joint ventures totaling $358 million. The proceeds from these dispositions, combined with the joint venture program, provided more than 70% of the capital required for the 2006 acquisitions and reduced the need to issue additional common equity or incur additional debt.

Capitalizing on strong demand and favorable prices for real estate assets during 2006, we completed a record level of asset sales. Dispositions are part of an on-going portfolio management process where we prune our portfolio of properties that do not meet our geographic or growth targets and provide capital to recycle into properties that have barrier-to-entry locations within high growth metropolitan markets. Over time we expect this to produce a portfolio with higher occupancy rates and much stronger internal revenue growth.

Summary of Critical Accounting Policies

Our discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and contingencies as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We evaluate our assumptions and estimates on an on-going basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Revenue Recognition
Rental revenue is generally recognized on a straight-line basis over the life of the lease, which begins the date the leasehold improvements are substantially complete, if owned by us, or the date the tenant takes control of the space, if the leasehold improvements are owned by the tenant. Revenue from tenant reimbursements of taxes, maintenance expenses and insurance is recognized in the period the related expense is recorded. Revenue based on a percentage of tenants' sales is recognized only after the tenant exceeds their sales breakpoint.



Partially Owned Joint Ventures and Partnerships
To determine the method of accounting for partially owned joint ventures or partnerships, we first apply the guidelines set forth in FASB Interpretation No. 46R, "Consolidation of Variable Interest Entities." Based upon our analysis, we have determined that we have no variable interest entities.

Partially owned joint ventures or partnerships over which we exercise financial and operating control are consolidated in our financial statements. In determining if we exercise financial and operating control, we consider factors such as ownership interest, authority to make decisions, kick-out rights and substantive participating rights. Partially owned joint ventures and partnerships where we have the ability to exercise significant influence, but do not exercise financial and operating control, are accounted for using the equity method.

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 18-40 years for buildings and 10-20 years for parking lot surfacing and equipment. Major replacements where the betterment extends the useful life of the asset 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.

Acquisitions of properties are accounted for utilizing the purchase method and, accordingly, the results of operations of an acquired property are included in our results of operations from the respective dates of acquisition. We have used estimates of future cash flows and other valuation techniques to allocate the purchase price of acquired property among land, buildings on an "as if vacant" basis, and other identifiable intangibles. Other identifiable intangible assets and liabilities include the effect of out-of-market leases, the value of having leases in place (lease origination and absorption costs), out-of-market assumed mortgages and tenant relationships.

Property also includes costs incurred in the development of new operating properties and properties in our merchant development program.  These properties are carried at costs and no depreciation is recorded on these assets. These costs include preacquisition costs directly identifiable with the specific project, development and construction costs, interest and real estate taxes. Indirect development costs, including salaries and benefits, travel and other related costs that are clearly attributable to the development of the property, are also capitalized. The capitalization of such costs ceases at the earlier of one year from the completion of major construction or when the property, or any completed portion, becomes available for occupancy.

Property also includes costs for tenant improvements paid by us, including reimbursements to tenants for improvements that are owned by us and will remain our property after the lease expires.

Our properties are reviewed for impairment if events or changes in circumstances indicate that the carrying amount of the property may not be recoverable. In such an event, a comparison is made of either the current and projected operating cash flows of each such property into the foreseeable future on an undiscounted basis or the estimated net sales price to the carrying amount of such property. Such carrying amount is adjusted, if necessary, to the estimated fair value to reflect an impairment in the value of the asset.

Some of our properties are held in single purpose entities. A single purpose entity is a legal entity typically established at the request of a lender solely for the purpose of owning a property or group of properties subject to a mortgage. There may be restrictions limiting the entity’s ability to engage in an activity other than owning or operating the property, assume or guaranty the debt of any other entity, or dissolve itself or declare bankruptcy before the debt has been repaid. Most of our single purpose entities are 100% owned by us and are consolidated in our financial statements.

Interest Capitalization
Interest is capitalized on land under development and buildings under construction based on rates applicable to borrowings outstanding during the period and the weighted average balance of qualified assets under development/construction during the period.



Deferred Charges
Debt and lease costs are amortized primarily on a straight-line basis, which approximates the effective interest method, over the terms of the debt and over the lives of leases, respectively. Lease costs represent the initial direct costs incurred in origination, negotiation and processing of a lease agreement. Such costs include outside broker commissions and other independent third party costs as well as salaries and benefits, travel and other related internal costs incurred in completing the leases. Costs related to supervision, administration, unsuccessful origination efforts and other activities not directly related to completed lease agreements are charged to expense as incurred.

Sales of Real Estate
Sales of real estate include the sale of shopping center pads, property adjacent to shopping centers, shopping center properties, merchant development properties and investments in real estate ventures.

We recognize profit on sales of real estate, including merchant development sales, in accordance with SFAS No. 66, “Accounting for Sales of Real Estate.” Profits are not recognized until (a) a sale is consummated; (b) the buyer’s initial and continuing investments are adequate to demonstrate a commitment to pay; (c) the seller’s receivable is not subject to future subordination; and (d) we have transferred to the buyer the usual risks and rewards of ownership in the transaction, and we do not have a substantial continuing involvement with the property.

We recognize gains on the sale of real estate to joint ventures in which we participate to the extent we receive cash from the joint venture.

Accrued Rent and Accounts Receivable
Receivable balances outstanding include base rents, tenant reimbursements and receivables attributable to the straight-lining of rental commitments. An allowance for the uncollectible portion of accrued rents and accounts receivable is determined based upon an analysis of balances outstanding, historical bad debt levels, tenant credit worthiness and current economic trends.

Income Taxes
We have elected to be treated as a Real Estate Investment Trust (REIT) under the Internal Revenue Code of 1986, as amended. As a REIT, we generally will not be subject to corporate level federal income tax on taxable income we distribute to our shareholders. To be taxed as a REIT we must meet a number of requirements including meeting defined percentage tests concerning the amount of our assets and revenues that come from, or are attributable to, real estate operations. As long as we distribute at least 90% of the taxable income of the REIT to our shareholders as dividends, we will not be taxed on the portion of our income we distribute as dividends unless we have ineligible transactions.

The Tax Relief Extension Act of 1999 gave REITs the ability to conduct activities which a REIT was previously precluded from doing as long as they are performed in entities which have elected to be treated as taxable REIT subsidiaries under the IRS code. These activities include buying or developing properties with the express purpose of selling them. We conduct certain of these activities in taxable REIT subsidiaries that we have created. We calculate and record income taxes in our financial statements based on the activities in those entities. We also record deferred taxes for the temporary tax differences that have resulted from those activities as required under SFAS No. 109, “Accounting for Income Taxes.”

Results of Operations
Comparison of the Year Ended December 31, 2006 to the Year Ended December 31, 2005

Revenues
Total revenues were $561.4 million for the year ended 2006 versus $510.4 million for the year ended 2005, an increase of $51.0 million or 10%. This increase resulted primarily from an increase in rental revenues of $50.4 million.

Property acquisitions and new development activity contributed $35.6 million of the rental income increase. The remaining increase of $14.8 million resulted from 1,264 renewals and new leases, comprising 6.1 million square feet at an average rental rate increase of 7.5%.


Occupancy (leased space) of the portfolio as compared to the prior year was as follows:

   
December 31,
 
   
2006
 
2005
 
           
Shopping Centers
   
95.0
%
 
94.6
%
Industrial
   
91.2
%
 
93.1
%
Total
   
94.1
%
 
94.2
%

Expenses
Total expenses for 2006 were $308.4 million versus $270.0 million in 2005, an increase of $38.4 million or 14.2%.

The increases in 2006 for depreciation and amortization expense ($10.5 million), operating expenses ($14.8 million), ad valorem taxes ($6.6 million) and general and administrative expenses ($6.4 million) were primarily a result of the properties acquired and developed during the year, an increase in property insurance expenses as a result of the hurricanes experienced in 2005, and increases associated with headcount increases related to the growth of the portfolio. Overall, direct operating costs and expenses (operating and ad valorem tax expense) of operating our properties as a percentage of rental revenues were 28% in 2006 and 27% in 2005.

Interest Expense
Interest expense totaled $146.9 million for 2006, up $16.1 million or 12.3% from 2005. The components of interest expense were as follows (in thousands):

   
Year Ended December 31,
 
   
2006
 
2005
 
           
Gross interest expense
 
$
161,894
 
$
140,317
 
Over-market mortgage adjustment of acquired properties
   
(7,335
)
 
(6,927
)
Capitalized interest
   
(7,616
)
 
(2,629
)
               
Total
 
$
146,943
 
$
130,761
 

Gross interest expense totaled $161.9 million in 2006, up $21.6 million or 15.4% from 2005. The increase in gross interest expense was due to an increase in the average debt outstanding from $2.2 billion in 2005 to $2.5 billion in 2006 at a weighted average interest rate of 6.0% in 2006 and 6.1% for 2005. Capitalized interest increased $5.0 million due to an increase in new development activity, and the over-market mortgage adjustment increased by $.4 million.

Interest and Other Income
Interest and other income was $9.0 million in 2006 versus $2.9 million in 2005, an increase of $6.1 million or 210%. This increase was attributable to interest earned from a qualified escrow account for the purposes of completing like-kind exchanges, construction loans associated with our new development activities, excess proceeds from our $575 million Convertible Debt Offering and assets held in a grantor trust related to our deferred compensation plan.

Equity in Earnings of Joint Ventures
Our equity in earnings of joint ventures was $14.7 million in 2006 versus $6.6 million in 2005, an increase of $8.1 million or 123%. This increase was attributable primarily to our share of the gains generated from the disposition of two shopping centers in Texas totaling $4.0 million, a gain of $1.1 million associated with land and merchant development activities in Texas and Washington and incremental income from our investments in newly formed joint ventures in 2005 and 2006 for the acquisition and development of retail and industrial properties.

Gain on Sale of Properties
The gain of $22.5 million and $22.3 million in 2006 and 2005, respectively, resulted primarily from the sale of an 80% interest in five industrial properties in the San Diego, Memphis and Atlanta markets and two retail centers in Louisiana, respectively, in which we retained a continuing 20% operating interest .



Gain on Land and Merchant Development Sales
Gain on land and merchant development sales of $7.1 million in 2006 resulted from the gain from the sale of the Timber Springs shopping center in Orlando, Florida and the sale of three parcels of land in Arizona (1) and Texas (2). The activity in 2005 resulted from the sale of a parcel of land in Orlando, Florida.
 
Provision for Income Taxes
The amount reported in 2006 includes the tax expense in our taxable REIT subsidiary and the deferred tax impact attributable to the Texas margin tax enacted in the second quarter of 2006.

Income from Discontinued Operations
Income from discontinued operations was $153.4 million in 2006 versus $83.5 million in 2005, an increase of $69.9 million or 83.7%. This increase was due to the disposition of 23 properties totaling 3.5 million square feet that provided sales proceeds of $308.2 million and generated gains of $145.5 million. The 2005 caption includes the operating results of properties disposed in 2006 and 2005 as well as the gain from the disposition of 16 properties and a vacant building totaling 1.3 million square feet that provided sales proceeds of $133.8 million and generated gains of $65.5 million.

Results of Operations
Comparison of the Year Ended December 31, 2005 to the Year Ended December 31, 2004

Revenues
Total revenues increased by $49.5 million or 10.7% in 2005 ($510.4 million in 2005 versus $460.9 million in 2004). This increase resulted primarily from the increase in rental revenues of $51.4 million and a decrease in other income of $1.9 million. Property acquisitions and new development activity contributed $41.3 million of the rental income increase with $14.2 million resulting from our existing properties, based on the occupancy and average rental rate factors described below. Offsetting these rental income increases was a decrease of $4.1 million, which resulted from the sale of an 80% interest in two retail centers in Louisiana.

Occupancy (leased space) of the portfolio as compared to the prior year was as follows:

   
December 31,
 
   
2005
 
2004
 
           
Shopping Centers
   
94.6
%
 
94.8
%
Industrial
   
93.1
%
 
92.6
%
Total
   
94.2
%
 
94.3
%

In 2005 we completed 1,298 renewals and new leases comprising 6.8 million square feet at an average rental rate increase of 7.0%.

Other income decreased by $1.9 million or 22.9% in 2005 ($6.4 million in 2005 versus $8.3 million in 2004). This decrease was due primarily to a decrease in lease cancellation payments from various tenants.

Expenses
Total expenses increased by $23.0 million or 9.3% in 2005 ($270.0 million in 2005 versus $247.0 million in 2004).

The increases in 2005 for depreciation and amortization expense ($13.2 million), operating expenses ($5.1 million) and ad valorem taxes ($6.9 million) were primarily a result of the properties acquired and developed during the year. Overall, direct operating costs and expenses (operating and ad valorem tax expense) of operating our properties as a percentage of rental revenues were 27% in both 2005 and 2004.

General and administrative expenses increased by $1.3 million or 8.1% in 2005 ($17.4 million in 2005 versus $16.1 million in 2004). This increase resulted primarily from normal compensation increases as well as increases in staffing necessitated by the growth in the portfolio. General and administrative expense as a percentage of rental revenues was 3% in 2005 and 4% in 2004.


Impairment loss of $3.6 million in 2004 related to a parcel of land held for development in Houston, Texas, which was sold in December 2004, and one retail property in Houston and one retail property in Port Arthur, Texas.

Interest Expense
Interest expense increased by $13.7 million or 11.7% in 2005 ($130.8 million in 2005 versus $117.1 million in 2004). The components of interest expense were as follows (in thousands):

   
Year Ended December 31,
 
   
2005
 
2004
 
           
Gross interest expense
 
$
140,317
 
$
125,069
 
Interest on preferred shares subject to mandatory redemption
         
2,007
 
Over-market mortgage adjustment of acquired properties
   
(6,927
)
 
(4,988
)
Capitalized interest
   
(2,629
)
 
(4,992
)
               
Total
 
$
130,761
 
$
117,096
 

Gross interest expense increased $15.2 million ($140.3 million in 2005 versus $125.1 million in 2004) due to an increase in the average debt outstanding from $2.0 billion in 2004 to $2.2 billion in 2005 and an increase in the weighted average interest rate between the two periods from 5.9% in 2004 to 6.1% in 2005. The increase in the over-market mortgage adjustment of $1.9 million resulted from our property acquisitions. Capitalized interest decreased $2.4 million due to completion of new development projects in 2004.

Loss on Redemption of Preferred Shares
Loss on redemption of preferred shares of $3.6 million in 2004 represents the unamortized original issuance costs related to the Series C Cumulative Preferred Shares redeemed in April 2004.

Equity in Earnings of Joint Ventures
Equity in earnings of joint ventures increased by $1.2 million or 22.2% in 2005 ($6.6 million in 2005 versus $5.4 million in 2004). This increase is due primarily to the acquisition of three retail properties in two newly formed unconsolidated joint ventures during 2005 and a gain from the disposition of an unimproved land tract. Also contributing to this increase is the sale of an 80% interest in two retail properties during 2005, which are held in tenancy-in-common arrangements in which we retained a 20% interest, and the acquisitions of five retail properties in 2004, each through a 50% unconsolidated joint venture.

Income Allocated to Minority Interests
Income allocated to minority interests increased by $1.2 million or 24.5% in 2005 ($6.1 million in 2005 versus $4.9 million in 2004). This increase resulted primarily from the acquisition of five retail properties during 2004 and three retail properties in June 2005 through limited partnerships utilizing the DownREIT structure. These limited partnerships are consolidated in our consolidated financial statements because we exercise financial and operating control.

Gain on Sale of Properties
Gain on sale of properties increased by $20.8 million in 2005 ($22.3 million in 2005 versus $1.5 million in 2004). The increase was due primarily to the sale of an 80% interest in two shopping centers in Lafayette and Shreveport, Louisiana totaling 295,000 square feet. Due to our continuing involvement with the leasing and managing of operations for both properties, the operating results of these properties have not been reclassified and reported as discontinued operations. The gain on the sale of our 80% interest in these two properties totaled $21.7 million.

Gain on Land and Merchant Development Sales
Gain on land sales of $.8 million represents the gain from the sale of an unimproved land tract in Orlando, Florida.



Income from Discontinued Operations
Income from discontinued operations increased by $38.7 million ($83.5 million in 2005 versus $44.8 million in 2004). Included in this caption for 2005 are the operating results of properties disposed in 2006 and the disposition of 16 properties and a vacant building totaling 1.3 million square feet that provided sales proceeds of $133.8 million and generated gains of $65.5 million. Included in this caption for 2004 are the operating results of properties disposed in 2006 and 2005 plus the disposition of five properties and one free-standing building totaling .7 million square feet in 2004. The 2004 dispositions provided sales proceeds of $49.9 million and generated gains of $24.9 million.

Effects of Inflation

We have structured our leases in such a way as to remain largely unaffected should significant inflation occur. Most of the leases contain percentage rent provisions whereby we receive increased 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 our leases are for terms of less than ten years, which allow us to adjust rental rates to changing market conditions when the leases expire. Most of our leases also 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 our operating results as they are absorbed by our tenants.

Capital Resources and Liquidity

Our primary liquidity needs are payment of our common and preferred dividends, maintaining and operating our existing properties, payment of our debt service costs, and funding planned growth. We anticipate that cash flows from operating activities will continue to provide adequate capital for all common and preferred dividend payments and debt service costs, as well as the capital necessary to maintain and operate our existing properties.

Primary sources of capital for funding our acquisitions and new development programs are our $400 million revolving credit facility, cash generated from sales of properties that no longer meet our investment criteria, cash flow generated by our operating properties and proceeds from capital issuances as needed. Amounts outstanding under the revolving credit agreement are retired as needed with proceeds from the issuance of long-term unsecured debt, common and preferred equity, cash generated from dispositions of properties, and cash flow generated by our operating properties. As of December 31, 2006 the balance outstanding on our $400 million revolving credit facility was $18.0 million, and there were no borrowings under our $20 million credit facility, which we use for cash management purposes.

Our capital structure also includes nonrecourse secured debt that we assume in conjunction with our acquisitions program. We also have nonrecourse debt secured by acquired or developed properties held in several of our joint ventures. We hedge the future cash flows of certain debt transactions, as well as changes in the fair value of our debt instruments, principally through interest rate swaps with major financial institutions. We generally have the right to sell or otherwise dispose of our assets except in certain cases where we are required to obtain a third party consent, such as assets held in entities in which we have less than 100% ownership.

Investing Activities:

Acquisitions
Retail Properties. During 2006 we invested approximately $781 million in the acquisition of operating retail properties. Approximately $402 million was invested in 17 shopping centers and $54 million was invested in two unconsolidated joint ventures to acquire 11 retail properties. We also invested $325 million in the Woolbright properties portfolio, 80% of which was subsequently bought from us as part of a joint venture arrangement with TIAA-CREF Global Real Estate. These combined acquisitions added 4.0 million square feet to our share of the portfolio.



In March 2006 we acquired Fresh Market Shoppes Shopping Center, an 87,000 square foot shopping center located in Hilton Head, South Carolina. Fresh Market and Bonefish Grill anchor this specialty retail center. We also acquired The Shoppes at Paradise Isle, a 172,000 shopping center located in Destin, Florida. Best Buy, Linens-N-Things, PetsMart and Office Depot anchor this property. Both of these shopping centers were acquired through a 25%-owned unconsolidated joint venture.

In April 2006 Valley Shopping Center, a 103,000 square foot shopping center anchored by Raley’s Supermarket was acquired. The center has below-market rents providing strong growth opportunities and is in close proximity to our regional office in Sacramento.

In May 2006 Brownsville Commons, an 82,000 square foot shopping center including a 54,000 square foot (corporate owned) Kroger supermarket, was acquired in Powder Springs, Georgia, a suburb of Atlanta. The Shoppes of Parkland, was also acquired, which is a 146,000 square foot shopping center located in Parkland, Florida and is anchored by BJ’s Wholesale. This center services two upper income neighborhoods, Parkland and Boca Raton.

In June 2006 we purchased a property in California and acquired a shopping center in Florida through a 25%-owned unconsolidated joint venture. Freedom Centre, anchored by Ralph’s and Rite Aid, is a 151,000 square foot shopping center located in Freedom, California. Indian Harbour Place is a 164,000 square foot shopping center located in Melbourne, Florida and is anchored by Publix.
 
In July 2006 we acquired Mendenhall Commons, an 80,000 square foot grocery-anchored neighborhood shopping center located in the affluent East Memphis submarket of Memphis, Tennessee. Kroger anchors the center. We also acquired the Regency Shopping Center, located in Lexington, Kentucky, and Little Brier Creek Lane in Raleigh, North Carolina. Regency Shopping Center is a 136,000 square foot shopping center, which is anchored by Kroger (corporate owned), Michael’s and TJ Maxx. Little Brier Creek Lane is a 63,000 square foot shopping center anchored by Pei Wei.

Quesada Commons, a 59,000 square foot shopping center, and Shoppes of Port Charlotte, a 41,000 square foot shopping center, were acquired through a 25%-owned unconsolidated joint venture in July 2006. Both centers are located in Port Charlotte, Florida and are recently constructed shopping centers. Publix, Florida’s dominant supermarket chain, anchors Quesada Commons, and Petco and Panera Bread anchor the Shoppes of Port Charlotte.

In August 2006 we acquired the North American Properties portfolio consisting of five retail properties, including four properties in metropolitan Atlanta, Georgia and one in Sanford, Florida, a suburb north of Orlando. The properties are all new construction and are anchored by strong national tenants as described in the below table:
 
Center Name
Square Feet of Property*
 
Location
Anchors
 
Occupancy at Acquisition Date
Brookwood Marketplace
253,000
 
Suwannee (Atlanta), GA
SuperTarget*, Home Depot, OfficeMax
 
96%
Camp Creek Phase II
196,000
 
Atlanta, GA
SuperTarget*, Circuit City
 
99%
Lakeside Marketplace
322,000
 
Acworth (Atlanta), GA
SuperTarget*, Circuit City, Ross Dress for Less, PETCO, OfficeMax
 
100%
Publix at Princeton Lakes
68,000
 
Atlanta, GA
Publix
 
100%
Marketplace at Seminole Towne Center
494,000
 
Sanford (Orlando), FL
SuperTarget*, Circuit City, Linens ‘n Things, Marshalls, PETCO
 
99%
*   Target owns its own property and is not part of the transaction.
 
 

The purchase agreement allows for the subsequent development and leasing of an additional phase of Brookwood Marketplace by the property seller. If the terms of the purchase agreement are met by the seller, the purchase price would be increased by approximately $6.9 million. This agreement expires in August 2008.

In September 2006 Dallas Commons and Reynolds Crossing were acquired in Atlanta, Georgia. Dallas Commons is a 95,000 square foot shopping center and Reynolds Crossing is an 116,000 square foot shopping center. Both centers are anchored by a 70,000 square foot (corporate owned) Kroger supermarket.

T he Woolbright Properties Portfolio was acquired, which consisted of seven neighborhood/community anchored retail shopping centers. Five of the centers were purchased in September 2006 with Alafaya Square and the Marketplace at Dr. Phillips purchased in early October 2006. This acquisition added 1.3 million square feet to our portfolio, and represented a total investment of $325 million. All seven properties are located in highly desirable locations within Florida’s three largest metropolitan markets of South Florida, Orlando, and Tampa/St. Petersburg. The centers are leased to a diverse mix of strong national retailers as described in the table below:

Center Name
Square Feet of Property
 
Location
Anchors
 
Occupancy at Acquisition Date
Alafaya Square
176,000
 
Oviedo (Orlando), FL
Publix, Planet Fitness
 
100%
Marketplace at Dr. Phillips
328,000
 
Orlando, FL
Albertson’s, Stein Mart, HomeGoods, Office Depot
 
99%
East Lake Woodlands
145,000
 
Palm Harbor (Tampa), FL
Publix, Walgreens
 
91%
International Drive Value Center
186,000
 
Orlando, FL
Bed Bath & Beyond, Ross, TJ Maxx
 
100%
Kendall Corners
96,000
 
Miami, FL
Ashley Furniture
 
100%
Palm Lakes Plaza
114,000
 
Maragate (Ft. Lauderdale), FL
Publix, CVS
 
99%
South Dade Shopping Center
220,000
 
Miami, FL
Publix, Bed Bath & Beyond, PETCO
 
100%

In November 2006, 80% of the Woolbright Properties Portfolio was sold as part of a joint venture arrangement with TIAA-CREF Global Real Estate.

In November 2006 we purchased six properties, four in Washington and two in Oregon through a 20%-owned unconsolidated joint venture. The centers are leased to a diverse mix of strong national retailers as described in the table below:

Center Name
Square Feet of Property
 
Location
Anchors
 
Occupancy at Acquisition Date
Mukilteo Speedway Center
90,000
 
Lynnwood (Seattle), WA
Food Emporium, Bartell Drug
 
96%
Meridian Town Center
143,000
 
Puyallup (Tacoma), WA
Safeway, JoAnn’s
 
100%
Rainier Valley Square
107,000
 
Seattle, WA
Safeway, Long Drugs
 
100%
South Hill Center
134,000
 
Puyallup (Tacoma), WA
Best Buy, Bed Bath & Beyond and Ross
 
99%
Clackamas Square
137,000
 
Portland, OR
TJ Maxx
 
100%
Raleigh Hills Plaza
40,000
 
Portland, OR
Walgreen, New Season Market
 
100%



In December 2006 we acquired Galleria Shopping Center in Charlotte, North Carolina and Charleston Commons in Las Vegas, Nevada. Galleria is a 316,000 square foot shopping center anchored by Cato Corporation and Dollar Tree. Charleston Commons, a 338,000 square foot shopping center, is anchored by Walmart, Office Max, Ross and PetSmart. We also acquired our partner’s share of Heritage Station, which is located in Wake Forest, North Carolina. Heritage Station is a 62,000 square foot shopping center that is anchored by Harris Teeter.

Industrial Properties. During 2006 we invested approximately $82 million in the acquisition of seven industrial properties totaling 1.4 million square feet.

In February 2006 we acquired the McGraw Hill Distribution Center, a single tenant warehouse of 418,000 square feet located in De Soto, Texas.

In June 2006 we acquired two vacant industrial warehouse buildings in San Diego, California at 1725 and 1855 Dornoch Court. These state-of-the-art buildings, aggregating 317,000 square feet, are located within one and a half miles of our Siempre Viva Business Park. Based on the high demand for top quality space in this area, we anticipate leasing both newly acquired buildings within the next year.

In October 2006 we acquired Midpoint I-20 Distribution Center, a 253,000 square foot property located in Arlington, Texas.

In November 200 6 we acquired Hopewell Industrial Center in Tampa, Florida and Freeport Commerce Center located in Irving, Texas. These centers aggregate 224,000 and 51,000 square feet, respectively.

In December 2006 we acquired 1919 North Loop West, an office building adjacent to our corporate headquarters in Houston, Texas where we intend to relocate some of our administrative operations. The building contains 140,000 square feet.

The cash requirements for these acquisitions were initially financed under our revolving credit facilities, using available cash generated from dispositions of properties or using cash flow generated by our operating properties.

Dispositions
Retail Properties.   In 2006 we sold 19 wholly-owned shopping centers totaling 2.9 million square feet of building area. Sales proceeds from these retail dispositions totaled $292 million and generated gains of $141 million. We also sold two joint venture properties totaling 97,000 square feet, and sales proceeds totaled $8 million and generated gains of $4 million.

Industrial Properties.   During 2006 we sold four industrial properties totaling 616,000 square feet. We also formed an industrial joint venture where five properties totaling 2.1 million square feet were contributed to a joint venture, and we retained a 20% interest. Sales proceeds from these dispositions totaled $115 million and generated gains of $26 million.

New Development and Capital Expenditures
At December 31, 2006, we had 26 projects under construction or in preconstruction stages. The total square footage is approximately 7.6 million. These properties are slated to open over the next two years.

Our new development projects are financed initially under our revolving credit facilities, using available cash generated from dispositions of properties or using cash flow generated by our operating properties.

Capital expenditures for additions to the existing portfolio, acquisitions, new development and our share of investments in unconsolidated joint ventures totaled $1.1 billion in 2006 and $455.1 million   in 2005 .



Financing Activities:

Debt
Total debt outstanding increased to $2.9 billion at December 31, 2006 from $2.3 billion at December 31, 2005, due primarily to funding of acquisitions and new development activity. Total debt at December 31, 2006 includes $2.8 billion of which interest rates are fixed and $115 million, which bears interest at variable rates, including the effect of $75 million of interest rate swaps. Additionally, debt totaling $1 billion was secured by operating properties while the remaining $1.9 billion was unsecured.

In February 2006 we amended and restated our $400 million unsecured revolving credit facility held by a syndicate of banks. This amended facility has an initial four-year term and provides a one-year extension option available at our request. Borrowing rates under this facility float at a margin over LIBOR, plus a facility fee. The borrowing margin and facility fee, which are currently 37.5 and 12.5 basis points, respectively, are priced off a grid that is tied to our senior unsecured credit rating. This facility includes a competitive bid feature where we are allowed to request bids for borrowings up to $200 million from the syndicate banks. Additionally, the facility contains an accordion feature, which allows us to increase the facility amount up to $600 million. The available balance under our revolving credit agreement was $371.9 million and $175.1 million at December 31, 2006 and 2005, respectively. As of February 15, 2007, there was no outstanding balance under this facility. We also maintain a $20 million unsecured and uncommitted overnight facility that is used for cash management purposes and as of February 15, 2007 there were no borrowings under this facility. We are in full compliance with the covenants of our $400 million unsecured revolving credit facility.
 
In August 2006 we issued $575 million of 3.95% convertible senior notes due 2026. The net proceeds from the sale of the debentures were used for general business purposes including the repurchase of 4.3 million of our common shares of beneficial interest and to reduce amounts outstanding under our revolving credit facilities. The debentures are convertible under certain circumstances for our common shares of beneficial interest at an initial conversion rate of 20.3770 common shares per $1,000 of principal amount of debentures (an initial conversion price of $49.075). Upon the conversion of notes, we will deliver cash for the principal return, as defined, and cash or common shares, at our option, for the excess of the conversion value, as defined, over the principal return. The debentures are redeemable for cash at our option beginning in 2011 for the principal amount plus accrued and unpaid interest. Holders of the debentures have the right to require us to repurchase their debentures for cash equal to the principal of the notes plus accrued and unpaid interest in 2011, 2016 and 2021 and in the event of a change in control.
 
In December 2006 we issued $75 million of ten year unsecured fixed rate medium term notes at 6.1% including the effect of an interest rate swap that hedged the transaction. Proceeds from this issuance were used to repay balances under our revolving credit facilities, to cash settle a forward hedge and for general business purposes.

At December 31, 2006, we had five interest rate swap contracts designated as fair value hedges with an aggregate notional amount of $75 million that convert fixed rate interest payments at rates ranging from 4.2% to 6.8% to variable interest payments. Also, at December 31, 2006, we had two forward-starting interest rate swap contracts with an aggregate notional amount of $118.6 million. These contracts have been designated as cash flow hedges and mitigate the risk of increasing interest rates on forecasted long-term debt issuances over a maximum period of two years.

In May 2006 we entered into a forward-starting interest rate swap with a notional amount of $74.0 million. In December 2006 we terminated this rate swap in conjunction with the issuance of $75.0 million of medium term notes. The termination fee of $4.1 million is being amortized over the life of the medium term note.

In June 2006 a $5 million swap matured in conjunction with the maturity of the associated medium term note. This contract was designated as a fair value hedge.

The interest rate swaps increased interest expense and decreased net income by $.5 million, $1.3 million, and $3.5 million in 2006, 2005, and 2004, respectively, and increased the average interest rate of our debt by .02%, .1%, and .2% in 2006, 2005, and 2004, respectively. We could be exposed to credit losses in the event of nonperformance by the counter-party; however, management believes the likelihood of such nonperformance is remote.

 

 
In conjunction with acquisitions completed during 2006 and 2005, we assumed $140.7 million and $135.3 million, respectively, of non-recourse debt secured by the related properties.

Equity
Common and preferred dividends increased to $173.0 million in 2006, compared to $167.2 million for 2005. The dividend rate for our common shares of beneficial interest for each quarter of 2006 was $.465 compared to $.44 for the same periods in 2005. Our dividend payout ratio on common equity for 2006, 2005 and 2004 approximated 64.0%, 63.4% and 65.3%, respectively, based on basic funds from operations for the respective periods.

In February 2006 our board of trust managers authorized up to $100 million for the purchase of outstanding common shares of beneficial interest in 2006. Share repurchases may be made in the open market or in privately negotiated transactions. In July 2006 our board of trust managers authorized the repurchase of our common shares of beneficial interest to a total of $207 million, and we used $167.6 million of the net proceeds from the $575 million debt offering to purchase 4.3 million common shares of beneficial interest at $39.26 per share.

On January 30, 2007, we issued $200 million of depositary shares. Each depositary share represents one-hundredth of a 6.5% Series F Cumulative Redeemable Preferred Share. The depositary shares are redeemable, in whole or in part, on or after January 30, 2012 at our option, at a redemption price of $25 per depositary share, plus any accrued and unpaid dividends thereon. The depositary shares are not convertible or exchangeable for any of our other property or securities. The Series F Preferred Shares pay a 6.5% annual dividend and have a liquidation value of $2,500 per share. Net proceeds of $194.4 million were used to repay amounts outstanding under our credit facilities and for general business purposes.

In September 2004 the SEC declared effective two additional shelf registration statements totaling $1.55 billion, of which $1.35 billion was available as of February 15, 2007. In addition, we have $85.4 million available as of February 15, 2007 under our $1 billion shelf registration statement, which became effective in April 2003. We will continue to closely monitor both the debt and equity markets and carefully consider our available financing alternatives, including both public and private placements.

Contractual Obligations

The following table summarizes our principal contractual obligations as of December 31, 2006 (in thousands):

   
2007
 
2008
 
2009
 
2010
 
2011
 
Thereafter
 
Total
 
                               
Mortgages and Notes Payable: (1)
                             
Unsecured Debt
 
$
196,651
 
$
154,680
 
$
121,802
 
$
138,090
 
$
665,301
 
$
1,207,200
 
$
2,483,724
 
Secured Debt
   
93,857
   
246,031
   
129,297
   
111,517
   
136,720
   
626,882
   
1,344,304
 
                                             
Ground Lease Payments
   
1,876
   
1,782
   
1,737
   
1,691
   
1,626
   
39,459
   
48,171
 
                                             
Obligations to Acquire Projects
   
218,322
                                 
218,322
 
                                         
 
 
Obligations to Develop Projects
   
149,614
   
71,312
   
37,891
   
22,796
               
281,613
 
                                             
Total Contractual Obligations
 
$
660,320
 
$
473,805
 
$
290,727
 
$
274,094
 
$
803,647
 
$
1,873,541
 
$
4,376,134
 

(1)   Includes principal and interest with interest on variable-rate debt calculated using rates at December 31, 2006 excluding the effect of interest rate swaps.

 
 
As of December 31, 2006 and December 31, 2005, we did not have any off-balance sheet arrangements that would materially affect our liquidity or availability of, or requirement for, our capital resources.  We have not guaranteed the debt of any of our joint ventures in which we own an interest.

Funds from Operations

The National Association of Real Estate Investment Trusts defines funds from operations as net income (loss) available to common shareholders computed in accordance with generally accepted accounting principles, excluding gains or losses from sales of real estate assets and extraordinary items, plus depreciation and amortization of operating properties, including our share of unconsolidated partnerships and joint ventures. We calculate FFO in a manner consistent with the NAREIT definition.

We believe FFO is an appropriate supplemental measure of operating performance because it helps investors compare our operating performance relative to other REITs. Management also uses FFO as a supplemental measure to conduct and evaluate our business because there are certain limitations associated with using GAAP net income by itself as the primary measure of our operating performance. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, management believes that the presentation of operating results for real estate companies that uses historical cost accounting is insufficient by itself. There can be no assurance that FFO presented by us is comparable to similarly titled measures of other REITs.

FFO should not be considered as an alternative to net income or other measurements under GAAP as an indicator of our operating performance or to cash flows from operating, investing or financing activities as a measure of liquidity. FFO does not reflect working capital changes, cash expenditures for capital improvements or principal payments on indebtedness.

Funds from operations is calculated as follows (in thousands):

   
Year Ended December 31,
 
   
2006
 
2005
 
2004
 
               
Net income available to common shareholders
 
$
294,909
 
$
209,552
 
$
133,911
 
Depreciation and amortization
   
126,713
   
122,203
   
111,211
 
Depreciation and amortization of unconsolidated joint ventures
   
5,079
   
3,539
   
3,131
 
Gain on sale of properties
   
(168,004
)
 
(87,569
)
 
(26,403
)
(Gain) loss on sale of properties of unconsolidated joint ventures
   
(4,052
)
 
8
   
87
 
Funds from operations
   
254,645
   
247,733
   
221,937
 
Funds from operations attributable to operating partnership units
   
5,453
   
5,218
   
3,798
 
Funds from operations assuming conversion of OP units
 
$
260,098
 
$
252,951
 
$
225,735
 
                     
Weighted average shares outstanding - basic
   
87,719
   
89,224
   
86,171
 
Effect of dilutive securities:
                   
Share options and awards
   
926
   
860
   
827
 
Operating partnership units
   
3,134
   
3,082
   
2,513
 
Weighted average shares outstanding - diluted
   
91,779
   
93,166
   
89,511
 


 
Newly Adopted Accounting Pronouncements

In December 2004 the FASB issued SFAS No. 123(R), “Share-Based Payment,” which establishes accounting standards for all transactions in which an entity exchanges its equity instruments for goods and services. This accounting standard focuses primarily on equity transactions with employees. On January 1, 2006, we adopted SFAS No. 123(R) using the modified prospective application method, and accordingly, prior period amounts have not been restated. We began recording compensation expense on any unvested awards granted prior to January 1, 2003 during the remaining vesting periods. Through December 31, 2005, we recorded compensation expense over the vesting period on awards granted since January 1, 2003. Compensation expense was not recorded on awards granted prior to January 1, 2003, but its pro forma impact on net income was disclosed.
 
The impact in 2006 from the adoption of SFAS No. 123(R) was an additional expense of $2.1 million, which decreased both Income from Continuing Operations and Net Income and decreased both Net Income per Common Share - Basic and Net Income per Common Share - Diluted by $.02.

The following table illustrates the effect on Net Income Available to Common Shareholders and Net Income per Common Share if the fair value-based method had been applied to all outstanding and unvested share option awards for the period prior to the adoption of SFAS No. 123(R) (in thousands, except per share amounts):

   
Year Ended December 31,
 
   
2005
 
2004
 
           
Net income available to common shareholders
 
$
209,552
 
$
133,911
 
Stock-based employee compensation included in net income available to common shareholders
   
434
   
193
 
Stock-based employee compensation determined under the fair value-based method for all awards
   
(849
)
 
(567
)
               
Pro forma net income available to common shareholders
 
$
209,137
 
$
133,537
 
               
Net income per common share:
             
Basic - as reported
 
$
2.35
 
$
1.55
 
Basic - pro forma
 
$
2.34
 
$
1.55
 
               
               
Net income per common share:
             
Diluted - as reported
 
$
2.31
 
$
1.54
 
Diluted - pro forma
 
$
2.30
 
$
1.53
 

In May 2005 the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections - A Replacement of APB Opinion No. 20 and SFAS No. 3.” SFAS No. 154 changes the requirements for the accounting and reporting of a change in accounting principle by requiring retrospective application to prior periods’ financial statements of the change in accounting principle, unless it is impracticable to do so. This statement also redefines ”restatement” as the revising of previously issued financial statements to reflect the correction of an error. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The adoption of SFAS No. 154 did not have a material effect on our financial position, results of operations or cash flows.


 
In June 2005 the FASB ratified the consensus in EITF Issue No. 04-5, “Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights.” EITF Issue No. 04-5 expands the definition of when a general partner, or general partners as a group, controls a limited partnership or similar entity. In July 2005 the FASB issued FSP No. SOP 78-9-1, “Interaction of AICPA Statement of Position 78-9 and EITF Issue No. 04-5.” FSP No. SOP 78-9-1 eliminates the concept of “important rights” and replaces it with concepts of “kick-out rights” and “substantive participating rights” as defined in EITF Issue No. 04-5. FSP No. SOP 78-9-1 and EITF Issue No. 04-5 are effective for all general partners of partnerships formed or modified after June 29, 2005, and for all other partnerships the first reporting period beginning after December 15, 2005. We have applied FSP No. SOP 78-9-1 and EITF Issue No. 04-5 to our joint ventures and concluded that these pronouncements did not require consolidation of additional entities.

In June 2006, the FASB issued FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized in the financial statements. The interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken, or expected to be taken, in a tax return. A tax position may only be recognized in the financial statements if it is more likely than not that the tax position will be sustained upon examination. There are also several disclosure requirements. The interpretation is effective for fiscal years beginning after December 15, 2006. We have assessed the potential impact of FIN 48 and have concluded that the adoption of this interpretation will not have a material effect on our financial position, results of operations or cash flows.
 
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This Statement defines fair value and establishes a framework for measuring fair value in generally accepted accounting principles. The key changes to current practice are (1) the definition of fair value, which focuses on an exit price rather than an entry price; (2) the methods used to measure fair value, such as emphasis that fair value is a market-based measurement, not an entity-specific measurement, as well as the inclusion of an adjustment for risk, restrictions and credit standing and (3) the expanded disclosures about fair value measurements. This Statement does not require any new fair value measurements.

This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. We are required to adopt SFAS No. 157 in the first quarter of 2008, and we are currently evaluating the impact that this Statement will have on our financial financial position, results of operations or cash flows.

In September 2006, the FASB issued FASB Statement No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans - An Amendment of FASB Statements No. 87, 88, 106, and 132R.” This new standard requires an employer to: (a) recognize in its statement of financial position an asset for a plan’s over funded status or a liability for a plan’s under funded status; (b) measure a plan’s assets and its obligations that determine its funded status as of the end of the employer’s fiscal year (with limited exceptions); and (c) recognize changes in the funded status of a defined benefit postretirement plan in the year in which the changes occur. These changes will be reported in comprehensive income of a business entity. The requirement to recognize the funded status of a benefit plan and the disclosure requirements (the “Recognition Provision”) are effective as of the end of the fiscal year ending after December 15, 2006. We recognized an additional liability of $803 thousand as a result of the adoption of the Recognition Provision of SFAS No. 158. The requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year-end statement of financial position (the “Measurement Provision”) is effective for fiscal years ending after December 15, 2008. We have assessed the potential impact of SFAS No. 158 and concluded that the adoption of the Measurement Provision of SFAS No. 158 will not have a material effect on our financial position, results of operations or cash flows.
 
In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108 (“SAB 108”), which becomes effective for the first fiscal period ending after November 15, 2006. SAB 108 provides guidance on the consideration of the effects of prior period misstatements in quantifying current year misstatements for the purpose of a materiality assessment. SAB 108 provides for the quantification of the impact of correcting all misstatements, including both the carryover and reversing effects of prior year misstatements, on the current year financial statements. The adoption of SAB 108 on December 31, 2006 did not have a material effect on our financial position, results of operations or cash flows.

 
43
 
In February 2007, the FASB issued Statement No. 159, “ The Fair Value Option for Financial Assets and Financial Liabilities.” SFAS No. 159 expands opportunities to use fair value measurement in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. This Statement is effective for fiscal years beginning after November 15, 2007. We have not decided if we will early adopt SFAS No. 159 or if we will choose to measure any eligible financial assets and liabilities at fair value.

ITEM 7A.   Quantitative and Qualitative Disclosures About Market Risk

We use fixed and floating-rate debt to finance our capital requirements. These transactions expose us to market risk related to changes in interest rates. Derivative financial instruments are used to manage a portion of this risk, primarily interest rate swap agreements with major financial institutions. These swap agreements expose us to credit risk in the event of non-performance by the counter-parties to the swaps. We do not engage in the trading of derivative financial instruments in the normal course of business. At December 31, 2006, we had fixed-rate debt of $2.8 billion and variable-rate debt of $115.4 million, after adjusting for the net effect of $75 million notional amount of interest rate swaps. At December 31, 2005, we had fixed-rate debt of $2.0 billion and variable-rate debt of $313.8 million, after adjusting for the net effect of $80.0 million notional amount of interest rate swaps. In the event interest rates were to increase 100 basis points, net income and future cash flows would decrease by $1.2 million and $3.1 million based upon the variable-rate debt and notes receivable outstanding at December 31, 2006 and 2005, respectively, and the fair value of fixed-rate debt at December 31, 2006 and 2005 would decrease by $200.7 million and $129.6 million, respectively.




To the Board of Trust Managers and Shareholders of
Weingarten Realty Investors

We have audited the accompanying consolidated balance sheets of Weingarten Realty Investors and subsidiaries (the “Company”) as of December 31, 2006 and 2005, and the related consolidated statements of income and comprehensive income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2006. Our audits also included the financial statement schedules listed in the Index at Item 15. 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 the standards of the Public Company Accounting Oversight Board (United States). 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 and subsidiaries at December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America. 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.
 
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company's internal control over financial reporting as of December 31, 2006, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2007 expressed an unqualified opinion on management's assessment of the effectiveness of the Company's internal control over financial reporting and an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.



DELOITTE & TOUCHE LLP

Houston, Texas
March 1, 2007





(In thousands, except per share amounts)

   
Year Ended December 31,
 
   
2006
 
2005
 
2004
 
               
Revenues:
             
Rentals
 
$
554,361
 
$
504,034
 
$
452,567
 
Other
   
7,019
   
6,367
   
8,347
 
                     
Total
   
561,380
   
510,401
   
460,914
 
                     
Expenses:
                   
Depreciation and amortization
   
127,613
   
117,062
   
103,870
 
Operating
   
91,422
   
76,630
   
71,540
 
Ad valorem taxes
   
65,528
   
58,923
   
51,966
 
General and administrative
   
23,801
   
17,379
   
16,122
 
Impairment loss
               
3,550
 
                     
Total
   
308,364
   
269,994
   
247,048
 
                     
Operating Income
   
253,016
   
240,407
   
213,866
 
Interest Expense
   
(146,943
)
 
(130,761
)
 
(117,096
)
Interest and Other Income
   
9,045
   
2,867
   
1,390
 
Loss on Redemption of Preferred Shares
               
(3,566
)
Equity in Earnings of Joint Ventures, net
   
14,655
   
6,610
   
5,384
 
Income Allocated to Minority Interests
   
(6,414
)
 
(6,060
)
 
(4,928
)
Gain on Sale of Properties
   
22,467
   
22,306
   
1,562
 
Gain on Land and Merchant Development Sales
   
7,166
   
804
       
Provision for Income Taxes
   
(1,366
)
 
 
       
In come from Continuing Operations
   
151,626
   
136,173
   
96,612
 
Operating Income from Discontinued Operations
   
7,864
   
18,021
   
19,886
 
Gain on Sale of Properties from Discontinued Operations
   
145,520
   
65,459
   
24,883
 
Income from Discontinued Operations
   
153,384
   
83,480
   
44,769
 
Net Income
 
$
305,010
 
$
219,653
 
$
141,381
 
 
                   
Dividends on Preferred Shares
   
(10,101
)
 
(10,101
)
 
(7,470
)
Net Income Available to Common Shareholders
 
$
294,909
 
$
209,552
 
$
133,911
 
                     
Net Income Per Common Share - Basic:
                   
Income from Continuing Operations
 
$
1.61
 
$
1.41
 
$
1.04
 
Income from Discontinued Operations
   
1.75
   
.94
   
.51
 
Net Income
 
$
3.36
 
$
2.35
 
$
1.55
 
                     
Net Income Per Common Share - Diluted:
                   
Income from Continuing Operations
 
$
1.60
 
$
1.41
 
$
1.04
 
Income from Discontinued Operations
   
1.67
   
.90
   
.50
 
Net Income
 
$
3.27
 
$
2.31
 
$
1.54
 
                     
Net Income
 
$
305,010
 
$
219,653
 
$
141,381
 
Other Comprehensive Loss:
                   
Unrealized loss on derivatives
   
(2,861
)
 
(1,943
)
 
(4,038
)
Amortization of loss on derivatives
   
364
   
340
   
236
 
Minimum pension liability adjustment
   
(1,150
)
 
(1,704
)
 
(590
)
Other Comprehensive Loss
   
(3,647
)
 
(3,307
)
 
(4,392
)
                     
Comprehensive Income
 
$
301,363
 
$
216,346
 
$
136,989
 

See Notes to Consolidated Financial Statements.



(In thousands, except per share amounts)

   
December 31,
 
   
2006
 
2005
 
ASSETS
         
           
Property
 
$
4,445,888
 
$
4,033,579
 
Accumulated Depreciation
   
(707,005
)
 
(679,642
)
Property - net
   
3,738,883
   
3,353,937
 
Investment in Real Estate Joint Ventures
   
203,839
   
84,348
 
               
Total
   
3,942,722
   
3,438,285
 
               
Notes Receivable from Real Estate Joint Ventures and Partnerships
   
3,971
   
42,195
 
Unamortized Debt and Lease Costs
   
112,873
   
95,616
 
Accrued Rent and Accounts Receivable (net of allowance for doubtful accounts of $5,995 in 2006 and $4,673 in 2005)
   
78,893
   
60,905
 
Cash and Cash Equivalents
   
71,003
   
42,690
 
Restricted Deposits and Mortgage Escrows
   
94,466
   
11,747
 
Other
   
71,612
   
46,303
 
               
Total
 
$
4,375,540
 
$
3,737,741
 
               
LIABILITIES AND SHAREHOLDERS' EQUITY
             
               
Debt
 
$
2,900,952
 
$
2,299,855
 
Accounts Payable and Accrued Expenses
   
132,821
   
102,143
 
Other
   
128,306
   
102,099
 
               
Total
   
3,162,079
   
2,504,097
 
               
Minority Interest
   
87,680
   
83,358
 
               
Commitments and Contingencies
             
               
Shareholders' Equity:
             
Preferred Shares of Beneficial Interest - par value, $.03 per share; shares authorized: 10,000
             
6.75% Series D cumulative redeemable preferred shares of beneficial interest; 100 shares issued and outstanding in 2006 and 2005; liquidation preference $75,000
   
3
   
3
 
6.95% Series E cumulative redeemable preferred shares of beneficial interest; 29 shares issued and outstanding in 2006 and 2005; liquidation preference $72,500
   
1
   
1
 
Common Shares of Beneficial Interest - par value, $.03 per share; shares authorized: 150,000; shares issued and outstanding: 85,765 in 2006 and 89,403 in 2005
   
2,582
   
2,686
 
Additional Paid-In Capital
   
1,136,481
   
1,288,432
 
Accumulated Dividends in Excess of Net Income
   
(786
)
 
(132,786
)
Accumulated Other Comprehensive Loss
   
(12,500
)
 
(8,050
)
Shareholders' Equity
   
1,125,781
   
1,150,286
 
               
Total
 
$
4,375,540
 
$
3,737,741
 

See Notes to Consolidated Financial Statements.



(In thousands)

   
Year Ended December 31,
 
   
2006
 
2005
 
2004
 
               
Cash Flows from Operating Activities:
             
Net income
 
$
305,010
 
$
219,653
 
$
141,381
 
Adjustments to reconcile net income to net cash provided by operating activities:
                   
Depreciation and amortization
   
131,992
   
128,573
   
117,053
 
Impairment loss
               
3,550
 
Loss on redemption of preferred shares
               
3,566
 
Equity in earnings of joint ventures, net
   
(14,655
)
 
(6,681
)
 
(5,572
)
Income allocated to minority interests
   
6,414
   
6,060
   
4,928
 
Gain on land and merchant development sales
   
(7,166
)
 
(804
)
     
Gain on sale of properties
   
(167,987
)
 
(87,765
)
 
(26,418
)
Distributions of income from unconsolidated entities
   
2,524
   
2,603
   
1,204
 
Changes in accrued rent and accounts receivable
   
(18,056
)
 
(3,281
)
 
(17,926
)
Changes in other assets
   
(37,607
)
 
(30,769
)
 
(36,122
)
Changes in accounts payable and accrued expenses
   
43,641
   
(27,964
)
 
17,342
 
Other, net
   
(1,518
)
 
900
   
900
 
Net cash provided by operating activities
   
242,592
   
200,525
   
203,886
 
                     
Cash Flows from Investing Activities:
                   
Investment in properties
   
(880,471
)
 
(259,730
)
 
(403,987
)
Proceeds from sales and disposition of property, net
   
661,175
   
201,363
   
52,475
 
Changes in restricted deposits and mortgage escrows
   
(79,737
)
 
1,764
   
488
 
Notes receivable:
                   
Advances
   
(54,800
)
 
(30,852
)
 
(24,920
)
Collections
   
47,617
   
5,278
   
43,224
 
         Real estate joint ventures and partnerships:
                   
Investments
   
(21,547
)
 
(29,233
)
 
(24,906
)
Distributions
   
13,077
   
5,951
   
7,972
 
Net cash used in investing activities
   
(314,686
)
 
(105,459
)
 
(349,654
)
                     
Cash Flows from Financing Activities:
                   
Proceeds from issuance of:
                   
Debt
   
780,782
   
148,347
   
443,770
 
Common shares of beneficial interest
   
4,570
   
2,829
   
221,578
 
Preferred shares of beneficial interest
               
70,000
 
Redemption of preferred shares of beneficial interest
               
(112,940
)
Repurchase of common shares of beneficial interest
   
(167,573
)
           
Principal payments of debt
   
(327,601
)
 
(82,810
)
 
(300,144
)
Common and preferred dividends paid
   
(173,010
)
 
(167,196
)
 
(152,390
)
          Debt issuance cost paid     (13,681 )            
Other, net
   
(3,080
)
 
1,039
   
1,054
 
Net cash provided by (used in) financing activities
   
100,407
   
(97,791
)
 
170,928
 
                     
Net increase (decrease) in cash and cash equivalents
   
28,313
   
(2,725
)
 
25,160
 
Cash and cash equivalents at January 1
   
42,690
   
45,415
   
20,255
 
                     
Cash and cash equivalents at December 31
 
$
71,003
 
$
42,690
 
$
45,415
 

See Notes to Consolidated Financial Statements.


(In thousands, except per share amounts)

Year Ended December 31, 2006, 2005, and 2004


   
Preferred
 
Common
     
Accumulated
 
Accumulated
 
   
Shares of
 
Shares of
 
Additional
 
Dividends in
 
Other
 
   
Beneficial
 
Beneficial
 
Paid-In
 
Excess of
 
Comprehensive
 
   
Interest
 
Interest
 
Capital
 
Net Income
 
Loss
 
                       
Balance, January 1, 2004
 
$
3
 
$
2,488
 
$
993,657
 
$
(174,234
)
$
(351
)
Net income
                     
141,381
       
Issuance of Series E preferred shares
   
1
         
69,999
             
Issuance of common shares
         
168
   
219,256
             
Shares issued in exchange for interests in limited partnerships
         
1
   
852
             
Valuation adjustment on shares issued in exchange for interests in limited partnerships
               
(2,934
)
           
Shares issued under benefit plans
         
15
   
2,440
             
Dividends declared - common shares (1)
                     
(144,920
)
     
Dividends declared - preferred shares (2)
                     
(7,470
)
     
Other comprehensive loss
                           
(4,392
)
Balance, December 31, 2004
   
4
   
2,672
   
1,283,270
   
(185,243
)
 
(4,743
)
Net income
                     
219,653
       
Shares issued in exchange for interests in limited partnerships
         
1
   
1,302
             
Valuation adjustment on shares issued in exchange for interests in limited partnerships
               
550
             
Shares issued under benefit plans
         
13
   
3,310
             
Dividends declared - common shares (1)
                     
(157,095
)
     
Dividends declared - preferred shares (3)
                     
(10,101
)
     
Other comprehensive loss
                           
(3,307
)
Balance, December 31, 2005
   
4
   
2,686
   
1,288,432
   
(132,786
)
 
(8,050
)
Net income
                     
305,010
       
Shares issued in exchange for interests in limited partnerships
         
7
   
7,988
             
Shares cancelled
         
(128
)
 
(167,445
)
           
Shares issued under benefit plans
         
17
   
7,506
             
Dividends declared - common shares (1)
                     
(162,909
)
     
Dividends declared - preferred shares (3)
                     
(10,101
)
     
Adjustment to initially apply FASB Statement No. 158
                           
(803
)
Other comprehensive loss
                           
(3,647
)
Balance, December 31, 2006
 
$
4
 
$
2,582
 
$
1,136,481
 
$
(786
)
$
(12,500
)

(1)
Common dividends per share were $1.86, $1.76 and $1.66 for the year ended December 31, 2006, 2005 and 2004, respectively.
(2)
Series D and Series E preferred dividends per share were $50.63 and $83.01, respectively.
(3)
Series D and Series E preferred dividends per share were $50.63 and $173.75, respectively.

See Notes to Consolidated Financial Statements.





Note 1.   Summary of Significant Accounting Policies

Business
Weingarten Realty Investors is a real estate investment trust organized under the Texas Real Estate Investment Trust Act. We, and our predecessor entity, began the ownership and development of shopping centers and other commercial real estate in 1948. Our primary business is leasing space to tenants in the shopping and industrial centers we own or lease. We also manage centers for joint ventures in which we are partners or for other outside owners for which we charge fees.

We operate a portfolio of properties includes neighborhood and community shopping centers and industrial properties of approximately 65 million square feet. We have a diversified tenant base with our largest tenant comprising only 3% of total rental revenues during 2006.

We currently operate, and intend to operate in the future, as a real estate investment trust.

Basis of Presentation
Our consolidated statements include the accounts of our subsidiaries and certain partially owned joint ventures or partnerships which meet the guidelines for consolidation. All significant intercompany balances and transactions have been eliminated.

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States. Such statements require management to make estimates and assumptions that affect the reported amounts on our consolidated financial statements.

Revenue Recognition
Rental revenue is generally recognized on a straight-line basis over the life of the lease, which begins the date the leasehold improvements are substantially complete, if owned by us, or the date the tenant takes control of the space, if the leasehold improvements are owned by the tenant. Revenue from tenant reimbursements of taxes, maintenance expenses and insurance is recognized in the period the related expense is recorded. Revenue based on a percentage of tenants' sales is recognized only after the tenant exceeds their sales breakpoint.

Partially Owned Joint Ventures and Partnerships
To determine the method of accounting for partially owned joint ventures or partnerships, we first apply the guidelines set forth in FASB Interpretation No. 46R, “Consolidation of Variable Interest Entities.” Based upon our analysis, we have determined that we have no variable interest entities.

Partially owned joint ventures or partnerships over which we exercise financial and operating control are consolidated in our financial statements. In determining if we exercise financial and operating control, we consider factors such as ownership interest, authority to make decisions, kick-out rights and substantive participating rights. Partially owned joint ventures and partnerships where we have the ability to exercise significant influence, but do not exercise financial and operating control, are accounted for using the equity method.

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 18-40 years for buildings and 10-20 years for parking lot surfacing and equipment. Major replacements where the betterment extends the useful life of the asset 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.


Acquisitions of properties are accounted for utilizing the purchase method and, accordingly, the results of operations are included in our results of operations from the respective dates of acquisition. We have used estimates of future cash flows and other valuation techniques to allocate the purchase price of acquired property among land, buildings on an "as if vacant" basis, and other identifiable intangibles. Other identifiable intangible assets and liabilities include the effect of out-of-market leases, the value of having leases in place (lease origination and absorption costs), out-of-market assumed mortgages and tenant relationships.

Property also includes costs incurred in the development of new operating properties and properties in our merchant development program.  These properties are carried at cost and no depreciation is recorded on these assets. These costs include preacquisition costs directly identifiable with the specific project, development and construction costs, interest and real estate taxes. Indirect development costs, including salaries and benefits, travel and other related costs that are clearly attributable to the development of the property, are also capitalized. The capitalization of such costs ceases at the earlier of one year from the completion of major construction or when the property, or any completed portion, becomes available for occupancy.

Property also includes costs for tenant improvements paid by us, including reimbursements to tenants for improvements that are owned by us and will remain our property after the lease expires.

Our properties are reviewed for impairment if events or changes in circumstances indicate that the carrying amount of the property may not be recoverable. In such an event, a comparison is made of either the current and projected operating cash flows of each such property into the foreseeable future on an undiscounted basis or the estimated net sales price to the carrying amount of such property. Such carrying amount is adjusted, if necessary, to the estimated fair value to reflect an impairment in the value of the asset.

Some of our properties are held in single purpose entities. A single purpose entity is a legal entity typically established at the request of a lender solely for the purpose of owning a property or group of properties subject to a mortgage. There may be restrictions limiting the entity’s ability to engage in an activity other than owning or operating the property, assume or guaranty the debt of any other entity, or dissolve itself or declare bankruptcy before the debt has been repaid. Most of our single purpose entities are 100% owned by us and are consolidated in our financial statements.

Interest Capitalization
Interest is capitalized on land under development and buildings under construction based on rates applicable to borrowings outstanding during the period and the weighted average balance of qualified assets under development/construction during the period.

Deferred Charges
Debt and lease costs are amortized primarily on a straight-line basis, which approximates the effective interest method, over the terms of the debt and over the lives of leases, respectively. Lease costs represent the initial direct costs incurred in origination, negotiation and processing of a lease agreement. Such costs include outside broker commissions and other independent third party costs as well as salaries and benefits, travel and other related internal costs incurred in completing the leases. Costs related to supervision, administration, unsuccessful origination efforts and other activities not directly related to completed lease agreements are charged to expense as incurred.

Sales of Real Estate
Sales of real estate include the sale of shopping center pads, property adjacent to shopping centers, shopping center properties, merchant development properties, investments in real estate ventures, and partial sales to joint ventures in which we participate.

We recognize profit on sales of real estate, including merchant development sales, in accordance with SFAS No. 66, “Accounting for Sales of Real Estate.” Profits are not recognized until (a) a sale is consummated; (b) the buyer’s initial and continuing investments are adequate to demonstrate a commitment to pay; (c) the seller’s receivable is not subject to future subordination; and (d) we have transferred to the buyer the usual risks and rewards of ownership in the transaction, and we do not have a substantial continuing involvement with the property.


We recognize gains on the sale of real estate to joint ventures in which we participate to the extent we receive cash from the joint venture.

Accrued Rent and Accounts Receivable
Receivable balances outstanding include base rents, tenant reimbursements and receivables attributable to the straight lining of rental commitments. An allowance for the uncollectible portion of accrued rents and accounts receivable is determined based upon an analysis of balances outstanding, historical bad debt levels, customer credit worthiness and current economic trends. Additionally, estimates of the expected recovery of pre-petition and post-petition claims with respect to tenants in bankruptcy are considered in assessing the collectibility of the related receivables.

Restricted Deposits and Mortgage Escrows
Restricted deposits and mortgage escrows consist of escrow deposits held by lenders primarily for property taxes, insurance and replacement reserves and restricted cash that is held in a qualified escrow account for the purposes of completing like-kind exchange transactions. At December 31, 2006, we had $79.4 million held for like-kind exchange transactions and $15.1 million held in escrow related to our mortgages. At December 31, 2005, we had $11.7 million held in escrow related to our mortgages.

Other Assets
Other assets in our consolidated financial statements include investments held in grantor trusts, prepaid expenses, the value of above-market leases and assumed mortgages and the related accumulated amortization, deferred tax assets and other miscellaneous receivables. Investments held in grantor trusts are adjusted to fair market value at each period end. Above-market leases and assumed mortgages are amortized over terms of the acquired leases and the remaining life of the mortgage, respectively.

Per Share Data
Net income per common share - basic is computed using net income available to common shareholders and the weighted average shares outstanding. Net income per common share - diluted includes the effect of potentially dilutive securities for the periods indicated as follows (in thousands):

   
Year Ended December 31,
 
   
2006
 
2005
 
2004
 
               
Numerator:
             
Net income available to common shareholders - basic
 
$
294,909
 
$
209,552
 
$
133,911
 
Income attributable to operating partnership units
   
5,453
   
5,218
   
3,798
 
Net income available to common shareholders - diluted
 
$
300,362
 
$
214,770
 
$
137,709
 
                     
Denominator:
                   
Weighted average shares outstanding - basic
   
87,719
   
89,224
   
86,171
 
Effect of dilutive securities:
                   
Share options and awards
   
926
   
860
   
827
 
Operating partnership units
   
3,134
   
3,082
   
2,513
 
Weighted average shares outstanding - diluted
   
91,779
   
93,166
   
89,511
 

Options to purchase, in millions: .5, .9 and .4   common shares of beneficial interest in 2006, 2005 and 2004, respectively, were not included in the calculation of net income per common share - diluted as the exercise prices were greater than the average market price for the year.
 


Income Taxes
We have elected to be treated as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended. As a REIT, we generally will not be subject to corporate level federal income tax on taxable income we distribute to our shareholders. To be taxed as a REIT we must meet a number of requirements including meeting defined percentage tests concerning the amount of our assets and revenues that come from, or are attributable to, real estate operations. As long as we distribute at least 90% of the taxable income of the REIT to our shareholders as dividends, we will not be taxed on the portion of our income we distribute as dividends unless we have ineligible transactions.
 
The Tax Relief Extension Act of 1999 gave REITs the ability to conduct activities which a REIT was previously precluded from doing as long as they are done in entities which have elected to be treated as taxable REIT subsidiaries under the IRS code. These activities include buying or developing properties with the express purpose of selling them. We conduct certain of these activities in taxable REIT subsidiaries that we have created. We calculate and record income taxes in our financial statements based on the activities in those entities. We also record deferred taxes for the temporary tax differences that have resulted from those activities as required under SFAS No. 109, “Accounting for Income Taxes.”

Cash Flow Information
All highly liquid investments with original maturities of three months or less are considered cash equivalents. We issued common shares of beneficial interest valued at $8.0 million, $1.3 million and $.9 million during 2006, 2005 and 2004, respectively, in exchange for interests in limited partnerships, which had been formed to acquire properties. In association with property acquisitions, we assumed debt and a capital lease obligation totaling $140.7 million, $135.3 million, and $140.7 million, and we issued operating partnership units valued at $11.1 million, $6.9 million and $23.4 million, during 2006, 2005 and 2004, respectively. Also, we accrued $6.5 million, $4.9 million and $7.2 million during 2006, 2005 and 2004, respectively, associated with the construction of property. Cash payments for interest on debt, net of amounts capitalized, of $139.1 million, $135.4 million, and $117.0 million were made during 2006, 2005, and 2004, respectively. A cash payment of $.6 million for federal income taxes was made during 2006. In connection with the sale of an 80% interest in 12 properties in 2006 and two properties in 2005, we retained a 20% unconsolidated investment of $90.6 million and $14.7 million, respectively. In connection with the sale of improved properties, we received notes receivable totaling $2.6 million in 2006, a $15.5 million capital lease obligation was settled, and debt of $11.1 million was assumed in 2005, respectively. In satisfaction of obligations under mortgage bonds and notes receivable of $2.9 million, we acquired 9.7 acres of land in 2004.

Reclassifications
Certain reclassifications of prior years’ amounts have been made to conform to the current year presentation, which includes the reclassification of the operating results of certain properties to discontinued operations. For additional information see Note 8, “Discontinued Operations.”

Note 2.   Newly Adopted Accounting Pronouncements

In December 2004 the FASB issued SFAS No. 123(R), “Share-Based Payment,” which establishes accounting standards for all transactions in which an entity exchanges its equity instruments for goods and services. This accounting standard focuses primarily on equity transactions with employees. On January 1, 2006, we adopted SFAS No. 123(R) using the modified prospective application method, and accordingly, prior period amounts have not been restated. We began recording compensation expense on any unvested awards granted prior to January 1, 2003 during the remaining vesting periods. Through December 31, 2005, we recorded compensation expense over the vesting period on awards granted since January 1, 2003. Compensation expense was not recorded on awards granted prior to January 1, 2003, but its pro forma impact on net income was disclosed.

The impact in 2006 from the adoption of SFAS No. 123(R) was an additional expense of $2.1 million, which decreased both Income from Continuing Operations and Net Income and decreased both Net Income per Common Share - Basic and Net Income per Common Share - Diluted by $.02.



The following table illustrates the effect on Net Income Available to Common Shareholders and Net Income per Common Share if the fair value-based method had been applied to all outstanding and unvested share option awards for the period prior to the adoption of SFAS No. 123(R) (in thousands, except per share amounts):

   
Year Ended December 31,
 
   
2005
 
2004
 
           
Net income available to common shareholders
 
$
209,552
 
$
133,911
 
Stock-based employee compensation included in net income available to common shareholders
   
434
   
193
 
Stock-based employee compensation determined under the fair value-based method for all awards
   
(849
)
 
(567
)
               
Pro forma net income available to common shareholders
 
$
209,137
 
$
133,537
 
               
Net income per common share:
             
Basic - as reported
 
$
2.35
 
$
1.55
 
Basic - pro forma
 
$
2.34
 
$
1.55
 
               
               
Net income per common share:
             
Diluted - as reported
 
$
2.31
 
$
1.54
 
Diluted - pro forma
 
$
2.30
 
$
1.53
 

In May 2005 the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections - A Replacement of APB Opinion No. 20 and SFAS No. 3.” SFAS No. 154 changes the requirements for the accounting and reporting of a change in accounting principle by requiring retrospective application to prior periods’ financial statements of the change in accounting principle, unless it is impracticable to do so. This statement also redefines ”restatement” as the revising of previously issued financial statements to reflect the correction of an error. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The adoption of SFAS No. 154 did not have a material effect on our financial position, results of operations or cash flows.

In June 2005 the FASB ratified the consensus in EITF Issue No. 04-5, “Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights.” EITF Issue No. 04-5 expands the definition of when a general partner, or general partners as a group, controls a limited partnership or similar entity. In July 2005 the FASB issued FSP No. SOP 78-9-1, “Interaction of AICPA Statement of Position 78-9 and EITF Issue No. 04-5.” FSP No. SOP 78-9-1 eliminates the concept of “important rights” and replaces it with concepts of “kick-out rights” and “substantive participating rights” as defined in EITF Issue No. 04-5. FSP No. SOP 78-9-1 and EITF Issue No. 04-5 are effective for all general partners of partnerships formed or modified after June 29, 2005, and for all other partnerships the first reporting period beginning after December 15, 2005. We have applied FSP No. SOP 78-9-1 and EITF Issue No. 04-5 to our joint ventures and concluded that these pronouncements did not require consolidation of additional entities.

In June 2006, the FASB issued FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized in the financial statements. The interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken, or expected to be taken, in a tax return. A tax position may only be recognized in the financial statements if it is more likely than not that the tax position will be sustained upon examination. There are also several disclosure requirements. The interpretation is effective for fiscal years beginning after December 15, 2006. We have assessed the potential impact of FIN 48 and have concluded that the adoption of this interpretation will not have a material effect on our financial position, results of operations or cash flows.


In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This Statement defines fair value and establishes a framework for measuring fair value in generally accepted accounting principles. The key changes to current practice are (1) the definition of fair value, which focuses on an exit price rather than an entry price; (2) the methods used to measure fair value, such as emphasis that fair value is a market-based measurement, not an entity-specific measurement, as well as the inclusion of an adjustment for risk, restrictions and credit standing and (3) the expanded disclosures about fair value measurements. This Statement does not require any new fair value measurements.

This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. We are required to adopt SFAS No. 157 in the first quarter of 2008, and we are currently evaluating the impact that this Statement will have on our financial position, results of operations or cash flows.

In September 2006, the FASB issued FASB Statement No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans - An Amendment of FASB Statements No. 87, 88, 106, and 132R.” This new standard requires an employer to: (a) recognize in its statement of financial position an asset for a plan’s over funded status or a liability for a plan’s under funded status; (b) measure a plan’s assets and its obligations that determine its funded status as of the end of the employer’s fiscal year (with limited exceptions); and (c) recognize changes in the funded status of a defined benefit postretirement plan in the year in which the changes occur. These changes will be reported in comprehensive income of a business entity. The requirement to recognize the funded status of a benefit plan and the disclosure requirements (the “Recognition Provision”) are effective as of the end of the fiscal year ending after December 15, 2006. We recognized an additional liability of $803 thousand as a result of the adoption of the Recognition Provision of SFAS No. 158. The requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year-end statement of financial position (the “Measurement Provision”) is effective for fiscal years ending after December 15, 2008. We have assessed the potential impact of SFAS No. 158 and concluded that the adoption of the Measurement Provision of SFAS No. 158 will not have a material effect on our financial position, results of operations or cash flows.
 
In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108 (“SAB 108”), which becomes effective for the first fiscal period ending after November 15, 2006. SAB 108 provides guidance on the consideration of the effects of prior period misstatements in quantifying current year misstatements for the purpose of a materiality assessment. SAB 108 provides for the quantification of the impact of correcting all misstatements, including both the carryover and reversing effects of prior year misstatements, on the current year financial statements. The adoption of SAB 108 on December 31, 2006 did not have a material effect on our financial position, results of operations or cash flows.

In February 2007, the FASB issued Statement No. 159, “ The Fair Value Option for Financial Assets and Financial Liabilities.” SFAS No. 159 expands opportunities to use fair value measurement in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. This Statement is effective for fiscal years beginning after November 15, 2007. We have not decided if we will early adopt SFAS No. 159 or if we will choose to measure any eligible financial assets and liabilities at fair value.

Note 3.   Derivatives and Hedging

We occasionally hedge the future cash flows of our debt transactions, as well as changes in the fair value of our debt instruments, principally through interest rate swaps with major financial institutions. At December 31, 2006, we had five interest rate swap contracts designated as fair value hedges with an aggregate notional amount of $75.0 million that convert fixed interest payments at rates ranging from 4.2% to 6.8% to variable interest payments. We have determined that they are highly effective in limiting our risk of changes in the fair value of fixed-rate notes attributable to changes in variable interest rates. Also, at December 31, 2006, we had two forward-starting interest rate swap contracts with an aggregate notional amount of $118.6 million which lock the swap rate at 5.2% until January 2008. The purpose of these forward-starting swaps, which are designated as cash flow hedges, is to mitigate the risk of future fluctuations in interest rates on forecasted issuances of long-term debt. We have determined that they are highly effective in offsetting future variable interest cash flows on anticipated long-term debt issuances.
 


In May 2006 we entered into a forward-starting interest rate swap with a notional amount of $74.0 million. In December 2006 we terminated this rate swap in conjunction with the issuance of $75.0 million of medium term notes. The termination fee of $4.1 million is being amortized over the life of the medium term note.

In June 2006 a $5 million swap matured in conjunction with the maturity of the associated medium term note. This contract was designated as a fair value hedge.

Changes in the market value of fair value hedges as well as changes in the market value of the hedged item are recorded in earnings each reporting period. For fiscal year 2006 and 2005, these changes in fair market value offset with minimal impact to earnings. The derivative instruments at December 31, 2006 and December 31, 2005 were reported at their fair values in Other Assets, net of accrued interest, of $.1 million and $.4 million, respectively, and as Other Liabilities, net of accrued interest, of $3.2 million and $4.4 million, respectively.

 
As of December 31, 2006 and December 31, 2005, the balance in Accumulated Other Comprehensive Loss relating to derivatives was $7.6 million and $5.1 million, respectively, and amounts amortized to interest expense were $.4 million in 2006, $.3 million in 2005 and $.2 million in 2004. Within the next twelve months, we expect to amortize to interest expense approximately $.9 million of the balance in Accumulated Other Comprehensive Loss.

The interest rate swaps increased interest expense and decreased net income by $.5 million, $1.3 million, and $3.5 million in 2006, 2005, and 2004, respectively, and increased the average interest rate of our debt by .02%, .1%, and .2% in 2006, 2005, and 2004, respectively. We could be exposed to credit losses in the event of nonperformance by the counter-party; however, management believes the likelihood of such nonperformance is remote.

Note 4.   Debt

Our debt consists of the following (in thousands):

   
December 31,
 
   
2006
 
2005
 
           
Debt payable to 2030 at 4.5% to 8.9%
 
$
2,848,805
 
$
2,049,470
 
Unsecured notes payable under revolving credit agreements
   
18,000
   
210,000
 
Obligations under capital leases
   
29,725
   
33,460
 
Industrial revenue bonds payable to 2015 at 4.0% to 6.19%  
   
4,422
   
6,925
 
               
Total
 
$
2,900,952
 
$
2,299,855
 

The grouping of total debt between fixed and variable-rate as well as between secured and unsecured is summarized below (in thousands):

   
December 31 ,
 
   
2006
 
2005
 
           
As to interest rate (including the effects of interest rate swaps):
         
Fixed-rate debt
 
$
2,785,553
 
$
1,986,059
 
Variable-rate debt
   
115,399
   
313,796
 
               
Total
 
$
2,900,952
 
$
2,299,855
 
               
As to collateralization:
             
Unsecured debt
 
$
1,910,216
 
$
1,457,805
 
Secured debt
   
990,736
   
842,050
 
               
Total
 
$
2,900,952
 
$
2,299,855
 
 


In February 2006 we amended and restated our $400 million unsecured revolving credit facility. The amended facility has an initial four-year term and provides a one-year extension option available at our request. Borrowing rates under this amended facility float at a margin over LIBOR, plus a facility fee. The borrowing margin and facility fee, which are currently 37.5 and 12.5 basis points, respectively, are priced off a grid that is tied to our senior unsecured credit ratings. This amended facility retains a competitive bid feature that allows us to request bids for amounts up to $200 million from each of the syndicate banks, allowing us an opportunity to obtain pricing below what we would pay using the grid. Additionally, the amended facility contains an accordion feature, which allows us the ability to increase the facility up to $600 million.

At December 31, 2006 and December 31, 2005, the balance outstanding under the $400 million revolving credit facility was $18 million at an average variable interest rate of 5.75% and $190 million at an average variable interest rate of 4.5%, respectively. We also have an agreement for an unsecured and uncommitted overnight facility totaling $20 million with a bank that is used for cash management purposes, of which nothing was outstanding at December 31, 2006. At December 31, 2005, we had $20 million outstanding under this credit facility at a variable interest rate of 4.7%. Letters of credit totaling $10.1 million and $14.9 million were outstanding under the $400 million revolving credit facility at December 31, 2006 and December 31, 2005, respectively. The available balance under our revolving credit agreement was $371.9 million and $175.1 million at December 31, 2006 and 2005, respectively. During 2006 the maximum balance and weighted average balance outstanding under both the $400 million and the $20 million revolving credit facilities combined were $368.2 million and $179.1 million, respectively, at a weighted average interest rate of 5.5%. During 2005 the maximum balance and weighted average balance outstanding under both the $400 million and the $20 million revolving credit facilities combined were $210.0 million and $102.3 million, respectively, at a weighted average interest rate of 5.1%.

In conjunction with acquisitions completed during 2006 and 2005, we assumed $140.7 million and $135.3 million, respectively, of nonrecourse debt secured by the related properties.

Various leases and properties, and current and future rentals from those leases and properties, collateralize certain debt. At December 31, 2006 and 2005, the carrying value of such property aggregated $1.8 billion and $1.6 billion, respectively.

Scheduled principal payments on our debt (excluding $18.0 million due under our revolving credit agreements, $18.6 million of capital leases and $2.7 million market value of interest rate swaps) are due during the following years (in thousands):

2007
$
114,098
 
2008
 
252,768
 
2009
 
113,624
 
2010
 
119,310
 
2011
 
890,450
 
2012
 
308,032
 
2013
 
324,696
 
2014
 
334,466
 
2015
 
176,228
 
Thereafter
 
233,284
 

Our various debt agreements contain restrictive covenants, including minimum interest and fixed charge coverage ratios, minimum unencumbered interest coverage ratios and minimum net worth requirements and maximum total debt levels. Management believes that we are in compliance with all restrictive covenants.

In December 2006 we issued $75 million of ten year unsecured fixed rate medium term notes at 6.1% including the effect of an interest rate swap that hedged the transaction. Proceeds from this issuance were used to repay balances under our revolving credit facilities, to cash settle a forward hedge and for general business purposes.
 

In July 2006 we priced an offering of $575 million aggregate principal amount of 3.95% convertible senior notes due 2026, which closed on August 2, 2006. Interest is payable semi-annually in arrears on February 1 and August 1 of each year, beginning February 1, 2007. The net proceeds of $395.9 million from the sale of the notes were used for general business purposes, to repurchase 4.3 million shares of our common shares of beneficial interest and to reduce amounts outstanding under our revolving credit facility.

The debentures are convertible under certain circumstances for our common shares of beneficial interest at an initial conversion rate of 20.3770 common shares per $1,000 of principal amount of debentures (an initial conversion price of $49.075). In addition, the conversion rate may be adjusted if certain change in control transactions or other specified events occur on or prior to August 4, 2011. Upon the conversion of notes, we will deliver cash for the principal return, as defined, and cash or common shares, at our option, for the excess of the conversion value, as defined, over the principal return. The debentures are redeemable for cash at our option beginning in 2011 for the principal amount plus accrued and unpaid interest. Holders of the debentures have the right to require us to repurchase their debentures for cash equal to the principal of the notes plus accrued and unpaid interest in 2011, 2016 and 2021 and in the event of a change in control. 

Holders may convert their notes based on the applicable conversion rate prior to the close of business on the second business day prior to the stated maturity date at any time on or after August 1, 2025 and also under any of the following circumstances:
 
•   during any calendar quarter beginning after December 31, 2006 (and only during such calendar quarter), if, and only if, the closing sale price of our common shares for at least 20 trading days (whether or not consecutive) in the period of 30 consecutive trading days ending on the last trading day of the preceding calendar quarter is greater than 130% of the conversion price per common share in effect on the applicable trading day;
 
•   during the five consecutive trading-day period following any five consecutive trading-day period in which the trading price of the notes was less than 98% of the product of the closing sale price of our common shares multiplied by the applicable conversion rate;
 
•   if those notes have been called for redemption, at any time prior to the close of business on the third business day prior to the redemption date;
 
•   if our common shares are not listed on a U.S. national or regional securities exchange or quoted on the Nasdaq National Market for 30 consecutive trading days.

In connection with the issuance of these notes, we filed a shelf registration statement related to the resale of the debentures and the common shares issuable upon the conversion of the debentures. This registration statement has been declared effective.

Note 5.   Preferred Shares

In July 2004 we issued $72.5 million of depositary shares with each share representing one-hundredth of a Series E Cumulative Redeemable Preferred Share. The depositary shares are redeemable, in whole or in part, for cash on or after July 8, 2009 at our option, at a redemption price of $25 per depositary share, plus any accrued and unpaid dividends thereon. The depositary shares are not convertible or exchangeable for any of our other property or securities. The Series E Preferred Shares pay a 6.95% annual dividend and have a liquidation value of $2,500 per share. Net proceeds of $70.2 million were utilized to pay down amounts outstanding under our $400 million revolving credit facility.

In April 2003 $75 million of depositary shares were issued with each share representing one-thirtieth of a Series D Cumulative Redeemable Preferred Share. The depositary shares are redeemable, in whole or in part, for cash on or after April 30, 2008 at our option, at a redemption price of $25 per depositary share, plus any accrued and unpaid dividends thereon. The depositary shares are not convertible or exchangeable for any of our property or securities. The Series D Preferred Shares pay a 6.75% annual dividend and have a liquidation value of $750 per share. Net proceeds of $73.0 million were used to redeem the 7.44% Series A Cumulative Redeemable Preferred Shares.
On January 30, 2007, we issued $200 million of depositary shares. Each depositary share represents one-hundredth of a Series F Cumulative Redeemable Preferred Share. The depositary shares are redeemable, in whole or in part, on or after January 30, 2012 at our option, at a redemption price of $25 per depositary share, plus any accrued and unpaid dividends thereon. The depositary shares are not convertible or exchangeable for any of our other property or securities. The Series F Preferred Shares pay a 6.5% annual dividend and have a liquidation value of $2,500 per share. Net proceeds of $194.4 million were used to repay amounts outstanding under our credit facilities and for general business purposes.

Note 6.   Common Shares

In February 2004 a three-for-two share split, effected in the form of a 50% share dividend, was declared for shareholders of record on March 16, 2004, payable March 30, 2004. We issued 28.5 million common shares of beneficial interest as a result of the share split. All references to the number of shares and per share amounts have been restated to reflect the share split, and an amount equal to the par value of the number of common shares issued has been reclassified to Common Shares of Beneficial Interest from Accumulated Dividends in Excess of Net Income.

In March 2004 we issued 3.6 million common shares of beneficial interest. Net proceeds to us totaled $118.0 million. The proceeds from this offering were used primarily to redeem our 7.0% Series C Cumulative Redeemable Preferred Shares on April 1, 2004. In August 2004 we issued an additional 3.2 million common shares of beneficial interest. Net proceeds to us totaled $101.9 million. The proceeds from this offering were used to pay down amounts outstanding under our $400 million revolving credit facility.

In February 2006 our board of trust managers authorized up to $100 million for the purchase of outstanding common shares of beneficial interest in 2006. Share repurchases may be made in the open market or in privately negotiated transactions. In July 2006 our board of trust managers authorized the repurchase of our common shares of beneficial interest to a total of $207 million, and we used $167.6 million of the net proceeds from the $575 million debt offering to purchase 4.3 million common shares of beneficial interest at $39.26 per share.

Note 7.   Property

Our property consisted of the following (in thousands):

   
December 31,
 
   
2006
 
2005
 
           
Land
 
$
847,295
 
$
761,454
 
Land held for development
   
21,405
   
20,634
 
Land under development
   
146,990
   
16,895
 
Buildings and improvements
   
3,339,074
   
3,195,207
 
Construction in-progress
   
91,124
   
39,389
 
               
Total
 
$
4,445,888
 
$
4,033,579
 

The following carrying charges were capitalized (in thousands):

   
Year Ended December 31,
 
   
2006
 
2005
 
2004
 
               
Interest
 
$
7,616
 
$
2,629
 
$
4,992
 
Ad valorem taxes
   
780
   
293
   
653
 
                     
Total
 
$
8,396
 
$
2,922
 
$
5,645
 


 
Acquisitions of properties are accounted for utilizing the purchase method and, accordingly, the results of operations are included in our results of operations from the respective dates of acquisition. We have used estimates of future cash flows and other valuation techniques to allocate the purchase price of acquired property among land, buildings on an "as if vacant" basis, and other identifiable intangibles.

During 2006 we invested $484 million in the acquisition of operating properties. Of this total, $402 million was invested in 17 shopping centers and $82 million was invested in seven industrial projects.

In 2006 we acquired land, either directly or through our interests in joint ventures at 17 separate locations for the development of 17 retail centers. During 2006 we invested $167 million in new developments.
 
Note 8.   Discontinued Operations

In 2006 we sold 19 shopping centers and four industrial properties, ten of which were located in Texas, three in Kansas, two each in Arkansas, Oklahoma and Tennessee, and one each in Arizona, Missouri, New Mexico and Colorado. In 2005 we sold 13 retail properties and a vacant building, ten of which were located in Texas and one each in Louisiana, Mississippi and Arkansas. Also in 2005, we sold two industrial properties in Texas and one in Nevada. The operating results of these properties have been reclassified and reported as discontinued operations in the Statements of Consolidated Income and Comprehensive Income in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," as well as any gains on the respective disposition for all periods presented. Revenues recorded in Operating Income From Discontinued Operations related to our dispositions totaled $17.7 million in 2006, $39.0 million in 2005 and $44.9 million in 2004. Included in the Consolidated Balance Sheet at December 31, 2005 were $205.4   million of Property and $59.6 million of Accumulated Depreciation related to properties sold during 2006.

The discontinued operations reported in 2006 and 2005 had no debt that was required to be repaid upon their disposition. In addition, we elected not to allocate other consolidated interest to discontinued operations since the interest savings to be realized from the proceeds of the sale of these operations was not material.

Note 9.   Related Party Transactions

We have interests in several joint ventures and partnerships. Notes receivable from these entities bear interest ranging from 6.0% to 10% at December 31, 2006, are due at various dates through 2028   and are generally secured by real estate assets. We recognized interest income on these notes as follows, in millions: $1.3 in both 2006 and 2005 and $.8 in 2004.
Note 10.   Investment in Real Estate Joint Ventures

We own interests in joint ventures or limited partnerships in which we exercise significant influence but do not have financial and operating control. These partnerships are accounted for under the equity method. Our interests in these joint ventures and limited partnerships range from 20% to 75%. Combined condensed unaudited financial information of these ventures (at 100%) is summarized as follows (in thousands):

   
December 31,
 
   
2006
 
2005
 
           
Combined Balance Sheets
         
           
Property
 
$
1,123,600
 
$
397,689
 
Accumulated depreciation
   
(41,305
)
 
(32,032
)
Property - net
   
1,082,295
   
365,657
 
               
Other assets
   
118,642
   
61,543
 
               
Total
 
$
1,200,937
 
$
427,200
 
               
               
               
Debt
 
$
327,695
 
$
136,182
 
Amounts payable to Weingarten Realty Investors
   
22,657
   
43,239
 
Other liabilities
   
39,967
   
12,081
 
Accumulated equity
   
810,618
   
235,698
 
               
Total
 
$
1,200,937
 
$
427,200
 
 

   
Year Ended December 31,
 
   
2006
 
2005
 
2004
 
               
Combined Statements of Income
             
               
Revenues
 
$
65,002
 
$
41,059
 
$
32,117
 
                     
Expenses:
                   
Interest
   
17,398
   
10,565
   
7,061
 
Depreciation and amortization
   
15,390
   
9,322
   
7,203
 
Operating
   
8,750
   
5,480
   
5,041
 
Ad valorem taxes
   
6,187
   
4,756
   
3,645
 
General and administrative
   
783
   
301
   
395
 
                     
Total
   
48,508
   
30,424
   
23,345
 
                     
Gain on land sales
   
1,938
   
170
       
Gain (loss) on sale of properties
   
5,991
   
(20
)
 
(182
)
Net income
 
$
24,423
 
$
10,785
 
$
8,590
 

Our investment in real estate joint ventures, as reported on the balance sheets, differs from our proportionate share of the joint ventures' underlying net assets due to basis differentials, which arose upon the transfer of assets to the joint ventures. This basis differential, which totaled $20.1 million and $10.3 million at December 31, 2006 and 2005, respectively, is generally amortized over the useful lives of the related assets.

Fees earned by us for the management of these joint ventures totaled, in millions, $1.9 in 2006, $.8 in 2005, and $.6 in 2004.
During 2006, we invested in a 25%-owned unconsolidated joint venture, which acquired five shopping centers. Fresh Market Shoppes is located in Hilton Head, South Carolina; Shoppes at Paradise Isle is located in Destin, Florida; Indian Harbor Place is located in Melbourne, Florida, and both Quesada Commons and Shoppes of Port Charlotte are located in Port Charlotte, Florida. Two 50%-owned joint ventures commenced development of a retail center each located in Mission, Texas and Apple Valley, California. Also, two shopping centers, one each in Crosby and Dickinson, Texas, were sold. Our share of the sales proceeds totaled $8.1 million and generated a gain of $4.1 million. Associated with our land and merchant development activities, two parcels of land in Houston, Texas and Liberty Lake, Washington were sold in a 75%-owned and a 50%-owned joint venture, respectively, of which our share of the gain totaled $1.1 million. We also acquired our partner’s share of Heritage Station, which is located in Wake Forest, North Carolina. Heritage Station is a 62,000 square foot shopping center that is anchored by Harris Teeter.

During the third quarter of 2006, we formed a strategic joint venture with Mercantile Real Estate Advisors, Inc. (“MREA”) to acquire and operate industrial properties within target markets across the United States. MREA served as investment advisor to the AFL-CIO Building Investment Trust (“BIT”). The joint venture is 80% owned by BIT and 20% by us. We will earn fees for operating the properties. BIT as the majority owner will make or approve all significant decisions.

Acquisitions will be focused on bulk warehouse and business distribution properties within targeted markets. The partners plan to invest $500 million in total capital over the next two years including leverage targeted at approximately 50% of total capital. As part of this transaction, we provided the initial seeding for the joint venture, contributing 16 buildings at five properties with a total value of $123 million and aggregating more than two million square feet. The sale of these properties to the joint venture resulted in a gain to us of $21.6 million. The properties are located in the San Diego, Memphis, and Atlanta markets.

During the fourth quarter of 2006, two new strategic joint ventures were formed with TIAA-CREF Global Real Estate and AEW Capital Management on behalf of its institutional clients, of which we own 20%. We provided the initial seeding for the TIAA-CREF Global Real Estate joint venture, whereby seven newly purchased neighborhood/community shopping centers in South Florida were contributed by us with a total value of $325 million and aggregating more than 1.3 million square feet. The AEW Capital Management joint venture acquired four grocery-anchored centers and two power centers located in Oregon and Washington.

During 2005, we acquired our joint venture partners' interest in one of our existing shopping centers located in Texas, and a 50%-owned unconsolidated joint venture acquired an interest in a retail property located in McAllen, Texas, which will be redeveloped. We sold an 80% interest in two retail properties totaling 295,000 square feet in Lafayette and Shreveport, Louisiana. These properties were held in tenancy-in-common arrangements in which we retained a 20% interest. We acquired a 25% interest in Lake Washington Crossing, a 119,000 square foot retail center in Melbourne, Florida, and a 25% interest in a 96,000 square foot retail center located in Chapel Hill, North Carolina. Additionally, a 50%-owned unconsolidated joint venture commenced development on a 161,000 square foot retail center located in Liberty Lake, Washington and two 50%-owned joint ventures commenced construction on two retail centers in Mission, Texas.

We have not guaranteed the debt of any of our joint ventures in which we own an interest.

Note 11.   Federal Income Tax Considerations

We qualify as a REIT under the provisions of the Internal Revenue Code, and therefore, no tax is imposed on us for our taxable income distributed to shareholders. To maintain our REIT status, we must distribute at least 90% of our ordinary taxable income to our shareholders and meet certain income source and investment restriction requirements. Our shareholders must report their share of income distributed in the form of dividends.

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 gain from sales of property. As a result of these differences, the book value of our net fixed assets exceeds the tax basis by $70.8 million at December 31, 2006.
The following table reconciles net income to REIT taxable income for the years ended December 31, 2006, 2005 and 2004 (in thousands):
 

   
2006
     
  2005
 
2004
 
                    
Net Income
 
$
305,010
     
$
219,653
 
$
141,381
 
Net (income) loss of taxable REIT subsidiaries included above
   
(4,264
)
     
(923
)
 
143
 
Net Income from REIT operations
   
300,746
       
218,730
   
141,524
 
Book depreciation and amortization including discontinued operations
   
127,613
       
117,062
   
103,870
 
Tax depreciation and amortization
   
(86,002
)
     
(80,922
)
 
(76,432
)
Book/tax difference on gains/losses from capital transactions
   
(128,628
)
     
(69,885
)
 
(12,716
)
Other book/tax differences, net
   
(18,155
)
     
(22,468
)
 
(6,285
)
REIT taxable income
   
195,574
       
162,517
   
149,961
 
Dividends paid deduction
   
(195,574
)
(1)
   
(167,196
)
 
(155,029
)
Dividends paid in excess of taxable income
 
$
0
     
$
(4,679
)
$
(5,068
)
 
(1)
The dividend deduction includes designated dividends from 2007 of $22.5 million.

For federal income tax purposes, the cash dividends distributed to common shareholders are characterized as follows:

   
2006
 
2005
 
2004
 
               
Ordinary income
   
76.2
%
 
81.2
%
 
84.0
%
Return of capital (generally nontaxable)
   
0.0
   
9.1
   
7.1
 
Capital gain distributions
   
23.8
   
9.7
   
8.9
 
                     
Total
   
100.0
%
 
100.0
%
 
100.0
%

We have two taxable REIT subsidiaries that are subject to federal, state, and local income tax. A minimal provision for federal income taxes was made in all three years. Only minimal state income taxes were paid in these periods.

We have reviewed our tax positions under FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized in the financial statements. The interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken, or expected to be taken, in a tax return. A tax position may only be recognized in the financial statements if it is more likely than not that the tax position will be sustained upon examination. We believe it is more likely than not that our tax positions will be sustained in any tax examinations.

In May 2006, the state of Texas enacted a margin tax, replacing the taxable capital components of the current franchise tax with a new “taxable margin” component. Most REIT’s are subject to the margin tax, where as they were previously exempt from the franchise tax. The tax becomes effective for us beginning in calendar year 2007. Since the tax base on the margin tax is derived from an income based measure, we believe the margin tax is an income tax. As a result, the provisions of SFAS 109, “Accounting for Income Taxes” applies to this tax. In accordance with SFAS 109, the effect on deferred tax liabilities of a change in a tax law should be included in tax expense attributable to continuing operations in the period including the enactment date. We have calculated our deferred tax assets and liabilities for Texas based on the new margin tax and the amount is immaterial. We anticipate incurring an expense for this tax in 2007.
Note 12.   Leasing Operations

The terms of our leases range from less than one year for smaller tenant spaces to over 25 years for larger tenant spaces. In addition to minimum lease payments, most of the leases provide for contingent rentals (payments for taxes, maintenance and insurance by lessees and an amount based on a percentage of the tenants' sales). Future minimum rental income from noncancelable tenant leases at December 31, 2006, in millions, is: $425.6 in 2007; $374.7 in 2008; $317.9 in 2009; $259.8 in 2010; $197.3 in 2011; and $779.5 thereafter. The future minimum rental amounts do not include estimates for contingent rentals. Such contingent rentals, in millions, aggregated $119.0 in 2006, $108.8 in 2005 and $101.3 in 2004.

Note 13.   Commitments and Contingencies

We are engaged in the operations of shopping centers, which are either owned or, with respect to certain shopping centers, operated under long-term ground leases. These ground leases expire at various dates through 2075, with renewal options. Space in our shopping centers is leased to tenants pursuant to agreements that provide for terms ranging generally from one month to 25 years and, in some cases, for annual rentals subject to upward adjustments based on operating expense levels, sales volume, or contractual increases as defined in the lease agreements.
 
Scheduled minimum rental payments under the terms of all non-cancelable operating leases in which we are the lessee, principally for shopping center ground leases, for the subsequent five years and thereafter ending December 31, are as follows (in thousands):

2007
 
$
1,876
 
2008
   
1,782
 
2009
   
1,737
 
2010
   
1,691
 
2011
   
1,626
 
Thereafter
   
39,459
 
   
$
48,171
 

The scheduled future minimum revenues, applicable to the ground lease rentals above, under the terms of all non-cancelable tenant leases, assuming no new or renegotiated leases or option extensions for the subsequent five years and thereafter ending December 31, are as follows (in thousands):

2007
 
$
30,299
 
2008
   
25,897
 
2009
   
21,538
 
2010
   
18,062
 
2011
   
15,006
 
Thereafter
   
63,626
 
   
$
174,428
 

Property under capital leases, consisting of four shopping centers at both December 31, 2006 and 2005, aggregated $29.1 million, and is included in buildings and improvements. Amortization of property under capital leases is included in depreciation and amortization expense, and the balance of Accumulated Depreciation associated with these capital leases at December 31, 2006 and 2005 was $13.1 million and $11.9 million, respectively. Future minimum lease payments under these capital leases total $52.0 million, with annual payments due, in millions, of $1.9 in each of 2007 and 2008; $2.0 in each of 2009 and 2010; $2.1 in 2011; and $42.1 thereafter. The amount of these total payments representing interest is $22.3 million. Accordingly, the present value of the net minimum lease payments was $29.7 million at December 31, 2006.
We participate in nine ventures, structured as DownREIT partnerships, that have properties in Arkansas, California, Florida, Georgia, North Carolina, Texas and Utah. As general partner we have operating and financial control over these ventures and consolidate their operations in our consolidated financial statements. These ventures allow the outside limited partners to put their interest to the partnership for our common shares of beneficial interest or an equivalent amount in cash. We may acquire any limited partnership interests that are put to the partnership and we have the option to redeem the interest in cash or a fixed number of our common shares at our discretion. In 2006 and 2005 we issued common shares of beneficial interest valued at $8.0 million and $1.3 million in exchange for certain of these limited partnership interests.

We expect to invest approximately $149.6 million in 2007, $71.3 million in 2008, $37.9 million in 2009, and $22.8 million in 2010 to complete construction of 26 properties under various stages of development. We also expect to invest $218.3 million to acquire projects in 2007.

In August 2006 we purchased a portfolio of properties from North American Properties. The purchase agreement allows for the subsequent development and leasing of an additional phase of Brookwood Marketplace by the property seller. If the terms of the purchase agreement are met by the seller, the purchase price would be increased by approximately $6.9 million. This agreement expires in August 2008.

We are subject to numerous federal, state and local environmental laws, ordinances and regulations in the areas where we own or operate properties. We are not aware of any material contamination, which may have been caused by us or any of our tenants, that would have a material effect on our financial position, results of operation or cash flows.
 
As part of our risk management activities we have applied and been accepted into state sponsored environmental programs which will limit our expenses if contaminants need to be remediated. We also have an environmental insurance policy that covers us against third party liabilities and remediation costs.

While we believe that we do not have any material exposure to environmental remediation costs, we cannot give absolute assurance that changes in the law or new discoveries of contamination will not result in increased liabilities to us.

We are involved in various matters of litigation arising in the normal course of business. While we are unable to predict with certainty the amounts involved, our management and counsel are of the opinion that, when such litigation is resolved, our resulting liability, if any, will not have a material effect on our consolidated financial statements.
Note 14.   Identified Intangible Assets and Liabilities

Identified intangible assets and liabilities associated with our property acquisitions are as follows (in thousands):

   
December 31,
 
December 31,
 
   
2006
 
2005
 
           
Identified Intangible Assets:
         
Above-Market Leases (included in Other Assets)
 
$
14,686
 
$
12,838
 
Above-Market Leases - Accumulated Amortization
   
(5,277
)
 
(3,393
)
Above-Market Assumed Mortgages (included in Other Assets)
   
1,653
       
Valuation of In Place Lease (included in Unamortized Debt and Lease Cost)
   
52,878
   
42,772
 
Valuation of In Place Lease - Accumulated Amortization
   
(16,297
)
 
(10,822
)
               
   
$
47,643
 
$
41,395
 
               
Identified Intangible Liabilities (included in Other Liabilities):
             
Below-Market Leases
 
$
24,602
 
$
17,012
 
Below-Market Leases - Accumulated Amortization
   
(6,569
)
 
(3,735
)
Below-Market Assumed Mortgages
   
59,863
   
60,792
 
Below-Market Assumed Mortgages - Accumulated Amortization
   
(18,123
)
 
(12,143
)
               
   
$
59,773
 
$
61,926
 

These identified intangible assets and liabilities are amortized over the terms of the acquired leases or the remaining lives of the assumed mortgages.

The net amortization of above-market and below-market leases increased Revenues-Rentals by $1.3 million, $.3 million, and $.04 million in 2006, 2005, and 2004, respectively. The estimated net amortization of these intangible assets and liabilities for each of the next five years is as follows (in thousands):

2007
 
$
1,649
 
2008
   
1,477
 
2009
   
1,389
 
2010
   
753
 
2011
   
364
 

The amortization of the in place lease intangible, which is recorded in Depreciation and Amortization, was $7.6 million, $6.2 million, and $4.3 million in 2006, 2005, and 2004, respectively. The estimated amortization of this intangible asset for each of the next five years is as follows (in thousands):

2007
 
$
6,797
 
2008
   
6,021
 
2009
   
5,127
 
2010
   
4,293
 
2011
   
3,379
 

The amortization of above-market and below-market assumed mortgages decreased Interest Expense by $7.3 million, $6.9 million, and $5.0 million in 2006, 2005, and 2004, respectively. The estimated amortization of these intangible assets and liabilities for each of the next five years is as follows (in thousands):

2007
 
$
6,774
 
2008
   
6,011
 
2009
   
4,671
 
2010
   
4,019
 
2011
   
2,722
 
Note 15.   Fair Value of Financial Instruments

The fair value of our financial instruments was determined using available market information and appropriate valuation methodologies as of December 31, 2006. Unless otherwise described below, all other financial instruments are carried at amounts which approximate their fair values.

Based on rates currently available to us for debt with similar terms and average maturities, fixed-rate debt with carrying values of $2.8 billion and $2.0 billion have fair values of approximately $2.7 billion and $2.1 billion at December 31, 2006 and 2005, respectively. The fair value of our variable-rate debt approximates its carrying values of $115.4 million and $313.8 million at year-end 2006 and 2005, respectively.

Note 16.   Share Options and Awards

In 1988 we adopted a Share Option Plan that provided for the issuance of options and share awards up to a maximum of 1.6 million common shares. This plan expired in December 1997, but some awards made pursuant to it remain outstanding as of December 31, 2006.

In 1992 we adopted the Employee Share Option Plan that grants 100 share options to every employee, excluding officers, upon completion of each five-year interval of service. This plan expires in 2012 and provides options for a maximum of 225,000 common shares, of which .2 million is available for future grant of options or awards at December 31, 2006. Options granted under this plan are exercisable immediately.

In 1993 we adopted the Incentive Share Option Plan that provided for the issuance of up to 3.9 million common shares, either in the form of restricted shares or share options. This plan expired in 2002, but some awards made pursuant to it remain outstanding as of December 31, 2006. The share options granted to nonofficers vest over a three-year period beginning after the grant date, and for officers vest over a seven-year period beginning two years after the grant date. Restricted shares under this plan have multiple vesting periods. Prior to 2000, restricted shares generally vested over a ten-year period. Effective in 2000, the vesting period became five years. In addition, the vesting period for these restricted shares can be accelerated based on appreciation in the market share price. All restricted shares related to this plan vested prior to 2005.

In 2001 we adopted the Long-term Incentive Plan for the issuance of options and share awards. In 2006 the maximum number of common shares issuable under this plan was increased to 4.8 million common shares of beneficial interest, of which 2.6 million is available for the future grant of options or awards at December 31, 2006. This plan expires in 2011. The share options granted to nonofficers vest over a three-year period beginning after the grant date, and share options and restricted shares for officers vest over a five-year period after the grant date. Restricted shares granted to trust managers and retirement eligible employees are expensed immediately.
 
The grant price for the Employee Share Option Plan is equal to the quoted fair market value of our common shares on the date of grant. The grant price of the Long-term Incentive Plan is calculated as an average of the high and low of the quoted fair market value of our common shares on the date of grant. In both plans, these options expire upon termination of employment or ten years from the date of grant. In the Long-term Incentive Plan restricted shares for officers and trust managers are granted at no exercise price. Our policy is to recognize compensation expense for equity awards ratably over the vesting period, except for retirement eligible amounts. Compensation expense, net of forfeitures, associated with share options and restricted shares totaled $4.9 million in 2006, $1.7 million in 2005 and $1.3 million in 2004, of which $1.3 million in 2006 and $.5 million in both 2005 and 2004 was capitalized.

The fair value of share options and restricted shares is estimated on the date of grant using the Black-Scholes option pricing method based on the expected weighted average assumptions in the following table. The dividend yield is an average of the historical yields at each record date over the estimated expected life. We estimate volatility using our historical volatility data for a period of ten years, and the expected life is based on historical data from an option valuation model of employee exercises and terminations. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The fair value and weighted average assumptions are as follows:
   
Year ended December 31,
 
   
2006
 
2005
 
2004
 
               
Fair value per share
 
$
4.97
 
$
3.02
 
$
2.72
 
Dividend yield
   
5.7
%
 
6.3
%
 
6.5
%
Expected volatility
   
18.2
%
 
16.8
%
 
16.3
%
Expected life (in years)
   
5.9
   
6.7
   
6.9
 
Risk-free interest rate
   
4.4
%
 
4.4
%
 
4.1
%

Following is a summary of the option activity for the three years ended December 31, 2006:

   
Shares
 
Weighted
 
   
Under
 
Average
 
   
Option
 
Exercise Price
 
Outstanding, January 1, 2004
   
3,092,536
 
$
22.01
 
Granted
   
380,071
   
39.69
 
Forfeited or expired
   
(13,000
)
 
23.40
 
Exercised
   
(447,817
)
 
18.42
 
Outstanding, December 31, 2004
   
3,011,790
   
24.77
 
Granted
   
537,319
   
37.40
 
Forfeited or expired
   
(30,797
)
 
28.10
 
Exercised
   
(338,666
)
 
19.17
 
Outstanding, December 31, 2005
   
3,179,646
   
27.47
 
Granted
   
544,346
   
47.41
 
Forfeited or expired
   
(65,996
)
 
28.63
 
Exercised
   
(510,843
)
 
20.73
 
Outstanding, December 31, 2006
   
3,147,153
 
$
31.99
 

The total intrinsic value of options exercised was $10.3 million in 2006, $6.4 million in 2005 and $7.7 million in 2004. As of December 31, 2006, there was approximately $4.9 million of total unrecognized compensation cost related to nonvested share options, which is expected to be amortized over a weighted average of 3.00 years.

The following table summarizes information about share options outstanding and exercisable at December 31, 2006:

   
Outstanding
 
Exercisable
 
       
Weighted
                 
Weighted
     
       
Average
 
Weighted
 
Aggregate
     
Weighted
 
Average
 
Aggregate
 
       
Remaining
 
Average
 
Intrinsic
     
Average
 
Remaining
 
Intrinsic
 
Range of
     
Contractual
 
Exercise
 
Value
     
Exercise
 
Contractual
 
Value
 
Exercise Prices
 
Number
 
Life
 
Price
 
(000’s)
 
Number
 
Price
 
Life
 
(000’s)
 
                                   
                                   
$17.89 - $26.83
   
1,273,216
   
4.78 years
 
$
21.72
         
844,091
 
$
21.20
   
4.54 years
       
                                                   
$26.84 - $40.26
   
1,333,391
   
7.98 years
 
$
35.53
         
600,580
 
$
34.21
   
7.60 years
       
                                                   
$40.27 - $47.50
   
540,546
   
9.92 years
 
$
47.46
                               
                                                   
Total
   
3,147,153
   
7.02 years
 
$
31.99
 
$
44,438
   
1,444,671
 
$
26.61
   
5.81 years
 
$
28,171
 
A summary of the status of nonvested restricted shares for the year ended December 31, 2006 is as follows:

   
Nonvested
 
Weighted
 
   
Restricted
 
Average Grant
 
   
Shares
 
Date Fair Value
 
Outstanding, January 1, 2006
   
142,268
   
36.32
 
Granted
   
83,057
   
46.34
 
Vested
   
(50,029
)
 
37.56
 
Forfeited
   
(3,041
)
 
36.24
 
Outstanding, December 31, 2006
   
172,255
 
$
40.80
 

As of December 31, 2006, there was approximately $6.1 million of total unrecognized compensation cost related to nonvested restricted shares, which is expected to be amortized over a weighted average of 3.66 years.

Note 17.   Employee Benefit Plans

We have a Savings and Investment Plan pursuant to which eligible employees may elect to contribute from 1% of their salaries to the maximum amount established annually by the Internal Revenue Service. Employee contributions are matched by us 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 $.8 million in 2006, $.7 million in 2005 and $.6 million in 2004.

We also have an Employee Share Purchase Plan under which .6 million of our common shares have been authorized. These shares, as well as common shares purchased by us on the open market, are made available for sale to employees at a discount of 15%. Shares purchased by the employee under the plan are restricted from being sold for two years from the date of purchase or until termination of employment. A total of 24,181, 22,717 and 20,671 shares were purchased by employees at an average price of $35.38, $30.89 and $28.27 during 2006, 2005 and 2004, respectively.

Effective April 1, 2002, we converted a noncontributory pension plan to a noncontributory cash balance retirement plan ("Retirement Plan") under which each participant received an actuarially determined opening balance. Annual additions to each participant's account include a service credit ranging from 3-5% of compensation, depending on years of service, and an interest credit based on the ten-year US Treasury Bill rate. Vesting generally occurs after five years of service. Certain participants were grandfathered under the prior pension plan formula. In addition to the plan described above, effective September 1, 2002, we established a separate and independent nonqualified supplemental retirement plan ("SRP") for officers, the assets of which are held in a grantor trust. This unfunded plan provides benefits in excess of the statutory limits of our noncontributory cash balance retirement plan.
 
At December 31, 2006, we adopted SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans.” As a result of the adoption we recognized additional minimum liability directly to accumulated other comprehensive income of $803 thousand.

The estimated net loss, prior service cost, and transition obligation that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year are $307 thousand, ($117) thousand and zero, respectively.

The following tables summarize changes in the benefit obligation, the plan assets and the funded status of our pension plans as well as the components of net periodic benefit costs, including key assumptions. The measurement dates for plan assets and obligations were December 31, 2006 and 2005.
   
Fiscal Year End
 
   
2006
 
2005
 
Change in Projected Benefit Obligation:
         
Benefit obligation at beginning of year
 
$
32,456
 
$
27,207
 
Service cost
   
3,090
   
2,641
 
Interest cost
   
2,309
   
1,724
 
Plan amendments
   
63
       
Actuarial losses
   
1,882
   
1,539
 
Benefit payments
   
(803
)
 
(655
)
Benefit obligation at end of year
 
$
38,997
 
$
32,456
 
               
Change in Plan Assets:
             
Fair value of plan assets at beginning of year
 
$
15,213
 
$
13,019
 
Actual return on plan assets
   
1,901
   
1,014
 
Employer contributions
   
1,622
   
1,835
 
Benefit payments
   
(803
)
 
(655
)
Fair value of plan assets at end of year
 
$
17,933
 
$
15,213
 
               
Unfunded Status at End of Year:
 
$
21,064
 
$
17,243
 
Unrecognized actuarial loss
         
(4,607
)
Unrecognized prior service credit
         
895
 
Pension liability
       
$
13,531
 
               
Amounts recognized in the balance sheets:
             
Pension liabilities - SRP
 
$
16,262
 
$
16,438
 
Other
   
(58
)
     
Accumulated other comprehensive loss - Retirement Plan
   
4,860
   
2,907
 
Net amounts recognized
 
$
21,064
 
$
13,531
 
               
Accumulated benefit obligation
 
$
38,194
 
$
31,653
 
               
Amounts recognized in accumulated other comprehensive loss consist of:
             
Net loss
 
$
5,565
   
N/A
 
Prior service credit
   
(704
)
 
N/A
 
Total amount recognized
 
$
4,861
   
N/A
 

 
 
   
Before Application of SFAS No. 158
 
Adjustments
 
After Application of SFAS No. 158
 
               
Liability for pension benefits (included in Other Liabilities)
 
$
3,999
 
$
803
 
$
4,802
 
Total liabilities
   
3,161,276
   
803
   
3,162,079
 
Accumulated other comprehensive loss
   
11,697
   
803
   
12,500
 
Total shareholders’ equity
   
1,126,584
   
803
   
1,125,781
 
Both of our pension plans are under funded. The following is the required information for plans with an accumulated benefit obligation in excess of plan assets at each year end:

   
2006
 
2005
 
Projected benefit obligation
 
$
38,997
 
$
32,456
 
Accumulated benefit obligation
   
38,194
   
31,653
 
Fair value of plan assets
   
17,933
   
15,213
 

The components of net periodic benefit cost for both plans are as follows (in thousands):

   
2006
 
2005
 
2004
 
               
Service cost
 
$
3,090
 
$
2,641
 
$
2,004
 
Interest cost
   
2,309
   
1,724
   
1,756
 
Expected return on plan assets
   
(1,385
)
 
(1,192
)
 
(1,028
)
Prior service cost
   
(128
)
 
(128
)
 
(128
)
Recognized loss
   
407
   
159
   
110
 
                     
Total
 
$
4,293
 
$
3,204
 
$
2,714
 

The assumptions used to develop periodic expense for both plans are shown below:

   
2006
 
2005
 
2004
 
               
Discount rate
   
5.75
%
 
6.00
%
 
6.25
%
Salary scale increases - Retirement Plan
   
4.00
%
 
4.00
%
 
4.00
%
Salary scale increases - SRP
   
5.00
%
 
5.00
%
 
5.00
%
Long-term rate of return on assets
   
8.50
%
 
8.50
%
 
8.75
%

The selection of the discount rate follows the guidance provided in SFAS No. 87, "Employers' Accounting for Pensions." The selection of the discount rate is made annually after comparison to yields based on high quality fixed-income investments. The salary scale is the composite rate which reflects anticipated inflation, merit increases, and promotions for the group of covered participants. The long-term rate of return is a composite rate for the trust. It is derived as the sum of the percentages invested in each principal asset class included in the portfolio multiplied by their respective expected rates of return. We considered the historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio. This analysis resulted in the selection of 8.50% as the long-term rate of return assumption for 2006.

The assumptions used to develop the actuarial present value of the benefit obligations at year-end for both plans are shown below:

   
2006
 
2005
 
2004
 
               
Discount rate
   
5.75
%
 
5.75
%
 
6.00
%
Salary scale increases - Retirement Plan
   
4.00
%
 
4.00
%
 
4.00
%
Salary scale increases - SRP
   
5.00
%
 
5.00
%
 
5.00
%

The expected contribution to be paid for both plans by us during 2007 is approximately $4.5 million, of which $2.0 million relates to the Retirement Plan. The expected benefit payments for the next ten years for both plans are as follows, in millions: $.8 in 2007; $7.9 in 2008; $.8 in 2009; $.9 in 2010, $1.0 in 2011; and $9.1 in 2012 through 2016.

The measurement dates of both plans were December 31, 2006 and December 31, 2005. The participant data used in determining the liabilities and costs was collected as of January 1, 2006.
The allocation of the fair value of plan assets as provided by the plan trustee was as follows (in thousands):

   
December 31,
 
   
2006
 
2005
 
           
Cash and short-term investments
   
3
%
 
3
%
Mutual funds - equity
   
69
%
 
71
%
Mutual funds - fixed income
   
28
%
 
26
%
               
Total
   
100
%
 
100
%

Our investment policy and strategy for plan assets require that plan assets be allocated based on a "Broad Market Diversification" model. Approximately 70% of plan assets are allocated to equity investments and 30% to fixed income investments. On a quarterly basis, the plan assets are reviewed in an effort to maintain this asset allocation. Selected investment funds are monitored as reasonably necessary to permit our Investment Committee to evaluate any material changes to the investment fund's performance.

We also have a deferred compensation plan for eligible employees allowing them to defer portions of their current cash or share-based compensation. Amounts deferred are reported as compensation expense in the year service is rendered and are deposited in a grantor trust. Cash deferrals are invested based on the employee’s investment selections from a mix of assets similar to the noncontributory cash balance retirement plan. Deferred share-based compensation can not be diversified, and distributions from this plan are made in the same form as the original deferral.

Note 18.   Segment Information

The operating segments presented are the segments for which separate financial information is available, and operating performance is evaluated regularly by senior management in deciding how to allocate resources and in assessing performance. We evaluate the performance of the operating segments based on net operating income that is defined as total revenues less operating expenses and ad valorem taxes. Management does not consider the effect of gains or losses from the sale of property in evaluating ongoing operating performance.

The shopping center segment is engaged in the acquisition, development and management of real estate, primarily anchored neighborhood and community shopping centers located in Arizona, Arkansas, California, Colorado, Florida, Georgia, Illinois, Kansas, Kentucky, Louisiana, Maine, Missouri, Nevada, New Mexico, North Carolina, Oklahoma, Oregon, South Carolina, Tennessee, Texas, Utah and Washington. The customer base includes supermarkets, discount retailers, drugstores and other retailers who generally sell basic necessity-type commodities. The industrial segment is engaged in the acquisition, development and management of bulk warehouses and office/service centers. Its properties are located in California, Florida, Georgia, Tennessee and Texas, and the customer base is diverse. Included in "Other" are corporate-related items, insignificant operations and costs that are not allocated to the reportable segments.
 
Information concerning our reportable segments is as follows (in thousands):

   
Shopping
             
   
Center
 
Industrial
 
Other
 
Total
 
                   
2006
                 
Revenues
 
$
503,655
 
$
55,037
 
$
2,688
 
$
561,380
 
Net operating income (loss)
   
366,426
   
38,409
   
(405
)
 
404,430
 
Equity in earnings of joint ventures, net
   
13,713
   
377
   
565
   
14,655
 
Investment in real estate joint ventures
   
174,587
   
25,156
   
4,096
   
203,839
 
Total assets
   
3,517,733
   
324,343
   
533,464
   
4,375,540
 
Capital expenditures
   
920,017
   
96,504
   
5,582
   
1,022,103
 
                           
2005
                         
Revenues
 
$
460,661
 
$
47,604
 
$
2,136
 
$
510,401
 
Net operating income
   
339,661
   
34,302
   
885
   
374,848
 
Equity in earnings of joint ventures, net
   
6,533
   
87
   
(10
)
 
6,610
 
Investment in real estate joint ventures
   
82,092
   
480
   
1,776
   
84,348
 
Total assets
   
3,035,964
   
355,848
   
345,929
   
3,737,741
 
Capital expenditures
   
339,328
   
89,066
   
646
   
429,040
 
                           
2004
                         
Revenues
 
$
415,595
 
$
43,869
 
$
1,450
 
$
460,914
 
Net operating income
   
305,556
   
31,413
   
439
   
337,408
 
Equity in earnings of joint ventures, net
   
5,441
   
96
   
(153
)
 
5,384
 
Investment in real estate joint ventures
   
46,861
   
539
   
982
   
48,382
 
Total assets
   
2,897,772
   
288,480
   
284,066
   
3,470,318
 
Capital expenditures
   
579,912
   
12,089
   
2,793
   
594,794
 

Net operating income reconciles to Income from Continuing Operations as shown on the Statements of Consolidated Income and Comprehensive Income as follows (in thousands):

   
2006
 
2005
 
2004
 
               
Total segment net operating income
 
$
404,430
 
$
374,848
 
$
337,408
 
Depreciation and amortization
   
(127,613
)
 
(117,062
)
 
(103,870
)
General and administrative
   
(23,801
)
 
(17,379
)
 
(16,122
)
Impairment loss
               
(3,550
)
Interest expense
   
(146,943
)
 
(130,761
)
 
(117,096
)
Interest and other income
   
9,045
   
2,867
   
1,390
 
Loss on redemption of preferred shares
               
(3,566
)
Income allocated to minority interests
   
(6,414
)
 
(6,060
)
 
(4,928
)
Equity in earnings of joint ventures, net
   
14,655
   
6,610
   
5,384
 
Gain on land and merchant development sales
   
7,166
   
804
       
Gain on sale of properties
   
22,467
   
22,306
   
1,562
 
Provision for income taxes
   
(1,366
)
           
Income from Continuing Operations
 
$
151,626
 
$
136,173
 
$
96,612
 
Note 19.   Quarterly Financial Data (Unaudited)

Summarized quarterly financial data is as follows (in thousands):

   
First
 
Second
   
Third
   
Fourth
 
                       
2006:
                     
Revenues
 
$
135,479
 
$
136,963
     
$
147,150
     
$
150,833
 
Net income available to common shareholders
   
52,084
   
87,741
 
(1
)
 
103,223
 
(1
)
 
51,861
 
Net income per common share - basic
   
0.58
   
0.98
 
(1
)
 
1.19
 
(1
)
 
0.61
 
Net income per common share - diluted
   
0.57
   
0.95
 
(1
)
 
1.15
 
(1
)
 
0.59
 
                                   
2005:
                                 
Revenues
 
$
123,270
 
$
127,614
     
$
131,307
     
$
131,077
 
Net income available to common shareholders
   
34,037
   
67,679
 
(1
)
 
58,958
 
(1
)
 
48,878
 
Net income per common share - basic
   
0.38
   
0.76
 
(1
)
 
0.66
 
(1
)
 
0.55
 
Net income per common share - diluted
   
0.38
   
0.74
 
(1
)
 
0.65
 
(1
)
 
0.54
 

(1)   The quarter results include gains on the sale of properties.

****


Not applicable


Under the supervision and with the participation of our principal executive officer and principal financial officer, management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of December 31, 2006. Based on that evaluation, our principal executive officer and our principal financial officer have concluded that our disclosure controls and procedures were effective as of December 31, 2006.
 
There has been no change to our internal control over financial reporting during the quarter ended December 31, 2006 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



 
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Weingarten Realty Investors and subsidiaries ("WRI") maintain a system of internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act, which is a process designed under the supervision of the WRI's principal executive officer and principal financial officer and effected by WRI's board of trust managers, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

WRI's internal control over financial reporting includes those policies and procedures that:

§   Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of WRI's assets;

§   Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of WRI are being made only in accordance with authorizations of management and trust managers of WRI; and

§   Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of WRI's assets that could have a material effect on the financial statements.

WRI's management has responsibility for establishing and maintaining adequate internal control over financial reporting for WRI. Management, with the participation of WRI's Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of WRI's internal control over financial reporting as of December 31, 2006 based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on their evaluation of WRI's internal control over financial reporting, WRI's management along with the Chief Executive and Chief Financial Officers believe that the WRI's internal control over financial reporting is effective as of December 31, 2006.

Deloitte & Touche LLP, WRI's independent registered public accounting firm that audited the financial statements and financial statement schedules included in this Form 10-K, has issued an attestation report on management's assessment of WRI's internal control over financial reporting.


March 1, 2007




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trust Managers and Shareholders of Weingarten Realty Investors

We have audited management's assessment, included in the accompanying Management’s Report on Internal Control over Financial Reporting, that Weingarten Realty Investors and subsidiaries (the “Company”) maintained effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management's assessment and an opinion on the effectiveness of the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors (or trust managers), management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors (or trust managers) of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management's assessment that the Company maintained effective internal control over financial reporting as of December 31, 2006, is fairly stated, in all material respects, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedules as of and for the year ended December 31, 2006 of the Company and our report dated March 1, 2007 expressed an unqualified opinion on those financial statements and financial statement schedules.

DELOITTE & TOUCHE LLP

Houston, Texas
March 1, 2007



Not applicable.

PART III

ITEM 10.   Trust Managers and Executive Officers   of the   Registrant

Information with respect to our trust managers and executive officers is incorporated herein by reference to the "Election of Trust Managers" and "Executive Officers" sections of our definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 3, 2007.

Code of Ethics

We have adopted a code of business and ethics for trust managers, officers and employees, known as the Code of Conduct and Ethics. The Code of Conduct and Ethics is available on our website at www.weingarten.com . Shareholders may request a free copy of the Code of Conduct and Ethics from:

Weingarten Realty Investors
Attention: Investor Relations
2600 Citadel Plaza Drive, Suite 300
Houston, Texas 77008
(713) 866-6000
www.weingarten.com

We have also adopted a Code of Conduct for Financial Managers setting forth a code of ethics applicable to our principal executive officer, principal financial officer and financial managers, which is available on our website at www.weingarten.com . Shareholders may request a free copy of the Code of Conduct for Financial Managers from the address and phone number set forth above.

Governance Guidelines

We have adopted Trust Managers Governance Guidelines, which are available on our website at www.weingarten.com. Shareholders may request a free copy of the Trust Managers Governance Guidelines from the address and phone number set forth above under "—Code of Ethics."

ITEM 11.   Executive Compensation

Incorporated herein by reference to the "Executive Compensation" section of our definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 3, 2007.


 
ITEM 12.   Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
 
Incorporated herein by reference to the "Share Ownership of Certain Beneficial Owners" section of our definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 3, 2007.

The following table summarizes the equity compensation plans under which our common shares may be issued as of December 31, 2006:

   
Number of shares to
 
Weighted average
   
   
be issued upon exercise
 
exercise price of
 
Number of shares
   
of outstanding options,
 
outstanding options,
 
remaining available
Plan category
 
warrants and rights
 
warrants and rights
 
for future issuance
             
             
Equity compensation plans approved by shareholders
 
3,147,153
 
$ 31.99
 
2,756,937
             
Equity compensation plans not approved by shareholders
 
―
 
―
 
―
             
Total
 
3,147,153
 
$ 31.99
 
2,756,937

ITEM 13.   Certain Relationships, Related Transactions and Director Independence

Incorporated herein by reference to the "Compensation Committee Interlocks and Insider Participation" section of our definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 3, 2007.

ITEM 14.   Principal Accountant Fees and Services

Incorporated herein by reference to the "Principal Accounting Firm Fees" within Proposal Two of our definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 3, 2007.



PART IV



 
(2)
Financial Statement Schedules:
         
   
Schedule
         
     
II
86
     
III
87
     
IV
89
 
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)
 
Exhibits:
 
3.1
—
Restated Declaration of Trust (filed as Exhibit 3.1 to WRI's Registration Statement on Form 8-A dated January 19, 1999 and incorporated herein by reference).
3.2
—
Amendment of the Restated Declaration of Trust (filed as Exhibit 3.2 to WRI's Registration Statement on Form 8-A dated January 19, 1999 and incorporated herein by reference).
3.3
—
Second Amendment of the Restated Declaration of Trust (filed as Exhibit 3.3 to WRI's Registration Statement on Form 8-A dated January 19, 1999 and incorporated herein by reference).
3.4
—
Third Amendment of the Restated Declaration of Trust (filed as Exhibit 3.4 to WRI's Registration Statement on Form 8-A dated January 19, 1999 and incorporated herein by reference).
3.5
—
Fourth Amendment of the Restated Declaration of Trust dated April 28, 1999 (filed as Exhibit 3.5 to WRI's Annual Report on Form 10-K for the year ended December 31, 2001 and incorporated herein by reference).
3.6
—
Fifth Amendment of the Restated Declaration of Trust dated April 20, 2001 (filed as Exhibit 3.6 to WRI's Annual Report on Form 10-K for the year ended December 31, 2001 and incorporated herein by reference).
3.7
—
Amended and Restated Bylaws of WRI (filed as Exhibit 99.2 to WRI's Registration Statement on Form 8-A dated February 23, 1998 and incorporated herein by reference).
4.1
—
Subordinated Indenture dated as of May 1, 1995 between WRI and Chase Bank of Texas, National Association (formerly, Texas Commerce Bank National Association) (filed as Exhibit 4(a) to WRI's Registration Statement on Form S-3 (No. 33-57659) and incorporated herein by reference).
4.2
—
Subordinated Indenture dated as of May 1, 1995 between WRI and Chase Bank of Texas, National Association (formerly, Texas Commerce Bank National Association) (filed as Exhibit 4(b) to WRI's Registration Statement on Form S-3 (No. 33-57659) and incorporated herein by reference).
4.3
—
Form of Fixed Rate Senior Medium Term Note (filed as Exhibit 4.19 to WRI’s Annual Report on Form 10-K for the year ended December 31, 1998 and incorporated herein by reference).
4.4
—
Form of Floating Rate Senior Medium Term Note (filed as Exhibit 4.20 to WRI’s Annual Report on Form 10-K for the year ended December 31, 1998 and incorporated herein by reference).

4.5
—
Form of Fixed Rate Subordinated Medium Term Note (filed as Exhibit 4.21 to WRI’s Annual Report on Form 10-K for the year ended December 31, 1998 and incorporated herein by reference).
4.6
—
Form of Floating Rate Subordinated Medium Term Note (filed as Exhibit 4.22 to WRI’s Annual Report on Form 10-K for the year ended December 31, 1998 and incorporated herein by reference).
4.7
—
Statement of Designation of 6.75% Series D Cumulative Redeemable Preferred Shares (filed as Exhibit 3.1 to WRI’s Registration Statement on Form 8-A dated April 17, 2003 and incorporated herein by reference).
4.8
—
Statement of Designation of 6.95% Series E Cumulative Redeemable Preferred Shares (filed as Exhibit 3.1 to WRI’s Registration Statement on Form 8-A dated July 8, 2004 and incorporated herein by reference).
4. 9
—
Statement of Designation of 6.50% Series F Cumulative Redeemable Preferred Shares (filed as Exhibit 3.1 to WRI’s Registration Statement on Form 8-A dated January 29, 2007 and incorporated herein by reference).
4. 10
—
6.75% Series D Cumulative Redeemable Preferred Share Certificate (filed as Exhibit 4.2 to WRI’s Registration Statement on Form 8-A dated April 17, 2003 and incorporated herein by reference).
4.1 1
—
6.95% Series E Cumulative Redeemable Preferred Share Certificate (filed as Exhibit 4.2 to WRI’s Registration Statement on Form 8-A dated July 8, 2004 and incorporated herein by reference).
4.1 2
—
6.50% Series F Cumulative Redeemable Preferred Share Certificate (filed as Exhibit 4.2 to WRI’s Registration Statement on Form 8-A dated January 29, 2007 and incorporated herein by reference).
4.1 3
—
Form of Receipt for Depositary Shares, each representing 1/30 of a share of 6.75% Series D Cumulative Redeemable Preferred Shares, par value $.03 per share (filed as Exhibit 4.3 to WRI’s Registration Statement on Form 8-A dated April 17, 2003 and incorporated herein by reference).
4.1 4
—
Form of Receipt for Depositary Shares, each representing 1/100 of a share of 6.95% Series E Cumulative Redeemable Preferred Shares, par value $.03 per share (filed as Exhibit 4.3 to WRI’s Registration Statement on Form 8-A dated July 8, 2004 and incorporated herein by reference).
4.1 5
—
Form of Receipt for Depositary Shares, each representing 1/100 of a share of 6.50% Series F Cumulative Redeemable Preferred Shares, par value $.03 per share (filed as Exhibit 4.3 to WRI’s Registration Statement on Form 8-A dated January 29, 2007 and incorporated herein by reference).
4.1 6
—
Form of 7% Notes due 2011 (filed as Exhibit 4.17 to WRI’s Annual Report on Form 10-K for the year ended December 31, 2001 and incorporated herein by reference).
4.1 7
—
Form of 3.95% Convertible Senior Notes due 2026 (filed as Exhibit 4.2 to WRI’s Form 8-K on August 2, 2006 and incorporated herein by reference).
10.1†
—
1988 Share Option Plan of WRI, as amended (filed as Exhibit 10.1 to WRI’s Annual Report on Form 10-K for the year ended December 31, 1990 and incorporated herein by reference).
10.2†
—
The Savings and Investment Plan for Employees of Weingarten Realty Investors dated December 17, 2003 (filed as Exhibit 10.34 on WRI’s Annual Report on Form 10-K for the year ended December 31, 2005 and incorporated herein by reference).
10.3†
—
The Savings and Investment Plan for Employees of WRI, as amended (filed as Exhibit 4.1 to WRI’s Registration Statement on Form S-8 (No. 33-25581) and incorporated herein by reference).
10.4†
—
First Amendment to the Savings and Investment Plan for Employees of Weingarten Realty Investors dated August 1, 2005 (filed as Exhibit 10.25 on WRI’s Form 10-Q for the quarter ended September 30, 2005 and incorporated herein by reference).
10.5†
—
The Fifth Amendment to Savings and Investment Plan for Employees of WRI (filed as Exhibit 4.1.1 to WRI’s Post-Effective Amendment No. 1 to Registration Statement on Form S-8 (No. 33-25581) and incorporated herein by reference).
10.6†
—
Mandatory Distribution Amendment for the Savings and Investment Plan for Employees of Weingarten Realty Investors dated August 1, 2005 (filed as Exhibit 10.26 on WRI’s Form 10-Q for the quarter ended September 30, 2005 and incorporated herein by reference).
10.7†
—
The 1993 Incentive Share Plan of WRI (filed as Exhibit 4.1 to WRI’s Registration Statement on Form S-8 (No. 33-52473) and incorporated herein by reference).
10.8†
—
1999 WRI Employee Share Purchase Plan (filed as Exhibit 10.6 to WRI’s Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference).
10.9†
—
2001 Long Term Incentive Plan (filed as Exhibit 10.7 to WRI’s Annual Report on Form 10-K for the year ended December 31, 2001 and incorporated herein by reference).



10.10
—
Master Promissory Note in the amount of $20,000,000 between WRI, as payee, and Chase Bank of Texas, National Association (formerly, Texas Commerce Bank National Association), as maker, effective December 30, 1998 (filed as Exhibit 4.15 to WRI ’s Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference).
10.11†
—
Weingarten Realty Retirement Plan restated effective April 1, 2002 (filed as Exhibit 10.29 on WRI’s Annual Report on Form 10-K for the year ended December 31, 2005 and incorporated herein by reference).
10.12†
—
First Amendment to the Weingarten Realty Retirement Plan, dated December 31, 2003 (filed as Exhibit 10.33 on WRI’s Annual Report on Form 10-K for the year ended December 31, 2005 and incorporated herein by reference).
10.13†
—
First Amendment to the Weingarten Realty Pension Plan, dated August 1, 2005 (filed as Exhibit 10.27 on WRI’s Form 10-Q for the quarter ended September 30, 2005 and incorporated herein by reference).
10.14†
—
Mandatory Distribution Amendment for the Weingarten Realty Retirement Plan dated August 1, 2005 (filed as Exhibit 10.28 on WRI’s Form 10-Q for the quarter ended September 30, 2005 and incorporated herein by reference).
10.15†
—
Weingarten Realty Investors Supplemental Executive Retirement Plan amended and restated effective September 1, 2002 (filed as Exhibit 10.10 on WRI’s Form 10-Q for the quarter ended June 30, 2005 and incorporated herein by reference).
10.16†
—
First Amendment to the Weingarten Realty Investors Supplemental Executive Retirement Plan amended on November 3, 2003 (filed as Exhibit 10.11 on WRI’s Form 10-Q for the quarter ended June 30, 2005 and incorporated herein by reference).
10.17†
—
Second Amendment to the Weingarten Realty Investors Supplemental Executive Retirement Plan amended October 22, 2004 (filed as Exhibit 10.12 on WRI’s Form 10-Q for the quarter ended June 30, 2005 and incorporated herein by reference).
10.18†
—
Third Amendment to the Weingarten Realty Investors Supplemental Executive Retirement Plan amended October 22, 2004 (filed as Exhibit 10.13 on WRI’s Form 10-Q for the quarter ended June 30, 2005 and incorporated herein by reference).
10.19†
—
Weingarten Realty Investors Retirement Benefit Restoration Plan adopted effective September 1, 2002 (filed as Exhibit 10.14 on WRI’s Form 10-Q for the quarter ended June 30, 2005 and incorporated herein by reference).
10.20†
—
First Amendment to the Weingarten Realty Investors Retirement Benefit Restoration Plan amended on November 3, 2003 (filed as Exhibit 10.15 on WRI’s Form 10-Q for the quarter ended June 30, 2005 and incorporated herein by reference).
10.21†
—
Second Amendment to the Weingarten Realty Investors Retirement Benefit Restoration Plan amended October 22, 2004 (filed as Exhibit 10.16 on WRI’s Form 10-Q for the quarter ended June 30, 2005 and incorporated herein by reference).
10.22†
—
Third Amendment to the Weingarten Realty Pension Plan dated December 23, 2005 (filed as Exhibit 10.30 on WRI’s Annual Report on Form 10-K for the year ended December 31, 2005 and incorporated herein by reference).
10.23†
—
Weingarten Realty Investors Deferred Compensation Plan amended and restated as a separate and independent plan effective September 1, 2002 (filed as Exhibit 10.17 on WRI’s Form 10-Q for the quarter ended June 30, 2005 and incorporated herein by reference).
10.24†
—
Supplement to the Weingarten Realty Investors Deferred Compensation Plan amended on April 25, 2003 (filed as Exhibit 10.18 on WRI’s Form 10-Q for the quarter ended June 30, 2005 and incorporated herein by reference).
10.25†
—
First Amendment to the Weingarten Realty Investors Deferred Compensation Plan amended on November 3, 2003 (filed as Exhibit 10.19 on WRI’s Form 10-Q for the quarter ended June 30, 2005 and incorporated herein by reference).
10.26†
—
Second Amendment to the Weingarten Realty Investors Deferred Compensation Plan, as amended, dated October 13, 2005 (filed as Exhibit 10.29 on WRI’s Form 10-Q for the quarter ended September 30, 2005 and incorporated herein by reference).
10.27†
—
Trust Under the Weingarten Realty Investors Deferred Compensation Plan amended and restated effective October 21, 2003 (filed as Exhibit 10.21 on WRI’s Form 10-Q for the quarter ended June 30, 2005 and incorporated herein by reference).



10.28†
—
Fourth Amendment to the Weingarten Realty Investors Deferred Compensation Plan, dated December 23, 2005 (filed as Exhibit 10.31 on WRI’s Annual Report on Form 10-K for the year ended December 31, 2005 and incorporated herein by reference).
10.29†
—
Trust Under the Weingarten Realty Investors Retirement Benefit Restoration Plan amended and restated effective October 21, 2003 (filed as Exhibit 10.22 on WRI’s Form 10-Q for the quarter ended June 30, 2005 and incorporated herein by reference).
10.30†
—
Trust Under the Weingarten Realty Investors Supplemental Executive Retirement Plan amended and restated effective October 21, 2003 (filed as Exhibit 10.23 on WRI’s Form 10-Q for the quarter ended June 30, 2005 and incorporated herein by reference).
10.31†
—
First Amendment to the Trust Under the Weingarten Realty Investors Deferred Compensation Plan, Supplemental Executive Retirement Plan, and Retirement Benefit Restoration Plan amended on March 16, 2004 (filed as Exhibit 10.24 on WRI’s Form 10-Q for the quarter ended June 30, 2005 and incorporated herein by reference).
10.32†
—
Third Amendment to the Weingarten Realty Investors Deferred Compensation Plan dated August 1, 2005 (filed as Exhibit 10.30 on WRI’s Form 10-Q for the quarter ended September 30, 2005 and incorporated herein by reference).
10.33
—
Amended and Restated Credit Agreement dated February 22, 2006 among Weingarten Realty Investors, the Lenders Party Hereto and JPMorgan Chase Bank, N.A., as Administrative Agent (filed as Exhibit 10.32 on WRI’s Form 10-K for the year ended December 31, 2005 and incorporated by reference).
10.34†
—
Fifth Amendment to the Weingarten Realty Investors Deferred Compensation Plan (filed as Exhibit 10.34 to WRI’s Form 10-Q for quarter ended June 30, 2006 and incorporated herein by reference).
10.35†
—
Restatement of the Weingarten Realty Investors Supplemental Executive Retirement Plan dated August 4, 2006 (filed as Exhibit 10.35 to WRI’s Form 10-Q for the quarter ended September 31, 2006 and incorporated herein by reference).
10.36†
—
Restatement of the Weingarten Realty Investors Deferred Compensation Plan dated August 4, 2006 (filed as Exhibit 10.36 to WRI’s Form 10-Q for the quarter ended September 31, 2006 and incorporated herein by reference).
10.37†
—
Restatement of the Weingarten Realty Investors Retirement Benefit Restoration Plan dated August 4, 2006 (filed as Exhibit 10.37 to WRI’s Form 10-Q for the quarter ended September 31, 2006 and incorporated herein by reference).
10.3 8†*
—
Amendment No. 1 to the Weingarten Realty Investors Supplemental Executive Retirement Plan dated December 15, 2006.
10.3 9†*
—
Amendment No. 1 to the Weingarten Realty Investors Retirement Benefit Restoration Plan dated December 15, 2006.
10. 40†*
—
Amendment No. 1 to the Weingarten Realty Investors Deferred Compensation Plan dated December 15, 2006.
10. 41†*
—
Final 401(k)/401(m) Regulations Amendment dated December 15, 2006.
12.1*
—
Computation of Fixed Charges Ratios.
14.1
—
Code of Ethical Conduct for Senior Financial Officers - Andrew M. Alexander (filed as Exhibit 14.1 to WRI’s Annual Report on Form 10-K for the year ended December 31, 2003 and incorporated herein by reference).
14.2
—
Code of Ethical Conduct for Senior Financial Officers - Stephen C. Richter (filed as Exhibit 14.2 to WRI’s Annual Report on Form 10-K for the year ended December 31, 2003 and incorporated herein by reference).
14.3
—
Code of Ethical Conduct for Senior Financial Officers - Joe D. Shafer (filed as Exhibit 14.3 to WRI’s Annual Report on Form 10-K for the year ended December 31, 2003 and incorporated herein by reference).
21.1*
—
Subsidiaries of the Registrant.
23.1*
—
Consent of Deloitte & Touche LLP.
24.1*
—
Power of Attorney (included on first signature page).
31.1*
—
Certification pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).
31.2*
—
Certification pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).



32.1**
—
Certification pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).
32.2**
—
Certification pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).
_______________
 
*
Filed with this report.
 
**
Furnished with this report.
 
†
Management contract or compensation plan or arrangement.
 



SIGNATURES

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:
/s/ Andrew M. Alexander
   
Andrew M. Alexander
   
Chief Executive Officer

Date: March 1, 2007

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS that each of Weingarten Realty Investors, a real estate investment trust organized under the Texas Real Estate Investment Trust Act, and the undersigned trust managers and officers of Weingarten Realty Investors hereby constitutes and appoints Andrew M. Alexander, Stanford Alexander, Martin Debrovner, Stephen C. Richter and Joe D. Shafer or any one of them, its or his true and lawful attorney-in-fact and agent, for it or him and in its or his name, place and stead, in any and all capacities, with full power to act alone, to sign any and all amendments to this Report, and to file each such amendment to the Report, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorney-in-fact and agent full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as it or he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.

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:
/s/ Stanford Alexander
Chairman
March 1, 2007
 
Stanford Alexander
and Trust Manager
 
       
By:
/s/ Andrew M. Alexander
Chief Executive Officer,
March 1, 2007
 
Andrew M. Alexander
President and Trust Manager
 
       
By:
/s/ James W. Crownover
Trust Manager
March 1, 2007
 
James W. Crownover
   
       
By:
/s/ Robert J. Cruikshank
Trust Manager
March 1, 2007
 
Robert J. Cruikshank
   
       
By:
/s/ Martin Debrovner
Vice Chairman
March 1, 2007
 
Martin Debrovner
   



By:
/s/ Melvin Dow
Trust Manager
March 1, 2007
 
Melvin Dow
   
       
By:
/s/ Stephen A. Lasher
Trust Manager
March 1, 2007
 
Stephen A. Lasher
   
       
By:
/s/ Stephen C. Richter
Executive Vice President and
March 1, 2007
 
Stephen C. Richter
Chief Financial Officer
 
       
By:
/s/ Douglas W. Schnitzer
Trust Manager
March 1, 2007
 
Douglas W. Schnitzer
   
       
By:
/s/ Marc J. Shapiro
Trust Manager
March 1, 2007
 
Marc J. Shapiro
   
       
By:
/s/ Joe D. Shafer
Vice President/Chief Accounting Officer
March 1, 2007
 
Joe D. Shafer
(Principal Accounting Officer)
 





Schedule II

WEINGARTEN REALTY INVESTORS
VALUATION AND QUALIFYING ACCOUNTS
December 31, 2006, 2005, and 2004

(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
 
                       
2006
                     
Allowance for Doubtful Accounts
 
$
4,673
 
$
3,917
       
$
2,595
 
$
5,995
 
2005
                               
Allowance for Doubtful Accounts
 
$
4,205
 
$
3,720
       
$
3,252
 
$
4,673
 
2004
                               
Allowance for Doubtful Accounts
 
$
4,066
 
$
3,325
       
$
3,186
 
$
4,205
 
_______________

Note A - Write-offs of accounts receivable previously reserved.




Schedule III


WEINGARTEN REALTY INVESTORS
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2006

(Amounts in thousands)

   
Total Cost
             
       
Buildings
 
Projects
             
       
and
 
Under
 
Total
 
Accumulated
 
Encumbrances
 
   
Land
 
Improvements
 
Development
 
Cost
 
Depreciation
 
(A)
 
                           
SHOPPING CENTERS:
                         
Texas
 
$
196,253
   
865,182
       
$
1,061,435
 
$
325,769
 
$
89,070
 
Other States
   
573,845
   
2,109,904
         
2,683,749
   
293,748
   
838,562
 
Total Shopping Centers
   
770,098
   
2,975,086
         
3,745,184
   
619,517
   
927,632
 
INDUSTRIAL:
                                     
Texas
   
46,272
   
226,916
         
273,188
   
59,361
       
Other States
   
30,392
   
93,787
         
124,179
   
5,529
   
11,192
 
Total Industrial
   
76,664
   
320,703
         
397,367
   
64,890
   
11,192
 
OTHER:
                                     
Texas
   
533
   
14,231
         
14,764
   
9,532
       
Total Improved Properties
   
847,295
   
3,310,020
         
4,157,315
   
693,939
   
938,824
 
LAND UNDER DEVELOPMENT OR HELD FOR DEVELOPMENT:
                                     
Texas
             
$
63,912
 
$
63,912
             
Other States
               
104,483
   
104,483
             
Total Land Under Development or Held for Development
               
168,395
   
168,395
             
SHOPPING CENTERS UNDER CAPITAL LEASE:
                                     
Other States
         
29,054
         
29,054
   
13,066
   
8,732
 
Total Leased Property Under Capital Lease
         
29,054
         
29,054
   
13,066
   
8,732
 
CONSTRUCTION IN PROGRESS:
                                     
Texas
               
29,984
   
29,984
             
Other States
               
61,140
   
61,140
             
Total Construction in Progress
               
91,124
   
91,124
             
                                       
TOTAL OF ALL   PROPERTIES
 
$
847,295
 
$
3,339,074
 
$
259,519
 
$
4,445,888
 
$
707,005
 
$
947,556
 

Note A -
Encumbrances do not include $17.2 million outstanding under a $30 million 20-year term loan, payable to a group of insurance companies secured by a property collateral pool including all or part of three shopping centers.




Schedule III
(Continued)



The changes in total cost of the properties for the years ended December 31, 2006, 2005 and 2004 were as follows:

   
2006
 
2005
 
2004
 
               
Balance at beginning of year
 
$
4,033,579
 
$
3,751,607
 
$
3,200,091
 
Additions at cost
   
1,022,103
   
429,040
   
594,794
 
Retirements or sales
   
(609,794
)
 
(147,068
)
 
(43,278
)
                     
Balance at end of year
 
$
4,445,888
 
$
4,033,579
 
$
3,751,607
 

The changes in accumulated depreciation for the years ended December 31, 2006, 2005 and 2004 were as follows:

   
2006
 
2005
 
2004
 
               
Balance at beginning of year
 
$
679,642
 
$
609,772
 
$
527,375
 
Additions at cost
   
110,406
   
107,901
   
100,074
 
Retirements or sales
   
(83,043
)
 
(38,031
)
 
(17,677
)
                     
Balance at end of year
 
$
707,005
 
$
679,642
 
$
609,772
 





Schedule IV

WEINGARTEN REALTY INVESTORS
MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 2006

(Amounts in thousands)

                       
       
Final
 
Periodic
 
Face
 
Carrying
 
   
Interest
 
Maturity
 
Payment
 
Amount of
 
Amount of
 
   
Rate
 
Date
 
Terms
 
Mortgages
 
Mortgages(A)
 
                       
SHOPPING CENTERS:
                     
FIRST MORTGAGES:
                     
Eastex Venture
                     
Beaumont, TX
   
8.00
%
 
10-31-09
 
$
317 Annual P & I
 
$
1,693
 
$
1,693
 
                                 
363-410 Burma, LLC
   
6.50
%
 
07-01-11
 
$
212 Annual P & I
   
2,607
   
2,607
 
                                 
                                 
INDUSTRIAL:
                               
FIRST MORTGAGES:
                               
South Loop Business Park
                               
Houston, TX
   
9.25
%
 
11-01-07
 
$
74 Annual P & I
   
112
   
112
 
                                 
                                 
SHOPPING CENTERS:
                               
CONSTRUCTION LOANS:
                               
WRI LLA Venture
   
7.75
%
 
12-31-07
   
At Maturity
   
896
   
896
 
                                 
TOTAL MORTGAGE LOANS ON REAL ESTATE  
                   
$
5,308
 
$
5,308
 

Note A -
The aggregate cost at December 31, 2006 for federal income tax purposes is $5,308.
Note B -
Changes in mortgage loans for the years ended December 31, 2006, 2005, and 2004 are summarized below.


   
2006
 
2005
 
2004
 
               
Balance, Beginning of Year
 
$
2,791
 
$
3,057
 
$
3,621
 
Additions to Existing Loans
   
3,347
   
339
       
Collections of Principal
   
(830
)
 
(605
)
 
(564
)
                     
Balance, End of Year
 
$
5,308
 
$
2,791
 
$
3,057
 

 
89
 
 
 
EXHIBIT 10.38

 
Amendment No. 1 to the
Weingarten Realty Investors
Supplemental Executive Retirement Plan

WHEREAS, Weingarten Realty Investors (the “Employer”) sponsors the Weingarten Realty Investors Supplemental Executive Retirement Plan (the “Plan”); and

WHEREAS , a restatement of the Plan was adopted on August 4, 2006, effective January 1, 2005; and

WHEREAS, the purpose of the Plan is to supplement the retirement benefit provided under the terms of the Weingarten Realty Pension Plan, as amended (the “Pension Plan”) for selected eligible employees; and

WHEREAS, the Employer desires to clarify certain provisions relating to the payment of Plan benefits and revise the Plan’s vesting provisions, as hereafter provided;

NOW, THEREFORE, the Employer amends the Plan as follows, effective as stated herein:
 

1.
Section 4.1 of the Plan is hereby amended as underlined to be and read as follows, effective with respect to individuals commencing Plan participation on and January 1, 2007:

4.1
Vesting of Account . A Participant's Account shall be 0% vested until a Participant has completed ten ( 10 ) Vesting Years of Service, at which time his or her Account shall be 100% vested.

2.
Article VI of the Plan is hereby amended to be and read as follows, effective January 1, 2005 and as otherwise provided herein:
 
Article VI - Distributions

6.1
Entitlement to Distribution . A Participant shall be entitled to distribution due to separation from service on account of death, Disability, Early Retirement, Retirement or any other reason, provided the Participant is vested in his Account.

6.2
Distribution Election.  
 
(a)  
General Rule . Distribution of the vested balance of a Participant’s Accounts shall be made in accordance with his or her election which indicates the Participant’s choice with respect to the form of distribution among the options available under Section 6.3 hereof. The Participant may make a separate election as to the form of distribution in the event of death and the time at which distribution is to commence following death. Such distribution elections must be made at the time the Participant completes his or her initial Participation Agreement in accordance with Section 2.1.
 
 
 
   
A Participant may modify his or her previously-made elections relating to the form of distribution and may modify the time at which distribution would otherwise commence under Section 6.4 hereof in accordance with Section 6.2(b). Notwithstanding the preceding, i f an Eligible Employee is participating in the Plan in 2005 or 2006 and has not previously designated the form of distribution of his or her Accounts or desires to modify a previously-filed distribution election, he or she must make or modify such an election, as the case may be, and file it with the Administrator on or before December 31, 2006; provided, however, that a Participant may not file a modified payment election in 2006 that has the effect of deferring payment of amounts the Participant would otherwise receive in 2006 or cause payments to be made in 2006 that would otherwise be made subsequent to 2006. The elections referred to in the immediately preceding sentence shall not be required to meet the requirements of Section 6.2(b).
 
 
(b)  
Modification to the Time or Form of Distribution . Except as may be permitted under 6.2(a) hereof, any election by a Participant to modify a previously-filed distribution election or to modify the time at which distribution would otherwise commence under Section 6.4 hereof is ineffective unless all of the following requirements are satisfied:
 
(i)  
Such modification may not be effective for at least twelve (12) months after the date on which the modification is made.
 
(ii)  
Except in the case of modifications relating to distributions on account of death or Disability, the modification must provide that payment will not commence for at least five (5) years from the date payment would otherwise have been made or commenced.
 
(iii)  
A modification related to a distribution to be made at a specified time or under a fixed schedule may not be made less than twelve (12) months prior to the date of the first otherwise scheduled payment.
 
(iv)  
Such modification may not permit acceleration of the time or schedule of any payment under the Plan, except as may be permitted pursuant to applicable Treasury Regulations.
 
6.3
Form of Payment. A Participant entitled to distribution shall receive such distribution in one of the following forms, as previously elected by the Participant in accordance with Section 6.2 and commencing in accordance with Section 6.4: (i) a single life annuity; (ii) a joint and 50%, 75% or 100% survivor annuity; (iii) a ten-year certain and life annuity; (iv) a five-year certain and life annuity; (v) one lump sum; and (vi) annual installments over a period elected by the Participant (up to twenty (20) years).   If payment is to be made in the form of an annuity, the amount payable to a Participant (and if applicable, the
 
 
 
 
 
survivor annuitant) as an annuity shall be determined, in the sole discretion of the Administrator, by reference to a commercial annuity which could be purchased from an insurer with the Participant's vested Account at the time such payments are to commence. Under no circumstances shall the Participant have any preferential or secured right to or interest in any annuity contract purchased from an insurer by the Employer or Trustee, and the rights of such Participant (and if applicable, the survivor annuitant) shall remain that of a general creditor. If the Participant has not made a valid election in accordance with Section 6.2 regarding the form of distribution of his Plan benefit, distribution shall be made in the form of one lump sum payment.
 
6.4
 Commencement of Payment.
 
(a)  
For purposes of this Section 6.4, the “Earliest Distribution Date” shall mean the earliest date on which distribution could be made or commence to the Participant under the Pension Plan, determined with regard to each Participant as of the date the Participant commenced participation under this Plan, without regard to any applicable amendments to the Pension Plan effective subsequent to the date the Participant commenced participation under this Plan.
 
(b)  
Effective for distributions payable on and after August 4, 2006, subject to paragraph (c) of this Section 6.4, payment to a Participant shall be made or commence on the Earliest Distribution Date; provided, however, that the Participant may elect, in accordance with Section 6.2, to defer payment to a date subsequent to the Earliest Distribution Date. In the case of distribution in the event of death, if a Participant previously made an election as to the time benefits commence following death, distribution shall be made at the time elected. Effective with respect to distributions payable on and after January 1, 2005 and prior to August 4, 2006, subject to paragraph (c) of this Section 6.4, payment to a Participant shall be made or commence as soon as administratively feasible after the Participant’s death, Disability, separation from service, or Retirement.
 
(c)  
Notwithstanding anything contained herein to the contrary, if a Participant is a Key Employee and separates from service for a reason other than death or Disability, such Participant’s distribution may not commence earlier than six (6) months from the date of his or her separation from service. Any payment that would have been made within six (6) months of the Participant’s separation from service without regard to the foregoing sentence shall instead be made on the first day of the month following the date that is six (6) months from the date on which the Participant separated from service.
 
6.5
Minimum Distribution . Notwithstanding any provision to the contrary, but subject to Section 6.4(c), if the balance of a Participant's Account at the time of separation from service is less than $50,000, then the Participant shall be paid his
 

 
 
 
or her benefits as a single lump sum thirty (30) days following the Participant’s separation from service.
 

IN WITNESS WHEREOF, the Employer has executed this instrument this 15th day of December, 2006, effective as stated herein.

Weingarten Realty Investors


By:
/s/ Stephen C. Richter
   
Its (Title):
Chief Financial Officer
 
 
 
 
 
EXHIBIT 10.39

Amendment No. 1 to the
Weingarten Realty Investors
Retirement Benefit Restoration Plan

WHEREAS, Weingarten Realty Investors (the “Employer”) sponsors the Weingarten Realty Investors Retirement Benefit Restoration Plan (the “Plan”); and

WHEREAS , a restatement of the Plan was adopted on August 4, 2006, effective January 1, 2005; and

WHEREAS, the purpose of the Plan is to supplement the retirement benefit provided under the terms of the Weingarten Realty Pension Plan, as amended (the “Pension Plan”) for selected eligible employees; and

WHEREAS, the Employer desires to clarify certain provisions relating to the payment of Plan benefits and revise the Plan’s vesting provisions, as hereafter provided;

NOW, THEREFORE, the Employer amends the Plan as follows, effective as stated herein:

1.
Section 4.1 of the Plan is hereby amended as underlined to be and read as follows, effective with respect to individuals commencing Plan participation on and January 1, 2007:

4.1
Vesting of Account. A Participant’s Account shall be 0% vested until a Participant has completed ten ( 10 ) Vesting Years of Service, at which time his or her Account shall be 100% vested.

2.
Article VI of the Plan is hereby amended to be and read as follows, effective January 1, 2005 and as otherwise provided herein:
 
Article VI - Distributions

6.1
Entitlement to Distribution . A Participant shall be entitled to distribution due to separation from service on account of death, Disability, Early Retirement, Retirement or any other reason, provided the Participant is vested in his Account.
 
6.2
Distribution Election.  
 
(a)  
General Rule . Distribution of the vested balance of a Participant’s Accounts shall be made in accordance with his or her election which indicates the Participant’s choice with respect to the form of distribution among the options available under Section 6.3 hereof. The Participant may make a separate election as to the form of distribution in the event of death and the time at which distribution is to commence following death. Such distribution elections must be made at the time the Participant completes his or her initial Participation Agreement in accordance with Section 2.1.
 
 
 
 
A Participant may modify his or her previously-made elections relating to the form of distribution and may modify the time at which distribution would otherwise commence under Section 6.4 hereof in accordance with Section 6.2(b). Notwithstanding the preceding, i f an Eligible Employee is participating in the Plan in 2005 or 2006 and has not previously designated the form of distribution of his or her Accounts or desires to modify a previously-filed distribution election, he or she must make or modify such an election, as the case may be, and file it with the Administrator on or before December 31, 2006; provided, however, that a Participant may not file a modified payment election in 2006 that has the effect of deferring payment of amounts the Participant would otherwise receive in 2006 or cause payments to be made in 2006 that would otherwise be made subsequent to 2006. The elections referred to in the immediately preceding sentence shall not be required to meet the requirements of Section 6.2(b).
 
(b)  
Modification to the Time or Form of Distribution . Except as may be permitted under 6.2(a) hereof, any election by a Participant to modify a previously-filed distribution election or to modify the time at which distribution would otherwise commence under Section 6.4 hereof is ineffective unless all of the following requirements are satisfied:
 
(i)  
Such modification may not be effective for at least twelve (12) months after the date on which the modification is made.
 
(ii)  
Except in the case of modifications relating to distributions on account of death or Disability, the modification must provide that payment will not commence for at least five (5) years from the date payment would otherwise have been made or commenced.
 
(iii)   
A modification related to a distribution to be made at a specified time or under a fixed schedule may not be made less than twelve (12) months prior to the date of the first otherwise scheduled payment.
 
  (iv)  
Such modification may not permit acceleration of the time or schedule of any payment under the Plan, except as may be permitted pursuant to applicable Treasury Regulations.
 
6.3
Form of Payment. A Participant entitled to distribution shall receive such distribution in one of the following forms, as previously elected by the Participant in accordance with Section 6.2 and commencing in accordance with Section 6.4: (i) a single life annuity; (ii) a joint and 50%, 75% or 100% survivor annuity; (iii) a ten-year certain and life annuity; (iv) a five-year certain and life annuity; (v) one lump sum; and (vi) annual installments over a period elected by the Participant (up to twenty (20) years).   If payment is to be made in the form of an annuity, the amount payable to a Participant (and if applicable, the
 
 
 
 
6.3
survivor annuitant) as an annuity shall be determined, in the sole discretion of the Administrator, by reference to a commercial annuity which could be purchased from an insurer with the Participant's vested Account at the time such payments are to commence. Under no circumstances shall the Participant have any preferential or secured right to or interest in any annuity contract purchased from an insurer by the Employer or Trustee, and the rights of such Participant (and if applicable, the survivor annuitant) shall remain that of a general creditor. If the Participant has not made a valid election in accordance with Section 6.2 regarding the form of distribution of his Plan benefit, distribution shall be made in the form of one lump sum payment.
 
6.4
Commencement of Payment .
 
 
(a)
For purposes of this Section 6.4, the “Earliest Distribution Date” shall mean the earliest date on which distribution could be made or commence to the Participant under the Pension Plan, determined with regard to each Participant as of the date the Participant commenced participation under this Plan, without regard to any applicable amendments to the Pension Plan effective subsequent to the date the Participant commenced participation under this Plan.

 
(b)
Effective for distributions payable on and after August 4, 2006, subject to paragraph (c) of this Section 6.4, payment to a Participant shall be made or commence on the Earliest Distribution Date; provided, however, that the Participant may elect, in accordance with Section 6.2, to defer payment to a date subsequent to the Earliest Distribution Date. In the case of distribution in the event of death, if a Participant previously made an election as to the time benefits commence following death, distribution shall be made at the time elected. Effective with respect to distributions payable on and after January 1, 2005 and prior to August 4, 2006, subject to paragraph (c) of this Section 6.4, payment to a Participant shall be made or commence as soon as administratively feasible after the Participant’s death, Disability, separation from service, or Retirement.

 
(c)
Notwithstanding anything contained herein to the contrary, if a Participant is a Key Employee and separates from service for a reason other than death or Disability, such Participant’s distribution may not commence earlier than six (6) months from the date of his or her separation from service. Any payment that would have been made within six (6) months of the Participant’s separation from service without regard to the foregoing sentence
 
6.5
Minimum Distribution . Notwithstanding any provision to the contrary, but subject to Section 6.4(c), if the balance of a Participant's Account at the time of separation from service is less than $50,000, then the Participant shall be paid his
 
 
 
 
 
or her benefits as a single lump sum thirty (30) days following the Participant’s separation from service.
 

IN WITNESS WHEREOF, the Employer has executed this instrument this 15th day of December, 2006, effective as stated herein.

Weingarten Realty Investors


By:
/s/ Stephen C. Richter
   
Its (Title):
Chief Financial Officer
 

 
EXHIBIT 10.40


Amendment No. 1 to the
Weingarten Realty Investors
Deferred Compensation Plan


WHEREAS , Weingarten Realty Investors (the “Employer”) sponsors the Weingarten Realty Investors Deferred Compensation Plan (the “Plan”) under the terms of which eligible participants are entitled to defer a portion of their compensation; and
 
WHEREAS , the Employer desires to amend certain Plan provisions relating to the payment of Plan benefits;

NOW THEREFORE , the Employer amends the Plan as follows, effective as of January 1, 2005.

1.   Article I of the Plan is hereby amended by deleting Sections 1.14 and 1.15 therefrom in their entirety.

2.   Article VII of the Plan is hereby amended to be and read as follows, effective January 1, 2005:

Article VII - Distributions
 
7.1   Distribution Election .  
 
(a)  
General Rule . Distribution of the Participant’s Accounts shall be made in accordance with the Participant’s election with respect to the form of payment. The Participant may make a separate election as to the form of distribution in the event of death and the time at which distribution is to commence following death. Such elections shall be made by the Participant at the time the Participant makes his or her initial Deferral Election. A Participant may modify his or her previously-made elections relating to the form of distribution and may modify the time at which distribution would otherwise commence under Sections 7.2 or 7.3 hereof in accordance with Section 7.1(b). Notwithstanding the preceding, if an Eligible Employee is participating in the Plan in 2005 or 2006 and has not previously designated the form of distribution of his or her Accounts or desires to modify a previously-filed distribution election, he or she must make or modify such an election, as the case may be, and file it with the Administrator on or before December 31, 2006; provided, however, that a Participant may not file a modified distribution election in 2006 that has the effect of deferring payment of amounts the Participant would otherwise receive in 2006 or cause payments to be made in 2006 that would otherwise be made subsequent to 2006. The elections referred to in the immediately preceding sentence shall not be required to meet the requirements of Section 7.1(b). If the Administrator separately accounts for Deferrals in each Plan Year, the Participant may make separate distribution elections with respect to each Plan Year’s Deferral Election, in which case each separate distribution election shall be effective with respect to the Deferrals to which the election relates.
 
 
 
1
 
 
(b)  
Modification To Distribution Date or Form of Payment . Except as may be permitted in Section 7.1(a) hereof, any election by a Participant to modify a previously-filed distribution election or to modify the time distribution would otherwise commence under Section 7.2 or 7.3 hereof is ineffective unless all of the following requirements are satisfied:
 
(i)  
Such modification may not be effective for at least twelve (12) months after the date on which the modification is filed with the Administrator.
 
(ii)  
Except in the case of modifications relating to distributions on account of death or Disability, the modification must provide that payment will not commence for at least five (5) years from the date payment would otherwise have been made or commenced.
 
(iii)  
A modification related to distribution to be made at a specified time or under a fixed schedule may not be made less than twelve (12) months prior to the date of the first otherwise scheduled payment.
 
(iv)  
Such modification may not permit acceleration of the time or schedule of any payment under the Plan, except as may be permitted pursuant to applicable Treasury Regulations.
 
(c)  
Distribution to Key Employees . Notwithstanding anything contained herein to the contrary, if a Participant is a Key Employee and separates from service for a reason other than death or Disability, distribution of such Participant’s Accounts may not commence earlier than six (6) months from the date of his or her separation from service. Any payment that would have been made within the first six months following the date on which the Participant separated from service without regard to this subsection (c) shall be made on the first day of the month following the date that is six months following the date on which the Participant separated from service.
 
7.2   Payment of Retirement, Education, and Fixed Period Accounts .
 
(a)  
Retirement Accounts .
 
(i)  
Form of Payment . Retirement Accounts are payable in one of the following forms, as elected by the Participant: (i) in a lump sum payment or (ii) in annual installments over a period of up to twenty (20) years. If the Participant has not made a valid election as to the form of payment of his Retirement Account, payment shall be made in one lump sum.
 
(ii)  
Commencement of Payment . Retirement Account payments shall be made or commence as of the first day of the month immediately following the month in which the Participant Retires (or as soon as administratively feasible thereafter); provided, however, that the Participant may elect, in accordance with Section 7.1(b), to defer payment to a later date. If an installment form of distribution is elected, annual installment payments subsequent to the first payment shall be made on each succeeding anniversary of the date the first payment was made.
 
 
 
2
 
 
(b)  
Education Accounts .
 
Education Account distributions shall be paid in four annual installments commencing on January 1 (or as soon as administratively feasible thereafter) of the calendar year in which the Student reaches age eighteen (18) and subsequently on the three anniversaries thereof in the following amounts:
 
Year 1
25% of the account balance
Year 2
33% of the remaining account balance
Year 3
50% of the remaining account balance
Year 4
100% of the remaining account balance

Distribution of an Education Account will commence as scheduled without regard to whether the Student dies prior to attaining age eighteen (18) or whether the Student attends college or incurs any post-secondary educational costs; provided, however, that the Participant may elect, in accordance with Section 7.1(b), to defer payment to a later date.
 
 
(c)  
Fixed Period Accounts . Fixed Period Account distributions shall be paid in one lump sum payment on January 1 (or as soon as administratively feasible thereafter) of the calendar year designated by the Participant on his or her Deferral Election; provided, however, that the Participant may elect, in accordance with Section 7.1(b), to defer payment to a later date.
 
7.3   Payment upon Death, Disability or Termination for Reason Other Than Retirement .
 
(a)  
General Rule . Payment of a Participant’s Account(s) shall be made or commence in accordance with this Section 7.3 if payment has not been made or commenced under Section 7.2 at the time the Participant separates from service due to death, Disability, or any other reason other than Retirement.
 
(b)  
Form of Payment . The Participant’s vested Account(s) are payable under this Section 7.3 in one of the following forms, as elected by the Participant: (i) in a lump sum payment or (ii) in annual installments over a period of up to twenty (20) years. If the Participant has not made a valid election as to the form of payment, payment shall be made in one lump sum.
 
(c)  
Commencement of Distribution . Payment under this Section 7.3 shall commence as of the first day of the month (or as soon as administratively feasible thereafter) following the month in which the Participant dies, separates from service due to Disability, or separates from service for any other reason other than Retirement; provided, however, that the Participant may elect, in accordance with Section 7.1(b), to defer payment to a later date. If an installment form of distribution is elected, annual installment payments subsequent to the first payment shall be made on each succeeding anniversary of the date the first payment was made.
 
 
 
3
 
 
7.4   Minimum Distribution .
 
(a)  
Subject to Section 7.1(c) but notwithstanding any other provision in the Plan to the contrary, if the balance of a Participant’s Account upon his separation from service is less than $50,000, the Participant shall be paid such balance on the first of the month following the month in which the Participant separates from service.
 
(b)  
Subject to Section 7.1(c), if the balance in a Participant’s Education Account is less than $4,000 at the time the first scheduled payment from such Account would otherwise be made, the Participant shall be paid such balance as a single lump sum on the date the first scheduled payment would have otherwise been made.
 
********


IN WITNESS WHEREOF, WEINGARTEN REALTY INVESTORS has caused this instrument to be executed by its duly authorized officer this 15th day of December, 2006, effective as of January 1, 2005, or as otherwise stated herein.
 


WEINGARTEN REALTY INVESTORS


By:
/s/ Stephen C. Richter
   
Its (Title):
Chief Financial Officer
 

 
4
 
EXHIBIT 10.41

FINAL 401(k)/401(m) REGULATIONS AMENDMENT


ARTICLE I
PREAMBLE

1.1
Adoption and effective date of amendment . This Amendment to the Plan is adopted to reflect certain provisions of the Final Regulations under Code Sections 401(k) and 401(m) that were published on December 29, 2004 (hereinafter referred to as the "Final 401(k) Regulations"). This Amendment is intended as good faith compliance with the requirements of these provisions. This Amendment shall be effective with respect to Plan Years beginning after December 31, 2005 unless the Employer otherwise elects in Section 2.1 below.

1.2
Supersession of inconsistent provisions . This Amendment shall supersede the provisions of the Plan to the extent those provisions are inconsistent with the provisions of this Amendment.

1.3
Application of provisions . Certain provisions of this Amendment relate to elective deferrals of a 401(k) plan; if the Plan to which this Amendment relates is not a 401(k) plan, then those provisions of this Amendment do not apply. Certain provisions of this Amendment relate to matching contributions and /or after-tax employee contributions subject to Code Section 401(m); if the Plan to which this Amendment relates is not subject to Code Section 401(m), then those provisions of this Amendment do not apply.


ARTICLE II
EMPLOYER ELECTIONS

2.1
Effective Date. This Amendment is effective, and the Plan shall implement the provisions of the Final 401(k) Regulations, with respect to Plan Years beginning after December 31, 2005 unless the Employer elects an earlier effective date in either a or b:

 
a.
[ ]
The Amendment is effective and the Final 401(k) Regulations apply to Plan Years beginning after December 31, 2004 (2005 and subsequent Plan Years).

 
b.
[ ]
The Amendment is effective and the Final 401(k) Regulations apply to Plan Years ending after December 29, 2004 (2004 and subsequent Plan Years).

2.2
ACP Test Safe Harbor. Unless otherwise selected below, if this Plan uses the ADP Test Safe Harbor provisions, then the provisions of Amendment Section 9.2(a) apply and all matching contributions under the Plan will be applied without regard to any allocation conditions except as provided in that Section.

 
a.
[ ]
The provisions of Amendment Section 9.2(b) apply. The allocation conditions applicable to matching contributions under the Plan continue to apply (if selected, the Plan is not an ACP Test Safe Harbor Plan).

 
b.
[ ]
The provisions of Amendment Section 9.2 (c) apply. All matching contributions under the Plan will be applied without regard to any allocation conditions as of the effective date of this Amendment.
 

 
 
1
 
 
ARTICLE III
GENERAL RULES

3.1
Deferral elections . A cash or deferred arrangement ("CODA") is an arrangement under which eligible Employees may make elective deferral elections. Such elections cannot relate to compensation that is currently available prior to the adoption or effective date of the CODA. In addition, except for occasional, bona fide administrative considerations, contributions made pursuant to such an election cannot precede the earlier of (1) the performance of services relating to the contribution and (2) when the compensation that is subject to the election would be currently available to the Employee in the absence of an election to defer.

3.2
Vesting provisions . Elective Contributions are always fully vested and nonforfeitable. The Plan shall disregard Elective Contributions in applying the vesting provisions of the Plan to other contributions or benefits under Code Section 411(a)(2). However, the Plan shall otherwise take a participant's Elective Contributions into account in determining the Participant's vested benefits under the Plan. Thus, for example, the Plan shall take Elective Contributions into account in determining whether a Participant has a nonforfeitable right to contributions under the Plan for purposes of forfeitures, and for applying provisions permitting the repayment of distributions to have forfeited amounts restored, and the provisions of Code Sections 410(a)(5)(D)(iii) and 411(a)(6)(D)(iii) permitting a plan to disregard certain service completed prior to breaks-in-service (sometimes referred to as "the rule of parity").


ARTICLE IV
HARDSHIP DISTRIBUTIONS

4.1
Applicability . The provisions of this Article IV apply if the Plan provides for hardship distributions upon satisfaction of the deemed immediate and heavy financial need standards set forth in Regulation Section 1.401(k)-1(d)(2)(iv)(A) as in effect prior to the issuance of the Final 401(k) Regulations.

4.2
Hardship events .   A distribution under the Plan is hereby deemed to be on account of an immediate and heavy financial need of an Employee if the distribution is for one of the following or any other item permitted under Regulation Section 1.401(k)-1(d)(3)(iii)(B):

 
(a)
Expenses for (or necessary to obtain) medical care that would be deductible under Code Section 213(d) (determined without regard to whether the expenses exceed 7.5% of adjusted gross income);

 
(b)
Costs directly related to the purchase of a principal residence for the Employee (excluding mortgage payments);

 
(c)
Payment of tuition, related educational fees, and room and board expenses, for up to the next twelve (12) months of post-secondary education for the Employee, the Employee's spouse, children, or dependents (as defined in Code Section 152, and, for taxable years beginning on or after January 1, 2005, without regard to Code Section 152(b)(1), (b)(2), and (d)(1)(B));
 
 
 
2
 

 
 
(d)
Payments necessary to prevent the eviction of the Employee from the Employee's principal residence or foreclosure on the mortgage on that residence;

 
(e)
Payments for burial or funeral expenses for the Employee's deceased parent, spouse, children or dependents (as defined in Code Section 152, and, for taxable years beginning on or after January 1, 2005, without regard to Code Section 152(d)(1)(B)); or

 
(f)
Expenses for the repair of damage to the Employee's principal residence that would qualify for the casualty deduction under Code Section 165 (determined without regard to whether the loss exceeds 10% of adjusted gross income).

4.3
Reduction of Code Section 402(g) limit following hardship distribution . If the Plan provides for hardship distributions upon satisfaction of the safe harbor standards set forth in Regulation Sections 1.401(k)-1(d)(3)(iii)(B) (deemed immediate and heavy financial need) and 1.401(k)-1(d)(3)(iv)(E) (deemed necessary to satisfy immediate need), then there shall be no reduction in the maximum amount of elective deferrals that a Participant may make pursuant to Code Section 402(g) solely because of a hardship distribution made by this Plan or any other plan of the Employer.


ARTICLE V
ACTUAL DEFERRAL PERCENTAGE (ADP) TEST

5.1
Targeted contribution limit .   Qualified Nonelective Contributions (as defined in Regulation Section 1.401(k)-6) cannot be taken into account in determining the Actual Deferral Ratio (ADR) for a Plan Year for a Non-Highly Compensated Employee (NHCE) to the extent such contributions exceed the product of that NHCE’s Code Section 414(s) compensation and the greater of five percent (5%) or two (2) times the Plan's "representative contribution rate." Any Qualified Nonelective Contribution taken into account under an Actual Contribution Percentage (ACP) test under Regulation Section 1.401(m)-2(a)(6) (including the determination of the representative contribution rate for purposes of Regulation Section 1.401(m)-2(a)(6)(v)(B)), is not permitted to be taken into account for purposes of this Section (including the determination of the "representative contribution rate" under this Section). For purposes of this Section:

 
(a)
The Plan's "representative contribution rate" is the lowest "applicable contribution rate" of any eligible NHCE among a group of eligible NHCEs that consists of half of all eligible NHCEs for the Plan Year (or, if greater, the lowest "applicable contribution rate" of any eligible NHCE who is in the group of all eligible NHCEs for the Plan Year and who is employed by the Employer on the last day of the Plan Year), and

 
(b)
The "applicable contribution rate" for an eligible NHCE is the sum of the Qualified Matching Contributions (as defined in Regulation Section 1.401(k)-6) taken into account in determining the ADR for the eligible NHCE for the Plan Year and the Qualified Nonelective Contributions made for the eligible NHCE for the Plan Year, divided by the eligible NHCE's Code Section 414(s) compensation for the same period.

Notwithstanding the above, Qualified Nonelective Contributions that are made in connection with an Employer’s obligation to pay prevailing wages under the Davis-Bacon Act (46 Stat. 1494), Public Law 71-798, Service Contract Act of 1965 (79 Stat. 1965), Public Law 89-286, or similar legislation can be taken into account for a Plan Year for an NHCE to the extent such contributions do not exceed 10 percent (10%) of that NHCE’s Code Section 414(s) compensation.
 
 
 
3
 

 
Qualified Matching Contributions may only be used to calculate an ADR to the extent that such Qualified Matching Contributions are matching contributions that are not precluded from being taken into account under the ACP test for the Plan Year under the rules of Regulation Section 1.401(m)-2(a)(5)(ii) and as set forth in Section 7.1.

5.2
Limitation on QNECs and QMACs. Qualified Nonelective Contributions and Qualified Matching Contributions cannot be taken into account to determine an ADR to the extent such contributions are taken into account for purposes of satisfying any other ADP test, any ACP test, or the requirements of Regulation Section 1.401(k)-3, 1.401(m)-3, or 1.401(k)-4. Thus, for example, matching contributions that are made pursuant to Regulation Section 1.401(k)-3(c) cannot be taken into account under the ADP test. Similarly, if a plan switches from the current year testing method to the prior year testing method pursuant to Regulation Section 1.401(k)-2(c), Qualified Nonelective Contributions that are taken into account under the current year testing method for a year may not be taken into account under the prior year testing method for the next year.

5.3
ADR of HCE if multiple plans .   The Actual Deferral Ratio (ADR) of any Participant who is a Highly Compensated Employee (HCE) for the Plan Year and who is eligible to have Elective Contributions (as defined in Regulation Section 1.401(k)-6) (and Qualified Nonelective Contributions and/or Qualified Matching Contributions, if treated as Elective Contributions for purposes of the ADP test) allocated to such Participant's accounts under two (2) or more cash or deferred arrangements described in Code Section 401(k), that are maintained by the same Employer, shall be determined as if such Elective Contributions (and, if applicable, such Qualified Nonelective Contributions and/or Qualified Matching Contributions) were made under a single arrangement. If an HCE participates in two or more cash or deferred arrangements of the Employer that have different Plan Years, then all Elective Contributions made during the Plan Year being tested under all such cash or deferred arrangements shall be aggregated, without regard to the plan years of the other plans. However, for Plan Years beginning before the effective date of this Amendment, if the plans have different Plan Years, then all such cash or deferred arrangements ending with or within the same calendar year shall be treated as a single cash or deferred arrangement. Notwithstanding the foregoing, certain plans shall be treated as separate if mandatorily disaggregated under the Regulations of Code Section 401(k).

5.4
Plans using different testing methods for the ADP and ACP test . Except as otherwise provided in this Section, the Plan may use the current year testing method or prior year testing method for the ADP test for a Plan Year without regard to whether the current year testing method or prior year testing method is used for the ACP test for that Plan Year. However, if different testing methods are used, then the Plan cannot use:

 
(a)
The recharacterization method of Regulation Section 1.401(k)-2(b)(3) to correct excess contributions for a Plan Year;

 
(b)
The rules of Regulation Section 1.401(m)-2(a)(6)(ii) to take Elective Contributions into account under the ACP test (rather than the ADP test); or

 
(c)
The rules of Regulation Section 1.401(k)-2(a)(6)(v) to take Qualified Matching Contributions into account under the ADP test (rather than the ACP test).

 
 
4
 

 
ARTICLE VI
ADJUSTMENT TO ADP TEST

6.1
Distribution of Income attributable to Excess Contributions . Distributions of Excess Contributions must be adjusted for income (gain or loss), including an adjustment for income for the period between the end of the Plan Year and the date of the distribution (the "gap period"). The Administrator has the discretion to determine and allocate income using any of the methods set forth below:

 
(a)
Reasonable method of allocating income . The Administrator may use any reasonable method for computing the income allocable to Excess Contributions, provided that the method does not violate Code Section 401(a)(4), is used consistently for all Participants and for all corrective distributions under the Plan for the Plan Year, and is used by the Plan for allocating income to Participant’s accounts. A Plan will not fail to use a reasonable method for computing the income allocable to Excess Contributions merely because the income allocable to Excess Contributions is determined on a date that is no more than seven (7) days before the distribution.

 
(b)
Alternative method of allocating income . The Administrator may allocate income to Excess Contributions for the Plan Year by multiplying the income for the Plan Year allocable to the Elective Contributions and other amounts taken into account under the ADP test (including contributions made for the Plan Year), by a fraction, the numerator of which is the Excess Contributions for the Employee for the Plan Year, and the denominator of which is the sum of the:

 
(1)
Account balance attributable to Elective Contributions and other amounts taken into account under the ADP test as of the beginning of the Plan Year, and

 
(2)
Any additional amount of such contributions made for the Plan Year.

 
(c)
Safe harbor method of allocating gap period income . The Administrator may use the safe harbor method in this paragraph to determine income on Excess Contributions for the gap period. Under this safe harbor method, income on Excess Contributions for the gap period is equal to ten percent (10%) of the income allocable to Excess Contributions for the Plan Year that would be determined under paragraph (b) above, multiplied by the number of calendar months that have elapsed since the end of the Plan Year. For purposes of calculating the number of calendar months that have elapsed under the safe harbor method, a corrective distribution that is made on or before the fifteenth (15th) day of a month is treated as made on the last day of the preceding month and a distribution made after the fifteenth day of a month is treated as made on the last day of the month.

 
(d)
Alternative method for allocating Plan Year and gap period income . The Administrator may determine the income for the aggregate of the Plan Year and the gap period, by applying the alternative method provided by paragraph (b) above to this aggregate period. This is accomplished by (1) substituting the income for the Plan Year and the gap period, for the income for the Plan Year, and (2) substituting the amounts taken into account under the ADP test for the Plan Year and the gap period, for the amounts taken into account under the ADP test for the Plan Year in determining the fraction that is multiplied by that income.
 
 
 
5
 

 
6.2
Corrective contributions . If a failed ADP test is to be corrected by making an Employer contribution, then the provisions of the Plan for the corrective contributions shall be applied by limiting the contribution made on behalf of any NHCE pursuant to such provisions to an amount that does not exceed the targeted contribution limits of Section 5.1 of this Amendment, or in the case of a corrective contribution that is a Qualified Matching Contribution, the targeted contribution limit of Section 7.1 of this Amendment.


ARTICLE VII
ACTUAL CONTRIBUTION PERCENTAGE (ACP) TEST

7.1
Targeted matching contribution limit . A matching contribution with respect to an Elective Contribution for a Plan Year is not taken into account under the Actual Contribution Percentage (ACP) test for an NHCE to the extent it exceeds the greatest of:

 
(a)
five percent (5%) of the NHCE's Code Section 414(s) compensation for the Plan Year;

 
(b)
the NHCE's Elective Contributions for the Plan Year; and

 
(c)
the product of two (2) times the Plan’s "representative matching rate" and the NHCE's Elective Contributions for the Plan Year.

For purposes of this Section, the Plan’s "representative matching rate" is the lowest "matching rate" for any eligible NHCE among a group of NHCEs that consists of half of all eligible NHCEs in the Plan for the Plan Year who make Elective Contributions for the Plan Year (or, if greater, the lowest "matching rate" for all eligible NHCEs in the Plan who are employed by the Employer on the last day of the Plan Year and who make Elective Contributions for the Plan Year).

For purposes of this Section, the "matching rate" for an Employee generally is the matching contributions made for such Employee divided by the Employee’s Elective Contributions for the Plan Year. If the matching rate is not the same for all levels of Elective Contributions for an Employee, then the Employee’s "matching rate" is determined assuming that an Employee’s Elective Contributions are equal to six percent (6%) of Code Section 414(s) compensation.

If the Plan provides a match with respect to the sum of the Employee’s after-tax Employee contributions and Elective Contributions, then for purposes of this Section, that sum is substituted for the amount of the Employee’s Elective Contributions in subsections (b) & (c) above and in determining the "matching rate," and Employees who make either after-tax Employee contributions or Elective Contributions are taken into account in determining the Plan's "representative matching rate." Similarly, if the Plan provides a match with respect to the Employee’s after-tax Employee contributions, but not Elective Contributions, then for purposes of this subsection, the Employee’s after-tax Employee contributions are substituted for the amount of the Employee’s Elective Contributions in subsections (b) & (c) above and in determining the "matching rate," and Employees who make after-tax Employee contributions are taken into account in determining the Plan's "representative matching rate."
 
 
 
6
 

 
7.2
Targeted QNEC limit . Qualified Nonelective Contributions (as defined in Regulation Section 1.401(k)-6) cannot be taken into account under the Actual Contribution Percentage (ACP) test for a Plan Year for an NHCE to the extent such contributions exceed the product of that NHCE’s Code Section 414(s) compensation and the greater of five percent (5%) or two (2) times the Plan's "representative contribution rate." Any Qualified Nonelective Contribution taken into account under an Actual Deferral Percentage (ADP) test under Regulation Section 1.401(k)-2(a)(6) (including the determination of the "representative contribution rate" for purposes of Regulation Section 1.401(k)-2(a)(6)(iv)(B)) is not permitted to be taken into account for purposes of this Section (including the determination of the "representative contribution rate" for purposes of subsection (a) below). For purposes of this Section:

 
(a)
The Plan's "representative contribution rate" is the lowest "applicable contribution rate" of any eligible NHCE among a group of eligible NHCEs that consists of half of all eligible NHCEs for the Plan Year (or, if greater, the lowest "applicable contribution rate" of any eligible NHCE who is in the group of all eligible NHCEs for the Plan Year and who is employed by the Employer on the last day of the Plan Year), and

 
(b)
The "applicable contribution rate" for an eligible NHCE is the sum of the matching contributions (as defined in Regulation Section 1.401(m)-1(a)(2)) taken into account in determining the ACR for the eligible NHCE for the Plan Year and the Qualified Nonelective Contributions made for that NHCE for the Plan Year, divided by that NHCE's Code Section 414(s) compensation for the Plan Year.

Notwithstanding the above, Qualified Nonelective Contributions that are made in connection with an Employer’s obligation to pay prevailing wages under the Davis-Bacon Act (46 Stat. 1494), Public Law 71-798, Service Contract Act of 1965 (79 Stat. 1965), Public Law 89-286, or similar legislation can be taken into account for a Plan Year for an NHCE to the extent such contributions do not exceed 10 percent (10%) of that NHCE’s Code Section 414(s) compensation.

7.3
ACR of HCE if multiple plans .   The Actual Contribution Ratio (ACR) for any Participant who is a Highly Compensated Employee (HCE) and who is eligible to have matching contributions or after-tax Employee contributions allocated to his or her account under two (2) or more plans described in Code Section 401(a), or arrangements described in Code Section 401(k) that are maintained by the same Employer, shall be determined as if the total of such contributions was made under each plan and arrangement. If an HCE participates in two (2) or more such plans or arrangements that have different plan years, then all matching contributions and after-tax Employee contributions made during the Plan Year being tested under all such plans and arrangements shall be aggregated, without regard to the plan years of the other plans. For plan years beginning before the effective date of this Amendment, all such plans and arrangements ending with or within the same calendar year shall be treated as a single plan or arrangement. Notwithstanding the foregoing, certain plans shall be treated as separate if mandatorily disaggregated under the Regulations of Code Section 401(m).

7.4
Plans using different testing methods for the ACP and ADP test . Except as otherwise provided in this Section, the Plan may use the current year testing method or prior year testing method for the ACP test for a Plan Year without regard to whether the current year testing method or prior year testing method is used for the ADP test for that Plan Year. However, if different testing methods are used, then the Plan cannot use:
 
 
 
7
 

 
 
(a)
The recharacterization method of Regulation Section 1.401(k)-2(b)(3) to correct excess contributions for a Plan Year;

 
(b)
The rules of Regulation Section 1.401(m)-2(a)(6)(ii) to take Elective Contributions into account under the ACP test (rather than the ADP test); or

 
(c)
The rules of Regulation Section 1.401(k)-2(a)(6) to take Qualified Matching Contributions into account under the ADP test (rather than the ACP test).


ARTICLE VIII
ADJUSTMENT TO ACP TEST

8.1
Distribution of Income attributable to Excess Aggregate Contributions . Distributions of Excess Aggregate Contributions must be adjusted for income (gain or loss), including an adjustment for income for the period between the end of the Plan Year and the date of the distribution (the "gap period"). For the purpose of this Section, "income" shall be determined and allocated in accordance with the provisions of Section 6.1 of this Amendment, except that such Section shall be applied by substituting "Excess Contributions" with "Excess Aggregate Contributions" and by substituting amounts taken into account under the ACP test for amounts taken into account under the ADP test.

8.2
Corrective contributions . If a failed ACP test is to be corrected by making an Employer contribution, then the provisions of the Plan for the corrective contributions shall be applied by limiting the contribution made on behalf of any NHCE pursuant to such provisions to an amount that does not exceed the targeted contribution limits of Sections 7.1 and 7.2 of this Amendment.


ARTICLE IX
SAFE HARBOR PLAN PROVISIONS

9.1
Applicability . The provisions of this Article IX apply if the Plan uses the alternative method of satisfying the Actual Deferral Percentage (ADP) test set forth in Code Section 401(k)(12) (ADP Test Safe Harbor) and/or the Actual Contribution Percentage (ACP) test set forth in Code Section 401(m)(11) (ACP Test Safe Harbor).

9.2
Elimination of conditions on matching contributions .   Unless otherwise provided in Section 2.2 of this Amendment, the provisions of subsection (a) below shall apply. However, if the Employer so elects in Section 2.2 of this Amendment, then the provisions of subsection (b) or (c) below shall apply.

 
(a)
Default provision. If, prior to the date this Amendment has been executed, an ADP Test Safe Harbor notice has been given for a Plan Year for which this Amendment is effective (see Amendment Section 1.1) and such notice provides that there are no allocation conditions imposed on any matching contributions under the Plan, then (1) the Plan will be an ACP Test Safe Harbor plan, provided the ACP Test Safe Harbor requirements are met and (2) the Plan will not impose any allocation conditions on matching contributions. However, if, prior to the date this Amendment has been executed, an ADP Test Safe Harbor notice has been given for a Plan Year for which this Amendment is effective and such notice provides that there are allocation conditions imposed on any matching contributions under the Plan, then the provisions of this Amendment do not modify any such allocation conditions or provisions for that Plan Year and the Plan must satisfy the ACP Test for such Plan Year using the current year testing method. With respect to any Plan Year beginning after the date this Amendment has been executed, if the Plan uses the ADP Test Safe Harbor and provides for matching contributions, then (1) the Plan will be an ACP Test Safe Harbor plan, provided the ACP Test Safe Harbor requirements are met and (2) the Plan will not impose any allocation conditions on matching contributions.
 
 
 
8
 

 
(b) Retention of allocation conditions. If the Employer so elects in Section 2.2 of this Amendment, then the Plan will retain any allocation conditions contained in the Plan with regard to matching contributions for any Plan Year for which this Amendment is effective. In that case, the Plan must satisfy the ACP Test for each such Plan Year.

(c) Elimination of allocation conditions. If the Employer so elects in Section 2.2 of this Amendment, then (1) the Plan will be an ACP Test Safe Harbor plan, provided the ACP Test Safe Harbor requirements are met, and (2) the Plan will not impose any allocation conditions on matching contributions.

9.3
Matching Catch-up contributions . If the Plan provides for ADP Test Safe Harbor matching contributions or ACP Test Safe Harbor matching contributions, then catch-up contributions (as defined in Code Section 414(v)) will be taken into account in applying such matching contributions under the Plan.

9.4
Plan Year requirement . Except as provided in Regulation Sections 1.401(k)-3(e) and 1.401(k)-3(f), and below, the Plan will fail to satisfy the requirements of Code Section 401(k)(12) and this Section for a Plan Year unless such provisions remain in effect for an entire twelve (12) month Plan Year.

9.5
Change of Plan Year . If a Plan has a short Plan Year as a result of changing its Plan Year, then the Plan will not fail to satisfy the requirements of Section 9.4 of this Amendment merely because the Plan Year has less than twelve (12) months, provided that:

 
(a)
The Plan satisfied the ADP Test Safe Harbor and/or ACP Test Safe Harbor requirements for the immediately preceding Plan Year; and

 
(b)
The Plan satisfies the ADP Test Safe Harbor and/or ACP Test Safe Harbor requirements (determined without regard to Regulation Section 1.401(k)-3(g)) for the immediately following Plan Year (or for the immediately following twelve (12) months if the immediately following Plan Year is less than twelve (12) months).

9.6
Timing of matching contributions . If the ADP Test Safe Harbor contribution being made to the Plan is a matching contribution (or any ACP Test Safe Harbor matching contribution) that is made separately with respect to each payroll period (or with respect to all payroll periods ending with or within each month or quarter of a Plan Year) taken into account under the Plan for the Plan Year, then safe harbor matching contributions with respect to any elective deferrals and/or after-tax employee contributions made during a Plan Year quarter must be contributed to the Plan by the last day of the immediately following Plan Year quarter.
 
 
 
9
 

 
9.7
Exiting safe harbor matching . The Employer may amend the Plan during a Plan Year to reduce or eliminate prospectively any or all matching contributions under the Plan (including any ADP Test Safe Harbor matching contributions) provided: (a) the Plan Administrator provides a supplemental notice to the Participants which explains the consequences of the amendment, specifies the amendment’s effective date, and informs Participants that they will have a reasonable opportunity to modify their cash or deferred elections and, if applicable, after-tax Employee contribution elections; (b) Participants have a reasonable opportunity (including a reasonable period after receipt of the supplemental notice) prior to the effective date of the amendment to modify their cash or deferred elections and, if applicable, after-tax Employee contribution elections; and (c) the amendment is not effective earlier than the later of: (i) thirty (30) days after the Plan Administrator gives supplemental notice; or (ii) the date the Employer adopts the amendment. An Employer which amends its Plan to eliminate or reduce any matching contribution under this Section, effective during the Plan Year, must continue to apply all of the ADP Test Safe Harbor and/or ACP Test Safe Harbor requirements of the Plan until the amendment becomes effective and also must apply for the entire Plan Year, using current year testing, the ADP test and the ACP test.

9.8
Plan termination . An Employer may terminate the Plan during a Plan Year in accordance with Plan termination provisions of the Plan and this Section.

 
(a)
Acquisition/disposition or substantial business hardship . If the Employer terminates the Plan resulting in a short Plan Year, and the termination is on account of an acquisition or disposition transaction described in Code Section 410(b)(6)(C), or if the termination is on account of the Employer’s substantial business hardship within the meaning of Code Section 412(d), then the Plan remains an ADP Test Safe Harbor and/or ACP Test Safe Harbor Plan provided that the Employer satisfies the ADP Test Safe Harbor and/or ACP Test Safe Harbor provisions through the effective date of the Plan termination.

 
(b)
Other termination . If the Employer terminates the Plan for any reason other than as described in Section 9.7(a) above, and the termination results in a short Plan Year, the Employer must conduct the termination under the provisions of Section 9.7 above, except that the Employer need not provide Participants with the right to change their cash or deferred elections.


This Amendment has been executed this 15th day of December, 2006.

Name of Plan:   The Savings and Investment Plan for Employees of Weingarten Realty Investors

Name of Employer:   Weingarten Realty Investors



By:
/s/ Stephen C. Richter
 
EMPLOYER


10
 

 
EXHIBIT 12.1

WEINGARTEN REALTY INVESTORS
COMPUTATION OF RATIOS OF EARNINGS AND FUNDS FROM OPERATIONS
TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS
(Amounts in thousands)


   
Year Ended December 31,
 
   
2006
 
2005
 
2004
 
2003
 
2002
 
                       
Income from continuing operations
 
$
151,626
 
$
136,173
 
$
96,612
 
$
89,290
 
$
88,510
 
                                 
Add:
                               
Portion of rents representative of the interest factor
   
1,062
   
961
   
963
   
1,030
   
914
 
Interest on indebtedness
   
146,943
   
130,761
   
117,096
   
90,269
   
67,171
 
Out-of-market mortgage adjustment
   
7,335
   
6,927
   
4,988
   
975
       
Preferred dividends
   
10,101
   
10,101
   
7,470
   
15,912
   
19,756
 
Net income as adjusted
 
$
317,067
 
$
284,923
 
$
227,129
 
$
197,476
 
$
176,351
 
                                 
Fixed charges:
                               
Interest on indebtedness
 
$
146,943
 
$
130,761
 
$
117,096
 
$
90,269
 
$
67,171
 
Out-of-market mortgage adjustment
   
7,335
   
6,927
   
4,988
   
975
       
Capitalized interest
   
7,616
   
2,629
   
4,992
   
6,361
   
9,642
 
Preferred dividends
   
10,101
   
10,101
   
7,470
   
15,912
   
19,756
 
Portion of rents representative of the interest factor
   
1,062
   
961
   
963
   
1,030
   
914
 
Fixed charges
 
$
173,057
 
$
151,379
 
$
135,509
 
$
114,547
 
$
97,483
 
                                 
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS
   
1.83
   
1.88
   
1.68
   
1.72
   
1.81
 
                                 
                                 
Net income available to common shareholders
 
$
294,909
 
$
209,552
 
$
133,911
 
$
97,880
 
$
112,111
 
Depreciation and amortization
   
131,792
   
125,742
   
114,342
   
90,367
   
78,111
 
Gain on sale of properties
   
(172,056
)
 
(87,561
)
 
(26,316
)
 
(7,273
)
 
(18,614
)
Funds from operations
   
254,645
   
247,733
   
221,937
   
180,974
   
171,608
 
Add:
                               
Portion of rents representative of the interest factor
   
1,062
   
961
   
963
   
1,030
   
914
 
Preferred dividends
   
10,101
   
10,101
   
7,470
   
15,912
   
19,756
 
Interest on indebtedness
   
146,943
   
130,761
   
117,096
   
90,269
   
67,171
 
Out-of-market mortgage adjustment
   
7,335
   
6,927
   
4,988
   
975
       
Funds from operations as adjusted
 
$
420,086
 
$
396,483
 
$
352,454
 
$
289,160
 
$
259,449
 
                                 
RATIO OF FUNDS FROM OPERATIONS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS
   
2.43
   
2.62
   
2.60
   
2.52
   
2.66
 

 
 
 

 
EXHIBIT 21.1

WEINGARTEN REALTY INVESTORS
LIST OF SUBSIDIARIES OF THE REGISTRANT

Subsidiary
 
State of Incorporation
     
6485 Crescent Drive LP
 
Delaware
AN/WRI DEVCO #1, Ltd.
 
Texas
AN/WRI Partnership, Ltd.
 
Texas
Best in the West Holdings, LLC
 
Delaware
Brookwood Square Holdings, LLC
 
Delaware
Chino Hills Holdings, LLC
 
Delaware
Crowfarn Drive LP
 
Delaware
Eastex Venture
 
Texas
El Camino Holdings LLC
 
Texas
Falls Pointe Holdings, LLC
 
Delaware
Fenton Market Place Venture
 
Texas
Flamingo Pines Holdings, LLC
 
Delaware
Heritage HT #1, LLC
 
North Carolina
High House Holdings LLC
 
Delaware
Hollywood Hills Holdings, LLC
 
Delaware
Jacinto City, Ltd.
 
Texas
Jackson West Holdings, LLC
 
Delaware
Las Tiendas Holdings, LLC
 
Delaware
Main/O.S.T., Ltd.
 
Texas
Markham West Shopping Center, L.P.
 
Delaware
Miller Weingarten Realty, LLC
 
Colorado
Nanocorp, Inc.
 
Texas
NOBSIL, L.L.C.
 
Maine
North Towne Plaza JV
 
Texas
Northcross Holdings, LLC
 
Delaware
Northwest Hollister Venture
 
Texas
Outland Center Drive LP
 
Delaware
Parliament Square Center, Inc.
 
Texas
Phelan Boulevard Venture
 
Texas
Pinecrest Plaza Holdings, LLC
 
Delaware
Rancho San Marcos Holdings, LLC
 
Delaware
RGC Starr Retail, Ltd.
 
Texas
Rosenberg, Ltd.
 
Texas
Roswell Corners Holdings LLC
 
Delaware
Shary Retail, Ltd.
 
Texas
Sheldon Center, Ltd.
 
Texas
Siempre Viva 7 and 8 Holdings, LLC
 
Delaware
South Loop-Long Wayside Company
 
Texas
Southside Industrial Way LP
 
Delaware
SPM/WRI College Station, L.P.
 
Texas
SPM/WRI Rockwall, L.P.
 
Texas
Steele Creek Holdings, LLC
 
Delaware
Strategic Retail Partners, L.L.C.
 
Delaware
Strategic Retail Partners II, L.L.C.
 
Delaware
Sugarloaf Holdings, LLC
 
Delaware
SV Portfolio LP
 
Delaware
S/W Albuquerque, L.P.
 
Texas
Utah-WRI Holdings, L.L.C.
 
Delaware
WB Sub GP, LLC
 
Delaware

Table continued on next page

1

EXHIBIT 21.1, Continued

Subsidiary
 
State of Incorporation
     
Weingarten 1815 S. 10th JV
 
Texas
Weingarten Aurora Inc.
 
Colorado
Weingarten Golden State, Inc.
 
Delaware
Weingarten GS Delaware, Inc.
 
Delaware
Weingarten GS, Inc.
 
Texas
Weingarten Herndon Plaza JV
 
Delaware
Weingarten Hughes Waterford Venture
 
Texas
Weingarten Las Tiendas JV
 
Texas
Weingarten Lowry Inc.
 
Colorado
Weingarten Maya Tropicana, LLC
 
Delaware
Weingarten Maya Tropicana II, LLC
 
Delaware
Weingarten Miller Buckingham LLC
 
Colorado
Weingarten Miller Glenwood Joint Venture
 
Delaware
Weingarten Miller Glenwood, LLC
 
Colorado
Weingarten Miller Sheridan LLC
 
Colorado
Weingarten NAP GP, LLC
 
Delaware
Weingarten NAP, LP
 
Delaware
Weingarten Nolana JV
 
Texas
Weingarten Northcross JV
 
Texas
Weingarten Nostat, Inc
 
Texas
Weingarten Realty Management Company
 
Texas
Weingarten Shary Crossing JV
 
Texas
Weingarten Shary North JV
 
Texas
Weingarten Shary South JV
 
Texas
Weingarten Starr Plaza JV
 
Texas
Weingarten Tenth-Jackson West JV
 
Texas
Weingarten Thorncreek Inc.
 
Colorado
Weingarten/Bridges at Smoky Hill
 
Texas
Weingarten/Bridges at Smoky Hill II LLC
 
Delaware
Weingarten/Bridges at Smoky Hill III LLC
 
Delaware
Weingarten/Finger Venture
 
Texas
Weingarten/Investments, Inc.
 
Texas
Weingarten/Lufkin, Inc.
 
Texas
Weingarten/Maya Tropicana Venture
 
Nevada
Weingarten/Miller Elizabeth Joint Venture
 
Texas
Weingarten/Miller/American Fork Joint Venture
 
Texas
Weingarten/Miller/American Fork LLC
 
Colorado
Weingarten/Miller/Aurora II LLC
 
Colorado
Weingarten/Miller/Aurora Joint Venture
 
Texas
Weingarten/Miller/Englewood LLC
 
Delaware
Weingarten/Miller/Fiest II Joint Venture
 
Texas
Weingarten/Miller/Fiest LLC
 
Delaware
Weingarten/Miller/Green Valley Joint Venture
 
Texas
Weingarten/Miller/GVR LLC
 
Colorado
Weingarten/Miller/GVR II LLC
 
Colorado
Weingarten/Miller/Lowry II LLC
 
Colorado
Weingarten/Miller/Lowry Joint Venture
 
Texas
Weingarten/Miller/Thorncreek II LLC
 
Colorado
Weingarten/Miller/Thorncreek Joint Venture
 
Texas
Weingarten/Miller/Westminster Joint Venture
 
Texas
Weingarten/Monvis LLC
 
Arizona

Table continued on next page

2

EXHIBIT 21.1, Continued

Subsidiary
 
State of Incorporation
     
WII Ridgeway, LLC
 
Delaware
WNI/Tennessee Holdings, Inc.
 
Delaware
WNI/Tennessee, L.P.
 
Delaware
WRI-Charleston Commons, LLC
 
Delaware
WRI-IND GP, LLC
 
Delaware
WRI-SRP Chatham Crossing, LLC
 
Delaware
WRI-SRP Cole Park Plaza, LLC
 
Delaware
WRI-SRP Highlands Ranch, LLC
 
Delaware
WRI-SRP Hilton Head, LLC
 
Delaware
WRI-SRP Indian Harbour, LLC
 
Delaware
WRI-SRP Lake Washington, LLC
 
Delaware
WRI-SRP Paradise Isle Holdings, LLC
 
Delaware
WRI-SRP Paradise Isle, LLC
 
Delaware
WRI-SRP Shoppes of Port Charlotte, LLC
 
Delaware
WRI-SRP Sunrise West LLC
 
Delaware
WRI-TC Alafaya Square, LLC
 
Delaware
WRI-TC East Lake Woodlands, LLC
 
Delaware
WRI-TC International Drive Value Center, LLC
 
Delaware
WRI-TC Kendall Corners, LLC
 
Delaware
WRI-TC Marketplace at Dr. Phillips, LLC
 
Delaware
WRI-TC Palm Lakes Plaza, LLC
 
Delaware
WRI-TC South Dade Shopping Center, LLC
 
Delaware
WRI-URS Clackamas, LLC
 
Delaware
WRI-URS Meridan, LLC
 
Delaware
WRI-URS Mukilteo Speedway, LLC
 
Delaware
WRI-URS Rainier Valley, LLC
 
Delaware
WRI-URS Raleigh Hills, LLC
 
Delaware
WRI-URS South Hill, LLC
 
Delaware
WRI 151 Ingram GP, LLC
 
Delaware
WRI 151 Ingram LP
 
Delaware
WRI 1725 Dornoch, LLC
 
Delaware
WRI 1855 Dornoch, LLC
 
Delaware
WRI Alliance Riley Venture
 
Texas
WRI Best in the West, LLC
 
Delaware
WRI Brookwood Marketplace, LLC
 
Delaware
WRI Brookwood Square, LLC
 
Delaware
WRI Camp Creek Marketplace II, LLC
 
Delaware
WRI Charleston Commons Holdings
 
Delaware
WRI Cottonwood Holdings, LLC
 
Delaware
WRI Cottonwood, LLC
 
Delaware
WRI El Camino, LP
 
Texas
WRI Fiesta Trails Holdings, LLC
 
Texas
WRI Fiesta Trails, LP
 
Texas
WRI Flamingo Pines, LLC
 
Delaware
WRI Freedom Centre, L.P.
 
Delaware
WRI Galleria Holdings, LLC
 
Delaware
WRI Galleria, LLC
 
Delaware
WRI Gateway Station GP, LLC
 
Delaware
WRI Gateway Station, LP
 
Delaware
WRI Golden State, LLC
 
Delaware
WRI Greenhouse LP
 
Delaware
WRI GS Partnership, L.P.
 
Delaware

Table continued on next page

3

EXHIBIT 21.1, Continued

Subsidiary
 
State of Incorporation
     
WRI Hopewell, LLC
 
Delaware
WRI Hughes, LLC
 
North Carolina
WRI Hughes Surf City LLC
 
Delaware
WRI Jackson West, LP
 
Delaware
WRI Johnston Road Plaza, LLC
 
Delaware
WRI Kennesaw, LLC
 
Delaware
WRI Laguna Isles, LLC
 
Delaware
WRI Lakeland LLC
 
Delaware
WRI Lakeside Marketplace, LLC
 
Delaware
WRI Las Tiendas, LP
 
Delaware
WRI LLA Venture
 
Texas
WRI Marshalls Plaza, LP
 
Texas
WRI North American Properties, L.P.
 
Delaware
WRI Northcross, LP
 
Texas
WRI Northtown II, LP
 
Texas
WRI Northtown I, LP
 
Texas
WRI Overton Holdings, LLC
 
Delaware
WRI Overton Plaza, LP
 
Texas
WRI Parkland, LLC
 
Delaware
WRI Pinecrest Plaza, LLC
 
Delaware
WRI Princeton Lakes, LLC
 
Delaware
WRI Ravenstone, LLC
 
Delaware
WRI Regency Centre, LLC
 
Delaware
WRI River Marketplace, LLC
 
Delaware
WRI Roswell Corners, LLC
 
Delaware
WRI Sandy Plains, LLC
 
Delaware
WRI Seminole Holdings, LLC
 
Delaware
WRI Seminole II, LLC
 
Delaware
WRI Seminole Marketplace, LLC
 
Delaware
WRI Siempre Viva 345, LLC
 
Delaware
WRI Siempre Viva 7 and 8, LLC
 
Delaware
WRI Steele Creek, LLC
 
Delaware
WRI Strom, L.P.
 
Delaware
WRI Sugarloaf, LLC
 
Delaware
WRI Thompson Bridge, LLC
 
Delaware
WRI Trautmann, L.P.
 
Delaware
WRI Uintah Gardens, LLC
 
Delaware
WRI Uintah Holdings, LLC
 
Delaware
WRI University Palms, LLC
 
Delaware
WRI University Place, LLC
 
Delaware
WRI West Jordan LLC
 
Delaware
WRI Westgate Industrial Holdings LLC
 
Texas
WRI Westgate Industrial LP
 
Texas
WRIJV, LP
 
Delaware
WRI/7080 Express Lane, Inc.
 
Texas
WRI/Atlanta Park-3658, L.P.
 
Delaware
WRI/Atlanta Park, L.P.
 
Delaware
WRI/Chino Hills, LLC
 
Delaware
WRI/Crosby Venture
 
Texas
WRI/Dickinson Venture
 
Texas
WRI/Falls Pointe, LLC
 
Delaware
WRI/High House LLC
 
Delaware

Table continued on next page

4

EXHIBIT 21.1, Continued

Subsidiary
 
State of Incorporation
     
WRI/Hollywood Hills, LLC
 
Delaware
WRI/Lone Star, Inc.
 
Texas
WRI/Louisiana Holdings, Inc.
 
Delaware
WRI/Miller Westminster I LLC
 
Delaware
WRI/Miller Westminster II LLC
 
Delaware
WRI/Pavilion, Inc.
 
Texas
WRI/Pembroke, Ltd.
 
Texas
WRI/Pitman Corners, Inc.
 
Texas
WRI/Post Oak, Inc.
 
Texas
WRI/Raleigh LP
 
Delaware
WRI/Rancho San Marcos, LLC
 
Delaware
WRI/Rockwall, Inc.
 
Texas
WRI/Tamiami Trail, LLC
 
Delaware
WRI/TEXLA, LLC
 
Louisiana
WRI/Utah Properties, L.P.
 
Delaware
WT Florida Ventures, LLC
 
Delaware
 
 

5
 
 

 
EXHIBIT 23.1







CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 33-20964, No. 33-24364, No. 33-41604, No. 33-52473, No. 33-54402, No. 33-54404, No. 333-94945, No. 333-37823 and No. 333-37831 on Form S-8, in Post-Effective Amendment No. 1 to Registration Statement No. 33-25581 on Form S-8 and in Registration Statement No. 333-85967, No. 333-57508, No. 333-104560, No. 333-104559, No. 333-119067, No. 333-119069, No. 333-121506, No. 333-122342, No. 333-122448, No. 333-124298, No. 333-127969, No. 333-134908, and No. 333-138336 on Form S-3 of our reports dated March 1, 2007, relating to the financial statements and financial statement schedules of Weingarten Realty Investors and management’s report on the effectiveness of internal control over financial reporting, appearing in this Annual Report on Form 10-K of Weingarten Realty Investors for the year ended December 31, 2006.

DELOITTE & TOUCHE LLP




Houston, Texas
March 1, 2007
 
 
 
 

 
EXHIBIT 31.1

CERTIFICATION


I, Andrew M. Alexander, certify that:

1.   I have reviewed this report on Form 10-K of Weingarten Realty Investors;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


BY:
/s/ Andrew M. Alexander
 
 
Andrew M. Alexander
 
President/Chief Executive Officer
 
March 1, 2007
 

 
 

 
EXHIBIT 31.2

CERTIFICATION


I, Stephen C. Richter, certify that:

1. I have reviewed this report on Form 10-K of Weingarten Realty Investors;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


BY:
/s/ Stephen C. Richter
 
 
Stephen C. Richter
 
Executive Vice President/Chief Financial Officer
 
March 1, 2007

 
 
 

 
EXHIBIT 32.1



CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Annual Report of Weingarten Realty Investors (the "Company") on Form 10-K for the period ended December 31, 2006, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Andrew M. Alexander, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



BY:
/s/ Andrew M. Alexander
 
 
Andrew M. Alexander
 
President/Chief Executive Officer
 
 
March 1, 2007



A signed original of this written statement required by Section 906 has been provided to Weingarten Realty Investors and will be retained by Weingarten and furnished to the Securities and Exchange Commission or its staff upon request.
 

 
 

EXHIBIT 32.2



CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Annual Report of Weingarten Realty Investors (the "Company") on Form 10-K for the period ended December 31, 2006, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Stephen C. Richter, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



BY:
/s/ Stephen C. Richter
 
 
Stephen C. Richter
 
Executive Vice President/Chief Financial Officer
 
 
March 1, 2007



A signed original of this written statement required by Section 906 has been provided to Weingarten Realty Investors and will be retained by Weingarten and furnished to the Securities and Exchange Commission or its staff upon request.