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
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(Mark
One)
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x
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the fiscal year ended December 31, 2007
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ON
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¨
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the transition period from __________________ to
________________
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Commission
file number 1-9876
WEINGARTEN
REALTY INVESTORS
(Exact
name of registrant as specified in its charter)
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TEXAS
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74-1464203
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(State
or other jurisdiction of incorporation or organization)
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(IRS
Employer Identification No.)
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2600
Citadel Plaza Drive
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P.O.
Box 924133
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Houston,
Texas
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77292-4133
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(Address
of principal executive offices)
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(Zip
Code)
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(713)
866-6000
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(Registrant's
telephone number)
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Securities
registered pursuant to Section 12(b) of the Act:
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Title of Each Class
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Name of Each Exchange on Which
Registered
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Common Shares of Beneficial Interest, $0.03 par value
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New
York Stock Exchange
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Series
D Cumulative Redeemable Preferred Shares, $0.03 par value
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New
York Stock Exchange
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Series
E Cumulative Redeemable Preferred Shares, $0.03 par value
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New
York Stock Exchange
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Series
F Cumulative Redeemable Preferred Shares, $0.03 par value
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New
York Stock Exchange
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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
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The aggregate market value of the
common shares of beneficial interest held by non-affiliates on June 30, 2007
(based upon the closing sale price on the New York Stock Exchange of
$41.10) was $3,023,271,982. As of June 30, 2007, there were
86,448,425 common shares of beneficial interest, $.03 par value,
outstanding.
As of January 31, 2008, there were
83,784,455 common shares of beneficial interest outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy
Statement relating to its Annual Meeting of Shareholders to be held May 7, 2008
are incorporated by reference in Part III.
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Item
No.
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Page
No.
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PART
I
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1.
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2
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1A.
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4
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1B.
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10
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2.
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11
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3.
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26
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4.
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26
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PART
II
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5.
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27
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6.
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30
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7.
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31
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7A.
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48
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8.
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49
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9.
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80
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9A.
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80
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9B.
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82
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PART
III
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10.
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82
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11.
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82
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12.
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83
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13.
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83
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14.
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83
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PART
IV
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15.
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84
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89
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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 herein 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
General
. Weingarten
Realty Investors is a real estate investment trust (“REIT”) 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, 2007, we owned or operated under long-term leases, either directly
or through our interest in real estate joint ventures or partnerships, a total
of 383 developed income-producing properties and 32 properties under various
stages of construction and development. The total number of centers
includes 335 neighborhood and community shopping centers located in 22 states
spanning the country from coast to coast. We also owned 77 industrial
projects located in California, Florida, Georgia, Tennessee, Texas and
Virginia and three other operating properties located in Arizona and
Texas. The portfolio of properties is approximately 72.8 million
square feet.
We also
owned interests in 19 parcels of unimproved land held for future development
that totaled approximately 9.9 million square feet.
At
December 31, 2007, we employed 485 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 10 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 32 properties currently under development or predevelopment is
$628.7 million.
To improve
the quality of the portfolio, we pursue the disposition of selective
noncore assets as circumstances warrant.
At
December 31, 2007, neighborhood and community shopping centers generated 89.1%
of total revenue and industrial properties accounted for 9.1%. We
expect to continue to focus the future growth of the portfolio in neighborhood
and community centers and bulk 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 alternative uses of our available capital.
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 traditionally have invested in first
mortgages to real estate 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 approximately 35.3% 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 2.9% and 1.6%,
respectively, of our total rental revenues for the year ended December 31,
2007. 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 BBB+ 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, 2007, our ratio of funds from operations to combined fixed charges
and preferred dividends was 2.2 to 1 and our debt to total market capitalization
was 49.3%.
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 23 states, primarily throughout the southern half of
the country. As of December 31, 2007, of our 415 properties, which
were owned or operated under long-term leases either directly or through our
interest in real estate joint ventures or partnerships, 90 are located in
Houston and its surrounding areas, and an additional 77 properties are located
in other parts of Texas. We also have 19 parcels of unimproved land,
11 of which are located in Houston and its surrounding areas and three of which
are located in other parts of Texas. Because of our investments in
Houston and its surrounding areas, as well as in other parts of Texas, the
Houston and Texas economies affect, to a large degree, our business and
operations.
Economic Factors.
As
expected, the national economy softened in 2007. The residential
mortgage and capital markets began showing signs of stress, primarily in the
form of escalating default rates on sub-prime mortgages and declining
residential housing prices nationwide. This “credit” crisis spread to
the broader commercial credit markets and has generally reduced the availability
of financing and widened spreads. These factors, coupled with a
slowing economy, may negatively impact the volume of real estate transactions
and cap rates, which could negatively impact stock price performance of public
real estate companies, including ours. While the housing market and energy
prices may affect consumer spending, 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. Furthermore, our portfolio
is strategically positioned in geographic markets that are forecasted to exceed
the national average according to many economic measures. Many of our
operating areas throughout the United States continue to show strong employment
growth and higher than average rent growth among larger metropolitan
areas. However, if these economic conditions persist in 2008 and
beyond, our real estate portfolio may experience lower occupancy and effective
rents, which would result in a corresponding decrease in net income, funds from
operations and cash flows. In addition, the value of our investment
in real estate joint ventures and partnerships and notes receivable from real
estate joint ventures and partnerships may also decline.
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 our officers, trust
managers or 10% beneficial owners, 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
(“SEC”). 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. Materials on our website are not part of our Annual
Report on Form 10-K.
Financial
Information
. Additional financial information concerning us is
included in the Consolidated Financial Statements located on pages 49
through 79 herein.
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:
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Changes
in the national, regional and local economic
climate;
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Local
conditions such as an oversupply of space or a reduction in demand for
real estate in the area;
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The
attractiveness of the properties to
tenants;
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Competition
from other available space;
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Our
ability to provide adequate management services and to maintain our
properties;
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Increased
operating costs, if these costs cannot be passed through to
tenants;
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The
expense of periodically renovating, repairing and releasing
spaces;
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Consequence
of any armed conflict involving, or terrorist attack against , the United
States;
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Our
ability to secure adequate
insurance;
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Fluctuations
in interest rates;
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Changes
in real estate taxes and other expenses;
and
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Availability
of financing on acceptable terms or at
all.
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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:
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Our
estimates on expected occupancy and rental rates may differ from actual
conditions;
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Our
estimates of the costs of any redevelopment or repositioning of acquired
properties may prove to be
inaccurate;
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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;
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We
may be unable to successfully integrate new properties into our existing
operations; or
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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.
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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.
Turmoil
in capital markets could adversely impact acquisition activities and pricing of
real estate assets.
Volatility
in capital markets could adversely affect acquisition activities by impacting
certain factors including the tightening of underwriting standards by lenders
and credit rating agencies and the significant inventory of unsold
Collateralized Mortgage Backed Securities in the market. These factors directly
affect a lender’s ability to provide debt financing as well as increase the cost
of available debt financing. As a result, we may not be able to
obtain favorable debt financing in the future or at all. This may result in
future acquisitions generating lower overall economic returns, which may
adversely affect our results of operations and distributions to shareholders.
Furthermore, any turmoil in the capital markets could adversely impact the
overall amount of capital available to invest in real estate, which may result
in price or value decreases of real estate assets.
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):
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Delay
lease commencements;
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Decline
to extend or renew leases upon
expiration;
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Fail
to make rental payments when due;
or
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Close
stores or declare bankruptcy.
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Any of
these actions could result in the termination of the tenants' lease 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:
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We
may abandon development opportunities after expending resources to
determine feasibility;
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Construction
costs of a project may exceed our original
estimates;
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Occupancy
rates and rents at a newly completed property may not be sufficient to
make the property profitable;
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Rental
rates per square foot could be less than
projected;
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Financing
may not be available to us on favorable terms for development of a
property;
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We
may not complete construction and lease-up on schedule, resulting in
increased debt service expense and construction costs;
and
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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.
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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:
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Our
cash flow may not satisfy required payments of principal and
interest;
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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;
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Required
debt payments are not reduced if the economic performance of any property
declines;
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Debt
service obligations could reduce funds available for distribution to our
shareholders and funds available for capital
investment;
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Any
default on our indebtedness could result in acceleration of those
obligations and possible loss of property to foreclosure;
and
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The
risk that necessary capital expenditures for purposes such as re−leasing
space cannot be financed on favorable
terms.
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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 real estate partnerships and joint ventures could limit our
control of those investments and reduce our expected return.
Real
estate 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, restrictions on our ability
to 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:
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§
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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;
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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
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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.
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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 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.
Loss
of our key personnel could adversely affect the value of our common shares of
beneficial interest and operations.
We are
dependent on the efforts of our key executive personnel. Although we
believe qualified replacements could be found for these key executives, the loss
of their services could adversely affect the value of our common shares of
beneficial interest and operations.
Policies
may be changed without obtaining the approval of our shareholders.
Our
shareholders do not control any policies with respect to our operating and
financial policies, including our policies regarding acquisitions,
dispositions, indebtedness, operations, capitalization and dividends, which are
determined by our Board of Trust Managers and management.
Volatile market conditions could result in value fluctuations in our common shares of beneficial interest and preferred shares. Among the market conditions that may affect the value of our common shares of beneficial interest and preferred shares are the following:
|
§
|
the
attractiveness of REIT securities as compared to other securities,
including securities issued by other real estate companies, fixed income
equity securities and debt
securities;
|
|
§
|
the
degree of interest held by institutional
investors;
|
|
§
|
our
operating performance and financial situation;
and
|
|
§
|
general
economic conditions.
|
The
current volatility on the stock market has created price and volume fluctuations
that have not necessarily been comparable to operating performance.
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.
None.
At
December 31, 2007, our real estate properties consisted of 415 locations in 23
states. A complete listing of these properties, including the name,
location, building area and land area, is as follows (in square
feet):
|
Center
and Location
|
Building
|
Land
|
||
|
Area
|
Area
|
|
Retail
|
||||||
|
Arizona
|
||||||
|
Arrowhead
Festival S.C., 75th Ave. at W. Bell Rd., Glendale
|
176,458
|
157,000
|
||||
|
Broadway
Marketplace, Broadway at Rural, Tempe
|
82,757
|
347,000
|
||||
|
Camelback
Village Square, Camelback at 7th Avenue, Phoenix
|
234,494
|
543,000
|
||||
|
Entrada
de Oro, Magee Road and Oracle Road, Tucson
|
109,091
|
572,000
|
||||
|
Fountain Plaza,
77th St. at McDowell, Scottsdale
|
102,271
|
445,000
|
||||
|
Fry's
Ellsworth Plaza, Broadway Rd. at Ellsworth Rd., Mesa
|
73,608
|
58,000
|
||||
|
Fry's
Valley Plaza, S. McClintock at E. Southern, Tempe
|
145,104
|
570,000
|
||||
|
Gladden
Farms, Lon Adams Rd at Tangerine Farms Rd
|
(1)(2)
|
119,685
|
464,785
|
|||
|
Laveen Village
Market, Baseline Rd. at 51st St., Phoenix
|
111,644
|
372,274
|
||||
|
Madera Village,
Tanque Verde Rd. and Catalina Hwy, Tucson
|
106,626
|
419,000
|
||||
|
Mohave
Crossroads, Bullhead Parkway at State Route 95,
Bullhead City
|
(2)
|
302,230
|
1,356,023
|
|||
|
Monte Vista Village Center,
Baseline Rd. at Ellsworth Rd., Mesa
|
104,151
|
353,000
|
||||
|
Oracle
Crossings, Oracle Highway and Magee Road, Tucson
|
253,625
|
1,307,000
|
||||
|
Oracle
Wetmore, Wetmore Road and Oracle Highway, Tucson
|
256,093
|
1,181,000
|
||||
|
Palmilla Center,
Dysart Rd. at McDowell Rd., Avondale
|
169,142
|
264,000
|
||||
|
Pueblo
Anozira, McClintock Dr. at Guadalupe Rd., Tempe
|
157,309
|
769,000
|
||||
|
Raintree
Ranch, Ray Road at Price Road, Chandler
|
(2)
|
128,106
|
759,000
|
|||
|
Rancho
Encanto, 35th Avenue at Greenway Rd., Phoenix
|
70,909
|
246,440
|
||||
|
Red Mountain
Gateway, Power Rd. at McKellips Rd., Mesa
|
205,568
|
353,000
|
||||
|
Scottsdale
Horizon, Frank Lloyd Wright Blvd and Thompson Peak Parkway,
Scottsdale
|
10,337
|
61,000
|
||||
|
Shoppes
at Bears Path, Tanque Verde Rd. and Bear Canyon Rd.,
Tucson
|
65,779
|
362,000
|
||||
|
Squaw Peak Plaza,
16th Street at Glendale Ave., Phoenix
|
61,060
|
220,000
|
||||
|
The
Shoppes at Parkwood Ranch, Southern Avenue and Signal Butte Road,
Mesa
|
(2)
|
69,300
|
658,567
|
|||
|
University Plaza,
Plaza Way at Milton Rd., Flagstaff
|
166,321
|
919,000
|
||||
|
Val Vista Towne Center,
Warner at Val Vista Rd., Gilbert
|
216,372
|
366,000
|
||||
|
Arizona,
Total
|
3,498,040
|
13,123,089
|
||||
|
Arkansas
|
||||||
|
Markham
Square, W. Markham at John Barrow, Little Rock
|
126,904
|
514,000
|
||||
|
Markham
West, 11400 W. Markham, Little Rock
|
178,210
|
769,000
|
||||
|
Westgate,
Cantrell at Bryant, Little Rock
|
52,626
|
206,000
|
||||
|
Arkansas,
Total
|
357,740
|
1,489,000
|
||||
|
California
|
||||||
|
580
Market Place, E. Castro Valley at Hwy. I-580, Castro
Valley
|
100,165
|
444,000
|
||||
|
Arcade
Square, Watt Ave. at Whitney Ave., Sacramento
|
76,497
|
234,000
|
||||
|
Buena
Vista Marketplace, Huntington Dr. at Buena Vista St.,
Duarte
|
90,805
|
322,000
|
||||
|
Centerwood Plaza,
Lakewood Blvd. at Alondra Dr., Bellflower
|
75,500
|
333,000
|
||||
|
Chino
Hills Marketplace, Chino Hills Pkwy. at Pipeline Ave., Chino
Hills
|
309,098
|
1,187,000
|
||||
|
Creekside Center,
Alamo Dr. at Nut Creek Rd., Vacaville
|
116,229
|
400,000
|
||||
|
Discovery Plaza,
W. El Camino Ave. at Truxel Rd., Sacramento
|
93,398
|
417,000
|
||||
|
El
Camino Promenade, El Camino Real at Via Molena, Encinitas
|
130,856
|
451,000
|
||||
|
Freedom
Centre, Freedom Blvd. At Airport Blvd., Watsonville
|
150,241
|
543,000
|
||||
|
Fremont Gateway Plaza,
Paseo Padre Pkwy. at Walnut Ave., Fremont
|
194,601
|
650,000
|
||||
|
Greenhouse
Marketplace, Lewelling Blvd. at Washington Ave., San
Leandro
|
238,664
|
578,000
|
||||
|
Hallmark Town Center,
W. Cleveland Ave. at Stephanie Ln., Madera
|
85,066
|
365,000
|
|
Center
and Location
|
Building
|
Land
|
||
|
Area
|
Area
|
|
Jess
Ranch Marketplace, Bear Valley Road at Jess Ranch Parkway, Apple
Valley
|
(1)(2)(3)
|
275,595
|
0
|
|||
|
Jess
Ranch Phase III, Bear Valley Road at Jess Ranch Parkway, Apple
Valley
|
(1)(2)(3)
|
71,500
|
1,692,000
|
|||
|
Marshalls Plaza,
McHenry at Sylvan Ave., Modesto
|
78,752
|
218,000
|
||||
|
Menifee Town Center,
Antelope Rd. at Newport Rd., Menifee
|
248,494
|
658,000
|
||||
|
Prospectors
Plaza, Missouri Flat Rd. at US Hwy. 50, Placerville
|
228,345
|
866,684
|
||||
|
Ralphs
Redondo, Hawthorne Blvd. at 182nd St., Redondo Beach
|
66,700
|
431,000
|
||||
|
Rancho
San Marcos Village, San Marcos Blvd. at Rancho Santa Fe Rd., San
Marcos
|
120,829
|
541,000
|
||||
|
San
Marcos Plaza, San Marcos Blvd. at Rancho Santa Fe Rd., San
Marcos
|
81,086
|
116,000
|
||||
|
Shasta
Crossroads, Churn Creek Rd. at Dana Dr., Redding
|
252,802
|
520,000
|
||||
|
Silver Creek Plaza,
E. Capital Expressway at Silver Creek Blvd., San Jose
|
199,179
|
573,000
|
||||
|
Southampton Center,
IH-780 at Southampton Rd., Benecia
|
162,390
|
596,000
|
||||
|
Stony
Point Plaza, Stony Point Rd. at Hwy. 12, Santa Rosa
|
198,528
|
619,000
|
||||
|
Summerhill Plaza,
Antelope Rd. at Lichen Dr., Sacramento
|
133,614
|
704,000
|
||||
|
Sunset Center,
Sunset Ave. at State Hwy. 12, Suisun City
|
85,238
|
359,000
|
||||
|
Tully
Corners Shopping Center, Tully Rd at Quimby Rd, San
Jose
|
(1)(3)
|
115,992
|
430,891
|
|||
|
Valley,
Franklin Boulevard and Mack Road, Sacramento
|
103,605
|
580,000
|
||||
|
Westminster Center,
Westminster Blvd. at Golden West St., Westminster
|
411,278
|
1,739,000
|
||||
|
California,
Total
|
4,495,047
|
16,567,575
|
||||
|
Colorado
|
||||||
|
Academy
Place, Academy Blvd. at Union Blvd., Colorado Springs
|
261,419
|
404,000
|
||||
|
Aurora
City Place, E. Alameda at I225, Aurora
|
(1)(3)
|
547,283
|
2,260,000
|
|||
|
Buckingham
Square, Mississippi at Havana, Aurora
|
(1)(2)
|
142,500
|
0
|
|||
|
CityCenter
Englewood, S. Santa Fe at Hampden Ave., Englewood
|
(1)
|
360,543
|
452,941
|
|||
|
Crossing
at Stonegate, Jordon Rd. at Lincoln Ave., Parker
|
(1)
|
109,058
|
870,588
|
|||
|
Glenwood
Meadows, Midland Ave. at W. Meadows, Glenwood Springs
|
(1)(2)(3)
|
395,760
|
1,287,805
|
|||
|
Green Valley Ranch Towne Center,
Tower Rd. at 48th Ave., Denver
|
(1)(3)
|
113,006
|
310,000
|
|||
|
Lowry Town Center,
2nd Ave. at Lowry Ave., Denver
|
(1)(3)
|
129,439
|
246,000
|
|||
|
River
Point at Sheridan, Highway 77 and Highway 88, Sheridan
|
(1)(2)(3)
|
380,638
|
4,270,000
|
|||
|
Thorncreek
Crossing, Washington St. at 120th St., Thornton
|
(1)
|
386,130
|
1,156,863
|
|||
|
Uintah Gardens,
NEC 19th St. at West Uintah, Colorado Springs
|
212,638
|
677,000
|
||||
|
Westminster Plaza,
North Federal Blvd. at 72nd Ave., Westminster
|
(1)
|
97,042
|
636,000
|
|||
|
Colorado,
Total
|
3,135,456
|
12,571,197
|
||||
|
Florida
|
||||||
|
Alafaya
Square, Alafaya Trail, Oviedo
|
(1)(3)
|
176,486
|
915,000
|
|||
|
Argyle Village,
Blanding at Argyle Forest Blvd., Jacksonville
|
304,447
|
1,329,000
|
||||
|
Boca
Lyons, Glades Rd. at Lyons Rd., Boca Raton
|
113,689
|
545,000
|
||||
|
Clermont
Landing, U.S. 27 & Steve's Road
|
(1)(2)
|
144,019
|
2,289,949
|
|||
|
Colonial
Landing, East Colonial Dr. at Maguire Boulevard, Orlando
|
(1)(2)
|
263,267
|
980,000
|
|||
|
Colonial Plaza,
E. Colonial Dr. at Primrose Dr., Orlando
|
496,628
|
2,009,000
|
||||
|
Countryside
Centre, US Highway 19 at Countryside Boulevard
|
242,123
|
906,440
|
||||
|
Curry
Ford, Young Pines and Curry Ford Rd, Orange County
|
(2)
|
0
|
132,422
|
|||
|
East
Lake Woodlands, East Lake Road and Tampa Road,
Palm Harbor
|
(1)(3)
|
140,103
|
730,000
|
|||
|
Embassy Lakes,
Sheraton St. at Hiatus Rd., Cooper City
|
179,937
|
618,000
|
||||
|
Flamingo
Pines, Pines Blvd. at Flamingo Rd., Pembroke Pines
|
368,111
|
1,447,000
|
||||
|
Hollywood Hills Plaza,
Hollywood Blvd. at North Park Rd., Hollywood
|
364,714
|
1,429,000
|
||||
|
Indian
Harbour Place, East Eau Gallie Boulevard,
Indian Harbour Beach
|
(1)(3)
|
163,521
|
636,000
|
|||
|
International Drive Value Center,
International Drive and Touchstone Drive, Orlando
|
(1)(3)
|
185,664
|
985,000
|
|||
|
Kendall
Corners, Kendall Drive and SW 127th Avenue, Miami
|
(1)(3)
|
96,515
|
365,000
|
|||
|
Lake
Washington Crossing, Wickham Rd. at Lake Washington Rd.,
Melbourne
|
(1)(3)
|
118,828
|
580,000
|
|||
|
Lake
Washington Square, Wickham Rd. at Lake Washington Rd.,
Melbourne
|
111,811
|
688,000
|
||||
|
Largo
Mall, Ulmerton Rd. at Seminole Ave., Largo
|
575,388
|
1,888,000
|
|
Center
and Location
|
Building
|
Land
|
||
|
Area
|
Area
|
|
Market
at Southside, Michigan Ave. at Delaney Ave., Orlando
|
159,835
|
349,000
|
||||
|
Marketplace
at Seminole Towne Center, Central Florida Greenway and Rinehart
Road, Sanford
|
493,761
|
1,743,000
|
||||
|
Northridge,
E. Commercial Blvd. at Dixie Hwy., Oakland Park
|
236,170
|
901,000
|
||||
|
Palm Coast Center,
State Road 100 & Belle Terre Parkway, Palm Coast
|
(1)(2)
|
303,146
|
1,384,772
|
|||
|
Palm Lakes Plaza,
Atlantic Boulevard and Rock Island Road, Maragate
|
(1)(3)
|
116,402
|
550,000
|
|||
|
Paradise
Key at Kelly Plantation, US Highway 98 and Mid Bay Bridge Rd,
Destin
|
(1)(3)
|
271,777
|
1,247,123
|
|||
|
Pembroke Commons,
University at Pines Blvd., Pembroke Pines
|
314,417
|
1,394,000
|
||||
|
Phillips
Crossing, Interstate 4 and Sand Lake Road, Orlando
|
(2)
|
91,350
|
697,000
|
|||
|
Phillips
Landing, Turkey Lake Rd., Orlando
|
(2)
|
253,888
|
311,000
|
|||
|
Pineapple
Commons, Us Highway 1 and Britt Rd.
|
(1)(3)
|
249,014
|
762,736
|
|||
|
Publix
at Laguna Isles, Sheridan St. at SW 196th Ave., Pembroke
Pines
|
69,475
|
400,000
|
||||
|
Quesada Commons,
Quesada Avenue and Toledo Blade Boulevard, Port Charlotte
|
(1)(3)
|
58,890
|
312,000
|
|||
|
Shoppes
at Paradise Isle, 34940 Emerald Coast Pkwy, Destin
|
(1)(3)
|
171,837
|
764,000
|
|||
|
Shoppes
at Parkland, Hillsboro Boulevard at State Road #7,
Parkland
|
145,652
|
905,000
|
||||
|
Shoppes
of Port Charlotte, Toledo Blade Boulevard and Tamiami Trail, Port
Charlotte
|
(1)(3)
|
41,011
|
276,000
|
|||
|
South
Dade, South Dixie Highway and Eureka Drive, Miami
|
(1)(3)
|
219,412
|
1,230,000
|
|||
|
Sunrise West Shopping
Center, West Commercial Drive and NW 91st Avenue, Sunrise
|
(1)(3)
|
76,321
|
540,000
|
|||
|
Sunset
19, US Hwy. 19 at Sunset Pointe Rd., Clearwater
|
275,910
|
1,078,000
|
||||
|
Tamiami
Trail Shops, S.W. 8th St. at S.W. 137th Ave., Miami
|
110,867
|
515,000
|
||||
|
The
Marketplace at Dr. Phillips, Dr. Phillips Boulevard and Sand Lake Road,
Orlando
|
(1)(3)
|
326,250
|
1,495,000
|
|||
|
The
Shoppes at South Semoran, Semoran Blvd. at Pershing Ave.
|
101,535
|
451,282
|
||||
|
TJ
Maxx Plaza, 117th Avenue at Sunset Blvd., Kendall
|
161,871
|
540,000
|
||||
|
University
Palms, Alafaya Trail at McCullough Rd., Oviedo
|
99,172
|
522,000
|
||||
|
Venice
Pines, Center Rd. at Jacaranda Blvd., Venice
|
97,303
|
525,000
|
||||
|
Vizcaya
Square, Nob Hill Rd. at Cleary Blvd., Plantation
|
112,410
|
521,000
|
||||
|
Westland Terrace Plaza,
SR 50 at Apopka Vineland Rd., Orlando
|
250,954
|
361,000
|
||||
|
Winter
Park Corners, Aloma Ave. at Lakemont Ave., Winter Park
|
102,397
|
400,000
|
||||
|
Florida,
Total
|
|
8,956,278
|
38,647,724
|
|||
|
Georgia
|
||||||
|
Brookwood
Marketplace, Peachtree Parkway at Mathis Airport Rd.,
Suwannee
|
367,170
|
1,459,000
|
||||
|
Brookwood
Square, East-West Connector at Austell Rd., Austell
|
253,448
|
971,000
|
||||
|
Brownsville Commons,
Brownsville Road and Hiram-Lithia Springs Road, Powder
Springs
|
81,886
|
205,000
|
||||
|
Camp
Creek Marketplace II, Camp Creek Parkway and Carmla Drive,
Atlanta
|
196,283
|
724,000
|
||||
|
Cherokee Plaza,
Peachtree Road and Colonial Drive, Atlanta
|
98,553
|
336,000
|
||||
|
Dallas
Commons, US Highway 278 and Nathan Dean Boulevard, Dallas
|
95,262
|
244,000
|
||||
|
Grayson Commons,
Grayson Hwy at Rosebud Rd., Grayson
|
76,611
|
507,383
|
||||
|
Lakeside
Marketplace, Cobb Parkway (US Hwy 41), Acworth
|
321,688
|
736,000
|
||||
|
Mansell
Crossing, North Point Parkway at Mansell Rd
|
(1)(3)
|
102,931
|
582,833
|
|||
|
Perimeter Village,
Ashford-Dunwoody Rd
|
387,755
|
1,803,820
|
||||
|
Publix
at Princeton Lakes, Carmia Drive and Camp Creek Drive,
Atlanta
|
68,389
|
336,000
|
||||
|
Reynolds
Crossing, Steve Reynolds and Old North Cross Rd., Duluth
|
115,983
|
407,000
|
||||
|
Roswell
Corners, Woodstock Rd. at Hardscrabble Rd., Roswell
|
318,499
|
784,000
|
||||
|
Sandy Plains
Exchange, Sandy Plains at Scufflegrit, Marietta
|
72,784
|
452,000
|
||||
|
South Fulton Town Center,
NWC South Fulton Parkway @ Hwy 92, Union City
|
(1)(2)
|
178,601
|
3,554,000
|
|||
|
Thompson Bridge Commons,
Thompson Bridge Rd. at Mt. Vernon Rd., Gainesville
|
78,351
|
540,000
|
||||
|
Georgia,
Total
|
2,814,194
|
13,642,036
|
||||
|
Illinois
|
||||||
|
Burbank
Station, S. Cicero Ave. at W. 78th St.
|
303,566
|
1,013,380
|
||||
|
Illinois,
Total
|
303,566
|
1,013,380
|
|
Center
and Location
|
Building
|
Land
|
||
|
Area
|
Area
|
|
Kansas
|
||||||
|
Kohl's,
Wanamaker Rd. at S.W. 17th St., Topeka
|
115,716
|
444,000
|
||||
|
Shawnee Village,
Shawnee Mission Pkwy. at Quivera Rd., Shawnee
|
135,139
|
10,000
|
||||
|
Kansas,
Total
|
250,855
|
454,000
|
||||
|
Kentucky
|
||||||
|
Festival
at Jefferson Court, Outer Loop at Jefferson Blvd.,
Louisville
|
218,396
|
1,153,000
|
||||
|
Millpond Center,
Boston at Man O’War, Lexington
|
151,567
|
773,000
|
||||
|
Regency
Shopping Centre, Nicholasville Rd.& West Lowry Lane,
Lexington
|
124,486
|
590,000
|
||||
|
Tates
Creek, Tates Creek at Man O’ War, Lexington
|
179,450
|
660,000
|
||||
|
Kentucky,
Total
|
673,899
|
3,176,000
|
||||
|
Louisiana
|
||||||
|
14/Park Plaza,
Hwy. 14 at General Doolittle, Lake Charles
|
172,068
|
535,000
|
||||
|
Ambassador Plaza,
Ambassador Caffery at W. Congress, Lafayette
|
101,950
|
34,915
|
||||
|
Conn's
Building, Ryan at 17th St., Lake Charles
|
23,201
|
36,000
|
||||
|
Danville Plaza,
Louisville at 19th, Monroe
|
141,380
|
539,000
|
||||
|
K-Mart Plaza,
Ryan St., Lake Charles
|
(1)(3)
|
215,948
|
126,000
|
|||
|
Manhattan
Place, Manhattan Blvd. at Gretna Blvd., Harvey
|
263,615
|
894,000
|
||||
|
Orleans
Station, Paris, Robert E. Lee at Chatham, New Orleans
|
0
|
31,000
|
||||
|
Park
Terrace, U.S. Hwy. 171 at Parish, DeRidder
|
131,127
|
520,000
|
||||
|
Prien Lake Plaza,
Prien Lake Rd. at Nelson Rd., Lake Charles
|
213,118
|
64,950
|
||||
|
River
Marketplace, Ambassador Caffery at Kaliste Saloom,
Lafayette
|
(1)(3)
|
342,968
|
1,029,415
|
|||
|
Seigen Plaza,
Siegen Lane at Honore Lane, Baton Rouge
|
349,737
|
1,000,000
|
||||
|
Southgate,
Ryan at Eddy, Lake Charles
|
170,588
|
511,000
|
||||
|
Town
& Country Plaza, U.S. Hwy. 190 West, Hammond
|
226,102
|
645,000
|
||||
|
University
Place, 70th St. at Youree Dr., Shreveport
|
(1)(3)
|
395,272
|
1,078,431
|
|||
|
Westwood Village,
W. Congress at Bertrand, Lafayette
|
141,346
|
942,000
|
||||
|
Louisiana,
Total
|
2,888,420
|
7,986,711
|
||||
|
Maine
|
||||||
|
The
Promenade, Essex at Summit, Lewiston
|
(1)
|
205,034
|
962,667
|
|||
|
Maine,
Total
|
205,034
|
962,667
|
||||
|
Missouri
|
||||||
|
Ballwin Plaza,
Manchester Rd. at Vlasis Dr., Ballwin
|
200,915
|
653,000
|
||||
|
Western Plaza,
Hwy 141 at Hwy 30, Fenton
|
(1)(3)
|
56,534
|
654,000
|
|||
|
Missouri,
Total
|
257,449
|
1,307,000
|
||||
|
Nevada
|
||||||
|
Best
in the West, Rainbow at Lake Mead Rd., Las Vegas
|
436,814
|
1,516,000
|
||||
|
Charleston Commons,
Charleston and Nellis, Las Vegas
|
338,378
|
1,316,000
|
||||
|
College
Park S.C., E. Lake Mead Blvd. at Civic Ctr. Dr., North Las
Vegas
|
167,654
|
721,000
|
||||
|
Decatur
215, Decatur at 215
|
(1)(2)
|
0
|
1,103,810
|
|||
|
Eastern
Horizon, Eastern Ave. at Horizon Ridge Pkwy.,
Henderson
|
210,287
|
478,000
|
||||
|
Francisco
Centre, E. Desert Inn Rd. at S. Eastern Ave., Las Vegas
|
148,815
|
639,000
|
||||
|
Mission Center,
Flamingo Rd. at Maryland Pkwy, Las Vegas
|
208,220
|
570,000
|
||||
|
Paradise
Marketplace, Flamingo Rd. at Sandhill, Las Vegas
|
148,713
|
537,000
|
||||
|
Rainbow Plaza,
Phase I, Rainbow Blvd. at Charleston Blvd., Las Vegas
|
136,369
|
514,518
|
||||
|
Rainbow Plaza,
Rainbow Blvd. at Charleston Blvd., Las Vegas
|
278,416
|
1,033,482
|
||||
|
Rancho
Towne & Country, Rainbow Blvd. at Charleston Blvd., Las
Vegas
|
87,367
|
350,000
|
||||
|
Tropicana
Beltway, Tropicana Beltway at Fort Apache Rd., Las Vegas
|
|
640,749
|
1,466,000
|
|||
|
Tropicana
Marketplace, Tropicana at Jones Blvd., Las Vegas
|
142,728
|
519,000
|
||||
|
Westland
Fair North, Charleston Blvd. At Decatur Blvd., Las Vegas
|
576,202
|
2,344,000
|
||||
|
Nevada,
Total
|
3,520,712
|
13,107,810
|
|
Center
and Location
|
Building
|
Land
|
||
|
Area
|
Area
|
|
New
Mexico
|
||||||
|
De
Vargas, N. Guadalupe at Paseo de Peralta, Santa Fe
|
312,421
|
795,000
|
||||
|
Eastdale,
Candelaria Rd. at Eubank Blvd., Albuquerque
|
117,623
|
601,000
|
||||
|
North Towne Plaza,
Academy Rd. at Wyoming Blvd., Albuquerque
|
104,034
|
607,000
|
||||
|
Pavillions
at San Mateo, I-40 at San Mateo, Albuquerque
|
195,944
|
791,000
|
||||
|
Plaza
at Cottonwood, Coors Bypass Blvd. at Seven Bar Loop Rd.,
Albuquerque
|
418,322
|
386,000
|
||||
|
Wyoming
Mall, Academy Rd. at Northeastern, Albuquerque
|
270,271
|
1,309,000
|
||||
|
New
Mexico, Total
|
1,418,615
|
4,489,000
|
||||
|
North
Carolina
|
||||||
|
Avent
Ferry, Avent Ferry Rd. at Gorman St., Raleigh
|
111,650
|
669,000
|
||||
|
Bull City
Market, Broad St. at West Main St., Durham
|
42,517
|
112,000
|
||||
|
Capital
Square, Capital Blvd. at Huntleigh Dr., Cary
|
143,063
|
607,000
|
||||
|
Chatham Crossing,
US 15/501 at Plaza Dr., Chapel Hill
|
(1)(3)
|
96,155
|
424,000
|
|||
|
Cole
Park Plaza, US 15/501 and Plaza Dr., Chapel Hill
|
(1)(3)
|
82,258
|
380,000
|
|||
|
Durham
Festival, Hillsborough Rd. at LaSalle St., Durham
|
134,295
|
487,000
|
||||
|
Falls
Pointe, Neuce Rd. at Durant Rd., Raleigh
|
193,331
|
659,000
|
||||
|
Galleria,
Galleria Boulevard and Sardis Road, Charlotte
|
328,144
|
799,000
|
||||
|
Harrison
Pointe, Harrison Ave. at Maynard Rd., Cary
|
130,934
|
1,343,000
|
||||
|
Heritage
Station, Forestville Rd. at Rogers Rd., Wake Forest
|
68,778
|
392,000
|
||||
|
High
House Crossing, NC Hwy 55 at Green Level W. Rd., Cary
|
89,997
|
606,000
|
||||
|
Johnston Road Plaza,
Johnston Rd. at McMullen Creek Pkwy., Charlotte
|
79,508
|
466,000
|
||||
|
Leesville Town
Centre, Leesville Rd. at Leesville Church Rd., Raleigh
|
112,615
|
904,000
|
||||
|
Little
Brier Creek, Little Brier Creek Lane and Brier Leaf Lane,
Raleigh
|
63,011
|
90,000
|
||||
|
Lynnwood
Collection, Creedmoor Rd at Lynn Road, Raleigh
|
86,362
|
429,000
|
||||
|
Mineral Springs Village,
Mineral Springs Rd. at Wake Forest Rd., Durham
|
59,859
|
572,000
|
||||
|
Northwoods
Market, Maynard Rd. at Harrison Ave., Cary
|
77,802
|
431,000
|
||||
|
Parkway
Pointe, Cory Parkway at S. R. 1011, Cary
|
80,061
|
461,000
|
||||
|
Pinecrest Plaza,
Hwy. 15-501 at Morganton Rd., Pinehurst
|
250,140
|
1,438,000
|
||||
|
Ravenstone Commons,
Hwy 98 at Sherron Rd., Durham
|
60,424
|
374,000
|
||||
|
Six
Forks Station, Six Forks Rd. at Strickland Rd., Raleigh
|
469,780
|
1,843,000
|
||||
|
Southern
Pines, U.S. 15-501 and Bruce Wood Rd, Southern Pines
|
(2)
|
0
|
1,047,000
|
|||
|
Steele
Creek Crossing, York Rd. at Steele Creek Rd., Charlotte
|
77,301
|
491,000
|
||||
|
Stonehenge
Market, Creedmoor Rd. at Bridgeport Dr., Raleigh
|
188,521
|
669,000
|
||||
|
Surf City
Crossing, Highway 17 and Highway 210, Surf City
|
(2)
|
48,756
|
2,538,476
|
|||
|
Waterford
Village, US Hwy 17 & US Hwy 74/76, Leland
|
(1)(2)
|
52,781
|
1,264,000
|
|||
|
Whitehall Commons,
NWC of Hwy. 49 at I-485, Charlotte
|
444,596
|
360,000
|
||||
|
North
Carolina, Total
|
3,572,639
|
19,855,476
|
||||
|
Oklahoma
|
||||||
|
Market
Boulevard , E. Reno Ave. at N. Douglas Ave., Midwest City
|
35,765
|
142,000
|
||||
|
Town
and Country, Reno Ave at North Air Depot, Midwest City
|
135,892
|
540,000
|
||||
|
Oklahoma,
Total
|
171,657
|
682,000
|
||||
|
Oregon
|
||||||
|
Clackamas
Square, SE 82nd Avenue and SE Causey Avenue, Portland
|
(1)(3)
|
136,739
|
215,000
|
|||
|
Oak Grove Market Center,
SE Mcloughlin Blvd & Oak Grove Ave
|
97,207
|
292,288
|
||||
|
Raleigh Hills Plaza,
SW Beaverton-Hillsdale Hwy and SW Scholls Ferry Road,
Portland
|
(1)(3)
|
39,520
|
165,000
|
|||
|
Oregon,
Total
|
273,466
|
672,288
|
||||
|
South
Carolina
|
||||||
|
Fresh
Market Shoppes, 890 William Hilton Head Pkwy, Hilton Head
|
(1)(3)
|
86,120
|
436,000
|
|||
|
South
Carolina, Total
|
86,120
|
436,000
|
|
Center
and Location
|
Building
|
Land
|
||
|
Area
|
Area
|
|
Tennessee
|
||||||
|
Bartlett Towne Center,
Bartlett Blvd. at Stage Rd., Bartlett
|
|
179,364
|
774,000
|
|||
|
Commons
at Dexter Lake Phase II, Dexter at N. Germantown,
Memphis
|
61,538
|
272,792
|
||||
|
Commons
at Dexter Lake, Dexter at N. Germantown, Memphis
|
166,958
|
740,208
|
||||
|
Highland
Square, Summer at Highland, Memphis
|
14,490
|
84,000
|
||||
|
Mendenhall Commons,
South Mendenahall Rd. and Sanderlin Avenue, Memphis
|
80,206
|
250,000
|
||||
|
Ridgeway
Trace, Memphis
|
(2)
|
137,740
|
275,915
|
|||
|
Summer Center,
Summer Ave. at Waring Rd., Memphis
|
148,708
|
560,000
|
||||
|
Tennessee,
Total
|
789,004
|
2,956,915
|
||||
|
Texas
|
||||||
|
10/Federal,
I-10 at Federal
|
132,472
|
474,000
|
||||
|
Alabama-Shepherd,
S. Shepherd at W. Alabama
|
56,110
|
176,000
|
||||
|
Angelina Village,
Hwy. 59 at Loop 287, Lufkin
|
256,940
|
1,835,000
|
||||
|
Bayshore Plaza,
Spencer Hwy. at Burke Rd.
|
121,966
|
196,000
|
||||
|
Bell Plaza,
45th Ave. at Bell St., Amarillo
|
130,529
|
682,000
|
||||
|
Bellaire
Boulevard, Bellaire at S. Rice
|
35,081
|
137,000
|
||||
|
Boswell Towne Center,
Highway 287 at Bailey Boswell Rd., Saginaw
|
87,835
|
137,000
|
||||
|
Braeswood
Square, N. Braeswood at Chimney Rock
|
103,336
|
422,000
|
||||
|
Broadway
, Broadway at 59th St., Galveston
|
74,477
|
220,000
|
||||
|
Broadway,
S. Broadway at W. 9th St., Tyler
|
60,400
|
259,000
|
||||
|
Brodie
Oaks, South Lamar Blvd. at Loop 360, Austin
|
335,942
|
1,050,000
|
||||
|
Calder,
Calder at 24th St., Beaumont
|
34,641
|
95,000
|
||||
|
Cedar
Bayou, Bayou Rd., La Marque
|
45,561
|
51,000
|
||||
|
Central Plaza,
Loop 289 at Slide Rd., Lubbock
|
151,196
|
529,000
|
||||
|
Centre
at Post Oak, Westheimer at Post Oak Blvd.
|
182,070
|
505,000
|
||||
|
Champions Village, F.M.
1960 at Champions Forest Dr.
|
383,779
|
1,391,000
|
||||
|
Coronado,
34th St. at Wimberly Dr., Amarillo
|
46,829
|
201,000
|
||||
|
Crestview,
Bissonnet at Wilcrest
|
8,970
|
35,000
|
||||
|
Crossroads,
I-10 at N. Main, Vidor
|
115,692
|
484,000
|
||||
|
Cullen
Place, Cullen at Reed
|
7,316
|
30,000
|
||||
|
Cullen Plaza,
Cullen at Wilmington
|
84,517
|
318,000
|
||||
|
Custer Park,
SWC Custer Road at Parker Road, Plano
|
180,568
|
376,000
|
||||
|
Cypress
Pointe, F.M. 1960 at Cypress Station
|
287,364
|
737,000
|
||||
|
Eastpark,
Mesa Rd. at Tidwell
|
114,373
|
664,000
|
||||
|
Edgebrook,
Edgebrook at Gulf Fwy.
|
78,324
|
360,000
|
||||
|
Fiesta
Trails, I-10 at DeZavala Rd., San Antonio
|
488,370
|
1,589,000
|
||||
|
Fiesta Village,
Quitman at Fulton
|
30,249
|
80,000
|
||||
|
Fondren/West
Airport, Fondren at W. Airport
|
56,593
|
223,000
|
||||
|
Food
King Place, 25th St. at Avenue P, Galveston
|
28,062
|
78,000
|
||||
|
Galveston
Place, Central City Blvd. at 61st St., Galveston
|
210,187
|
828,000
|
||||
|
Gateway
Station, I-35W and McAlister Rd., Burleson
|
(1)(2)
|
30,000
|
344,286
|
|||
|
Gillham
Circle, Gillham Circle at Thomas, Port Arthur
|
33,134
|
94,000
|
||||
|
Glenbrook
Square, Telephone Road
|
76,483
|
320,000
|
||||
|
Griggs
Road, Griggs at Cullen
|
80,114
|
382,000
|
||||
|
Harrisburg Plaza,
Harrisburg at Wayside
|
93,438
|
334,000
|
||||
|
Heights Plaza,
20th St. at Yale
|
71,777
|
228,000
|
||||
|
Horne
Street Market, I-30 & Horne Street, Fort Worth
|
(2)
|
0
|
223,463
|
|||
|
Humblewood
Shopping Plaza, Eastex Fwy. at F.M. 1960
|
277,837
|
784,000
|
||||
|
I-45/Telephone
Rd. Center, I-45 at Maxwell Street
|
172,609
|
819,000
|
||||
|
Independence Plaza,
Town East Blvd., Mesquite
|
179,182
|
787,000
|
||||
|
Island
Market Place, 6th St. at 9th Ave., Texas City
|
27,277
|
90,000
|
||||
|
Jacinto City,
Market at Baca
|
(1)
|
49,138
|
134,000
|
|||
|
Killeen
Marketplace, 3200 E. Central Texas Expressway, Killeen
|
251,137
|
512,000
|
||||
|
Lake Pointe Market Center,
Dalrock Rd. at Lakeview Pkwy., Rowlett
|
124,036
|
218,158
|
||||
|
Las
Tiendas Plaza, Expressway 83 at McColl Rd., McAllen
|
(1)(3)
|
530,067
|
910,000
|
|||
|
Lawndale,
Lawndale at 75th St.
|
51,393
|
177,000
|
||||
|
League
City Plaza, I-45 at F.M. 518, League City
|
126,990
|
680,000
|
||||
|
Little
York Plaza, Little York at E. Hardy
|
117,353
|
483,000
|
||||
|
Lone
Star Pavilions, Texas at Lincoln Ave., College Station
|
106,907
|
439,000
|
||||
|
Lyons
Avenue, Lyons at Shotwell
|
67,629
|
178,000
|
||||
|
Market
at Nolana, Nolana Ave and 29th St., McAllen
|
(1)(2)(3)
|
222,248
|
508,000
|
|||
|
Market
at Sharyland Place, U.S. Expressway 83 and Shary Road,
Mission
|
(1)(2)(3)
|
91,411
|
543,000
|
|
Center
and Location
|
Building
|
Land
|
||
|
Area
|
Area
|
|
Market
at Town Center, Town Center Blvd., Sugar Land
|
375,820
|
1,733,000
|
||||
|
Market
at Westchase, Westheimer at Wilcrest
|
84,084
|
318,000
|
||||
|
Montgomery Plaza,
Loop 336 West at I-45, Conroe
|
296,837
|
1,179,000
|
||||
|
Moore Plaza,
S. Padre Island Dr. at Staples, Corpus Christi
|
533,577
|
1,491,000
|
||||
|
New
Boston Road, New Boston at Summerhill, Texarkana
|
97,000
|
335,000
|
||||
|
North
Creek Plaza, Del Mar Blvd. at Hwy. I-35, Laredo
|
448,756
|
1,251,000
|
||||
|
North
Main Square, Pecore at N. Main
|
18,515
|
64,000
|
||||
|
North
Oaks, F.M. 1960 at Veterans Memorial
|
417,279
|
1,646,000
|
||||
|
North
Park Plaza, Eastex Fwy. at Dowlen, Beaumont
|
(1)(3)
|
281,401
|
636,000
|
|||
|
North
Sharyland Towne Crossing, Shary Rd. at North Hwy. 83,
Mission
|
(1)(2)(3)
|
0
|
966,000
|
|||
|
North
Towne Plaza, U.S. 77 and 83 at SHFM 802, Brownsville
|
(1)(2)
|
117,000
|
1,258,551
|
|||
|
North
Triangle , I-45 at F.M. 1960
|
16,060
|
113,000
|
||||
|
Northbrook Center,
Northwest Fwy. at W. 34th
|
172,479
|
655,000
|
||||
|
Northcross,
N. 10th St. at Nolana Loop, McAllen
|
(1)(3)
|
76,391
|
218,000
|
|||
|
Northway,
Northwest Fwy. at 34th
|
217,136
|
793,000
|
||||
|
Northwest
Crossing, N.W. Fwy. at Hollister
|
(1)(3)
|
304,064
|
884,000
|
|||
|
Oak
Forest, W. 43rd at Oak Forest
|
147,674
|
541,000
|
||||
|
Oak
Park Village, Nacogdoches at New Braunfels, San
Antonio
|
64,287
|
221,000
|
||||
|
Old Navy Building,
1815 10th Street, McAllen
|
(1)(3)
|
15,000
|
62,000
|
|||
|
Orchard
Green, Gulfton at Renwick
|
74,983
|
273,000
|
||||
|
Overton Park Plaza,
SW Loop 820/Interstate 20 at South Hulen St.,
Ft. Worth
|
463,302
|
1,636,000
|
||||
|
Palmer Plaza,
F.M. 1764 at 34th St., Texas City
|
196,506
|
367,000
|
||||
|
Parliament
Square II, W. Ave. at Blanco, San Antonio
|
54,541
|
220,919
|
||||
|
Parliament
Square, W. Ave. at Blanco, San Antonio
|
64,950
|
263,081
|
||||
|
Phelan
West, Phelan at 23rd St., Beaumont
|
(1)(3)
|
82,221
|
88,509
|
|||
|
Phelan,
Phelan at 23rd St, Beaumont
|
12,000
|
63,000
|
||||
|
Pitman
Corners, Custer Road at West 15th, Plano
|
192,283
|
699,000
|
||||
|
Plantation
Centre, Del Mar Blvd. at McPherson Rd., Laredo
|
134,919
|
596,000
|
||||
|
Portairs,
Ayers St. at Horne Rd., Corpus Christi
|
118,233
|
416,000
|
||||
|
Preston
Shepard Place, Preston Rd. at Park Blvd.
|
(1)(3)
|
363,337
|
1,359,072
|
|||
|
Randall's
/Cypress Station, F.M. 1960 at I-45
|
138,974
|
618,000
|
||||
|
Randall's
/Kings Crossing, Kingwood Dr. at Lake Houston Pkwy.
|
127,525
|
624,000
|
||||
|
Randall's
/Norchester, Grant at Jones
|
107,200
|
475,000
|
||||
|
Richmond
Square, Richmond Ave. at W. Loop 610
|
93,870
|
135,000
|
||||
|
River
Oaks East, W. Gray at Woodhead
|
71,265
|
206,000
|
||||
|
River
Oaks West, W. Gray at S. Shepherd
|
234,198
|
609,000
|
||||
|
River
Pointe, I-45 at Loop 336, Conroe
|
189,703
|
310,000
|
||||
|
Rockwall,
I-30 at Market Center Street, Rockwall
|
209,051
|
933,000
|
||||
|
Rose-Rich,
U.S. Hwy. 90A at Lane Dr., Rosenberg
|
103,385
|
386,000
|
||||
|
Sharyland
Towne Crossing, Shary Rd. at Hwy. 83, Mission
|
(1)(2)(3)
|
343,583
|
2,008,000
|
|||
|
Sheldon Forest
North , North, I-10 at Sheldon
|
22,040
|
131,000
|
||||
|
Sheldon Forest
South , North, I-10 at Sheldon
|
(1)
|
75,340
|
328,000
|
|||
|
Shops
at Three Corners, S. Main at Old Spanish Trail
|
(1)
|
252,140
|
1,007,143
|
|||
|
South
10th St. HEB, S. 10th St. at Houston St., McAllen
|
(1)(3)
|
103,702
|
368,000
|
|||
|
Southcliff,
I-20 at Grandbury Rd., Ft. Worth
|
115,827
|
568,000
|
||||
|
Southgate,
Calder Ave. at 6th St., Beaumont
|
33,555
|
118,000
|
||||
|
Southgate,
W. Fuqua at Hiram Clark
|
125,440
|
533,000
|
||||
|
Spring Plaza,
Hammerly at Campbell
|
56,166
|
202,000
|
||||
|
Starr
Plaza, U.S. Hwy. 83 at Bridge St., Rio Grande City
|
(1)(2)(3)
|
176,812
|
742,000
|
|||
|
Steeplechase,
Jones Rd. at F.M. 1960
|
294,501
|
849,000
|
||||
|
Stella
Link , Stella Link at S. Braeswood
|
96,396
|
423,588
|
||||
|
Stevens
Ranch, NEC SH 211 and Potranco Road, San Antonio
|
(1)(2)
|
0
|
8,656,243
|
|||
|
Studemont,
Studewood at E. 14th St
|
28,466
|
91,000
|
|
Center
and Location
|
Building
|
Land
|
||
|
Area
|
Area
|
|
Ten
Blalock Square, I-10 at Blalock
|
97,217
|
321,000
|
||||
|
Thousand
Oaks, Thousand Oaks Dr. at Jones Maltsberger Rd., San
Antonio
|
162,882
|
730,000
|
||||
|
Tomball
Marketplace, FM 2920 and Future 249, Tomball
|
(2)
|
85,000
|
2,431,000
|
|||
|
Town
and Country, 4th St. at University, Lubbock
|
30,743
|
339,000
|
||||
|
Valley
View, West Ave. at Blanco Rd., San Antonio
|
89,859
|
341,000
|
||||
|
Village
Arcade, University at Kirby
|
57,219
|
276,503
|
||||
|
Village
Arcade-Phase II , University at
Kirby
|
28,371
|
60,099
|
||||
|
Village
Arcade-Phase III, University at Kirby
|
106,879
|
231,156
|
||||
|
Westchase Center,
Westheimer at Wilcrest
|
332,544
|
754,000
|
||||
|
Westhill Village,
Westheimer at Hillcroft
|
130,562
|
479,000
|
||||
|
Westmont,
Dowlen at Phelan, Beaumont
|
98,071
|
507,000
|
||||
|
Westover
Square, 151 and Ingram, San Antonio
|
(1)(2)
|
0
|
369,741
|
|||
|
Westwood Center,
Culebra Road and Westwood Loop, San Antonio
|
(2)
|
5,000
|
1,262,177
|
|||
|
Wolflin Village,
Wolflin Ave. at Georgia St., Amarillo
|
193,284
|
421,000
|
||||
|
Texas,
Total
|
16,567,314
|
72,539,689
|
||||
|
Utah
|
||||||
|
Alpine
Valley Center, Main St. at State St., American Fork
|
(1)(3)
|
224,654
|
447,045
|
|||
|
Taylorsville Town Center,
West 4700 South at Redwood Rd., Taylorsville
|
134,214
|
399,000
|
||||
|
West
Jordan Town Center, West 7000 South at S. Redwood Rd., West
Jordan
|
304,899
|
814,000
|
||||
|
Utah,
Total
|
663,767
|
1,660,045
|
||||
|
Washington
|
||||||
|
Meridian Town Center,
Meridian Avenue East and 132nd Street East, Puyallup
|
(1)(3)
|
143,012
|
535,000
|
|||
|
Mukilteo Speedway Center,
Mukilteo Speedway, Lincoln Way, and Highway 99, Lynnwood
|
(1)(3)
|
90,273
|
355,000
|
|||
|
Rainer Square Plaza,
Rainer Avenue South and South Charleston Street, Seattle
|
(1)(3)
|
107,423
|
345,000
|
|||
|
South Hill Center,
43rd Avenue Southwest and Meridian Street South, Puyallup
|
(1)(3)
|
134,020
|
515,000
|
|||
|
Village
at Liberty Lake, E. Country Vista Dr. at N. Liberty Rd.,
Liberty Lake
|
(1)(2)(3)
|
132,874
|
112,088
|
|||
|
Washington,
Total
|
607,602
|
1,862,088
|
||||
|
Industrial
|
||||||
|
California
|
||||||
|
Siempre Viva Business Park,
Siempre Viva Rd. at Kerns St., San Diego
|
(1)(3)
|
726,766
|
1,760,000
|
|||
|
California,
Total
|
726,766
|
1,760,000
|
||||
|
Florida
|
||||||
|
1801
Massaro, 1801 Massaro Blvd., Tampa
|
159,000
|
337,000
|
||||
|
Hopewell Industrial Center,
Old Hopewell Boulevard and U.S. Highway 301, Tampa
|
224,483
|
486,000
|
||||
|
Lakeland Industrial Center,
I-4 at County Rd., Lakeland
|
600,000
|
1,535,000
|
||||
|
Lakeland Interestate Industrial
Park I, Interstate Drive and Kathleen Rd., Lakeland
|
168,400
|
425,000
|
||||
|
Tampa
East Industrial Portfolio, 1841 Massaro Blvd., Tampa
|
512,923
|
1,342,000
|
||||
|
Florida,
Total
|
1,664,806
|
4,125,000
|
||||
|
Georgia
|
||||||
|
6485
Crescent Drive, I-85 at Jimmy Carter Blvd., Norcross
|
(1)(3)
|
360,460
|
965,000
|
|||
|
Atlanta Industrial
Park , Atlanta Industrial Pkwy. at Atlanta Industrial Dr.,
Atlanta
|
120,200
|
381,918
|
||||
|
Atlanta Industrial
Park II & VI, Atlanta Industrial Pkwy. at Atlanta Industrial Dr.,
Atlanta
|
382,100
|
1,214,068
|
||||
|
Atlanta
Industrial Parkway, Atlanta Industrial Pkwy. at Atlanta Industrial Dr.,
Atlanta
|
50,000
|
159,014
|
||||
|
Kennesaw
75, 3850-3900 Kennesaw Prkwy, Kennesaw
|
178,467
|
491,000
|
||||
|
Riverview Distribution Center,
Fulton Industrial Blvd. at Camp Creek Parkway
|
265,200
|
1,301,791
|
||||
|
Sears
Logistics, 3700 Southside Industrial Way, Atlanta
|
(1)(3)
|
402,554
|
890,000
|
|||
|
South
Park 3075, Anvil Block Rd and SouthPark Blvd, Atlanta
|
234,525
|
1,022,292
|
||||
|
Southside
Industrial Parkway, Southside Industrial Pkwy at Jonesboro Rd.,
Atlanta
|
72,000
|
242,000
|
||||
|
Westlake
125, Camp Creek Parkway and Westlake Parkway, Atlanta
|
154,464
|
422,048
|
||||
|
Georgia,
Total
|
2,219,970
|
7,089,131
|
||||
|
Tennessee
|
||||||
|
Crowfarn
Drive Warehouse, Crowfarn Dr. at Getwell Rd., Memphis
|
(1)(3)
|
158,849
|
315,000
|
|||
|
Outland Business Center,
Outland Center Dr., Memphis
|
(1)(3)
|
410,138
|
1,215,000
|
|
Center
and Location
|
Building
|
Land
|
||
|
Area
|
Area
|
|
Southpoint
I & II, Pleasant Hill Rd. at Shelby Dr., Memphis
|
570,940
|
1,127,000
|
||||
|
Tennessee,
Total
|
1,139,927
|
2,657,000
|
||||
|
Texas
|
||||||
|
1625
Diplomat Drive, SWC Diplomat Dr. at McDaniel Dr.,
Carrollton
|
106,140
|
199,000
|
||||
|
610
and 11th St. Warehouse, Loop 610 at 11th St.
|
(1)(3)
|
243,642
|
540,000
|
|||
|
610
and 11th St. Warehouse, Loop 610 at 11th St.
|
104,975
|
202,000
|
||||
|
610/288
Business Park , Cannon Street
|
(1)(3)
|
295,426
|
480,000
|
|||
|
Beltway
8 Business Park, Beltway 8 at Petersham Dr.
|
157,498
|
499,000
|
||||
|
Blankenship Building,
Kempwood Drive
|
59,729
|
175,000
|
||||
|
Braker
2 Business Center, Kramer Ln. at Metric Blvd., Austin
|
27,359
|
93,000
|
||||
|
Brookhollow Business Center,
Dacoma at Directors Row
|
133,553
|
405,000
|
||||
|
Central
Park Northwest VI, Central Pkwy. at Dacoma
|
175,348
|
518,000
|
||||
|
Central
Park Northwest VII, Central Pkwy. at Dacoma
|
103,602
|
283,000
|
||||
|
Central Plano Business Park,
Klein Rd. at Plano Pkwy., Plano
|
137,785
|
415,000
|
||||
|
Claywood Industrial
Park, Clay at Hollister
|
390,141
|
1,761,000
|
||||
|
Corporate
Center Park I and II, Putnam Dr. at Research Blvd.,
Austin
|
119,452
|
326,000
|
||||
|
Crosspoint
Warehouse, Crosspoint
|
72,505
|
179,000
|
||||
|
Freeport Business Center,
13215 N. Promenade Blvd., Stafford
|
251,385
|
635,000
|
||||
|
Freeport Commerce Center,
Sterling Street and Statesman Drive, Irving
|
50,590
|
196,000
|
||||
|
Houston
Cold Storage Warehouse, 7080 Express Lane
|
128,752
|
345,189
|
||||
|
Interwest Business Park,
Alamo Downs Parkway, San Antonio
|
219,245
|
742,000
|
||||
|
Isom Business Park,
919-981 Isom Road, San Antonio
|
175,200
|
462,000
|
||||
|
Jester Plaza Office Service Center,
West T.C. Jester
|
100,605
|
244,000
|
||||
|
Jupiter Service Center,
Jupiter near Plano Pkwy., Plano
|
78,480
|
234,000
|
||||
|
Kempwood
Industrial, Kempwood Dr. at Blankenship Dr.
|
113,218
|
327,000
|
||||
|
Kempwood
Industrial, Kempwood Dr. at Blankenship Dr.
|
(1)(3)
|
219,489
|
530,000
|
|||
|
Lathrop
Warehouse, Lathrop St. at Larimer St.
|
(1)(3)
|
251,890
|
435,000
|
|||
|
Manana Office Center,
I-35 at Manana, Dallas
|
223,128
|
470,000
|
||||
|
McGraw Hill Distribution Center,
420 E. Danieldale Rd, DeSoto
|
417,938
|
888,000
|
||||
|
Midpoint
I-20 Distribution Center, New York Avenue and Arbrook Boulevard,
Arlington
|
253,165
|
593,000
|
||||
|
Midway Business Center,
Midway at Boyington, Carrollton
|
141,246
|
309,000
|
||||
|
Navigation Business Park,
Navigation at N. York
|
(1)(3)
|
238,321
|
555,000
|
|||
|
Newkirk Service Center,
Newkirk near N.W. Hwy., Dallas
|
105,892
|
223,000
|
||||
|
Northeast
Crossing Office/Service Center, East N.W. Hwy. at Shiloh,
Dallas
|
78,700
|
199,000
|
||||
|
Northway
Park II, Loop 610 East at Homestead
|
(1)(3)
|
303,483
|
745,000
|
|||
|
Northwest
Crossing Office/Service Center, N.W. Hwy. at Walton Walker,
Dallas
|
126,984
|
290,000
|
||||
|
Oak Hills Industrial
Park, Industrial Oaks Blvd., Austin
|
89,858
|
340,000
|
||||
|
O'Connor
Road Business Park, O’Connor Road, San Antonio
|
150,091
|
459,000
|
||||
|
Railwood
F, Market at U.S. 90
|
(1)(3)
|
300,000
|
560,000
|
|||
|
Railwood Industrial
Park, Mesa at U.S. 90
|
(1)(3)
|
497,656
|
1,060,000
|
|||
|
Railwood Industrial
Park, Mesa at U.S. 90
|
402,680
|
1,141,764
|
||||
|
Randol
Mill Place, Randol Mill Road, Arlington
|
54,639
|
178,000
|
||||
|
Redbird Distribution Center,
Joseph Hardin Drive, Dallas
|
110,839
|
233,000
|
||||
|
Regal
Distribution Center, Leston Avenue, Dallas
|
202,559
|
318,000
|
||||
|
Rutland
10 Business Center, Metric Blvd. At Centimeter Circle,
Austin
|
54,000
|
139,000
|
||||
|
Sherman Plaza Business Park,
Sherman at Phillips, Richardson
|
101,137
|
312,000
|
||||
|
South Loop Business Park,
S. Loop at Long Dr.
|
(1)(3)
|
92,450
|
206,000
|
|||
|
Southpark
A,B,C, East St. Elmo Rd. at Woodward St., Austin
|
78,276
|
238,000
|
||||
|
Southpoint Service Center,
Burleson at Promontory Point Dr., Austin
|
57,667
|
234,000
|
||||
|
Southport Business Park
5, South Loop 610
|
160,653
|
358,000
|
||||
|
Southwest Park
II Service Center, Rockley Road
|
67,700
|
216,000
|
||||
|
Space Center Industrial
Park, Pulaski St. at Irving Blvd., Dallas
|
264,582
|
426,000
|
||||
|
Stonecrest Business Center,
Wilcrest at Fallstone
|
110,641
|
308,000
|
||||
|
Town
& Country Commerce Center, I-10 at Beltway 8
|
206,000
|
0
|
|
Center
and Location
|
Building
|
Land
|
||
|
Area
|
Area
|
|
Wells Branch
Corporate Center, Wells Branch Pkwy., Austin
|
59,144
|
183,000
|
||||
|
West
10 Business Center II, Wirt Rd. at I-10
|
82,658
|
147,000
|
||||
|
West Loop Commerce Center,
W. Loop N. at I-10
|
34,256
|
91,000
|
||||
|
West-10
Business Center, Wirt Rd. at I-10
|
102,087
|
331,000
|
||||
|
Westgate Service Center,
Park Row Drive at Whiteback Dr.
|
119,786
|
499,000
|
||||
|
Texas,
Total
|
9,004,225
|
22,474,953
|
||||
|
Virginia
|
||||||
|
Enterchange
at Meadowville, 2101 Bermuda Hundred Dr, Chester
|
(1)(3)
|
226,809
|
845,717
|
|||
|
Enterchange
at Northlake A, 11900-11998 North Lakeridge Parkway,
Ashland
|
215,077
|
697,831
|
||||
|
Enterchange
at Northlake C, North Lakeridge Parkway & Northlake Park Dr,
Ashland
|
(1)(3)
|
293,115
|
677,794
|
|||
|
Enterchange
at Walthall A & B, 1900-1998 Ruffin Mill Rd, Colonial
Heights
|
(1)(3)
|
606,780
|
1,467,536
|
|||
|
Enterchange
at Walthall C, 1936-1962 Ruffin Mill Rd, Colonial Heights
|
(1)(3)
|
261,922
|
864,840
|
|||
|
Enterchange
at Walthall D, 1700-1798 Ruffin Mill Rd, Colonial Heights
|
171,222
|
752,020
|
||||
|
Interport
Business Center A, 4800-4890 Eubank Road, Richmond
|
(1)(3)
|
447,412
|
1,037,556
|
|||
|
Interport
Business Center B, 4700-4790 Eubank Road, Richmond
|
(1)(3)
|
118,000
|
277,477
|
|||
|
Interport
Business Center C, 5300-5390 Laburnum Ave, Richmond
|
(1)(3)
|
54,885
|
154,202
|
|||
|
Virginia,
Total
|
2,395,222
|
6,774,973
|
||||
|
Other
|
||||||
|
Arizona
|
||||||
|
Arcadia Biltmore Plaza,
Campbell Ave. at North 36th St., Phoenix
|
13,879
|
74,000
|
||||
|
Arizona,
Total
|
13,879
|
74,000
|
||||
|
Texas
|
||||||
|
1919
North Loop West, Hacket Drive at West Loop 610 North
|
132,978
|
157,000
|
||||
|
Citadel Plaza,
Citadel Plaza Dr.
|
13,460
|
170,931
|
||||
|
Texas,
Total
|
146,438
|
327,931
|
|
Center
and Location
|
|
Land
|
||
|
|
Area
|
|
Unimproved
Land
|
||
|
Arizona
|
||
|
Mohave
Crossroads
|
7,185
|
|
|
Arizona,
Total
|
7,185
|
|
|
Louisiana
|
||
|
70th
St. at Mansfield Rd., Shreveport
|
41,704
|
|
|
U.S.
Highway 171 at Parish, DeRidder
|
462,000
|
|
|
Louisiana,
Total
|
503,704
|
|
|
North
Carolina
|
||
| Crabtree Towne Center, Creedmoor (Highway 50) and Crabtree Valley Avenue, Raleigh |
576,000
|
|
|
The
Shoppes at Caveness Farms
|
3,380,000
|
|
|
North
Carolina, Total
|
3,956,000
|
|
|
Texas
|
||
|
9th
Ave. at 25th St., Port Arthur
|
243,000
|
|
|
Bissonnet
at Wilcrest
|
84,629
|
|
|
Citadel Plaza
at 610 North Loop
|
137,000
|
|
|
East
Orem
|
122,000
|
|
| Festival Plaza, Helotes, TX | 75,000 | |
|
Highway
3 at Highway 1765, Texas City
|
201,000
|
|
|
Kirkwood
at Dashwood Drive
|
322,000
|
|
|
Mesa
Road at Tidwell
|
901,000
|
|
|
Northwest
Freeway at Gessner
|
340,456
|
|
|
River
Pointe Drive at Interstate 45, Conroe
|
118,483
|
|
| Rock Prairie Marketplace, Rock Prairie Rd. at Hwy. 6, College Station | 2,590,000 | |
|
Shaver
at Southmore, Pasadena
|
17,000
|
|
|
West
Little York at Interstate 45
|
161,000
|
|
|
West
Loop North at Interstate 10
|
145,000
|
|
|
Texas,
Total
|
5,457,568
|
|
Weingarten
Realty Investors
|
||||||
|
Property
Listing at December 31, 2007
|
||||||
|
ALL
PROPERTIES BY STATE
|
Number
of
Properties
|
Building
Total
Square
Feet
|
Land
Total
Square
Feet
|
|||
|
Arizona
|
26
|
3,511,919
|
13,204,274
|
|||
|
Arkansas
|
3
|
357,740
|
1,489,000
|
|||
|
California
|
30
|
5,221,813
|
18,327,575
|
|||
|
Colorado
|
12
|
3,135,456
|
12,571,197
|
|||
|
Florida
|
50
|
10,621,084
|
42,772,724
|
|||
|
Georgia
|
24
|
5,034,164
|
20,731,167
|
|||
|
Illinois
|
1
|
303,566
|
1,013,380
|
|||
|
Kansas
|
2
|
250,855
|
454,000
|
|||
|
Kentucky
|
4
|
673,899
|
3,176,000
|
|||
|
Louisiana
|
15
|
2,888,420
|
8,490,415
|
|||
|
Maine
|
1
|
205,034
|
962,667
|
|||
|
Missouri
|
2
|
257,449
|
1,307,000
|
|||
|
Nevada
|
13
|
3,520,712
|
13,107,810
|
|||
|
New
Mexico
|
6
|
1,418,615
|
4,489,000
|
|||
|
North
Carolina
|
27
|
3,572,639
|
23,811,476
|
|||
|
Oklahoma
|
2
|
171,657
|
682,000
|
|||
|
Oregon
|
3
|
273,466
|
672,288
|
|||
|
South
Carolina
|
1
|
86,120
|
436,000
|
|||
|
Tennessee
|
9
|
1,928,931
|
5,613,915
|
|||
|
Texas
|
167
|
25,717,977
|
100,800,141
|
|||
|
Utah
|
3
|
663,767
|
1,660,045
|
|||
|
Virginia
|
9
|
2,395,222
|
6,774,973
|
|||
|
Washington
|
5
|
607,602
|
1,862,088
|
|||
|
Grand
Total
|
415
|
72,818,107
|
284,409,135
|
|||
|
Total
Retail
|
335
|
55,506,874
|
229,201,690
|
|||
|
Total
Industrial
|
77
|
17,150,916
|
44,881,057
|
|||
|
Total
Unimproved Land
|
|
9,924,457
|
||||
|
Total
Other
|
3
|
160,317
|
401,931
|
|||
___________________________
Total
square footage includes 464,561 square feet of building area
and 11,875,005
square feet of land
leased from others.
Footnotes
for detail property listing
(1) Denotes
partial ownership. The square feet figures represent WRI's
proportionate ownership of the property held by the joint venture or
partnership.
(2) Denotes
property currently under development.
(3) Denotes
properties that are not consolidated under generally accepted accouting
principles.
NOTE: Square
feet is reflective of area available to be leased. Certain listed
properties may have additional square feet under WRI
ownership.
General.
In 2007,
no single property accounted for more than 1.8% of our total assets or 1.4% of
gross revenues. The five largest properties, in the aggregate,
represented approximately 6.4% of our gross revenues for the year ended December
31, 2007; otherwise, none of the remaining properties accounted for more than
1.1% of our gross revenues during the same period. The weighted
average occupancy rate for all of our improved properties as of December 31,
2007 was 94.4% compared to 94.1% as of December 31, 2006.
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 real estate 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 real estate joint ventures or partnerships that hold 116
of our properties. Our ownership interest ranges from 7.8% 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 of beneficial
interest at our discretion.
Shopping Centers.
At December 31,
2007, we owned or operated under long-term leases, either directly or through
our interest in real estate joint ventures or partnerships, a total of 303
developed income-producing properties and 32 properties under various stages of
construction and development, which are located in 22 states spanning the USA
from coast to coast.
Our
shopping centers are primarily neighborhood and community shopping centers that
typically range in size from 100,000 to 600,000 square feet of building area, as
distinguished from large regional enclosed malls and small strip centers, which
generally contain 5,000 to 25,000 square feet. 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 7,500 separate leases with 5,700 different
tenants. Included among our top revenue-producing tenants
are: The Kroger Co., T.J.X. Companies, Safeway, Ross Stores, Publix,
Home Depot, Office Depot, Blockbuster Video, Barnes & Noble and
Gap. The diversity of our tenant base is also evidenced by the fact that
our largest tenant accounted for only 2.9% of rental revenues during
2007.
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. While we believe the effect of this will not have a
material impact on our financial position, results of operations, or liquidity
due to the significant diversification of our tenant base, the uncertainty in
the commercial credit markets could result in a negative impact.
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' prorata 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
2007, we invested approximately $458.4 million in the acquisition of operating
retail properties. Approximately $417.3 million was invested in 13
shopping centers and $41.1 million was invested in four unconsolidated joint
ventures to acquire seven retail properties.
A
portfolio of six retail properties was purchased in January and March 2007,
including five properties in Tucson, Arizona and one in Scottsdale,
Arizona. The centers are leased to a diverse mix of national
retailers including Wal-Mart, Safeway, Walgreens, Kohl’s, Home Depot, PetSmart
and Circuit City. This acquisition added 801,551 square feet to our
portfolio and represented a total investment of $140 million. This
purchase transaction includes an earnout provision of approximately $29 million
that is contingent upon the subsequent development of space by the property
seller. This contingency agreement expires in 2010.
Cherokee
Plaza, acquired in January 2007, is a 98,553 square foot grocery-anchored
neighborhood center located in the prestigious Buckhead area in Atlanta,
Georgia. The 100% occupied property is anchored by a 57,000 square
foot Kroger.
Sunrise
West Shopping Center, acquired in January 2007, is a 76,321 square foot
grocery-anchored neighborhood center located in Sunrise (Miami),
Florida. This property is anchored by a 44,000 square foot
Publix. Cole Park Plaza, acquired in February 2007, is an 82,258
square foot retail development located in Chapel Hill (Durham), North Carolina
next to our existing Chatham Crossing shopping center. Both Sunrise
and Cole Park were acquired through an existing unconsolidated joint venture
with AEW Capital Management.
Oak Grove
Market Center, acquired in June 2007, is a 97,207 square foot grocery-anchored
shopping center located in Portland, Oregon. The center is anchored
by a 53,000 square foot Safeway.
In July
2007, we acquired a portfolio of five retail power centers, adding 1.4 million
square feet to our portfolio under management. Three of the retail
power centers in Florida, Georgia and Texas were acquired through a new
unconsolidated real estate joint venture with PNC Realty Investors on behalf of
its institutional client, AFL-CIO Building Investment Trust (the
“BIT”). We own 20% of this joint venture with the BIT owning
80%. The remaining two centers, one in Atlanta, Georgia and the other
in Chicago, Illinois, were wholly acquired by us.
Countryside
Centre, a 242,123 square foot community center located in the St.
Petersburg/Clearwater Area of Florida, was also acquired in July
2007. This center is anchored by Albertson’s, TJ Maxx, Home Goods and
Shoe Carnival.
Stella
Link Shopping Center is a 28,510 square foot shopping center located in Houston,
Texas, which was acquired in August 2007. This retail center is
adjacent to one of our operating properties, which is anchored by Sellers
Brothers and Burke’s Outlet.
The
Shoppes at South Semoran is a 101,535 square foot shopping center located in
suburban Orlando, Florida, which was acquired in September 2007. This
100% occupied center is anchored by a 57,000 square foot Winn
Dixie.
In
September 2007, we acquired a 10% interest in Tully Corners Shopping Center
through a tenancy-in-common arrangement. This 115,992 square foot
grocery-anchored shopping center, located in San Jose, California, is anchored
by Save Mart, Petco and Party City.
In
October 2007, we acquired a 10% interest in Paradise Key Shopping Center through
a tenancy-in-common arrangement. This 271,777 square foot
grocery-anchored shopping center is located in Destin, Florida.
In
December 2007, we acquired our partner’s 50% interest in Tropicana Beltway
located in Las Vegas, Nevada. The center is anchored by Lowe’s and
Wal-Mart.
In 2007,
we sold 17 shopping centers totaling 1.8 million square feet of building area,
of which nine were located in Texas, three in Louisiana, two each in Colorado
and Illinois and one in Georgia. Sales proceeds from these
dispositions totaled $243.2 million and generated gains of $80.9
million. Three of these shopping centers were each held in a 50%
consolidated real estate joint venture. These real estate joint
ventures are consolidated in our financial statements because we exercise
financial and operating control.
In
December 2007, a retail center in Highland Ranch, Colorado was
sold. This property was held in a 40%-owned unconsolidated real
estate joint venture, and our share of the sales proceeds and gain generated was
$11.2 million and $2.2 million, respectively.
Industrial
Properties.
At December 31, 2007, we owned, either directly or
through our interest in real estate joint ventures or partnerships, 77
industrial projects and three other operating properties totaling approximately
17.3 million square feet of building area. Our industrial properties
consist of bulk warehouse, business distribution and office-service center
assets ranging in size from 13,000 to 727,000 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. Our properties are located in California, Florida, Georgia,
Tennessee, Texas and Virginia. During 2007, we invested approximately
$85.8 million in the acquisition of seven industrial properties and one office
building, and $21.2 million was invested in an unconsolidated real estate joint
venture to acquire seven industrial properties.
Lakeland
Business Park, acquired in January 2007, is a 100% leased 168,400 square foot
industrial business center located in Lakeland (Tampa), Florida.
In April
and May 2007, we acquired a portfolio of 10 high quality industrial buildings
located in Richmond, Virginia for a purchase price of $136 million, including $6
million that is contingent upon the lease up of vacant space by the property
seller. This contingency agreement expires in 2009. Eight
of the buildings were acquired through an existing 20%-owned unconsolidated
joint venture with PNC Realty Investors on behalf of its institutional client
the BIT. The remaining two buildings were acquired directly by
us. This portfolio added 2.4 million square feet under
management.
Town
& Country Commerce Center, acquired in June 2007, is a 206,000
square foot industrial distribution center located in Houston,
Texas. The property is 100% leased to Arizona Tile and
Seitel Solution Tech Center.
Riverview
Distribution Center, acquired in August 2007, is a 265,200 square foot
industrial center located in Atlanta, Georgia. It is anchored by
109,000 square foot CHEP USA.
In
October 2007, we acquired Westlake Industrial Centre, a 154,464 square foot
industrial building, and Southpark Industrial Centre, a 234,525 square foot
industrial center, both of which are located in Atlanta, Georgia.
In 2007,
we sold an industrial distribution center totaling 152,000 square feet and an
industrial building totaling 90,000 square feet. Both of these
properties are located in Texas. Sales proceeds from these
dispositions totaled $10.7 million and generated gains of $3.7
million.
Unimproved
Land.
At December 31, 2007, we owned 19 parcels of unimproved
land consisting of approximately 9.9 million square feet of land area located in
Arizona, Louisiana, North Carolina and Texas. These properties
include approximately 1.6 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 8.3 million square feet of land, which
may be used for new development. Most of these unimproved properties
are served by roads and utilities and 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, 2007, we had 32
projects under construction or in preconstruction stages with an estimated final
square footage of approximately 9.1 million. These properties are
slated to be completed over the next one to five years
.
In 2007,
under our merchant development program, we sold two vacant industrial buildings
in San Diego, California; one shopping center in Phoenix, Arizona, the River
Pointe apartments in Conroe, Texas and 17 parcels of land, of which 11 were
located in Texas, three in Arizona and one each in Florida, Louisiana
and Tennessee. Sales proceeds from these dispositions totaled
$103.0 million and generated gains of $16.4 million. At a 50%-owned
unconsolidated joint venture, a land parcel was sold in Liberty Lakes,
Washington. Our share of the sales proceeds and the gain generated
totaled $1.5 million and $.6 million, respectively.
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.
None.
PART
II
Our
common shares of beneficial interest are listed and traded on the New York Stock
Exchange under the symbol "WRI." The number of holders of record of
our common shares of beneficial interest as of January 31, 2008 was
3,305. 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
|
||||||||||
|
2007:
|
||||||||||||
|
Fourth
|
$ | 44.82 | $ | 31.44 | $ | .495 | ||||||
|
Third
|
42.15 | 36.34 | .495 | |||||||||
|
Second
|
49.00 | 40.84 | .495 | |||||||||
|
First
|
52.16 | 46.06 | .495 | |||||||||
|
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 | |||||||||
The
following table summarizes the equity compensation plans under which our common
shares of beneficial interest may be issued as of December 31,
2007:
|
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
|
2,840,290
|
$
32.66
|
2,626,360
|
|||
|
Equity
compensation plans not approved by shareholders
|
―
|
―
|
―
|
|||
|
Total
|
2,840,290
|
$
32.66
|
2,626,360
|
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, 2002 in our common shares of beneficial
interest and that all dividends were reinvested by the shareholder.
Comparison
of Five Year Cumulative Return
|
2003
|
2004
|
2005
|
2006
|
2007
|
||||||||||||||||
|
Weingarten
|
127.19 | 181.08 | 178.82 | 227.97 | 163.05 | |||||||||||||||
|
S&P
500 Index
|
128.68 | 142.69 | 149.70 | 173.34 | 182.87 | |||||||||||||||
|
The
NAREIT All Equity Index
|
137.13 | 180.44 | 202.38 | 273.34 | 230.45 | |||||||||||||||
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.
In July
2007, our Board of Trust Managers authorized a common share repurchase program
as part of our ongoing investment strategy. Under the terms of the
program, we may purchase up to a maximum value of $300 million of our common
shares of beneficial interest during the next two years. Share
repurchases may be made in the open market or in privately negotiated
transactions at the discretion of management and as market conditions
warrant. We anticipate funding the repurchase of shares primarily
through the proceeds received from our property disposition program, as well as
from general corporate funds.
Repurchases
of our common shares of beneficial interest for the quarter ended December 31,
2007 are as follows:
|
(a)
|
(b)
|
(c)
|
(d)
|
|||||||||||||
|
Total
|
Average
|
Total
Number of
|
Maximum
Dollar
|
|||||||||||||
|
Number
|
Price
|
Shares
Purchased
|
Value
of Shares that
|
|||||||||||||
|
of
Shares
|
Paid
per
|
as
Part of Publicly
|
May
Yet be Purchased
|
|||||||||||||
|
Period
|
Purchased
|
Share
|
Announced
Program
|
Under
the Program
|
||||||||||||
|
November
1, 2007 to November 30, 2007
|
1,370,073 | $ | 36.47 | 1,370,073 | $ | 196,715,648 | ||||||||||
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, | ||||||||||||||||||||
|
2007
|
2006
|
2005
|
2004
|
2003
|
||||||||||||||||
|
Revenues
(primarily real estate rentals)
|
$ | 599,054 | $ | 538,194 | $ | 487,856 | $ | 441,144 | $ | 361,757 | ||||||||||
|
Expenses:
|
||||||||||||||||||||
|
Depreciation
and amortization
|
131,708 | 121,471 | 110,956 | 98,727 | 78,139 | |||||||||||||||
|
Other
|
201,798 | 174,471 | 146,778 | 137,674 | 110,360 | |||||||||||||||
|
Total
|
333,506 | 295,942 | 257,734 | 236,401 | 188,499 | |||||||||||||||
|
Operating
Income
|
265,548 | 242,252 | 230,122 | 204,743 | 173,258 | |||||||||||||||
|
Interest
Expense
|
(148,829 | ) | (145,374 | ) | (129,160 | ) | (116,142 | ) | (90,214 | ) | ||||||||||
|
Interest
and Other Income
|
8,486 | 9,044 | 2,860 | 1,389 | 1,562 | |||||||||||||||
|
Loss
on Redemption of Preferred Shares
|
(3,566 | ) | (2,739 | ) | ||||||||||||||||
|
Equity
in Earnings of Real Estate Joint Ventures
and Partnerships,
net
|
19,853 | 14,655 | 6,610 | 5,384 | 4,681 | |||||||||||||||
|
Income
Allocated to Minority Interests
|
(10,237 | ) | (6,414 | ) | (6,060 | ) | (4,928 | ) | (2,723 | ) | ||||||||||
|
Gain
on Land and Merchant Development Sales
|
16,385 | 7,166 | 804 | |||||||||||||||||
|
Gain
on Sale of Properties
|
4,086 | 22,493 | 22,306 | 1,562 | 667 | |||||||||||||||
|
Provision
for Income Taxes
|
(4,073 | ) | (1,366 | ) | ||||||||||||||||
|
Income
from Continuing Operations
|
151,219 | 142,456 | 127,482 | 88,442 | 84,492 | |||||||||||||||
|
Income
from Discontinued Operations (1)
|
86,798 | 162,554 | 92,171 | 52,939 | 31,788 | |||||||||||||||
|
Net
Income
|
$ | 238,017 | $ | 305,010 | $ | 219,653 | $ | 141,381 | $ | 116,280 | ||||||||||
|
Net
Income Available to Common Shareholders
|
$ | 212,642 | $ | 294,909 | $ | 209,552 | $ | 133,911 | $ | 97,880 | ||||||||||
|
Per
Share Data - Basic:
|
||||||||||||||||||||
|
Income
from Continuing Operations
|
$ | 1.47 | $ | 1.51 | $ | 1.32 | $ | 0.94 | $ | 0.84 | ||||||||||
|
Net
Income
|
$ | 2.49 | $ | 3.36 | $ | 2.35 | $ | 1.55 | $ | 1.24 | ||||||||||
|
Weighted
Average Number of Shares
|
85,504 | 87,719 | 89,224 | 86,171 | 78,800 | |||||||||||||||
|
Per
Share Data - Diluted:
|
||||||||||||||||||||
|
Income
from Continuing Operations
|
$ | 1.46 | $ | 1.50 | $ | 1.32 | $ | 0.94 | $ | 0.84 | ||||||||||
|
Net
Income
|
$ | 2.44 | $ | 3.27 | $ | 2.31 | $ | 1.54 | $ | 1.24 | ||||||||||
|
Weighted
Average Number of Shares
|
88,893 | 91,779 | 93,166 | 89,511 | 81,574 | |||||||||||||||
|
Property
(at cost)
|
$ | 4,972,344 | $ | 4,445,888 | $ | 4,033,579 | $ | 3,751,607 | $ | 3,200,091 | ||||||||||
|
Total
Assets
|
$ | 4,993,343 | $ | 4,373,887 | $ | 3,737,741 | $ | 3,470,318 | $ | 2,923,094 | ||||||||||
|
Debt
|
$ | 3,165,059 | $ | 2,941,039 | $ | 2,348,504 | $ | 2,138,842 | $ | 1,835,126 | ||||||||||
|
Other
Data:
|
||||||||||||||||||||
|
Cash
Flows from Operating Activities
|
$ | 223,309 | $ | 242,592 | $ | 200,525 | $ | 203,886 | $ | 162,316 | ||||||||||
|
Cash
Flows from Investing Activities
|
$ | (480,630 | ) | $ | (314,686 | ) | $ | (105,459 | ) | $ | (349,654 | ) | $ | (331,503 | ) | |||||
|
Cash
Flows from Financing Activities
|
$ | 252,095 | $ | 100,407 | $ | (97,791 | ) | $ | 170,928 | $ | 168,623 | |||||||||
|
Cash
Dividends per Common Share
|
$ | 1.98 | $ | 1.86 | $ | 1.76 | $ | 1.66 | $ | 1.56 | ||||||||||
|
Funds
from Operations: (2)
|
||||||||||||||||||||
|
Net
Income Available to Common Shareholders
|
$ | 212,642 | $ | 294,909 | $ | 209,552 | $ | 133,911 | $ | 97,880 | ||||||||||
|
Depreciation
and Amortization
|
141,150 | 131,792 | 125,742 | 114,342 | 90,367 | |||||||||||||||
|
Gain
on Sale of Properties
|
(86,076 | ) | (172,056 | ) | (87,561 | ) | (26,316 | ) | (7,273 | ) | ||||||||||
|
Total
|
$ | 267,716 | $ | 254,645 | $ | 247,733 | $ | 221,937 | $ | 180,974 | ||||||||||
|
(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 for all periods
presented.
|
|
(2)
|
The
National Association of Real Estate Investment Trusts defines funds from
operations (“FFO”) as net income (loss) available to common shareholders
computed in accordance with generally accepted accounting principles,
excluding gains or losses from sales of operating real estate assets and
extraordinary items, plus depreciation and amortization of operating
properties, including our share of unconsolidated real estate joint
ventures and partnerships. We calculate FFO in a manner
consistent with the NAREIT definition.
Management
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.
|
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 consolidated 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 (“REIT”) 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 rental properties which includes neighborhood and
community shopping centers and industrial properties of approximately 72.8
million square feet. We have a diversified tenant base with our
largest tenant comprising only 2.9% of total rental revenues during
2007.
We focus
on increasing funds from operations (“FFO”) 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. The turmoil in the current capital markets has
adversely affected both the pricing and the availability of certain financial
instruments. However, based on our business plan for the upcoming
year, we believe that asset dispositions, joint venture relationships and
existing capital resources such as our revolving credit facilities will provide
adequate capital to execute our business plan.
At
December 31, 2007, we owned or operated under long-term leases, either directly
or through our interest in real estate joint ventures or partnerships, a total
of 383 developed income-producing properties and 32 properties under various
stages of construction and development. The total number of centers
includes 335 neighborhood and community shopping centers, 77 industrial projects
and three other operating properties located in 23 states spanning the country
from coast to coast.
We also
owned interests in 19 parcels of unimproved land held for future development
that totaled approximately 9.9 million square feet.
We had
approximately 7,500 leases with 5,700 different tenants at December 31,
2007.
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
94.4% at December 31, 2007 compared to 94.1% at December 31,
2006. Historically, occupancy for the total portfolio has never
fallen below 90.0%. We expect our existing portfolio occupancy to
continue at this level due to our tenant diversification and a strong tenant
anchor base in 2008. 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 1,261 new leases or renewals during 2007
totaling 7.0 million square feet, increasing rental rates an average of 10.3% 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
2007 and 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, 2007, we had 32 properties in various stages of development,
including our merchant development program, which is up from 26 properties under
development a year ago. We have invested $341.0 million to-date on
these projects and, at completion we estimate our total investment to be $628.7
million. These properties are slated to open over the next one to
five years with a projected return on investment of approximately 9% when
completed.
In
addition to these projects, we have a development pipeline with eight
development sites under contract, which will represent a projected investment of
approximately $178 million. Due to current economic factors,
obtaining new projects over the next year may prove challenging as potential
retail anchors are delaying their expansion plans due to the softening of the
economy. We will continue to seek opportunities and monitor this
market closely.
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. Also, disposition of land parcels and non-operating
properties are included in this program. We generated gains of
approximately $16.4 million from this program during 2007. We expect
to generate similar gains in 2008 and throughout future years.
Acquisitions and Joint
Ventures
During
2007, we acquired 20 shopping centers, 14 industrial properties, our partner’s
50% interest in a retail center and one other operating property for a purchase
price of approximately $565 million. Included in that total were
seven retail properties and seven industrial properties purchased as part of
unconsolidated real estate joint ventures. It is possible that,
consistent with our strategy, some of the other acquired properties will also be
contributed to future joint ventures.
Acquisitions
are a key component of our strategy. However, the turmoil in the
credit markets has significantly reduced transactions in the marketplace
and, therefore, created uncertainty with respect to
pricing. 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.
Joint
venture fee income for 2007 was approximately $8.2 million or an increase of
$5.7 million over 2006. This is a direct result of our strategy
initiative to develop new joint venture relationships. We expect
continued strong growth in joint venture income during the upcoming
year.
Dispositions
During
2007, we sold 17 shopping centers, one industrial distribution center and one
industrial building for $253.9 million. Also, one shopping center in
an unconsolidated joint venture was sold, of which our share of the sales
proceeds totaled $11.2 million. Although lenders for prospective
acquirers have tightened their underwriting criteria, we expect to continue
to dispose of non-core properties during the coming year as opportunities
present themselves. Dispositions are part of an ongoing 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 ongoing 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 recognized. Revenue based on a
percentage of tenants' sales is recognized only after the tenant exceeds their
sales breakpoint. In addition, in circumstances where we would
provide a tenant improvement allowance for improvements that are owned by the
tenant, we would recognize the allowance as a reduction of rental revenue on a
straight-line basis over the term of the lease. Other revenue is
income from contractual agreements with third parties, tenants or partially
owned real estate joint ventures or partnerships, which is recognized as the
related services are performed under the respective agreements.
Real
Estate Joint Ventures and Partnerships
To
determine the method of accounting for partially owned real estate joint
ventures and partnerships, we first apply the guidelines set forth in Financial
Accounting Standards Board (“FASB”) Interpretation No. 46R, "Consolidation of
Variable Interest Entities." Based upon our analysis, we have
determined that we have no interests in variable interest entities.
Partially
owned real estate joint ventures and 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 real estate 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.
Our
investments in partially owned real estate joint ventures and partnerships are
reviewed for impairment, periodically, if events or circumstances change
indicating that the carrying amount of our investments may not be
recoverable. The ultimate realization of our investments in partially
owned real estate joint ventures and partnerships is dependent on a number of
factors, including the performance of each investment and market
conditions. We will record an impairment charge if we determine that
a decline in the value of an investment is other than temporary.
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. If we do not allocate these costs appropriately
or incorrectly estimate the useful lives of our real estate, depreciation
expense may be misstated.
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 date 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, tenant
improvements and other identifiable intangibles. Current economic and
operational property conditions, known trends and changes expected in current
market conditions are considered in the estimates of future cash flows used for
purchase price allocation purposes. Other identifiable intangible
assets and liabilities include the effect of out-of-market leases, the value of
having leases in place (“as is” versus “as if vacant” and absorption costs),
out-of-market assumed mortgages and tenant
relationships. Depreciation and amortization is computed using the
straight-line method, generally over estimated useful lives of 40 years for
buildings and one to 25 years for other identifiable intangible
assets. The impact of these estimates could result in significant
differences related to the purchased assets, liabilities and resulting
depreciation or amortization. Initial valuations are subject to
change until such information is finalized, no later than 12 months from the
acquisition date. The impact of incorrect estimates in connection
with acquisition asset values and related estimated useful lives could be
material to our consolidated financial statements.
Property
also includes costs incurred in the development of new operating properties and
properties in our merchant development program. 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. Also, disposition of land parcels and non-operating properties
are included in this program. These properties are carried at cost
and no depreciation is recorded on these assets until the commencement of rental
revenue or no later than one year from the completion of major
construction. These costs include pre-acquisition 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 directly
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, including any identifiable
intangible assets, may not be recoverable. In such an event, a
comparison is made of the current and projected operating cash flows of each
such property into the foreseeable future on an undiscounted basis to the
carrying amount of such property. Our overall future plans for a
property and our views on current market and economic conditions may have a
significant impact on the resulting estimated future cash flows of a property
that are analyzed for these purposes. The property carrying amount is
adjusted, if necessary, to the estimated fair value to reflect an impairment in
the value of the asset.
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. Differences in methodologies to calculate applicable interest
rates and the cost of qualified assets can yield significant differences in the
amounts capitalized and, as a result, the amount of depreciation
recognized.
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 internal costs directly related to 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. Differences in methodologies to calculate and
defer these costs can yield differences in the amounts deferred and,
accordingly, the amount of amortization recognized.
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 joint ventures and partnerships and partial sales to
real estate joint ventures and partnerships in which we
participate.
We
recognize profit on sales of real estate, including merchant development sales,
in accordance with FASB’s Statement of Financial Accounting Standards (“SFAS”)
No. 66 (“SFAS 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 and partnerships in
which we participate to the extent we receive cash from the joint venture or
partnership, if it meets the sales criteria in accordance with SFAS 66 and we do
not have a commitment to support the operations of the real estate joint venture
or partnership to an extent greater than our proportionate interest in the real
estate joint venture or partnership..
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. 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. As these factors change, the allowance is subject to
revision and may impact the results of operations.
Income
Taxes
We have
elected to be treated as a 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 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 such activities 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 consolidated
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.” We use estimates in preparing our deferred tax amounts and if
revised, these estimates could impact our results of operations.
Results
of Operations
Comparison
of the Year Ended December 31, 2007 to the Year Ended December 31,
2006
Revenues
Total
revenues were $599.1 million for the year ended 2007 versus $538.2 million for
the year ended 2006, an increase of $60.9 million or 11.3%. This
increase resulted primarily from an increase in rental revenues of $54.4 million
and other income of $6.5 million.
Property
acquisitions and new development activity contributed $56.6 million of the
rental income increase with $5.3 million resulting from 1,261 renewals and new
leases, comprising 7.0 million square feet at an average rental rate increase of
10.3%. Offsetting these rental income increases was a decrease of
$7.5 million, which resulted from the sale of an 80% interest in five industrial
centers in the third quarter of 2006.
Occupancy
(leased space) of the portfolio as compared to the prior year was as
follows:
Other
income increased by $6.5 million from the prior year. This increase
resulted primarily from the increase in joint venture fee income of $5.7 million
and miscellaneous tenant revenue of $.8 million.
Expenses
Total
expenses for 2007 were $333.5 million versus $295.9 million in 2006, an increase
of $37.6 million or 12.7%.
The
increases in 2007 for depreciation and amortization expense ($10.2 million),
operating expenses ($18.3 million), ad valorem taxes ($5.9 million) and general
and administrative expenses ($3.2 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 additional headcount needed to achieve growth in 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 29.8% in 2007 and 28.4% in 2006.
Interest
Expense
Interest
expense totaled $148.8 million for 2007, up $3.5 million or 2.4% from
2006. The components of interest expense were as follows (in
thousands):
|
Year
Ended December 31,
|
||||||||
|
2007
|
2006
|
|||||||
|
Gross
interest expense
|
$ | 180,612 | $ | 160,454 | ||||
|
Over-market
mortgage adjustment of acquired properties
|
(6,758 | ) | (7,464 | ) | ||||
|
Capitalized
interest
|
(25,025 | ) | (7,616 | ) | ||||
|
Total
|
$ | 148,829 | $ | 145,374 | ||||
Gross
interest expense totaled $180.6 million in 2007, up $20.2 million or 12.6% from
2006. The increase in gross interest expense was due to an increase
in the average debt outstanding from $2.5 billion in 2006 to $3.0 billion in
2007 at a weighted average interest rate of 5.9% in 2007 and 6.0% for
2006. Capitalized interest increased $17.4 million due to an increase
in new development activity, and the over-market mortgage adjustment decreased
by $.7 million.
Equity
in Earnings of Real Estate Joint Ventures and Partnerships, net
Our
equity in earnings of real estate joint ventures and partnerships was $19.9
million in 2007 versus $14.7 million in 2006, an increase of $5.2 million or
35.4%. This increase was attributable primarily to our incremental
income from our investments in newly formed joint ventures for the acquisition
and development of retail and industrial properties.
Income
Allocated to Minority Interests
Income
allocated to minority interests was $10.2 million in 2007 versus $6.4 million in
2006, an increase of $3.8 million or 59.4%. This increase resulted
primarily from the gain on sale of three shopping centers that were each held in
a 50%-owned consolidated entity. .
Gain
on Sale of Properties
The
decrease in gain on sale of properties of $18.4 million resulted primarily from
the sale of an 80% interest in five industrial properties in the San Diego,
Memphis and Atlanta markets in 2006
.
Gain
on Land and Merchant Development Sales
Gain on
land and merchant development sales totaled $16.4 million in 2007. We
sold two vacant industrial buildings in San Diego, California; one shopping
center in Phoenix, Arizona, the River Pointe apartments in Conroe, Texas and 17
parcels of land, of which 11 are located in Texas, three in Arizona and one each
in Florida, Louisiana and Tennessee. The activity in 2006 of
$7.1 million resulted from the disposition of the Timber Springs shopping center
in Orlando, Florida and the sale of three parcels of land in Arizona (1) and
Texas (2).
Provision
for Income Taxes
The
increase is attributable to an increase of $1.9 million in the Texas margin tax,
which was enacted in the second quarter of 2006 and an increase of $.8 million
at our taxable REIT subsidiary.
Income
from Discontinued Operations
Income
from discontinued operations was $86.8 million in 2007 versus $162.6 million in
2006, a decrease of $75.8 million or 46.6%. This decrease was due
primarily to the decrease in gain on sale of 17 properties in 2007 as compared
to the gain on sale of 23 properties in 2006. Also, the income from
discontinued operations for 2006 includes the operating results of the
properties disposed of in 2007.
Results
of Operations
Comparison
of the Year Ended December 31, 2006 to the Year Ended December 31,
2005
Revenues
Total
revenues increased by $50.3 million or 10.3% in 2006 ($538.2 million in 2006
versus $487.9 million in 2005). This increase resulted primarily from
the increase in rental revenues of $49.8 million or 10.3%.
Property
acquisitions and new development activity contributed $35.6 million of the
rental income increase. The remaining increase of $14.2 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:
Expenses
Total
expenses increased by $38.2 million or 14.8% in 2006 ($295.9 million in 2006
versus $257.7 million in 2005).
The
increases in 2006 for depreciation and amortization expense ($10.5 million),
operating expenses ($14.8 million) and ad valorem taxes ($6.5 million) and
general and administrative expense ($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 to support 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 28.4% in 2006 and 26.9% in 2005.
Interest
Expense
Interest
expense totaled $145.4 million for 2006, up $16.2 million or 12.6% from
2005. The components of interest expense were as follows (in
thousands):
|
Year
Ended December 31,
|
||||||||
|
2006
|
2005
|
|||||||
|
Gross
interest expense
|
$ | 160,454 | $ | 138,845 | ||||
|
Over-market
mortgage adjustment of acquired properties
|
(7,464 | ) | (7,056 | ) | ||||
|
Capitalized
interest
|
(7,616 | ) | (2,629 | ) | ||||
|
Total
|
$ | 145,374 | $ | 129,160 | ||||
Gross
interest expense totaled $160.5 million in 2006, up $21.6 million or 15.6% 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 210.3%. 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 Real Estate Joint Ventures and Partnerships, net
Equity in
earnings of real estate joint ventures and partnerships increased by $8.1
million or 122.7% in 2006 ($14.7 million in 2006 versus $6.6 million in
2005). 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 increased by $70.4 million ($162.6 million in 2006
versus $92.2 million in 2005). 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 2007 and 2006 plus the disposition of 16 properties and a
vacant building totaling 1.3 million square feet in 2005. The 2005
dispositions provided sales proceeds of $133.8 million and generated gains of
$65.5 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 10 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. We do not
anticipate that the current turmoil in the capital markets will have a
significant effect on our ability to obtain capital or to execute our business
plan. We believe that asset dispositions, real estate joint venture
relationships and existing capital resources such as our revolving credit
facilities will provide adequate capital. Our most restrictive debt
covenants limit the amount of additional leverage we can add, however, we
believe the sources of capital described above are adequate to execute our
current business plan and remain in compliance with our debt
covenants.
Primary
sources of capital for funding our acquisitions and new development programs are
our revolving credit facilities, cash generated from sales of properties,
transactions with venture partners, 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 debt, common and preferred equity, cash
generated from dispositions of properties and cash flow generated by our
operating properties. As of December 31, 2007, the balance
outstanding under our $575 million revolving credit facility was $255.0 million,
and no amounts were outstanding under our $30 million credit facility, which we
use for cash management purposes.
Our
capital structure also includes non-recourse secured debt that we assume in
conjunction with our acquisitions program. We also have non-recourse
debt secured by acquired or developed properties held in several of our real
estate joint ventures and partnerships. 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
.
A
portfolio of six retail properties was purchased in January and March 2007,
including five properties in Tucson, Arizona and one in Scottsdale,
Arizona. The centers are leased to a diverse mix of national
retailers including Wal-Mart, Safeway, Walgreens, Kohl’s, Home Depot, PetSmart
and Circuit City. This acquisition added 801,551 square feet to our
portfolio and represented a total investment of $140 million. This
purchase transaction includes an earnout provision of approximately $29 million
that is contingent upon the subsequent development of space by the property
seller. This contingency agreement expires in 2010.
Cherokee
Plaza, acquired in January 2007, is a 98,553 square foot grocery-anchored
neighborhood center located in the prestigious Buckhead area in Atlanta,
Georgia. The 100% occupied property is anchored by a 57,000 square
foot Kroger.
Sunrise
West Shopping Center, acquired in January 2007, is a 76,321 square foot
grocery-anchored neighborhood center located in Sunrise (Miami),
Florida. This property is anchored by a 44,000 square foot
Publix. Cole Park Plaza, acquired in February 2007, is an 82,258
square foot retail development located in Chapel Hill (Durham), North Carolina
next to our existing Chatham Crossing shopping center. Both Sunrise
and Cole Park were acquired through an existing unconsolidated joint venture
with AEW Capital Management.
Oak Grove
Market Center, acquired in June 2007, is a 97,207 square foot grocery-anchored
shopping center located in Portland, Oregon. The center is anchored
by a 53,000 square foot Safeway.
In July
2007, we acquired a portfolio of five retail power centers, adding 1.4 million
square feet to our portfolio under management. Three of the retail
power centers in Florida, Georgia and Texas were acquired through a new
unconsolidated real estate joint venture with PNC Realty Investors on behalf of
its institutional client, AFL-CIO Building Investment Trust (the
“BIT”). We own 20% of this joint venture with the BIT owning
80%. The remaining two centers, one in Atlanta, Georgia and the other
in Chicago, Illinois, were wholly acquired by us.
Countryside
Centre, a 242,123 square foot community center located in the St.
Petersburg/Clearwater Area of Florida, was also acquired in July
2007. This center is anchored by Albertson’s, TJ Maxx, Home Goods and
Shoe Carnival.
Stella
Link Shopping Center is a 28,510 square foot shopping center located in Houston,
Texas, which was acquired in August 2007. This retail center is
adjacent to one of our operating properties, which is anchored by Sellers
Brothers and Burke’s Outlet.
The
Shoppes at South Semoran is a 101,535 square foot shopping center located in
suburban Orlando, Florida, which was acquired in September 2007. This
100% occupied center is anchored by a 57,000 square foot Winn
Dixie.
In
September 2007, we acquired a 10% interest in Tully Corners Shopping Center
through a tenancy-in-common arrangement. This 115,992 square foot
grocery-anchored shopping center, located in San Jose, California, is anchored
by Save Mart, Petco and Party City.
In
October 2007, we acquired a 10% interest in Paradise Key Shopping Center through
a tenancy-in-common arrangement. This 271,777 square foot
grocery-anchored shopping center is located in Destin, Florida.
In
December 2007, we acquired our partner’s 50% interest in Tropicana Beltway
located in Las Vegas, Nevada. The center is anchored by Lowe’s and
Wal-Mart.
Industrial
Properties.
Lakeland
Business Park, acquired in January 2007, is a 100% leased 168,400 square foot
industrial business center located in Lakeland (Tampa), Florida.
In April
and May 2007, we acquired a portfolio of 10 high quality industrial buildings
located in Richmond, Virginia for a purchase price of $136 million, including $6
million that is contingent upon the lease up of vacant space by the property
seller. This contingency agreement expires in 2009. Eight
of the buildings were acquired through an existing 20%-owned unconsolidated
joint venture with PNC Realty Investors on behalf of its institutional client
the BIT. The remaining two buildings were acquired directly by
us. This portfolio added 2.4 million square feet under
management.
Town
& Country Commerce Center, acquired in June 2007, is a 206,000
square foot industrial distribution center located in Houston,
Texas. The property is 100% leased to Arizona Tile and
Seitel Solution Tech Center.
Riverview
Distribution Center, acquired in August 2007, is a 265,200 square foot
industrial center located in Atlanta, Georgia. It is anchored by
109,000 square foot CHEP USA.
In
October 2007, we acquired Westlake Industrial Centre, a 154,464 square foot
industrial building, and Southpark Industrial Centre, a 234,525 square foot
industrial center, both of which are located in Atlanta, Georgia.
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 2007,
we sold 17 shopping centers totaling 1.8 million square feet of building area,
of which nine were located in Texas, three in Louisiana, two each in Colorado
and Illinois and one in Georgia. Sales proceeds from these
dispositions totaled $243.2 million and generated gains of $80.9
million. Three of these shopping centers were each held in a 50%
consolidated real estate joint venture. These real estate joint
ventures are consolidated in our financial statements because we exercise
financial and operating control.
In
December 2007, a retail center in Highland Ranch, Colorado was
sold. This property was held in a 40%-owned unconsolidated joint
venture, and our share of the sales proceeds and the gain generated was $11.2
million and $2.2 million, respectively.
Industrial
Properties.
In 2007,
we sold an industrial distribution center totaling 152,000 square feet and an
industrial building totaling 90,000 square feet. Both of these
properties are located in Texas. Sales proceeds from these
dispositions totaled $10.7 million and generated gains of $3.7
million.
New
Development and Capital Expenditures
At
December 31, 2007, we had 32 projects under construction or in preconstruction
stages with an estimated final square footage of approximately 9.1
million. These properties are slated to be completed over the next
one to five years
.
In 2007,
under our merchant development program, we sold two vacant industrial buildings
in San Diego, California; one shopping center in Phoenix, Arizona, the River
Pointe apartments in Conroe, Texas and 17 parcels of land, of which 11 are
located in Texas, three in Arizona and one each in Florida, Louisiana
and Tennessee. Sales proceeds from these dispositions totaled
$103.0 million and generated gains of $16.4 million. At a 50%-owned
unconsolidated joint venture, a land parcel was sold in Liberty Lakes,
Washington. Our share of the sales proceeds and the gain generated
totaled $1.5 million and $.6 million, respectively.
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 real estate joint
ventures and partnerships totaled $1.1 billion in both 2007 and 2006 and $455.1
million in 2005. We expect to invest approximately $127.0 million in
2008, $100.5 million in 2009, $53.3 million in 2010, $7.8 million in 2011 and
$1.4 million in 2012 to complete construction of 32 properties under various
stages of development. We also expect to invest $8.3 million to
acquire projects in 2008 and $1.8 in 2009.
Financing
Activities:
Debt
Total
debt outstanding increased to $3.2 billion at December 31, 2007 from $2.9
billion at December 31, 2006. Total debt at December 31, 2007
included $2.8 billion of which interest rates are fixed and $321.7 million,
including the effect of $50 million of interest rate swaps, that bears interest
at variable rates. Additionally, debt totaling $1.1 billion was
secured by operating properties while the remaining $2.1 billion was
unsecured.
In
November 2007, we increased our revolving credit facility from $400 million to
$575 million and amended certain covenants of this facility. This
unsecured revolving credit facility held by a syndicate of banks expires in
February 2010 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 42.5 and 15.0 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 $287.5 million from the syndicate banks. As of
February 15, 2008, there was $380.0 million outstanding under this
facility. We also maintain a $30 million unsecured and uncommitted
overnight facility that is used for cash management purposes, and as of February
15, 2008, there was no outstanding balance under this facility. The
available balance under our revolving credit agreement was $184.6 million at
February 15, 2008, which is reduced by amounts outstanding for letters of credit
and our overnight facility. We are in full compliance with the
covenants of our unsecured revolving credit facilities as of December 31,
2007.
In
January 2008, we elected to repay at par a fixed rate 8.33% mortgage totaling
$121.8 million that was secured by 19 supermarket-anchored shopping centers in
California originally acquired in April 2001.
In August
2006, we issued $575 million of 3.95% convertible senior unsecured notes due
2026. The net proceeds from the sale of the debentures, after
repurchasing 4.3 million of our common shares of beneficial interest, were used
for general business purposes 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 of beneficial interest per $1,000 of
principal amount of debentures (an initial conversion price of
$49.075). Upon the conversion of debentures, we will deliver cash for
the principal return, as defined, and cash or common shares of beneficial
interest, 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 debentures
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 10-year unsecured fixed rate medium term
notes at 6.1% including the effect of an interest rate swap that had 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 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
interest rate swap in conjunction with the issuance of the $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.
At
December 31, 2007, we had two interest rate swap contracts designated as fair
value hedges with an aggregate notional amount of $50.0 million that convert
fixed rate interest payments at rates of 4.2% to variable interest
payments. Also, at December 31, 2007, 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. We could be exposed to
losses in the event of nonperformance by the counter-parties; however,
management believes the likelihood of such nonperformance is
remote.
In July,
November and December 2007, swaps of $10 million, $5 million and $10 million,
respectively, matured in conjunction with the maturity of the associated medium
term notes. These hedge contracts were designated as a fair value
hedges.
In
conjunction with acquisitions completed during 2007, we assumed $99.4 million of
non-recourse debt secured by the related properties.
A capital
lease obligation totaling $12.9 million was assumed and subsequently settled in
2007. As of December 31, 2006, the balance of non-recourse secured
debt that was assumed in conjunction with 2006 acquisitions was $140.7
million.
In
conjunction with the disposition of properties completed during 2007, we
incurred a net loss of $.4 million on the early extinguishment of three loans
totaling $22.2 million.
Equity
Common
and preferred dividends increased to $194.5 million in 2007, compared to $173.0
million in 2006. The dividend rate for our common shares of
beneficial interest increased for each quarter of 2007 to $.495 compared to
$.465 for the same period of 2006. Our dividend payout ratio on
common equity for 2007, 2006 and 2005 approximated 63.2%, 64.0% and 63.4%,
respectively, based on basic funds from operations for the respective
periods.
In July
2007, our Board of Trust Managers authorized a common share repurchase program
as part of our ongoing investment strategy. Under the terms of the
program, we may purchase up to a maximum value of $300 million of our common
shares of beneficial interest during the next two years. Share
repurchases may be made in the open market or in privately negotiated
transactions at the discretion of management and as market conditions
warrant. We anticipate funding the repurchase of shares primarily
through the proceeds received from our property disposition program, as well as
from general corporate funds.
During
2007, we have repurchased and cancelled 1.4 million common shares of beneficial
interest at an average share price of $37.75. At December 31,
2007, a total of 1.4 million common shares of beneficial interest were
outstanding that were purchased at an average share price of $36.47. These
shares were subsequently retired on January 11, 2008.
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
September 25, 2007, we issued $200 million of depositary shares in a private
placement, and the net proceeds of $193.6 million were used to repay amounts
outstanding under our credit facilities. Each depositary share
represents one-hundredth of a Series G Cumulative Redeemable Preferred
Share. The depositary shares are redeemable, in whole or in part on
or after September 25, 2007 at our option, at a redemption price of $25
multiplied by a graded rate per depositary share based on the date of redemption
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 G Preferred Shares pay a variable-rate
quarterly dividend through September 2008 and then a variable-rate monthly
dividend and have a liquidation preference of $2,500 per share. The
variable-rate dividend is calculated on the period’s three-month LIBOR rate plus
a percentage determined by the number of days outstanding. Further,
the rate may vary if any of our outstanding preferred shares are
downgraded. The variable-rate dividend is not to exceed
20%.
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 preference of $2,500
per share. Net proceeds of $194.0 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, 2008. In addition, we have $85.4 million available as of
February 15, 2008 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 primary contractual obligations as of December
31, 2007 (in thousands):
|
2008
|
2009
|
2010
|
2011
|
2012
|
Thereafter
|
Total
|
||||||||||||||||||||||
|
Mortgages
and Notes P
ayable:(1)
|
||||||||||||||||||||||||||||
|
Unsecured
Debt
|
$ | 156,400 | $ | 123,522 | $ | 394,810 | $ | 860,566 | $ | 242,216 | $ | 797,690 | $ | 2,575,204 | ||||||||||||||
|
Secured
Debt
|
249,818 | 134,079 | 116,324 | 141,532 | 167,306 | 555,800 | 1,364,859 | |||||||||||||||||||||
|
Ground
Lease Payments
|
2,436 | 2,961 | 2,917 | 2,862 | 2,821 | 113,568 | 127,565 | |||||||||||||||||||||
|
Obligations
to Acquire
Projects
|
8,306 | 1,824 | 10,130 | |||||||||||||||||||||||||
|
Obligations
to Develop Projects
|
126,957 | 100,583 | 53,284 | 7,799 | 1,370 | 289,993 | ||||||||||||||||||||||
|
Total
Contractual Obligations
|
$ | 543,917 | $ | 362,969 | $ | 567,335 | $ | 1,012,759 | $ | 413,713 | $ | 1,467,058 | $ | 4,367,751 | ||||||||||||||
(1)
Includes
principal and interest with interest on variable-rate debt calculated using
rates at December 31, 2007 excluding the effect of interest rate
swaps.
Off
Balance Sheet Arrangements
As of
December 31, 2007 and December 31, 2006, none of our off-balance sheet
arrangements had a material affect on our liquidity or availability of, or
requirement for, our capital resources. Letters of credit totaling
$9.2 million and $10.1 million were outstanding under the revolving credit
facility at December 31, 2007 and 2006, respectively.
Related
to our investment in a redevelopment project in Sheridan, Colorado that is held
in an unconsolidated real estate joint venture, we, our joint venture partner
and the joint venture have each provided a guarantee for the payment of any
annual sinking fund requirement shortfalls on bonds issued in connection with
the project. The Sheridan Redevelopment Agency issued $97 million of
Series A bonds used for an urban renewal project. The bonds are to be
repaid with incremental sales and property taxes and a public improvement fee
(“PIF”) to be assessed on future retail sales. The incremental taxes
and PIF are to remain intact until the bond liability has been paid in full,
including any amounts we may have to provide. We have evaluated and
determined that the fair value of the guarantee is nominal. However,
due to the guarantee, a liability has been recorded by the joint venture equal
to amounts funded under the bonds.
Funds
from Operations
The
National Association of Real Estate Investment Trusts defines FFO as net income
(loss) available to common shareholders computed in accordance with generally
accepted accounting principles, excluding gains or losses from sales of
operating real estate assets and extraordinary items, plus depreciation and
amortization of operating properties, including our share of unconsolidated real
estate joint ventures and partnerships. We calculate FFO in a manner
consistent with the NAREIT definition.
Management
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.
FFO is
calculated as follows (in thousands):
|
Year
Ended December 31,
|
||||||||||||
|
2007
|
2006
|
2005
|
||||||||||
|
Net
income available to common shareholders
|
$ | 212,642 | $ | 294,909 | $ | 209,552 | ||||||
|
Depreciation
and amortization
|
129,946 | 126,713 | 122,203 | |||||||||
|
Depreciation
and amortization of unconsolidated joint ventures
|
11,204 | 5,079 | 3,539 | |||||||||
|
Gain
on sale of properties
|
(83,907 | ) | (168,004 | ) | (87,569 | ) | ||||||
|
(Gain)
loss on sale of properties of unconsolidated joint
ventures
|
(2,169 | ) | (4,052 | ) | 8 | |||||||
|
Funds
from operations
|
267,716 | 254,645 | 247,733 | |||||||||
|
Funds
from operations attributable to operating partnership
units
|
4,407 | 5,453 | 5,218 | |||||||||
|
Funds
from operations assuming conversion of OP units
|
$ | 272,123 | $ | 260,098 | $ | 252,951 | ||||||
|
Weighted
average shares outstanding - basic
|
85,504 | 87,719 | 89,224 | |||||||||
|
Effect
of dilutive securities:
|
||||||||||||
|
Share
options and awards
|
891 | 926 | 860 | |||||||||
|
Operating
partnership units
|
2,498 | 3,134 | 3,082 | |||||||||
|
Weighted
average shares outstanding - diluted
|
88,893 | 91,779 | 93,166 | |||||||||
Newly
Issued Accounting Pronouncements
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. We adopted FIN 48 as of January 1, 2007, and its
adoption did not have a material effect on our consolidated financial
statements.
In
September 2006, the FASB issued SFAS No. 157 (“SFAS 157”), “Fair Value
Measurements.” This statement defines fair value and establishes a
framework for measuring fair value in generally accepted accounting principles
and expands disclosures about fair value measurements. 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.
We are
required to adopt SFAS 157 in the first quarter of 2008 regarding our financial
assets and liabilities. The FASB has issued FSP FAS 157-2, “Effective Date
of FASB Statement No. 157,” to defer the provisions of SFAS 157 relating to
nonfinancial assets and liabilities that delays implementation by us until
January 1, 2009. SFAS 157 is not expected to materially affect how we
determine fair value, but may result in certain additional
disclosures.
In
September 2006, the FASB issued SFAS No. 158 (“SFAS 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 overfunded status or a liability for a plan’s
underfunded 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. The requirement to recognize the funded status of a benefit
plan and the disclosure requirements were effective for us as of December 31,
2006, and as a result we recognized an additional liability of
$803,000. 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 the Measurement Provision of SFAS 158 and concluded that its adoption will
not have a material effect on our consolidated financial
statements.
In
February 2007, the FASB issued SFAS No. 159 (“SFAS 159”), “The Fair Value Option
for Financial Assets and Financial Liabilities.” SFAS 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 us on January 1,
2008. We are currently evaluating the impact that the adoption of
SFAS 159 will have on our consolidated financial statements.
In
December 2007, the FASB issued SFAS No. 141 (revised 2007) (“SFAS 141R”),
“Business
Combinations.” SFAS 141R expands the original guidance’s definition of a
business. It broadens the fair value measurement and recognition to
all assets acquired, liabilities assumed and interests transferred as a result
of business combinations. SFAS 141R requires expanded disclosures to
improve the ability to evaluate the nature and financial effects of business
combinations. SFAS 141R is effective for us for business combinations
made on or after January 1, 2009. While we have not formally
quantified the effect, we expect the adoption of SFAS 141R to have a material
effect on our consolidated financial statements if our property acquisitions
fall under the definition of a business.
In
December 2007, the FASB issued SFAS No. 160 (“SFAS 160”), “Noncontrolling
Interests in Consolidated Financial Statements—an amendment of ARB
No. 51”. SFAS 160 requires that a noncontrolling interest in an
unconsolidated entity be reported as equity and any losses in excess of an
unconsolidated entity’s equity interest will be recorded to the noncontrolling
interest. The statement requires fair value measurement of any
noncontrolling equity investment retained in a deconsolidation. SFAS
160 is effective on January 1, 2009 and most provisions will be applied
retrospectively. We are currently evaluating the impact SFAS 160 will
have on our consolidated financial statements.
On August
31, 2007, the FASB authorized a proposed FASB Staff Position (the “proposed
FSP”) that, if issued, would affect the accounting for our convertible and
exchangeable senior debentures. If issued in the form expected, the
proposed FSP would require that the initial debt proceeds from the sale of our
convertible and exchangeable senior debentures be allocated between a liability
component and an equity component. The resulting debt discount would
be amortized using the effective interest method over the period the debt is
expected to be outstanding as additional interest expense. The
proposed FSP has not been issued, but the FASB has indicated that it is expected
to be effective for fiscal years beginning after December 15, 2007 and requires
retroactive application. Upon the adoption of the proposed FSP on
January 1, 2008, we have estimated the unamortized debt discount (as of December
31, 2007) to be approximately $34.5 million to be included as a reduction of
Debt and approximately $46.3 million as Accumulated Additional Paid-In Capital
in our condensed consolidated balance sheet. We have estimated
incremental Interest Expense to be approximately $8.4 million and $3.4 million
for the years ended December 31, 2007 and 2006.
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, 2007,
we had fixed-rate debt of $2.8 billion and variable-rate debt of $321.7 million,
after adjusting for the net effect of $50 million notional amount of interest
rate swaps. 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 $75.0 million notional amount of interest rate swaps. In
the event interest rates were to increase 100 basis points, annual net income
and cash flows would decrease by $3.2 million and $1.2 million based upon the
variable-rate debt and notes receivable outstanding at December 31, 2007 and
2006, respectively, and the fair value of fixed-rate debt at December 31, 2007
and 2006 would decrease by $204.8 million and $200.7 million,
respectively.
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Trust Managers and Shareholders of
Weingarten
Realty Investors
Houston,
Texas
We have
audited the accompanying consolidated balance sheets of Weingarten Realty
Investors and subsidiaries (the "Company") as of December 31, 2007 and 2006, 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, 2007. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements 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
as of December 31, 2007 and 2006, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2007, in
conformity with accounting principles generally accepted in the United States of
America.
We have
also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the Company's internal control over financial
reporting as of December 31, 2007, 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 February 29, 2008 expressed an
unqualified opinion on the Company’s internal control over financial
reporting.
/s/Deloitte
& Touche LLP
Houston,
Texas
February
29, 2008
(In
thousands, except per share amounts)
|
Year
Ended December 31,
|
||||||||||||
|
2007
|
2006
|
2005
|
||||||||||
|
Revenues:
|
||||||||||||
|
Rentals
|
$ | 585,702 | $ | 531,353 | $ | 481,628 | ||||||
|
Other
|
13,352 | 6,841 | 6,228 | |||||||||
|
Total
|
599,054 | 538,194 | 487,856 | |||||||||
|
Expenses:
|
||||||||||||
|
Depreciation
and amortization
|
131,708 | 121,471 | 110,956 | |||||||||
|
Operating
|
106,259 | 88,018 | 73,218 | |||||||||
|
Ad
valorem taxes
|
68,560 | 62,652 | 56,181 | |||||||||
|
General
and administrative
|
26,979 | 23,801 | 17,379 | |||||||||
|
Total
|
333,506 | 295,942 | 257,734 | |||||||||
|
Operating
Income
|
265,548 | 242,252 | 230,122 | |||||||||
|
Interest
Expense
|
(148,829 | ) | (145,374 | ) | (129,160 | ) | ||||||
|
Interest
and Other Income
|
8,486 | 9,044 | 2,860 | |||||||||
|
Equity
in Earnings of Real Estate Joint Ventures and
Partnerships
,
net
|
19,853 | 14,655 | 6,610 | |||||||||
|
Income
Allocated to Minority Interests
|
(10,237 | ) | (6,414 | ) | (6,060 | ) | ||||||
|
Gain
on Sale of Properties
|
4,086 | 22,493 | 22,306 | |||||||||
|
Gain
on Land and Merchant Development Sales
|
16,385 | 7,166 | 804 | |||||||||
|
Provision
for Income Taxes
|
(4,073 | ) | (1,366 | ) | ||||||||
|
Income
from Continuing Operations
|
151,219 | 142,456 | 127,482 | |||||||||
|
Operating
Income from Discontinued Operations
|
3,139 | 17,060 | 26,712 | |||||||||
|
Gain
on Sale of Properties from Discontinued Operations
|
83,659 | 145,494 | 65,459 | |||||||||
|
Income
from Discontinued Operations
|
86,798 | 162,554 | 92,171 | |||||||||
|
Net
Income
|
238,017 | 305,010 | 219,653 | |||||||||
|
Dividends
on Preferred Shares
|
(25,375 | ) | (10,101 | ) | (10,101 | ) | ||||||
|
Net
Income Available to Common Shareholders
|
$ | 212,642 | $ | 294,909 | $ | 209,552 | ||||||
|
Net
Income Per Common Share - Basic:
|
||||||||||||
|
Income
from Continuing Operations
|
$ | 1.47 | $ | 1.51 | $ | 1.32 | ||||||
|
Income
from Discontinued Operations
|
1.02 | 1.85 | 1.03 | |||||||||
|
Net
Income
|
$ | 2.49 | $ | 3.36 | $ | 2.35 | ||||||
|
Net
Income Per Common Share - Diluted:
|
||||||||||||
|
Income
from Continuing Operations
|
$ | 1.46 | $ | 1.50 | $ | 1.32 | ||||||
|
Income
from Discontinued Operations
|
.98 | 1.77 | .99 | |||||||||
|
Net
Income
|
$ | 2.44 | $ | 3.27 | $ | 2.31 | ||||||
|
Comprehensive
Income:
|
||||||||||||
|
Net
Income
|
$ | 238,017 | $ | 305,010 | $ | 219,653 | ||||||
|
Other
Comprehensive Loss:
|
||||||||||||
|
Unrealized
loss on derivatives
|
(5,014 | ) | (2,861 | ) | (1,943 | ) | ||||||
|
Amortization
of loss on derivatives
|
878 | 364 | 340 | |||||||||
|
Minimum
pension liability adjustment
|
1,161 | (1,150 | ) | (1,704 | ) | |||||||
|
Other
Comprehensive Loss
|
(2,975 | ) | (3,647 | ) | (3,307 | ) | ||||||
|
Comprehensive
Income
|
$ | 235,042 | $ | 301,363 | $ | 216,346 | ||||||
See Notes
to Consolidated Financial Statements.
(In
thousands, except per share amounts)
Year
Ended December 31, 2007, 2006, and 2005
|
Net
|
||||||||||||||||||||||||||||
|
Preferred
|
Common
|
Treasury
|
Income
in
|
|||||||||||||||||||||||||
|
Shares
|
Shares
|
Shares
|
Accumulated
|
Excess
of
|
Accumulated
|
|||||||||||||||||||||||
|
of
|
of
|
of
|
Additional
|
(Less
Than)
|
Other
|
|||||||||||||||||||||||
|
Beneficial
|
Beneficial
|
Beneficial
|
Paid-In
|
Accumulated
|
Comprehensive
|
|||||||||||||||||||||||
|
Interest
|
Interest
|
Interest
|
Capital
|
Dividends
|
Loss
|
Total
|
||||||||||||||||||||||
|
Balance,
January 1, 2005
|
$ | 4 | $ | 2,672 | $ | 1,283,270 | $ | (185,243 | ) | $ | (4,743 | ) | $ | 1,095,960 | ||||||||||||||
|
Net
income
|
219,653 | 219,653 | ||||||||||||||||||||||||||
|
Shares
issued in exchange for interests in limited partnerships
|
1 | 1,302 | 1,303 | |||||||||||||||||||||||||
|
Valuation
adjustment on shares issued in exchange for interests in
limited partnerships
|
550 | 550 | ||||||||||||||||||||||||||
|
Shares
issued under benefit plans
|
13 | 3,310 | 3,323 | |||||||||||||||||||||||||
|
Dividends
declared – common shares (1)
|
(157,095 | ) | (157,095 | ) | ||||||||||||||||||||||||
|
Dividends
declared – preferred shares (2)
|
(10,101 | ) | (10,101 | ) | ||||||||||||||||||||||||
|
Other
comprehensive loss
|
(3,307 | ) | (3,307 | ) | ||||||||||||||||||||||||
|
Balance,
December 31, 2005
|
4 | 2,686 | 1,288,432 | (132,786 | ) | (8,050 | ) | 1,150,286 | ||||||||||||||||||||
|
Net
income
|
305,010 | 305,010 | ||||||||||||||||||||||||||
|
Shares
issued in exchange for interests in limited partnerships
|
7 | 7,988 | 7,995 | |||||||||||||||||||||||||
|
Shares
cancelled
|
(128 | ) | (167,445 | ) | (167,573 | ) | ||||||||||||||||||||||
|
Shares
issued under benefit plans
|
17 | 7,506 | 7,523 | |||||||||||||||||||||||||
|
Dividends
declared – common shares (1)
|
(162,909 | ) | (162,909 | ) | ||||||||||||||||||||||||
|
Dividends
declared – preferred shares (2)
|
(10,101 | ) | (10,101 | ) | ||||||||||||||||||||||||
|
Adjustment
to initially apply FASB Statement No. 158
|
(803 | ) | (803 | ) | ||||||||||||||||||||||||
|
Other
comprehensive loss
|
(3,647 | ) | (3,647 | ) | ||||||||||||||||||||||||
|
Balance,
December 31, 2006
|
4 | 2,582 | 1,136,481 | (786 | ) | (12,500 | ) | 1,125,781 | ||||||||||||||||||||
|
Net
income
|
238,017 | 238,017 | ||||||||||||||||||||||||||
|
Issuance
of Series F preferred shares
|
2 | 193,972 | 193,974 | |||||||||||||||||||||||||
|
Issuance
of Series G preferred shares
|
2 | 193,548 | 193,550 | |||||||||||||||||||||||||
|
Shares
issued in exchange for interests in limited partnerships
|
17 | 13,562 | 13,579 | |||||||||||||||||||||||||
|
Shares
repurchased (4)
|
$ | (41 | ) | (49,966 | ) | (50,007 | ) | |||||||||||||||||||||
|
Shares
repurchased and cancelled
|
(42 | ) | (53,317 | ) | (53,359 | ) | ||||||||||||||||||||||
|
Shares
issued under benefit plans
|
8 | 7,747 | 7,755 | |||||||||||||||||||||||||
|
Dividends
declared – common shares (1)
|
(169,117 | ) | (169,117 | ) | ||||||||||||||||||||||||
|
Dividends
declared – preferred shares (3)
|
(25,375 | ) | (25,375 | ) | ||||||||||||||||||||||||
|
Other
comprehensive loss
|
(2,975 | ) | (2,975 | ) | ||||||||||||||||||||||||
|
Balance,
December 31, 2007
|
$ | 8 | $ | 2,565 | $ | (41 | ) | $ | 1,442,027 | $ | 42,739 | $ | (15,475 | ) | $ | 1,471,823 | ||||||||||||
|
(1)
|
Common
dividends per share were $1.98, $1.86 and $1.76 for the year ended
December 31, 2007, 2006 and 2005, respectively.
|
|
(2)
|
Series
D and Series E preferred dividends per share were $50.63 and $173.75,
respectively, for both the year ended December 31, 2006 and
2005.
|
|
(3)
|
Series
D, E, F and G preferred dividends per share were $50.63, $173.75, $142.64
and $34.88, respectively, for the year ended December 31,
2007.
|
|
(4)
|
A
total of 1.4 million common shares of beneficial interest were purchased
in 2007 and subsequently retired on January 11,
2008.
|
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 that include neighborhood and community
shopping centers and industrial properties of approximately 72.8 million square
feet. We have a diversified tenant base with our largest tenant
comprising only 2.9% of total rental revenues during 2007.
We
currently operate, and intend to operate in the future, as a real estate
investment trust (“REIT”).
Basis
of Presentation
Our
consolidated financial statements include the accounts of our subsidiaries and
certain partially owned real estate 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. Actual results could differ from
these estimates
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 recognized. Revenue based on a
percentage of tenants' sales is recognized only after the tenant exceeds their
sales breakpoint. In addition, in circumstances where we would
provide a tenant improvement allowance for improvements that are owned by the
tenant, we would recognize the allowance as a reduction of rental revenue on a
straight-line basis over the term of the lease. Other revenue is
income from contractual agreements with third parties, tenants or partially
owned real estate joint ventures or partnerships, which is recognized as the
related services are performed under the respective agreements.
Real
Estate Joint Ventures and Partnerships
To
determine the method of accounting for partially owned real estate joint
ventures and partnerships, we first apply the guidelines set forth in Financial
Accounting Standards Board (“FASB”) Interpretation No. 46R, “Consolidation of
Variable Interest Entities.” Based upon our analysis, we have
determined that we have no interests in variable interest entities.
Partially
owned real estate joint ventures and 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 real estate 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.
Our
investments in partially owned real estate joint ventures and partnerships are
reviewed for impairment, periodically, if events or circumstances change
indicating that the carrying amount of our investments may not be
recoverable. The ultimate realization of our investments in partially
owned real estate joint ventures and partnerships is dependent on a number of
factors, including the performance of each investment and market
conditions. We will record an impairment charge if we determine that
a decline in the value of an investment is other than temporary. No
impairment was recorded for the years ended December 31, 2007, 2006 and
2005.
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 date 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, tenant
improvements 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 (“as is” versus “as vacant” basis and
absorption costs), out-of-market assumed mortgages and tenant
relationships. Depreciation and amortization is computed using the
straight-line method, generally over estimated useful lives of 40 years for
buildings and one to 25 years for other identifiable intangible
assets. Initial valuations are subject to change until such
information is finalized, no later than 12 months from the acquisition
date.
Property
also includes costs incurred in the development of new operating properties and
properties in our merchant development program. 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. Also, disposition of land parcels and non-operating properties
are included in this program. These properties are carried at cost
and no depreciation is recorded on these assets until the commencement of rental
revenue or no later than one year from the completion of major
construction. 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 directly
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, including any identifiable
intangible assets, may not be recoverable. In such an event, a
comparison is made of the current and projected operating cash flows of each
such property into the foreseeable future on an undiscounted basis 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. No impairment was recorded for the years ended December
31, 2007, 2006 and 2005.
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, assuming or
guaranteeing the debt of any other entity, or dissolving itself or declaring
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 internal costs directly related to 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 joint ventures and partnerships and partial sales to
real estate joint ventures and partnerships in which we
participate.
We
recognize profit on sales of real estate, including merchant development sales,
in accordance with FASB’s Statement of Financial Accounting Standards (“SFAS”)
No. 66 (“SFAS 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 and partnerships in
which we participate to the extent we receive cash from the joint venture or
partnership, if it meets the sales criteria in accordance with SFAS 66 and we do
not have a commitment to support the operations of the real estate joint venture
or partnership to an extent greater than our proportionate interest in the real
estate joint venture or partnership.
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. 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, 2007 and December
31, 2006, we had $21.3 million and $79.4 million held for like-kind exchange
transactions, respectively, and $17.6 million and $15.1 million held in escrow
related to our mortgages, respectively.
Other
Assets
Other
assets in our consolidated financial statements include investments held in
grantor trusts, prepaid expenses, the value of above-market leases and the
related accumulated amortization, deferred tax assets and other miscellaneous
receivables. Investments held in grantor trusts are adjusted to fair
value at each period end with changes included in our Statements of Consolidated
Income and Comprehensive Income. Above-market leases are amortized
over terms of the acquired leases.
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,
|
||||||||||||
|
2007
|
2006
|
2005
|
||||||||||
|
Numerator:
|
||||||||||||
|
Net
income available to common shareholders – basic
|
$ | 212,642 | $ | 294,909 | $ | 209,552 | ||||||
|
Income
attributable to operating partnership units
|
4,407 | 5,453 | 5,218 | |||||||||
|
Net
income available to common shareholders – diluted
|
$ | 217,049 | $ | 300,362 | $ | 214,770 | ||||||
|
Denominator:
|
||||||||||||
|
Weighted
average shares outstanding – basic
|
85,504 | 87,719 | 89,224 | |||||||||
|
Effect
of dilutive securities:
|
||||||||||||
|
Share
options and awards
|
891 | 926 | 860 | |||||||||
|
Operating
partnership units
|
2,498 | 3,134 | 3,082 | |||||||||
|
Weighted
average shares outstanding - diluted
|
88,893 | 91,779 | 93,166 | |||||||||
Options
to purchase common shares of beneficial interest of .5 million in both 2007 and
2006 and .9 million in 2005, 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 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 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 such activities 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 consolidated
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 $13.6 million, $8.0 million and $1.3 million during 2007,
2006 and 2005, respectively, in exchange for interests in real estate joint
ventures and partnerships, which had been formed to acquire
properties. We also accrued $15.5 million, $6.5 million and $4.9
million during 2007, 2006 and 2005, respectively, associated with the
construction of property. Cash payments for interest on debt, net of
amounts capitalized, of $153.2 million, $139.1 million and $135.4 million were
made during 2007, 2006 and 2005, respectively. A cash payment of $.8
million and $.6 million for federal income taxes was made during 2007 and 2006,
respectively.
In
association with property acquisitions and investments in unconsolidated real
estate joint ventures, items assumed were as follows (in
thousands):
|
Year
Ended December 31,
|
||||||||||||
|
2007
|
2006
|
2005
|
||||||||||
|
Debt
|
$ | 99,428 | $ | 140,740 | $ | 135,330 | ||||||
|
Obligations
Under Capital Leases
|
12,888 | |||||||||||
|
Minority
Interest
|
27,932 | 15,816 | 6,871 | |||||||||
|
Net
Assets and Liabilities
|
14,322 | 21,597 | 31,983 | |||||||||
In
conjunction with the disposition of properties completed during 2007, we
defeased three mortgage loans totaling $22.2 million and transferred marketable
securities totaling $22.5 million in connection with the legal defeasance of
these three loans. Also, we settled a $12.9 million capital lease
obligation. Net assets and liabilities were reduced by $59.8 million
during 2007 from the reorganization of three joint ventures, two of which were
previously consolidated, to tenancy-in-common arrangements where we have a 50%
interest. This net reduction from the reorganization of three joint
ventures was offset by the assumption of debt totaling $33.2
million.
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. In 2005, a $15.5 million capital lease obligation was settled,
and debt of $11.1 million was assumed.
Reclassifications
The
reclassification of prior years’ operating results for certain properties to
discontinued operations was made to conform to the current year
presentation. We also reclassified the net balance of our
below-market assumed mortgages from Other Liabilities to Debt and our
above-market assumed mortgages from Other Assets to Debt. For
additional information see Note 9, “Discontinued Operations” and Note 16,
“Identified Intangible Assets and Liabilities,” respectively. These
reclassifications had no impact on previously reported net income, net income
per share, shareholders’ equity or cash flows.
Note
2.
Newly Issued Accounting
Pronouncements
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. We adopted FIN 48 as of January 1, 2007, and its
adoption did not have a material effect on our consolidated financial
statements.
In
September 2006, the FASB issued SFAS No. 157 (“SFAS 157”), “Fair Value
Measurements.” This statement defines fair value and establishes a
framework for measuring fair value in generally accepted accounting principles
and expands disclosures about fair value measurements. 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.
We are
required to adopt SFAS 157 in the first quarter of 2008 regarding our financial
assets and liabilities. The FASB has issued FSP FAS 157-2, “Effective Date of
FASB Statement No. 157,” to defer the provisions of SFAS 157 relating to
nonfinancial assets and liabilities that delays implementation by us until
January 1, 2009. SFAS 157 is not expected to materially affect how we
determine fair value, but may result in certain additional
disclosures.
In
September 2006, the FASB issued SFAS No. 158 (“SFAS 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 overfunded status or a liability for a plan’s
underfunded 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. The requirement to recognize the funded status of a benefit
plan and the disclosure requirements were effective for us as of
December 31, 2006, and as a result we recognized an additional liability of
$803,000. 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 the Measurement Provision of SFAS 158 and concluded that its adoption will
not have a material effect on our consolidated financial
statements.
In
February 2007, the FASB issued SFAS No. 159 (“SFAS 159”), “The Fair Value Option
for Financial Assets and Financial Liabilities.” SFAS 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 us on January 1,
2008. We are currently evaluating the impact that the adoption of
SFAS 159 will have on our consolidated financial statements.
In
December 2007, the FASB issued SFAS No. 141 (revised 2007) (“SFAS 141R”),
“Business
Combinations.” SFAS 141R expands the original guidance’s definition of a
business. It broadens the fair value measurement and recognition to
all assets acquired, liabilities assumed and interests transferred as a result
of business combinations. SFAS 141R requires expanded disclosures to
improve the ability to evaluate the nature and financial effects of business
combinations. SFAS 141R is effective for us for business combinations
made on or after January 1, 2009. We expect the adoption of SFAS 141R
to have a material effect on our consolidated financial
statements. While we have not formally quantified the effect, we
expect the adoption of SFAS 141R to have a material effect on our consolidated
financial statements if our property acquisitions fall under the definition of a
business.
In
December 2007, the FASB issued SFAS No. 160 (“SFAS 160”), “Noncontrolling
Interests in Consolidated Financial Statements—an amendment of ARB No.
51”. SFAS 160 requires that a noncontrolling interest in an
unconsolidated entity be reported as equity and any losses in excess of an
unconsolidated entity’s equity interest will be recorded to the noncontrolling
interest. The statement requires fair value measurement of any
noncontrolling equity investment retained in a deconsolidation. SFAS
160 is effective on January 1, 2009 and most provisions will be applied
retrospectively. We are currently evaluating the impact SFAS 160 will
have on our consolidated financial statements.
On August
31, 2007, the FASB authorized a proposed FASB Staff Position (the “proposed
FSP”) that, if issued, would affect the accounting for our convertible and
exchangeable senior debentures. If issued in the form expected, the
proposed FSP would require that the initial debt proceeds from the sale of our
convertible and exchangeable senior debentures be allocated between a liability
component and an equity component. The resulting debt discount would
be amortized using the effective interest method over the period the debt is
expected to be outstanding as additional interest expense. The
proposed FSP has not been issued, but the FASB has indicated that it is expected
to be effective for fiscal years beginning after December 15, 2007 and requires
retroactive application. Upon the adoption of the proposed FSP on
January 1, 2008, we have estimated the unamortized debt discount (as of December
31, 2007) to be approximately $34.5 million to be included as a reduction of
Debt and approximately $46.3 million as Accumulated Additional Paid-In Capital
on our condensed consolidated balance sheet. We have estimated
incremental Interest Expense to be approximately $8.4 million and $3.4 million
for the years ended December 31, 2007 and 2006.
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, 2007,
we had two interest rate swap contracts designated as fair value hedges with an
aggregate notional amount of $50.0 million that convert fixed interest payments
at rates of 4.2% 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, 2007, 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% effective through January
2018. 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 July,
November and December 2007, swaps of $10 million, $5 million and $10 million,
respectively, matured in conjunction with the maturity of the associated medium
term notes. These hedge contracts were designated as fair value
hedges.
Changes
in the fair value of fair value hedges, as well as changes in the fair value of
the hedged item attributable to the hedge risk, are recorded in earnings each
reporting period. For the twelve months ended December 31, 2007 and
2006, these changes in fair value offset through earnings. At
December 31, 2007, we had no derivative instruments reported in Other
Assets. The derivative instruments at December 31, 2006 were reported
at their fair values in Other Assets, net of accrued interest, of $.1 million,
and as Other Liabilities, net of accrued interest, of $5.8 million and $3.2
million at December 31, 2007 and December 31, 2006, respectively.
As of
December 31, 2007 and December 31, 2006, the balance in Accumulated Other
Comprehensive Loss relating to derivatives was $11.8 million and $7.6 million,
respectively, and amounts amortized to Interest Expense were $.9 million in
2007, $.4 million in 2006 and $.3 million in 2005. Within the next 12
months, approximately $.9 million of the balance in Accumulated Other
Comprehensive Loss is expected to be amortized to Interest Expense.
The
interest rate swaps increased interest expense and decreased net income by $.6
million, $.5 million and $1.3 million in 2007, 2006 and 2005, respectively, and
increased the average interest rate of our debt by .02% in 2007 and 2006 and .1%
in 2005. We could be exposed to losses in the event of nonperformance
by the counter-parties; however, management believes the likelihood of such
nonperformance is remote.
Note
4.
Debt
Our debt
consists of the following (in thousands):
|
December
31,
|
||||||||
|
2007
|
2006
|
|||||||
|
Debt
payable to 2030 at 4.5% to 8.8%
|
$ | 2,876,445 | $ | 2,888,892 | ||||
|
Unsecured
notes payable under revolving credit agreements
|
255,000 | 18,000 | ||||||
|
Obligations
under capital leases
|
29,725 | 29,725 | ||||||
|
Industrial
revenue bonds payable to 2015 at 3.5% to 5.4%
|
3,889 | 4,422 | ||||||
|
Total
|
$ | 3,165,059 | $ | 2,941,039 | ||||
The
grouping of total debt between fixed and variable-rate as well as between
secured and unsecured is summarized below (in thousands):
|
December
31
,
|
||||||||
|
2007
|
2006
|
|||||||
|
As
to interest rate (including the effects of interest rate
swaps):
|
||||||||
|
Fixed-rate
debt
|
$ | 2,843,320 | $ | 2,825,640 | ||||
|
Variable-rate
debt
|
321,739 | 115,399 | ||||||
|
Total
|
$ | 3,165,059 | $ | 2,941,039 | ||||
|
As
to collateralization:
|
||||||||
|
Unsecured
debt
|
$ | 2,095,506 | $ | 1,910,216 | ||||
|
Secured
debt
|
1,069,553 | 1,030,823 | ||||||
|
Total
|
$ | 3,165,059 | $ | 2,941,039 | ||||
In
November 2007, we increased our revolving credit facility from $400 million to
$575 million and amended certain covenants of this facility. This
unsecured revolving credit facility held by a syndicate of banks expires in
February 2010 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 42.5 and 15.0 basis points, respectively, are priced off a
grid that is tied to our senior unsecured credit ratings. This
facility retains a competitive bid feature that allows us to request bids for
amounts up to $287.5 million from each of the syndicate banks, allowing us an
opportunity to obtain pricing below what we would pay using the pricing
grid.
At
December 31, 2007 and December 31, 2006, the balance outstanding under the
revolving credit facility was $255 million at a variable interest rate of 5.4%
and $18 million at a variable interest rate of 5.8%, respectively. We
also have an agreement for an unsecured and uncommitted overnight facility
totaling $30 million as of December 31, 2007 and $20 million at December 31,
2006 with a bank that we use for cash management purposes, of which no amounts
were outstanding at each respective date. Letters of credit totaling
$9.2 million and $10.1 million were outstanding under the revolving credit
facility at December 31, 2007 and 2006, respectively. The available
balance under our revolving credit agreement was $310.8 million and $371.9
million at December 31, 2007 and December 31, 2006,
respectively. During 2007, the maximum balance and weighted average
balance outstanding under both facilities combined were $312.4 million and $96.7
million, respectively, at a weighted average interest rate of
6.1%. During 2006, the maximum balance and weighted average balance
outstanding under both facilities combined were $368.2 million and $179.1
million, respectively, at a weighted average interest rate of 5.5%.
In
January 2008, we elected to repay at par a fixed rate 8.33% mortgage totaling
$121.8 million that was secured by 19 supermarket-anchored shopping centers in
California originally acquired in April 2001.
In
conjunction with acquisitions completed during 2007, we assumed $99.4 million of
nonrecourse debt secured by the related properties. A capital lease
obligation totaling $12.9 million was assumed and subsequently settled in
2007. As of December 31, 2006, the balance of secured debt that was
assumed in conjunction with 2006 acquisitions was $140.7 million.
In
conjunction with the disposition of properties completed 2007, we incurred a net
loss of $.4 million on the early extinguishment of three loans totaling $22.2
million. These defeasance costs were recognized as Interest Expense
and 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."
Various
leases and properties, and current and future rentals from those lease and
properties, collateralize certain debt. At December 31, 2007 and
2006, the carrying value of such property aggregated $1.9 billion and $1.8
billion, respectively.
Scheduled
principal payments on our debt (excluding $255.0 million due under our revolving
credit agreements, $21.0 million of certain capital leases, ($.4) million fair
value of interest rate swaps and $29.7 million of non-cash debt-related items)
are due during the following years (in thousands):
|
2008
|
$ | 254,509 | ||
|
2009
|
113,506 | |||
|
2010
|
119,183 | |||
|
2011
|
890,314 | |||
|
2012
|
333,112 | |||
|
2013
|
283,412 | |||
|
2014
|
373,787 | |||
|
2015
|
200,596 | |||
|
2016
|
142,667 | |||
|
Thereafter
|
148,616 |
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. We are in compliance with all restrictive covenants as of
December 31, 2007.
In
December 2006, we issued $75 million of 10-year unsecured fixed rate medium term
notes at 6.1% including the effect of an interest rate swap that had 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 of 3.95% convertible senior
unsecured 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 debentures, after repurchasing 4.3 million of our common shares
of beneficial interest, were used for general business purposes 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 of
beneficial interest 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
debentures, we will deliver cash for the principal return, as defined, and cash
or common shares of beneficial interest, 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 debentures plus accrued and unpaid interest in
2011, 2016 and 2021 and in the event of a change in control.
In
connection with the issuance of these debentures, we filed a shelf registration
statement related to the resale of the debentures and the common shares of
beneficial interest issuable upon the conversion of the
debentures. This registration statement has been declared effective
by the SEC.
Note
5.
Preferred
Shares
On
September 25, 2007, we issued $200 million of depositary shares in a private
placement, and the net proceeds of $193.6 million were used to repay amounts
outstanding under our credit facilities. Each depositary share
represents one-hundredth of a Series G Cumulative Redeemable Preferred
Share. The depositary shares are redeemable, in whole or in part at
our option, at a redemption price of $25 multiplied by a graded rate per
depositary share based on the date of redemption 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
G Preferred Shares pay a variable-rate quarterly dividend through September 2008
and then a variable-rate monthly dividend and have a liquidation preference of
$2,500 per share. The variable-rate dividend is calculated on the
period’s three-month LIBOR rate plus a percentage determined by the number of
days outstanding. Further, the rate may vary if any of our
outstanding preferred shares are downgraded. The variable-rate
dividend is not to exceed 20%. At December 31, 2007, the
variable-rate dividend was 5.9%.
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 preference of $2,500
per share. Net proceeds of $194.0 million were used to repay amounts
outstanding under our credit facilities and for general business
purposes.
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 preference of $2,500 per
share.
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 preference of $750 per share.
Note
6.
Common Shares of
Beneficial Interest
In July
2007, our Board of Trust Managers authorized a common share repurchase program
as part of our ongoing investment strategy. Under the terms of the
program, we may purchase up to a maximum value of $300 million of our common
shares of beneficial interest during the next two years. Share
repurchases may be made in the open market or in privately negotiated
transactions at the discretion of management and as market conditions
warrant. We anticipate funding the repurchase of shares primarily
through the proceeds received from our property disposition program, as well as
from general corporate funds.
During
2007, we have repurchased and cancelled 1.4 million common shares of
beneficial interest at an average share price of $37.75.
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. For
additional information see Note 4, “Debt.”
Note
7.
Treasury Shares of
Beneficial Interest
At
December 31, 2007, a total of 1.4 million common shares of beneficial interest
were outstanding that were purchased at an average share price of $36.47.
These shares were subsequently retired on January 11, 2008.
Note
8.
Property
Our
property consisted of the following (in thousands):
|
December
31,
|
||||||||
|
2007
|
2006
|
|||||||
|
Land
|
$ | 974,145 | $ | 847,295 | ||||
|
Land
held for development
|
62,033 | 21,405 | ||||||
|
Land
under development
|
223,827 | 146,990 | ||||||
|
Buildings
and improvements
|
3,533,037 | 3,339,074 | ||||||
|
Construction
in-progress
|
179,302 | 91,124 | ||||||
|
Total
|
$ | 4,972,344 | $ | 4,445,888 | ||||
The
following carrying charges were capitalized (in thousands):
|
Year
Ended December 31,
|
||||||||||||
|
2007
|
2006
|
2005
|
||||||||||
|
Interest
|
$ | 25,025 | $ | 7,616 | $ | 2,629 | ||||||
|
Ad
valorem taxes
|
1,985 | 780 | 293 | |||||||||
|
Total
|
$ | 27,010 | $ | 8,396 | $ | 2,922 | ||||||
During
2007, we invested $503.1 million in the acquisition of operating
properties. We completed the acquisition of 13 shopping centers, one
office building and seven industrial properties that are located in Arizona,
Florida, Georgia, Illinois, Oregon, Texas and Virginia. We also
acquired our partner’s 50% interest in a shopping center in Las Vegas,
Nevada. Of this total, $417.3 million was invested in shopping
centers, and $85.8 million was invested in industrial properties and the office
building.
During
2007, we invested $243.1 million in 28 new developments projects. We
commenced 13 new development projects located in Arizona, Florida, Georgia,
Nevada, North Carolina and Texas during 2007. Of these, six represent
interests in consolidated joint ventures in which we have ownership interests
ranging from 50% to 55%.
Note
9.
Discontinued Operations
During
2007, we sold 17 shopping centers and one industrial center, 10 of which were
located in Texas, three in Louisiana, two each in Colorado and Illinois, and one
in Georgia. In 2006, we sold 19 shopping centers and four industrial properties,
10 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. 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 totaled $10.9 million in 2007, $40.8 million in 2006, and $61.5
million in 2005. Included in the Consolidated Balance Sheet at
December 31, 2006 were $180.1 million of Property, $30.4 million of Accumulated
Depreciation and $22.4 million of Debt related to properties sold during
2007.
In 2007,
we incurred a net loss of $.4 million on the defeasance of three loans totaling
$22.2 million that were required to be settled upon their
disposition. These defeasance costs were recognized as Interest
Expense and have been reclassified and reported as operating income from
discontinued operations.
The
discontinued operations reported in 2006 had no debt that was required to be
repaid upon their disposition.
We
elected not to allocate other consolidated interest to discontinued operations
because the interest savings to be realized from the proceeds of the sale of
these operations was not material.
Note
10. Notes
Receivable from Real Estate Joint Ventures and Partnerships
We have
ownership interests in a number of real estate joint ventures and
partnerships. Notes receivable from these entities bear interest
ranging from 5.7% to 10% at December 31, 2007 and 6.0% to 10% at December 31,
2006. These notes 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: $1.5 in 2007 and $1.3 in both
2006 and 2005.
Note
11. Related
Parties
In 2007,
we acquired our partner’s 50% interest in a shopping center in Las Vegas,
Nevada. As part of this transaction, our $22.2 million note
receivable from this partner was settled.
In 2007,
we sold a 12.6% interest in a shopping center located in Lafayette, Louisiana to
our outside partner. Sales proceeds and the gain generated totaled
$4.4 million and $.8 million, respectively.
Note
12. Investment
in Real Estate Joint Ventures and Partnerships
We own
interests in real estate joint ventures or limited partnerships and have
tenancy-in-common interests in which we exercise significant influence, but do
not have financial and operating control. We account for these
investments using the equity method, and our interests range from 7.8% to
75%. Combined condensed unaudited financial information of these
ventures (at 100%) is summarized as follows (in thousands):
|
December
31,
|
||||||||
|
2007
|
2006
|
|||||||
|
Combined
Condensed Balance Sheets
|
||||||||
|
Property
|
$ | 1,660,915 | $ | 1,123,600 | ||||
|
Accumulated
depreciation
|
(71,998 | ) | (41,305 | ) | ||||
|
Property
– net
|
1,588,917 | 1,082,295 | ||||||
|
Other
assets
|
238,166 | 117,594 | ||||||
|
Total
|
$ | 1,827,083 | $ | 1,199,889 | ||||
|
Debt
(primarily mortgage payable)
|
$ | 378,206 | $ | 327,460 | ||||
|
Notes
and accounts payable to Weingarten Realty Investors
|
87,191 | 22,657 | ||||||
|
Other
liabilities
|
138,150 | 39,154 | ||||||
|
Accumulated
equity
|
1,223,536 | 810,618 | ||||||
|
Total
|
$ | 1,827,083 | $ | 1,199,889 | ||||
|
Year
Ended December 31,
|
||||||||||||
|
2007
|
2006
|
2005
|
||||||||||
|
Combined
Condensed Statements of Income
|
||||||||||||
|
Revenues
|
$ | 146,642 | $ | 65,002 | $ | 41,059 | ||||||
|
Expenses:
|
||||||||||||
|
Depreciation
and amortization
|
38,574 | 15,390 | 9,322 | |||||||||
|
Interest
|
23,093 | 17,398 | 10,565 | |||||||||
|
Operating
|
22,396 | 8,750 | 5,480 | |||||||||
|
Ad
valorem taxes
|
15,767 | 6,187 | 4,756 | |||||||||
|
General
and administrative
|
1,243 | 783 | 301 | |||||||||
|
Total
|
101,073 | 48,508 | 30,424 | |||||||||
|
Gain
on land and merchant development sales
|
1,295 | 1,938 | 170 | |||||||||
|
Gain
(loss) on sale of properties
|
5,422 | 5,991 | (20 | ) | ||||||||
|
Net
income
|
$ | 52,286 | $ | 24,423 | $ | 10,785 | ||||||
Our
investment in real estate joint ventures and partnerships, as reported on our
Consolidated Balance Sheets, differs from our proportionate share of the
entities' underlying net assets due to basis differentials, which arose upon the
transfer of assets to the joint ventures. The basis differentials,
which totaled $15.8 million and $20.1 million at December 31, 2007 and December
31, 2006, respectively, are generally amortized over the useful lives of the
related assets.
Fees
earned by us for the management of these real estate joint ventures and
partnerships totaled $5.0 million in 2007, $1.9 million in 2006, and $.8 million
in 2005.
During
2007, a 25%-owned unconsolidated real estate joint venture acquired two shopping
centers. Cole Park Plaza is located in Chapel Hill, North Carolina,
and Sunrise West is located in Sunrise, Florida. A 50%-owned
unconsolidated real estate joint venture was formed for the purpose of
developing a retail shopping center. A 20%-owned unconsolidated real
estate joint venture acquired seven industrial properties, one each in Ashland
and Chester, Virginia, two in Colonial Heights, Virginia and three in Richmond,
Virginia. We invested in a 20%-owned unconsolidated real estate joint
venture, which acquired three retail power centers: Pineapple Commons
located in Stuart, Florida; Mansell Crossing located in Alpharetta, Georgia; and
Preston Shepard Place located in Plano, Texas. We acquired a 10%
interest in two retail shopping centers each through a tenancy-in-common
arrangement that are located in San Jose, California and Destin,
Florida.
In March
2007, three joint ventures, two of which were previously consolidated, were
reorganized and our 50% interest in each of these properties is now held in a
tenancy-in-common arrangement.
In
November 2007, we sold a 12.6% interest in a shopping center located in
Lafayette, Louisiana to our outside partner. Sales proceeds and the
gain generated totaled $4.4 million and $.8 million, respectively.
In
December 2007, we acquired our partner’s 50% interest in a shopping center
located in Las Vegas, Nevada, which was previously held in an unconsolidated
real estate joint venture.
In
December 2007, a retail center in Highland Ranch, Colorado was
sold. This property was held in a 40%-owned unconsolidated real
estate joint venture, and our share of the sales proceeds and the gain generated
was $11.2 million and $2.2 million, respectively. Also, a land parcel
was sold in Liberty Lakes, Washington, which was held in a 50%-owned
unconsolidated real estate joint venture. Our share of the sales
proceeds and the gain generated totaled $1.5 million and $.6 million,
respectively.
During
2006, we invested in a 25%-owned unconsolidated real estate 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 real estate 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 real
estate 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 PNC Realty
Investors (“PNC”) to acquire and operate industrial properties within target
markets across the United States. PNC served as investment advisor to
the AFL-CIO Building Investment Trust (“BIT”). The joint venture is
80% owned by BIT and 20% by us. 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
contributed 16 buildings at five properties with a total value of $123 million
and aggregating more than two million square feet. The sale of an 80%
interest in these properties resulted in a gain to us of $21.6 million, and due
to our continuing involvement with these properties, the operating results have
not been reclassified and reported in discontinued operations. 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 contributed to the
TIAA-CREF Global Real Estate joint venture seven recently purchased
neighborhood/community shopping centers in South Florida 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.
Note
13. Federal
Income Tax Considerations
We
qualify as a REIT under the provisions of the Internal Revenue Code, and
therefore, no tax is imposed on 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 depreciation, rental
revenue, compensation 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 $275 million at December 31, 2007 and $70.8 million at December 31,
2006.
The
following table reconciles net income to REIT taxable income for the year ended
December 31, 2007, 2006 and 2005 (in thousands):
|
2007
|
2006
|
2005
|
||||||||||
|
Net
Income
|
$ | 238,017 | $ | 305,010 | $ | 219,653 | ||||||
|
Net
income of taxable REIT subsidiaries included above
|
(6,352 | ) | (4,264 | ) | (923 | ) | ||||||
|
Net
Income from REIT operations
|
231,665 | 300,746 | 218,730 | |||||||||
|
Book
depreciation and amortization including discontinued
operations
|
134,676 | 131,992 | 126,930 | |||||||||
|
Tax
depreciation and amortization
|
(98,238 | ) | (86,002 | ) | (80,922 | ) | ||||||
|
Book/tax
difference on gains/losses from capital transactions
|
(76,054 | ) | (128,628 | ) | (69,885 | ) | ||||||
|
Other
book/tax differences, net
|
2,698 | (22,534 | ) | (32,336 | ) | |||||||
|
REIT
taxable income
|
194,747 | 195,574 | 162,517 | |||||||||
|
Dividends
paid deduction
|
(194,747 | ) | (195,574 | ) | (167,196 | ) | ||||||
|
Dividends
paid in excess of taxable income
|
$ | - | $ | - | $ | (4,679 | ) | |||||
The
dividends paid deduction in 2007 and 2006 includes designated dividends of $10.9
million from 2008 and $10.2 million from 2007.
For
federal income tax purposes, the cash dividends distributed to common
shareholders are characterized as follows:
|
2007
|
2006
|
2005
|
||||||||||
|
Ordinary
income
|
85.6 | % | 76.2 | % | 81.2 | % | ||||||
|
Capital
gain distributions
|
14.4 | 23.8 | 9.7 | |||||||||
|
Return
of capital (generally nontaxable)
|
9.1 | |||||||||||
|
Total
|
100.0 | % | 100.0 | % | 100.0 | % | ||||||
Our
taxable REIT subsidiary is subject to federal, state and local income
taxes. We have recorded a federal income tax provision of $2.1
million, $1.3 million and zero for the years ended December 31, 2007, 2006 and
2005, respectively. Our deferred tax assets at December 31, 2007 and
2006 were $1.1 million and $.3 million, respectively, with the deferred tax
liabilities totaling $1.4 million and $1.6 million,
respectively. Also, a current tax obligation of $2.3 million has been
recorded at December 31, 2007 in association with this tax.
We have
reviewed our tax positions under FIN 48. 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 new business tax (the “Revised Texas
Franchise Tax”) that replaces its existing franchise tax. In general,
legal entities that do business in Texas are subject to the Revised Texas
Franchise Tax. Most REITs are subject to the Revised Franchise Tax,
whereas they were previously exempt. The Revised Texas Franchise Tax
becomes effective for franchise tax reports due on or after January 1, 2008 and
will be based on revenues earned during the 2007 fiscal year.
Because
the Revised Texas Franchise Tax is determined by applying a tax rate to a base
that considers both revenues and expenses, it is considered an income tax and is
accounted for in accordance with the provisions of SFAS No. 109, “Accounting for
Income Taxes.”
For the
years ended December 31, 2007 and 2006, we recorded a provision for the Revised
Texas Franchise Tax of $2.0 million and $.1 million,
respectively. The deferred tax assets and deferred tax liability
associated with this tax each totaled $.1 million as of December 31, 2007 and
2006. Also, a current tax obligation of $2.0 million has been
recorded at December 31, 2007 in association with this tax.
Note
14. 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 non-cancelable
tenant leases at December 31, 2007, in millions, is: $445.2 in 2008; $392.3 in
2009; $329.8 in 2010; $257.7 in 2011; $193.5 in 2012; and $797.6
thereafter. The future minimum rental amounts do not include
estimates for contingent rentals. Such contingent rentals, in
millions, aggregated $126.3 in 2007, $119.0 in 2006 and $108.8 in
2005.
Note
15. 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):
|
2008
|
$ | 2,436 | ||
|
2009
|
2,961 | |||
|
2010
|
2,917 | |||
|
2011
|
2,862 | |||
|
2012
|
2,821 | |||
|
Thereafter
|
113,568 | |||
| $ | 127,565 |
Rental
expense (including insignificant amounts for contingent rentals) for operating
leases was, in millions: $3.4 in 2007; $3.2 in 2006 and $2.9 in
2005.
The
scheduled future minimum revenues under subleases, 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):
|
2008
|
$ | 32,356 | ||
|
2009
|
28,028 | |||
|
2010
|
23,814 | |||
|
2011
|
20,022 | |||
|
2012
|
16,222 | |||
|
Thereafter
|
68,544 | |||
| $ | 188,986 |
Property
under capital leases, consisting of four shopping centers at both December 31,
2007 and 2006 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,
2007 and 2006 was $14.2 million and $13.1 million,
respectively. Future minimum lease payments under these capital
leases total $50.1 million, with annual payments due, in millions, of $1.9 in
2008; $2.0 in each of 2009 and 2010; $2.1 in each of 2011 and 2012; and $40.0
thereafter. The amount of these total payments representing interest
is $20.4 million. Accordingly, the present value of the net minimum
lease payments was $29.7 million at December 31, 2007.
We
participate in six real estate ventures structured as DownREIT partnerships that
have properties in Arkansas, California, Georgia, North Carolina, Texas and
Utah. As a 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
of beneficial interest, at our discretion. We also participate in two
real estate ventures that have properties in Florida and Texas that allow their
outside partners to put operating partnership units to us for our common shares
of beneficial interest or an equivalent amount of cash. We have the
option to redeem these units in cash or a fixed number of our common shares of
beneficial interest, at our discretion.
In 2007 and
2006 we issued common shares of beneficial interest valued at $13.6 million and
$8.0, million, respectively, in exchange for certain of these limited
partnership interests
or operating
partnership units. The aggregate redemption value of the operating
partnership units was approximately $76 million and $139 million as of December
31, 2007 and 2006, respectively.
In
January 2007, two retail properties were purchased in Arizona. This
purchase transaction includes an earnout provision of approximately $29 million
that is contingent upon the subsequent development of space by the property
seller. This contingency agreement expires in 2010. As of
December 31, 2007, $5.2 million has been paid and $4.2 million has been
accrued. Amounts paid or accrued under such earnouts are treated as
additional purchase price and capitalized to the related property.
In April
2007, we acquired an industrial building located in Virginia. This
purchase transaction includes an earnout provision of approximately $6 million
that is contingent upon the lease up of vacant space by the property
seller. This contingency agreement expires in 2009. As of
December 31, 2007, $5.6 million has been accrued. Amounts paid or
accrued under such earnouts are treated as additional purchase price and
capitalized to the related property.
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 have no
obligation for this contingency as of December 31, 2007.
We expect
to invest approximately $127.0 million in 2008, $100.5 million in 2009, $53.3
million in 2010, $7.8 million in 2011 and $1.4 million in 2012 to complete
construction of 32 properties under various stages of development. We
also expect to invest $8.3 million to acquire projects in 2008 and $1.8 in
2009.
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 consolidated financial
statements.
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.
Related
to our investment in a redevelopment project in Sheridan, Colorado that is held
in an unconsolidated real estate joint venture, we, our joint venture partner
and the joint venture have each provided a guarantee for the payment of any
annual sinking fund requirement shortfalls on bonds issued in connection with
the project. The Sheridan Redevelopment Agency issued $97 million of
Series A bonds used for an urban renewal project. The bonds are to be
repaid with incremental sales and property taxes and a public improvement fee
(“PIF”) to be assessed on future retail sales. The incremental taxes
and PIF are to remain intact until the bond liability has been paid in full,
including any amounts we may have to provide. We have evaluated and
determined that the fair value of the guarantee is nominal. However,
due to the guarantee, a liability has been recorded by the joint venture equal
to amounts funded under the bonds.
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
16. Identified
Intangible Assets and Liabilities
Identified
intangible assets and liabilities associated with our property acquisitions are
as follows (in thousands):
|
December
31,
|
December
31,
|
|||||||
|
2007
|
2006
|
|||||||
|
Identified
Intangible Assets:
|
||||||||
|
Above-Market
Leases (included in Other Assets)
|
$ | 18,590 | $ | 14,686 | ||||
|
Above-Market
Leases – Accumulated Amortization
|
(7,323 | ) | (5,277 | ) | ||||
|
Below-Market
Assumed Mortgages (included in Debt)
|
2,072 | 1,653 | ||||||
|
Below-Market
Assumed Mortgages – Accumulated Amortization
|
(246 | ) | ||||||
|
Valuation
of In Place Leases (included in Unamortized Debt and Lease
Cost)
|
59,498 | 52,878 | ||||||
|
Valuation
of In Place Leases – Accumulated Amortization
|
(22,308 | ) | (16,297 | ) | ||||
| $ | 50,283 | $ | 47,643 | |||||
|
Identified
Intangible Liabilities:
|
||||||||
|
Below-Market
Leases (included in Other Liabilities)
|
$ | 39,141 | $ | 24,602 | ||||
|
Below-Market
Leases – Accumulated Amortization
|
(11,949 | ) | (6,569 | ) | ||||
|
Above-Market
Assumed Mortgages (included in Debt)
|
58,414 | 59,863 | ||||||
|
Above-Market
Assumed Mortgages – Accumulated Amortization
|
(24,517 | ) | (18,123 | ) | ||||
| $ | 61,089 | $ | 59,773 | |||||
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 rental revenues
by $3.2 million, $1.3 million, and $.3 million in 2007, 2006, and 2005,
respectively. The estimated net amortization of these intangible
assets and liabilities will increase rental revenues for each of the next five
years as follows (in thousands):
|
2008
|
$ | 3,321 | ||
|
2009
|
2,771 | |||
|
2010
|
1,940 | |||
|
2011
|
1,369 | |||
|
2012
|
1,115 |
The
amortization of the in place lease intangible recorded in depreciation and
amortization, was $8.3 million, $7.6 million, and $6.2 million in 2007, 2006,
and 2005, respectively. The estimated amortization of this intangible
asset will increase depreciation and amortization for each of the next five
years as follows (in thousands):
|
2008
|
$ | 7,187 | ||
|
2009
|
6,255 | |||
|
2010
|
5,227 | |||
|
2011
|
4,042 | |||
|
2012
|
3,229 |
The
amortization of above-market and below-market assumed mortgages decreased
interest expense by $6.7 million, $7.3 million and $6.9 million in 2007, 2006,
and 2005, respectively. The estimated amortization of these
intangible assets and liabilities will decrease interest expense for each of the
next five years as follows (in thousands):
|
2008
|
$ | 5,804 | ||
|
2009
|
4,476 | |||
|
2010
|
3,823 | |||
|
2011
|
2,526 | |||
|
2012
|
1,355 |
Note
17. 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,
2007. 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 at both
December 31, 2007 and 2006, have fair values of approximately $2.9 billion and
$2.7 billion, respectively. The fair value of our variable-rate debt
approximates its carrying values of $321.7 million and $115.4 million as of
December 31, 2007 and 2006, respectively.
Note
18. Share
Options and Awards
On
January 1, 2006, we adopted SFAS No. 123(R), “Share-Based Payment,” which
established 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. We began recording compensation expense on any unvested
awards granted during the remaining vesting periods.
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 of beneficial
interest. This plan expired in December 1997, and no awards remain
outstanding at December 31, 2007.
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 beneficial interest, of which .2 million is
available for future grant of options or awards at December 31,
2007. 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 of beneficial interest, 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,
2007. The share options granted to non-officers 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 10
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 of beneficial
interest 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, 2007. This plan expires in
2011. The share options granted to non-officers 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 options or
awards granted to retirement eligible employees are expensed
immediately.
The grant
price for the Employee Share Option Plan is equal to the closing price of our
common shares of beneficial interest 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 value of our common shares of beneficial interest on
the date of grant. In both plans, these options expire upon
termination of employment or 10 years from the date of grant. In the
Long-term Incentive Plan, restricted shares for officers and trust managers are
granted at no purchase 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 $5.1 million in
2007, $4.9 million in 2006 and $1.7 million in 2005, of which $1.3 million in
both 2007 and 2006 and $.5 million in 2005 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 10 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,
|
||||||||||||
|
2007
|
2006
|
2005
|
||||||||||
|
Fair
value per share option
|
$ | 4.29 | $ | 4.97 | $ | 3.02 | ||||||
|
Dividend
yield
|
5.5 | % | 5.7 | % | 6.3 | % | ||||||
|
Expected
volatility
|
18.1 | % | 18.2 | % | 16.8 | % | ||||||
|
Expected
life (in years)
|
6.0 | 5.9 | 6.7 | |||||||||
|
Risk-free
interest rate
|
4.1 | % | 4.4 | % | 4.4 | % | ||||||
Following
is a summary of the option activity for the three years ended December 31,
2007:
|
Weighted
|
||||||||
|
Shares
|
Average
|
|||||||
|
Under
|
Exercise
|
|||||||
|
Option
|
Price
|
|||||||
|
Outstanding,
January 1, 2005
|
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 | ||||||
|
Granted
|
7,821 | 42.63 | ||||||
|
Forfeited
or expired
|
(73,156 | ) | 35.78 | |||||
|
Exercised
|
(241,528 | ) | 23.24 | |||||
|
Outstanding,
December 31, 2007
|
2,840,290 | $ | 32.66 | |||||
The total
intrinsic value of options exercised was $5.0 million in 2007, $10.3 million in
2006 and $6.4 million in 2005. As of December 31, 2007 and 2006,
there was approximately $3.3 million and $4.9 million, respectively, of total
unrecognized compensation cost related to unvested share options, which is
expected to be amortized over a weighted average of 2.0 years and 3.0 years,
respectively.
The
following table summarizes information about share options outstanding and
exercisable at December 31, 2007:
|
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 | 1,059,744 |
4.0
years
|
$ | 21.95 | 860,045 | $ | 21.55 |
3.8
years
|
|||||||||||||||||||
| $ | 26.84 - $40.26 | 1,262,966 |
7.0
years
|
$ | 35.58 | 818,749 | $ | 34.91 |
6.8
years
|
|||||||||||||||||||
| $ | 40.27 - $49.62 | 517,580 |
8.9
years
|
$ | 47.47 | 113,702 | $ | 47.46 |
8.9
years
|
|||||||||||||||||||
|
Total
|
2,840,290 |
6.2
years
|
$ | 32.66 | $ | - | 1,792,496 | $ | 29.30 |
5.5
years
|
$ | 3,836 | ||||||||||||||||
A summary
of the status of unvested restricted shares for the ended December 31, 2007 is
as follows:
|
Unvested
|
Weighted
|
|||||||
|
Restricted
|
Average
Grant
|
|||||||
|
Shares
|
Date
Fair Value
|
|||||||
|
Outstanding,
January 1, 2007
|
172,255 | $ | 40.80 | |||||
|
Granted
|
10,412 | 48.43 | ||||||
|
Vested
|
(55,841 | ) | 40.63 | |||||
|
Forfeited
|
(9,287 | ) | 42.04 | |||||
|
Outstanding,
December 31, 2007
|
117,539 | $ | 41.45 | |||||
As of
December 31, 2007 and 2006, there was approximately $4.4 million and $6.1
million, respectively, of total unrecognized compensation cost related to
unvested restricted shares, which is expected to be amortized over a weighted
average of 2.7 years and 3.7 years, respectively.
Note
19. 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 $1.0
million in 2007, $.8 million in 2006 and $.7 million in 2005.
We also
have an Employee Share Purchase Plan under which .6 million of our common shares
of beneficial interest have been authorized. These shares, as well as
common shares of beneficial interest purchased by us on the open market, are
made available for sale to employees at a discount of 15% from the quoted market
price on the purchase date. 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 30,437, 24,181 and
22,717 shares were purchased by employees at an average price of $33.49, $35.38
and $30.89 during 2007, 2006 and 2005, 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 two separate and independent
nonqualified supplemental retirement plans ("SRP") for certain employees, the
assets of which are held in a grantor trust. These unfunded plans
provide benefits in excess of the statutory limits of our noncontributory cash
balance retirement plan. 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 of 7.5%. Vesting generally
occurs after five years of service. We have elected to use the actuarial
present value of the vested benefits to which the participant is entitled if the
participant separates immediately for the SRP, as defined in EITF 88-1,
"Determination of Vested Benefit Obligation for a Defined Benefit Pension
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 $803,000.
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 $183,000, ($117,000) 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, 2007 and
2006.
|
Fiscal
Year End
|
||||||||
|
2007
|
2006
|
|||||||
|
Change
in Projected Benefit Obligation:
|
||||||||
|
Benefit
obligation at beginning of year
|
$ | 38,997 | $ | 32,456 | ||||
|
Service
cost
|
3,846 | 3,090 | ||||||
|
Interest
cost
|
2,175 | 2,309 | ||||||
|
Plan
amendments
|
63 | |||||||
|
Actuarial
(gains) losses
|
(1,325 | ) | 1,882 | |||||
|
Benefit
payments
|
(2,610 | ) | (803 | ) | ||||
|
Benefit
obligation at end of year
|
$ | 41,083 | $ | 38,997 | ||||
|
Change
in Plan Assets:
|
||||||||
|
Fair
value of plan assets at beginning of year
|
$ | 17,933 | $ | 15,213 | ||||
|
Actual
return on plan assets
|
1,185 | 1,901 | ||||||
|
Employer
contributions
|
3,926 | 1,622 | ||||||
|
Benefit
payments
|
(2,610 | ) | (803 | ) | ||||
|
Fair
value of plan assets at end of year
|
$ | 20,434 | $ | 17,933 | ||||
|
Unfunded
Status at End of Year:
|
$ | 20,649 | $ | 21,064 | ||||
|
Accumulated
benefit obligation
|
$ | 40,101 | $ | 38,194 | ||||
|
Amounts
recognized in accumulated other comprehensive loss consist
of:
|
||||||||
|
Net
loss
|
$ | 4,287 | $ | 5,565 | ||||
|
Prior
service credit
|
(587 | ) | (704 | ) | ||||
|
Total
amount recognized
|
$ | 3,700 | $ | 4,861 | ||||
The
following
is the
required information for plans with an accumulated benefit obligation in excess
of plan assets at each year end:
|
2007
|
2006
|
|||||||
|
Projected
benefit obligation
|
$ | 41,083 | $ | 38,997 | ||||
|
Accumulated
benefit obligation
|
40,101 | 38,194 | ||||||
|
Fair
value of plan assets
|
20,434 | 17,933 | ||||||
At December 31, 2007 and
2006, the Retirement Plan was underfunded by $2.7 million and $4.8 million,
respectively, and the SRP was underfunded by $17.9 million and $16.3 million,
respectively.
The
following is the required information for other changes in plan assets and
benefit obligations recognized in other comprehensive income:
|
2007
|
2006
|
2005
|
||||||||||
|
Net
gain
|
$ | (925 | ) | N/A | N/A | |||||||
|
Amortization
of net gain
|
(353 | ) | N/A | N/A | ||||||||
|
Amortization
of prior service cost
|
117 | N/A | N/A | |||||||||
|
Total
recognized in other comprehensive income
|
$ | (1,161 | ) | N/A | N/A | |||||||
| Total recognized in net periodic benefit costs and other comprehensive income | $ | 3,511 | N/A | N/A | ||||||||
The
components of net periodic benefit cost for both plans are as follows (in
thousands):
|
2007
|
2006
|
2005
|
||||||||||
|
Service
cost
|
$ | 3,846 | $ | 3,090 | $ | 2,641 | ||||||
|
Interest
cost
|
2,175 | 2,309 | 1,724 | |||||||||
|
Expected
return on plan assets
|
(1,500 | ) | (1,385 | ) | (1,192 | ) | ||||||
|
Prior
service cost
|
(117 | ) | (128 | ) | (128 | ) | ||||||
|
Recognized
loss
|
269 | 407 | 159 | |||||||||
|
Total
|
$ | 4,673 | $ | 4,293 | $ | 3,204 | ||||||
The
assumptions used to develop periodic expense for both plans are shown
below:
|
2007
|
2006
|
2005
|
||||||||||
|
Discount
rate – Retirement Plan
|
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 | % | ||||||
|
Long-term
rate of return on assets – Retirement Plan
|
8.50 | % | 8.50 | % | 8.50 | % | ||||||
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 2007.
The
assumptions used to develop the actuarial present value of the benefit
obligations at year-end for both plans are shown below:
|
2007
|
2006
|
2005
|
||||||||||
|
Discount
rate – Retirement Plan
|
6.25 | % | 5.75 | % | 5.75 | % | ||||||
|
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 2008 is
approximately $5.5 million, of which $2.5 million relates to the Retirement
Plan. The expected benefit payments for the next ten years for both
plans are as follows, in millions: $.7 in 2008; $7.0 in 2009; $.8 in 2010; $.8
in 2011, $2.5 in 2012 and $9.3 in 2013 through 2017.
The
participant data used in determining the liabilities and costs was collected as
of January 1, 2007.
The
allocation of the fair value of plan assets as provided by the plan trustee was
as follows (in thousands):
|
December
31,
|
||||||||
|
2007
|
2006
|
|||||||
|
Cash
and short-term investments
|
3 | % | 3 | % | ||||
|
Mutual
funds – equity
|
69 | % | 69 | % | ||||
|
Mutual
funds – fixed income
|
28 | % | 28 | % | ||||
|
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 salary or share-based
compensation. Deferred amounts are deposited in a grantor trust,
which are included in Other Assets, and are reported as compensation expense in
the year service is rendered. Cash deferrals are invested based on
the employee’s investment selections from a mix of assets based on a “Broad
Market Diversification” model. Deferred share-based compensation
cannot be diversified, and distributions from this plan are made in the same
form as the original deferral.
Note
20. Segment
Information
The
reportable segments presented are the segments for which separate financial
information is available, and for which operating performance is evaluated
regularly by senior management in deciding how to allocate resources and in
assessing performance. We evaluate the performance of the reportable
segments based on net operating income, 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 segment
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,
Illinois, Georgia, 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, Texas and Virginia, 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
|
|||||||||||||
|
Year
Ended December 31, 2007:
|
||||||||||||||||
|
Revenues
|
$ | 533,815 | $ | 54,355 | $ | 10,884 | $ | 599,054 | ||||||||
|
Net
Operating Income
|
382,092 | 37,610 | 4,533 | 424,235 | ||||||||||||
|
Equity
in Earnings of Real Estate Joint Ventures and Partnerships,
net
|
18,309 | 1,348 | 196 | 19,853 | ||||||||||||
|
Capital
Expenditures
|
771,590 | 91,881 | 24,874 | 888,345 | ||||||||||||
|
Year
Ended December 31, 2006:
|
||||||||||||||||
|
Revenues
|
$ | 481,388 | $ | 54,118 | $ | 2,688 | $ | 538,194 | ||||||||
|
Net
Operating Income (Loss)
|
350,145 | 37,784 | (405 | ) | 387,524 | |||||||||||
|
Equity
in Earnings of Real Estate Joint Ventures and Partnerships,
net
|
13,713 | 377 | 565 | 14,655 | ||||||||||||
|
Capital
Expenditures
|
920,017 | 96,504 | 5,582 | 1,022,103 | ||||||||||||
|
Year
Ended December 31, 2005:
|
||||||||||||||||
|
Revenues
|
$ | 439,005 | $ | 46,715 | $ | 2,136 | $ | 487,856 | ||||||||
|
Net
Operating Income
|
323,861 | 33,711 | 885 | 358,457 | ||||||||||||
|
Equity
in Earnings (Loss) of Real Estate Joint Ventures and Partnerships,
net
|
6,533 | 87 | (10 | ) | 6,610 | |||||||||||
|
Capital
Expenditures
|
339,328 | 89,066 | 646 | 429,040 | ||||||||||||
|
As
of December 31, 2007:
|
||||||||||||||||
|
Investment
in Real Estate Joint Ventures and Partnerships
|
$ | 261,293 | $ | 35,103 | $ | 4,360 | $ | 300,756 | ||||||||
|
Total
Assets
|
3,908,105 | 353,157 | 732,081 | 4,993,343 | ||||||||||||
|
As
of December 31, 2006:
|
||||||||||||||||
|
Investment
in Real Estate Joint Ventures and Partnerships
|
$ | 174,587 | $ | 25,156 | $ | 4,096 | $ | 203,839 | ||||||||
|
Total
Assets
|
3,516,080 | 324,343 | 533,464 | 4,373,887 | ||||||||||||
|
As
of December 31, 2005
|
||||||||||||||||
|
Investment
in Real Estate Joint Ventures and Partnerships
|
$ | 82,092 | $ | 480 | $ | 1,776 | $ | 84,348 | ||||||||
|
Total
Assets
|
3,035,964 | 355,848 | 345,929 | 3,737,741 | ||||||||||||
Net
operating income reconciles to Income from Continuing Operations as shown on the
Statements of Consolidated Income and Comprehensive Income as follows (in
thousands):
|
2007
|
2006
|
2005
|
||||||||||
|
Total
Segment Net Operating Income
|
$ | 424,235 | $ | 387,524 | $ | 358,457 | ||||||
|
Depreciation
and Amortization
|
(131,708 | ) | (121,471 | ) | (110,956 | ) | ||||||
|
General
and Administrative
|
(26,979 | ) | (23,801 | ) | (17,379 | ) | ||||||
|
Interest
Expense
|
(148,829 | ) | (145,374 | ) | (129,160 | ) | ||||||
|
Interest
and Other Income
|
8,486 | 9,044 | 2,860 | |||||||||
|
Equity
in Earnings of Real Estate Joint
Ventures
and Partnerships, net
|
19,853 | 14,655 | 6,610 | |||||||||
|
Income
Allocated to Minority Interests
|
(10,237 | ) | (6,414 | ) | (6,060 | ) | ||||||
|
Gain
on Land and Merchant Development Sales
|
16,385 | 7,166 | 804 | |||||||||
|
Gain
on Sale of Properties
|
4,086 | 22,493 | 22,306 | |||||||||
|
Provision
for Income Taxes
|
(4,073 | ) | (1,366 | ) | ||||||||
|
Income
from Continuing Operations
|
$ | 151,219 | $ | 142,456 | $ | 127,482 | ||||||
Note
21. Quarterly
Financial Data (Unaudited)
Summarized
quarterly financial data is as follows (in thousands):
|
First
|
Second
|
Third
|
Fourth
|
||||||||||||||||
|
2007:
|
|||||||||||||||||||
|
Revenues
(2)
|
$ | 143,507 | $ | 145,027 | $ | 156,116 | $ | 154,404 | |||||||||||
|
Net
income available to common shareholders
|
46,657 | 70,002 | (1) | 38,281 | 57,702 | (1) | |||||||||||||
|
Net
income per common share – basic
|
0.61 | 0.81 | (1) | 0.45 | 0.68 | (1) | |||||||||||||
|
Net
income per common share – diluted
|
0.53 | 0.79 | (1) | 0.44 | 0.67 | (1) | |||||||||||||
|
2006:
|
|||||||||||||||||||
|
Revenues
(2)
|
$ | 128,300 | $ | 130,621 | $ | 138,557 | $ | 140,716 | |||||||||||
|
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 | |||||||||||||
|
|
(1)
|
The
quarter results include gains on the sale of
properties.
|
|
|
(2)
|
Revenues
from the sale of operating properties have been reclassified and reported
as operating income from discontinued operations for all periods
presented.
|
****
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, 2007. 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,
2007.
There has
been no change to our internal control over financial reporting during the
quarter ended December 31, 2007 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 its 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, 2007 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 WRI's internal control over financial reporting is effective as of December
31, 2007.
Deloitte
& Touche LLP, WRI's independent registered public accounting firm that
audited the consolidated financial statements and financial statement schedules
included in this Form 10-K, has issued an attestation report on the
effectiveness of WRI's internal control over financial reporting.
February
29, 2008
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Trust Managers and Shareholders of
Weingarten
Realty Investors
Houston,
Texas
We have
audited the internal control over financial reporting of Weingarten Realty
Investors and subsidiaries (the "Company") as of December 31, 2007, 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,
included in the accompanying
Management’s Report On
Internal Control Over Financial Reporting
.
Our responsibility is
to express an opinion on 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, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness
of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
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, 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 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, the Company maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2007, 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
consolidated financial statement schedules as of and for the year ended December
31, 2007 of the Company and our reports dated February 29, 2008 expressed
unqualified opinions on those financial statements and financial statement
schedules.
/s/Deloitte
& Touche LLP
Houston,
Texas
February
29, 2008
Not
applicable.
PART
III
Information
with respect to our trust managers and executive officers is incorporated herein
by reference to the "Election of Trust Managers," "Executive Officers" and
“Share Ownership of Certain Beneficial Owners and Management—Section 16(a)
Beneficial Ownership Reporting Compliance” sections of our definitive Proxy
Statement for the Annual Meeting of Shareholders to be held May 7,
2008.
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."
Information
with respect to executive compensation is incorporated herein by reference to
the “Executive Compensation”, “Election of Trust Managers”, “Trust Manager
Compensation Table” and “Compensation Committee Report” sections of our
definitive Proxy Statement for the Annual Meeting of Shareholders to be held May
7, 2008.
The
"Share Ownership of Certain Beneficial Owners and Management" section of our
definitive Proxy Statement for the Annual Meeting of Shareholders to be held May
7, 2008 is incorporated herein by reference.
The
following table summarizes the equity compensation plans under which our common
shares of beneficial interest may be issued as of December 31,
2007:
|
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
|
2,840,290
|
$
32.66
|
2,626,360
|
|||
|
Equity
compensation plans not approved by shareholders
|
―
|
―
|
―
|
|||
|
Total
|
2,840,290
|
$
32.66
|
2,626,360
|
The
“Corporate Governance – Independence of Trust Managers and Committee Members”,
“Compensation Committee Interlocks and Insider Participation" and “Certain
Transactions” sections of our definitive Proxy Statement for the Annual Meeting
of Shareholders to be held May 7, 2008 are incorporated herein by
reference.
The
"Independent Registered Public Accounting Firm Fees" section within “Proposal
Two –Ratification of Independent Registered Public Accounting Firm” of our
definitive Proxy Statement for the Annual Meeting of Shareholders to be held May
7, 2008 is incorporated herein by reference.
PART
IV
|
(a)
|
Financial
Statements and Financial Statement Schedules:
|
Page
|
|||
|
(1)
|
(A)
|
49
|
|||
|
(B)
|
Financial
Statements
|
||||
|
(i)
|
50
|
||||
|
(ii)
|
51
|
||||
|
(iii)
|
52
|
||||
|
(iv)
|
53
|
||||
|
(v)
|
54
|
||||
|
(2)
|
Financial
Statement Schedules:
|
||||
|
91
|
|||||
|
Schedule
|
|||||
|
II
|
92
|
||||
|
III
|
93
|
||||
|
IV
|
95
|
||||
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).
|
|
3.8
|
—
|
Amendment
of Bylaws-Direct Registration System, Section 7.2(a) dated May 3,
2007 (filed as Exhibit 3.8 to WRI’s Form 10-Q for the quarter ended June
30, 2007 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).
|
|
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
|
—
|
Amendment
Agreement dated November 7, 2007 to the Amended and Restated Credit
Agreement (filed as Exhibit 10.34 on WRI’s Form 10-Q for the quarter ended
September 30, 2007 and incorporated herein by
reference).
|
|
10.35†
|
—
|
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).
|
|
10.36†
|
—
|
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 30, 2006 and incorporated herein by
reference).
|
|
10.37†
|
—
|
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 30, 2006 and incorporated herein by
reference).
|
|
10.38†
|
—
|
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 30, 2006 and incorporated herein by
reference).
|
|
10.39†
|
—
|
Amendment
No. 1 to the Weingarten Realty Investors Supplemental Executive Retirement
Plan dated December 15, 2006 (filed as Exhibit 10.38 on WRI’s Form 10-K
for the year ended December 31, 2006 and incorporated by
reference).
|
|
10.40†
|
—
|
Amendment
No. 1 to the Weingarten Realty Investors Retirement Benefit Restoration
Plan dated December 15, 2006 (filed as Exhibit 10.39 on WRI’s Form 10-K
for the year ended December 31, 2006 and incorporated by
reference).
|
|
10.41†
|
—
|
Amendment
No. 1 to the Weingarten Realty Investors Deferred Compensation Plan dated
December 15, 2006 (filed as Exhibit 10.40 on WRI’s Form 10-K for the year
ended December 31, 2006 and incorporated by reference).
|
|
10.42†
|
—
|
Final
401(k)/401(m) Regulations Amendment dated December 15, 2006 (filed as
Exhibit 10.41 on WRI’s Form 10-K for the year ended December 31, 2006 and
incorporated by reference).
|
|
10.43†*
|
—
|
|
10.44†*
|
—
|
|
|
10.45†*
|
—
|
|
|
10.46†*
|
—
|
|
|
10.47†*
|
—
|
|
|
12.1*
|
—
|
|
|
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).
|
|
23.1*
|
—
|
|
|
31.1*
|
—
|
|
|
31.2*
|
—
|
|
|
32.1**
|
—
|
|
|
32.2**
|
—
|
_______________
|
*
|
Filed
with this report.
|
|
**
|
Furnished
with this report.
|
|
†
|
Management
contract or compensation plan or
arrangement.
|
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: February
29, 2008
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
|
February
29, 2008
|
|
Stanford
Alexander
|
and
Trust Manager
|
||
|
By:
|
/s/ Andrew
M. Alexander
|
Chief
Executive Officer,
|
February
29, 2008
|
|
Andrew
M. Alexander
|
President
and Trust Manager
|
||
|
By:
|
/s/ James
W. Crownover
|
Trust
Manager
|
February
29, 2008
|
|
James
W. Crownover
|
|||
|
By:
|
/s/ Robert
J. Cruikshank
|
Trust
Manager
|
February
29, 2008
|
|
Robert
J. Cruikshank
|
|||
|
By:
|
/s/ Martin
Debrovner
|
Vice
Chairman
|
February
29, 2008
|
|
Martin
Debrovner
|
|
By:
|
/s/ Melvin
Dow
|
Trust
Manager
|
February
29, 2008
|
|
Melvin
Dow
|
|||
|
By:
|
/s/ Stephen
A. Lasher
|
Trust
Manager
|
February
29, 2008
|
|
Stephen
A. Lasher
|
|||
|
By:
|
/s/ Stephen
C. Richter
|
Executive
Vice President and
|
February
29, 2008
|
|
Stephen
C. Richter
|
Chief
Financial Officer
|
||
|
By:
|
/s/ Douglas
W. Schnitzer
|
Trust
Manager
|
February
29, 2008
|
|
Douglas
W. Schnitzer
|
|||
|
By:
|
/s/ Joe
D. Shafer
|
Vice
President/Chief Accounting Officer
|
February
29, 2008
|
|
Joe
D. Shafer
|
(Principal
Accounting Officer)
|
||
|
By:
|
/s/ C.
Park Shaper
|
Trust
Manager
|
February
29, 2008
|
|
C.
Park Shaper
|
|||
|
By:
|
/s/ Marc
J. Shapiro
|
Trust
Manager
|
February
29, 2008
|
|
Marc
J. Shapiro
|
|||
To the
Board of Trust Managers and Shareholders of
Weingarten
Realty Investors
Houston,
Texas
We have
audited the consolidated financial statements of Weingarten Realty Investors and
subsidiaries (the "Company") as of December 31, 2007 and 2006, and for each of
the three years in the period ended December 31, 2007, and the Company's
internal control over financial reporting as of December 31, 2007, and have
issued our reports thereon dated February 29, 2008; such reports are included
elsewhere in this Form 10-K. Our audits also included the
consolidated financial statement schedules of the Company listed
in Item 15. These
consolidated financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our
opinion, such
consolidated 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.
/s/Deloitte
& Touche LLP
Houston,
Texas
February
29, 2008
Schedule
II
WEINGARTEN
REALTY INVESTORS
December
31, 2007, 2006, and 2005
(Amounts
in thousands)
|
Charged
|
||||||||||||||||
|
Balance
at
|
to
costs
|
Balance
|
||||||||||||||
|
beginning
|
and
|
Deductions
|
at
end of
|
|||||||||||||
|
Description
|
of
period
|
expenses
|
(A)
|
period
|
||||||||||||
|
2007
|
||||||||||||||||
|
Allowance
for Doubtful Accounts
|
$ | 5,995 | $ | 5,929 | $ | 3,203 | $ | 8,721 | ||||||||
|
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 | ||||||||
_______________
Note A -
Write-offs of accounts receivable previously reserved.
Schedule
III
WEINGARTEN
REALTY INVESTORS
DECEMBER
31, 2007
(Amounts
in thousands)
|
Total
Cost
|
||||||||||||||||||||||||
|
Buildings
|
Projects
|
Total
|
||||||||||||||||||||||
|
and
|
Under
|
Cost
|
Accumulated
|
Encumbrances
|
||||||||||||||||||||
|
Land
|
Improvements
|
Development
|
(B)
|
Depreciation
|
(A)
|
|||||||||||||||||||
|
SHOPPING
CENTERS:
|
||||||||||||||||||||||||
|
Texas
|
$ | 180,711 | $ | 804,127 | $ | 984,838 | $ | 333,815 | $ | 82,906 | ||||||||||||||
|
Other
States
|
711,702 | 2,315,769 | 3,027,471 | 341,921 | 860,244 | |||||||||||||||||||
|
Total
Shopping Centers
|
892,413 | 3,119,896 | 4,012,309 | 675,736 | 943,150 | |||||||||||||||||||
|
INDUSTRIAL:
|
||||||||||||||||||||||||
|
Texas
|
47,185 | 225,438 | 272,623 | 65,442 | ||||||||||||||||||||
|
Other
States
|
30,905 | 131,816 | 162,721 | 8,173 | 16,083 | |||||||||||||||||||
|
Total
Industrial
|
78,090 | 357,254 | 435,344 | 73,615 | 16,083 | |||||||||||||||||||
|
OTHER:
|
||||||||||||||||||||||||
|
Texas
|
1,871 | 23,600 | 25,471 | 10,647 | ||||||||||||||||||||
|
Other
States
|
1,771 | 3,233 | 5,004 | 74 | ||||||||||||||||||||
|
Total
Other
|
3,642 | 26,833 | 30,475 | 10,721 | ||||||||||||||||||||
|
Total
Improved Properties
|
974,145 | 3,503,983 | 4,478,128 | 760,072 | 959,233 | |||||||||||||||||||
|
LAND
UNDER DEVELOPMENT OR HELD FOR DEVELOPMENT:
|
||||||||||||||||||||||||
|
Texas
|
$ | 118,106 | $ | 118,106 | ||||||||||||||||||||
|
Other
States
|
167,754 | 167,754 | ||||||||||||||||||||||
|
Total
Land Under Development or Held for Development
|
285,860 | 285,860 | ||||||||||||||||||||||
|
SHOPPING
CENTERS UNDER CAPITAL LEASE:
|
||||||||||||||||||||||||
|
Other
States
|
29,054 | 29,054 | 14,249 | 8,732 | ||||||||||||||||||||
|
Total
Leased Property Under Capital Lease
|
29,054 | 29,054 | 14,249 | 8,732 | ||||||||||||||||||||
|
CONSTRUCTION
IN PROGRESS:
|
||||||||||||||||||||||||
|
Texas
|
57,721 | 57,721 | ||||||||||||||||||||||
|
Other
States
|
121,581 | 121,581 | ||||||||||||||||||||||
|
Total
Construction in Progress
|
179,302 | 179,302 | ||||||||||||||||||||||
|
TOTAL
OF ALL PROPERTIES
|
$ | 974,145 | $ | 3,533,037 | $ | 465,162 | $ | 4,972,344 | $ | 774,321 | $ | 967,965 | ||||||||||||
|
Note
A -
|
Encumbrances
do not include $15.7 million outstanding under a $30 million 20-year term
loan, payable to a group of insurance companies secured by a property
collateral pool including two shopping
centers.
|
|
Note
B -
|
The
book value of our net fixed asset exceeds the tax basis by $275 million at
December 31, 2007.
|
Schedule
III
(Continued)
The changes in total cost of the
properties for the years ended December 31, 2007, 2006 and 2005 were as
follows:
|
2007
|
2006
|
2005
|
||||||||||
|
Balance
at beginning of year
|
$ | 4,445,888 | $ | 4,033,579 | $ | 3,751,607 | ||||||
|
Additions
at cost
|
888,345 | 1,022,103 | 429,040 | |||||||||
|
Retirements
or sales
|
(361,889 | ) | (609,794 | ) | (147,068 | ) | ||||||
|
Balance
at end of year
|
$ | 4,972,344 | $ | 4,445,888 | $ | 4,033,579 | ||||||
The changes in accumulated
depreciation for the years ended December 31, 2007, 2006 and 2005 were as
follows:
|
2007
|
2006
|
2005
|
||||||||||
|
Balance
at beginning of year
|
$ | 707,005 | $ | 679,642 | $ | 609,772 | ||||||
|
Additions
at cost
|
114,956 | 110,406 | 107,901 | |||||||||
|
Retirements
or sales
|
(47,640 | ) | (83,043 | ) | (38,031 | ) | ||||||
|
Balance
at end of year
|
$ | 774,321 | $ | 707,005 | $ | 679,642 | ||||||
Schedule
IV
WEINGARTEN
REALTY INVESTORS
DECEMBER
31, 2007
(Amounts
in thousands)
|
Note
A -
|
The
aggregate cost at December 31, 2007 for federal income tax purposes is
$79,898.
|
|
Note
B -
|
Changes
in mortgage loans for the years ended December 31, 2007, 2006, and 2005
are summarized below.
|
|
2007
|
2006
|
2005
|
||||||||||
|
Balance,
Beginning of Year
|
$ | 5,308 | $ | 2,791 | $ | 3,057 | ||||||
|
Additions
to Existing Loans
|
155,855 | 3,347 | 339 | |||||||||
|
Collections
of Principal
|
(81,265 | ) | (830 | ) | (605 | ) | ||||||
|
Balance,
End of Year
|
$ | 79,898 | $ | 5,308 | $ | 2,791 | ||||||
95