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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
 
FORM 10-K
(Mark One)
ý     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2013
OR
¨     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                                          to                                         
Commission file number 1-9876
Weingarten Realty Investors
(Exact name of registrant as specified in its charter)
TEXAS
74-1464203
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
2600 Citadel Plaza Drive
 
P.O. Box 924133
 
Houston, Texas
77292-4133
(Address of principal executive offices)
(Zip Code)
(713) 866-6000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
 
Name of Each Exchange on Which Registered
Common Shares of Beneficial Interest, $0.03 par value
 
New York Stock Exchange
Series F Cumulative Redeemable Preferred Shares, $0.03 par value
 
New York Stock Exchange
8.1% Notes due 2019
 
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   
YES   ý             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   ý
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   ý      NO   ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 
YES   ý             NO   ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) 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.       ý
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer   ý
Accelerated filer   ¨
Non-accelerated filer   ¨
(Do not check if a smaller reporting company)
Smaller reporting company   ¨
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES   ¨             NO   ý
The aggregate market value of the common shares of beneficial interest held by non-affiliates on June 30, 2013 (based upon the most recent closing sale price on the New York Stock Exchange as of such date of $30.77 ) was $3.4 billion .
As of January 31, 2014 , there were 121,950,270 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 on April 24, 2014 have been incorporated by reference to Part III of this Form 10-K.

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TABLE OF CONTENTS
 
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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 those 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) disruptions in financial markets, (ii) general economic and local real estate conditions, (iii) the inability of major tenants to continue paying their rent obligations due to bankruptcy, insolvency or general downturn in their business, (iv) financing risks, such as the inability to obtain equity, debt, or other sources of financing on favorable terms, (v) changes in governmental laws and regulations, (vi) the level and volatility of interest rates, (vii) the availability of suitable acquisition opportunities, (viii) the ability to dispose properties, (ix) changes in expected development activity, (x) increases in operating costs, (xi) tax matters, including failure to qualify as a real estate investment trust, and (xii) investments through real estate joint ventures and partnerships, which involve risks not present in investments in which we are the sole investor. Accordingly, there is no assurance that our expectations will be realized. For further discussion of the factors that could materially affect the outcome of our forward-looking statements and our future results and financial condition, see “Item 1A. Risk Factors.”

PART I

ITEM 1. Business
General Development of Business .    Weingarten Realty Investors is a real estate investment trust (“REIT”) organized under the Texas Business Organizations Code. 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 centers we own or lease. We also provide property management services for which we charge fees to either joint ventures where we are partners or other outside owners.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7 and the Consolidated Financial Statements and Notes thereto included in Item 8 of this Annual Report on Form 10-K for the year ended December 31, 2013 , for information on certain recent developments of the Company.
Financial Information about Segments.     We are in the business of owning, managing and developing retail shopping centers. As each of our centers has similar characteristics and amenities, our operations have been aggregated into one reportable segment. See the Consolidated Financial Statements and Notes thereto included in Item 8 of this Annual Report on Form 10-K for further information regarding reportable segments.
Narrative Description of Business .    At December 31, 2013 , we owned or operated under long-term leases, either directly or through our interest in real estate joint ventures or partnerships, a total of 268 developed income-producing properties and two properties under various stages of construction and development, which are located in 21 states spanning the country from coast to coast. The portfolio of properties contains approximately 49.9 million  square feet of gross leasable area that is either owned by us or others.
We also owned interests in 35 parcels of land held for development that totaled approximately 26.4 million square feet.
At December 31, 2013 , we employed 316 full-time persons; 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 (“U.S.”).

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Investment and Operating Strategy.     Our goal is to remain a leader in owning and operating top-tier neighborhood and community shopping centers in certain markets of the U.S. We expect to achieve this goal by strategically focusing on core operating fundamentals through our decentralized operating platform built on local expertise in leasing and property management, selective redevelopment of the existing portfolio of properties, disciplined growth from strategic acquisitions and new developments, and disposition of assets that no longer meet our ownership criteria. Proceeds from dispositions may be recycled by repaying debt, purchasing new assets or reinvesting in currently owned assets or for other corporate purposes. We remain committed to maintaining a conservatively leveraged balance sheet, a well-staggered debt maturity schedule and strong credit agency ratings.
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.
We may invest in mortgages; however, we have traditionally invested in first mortgages to real estate joint ventures or partnerships in which we own an equity interest or to obtain control over a real estate asset that we desire to own. 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.
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.
We expect to continue our focus on the future growth of the portfolio in neighborhood and community shopping centers in markets where we currently operate and may expand to other markets throughout the U.S. Our markets of interest reflect high income and job growth, as well as high barriers-to-entry. Our attention is also focused on high quality, supermarket-anchored and necessity-based centers.
Diversification from both a geographic and tenancy perspective is a critical component of our operating strategy. We continue to seek opportunities outside the Texas market, where approximately 28.2% of the building square footage of our properties is located, up from 28.1% in 2012. With respect to tenant diversification, our two largest tenants, The Kroger Co. and TJX Companies, Inc., accounted for 3.8% and 2.5%, respectively, of our total rental revenues for the year ended December 31, 2013 . No other tenant accounted for more than 1.9% of our total rental revenues. 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 the 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.
Strategically, we strive to finance our growth and working capital needs in a conservative manner, including managing our debt maturities. Our senior debt credit ratings were BBB from Standard & Poors and Baa2 from Moody’s Investor Services with both projecting a stable outlook as of December 31, 2013 and 2012 . We intend to maintain a conservative approach to managing our balance sheet, which, in turn, gives us many options for raising debt or equity capital when needed. At December 31, 2013 and 2012 , our ratio of earnings to combined fixed charges and preferred dividends as defined by the Securities and Exchange Commission (“SEC”), not based on funds from operations, was 2.10 to 1 and 1.59 to 1, respectively. Our debt to total assets before depreciation ratio was 43.5% and 42.2% at December 31, 2013 and 2012 , respectively.
Our policies with respect to the investment and operating strategies discussed above are periodically reviewed by our Board of Trust Managers and may be modified without a vote of our shareholders.
Location of Properties.     Our properties are located in 21 states, primarily throughout the southern half of the country. As of December 31, 2013 , we have 270 properties (including two properties under development) that were owned or operated under long-term leases, either directly or through our interests in real estate joint ventures or partnerships. Total revenues less operating expenses and real estate taxes from continuing operations ("net operating income from continuing operations") generated by our properties located in Houston and its surrounding areas was 19.1% of total net operating income from continuing operations for the year ended December 31, 2013 , and an additional 8.4% of net operating income from continuing operations is generated from properties that are located in other parts of Texas. We also have 35 parcels of land held for development, nine of which are located in Houston and its surrounding areas and 11 of which are located in other parts of Texas. Because 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.

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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 in our trade areas. This results in competition for the acquisition of both existing income-producing properties and prime development sites. Competition for these acquisitions may also increase as credit availability improves resulting in additional pricing pressure.
We also compete for tenants to occupy the space that is developed, acquired and managed by our competitors. The principal competitive factors in attracting tenants in our market areas are location, price, anchor tenants and maintenance of properties. We believe our key 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 quality anchor tenants and the practice of continuous maintenance and renovation of our properties.
Qualification as a Real Estate Investment Trust.     As of December 31, 2013 , we met the qualification requirements of a REIT under the Internal Revenue Code, as amended. As a result, we will not be subject to federal income tax to the extent it meets certain requirements of the Internal Revenue Code, with the exception of our taxable REIT subsidiary.
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 any amendments to those reports, as well as Reports on Forms 3, 4, 5 and SC 13G 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 SEC. We have also made available on our website copies of our Audit Committee Charter, Management Development and Executive Compensation Committee Charter, Governance and Nominating Committee Charter, Code of Conduct and Ethics, Code of Ethical Conduct for Officers and Senior Financial Associates and Governance Policies. In the event of any changes to these charters, codes or policies, 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 or the SEC’s Internet site at www.sec.gov . 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 in Item 8 herein.

ITEM 1A. Risk Factors
The risks described below could materially and adversely affect our shareholders and our results of operations, financial condition, liquidity and cash flows. In addition to these risks, our operations may also be affected by additional factors not presently known or that we currently consider immaterial to our operations.
Disruptions in the financial markets could affect our liquidity and have other adverse effects on us and the market price of our common shares of beneficial interest.
The U.S. and global equity and credit markets have experienced and may in the future experience significant price volatility, dislocations and liquidity disruptions, which could cause market prices of many stocks to fluctuate substantially and the spreads on prospective debt financings to widen considerably. These circumstances could materially impact liquidity in the financial markets, making terms for certain financings less attractive, and in certain cases result in the unavailability of certain types of financing. Uncertainties in the equity and credit markets may negatively impact our ability to access additional financing at reasonable terms or at all, which may negatively affect our ability to complete dispositions, form joint ventures or refinance our debt. A prolonged downturn in the equity or credit markets could cause us to seek alternative sources of potentially less attractive financing, and require us to adjust our business plan accordingly. In addition, these factors may make it more difficult for us to sell properties or adversely affect the price we receive for properties that we do sell, as prospective buyers may experience increased costs of financing or difficulties in obtaining financing. These events in the equity and credit markets may make it more difficult or costly for us to raise capital through the issuance of our common shares of beneficial interest (“common shares”) or preferred shares. These disruptions in the financial markets also may have a material adverse effect on the market value of our common shares and preferred shares and other adverse effects on us or the economy generally. There can be no assurances that government responses to the disruptions in the financial markets will continue to restore consumer confidence, maintain stabilized markets or continue to provide the availability of equity or credit financing.

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Among the market conditions that may affect the value of our common shares and preferred shares and access to the capital markets 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;
•
Changes in revenues or earnings estimates or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to our securities or those of other REITs;
•
The degree of interest held by institutional investors;
•
The market's perception of the quality of our assets and our growth potential;
•
The ability of our tenants to pay rent to us and meet their other obligations to us under current lease terms;
•
Our ability to re-lease space as leases expire;
•
Our ability to refinance our indebtedness as it matures;
•
Actual or anticipated quarterly fluctuations in our operating results and financial condition;
•
Any changes in our distribution policy;
•
Any future issuances of equity securities;
•
Strategic actions by us or our competitors, such as acquisitions or restructurings;
•
General market conditions and, in particular, developments related to market conditions for the real estate industry; and
•
Domestic and international economic and political factors unrelated to our performance.
The volatility in the stock market can create price and volume fluctuations that may not necessarily be comparable to operating performance.
The economic performance and value of our shopping centers depend on many factors, each of which could have an adverse impact on our cash flows and operating results.
The economic performance and value of our properties can be affected by many factors, including the following:
•
Changes in the national, regional and local economic climate;
•
Changes in environmental regulatory requirements including, but not limited to, legislation on global warming;
•
Local conditions such as an oversupply of space or a reduction in demand for real estate in the area;
•
The attractiveness of the properties to tenants;
•
Competition from other available space;
•
Competition for our tenants from Internet sales;
•
Our ability to provide adequate management services and to maintain our properties;
•
Increased operating costs, if these costs cannot be passed through to tenants;
•
The cost of periodically renovating, repairing and releasing spaces;
•
The consequences of any armed conflict involving, or terrorist attack against, the U.S.;
•
Our ability to secure adequate insurance;
•
Fluctuations in interest rates;
•
Changes in real estate taxes and other expenses; and
•
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 retail companies, the ongoing consolidation in the retail sector, the excess amount of retail space in a number of markets and increasing consumer purchases through 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.
We have a high concentration of properties in the state of Texas, and adverse economic or other conditions in that area could have a material adverse effect on us.
We are particularly susceptible to adverse economic or other conditions in the state of Texas, including increased unemployment, industry slowdowns, business layoffs or downsizing, decrease consumer confidence, relocations of businesses, changes in demographics, increases in real estate and other taxes, increase regulations and natural disasters, any of which could have a material adverse effect on us.
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 commercial properties to the extent that suitable acquisitions can be made on advantageous terms. Acquisitions of commercial properties involve risks such as:
•
Our estimates on expected occupancy and rental rates may differ from actual conditions;
•
Our estimates of the costs of any redevelopment or repositioning of acquired properties may prove to be inaccurate;
•
We may be unable to operate successfully in new markets where acquired properties are located, due to a lack of market knowledge or understanding of local economies;
•
We may be unable to successfully integrate new properties into our existing operations; or
•
We may have difficulty obtaining financing on acceptable terms or paying the operating expenses and debt service associated with acquired properties prior to sufficient occupancy.
In addition, we may not be in a position or have the opportunity in the future to make suitable property acquisitions on advantageous terms due to competition for such properties with others engaged in real estate investment. Our inability to successfully acquire new properties may have an adverse effect on our results of operations.
Turmoil in capital markets could adversely impact acquisition activities and pricing of real estate assets.
Volatility in the capital markets could impact the availability of debt financing due to numerous factors, including the tightening of underwriting standards by lenders and credit rating agencies. 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.

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Our real estate assets may be subject to impairment charges.
Periodically, we assess whether there are any indicators that the value of our real estate assets, including any capitalized costs and any identifiable intangible assets, may be impaired. A property's value is impaired only if the estimate of the aggregate future undiscounted cash flows without interest charges to be generated by the property are less than the carrying value of the property. In estimating cash flows, we consider factors such as expected future operating income, trends and prospects, the effects of demand, competition and other factors. If we are evaluating the potential sale of an asset or development alternatives, the undiscounted future cash flows consider the most likely course of action at the balance sheet date based on current plans, intended holding periods and available market information. Determining whether a property is impaired and, if impaired, the amount of write-down to fair value requires a significant amount of judgment by management and is based on the best information available to management at the time of evaluation. If market conditions deteriorate or management’s plans for certain properties change, additional write-downs could be required in the future and any future impairment could have a material adverse effect on our results of operations in the period in which the charge is taken.
Reduction of rental income would adversely affect our profitability, our ability to meet our debt obligations and our ability to make distributions to our shareholders.
The substantial majority of our income is derived from rental income from real property. As a result, our performance depends on our ability to collect rent from tenants. Our income and funds for distribution would be negatively affected if a significant number of our tenants, or any of our major tenants (as discussed in more detail below):
•
Delay lease commencements;
•
Decline to extend or renew leases upon expiration;
•
Fail to make rental payments when due; or
•
Close stores or declare bankruptcy.
Any of these actions could result in the termination of the tenants’ lease and the loss of rental income attributable to the terminated leases. In addition, 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 these events, 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. Furthermore, certain costs remain fixed even though a property may not be fully occupied. The loss of rental revenues from a number of our tenants and our inability to replace such tenants, particularly in the case of a substantial tenant with leases in multiple locations, may adversely affect our profitability, our ability to meet debt and other financial obligations and our ability to make distributions to the shareholders.
Adverse effects on the success and stability of our anchor tenants, could lead to reductions of rental income.
Our rental income could be adversely affected in the event of a downturn in the business, or the bankruptcy or insolvency of any anchor store or anchor tenant. Anchor tenants generally occupy large amounts of square footage, pay a significant portion of the total rents at a property and contribute to the success of other tenants by drawing significant numbers of customers to a property. The closing of one or more anchor stores at a property could adversely affect that property and result in lease terminations or reductions in rent from other tenants, whose leases may permit termination or rent reduction in those circumstances or whose own operations may suffer as a result. Furthermore, tenant demand for certain of our anchor spaces may decrease, and as a result, we may see an increase in vacancy and/or a decrease in rents for those spaces, which could have a negative impact to our rental income.

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We face significant competition in the leasing market, which may decrease or prevent increases in the occupancy and rental rates of our properties.
We compete with numerous developers, owners and operators of retail properties, many of which own properties similar to, and in the same market sectors as, our properties. If our competitors offer space at rental rates below current market rates, or below the rental rates we currently charge our tenants, we may lose existing or potential tenants, or we may be forced to reduce rental rates in order to attract new tenants and retain existing tenants when their leases expire.
Also, if our competitors develop additional retail properties in locations near our properties, there may be increased competition for customer traffic and creditworthiness tenants, which may result in fewer tenants or decreased cash flows from tenants, or both, and may require us to make capital improvements to properties that we would not have otherwise made. Our tenants also face increasing competition from other forms of marketing of goods, such as direct mail and Internet marketing. As a result, our financial condition and our ability to make distributions to our shareholders may be adversely affected.
We may be unable to collect balances due from tenants in bankruptcy.
A tenant that files for bankruptcy protection may not continue to pay us rent. A bankruptcy filing by or relating to one of our tenants or a lease guarantor would bar all efforts by us to collect pre-bankruptcy debts from the tenant or the lease guarantor, or their property, unless the bankruptcy court permits us to do so. A tenant or lease guarantor bankruptcy could delay our efforts to collect past due balances under the relevant leases and could ultimately preclude collection of these sums. If a lease is rejected by a tenant in bankruptcy, we would have only a general unsecured claim for damages. As a result, it is likely that we would recover substantially less than the full value of any unsecured claims it holds, if at all.
Our development and construction activities could adversely affect our operating results.
We intend to continue the selective development and construction of retail properties in accordance with our development and underwriting policies as opportunities arise. Our development and construction activities include risks that:
•
We may abandon development opportunities after expending resources to determine feasibility;
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Construction costs of a project may exceed our original estimates;
•
Occupancy rates and rents at a newly completed property may not be sufficient to make the property profitable;
•
Rental rates could be less than projected;
•
Project completion may be delayed because of a number of factors, including weather, labor disruptions, construction delays or delays in receipt of zoning or other regulatory approvals, adverse economic conditions, acts of terror or other acts of violence, or acts of God (such as fires, earthquakes or floods);
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Financing may not be available to us on favorable terms for development of a property; and
•
We may not complete construction and lease-up on schedule, resulting in increased debt service expense and construction costs.
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, including additional impairment charges. Also, new development activities, regardless of whether or not they are ultimately successful, typically require substantial time and attention from management.
There is a lack of operating history with respect to any recent acquisitions and development of properties, and we may not succeed in the integration or management of additional properties.
These properties may have characteristics or deficiencies currently unknown to us that affect their value or revenue potential. It is also possible that the operating performance of these properties may decline under our management. As we acquire additional properties, we will be subject to risks associated with managing new properties, including lease-up and tenant retention. In addition, our ability to manage our growth effectively will require us to successfully integrate any new acquisitions into our existing management structure. We may not succeed with this integration or effectively manage additional properties. Also, newly acquired properties may not perform as expected.

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Real estate property investments are illiquid, and therefore, we may not be able to dispose of properties when desirable or on favorable terms.
Real estate property investments generally cannot be disposed of quickly. In addition, the Internal Revenue Code imposes restrictions on the ability of a REIT to dispose of properties that are not applicable to other types of real estate companies. Our ability to dispose of properties on advantageous terms depends on factors beyond our control, including competition from other sellers and the availability of attractive financing for potential buyers of our properties, and we cannot predict the various market conditions affecting real estate investments that will exist at any particular time in the future. Therefore, we may not be able to quickly 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.
As part of our capital recycling program, we intend to sell our non-core assets and may not be able to recover our investments, which may result in losses to us.
There can be no assurance that we will be able to recover the current carrying amount of all of our owned and partially owned non-core properties and investments in the future. Our failure to do so would require us to recognize impairment charges in the period in which we reached that conclusion, which could adversely affect our business, financial condition, operating results and cash flows.
Our cash flows and operating results could be adversely affected by required payments of debt or related interest and other risks of our debt financing.
We are generally subject to risks associated with debt financing. These risks include:
•
Our cash flow may not satisfy required payments of principal and interest;
•
We may not be able to refinance existing indebtedness on our properties as necessary or the terms of the refinancing may be less favorable to us than the terms of existing debt;
•
Required debt payments are not reduced if the economic performance of any property declines;
•
Debt service obligations could reduce funds available for distribution to our shareholders and funds available for capital investment;
•
Any default on our indebtedness could result in acceleration of those obligations and possible loss of property to foreclosure; and
•
The risk that necessary capital expenditures for purposes such as re-leasing space cannot be financed on favorable terms.
If a property is mortgaged to secure payment of indebtedness and we cannot make the mortgage payments, we may have to surrender the property to the lender with a consequent loss of any prospective income and equity value from such property. Any of these risks can place strains on our cash flows, reduce our ability to grow and adversely affect our results of operations.
Credit ratings may not reflect all the risks of an investment in our debt or preferred shares and rating changes could adversely effect our revolving credit facility.
Our credit ratings are an assessment by rating agencies of our ability to pay our debts and preferred dividends when due. Consequently, real or anticipated changes in our credit ratings will generally affect the market value of our debt and preferred shares. Credit ratings may be revised or withdrawn at any time by the rating agency at its sole discretion. Additionally, our revolving credit facility fees are based on our credit ratings. We do not undertake any obligation to maintain the ratings or to advise holders of our debt or preferred shares of any change in ratings. Each agency's rating should be evaluated independently of any other agency's rating.
There can be no assurance that we will be able to maintain our current credit ratings. Adverse changes in our credit ratings could impair our ability to obtain additional debt and equity financing on favorable terms, if at all, and could significantly reduce the market price of our publicly-traded securities.

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Rising interest rates could adversely affect our cash flows and adversely affect the market price of our debt and preferred shares.
We have indebtedness with interest rates that vary depending on market indices. Also, our credit facilities bear interest at variable rates. We may incur variable-rate debt in the future. Increases in interest rates on variable-rate debt would increase our interest expense, which would negatively affect net income and cash available for payment of our debt obligations and distributions to shareholders. In addition, an increase in interest rates could adversely affect the market value of our outstanding debt and preferred shares, as well as increase the cost of refinancing and the issuance of new debt or securities.
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.
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 or refinance, 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.
Volatility in market and economic conditions may impact our partners’ ability to perform in accordance with our real estate joint venture and partnership agreements resulting in a change in control or the liquidation plans of its underlying properties.
Changes in control of our investments could result if any reconsideration events occur, such as amendments to our real estate joint venture and partnership agreements, changes in debt guarantees or changes in ownership due to required capital contributions. Any changes in control will result in the revaluation of our investments to fair value, which could lead to an impairment. We are unable to predict whether, or to what extent, a change in control may result or the impact of adverse market and economic conditions may have to our partners.
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 Internal Revenue Service (“IRS”) might change the tax laws or regulations and the courts might issue new rulings, in each case potentially having retroactive effect that could make it more difficult or impossible for us to qualify as a REIT. If we fail to qualify as a REIT in any tax year, then:
•
We would be taxed as a regular domestic corporation, which, among other things, means that we would be unable to deduct distributions to our shareholders in computing our taxable income and would be subject to U.S. federal income tax on our taxable income at regular corporate rates;
•
Any resulting tax liability could be substantial and would reduce the amount of cash available for distribution to shareholders, and could force us to liquidate assets or take other actions that could have a detrimental effect on our operating results; and

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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 would, therefore, be reduced for each of the years in which we do not qualify as a REIT.
Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow. We may also be subject to certain U.S. federal, state and local taxes on our income and property either directly or at the level of our subsidiaries. Any of these taxes would decrease cash available for distribution to our shareholders.
Compliance with REIT requirements may negatively affect our operating decisions.
To maintain our status as a REIT for U.S. federal income tax purposes, we must meet certain requirements, on an ongoing basis, including requirements regarding our sources of income, the nature and diversification of our assets, the amounts we distribute to our shareholders and the ownership of our common 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.
Effective January 1, 2013, the maximum U.S. federal income tax rate for qualified dividends paid to individual U.S. shareholders is 20%. Unlike dividends received from a corporation that is not a REIT, our distributions to individual shareholders generally are not eligible for the reduced rates and are, consequently, taxed at ordinary income rates.
Our common shares dividend policy may change in the future.
The timing, amount and composition of any future dividends to our common shareholders will be at the sole discretion of our Board of Trust Managers and will depend upon a variety of factors as to which no assurance can be given. Our ability to make dividends to our common shareholders depends, in part, upon our operating results, overall financial condition, the performance of our portfolio (including occupancy levels and rental rates), our capital requirements, access to capital, our ability to qualify for taxation as a REIT and general business and market conditions. Any change in our dividend policy could have an adverse effect on the market price of our common shares.
Our declaration of trust contains certain limitations associated with share ownership.
To maintain our status as a REIT, our declaration of trust prohibits any individual from owning more than 9.8% of our outstanding common shares. This restriction is likely to discourage third parties from acquiring control without the consent of our Board of Trust Managers, even if a change in control were in the best interests of our shareholders.
Also, our declaration of trust requires the approval of the holders of 80% of our outstanding common shares and the approval by not less than 50% of the outstanding common shares not owned by any related person (a person owning more than 50% of our common shares) to consummate a business transaction such as a merger. There are certain exceptions to this requirement; however, the 80% approval requirement could make it difficult for us to consummate a business transaction even if it is in the best interest of our shareholders.

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There may be future dilution of our common shares.
Our declaration of trust authorizes our Board of Trust Managers to, among other things, issue additional common or preferred shares or securities convertible or exchangeable into equity securities, without shareholder approval. We may issue such additional equity or convertible securities to raise additional capital. The issuance of any additional common or preferred shares or convertible securities could be substantially dilutive to holders of our common shares. Moreover, to the extent that we issue restricted shares, options, or warrants to purchase our common shares in the future and those options or warrants are exercised or the restricted shares vest, our shareholders may experience further dilution. Holders of our common shares have no preemptive rights that entitle them to purchase a pro rata share of any offering of shares of any class or series and, therefore, such sales or offerings could result in increased dilution to our shareholders.
We may issue debt and equity securities or securities convertible into equity securities, any of which may be senior to our common shares as to distributions and in liquidation, which could negatively affect the value of our common shares.
In the future, we may attempt to increase our capital resources by entering into unsecured or secured debt or debt-like financings, or by issuing additional debt or equity securities, which could include issuances of medium-term notes, senior notes, subordinated notes, secured debt, guarantees, preferred shares, hybrid securities, or securities convertible into or exchangeable for equity securities. In the event of our liquidation, our lenders and holders of our debt and preferred securities would receive distributions of our available assets before distributions to the holders of our common shares. Because any decision to incur debt and issue securities in future offerings may be influenced by market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, or nature of our future financings. Further, market conditions could require us to accept less favorable terms for the issuance of our securities in the future.
Loss of our key personnel could adversely affect the value of our common shares 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 and operations.
Changes in accounting standards may adversely impact our reported financial condition and results of operations.
The Financial Accounting Standards Board (“FASB”), in conjunction with the SEC, has several key projects on their agenda that could impact how we currently account for our material transactions, including lease accounting and other convergence projects with the International Accounting Standards Board. We believe that these and other potential proposals could have varying degrees of impact on us ranging from minimal to material. At this time, we are unable to predict with certainty which, if any, proposals may be passed or what level of impact any such proposal could have on us.
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.

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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 tenant's 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.
We may be subject to liability under environmental laws, ordinances and regulations.
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 disposal or treatment of hazardous or toxic substances released on or in our property. We may also be liable for certain 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.
Natural disasters and severe weather conditions could have an adverse effect on our cash flow and operating results.
Changing weather patterns and climatic conditions, such as global warming, may have added to the unpredictability and frequency of natural disasters in some parts of the world and created additional uncertainty as to future trends and exposures. Our operations are located in many areas that are subject to natural disasters and severe weather conditions such as hurricanes, tornadoes, earthquakes, droughts, floods and fires. The occurrence of natural disasters or severe weather conditions can delay new development projects, increase investment costs to repair or replace damaged properties, increase future property insurance costs, and negatively impact the tenant demand for lease space. If insurance is unavailable to us or is unavailable on acceptable terms, or if our insurance is not adequate to cover business interruption or losses from these events, our earnings, liquidity or capital resources could be adversely affected.
Our business and operations would suffer in the event of system failures.
Despite the implementation of security measures and the existence of a disaster recovery plan for our internal information technology systems, our systems are vulnerable to damages from any number of sources, including computer viruses, unauthorized access, energy blackouts, natural disasters, terrorism, war and telecommunication failures. Any system failure or accident that causes interruptions in our operations could result in a material disruption to our business. We may also incur additional costs to remedy damages caused by such disruptions.
We face risks relating to cybersecurity attacks, loss of confidential information and other business disruptions.
Our business is at risk from and may be impacted by cybersecurity attacks, including attempts to gain unauthorized access to our confidential data and other electronic security breaches. Such cybersecurity attacks can range from individual attempts to gain unauthorized access to our information technology systems to more sophisticated security threats. While we employ a number of measures to prevent, detect and mitigate these threats including a defense in depth strategy of malware detection, password protection, backup servers and monthly penetration testing, there is no guarantee such efforts will be successful in preventing a cybersecurity attack. As our reliance on technology has increased, so have the risks posed to our systems, both internal and those we have outsourced. Cybersecurity incidents could compromise the confidential information of our tenants, employees and third-party vendors and disrupt and affect the efficiency of our business operations.


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ITEM 1B. Unresolved Staff Comments
None.

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ITEM 2. Properties
At December 31, 2013 , our real estate properties consisted of 270 locations in 21 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
Total
 
Land
Total
Operating Centers
 
 
 
 
 
Arizona
 
 
 
 
 
Arcadia Biltmore Plaza, Campbell Ave. at North 36th St., Phoenix
 
 
21,122

 
74,000

Arrowhead Festival S.C., 75th Ave. at W. Bell Rd., Glendale
 
 
194,309

 
157,000

Broadway Marketplace, Broadway at Rural, Tempe
 
 
87,379

 
347,000

Camelback Village Square, Camelback at 7th Avenue, Phoenix
 
 
242,715

 
543,000

Desert Village, Pinnacle Peak Rd at Pima Rd, Scottsdale
 
 
107,071

 
595,901

Entrada de Oro, Magee Road and Oracle Road, Tucson
 
 
109,075

 
572,000

Fountain Plaza, 77th St. at McDowell, Scottsdale
 
 
305,588

 
445,000

Laveen Village Market, Baseline Rd. at 51st St., Phoenix
 
 
318,805

 
372,274

Madera Village, Tanque Verde Rd. and Catalina Hwy., Tucson
 
 
106,858

 
419,000

Mohave Crossroads, Bullhead Parkway at State Route 95, Bullhead City
 
 
395,477

 
990,867

Monte Vista Village Center, Baseline Rd. at Ellsworth Rd., Mesa
 
 
108,551

 
353,000

Oracle Crossings, Oracle Highway and Magee Road, Tucson
 
 
261,194

 
1,307,000

Oracle Wetmore, Wetmore Road and Oracle Highway, Tucson
 
 
343,237

 
711,162

Palmilla Center, Dysart Rd. at McDowell Rd., Avondale
 
 
178,219

 
264,000

Pueblo Anozira, McClintock Dr. at Guadalupe Rd., Tempe
 
 
157,607

 
769,000

Raintree Ranch, Ray Rd. at Price Rd., Chandler
 
 
133,020

 
714,813

Rancho Encanto, 35th Avenue at Greenway Rd., Phoenix
 
 
72,170

 
246,440

Red Mountain Gateway, Power Rd. at McKellips Rd., Mesa
 
 
199,012

 
353,000

Scottsdale Horizon, Frank Lloyd Wright Blvd. and Thompson Peak Parkway, Scottsdale
 
 
148,383

 
61,000

Shoppes at Bears Path, Tanque Verde Rd. and Bear Canyon Rd., Tucson
 
 
66,131

 
362,000

Squaw Peak Plaza, 16th Street at Glendale Ave., Phoenix
 
 
60,728

 
220,000

The Shoppes at Parkwood Ranch, Southern Avenue and Signal Butte Road, Mesa
 
 
106,738

 
569,966

Valley Plaza, S. McClintock at E. Southern, Tempe
 
 
153,880

 
570,000

Arizona, Total
 
 
3,877,269

 
11,017,423

Arkansas
 
 
 
 
 
Markham Square, W. Markham at John Barrow, Little Rock
 
 
124,284

 
514,000

Markham West, 11400 W. Markham, Little Rock
 
 
178,500

 
769,000

Westgate, Cantrell at Bryant, Little Rock
 
 
52,626

 
206,000

Arkansas, Total
 
 
355,410

 
1,489,000

California
 
 
 
 
 
580 Market Place, E. Castro Valley at Hwy. I-580, Castro Valley
 
 
100,097

 
444,000

8000 Sunset Strip Shopping Center, Sunset Blvd. and Crescent Heights Blvd., Los Angeles
 
 
172,596

 
89,298

Arcade Square, Watt Ave. at Whitney Ave., Sacramento
 
 
76,497

 
234,000

Buena Vista Marketplace, Huntington Dr. at Buena Vista St., Duarte
 
 
115,340

 
322,000

Centerwood Plaza, Lakewood Blvd. at Alondra Dr., Bellflower
 
 
90,776

 
333,000

Chino Hills Marketplace, Chino Hills Pkwy. at Pipeline Ave., Chino Hills
 
 
310,921

 
1,187,000

Creekside Center, Alamo Dr. at Nut Creek Rd., Vacaville
 
 
114,445

 
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
 
 
129,676

 
451,000

Freedom Centre, Freedom Blvd. At Airport Blvd., Watsonville
 
 
150,865

 
543,000

Fremont Gateway Plaza, Paseo Padre Pkwy. at Walnut Ave., Fremont
 
 
361,701

 
650,000

Greenhouse Marketplace, Lewelling Blvd. at Washington Ave., San Leandro
 
 
236,832

 
578,000

Hallmark Town Center, W. Cleveland Ave. at Stephanie Ln., Madera
 
 
98,359

 
365,000

Jess Ranch Marketplace, Bear Valley Rd. at Jess Ranch Pkwy., Apple Valley
 
 
307,870

 
920,423


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Center and Location
 
 
Building
Total
 
Land
Total
Jess Ranch Phase III, Bear Valley Road at Jess Ranch Parkway, Apple Valley
 
 
194,342

 
700,431

Marshalls Plaza, McHenry at Sylvan Ave., Modesto
 
 
85,952

 
218,000

Menifee Town Center, Antelope Rd. at Newport Rd., Menifee
 
 
248,734

 
658,000

Prospectors Plaza, Missouri Flat Rd. at US Hwy. 50, Placerville
 
 
252,521

 
866,684

Rancho San Marcos Village, San Marcos Blvd. at Rancho Santa Fe Rd., San Marcos
 
 
132,689

 
541,000

San Marcos Plaza, San Marcos Blvd. at Rancho Santa Fe Rd., San Marcos
 
 
81,086

 
116,000

Shasta Crossroads (II), Churn Creek Rd and State Hwy 44, Redding
(1)(3)
 
90,663

 
252,783

Shasta Crossroads, Churn Creek Rd. at Dana Dr., Redding
 
 
176,866

 
520,000

Silver Creek Plaza, E. Capital Expressway at Silver Creek Blvd., San Jose
 
 
197,925

 
573,000

Southampton Center, IH-780 at Southampton Rd., Benecia
 
 
162,426

 
596,000

Stoneridge Town Centre, Highway 60 at Nason St., Moreno Valley
(1)(3)
 
434,450

 
1,104,246

Stony Point Plaza, Stony Point Rd. at Hwy. 12, Santa Rosa
 
 
200,011

 
619,000

Summerhill Plaza, Antelope Rd. at Lichen Dr., Sacramento
 
 
128,835

 
704,000

Valley, Franklin Blvd. and Mack Rd., Sacramento
 
 
107,005

 
580,000

Westminster Center, Westminster Blvd. at Golden West St., Westminster
 
 
425,437

 
1,739,000

California, Total
 
 
5,278,315

 
16,721,865

Colorado
 
 
 
 
 
Aurora City Place, E. Alameda at I225, Aurora
(1)(3)
 
542,956

 
2,260,000

Cherry Creek, E. Alameda Ave. at S. Colorado Blvd., Glendale
 
 
272,671

 
330,795

CityCenter Englewood, S. Santa Fe at Hampden Ave., Englewood
(1)(3)
 
359,213

 
452,941

Crossing at Stonegate, Jordon Rd. at Lincoln Ave., Parker
(1)(3)
 
109,058

 
870,588

Edgewater Marketplace, Sheridan Blvd. at 17th Ave., Edgewater
 
 
270,553

 
538,576

Green Valley Ranch Towne Center, Tower Rd. at 48th Ave., Denver
(1)(3)
 
114,947

 
276,000

Lowry Town Center, 2nd Ave. at Lowry Ave., Denver
(1)(3)
 
129,398

 
246,000

River Point at Sheridan, Highway 85 and Highway 285, Sheridan
 
 
519,020

 
3,556,487

Thorncreek Crossing, Washington St. at 120th St., Thornton
(1)(3)
 
386,127

 
1,156,863

Westminster Plaza, North Federal Blvd. at 72nd Ave., Westminster
(1)
 
111,113

 
636,000

Colorado, Total
 
 
2,815,056

 
10,324,250

Florida
 
 
 
 
 
Alafaya Square, Alafaya Trail, Oviedo
(1)(3)
 
176,486

 
915,000

Argyle Village, Blanding at Argyle Forest Blvd., Jacksonville
 
 
312,432

 
1,329,000

Atlantic North, Kernan Blvd. at Atlantic Blvd., Jacksonville
(1)(3)
 
112,685

 
326,061

Atlantic West, Kernan Blvd. at Atlantic Blvd., Jacksonville
(1)(3)
 
180,578

 
584,304

Boca Lyons, Glades Rd. at Lyons Rd., Boca Raton
 
 
117,515

 
545,000

Clermont Landing, U.S. 27 & Steve's Road, Clermont
(1)(3)
 
338,956

 
2,039,915

Colonial Landing, East Colonial Dr. at Maguire Boulevard, Orlando
(1)
 
259,024

 
980,000

Colonial Plaza, E. Colonial Dr. at Primrose Dr., Orlando
 
 
498,794

 
2,009,000

Countryside Centre, US Highway 19 at Countryside Boulevard, Clearwater
 
 
248,253

 
906,440

East Lake Woodlands, East Lake Road and Tampa Road, Palm Harbor
(1)(3)
 
143,693

 
730,000

Embassy Lakes, Sheraton St. at Hiatus Rd., Cooper City
 
 
179,937

 
618,000

Epic Village - St. Augustine, SR 207 at Rolling Hills Dr, St. Augustine
(1)
 
64,180

 
773,626

Flamingo Pines, Pines Blvd. at Flamingo Rd., Pembroke Pines
(1)(3)
 
148,840

 
707,075

Flamingo Pines, Pines Blvd. at Flamingo Rd., Pembroke Pines
 
 
266,761

 
739,925

Hollywood Hills Plaza, Hollywood Blvd. at North Park Rd., Hollywood
(1)(3)
 
408,509

 
1,429,000

Indian Harbour Place, East Eau Gallie Blvd., Indian Harbour Beach
(1)(3)
 
163,521

 
636,000

International Drive Value Center, International Dr. and Touchstone Dr., Orlando
(1)(3)
 
185,365

 
985,000

Kernan Village, Kernan Blvd. at Atlantic Blvd., Jacksonville
(1)(3)
 
288,780

 
615,114

Lake Washington Crossing, Wickham Rd. at Lake Washington Rd., Melbourne
(1)(3)
 
118,698

 
580,000

Largo Mall, Ulmerton Rd. at Seminole Ave., Largo
 
 
575,114

 
1,888,000

Marketplace at Seminole Towne Center, Central Florida Greenway and Rinehart Rd., Sanford
 
 
484,048

 
1,743,000

Northridge, E. Commercial Blvd. at Dixie Hwy., Oakland Park
(1)(3)
 
236,628

 
901,000


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Center and Location
 
 
Building
Total
 
Land
Total
Palms of Carrollwood, N. Dale Maybry Dr. at Fletcher Ave., Tampa
 
 
167,887

 
679,536

Pembroke Commons, University at Pines Blvd., Pembroke Pines
(1)(3)
 
324,731

 
1,394,000

Phillips Crossing, Interstate 4 and Sand Lake Road, Orlando
 
 
145,644

 
697,000

Phillips Landing, Turkey Lake Rd., Orlando
 
 
286,033

 
311,000

Pineapple Commons, Us Highway 1 and Britt Rd., Stuart
(1)(3)
 
264,468

 
762,736

Publix at Laguna Isles, Sheridan St. at SW 196th Ave., Pembroke Pines
 
 
69,475

 
400,000

Quesada Commons, Quesada Ave. and Toledo Blade Blvd., Port Charlotte
(1)(3)
 
58,890

 
312,000

Sea Ranch Centre, Pine Avenue & SR A-1-A, Sea Ranch Lakes
 
 
98,874

 
311,890

Shoppes at Paradise Isle, 34940 Emerald Coast Pkwy., Destin
(1)(3)
 
171,669

 
764,000

Shoppes at Parkland, Hillsboro Blvd. at State Rd. #7, Parkland
(1)
 
167,308

 
905,000

Shoppes of Port Charlotte, Toledo Blade Blvd. and Tamiami Trail, Port Charlotte
(1)(3)
 
3,921

 
176,720

Shoppes of Port Charlotte, Toledo Blade Blvd. and Tamiami Trail, Port Charlotte
(1)(3)
 
41,011

 
276,000

Sunrise West Shopping Center, West Commercial Dr. and NW 91st Ave., 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
(1)(3)
 
132,564

 
515,000

The Marketplace at Dr. Phillips, Dr. Phillips Boulevard and Sand Lake Road, Orlando
(1)(3)
 
326,090

 
1,495,000

The Shoppes at South Semoran, Semoran Blvd. at Pershing Ave., Orlando
 
 
101,611

 
451,282

TJ Maxx Plaza, 117th Avenue at Sunset Blvd., Kendall
 
 
161,429

 
540,000

University Palms, Alafaya Trail at McCullough Rd., Oviedo
(1)
 
105,127

 
522,000

Vizcaya Square, Nob Hill Rd. at Cleary Blvd., Plantation
 
 
110,081

 
521,000

Whole Foods @ Carrollwood, Northdale Blvd. at North Dale Mabry, Tampa
 
 
36,900

 
275,735

Winter Park Corners, Aloma Ave. at Lakemont Ave., Winter Park
 
 
102,382

 
400,000

Florida, Total
 
 
8,737,123

 
35,308,359

Georgia
 
 
 
 
 
Brookwood Marketplace, Peachtree Pkwy. at Mathis Airport Rd., Suwannee
 
 
397,295

 
1,459,000

Brookwood Square, East-West Connector at Austell Rd., Austell
 
 
177,903

 
971,000

Brownsville Commons, Brownsville Rd. and Hiram-Lithia Springs Rd., Powder Springs
 
 
81,886

 
205,000

Camp Creek Marketplace II, Camp Creek Pkwy. and Carmla Dr., Atlanta
 
 
228,003

 
724,000

Cherokee Plaza, Peachtree Road and Colonial Drive, Atlanta
(1)
 
102,864

 
336,000

Dacula Marketplace, Fence Rd. at Dacula Rd., Dacula
 
 
116,943

 
279,220

Dallas Commons, US Hwy. 278 and Nathan Dean Blvd., Dallas
 
 
95,262

 
244,000

Grayson Commons, Grayson Hwy. at Rosebud Rd., Grayson
 
 
76,611

 
507,383

Lakeside Marketplace, Cobb Pkwy. (US Hwy. 41), Acworth
 
 
332,889

 
736,000

Mansell Crossing, North Point Parkway at Mansell Rd, Alpharetta
(1)(3)
 
102,931

 
582,833

Perimeter Village, Ashford-Dunwoody Rd, Atlanta
 
 
373,621

 
1,803,820

Publix at Princeton Lakes, Carmia Dr. and Camp Creek Dr., Atlanta
(1)(3)
 
72,207

 
336,000

Reynolds Crossing, Steve Reynolds and Old North Cross Rd., Duluth
 
 
115,983

 
407,000

Roswell Corners, Woodstock Rd. at Hardscrabble Rd., Roswell
 
 
318,369

 
733,101

Roswell Crossing, King Rd and W. Crossville Rd., Roswell
 
 
201,979

 
1,011,093

Sandy Plains Exchange, Sandy Plains at Scufflegrit, Marietta
(1)
 
72,784

 
452,000

Thompson Bridge Commons, Thompson Bridge Rd. at Mt. Vernon Rd., Gainesville
(1)
 
95,587

 
540,000

Georgia, Total
 
 
2,963,117

 
11,327,450

Kentucky
 
 
 
 
 
Festival at Jefferson Court, Outer Loop at Jefferson Blvd., Louisville
 
 
218,396

 
1,153,000

Millpond Center, Boston at Man O’War, Lexington
 
 
151,498

 
773,000

Regency Shopping Centre, Nicholasville Rd. & West Lowry Ln., Lexington
 
 
188,782

 
590,000

Tates Creek, Tates Creek at Man O’ War, Lexington
 
 
203,532

 
586,384

Kentucky, Total
 
 
762,208

 
3,102,384

Louisiana
 
 
 
 
 
14/Park Plaza, Hwy. 14 at General Doolittle, Lake Charles
 
 
172,068

 
535,000

Danville Plaza, Louisville at 19th, Monroe
 
 
136,368

 
539,000


16
Table of Contents

Center and Location
 
 
Building
Total
 
Land
Total
K-Mart Plaza, Ryan St., Lake Charles
(1)(3)
 
232,390

 
126,000

Manhattan Place, Manhattan Blvd. at Gretna Blvd., Harvey
 
 
276,615

 
718,339

Southgate, Ryan at Eddy, Lake Charles
 
 
156,838

 
511,000

Town & Country Plaza, U.S. Hwy. 190 West, Hammond
 
 
226,142

 
656,021

University Place, 70th St. at Youree Dr., Shreveport
 
 
381,253

 
1,114,265

Westwood Village, W. Congress at Bertrand, Lafayette
 
 
138,034

 
942,000

Louisiana, Total
 
 
1,719,708

 
5,141,625

Maryland
 
 
 
 
 
Pike Center, Rockville Pike and Bou Ave., Rockville
 
 
81,336

 
292,462

Maryland, Total
 
 
81,336

 
292,462

Missouri
 
 
 
 
 
Ballwin Plaza, Manchester Rd. at Vlasis Dr., Ballwin
 
 
200,915

 
653,000

Western Plaza, Hwy 141 at Hwy. 30, Fenton
(1)(3)
 
56,734

 
654,000

Missouri, Total
 
 
257,649

 
1,307,000

Nevada
 
 
 
 
 
Best in the West, Rainbow at Lake Mead Rd., Las Vegas
 
 
428,067

 
1,516,000

Charleston Commons, Charleston and Nellis, Las Vegas
 
 
362,273

 
1,314,791

College Park S.C., E. Lake Mead Blvd. at Civic Ctr. Dr., North Las Vegas
 
 
195,367

 
721,000

Eastern Horizon, Eastern Ave. at Horizon Ridge Pkwy., Henderson
 
 
209,727

 
478,000

Francisco Centre, E. Desert Inn Rd. at S. Eastern Ave., Las Vegas
 
 
148,815

 
639,000

Paradise Marketplace, Flamingo Rd. at Sandhill, Las Vegas
 
 
148,572

 
323,556

Rainbow Plaza, Phase I, Rainbow Blvd. at Charleston Blvd., Las Vegas
 
 
136,339

 
514,518

Rainbow Plaza, Rainbow Blvd. at Charleston Blvd., Las Vegas
 
 
273,916

 
1,033,482

Rancho Towne & Country, Rainbow Blvd. at Charleston Blvd., Las Vegas
 
 
139,847

 
350,000

Tropicana Beltway, Tropicana Beltway at Fort Apache Rd., Las Vegas
 
 
617,821

 
1,466,000

Tropicana Marketplace, Tropicana at Jones Blvd., Las Vegas
 
 
142,643

 
309,912

Westland Fair North, Charleston Blvd. at Decatur Blvd., Las Vegas
 
 
602,904

 
1,008,451

Nevada, Total
 
 
3,406,291

 
9,674,710

New Mexico
 
 
 
 
 
Eastdale, Candelaria Rd. at Eubank Blvd., Albuquerque
 
 
119,088

 
601,000

North Towne Plaza, Academy Rd. at Wyoming Blvd., Albuquerque
 
 
142,106

 
607,000

New Mexico, Total
 
 
261,194

 
1,208,000

North Carolina
 
 
 
 
 
Avent Ferry, Avent Ferry Rd. at Gorman St., Raleigh
 
 
111,622

 
669,000

Bull City Market, Broad St. at West Main St., Durham
 
 
40,875

 
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

Falls Pointe, Neuce Rd. at Durant Rd., Raleigh
 
 
198,553

 
659,000

Galleria, Galleria Boulevard and Sardis Road, Charlotte
 
 
328,276

 
799,000

Harrison Pointe, Harrison Ave. at Maynard Rd., Cary
 
 
130,758

 
1,222,382

Heritage Station, Forestville Rd. at Rogers Rd., Wake Forest
(1)
 
77,669

 
341,035

High House Crossing, NC Hwy. 55 at Green Level W. Rd., Cary
 
 
90,155

 
606,000

Hope Valley Commons, Highway 751 and Highway 54, Durham
 
 
81,371

 
1,247,123

Leesville Town Centre, Leesville Rd. at Leesville Church Rd., Raleigh
 
 
114,396

 
904,000

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

Six Forks Station, Six Forks Rd. at Strickland Rd., Raleigh
 
 
468,178

 
1,843,000

Stonehenge Market, Creedmoor Rd. at Bridgeport Dr., Raleigh
 
 
188,449

 
669,000

Surf City Crossing, Highway 17 and Highway 210, Surf City
 
 
63,016

 
434,311

Waterford Village, U.S. Hwy. 17 & U.S. Hwy. 74/76, Leland
 
 
89,715

 
1,426,594


17
Table of Contents

Center and Location
 
 
Building
Total
 
Land
Total
Whitehall Commons, NWC of Hwy. 49 at I-485, Charlotte
 
 
444,561

 
360,000

North Carolina, Total
 
 
2,824,675

 
13,215,445

Oklahoma
 
 
 
 
 
Town and Country, Reno Ave. at North Air Depot, Midwest City
 
 
128,231

 
540,000

Oklahoma, Total
 
 
128,231

 
540,000

Oregon
 
 
 
 
 
Clackamas Square, SE 82nd Avenue and SE Causey Avenue, Portland
(1)(3)
 
140,227

 
215,000

Oak Grove Market Center, SE Mcloughlin Blvd. & Oak Grove Ave., Portland
 
 
97,177

 
292,288

Raleigh Hills Plaza, SW Beaverton-Hillsdale Hwy and SW Scholls Ferry Road, Portland
(1)(3)
 
39,520

 
165,000

Oregon, Total
 
 
276,924

 
672,288

South Carolina
 
 
 
 
 
Fresh Market Shoppes, 890 William Hilton Head Pkwy., Hilton Head
(1)(3)
 
86,746

 
436,000

South Carolina, Total
 
 
86,746

 
436,000

Tennessee
 
 
 
 
 
Bartlett Towne Center, Bartlett Blvd. at Stage Rd., Bartlett
 
 
192,624

 
774,000

Commons at Dexter Lake Phase II, Dexter at N. Germantown, Memphis
(1)
 
66,838

 
272,792

Commons at Dexter Lake, Dexter at N. Germantown, Memphis
(1)
 
178,558

 
740,208

Highland Square, Summer at Highland, Memphis
 
 
14,490

 
84,000

Mendenhall Commons, South Mendenahall Rd. and Sanderlin Ave., Memphis
(1)
 
88,108

 
250,000

Ridgeway Trace, Poplar Avenue and Ridgeway Road, Memphis
 
 
307,727

 
222,553

Tennessee, Total
 
 
848,345

 
2,343,553

Texas
 
 
 
 
 
10/Federal, I-10 at Federal, Houston
(1)
 
132,472

 
474,000

1919 North Loop West, Hacket Drive at West Loop 610 North, Houston
 
 
138,058

 
157,000

Alabama-Shepherd, S. Shepherd at W. Alabama, Houston
 
 
56,969

 
176,000

Angelina Village, Hwy. 59 at Loop 287, Lufkin
 
 
248,199

 
1,835,000

Bell Plaza, 45th Ave. at Bell St., Amarillo
(1)
 
130,631

 
682,000

Bellaire Boulevard, Bellaire at S. Rice, Houston
(1)
 
41,273

 
137,000

Blalock Market at I-10, I-10 at Blalock, Houston
 
 
97,277

 
321,000

Boswell Towne Center, Highway 287 at Bailey Boswell Rd., Saginaw
 
 
88,008

 
137,000

Braeswood Square, N. Braeswood at Chimney Rock, Houston
 
 
104,686

 
422,000

Broadway , Broadway at 59th St., Galveston
(1)
 
74,604

 
220,000

Broadway, S. Broadway at W. 9th St., Tyler
 
 
60,400

 
259,000

Centre at Post Oak, Westheimer at Post Oak Blvd., Houston
 
 
183,940

 
505,000

Champions Village, F.M. 1960 at Champions Forest Dr., Houston
(1)
 
392,967

 
1,391,000

Citadel Plaza, Citadel Plaza Dr., Houston
 
 
121,000

 
170,931

Crossroads, I-10 at N. Main, Vidor
 
 
115,798

 
484,000

Cullen Plaza, Cullen at Wilmington, Houston
(1)
 
84,517

 
318,000

Cypress Pointe, F.M. 1960 at Cypress Station, Houston
 
 
283,381

 
737,000

Cypress Station, F.M. 1960 at I-45, Houston
 
 
140,924

 
618,000

Fiesta Trails, I-10 at DeZavala Rd., San Antonio
 
 
482,370

 
1,589,000

Fiesta Village, Quitman at Fulton, Houston
(1)
 
30,249

 
80,000

Galveston Place, Central City Blvd. at 61st St., Galveston
 
 
210,537

 
828,000

Gateway Station, I-35W and McAlister Rd., Burleson
(1)
 
68,360

 
344,286

Glenbrook Square, Telephone Road, Houston
(1)
 
77,890

 
320,000

Griggs Road, Griggs at Cullen, Houston
(1)
 
80,116

 
382,000

Harrisburg Plaza, Harrisburg at Wayside, Houston
(1)
 
93,438

 
334,000

HEB - Dairy Ashford & Memorial, Dairy Ashford and Memorial Drive, Houston
 
 
36,874

 
118,740

Heights Plaza, 20th St. at Yale, Houston
 
 
71,277

 
228,000

Humblewood Shopping Plaza, Eastex Fwy. at F.M. 1960, Houston
 
 
279,226

 
784,000

I-45/Telephone Rd. Center, I-45 at Maxwell Street, Houston
(1)
 
171,599

 
658,586


18
Table of Contents

Center and Location
 
 
Building
Total
 
Land
Total
Independence Plaza, McPherson Rd and Bob Bullock Loop, Laredo
 
 
335,202

 
1,802,513

Kirby Strip Center, Kirby Dr, Houston
 
 
10,005

 
37,897

Lake Pointe Market Center, Dalrock Rd. at Lakeview Pkwy., Rowlett
 
 
121,689

 
218,158

Las Tiendas Plaza, Expressway 83 at McColl Rd., McAllen
(1)(3)
 
500,067

 
910,000

Lawndale, Lawndale at 75th St., Houston
(1)
 
52,127

 
177,000

League City Plaza, I-45 at F.M. 518, League City
(1)
 
126,990

 
680,000

Little York Plaza, Little York at E. Hardy, Houston
(1)
 
113,878

 
483,000

Lyons Avenue, Lyons at Shotwell, Houston
(1)
 
67,629

 
178,000

Market at Nolana, Nolana Ave. and 29th St., McAllen
(1)(3)
 
243,821

 
181,300

Market at Sharyland Place, U.S. Expressway 83 and Shary Rd., Mission
(1)(3)
 
301,174

 
543,000

Market at Town Center, Town Center Blvd., Sugar Land
 
 
388,865

 
1,733,000

Market at Westchase, Westheimer at Wilcrest, Houston
 
 
84,084

 
318,000

Moore Plaza, S. Padre Island Dr. at Staples, Corpus Christi
 
 
599,622

 
1,491,000

Mueller Regional Retail Center, I-35 & E 51st St., Austin
 
 
351,070

 
1,467,101

North Creek Plaza, Del Mar Blvd. at Hwy. I-35, Laredo
 
 
481,764

 
1,251,000

North Park Plaza, Eastex Fwy. at Dowlen, Beaumont
(1)(3)
 
279,530

 
636,000

North Towne Plaza, U.S. 77 and 83 at SHFM 802, Brownsville
 
 
153,000

 
303,715

North Triangle , I-45 at F.M. 1960, Houston
 
 
16,060

 
113,000

Northbrook Center, Northwest Fwy. at W. 34th, Houston
 
 
173,288

 
655,000

Northcross, N. 10th St. at Nolana Loop, McAllen
(1)(3)
 
74,865

 
218,000

Oak Forest, W. 43rd at Oak Forest, Houston
 
 
151,324

 
541,000

Oak Park Village, Nacogdoches at New Braunfels, San Antonio
(1)
 
64,287

 
221,000

Old Navy Building, 1815 10th St., McAllen
(1)(3)
 
15,000

 
62,000

Overton Park Plaza, SW Loop 820/Interstate 20 at South Hulen St., Ft. Worth
 
 
458,788

 
1,636,000

Palmer Plaza, F.M. 1764 at 34th St., Texas City
 
 
195,231

 
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

Plantation Centre, Del Mar Blvd. at McPherson Rd., Laredo
 
 
143,015

 
596,000

Preston Shepard Place, Preston Rd. at Park Blvd., Plano
(1)(3)
 
363,337

 
1,359,072

Randall's/Kings Crossing, Kingwood Dr. at Lake Houston Pkwy., Houston
(1)
 
126,397

 
624,000

Richmond Square, Richmond Ave. at W. Loop 610, Houston
 
 
92,356

 
326,315

River Oaks East, W. Gray at Woodhead, Houston
 
 
71,265

 
206,000

River Oaks West, W. Gray at S. Shepherd, Houston
 
 
248,663

 
609,000

Rose-Rich, U.S. Hwy. 90A at Lane Dr., Rosenberg
 
 
102,641

 
386,000

Sharyland Towne Crossing, Shary Rd. at Hwy. 83, Mission
(1)(3)
 
484,949

 
2,008,000

Shoppes at Memorial Villages, I-10 & Wirt Road, Houston
 
 
187,541

 
516,768

Shops at Three Corners, S. Main at Old Spanish Trail, Houston
(1)
 
272,350

 
1,007,143

South 10th St. HEB, S. 10th St. at Houston St., McAllen
(1)(3)
 
103,702

 
368,000

Southgate, W. Fuqua at Hiram Clark, Houston
(1)
 
125,260

 
533,000

Spring Plaza, Hammerly at Campbell, Houston
(1)
 
55,056

 
202,000

Starr Plaza, U.S. Hwy. 83 at Bridge St., Rio Grande City
(1)(3)
 
176,693

 
742,000

Stella Link, Stella Link at S. Braeswood, Houston
 
 
70,087

 
423,588

Thousand Oaks, Thousand Oaks Dr. at Jones Maltsberger Rd., San Antonio
(1)
 
162,322

 
730,000

Valley View, West Ave. at Blanco Rd., San Antonio
 
 
91,544

 
341,000

Village Arcade, University at Kirby, Houston
 
 
57,281

 
276,503

Village Arcade-Phase II, University at Kirby, Houston
 
 
28,371

 
60,099

Village Arcade-Phase III, University at Kirby, Houston
 
 
107,134

 
231,156

Village Plaza at Bunker Hill, Bunker Hill Rd at Interstate 10, Houston
(1)(3)
 
495,204

 
1,921,649

Westchase Center, Westheimer at Wilcrest, Houston
 
 
331,624

 
754,000

Westhill Village, Westheimer at Hillcroft, Houston
 
 
130,041

 
479,000


19
Table of Contents

Center and Location
 
 
Building
Total
 
Land
Total
Westwood Center, Culebra Road and Westwood Loop, San Antonio
 
 
77,679

 
691,328

Texas, Total
 
 
13,762,624

 
46,898,357

Utah
 
 
 
 
 
DDS Office Building, S. 300 West at Paxton Ave., Salt Lake City
 
 
27,300

 
86,249

Taylorsville Town Center, West 4700 South at Redwood Rd., Taylorsville
 
 
130,214

 
399,000

West Jordan Town Center, West 7000 South at S. Redwood Rd., West Jordan
 
 
304,899

 
814,000

Utah, Total
 
 
462,413

 
1,299,249

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

Promenade 23, S. Jackson St. at 23rd Ave., Seattle
 
 
96,660

 
258,746

Queen Anne Marketplace, Mercer Street and 1st Avenue North, Seattle
(1)(3)
 
81,385

 
—

Rainer Square Plaza, Rainer Avenue South and South Charleston Street, Seattle
(1)(3)
 
110,803

 
345,000

South Hill Center, 43rd Avenue Southwest and Meridian Street South, Puyallup
(1)(3)
 
134,010

 
515,000

Washington, Total
 
 
656,143

 
2,008,746

New Development Centers
 
 
 
 
 
Texas
 
 
 
 
 
Tomball Marketplace, FM 2920 and Future 249, Tomball
(2)
 
295,786

 
1,712,609

Texas, Total
 
 
295,786

 
1,712,609

Virginia
 
 
 
 
 
Hilltop Village, Telegraph Rd. at Beulah Rd., Alexandria
(1)(2)
 
—

 
1,437,480

Virginia, Total
 
 
—

 
1,437,480

Unimproved Land
 
 
 
 
 
Arizona
 
 
 
 
 
Bullhead Parkway at State Route 95, Bullhead City
 
 
 
 
312,761

Lon Adams Rd at Tangerine Farms Rd, Marana
 
 
 
 
422,532

Southern Avenue and Signal Butte Road, Mesa
 
 
 
 
63,162

Arizona, Total
 
 
 
 
798,455

Colorado
 
 
 
 
 
Highway 85 and Highway 285, Sheridan
 
 
 
 
713,513

Colorado, Total
 
 
 
 
713,513

Florida
 
 
 
 
 
SR 207 at Rolling Hills Dr, St. Augustine
 
 
 
 
228,254

State Road 100 & Belle Terre Parkway, Palm Coast
 
 
 
 
292,288

Young Pines and Curry Ford Rd, Orange County
 
 
 
 
82,764

Florida, Total
 
 
 
 
603,306

Georgia
 
 
 
 
 
NWC South Fulton Pkwy. @ Hwy. 92, Union City
 
 
 
 
3,554,496

Georgia, Total
 
 
 
 
3,554,496

Louisiana
 
 
 
 
 
Ambassador Caffery at W. Congress, Lafayette
 
 
 
 
34,848

Louisiana, Total
 
 
 
 
34,848

Nevada
 
 
 
 
 
SWC Highway 215 at Decatur, Las Vegas
 
 
 
 
639,896

Nevada, Total
 
 
 
 
639,896

North Carolina
 
 
 
 
 
Creedmoor (Highway 50) and Crabtree Valley Avenue, Raleigh
 
 
 
 
510,959

Highway 17 and Highway 210, Surf City
 
 
 
 
2,024,233

U.S. Highway 1 at Caveness Farms Rd., Wake Forest
 
 
 
 
1,637,420


20
Table of Contents

Center and Location
 
 
Building
Total
 
Land
Total
U.S. Hwy. 17 & U.S. Hwy. 74/76, Leland
 
 
 
 
549,727

North Carolina, Total
 
 
 
 
4,722,339

Tennessee
 
 
 
 
 
Poplar Avenue and Ridgeway Road, Memphis
 
 
 
 
53,579

Tennessee, Total
 
 
 
 
53,579

Texas
 
 
 
 
 
9th Ave. at 25th St., Port Arthur
 
 
 
 
243,065

Bissonnet at Wilcrest, Houston
 
 
 
 
40,946

Citadel Plaza at 610 North Loop, Houston
 
 
 
 
137,214

East Orem, Houston
 
 
 
 
121,968

FM 1957 (Potranco Road) and FM 211, San Antonio
 
 
 
 
8,655,372

FM 2920 and Highway 249, Tomball
 
 
 
 
459,776

Gattis School Rd at A.W. Grimes Blvd., Round Rock
 
 
 
 
57,499

Highway 3 at Highway 1765, Texas City
 
 
 
 
200,812

I-30 & Horne Street, Ft. Worth
 
 
 
 
58,370

Kirkwood at Dashwood Drive, Houston
 
 
 
 
321,908

Leslie Rd. at Bandera Rd., Helotes
 
 
 
 
74,052

Mesa Road at Tidwell, Houston
 
 
 
 
105,501

Nolana Ave. and 29th St., McAllen
 
 
 
 
163,350

Northwest Freeway at Gessner, Houston
 
 
 
 
117,612

Rock Prairie Rd. at Hwy. 6, College Station
 
 
 
 
394,218

SH 151 and Ingram Rd, San Antonio
 
 
 
 
252,692

Shary Rd. at North Hwy. 83, Mission
 
 
 
 
1,560,319

U.S. 77 and 83 at SHFM 802, Brownsville
 
 
 
 
914,723

US Hwy. 281 at Wilderness Oaks, San Antonio
 
 
 
 
1,269,774

West Little York at Interstate 45, Houston
 
 
 
 
161,172

Texas, Total
 
 
 
 
15,310,343


21
Table of Contents


Property Listing Summary
as of December 31, 2013
ALL PROPERTIES BY STATE
 
Number of
Properties
 
Building 
Total
 
Land Total
Arizona
 
23

 
3,877,269

 
11,815,878

Arkansas
 
3

 
355,410

 
1,489,000

California
 
29

 
5,278,315

 
16,721,865

Colorado
 
10

 
2,815,056

 
11,037,763

Florida
 
43

 
8,737,123

 
35,911,665

Georgia
 
17

 
2,963,117

 
14,881,946

Kentucky
 
4

 
762,208

 
3,102,384

Louisiana
 
8

 
1,719,708

 
5,176,473

Maryland
 
1

 
81,336

 
292,462

Missouri
 
2

 
257,649

 
1,307,000

Nevada
 
11

 
3,406,291

 
10,314,606

New Mexico
 
2

 
261,194

 
1,208,000

North Carolina
 
18

 
2,824,675

 
17,937,784

Oklahoma
 
1

 
128,231

 
540,000

Oregon
 
3

 
276,924

 
672,288

South Carolina
 
1

 
86,746

 
436,000

Tennessee
 
5

 
848,345

 
2,397,132

Texas
 
79

 
14,058,410

 
63,921,309

Utah
 
3

 
462,413

 
1,299,249

Virginia
 
1

 
—

 
1,437,480

Washington
 
6

 
656,143

 
2,008,746

Total
 
270

 
49,856,563

 
203,909,030

Total Operating Properties
 
268

 
49,560,777

 
174,328,166

Total New Development
 
2

 
295,786

 
3,150,089

Total Unimproved Land
 
 
 
 
 
26,430,775

___________________
Total square footage includes 545,897 square feet of building area and 12,731,795 square feet of land leased from others.
Footnotes for detail property listing:
(1)
Denotes property is held by a real estate joint venture or partnership; however, the building and land square feet figures include our partners’ ownership interest in the property.
(2)
Denotes property currently under development.
(3)
Denotes properties that are not consolidated under generally accepted accounting principles.
NOTE:
Square feet are reflective of area available to be leased. Certain listed properties may have additional square feet that are not owned by us.

22
Table of Contents

At December 31, 2013 , we owned or operated under long-term leases, either directly or through our interest in real estate joint ventures or partnerships, a total of 268 developed income-producing centers and two centers under various stages of construction and development, which are located in 21 states spanning the country from coast to coast.
During 2013 , we acquired three centers located in Florida and Texas and a 51% owned unconsolidated real estate joint venture acquired a real estate asset in Washington. In addition to this ongoing acquisition activity, we completed two additional transactions with joint venture partners in which we acquired our partner’s 50% unconsolidated joint venture interest in a California property, and we received cash, real property and our partner’s interest in two consolidated joint ventures in exchange for our interest in two unconsolidated joint ventures and the payment of a note receivable. In all, our share of the gross purchase price for these transactions totaled approximately $247.5 million .
During 2013 , we sold an interest in four unconsolidated real estate joint ventures, 20 centers and other property and five real estate assets through our interests in unconsolidated real estate joint ventures and partnerships. Of the 20 centers disposed, nine were located in Texas, three each in North Carolina and Florida; two in New Mexico and one each in California, Nevada and Tennessee. Our share of aggregate gross sales proceeds from these transactions totaled $285.1 million .
Operating Centers.     In 2013 , no single center accounted for more than 3.1% of our total assets or 2.2% of revenues. The five largest centers, in the aggregate, represented approximately 9.5% of our revenues for the year ended December 31, 2013 ; otherwise, none of the remaining centers accounted for more than 1.6% of our revenues during the same period.
The majority of our centers are owned directly by us (subject in some cases to mortgages), although our interests in some centers are held indirectly through interests in real estate joint ventures or under long-term leases. In our opinion, our centers are well maintained and in good repair, suitable for their intended uses, and adequately covered by insurance.
We participate in 43 real estate joint ventures or partnerships that hold an interest in 103 of our centers. Our ownership interest ranges from 15% 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 centers. 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 center. Each operating partnership unit is the equivalent of one of our common shares. These units generally give our partners the right to put their limited partnership units to us on or after the first anniversary of the entity’s formation. We may acquire these limited partnership units for either cash or a fixed number of our common shares at our discretion.
As of December 31, 2013 , the weighted average occupancy rate for our centers was 94.9% compared to 93.7% as of December 31, 2012 . The average effective annual rental per square foot was approximately $15.66 in 2013 , $15.14 in 2012 , $13.79 in 2011 , $13.60 in 2010 and $13.31 in 2009 for our centers.

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As of December 31, 2013 , lease expirations for the next 10 years, assuming tenants do not exercise renewal options, are as follows:
 
 
 
 
 
 
 
 
Annual Net Rent
of Expiring Leases
Year
 
Number of
Expiring
Leases
 
Square Feet
of Expiring
Leases
(000’s)
 
Percentage of
Leaseable
Square Feet
 
Total
(000’s)
 
Per Square
Foot
 
Percentage of
Total Annual
Net Rent
2014
 
625

 
2,551

 
5.12
%
 
$
38,448

 
$
15.07

 
9.91
%
2015
 
814

 
3,611

 
7.24
%
 
53,111

 
14.71

 
13.68
%
2016
 
815

 
3,816

 
7.65
%
 
60,274

 
15.80

 
15.53
%
2017
 
594

 
3,263

 
6.54
%
 
53,622

 
16.43

 
13.82
%
2018
 
596

 
3,695

 
7.41
%
 
53,616

 
14.51

 
13.81
%
2019
 
188

 
1,961

 
3.93
%
 
25,342

 
12.92

 
6.53
%
2020
 
99

 
1,236

 
2.48
%
 
16,506

 
13.35

 
4.25
%
2021
 
108

 
1,338

 
2.68
%
 
18,405

 
13.76

 
4.74
%
2022
 
97

 
1,164

 
2.33
%
 
17,385

 
14.94

 
4.48
%
2023
 
88

 
799

 
1.60
%
 
12,785

 
16.00

 
3.29
%
Our centers are primarily neighborhood and community shopping centers that typically range in size from 50,000 to 650,000 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. 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 actively embrace various initiatives that support the future of environmentally friendly shopping centers. Our primary areas of focus include energy efficiency, waste recycling, water conservation and construction/development best practices. We recognize there are economic, environmental and social implications associated with the full range of our sustainability efforts, and that a commitment to incorporating sustainable practices will add long-term value to our centers.
We have approximately 6,300 separate leases with 4,200 different tenants. Included among our top revenue-producing tenants are: The Kroger Co., TJX Companies, Inc., Ross Stores, Inc., H-E-B, Safeway Inc., Office Depot, Inc., PetSmart, Inc., Bed, Bath & Beyond Inc., Home Depot, Inc., Best Buy, Inc., The Sports Authority, Inc. and Whole Foods Market, Inc. The diversity of our tenant base is also evidenced by the fact that our largest tenant, The Kroger Co., accounted for only 3.8% of rental revenues during 2013 .
Our 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.

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Table of Contents

Most of our leases provide for the monthly payment in advance of fixed minimum rentals, the tenants’ pro rata share of real estate 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). Some of the lease agreements with major or national tenants contain modifications of these basic provisions, such as placing a maximum contribution on their pro rata share of recoverable charges, in view of the financial condition, stability or desirability of those tenants. Certain leases 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 reimburse us on a monthly basis. Generally, our leases only permit the tenant to assign or sublease its space with our prior written consent, which we agree not to unreasonably withhold. Our major and national tenants, however, generally have greater assignment and sublease rights that may not require our consent. 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. Most of our leases require the tenant to use its space for the purpose designated in its lease agreement and to operate its business on a continuous basis.
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 economy and commercial credit markets could have a negative impact on us.
New Development Centers .     At December 31, 2013 , we had two properties in various stages of development and have funded $71.5 million to date on these projects. We estimate our aggregate net investment upon completion to be $97.5 million . These properties are projected to have an average stabilized return on investment of approximately 8.0% when completed. Upon completion, the square footage to be added to the portfolio and the estimated cost per square footage of these two properties are as follows:
Estimated
Year of
Completion
 
Square Feet
(000’s)
 
Estimated
Cost per
Square Foot
2014
 
165
 
$201.25
2015
 
265
 
242.22
Unimproved Land.     At December 31, 2013 , we owned, either directly or through our interest in real estate joint ventures or partnerships, 35 parcels of unimproved land consisting of approximately 26.4 million square feet. These land parcels include approximately 1.6 million square feet of land adjacent to certain of our existing operating centers, which may be used for expansion of these centers, as well as approximately 24.8 million square feet of land, which may be used for new development. Almost all of the unimproved land is served by roads and utilities and are suitable for development as centers and other retail space, and we intend to emphasize the development of these parcels for such purpose. We have approximately $116.9 million in land held for development.

ITEM 3. Legal Proceedings
We are involved in various matters of litigation arising in the normal course of business. While we are unable to predict with certainty the amounts involved, our management and legal counsel believe that when such litigation is resolved, our resulting liability, if any, will not have a material impact on our consolidated financial statements.

ITEM 4. Mine Safety Disclosures
Not applicable.


25
Table of Contents

PART II

ITEM 5. Market for Registrant’s Common Shares of Beneficial Interest, Related Shareholder Matters and Issuer Purchases of Equity Securities
Our common shares are listed and traded on the New York Stock Exchange under the symbol “WRI.” As of January 31, 2014 , the number of holders of record of our common shares was 2,236. 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    
2013:
 
 
 
 
 
Fourth
$
32.44

 
$
27.42

 
$
.305

Third
32.69

 
27.54

 
.305

Second
35.84

 
28.79

 
.305

First
31.55

 
27.35

 
.305

2012:
 
 
 
 
 
Fourth
$
28.19

 
$
25.81

 
$
.290

Third
28.85

 
25.88

 
.290

Second
27.53

 
24.36

 
.290

First
26.45

 
21.56

 
.290

The following table summarizes the equity compensation plans under which our common shares may be issued as of December 31, 2013 :
Plan category
 
Number of 
shares to
be issued 
upon 
exercise of outstanding options,
warrants and rights
 
Weighted 
average
exercise price of
outstanding options,
warrants and rights
 
Number of 
shares
remaining available
for future issuance
Equity compensation plans approved by shareholders
 
3,543,746
 
$29.16
 
1,676,028
Equity compensation plans not approved by shareholders
 
—
 
—
 
—
Total
 
3,543,746
 
$29.16
 
1,676,028

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Table of Contents

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 FTSE NAREIT Equity Shopping Centers Index, weighted by market value at each measurement point. The graph assumes that on December 31, 2008 , $100 was invested in our common shares and that all dividends were reinvested by the shareholder.
Comparison of Five Year Cumulative Return
*$100 invested on December 31, 2008 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31.

Source: SNL Financial LC
 
2009
 
2010
 
2011
 
2012
 
2013
Weingarten Realty Investors
$
105.16

 
$
132.60

 
$
127.53

 
$
163.51

 
$
174.51

S&P 500 Index
126.46

 
145.51

 
148.59

 
172.37

 
228.19

FTSE NAREIT Equity Shopping Centers Index
98.34

 
128.61

 
127.67

 
159.62

 
167.58

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 do not make or endorse any predications as to future share performance.


27
Table of Contents

ITEM 6. Selected Financial Data
The following table sets forth our selected consolidated financial data and should be read in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the Consolidated Financial Statements and accompanying Notes in “Item 8. Financial Statements and Supplementary Data” and the financial schedules included elsewhere in this Form 10-K.
 
(Amounts in thousands, except per share amounts)
Year Ended December 31,
 
2013
 
2012
 
2011
 
2010
 
2009
Operating Data: (1)
 
 
 
 
 
 
 
 
 
Revenues (primarily real estate rentals)
$
497,725

 
$
456,904

 
$
432,616

 
$
423,218

 
$
439,610

Depreciation and Amortization
149,493

 
129,500

 
119,933

 
114,184

 
112,259

Impairment Loss
2,579

 
9,585

 
49,671

 
33,317

 
34,983

Operating Income
163,400

 
146,680

 
105,385

 
119,980

 
132,986

Interest Expense, net
97,444

 
106,800

 
130,478

 
135,664

 
146,139

Gain on Sale and Acquisition of Real Estate Joint
Venture and Partnership Interests
33,670

 
14,203

 
—

 
—

 
—

Equity in Earnings (Losses) of Real Estate Joint
Ventures and Partnerships, net
35,112

 
(1,558
)
 
7,834

 
12,889

 
5,548

Gain on Acquisition
—

 
1,869

 
—

 
—

 
—

(Loss) Gain on Redemption of Convertible Senior
Unsecured Notes
—

 
—

 
—

 
(135
)
 
25,311

(Provision) Benefit for Income Taxes
(7,051
)
 
70

 
(2
)
 
291

 
(5,871
)
Income (Loss) from Continuing Operations
135,372

 
60,511

 
(12,202
)
 
7,179

 
27,104

Gain on Sale of Property
762

 
1,004

 
1,304

 
2,005

 
24,494

Net Income
265,156

 
152,421

 
16,739

 
51,238

 
175,276

Net Income Adjusted for Noncontrolling Interests
220,262

 
146,640

 
15,621

 
46,206

 
171,102

Net Income (Loss) Attributable to Common
Shareholders
$
184,145

 
$
109,210

 
$
(19,855
)
 
$
10,730

 
$
135,626

Per Share Data - Basic:
 
 
 
 
 
 
 
 
 
Income (Loss) from Continuing Operations
 Attributable to Common Shareholders
$
0.78

 
$
0.16

 
$
(0.38
)
 
$
(0.25
)
 
$
0.14

Net Income (Loss) Attributable to Common
 Shareholders
$
1.52

 
$
0.90

 
$
(0.17
)
 
$
0.09

 
$
1.24

Weighted Average Number of Shares
121,269

 
120,696

 
120,331

 
119,935

 
109,546

Per Share Data - Diluted:
 
 
 
 
 
 
 
 
 
Income (Loss) from Continuing Operations
 Attributable to Common Shareholders
$
0.77

 
$
0.16

 
$
(0.38
)
 
$
(0.25
)
 
$
0.14

Net Income (Loss) Attributable to Common
 Shareholders
$
1.50

 
$
0.90

 
$
(0.17
)
 
$
0.09

 
$
1.23

Weighted Average Number of Shares - Diluted
122,460

 
121,705

 
120,331

 
119,935

 
110,178

Balance Sheet Data:
 
 
 
 
 
 
 
 
 
Property (at cost)
$
4,289,276

 
$
4,399,850

 
$
4,688,526

 
$
4,777,794

 
$
4,658,396

Total Assets
4,223,929

 
4,184,784

 
4,588,226

 
4,807,855

 
4,890,385

Debt, net
$
2,299,844

 
$
2,204,030

 
$
2,531,837

 
$
2,589,448

 
$
2,531,847

Other Data:
 
 
 
 
 
 
 
 
 
Cash Flows from Operating Activities
$
233,992

 
$
227,330

 
$
214,731

 
$
214,625

 
$
244,316

Cash Flows from Investing Activities
134,654

 
370,308

 
(3,745
)
 
(121,421
)
 
191,872

Cash Flows from Financing Activities
(296,674
)
 
(591,676
)
 
(221,203
)
 
(222,929
)
 
(341,550
)
Cash Dividends per Common Share
1.22

 
1.16

 
1.10

 
1.04

 
1.28

Funds from Operations - Basic (2)
$
222,732

 
$
222,128

 
$
173,325

 
$
187,008

 
$
204,634

___________________
(1)
For all periods presented, the operating data related to continuing operations and gain on sale of property do not include the effects of amounts reported in discontinued operations, and certain business combination transactions have occurred. See Note 15 and 23 to our consolidated financial statements in Item 8 for additional information.
(2)
See Item 7 for the National Association of Real Estate Investment Trusts definition of funds from operations.

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Table of Contents

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto and the comparative summary of selected financial data appearing elsewhere in this report. Historical results and trends which might appear should not be taken as indicative of future operations. Our results of operations and financial condition, as reflected in the accompanying 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 REIT organized under the Texas Business Organizations Code. 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 centers we own or lease. We also provide property management services for which we charge fees to either joint ventures where we are partners or other outside owners.
We operate a portfolio of rental properties, primarily neighborhood and community shopping centers, totaling approximately 49.9 million square feet of gross leasable area, that is either owned by us or others. We have a diversified tenant base with our largest tenant comprising only 3.8% of total rental revenues during 2013 .
At December 31, 2013 , we owned or operated under long-term leases, either directly or through our interest in real estate joint ventures or partnerships, a total of 268 developed income-producing properties and two properties under various stages of construction and development, which are located in 21 states spanning the country from coast to coast.
We also owned interests in 35 parcels of land held for development that totaled approximately 26.4 million square feet at December 31, 2013 .
We had approximately 6,300 leases with 4,200 different tenants at December 31, 2013 . 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 real estate taxes, and additional rent payments based on a percentage of the tenants’ sales. 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 the 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.
Our goal is to remain a leader in owning and operating top-tier neighborhood and community shopping centers in certain markets of the United States. This year we focused on three strategic initiatives: (1) recycling capital to improve our portfolio, (2) maintaining a strong, flexible consolidated balance sheet and well-managed debt maturity schedule and (3) improving operating performance. We believe these initiatives have kept our portfolio of properties in the forefront of being among the strongest in our sector. For 2014, these strategies will continue to be in effect as we continue to transition the portfolio.
Under our capital recycling plan, we continue to dispose of non-core operating properties, which provides capital for growth opportunities and strengthens our operating fundamentals. During 2013 , we successfully disposed of real estate assets with our share of aggregate gross sales proceeds totaling $285.1 million , both directly or through our interest in real estate joint ventures or partnerships. This program is ongoing, and we expect to complete dispositions in the range of $300 million to $400 million in 2014. We have approximately $110.1 million of dispositions currently under contracts or letters of intent; however, there are no assurances that these transactions will close. Subsequent to year end, we sold two centers with gross proceeds totaling $55.6 million. Also, we received notice in December 2013 from the holder of one of our ground leases in Texas of their intent to exercise their purchase option under the ground lease. This transaction is expected to close in the second half of 2014 and will result in the disposition of three properties.
As we are generally selling lower tier, non-core assets, potential buyers looking to finance such acquisitions may find access to capital an issue; especially if long-term rates rise. Even with these conditions, we believe we can continue to successfully execute our capital recycling plan; although a number of factors, including weaknesses in the secured lending markets or a downturn in the economy, could impact our ability to execute this plan.

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Table of Contents

We continue to actively seek acquisitions and new development opportunities to grow our operations. During 2013 , we have closed on acquisitions, including our pro rata share of interests in unconsolidated real estate joint ventures and purchased interests in both consolidated and unconsolidated real estate joint ventures, totaling $247.5 million . Despite substantial competition for quality opportunities and the uncertainty of long-term rates, we will continue to identify select acquisition properties that meet our return hurdles and to actively evaluate other opportunities as they enter the market. For 2014, we expect to invest in acquisitions and new developments in the range of $200 million to $300 million. In 2014, we will continue to focus our attention on identifying new development projects as another source of growth.
Subsequent to December 31, 2013, we completed the dissolution of a consolidated real estate joint venture, in which we had a 30% ownership interest. This venture owned a portfolio of 13 centers of which four are located in Texas, three each in Georgia and Tennessee, two in Florida and one in North Carolina. The transaction was completed through the distribution of five centers to us and eight centers to our partner.
We strive to maintain a strong, conservative capital structure which provides ready access to a variety of attractive long and short-term capital sources. We carefully balance lower cost short-term financing with long-term liabilities associated with acquired or developed long-term assets. During 2013, we issued $300 million of 3.5% and $250 million of 4.45% senior unsecured notes maturing in 2023 and 2024, respectively. We also paid off all amounts outstanding under our revolving credit facility, redeemed $75 million of our 6.75% Series D Cumulative Redeemable Preferred Shares and $200 million of our 6.5% Series F Cumulative Redeemable Preferred Shares and paid down $173.6 million of fixed-rate medium term notes. In anticipation of potential volatility and uncertainty in the capital markets, $250 million of 4.45% senior unsecured notes were issued in October to essentially pre-fund our January 2014 debt maturities totaling $285 million.
In 2013, we amended and extended our $500 million unsecured revolving credit facility. The amendment reduces the borrowing margin and facility fee, which are priced off a grid that is tied to our senior unsecured credit ratings, by 10 and five basis points, respectively. In addition, the unsecured revolving credit facility's maturity date has been extended to 2017 with options to extend up to an additional year. These transactions continue to strengthen our consolidated balance sheet and further enhance our access to various sources of capital, while reducing our cost of capital. While the availability of capital has improved over the past few years, there can be no assurance that favorable pricing and availability will not deteriorate in the future.
Operational Metrics
In assessing the performance of our centers, management carefully monitors various operating metrics of the portfolio. Below are performance metrics associated with our signed occupancy, same property net operating income ("SPNOI") growth and leasing activity on a pro rata basis.
 
December 31,
 
2013
 
2012
Anchor (space of 10,000 square feet or greater)
98.5
%
 
97.1
%
Non-Anchor (small shop)
89.0
%
 
88.2
%
Total Occupancy
94.8
%
 
93.6
%
 
Three Months Ended
December 31, 2013
 
Twelve Months Ended
December 31, 2013
SPNOI Growth (1)
3.0
%
 
4.2
%
___________________
(1)
See Non-GAAP Financial Measures for a definition of the measurement of SPNOI and a reconciliation to operating income within this section of Item 7.

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Table of Contents

 
Number
of
Leases
 
Square
Feet
('000's)
 
Average
New
Rent per
Square
Foot ($)
 
Average
Prior
Rent per
Square
Foot ($)
 
Average Cost
of Tenant
Improvements
per Square
Foot ($)
 
Change in
Base Rent
on Cash
Basis
Leasing Activity:
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31, 2013
 
 
 
 
 
 
New leases (1)
60

 
95

 
$
24.73

 
$
21.88

 
$
15.02

 
13.1
%
Renewals
212

 
753

 
15.75

 
14.91

 
0.55

 
5.7
%
Not comparable spaces
59

 
217

 
—

 
—

 
—

 
—
%
Total
331

 
1,065

 
$
16.76

 
$
15.69

 
$
2.17

 
6.8
%
 
 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended December 31, 2013
 
 
 
 
 
 
New leases (1)
260

 
623

 
$
20.91

 
$
18.55

 
$
16.01

 
12.7
%
Renewals
892

 
3,178

 
15.58

 
14.88

 
0.25

 
4.7
%
Not comparable spaces
261

 
902

 
—

 
—

 
—

 
—
%
Total
1,413

 
4,703

 
$
16.46

 
$
15.49

 
$
2.84

 
6.3
%
___________________
(1)
Average external lease commissions per square foot for the three and twelve months ended December 31, 2013 were $5.52 and $4.78, respectively.
The operating metrics of our portfolio strengthened in 2013 as we focused on increasing occupancy and SPNOI. Our portfolio delivered solid operating results with:
•
improved occupancy to 94.8%, including an increase of .8% in small shop occupancy over 2012, primarily as a result of our disposition program and lack of new available retail space in the market;
•
an increase of 4.2% in SPNOI for the year ended December 31, 2013 over the same period of 2012; and
•
rental rate increases of 12.7% for new leases during 2013.
While we will continue to monitor the economy and the effects on our tenants, we believe the significant diversification of our portfolio, both geographically and by tenant base, and the quality of our portfolio will allow us to further increase occupancy levels as we move through 2014, albeit at a lesser rate than the previous year, assuming, among other things, no bankruptcies by multiple national or regional tenants. A reduction in quality retail space available contributed to the increase in overall rental rates on a same-space basis as we completed new leases and renewed existing leases. Leasing volume is anticipated to decline as we have less vacant space available for leasing. While we have achieved strong growth in SPNOI during 2013, maintaining this level of positive operating performance in 2014 is not assured. Our expectation is that SPNOI will average between 2.5% to 3.5% for 2014.
New Development
At December 31, 2013 , we had two properties in various stages of construction and development. We have funded $71.5 million to date on these projects, and we estimate our aggregate net investment upon completion to be $97.5 million . Overall, the average projected stabilized return on investment for these properties is approximately 8.0% upon completion.
We have approximately $116.9 million in land held for development at December 31, 2013 . While we are experiencing a greater interest from retailers and other market participants in our land held for development, opportunities for economically viable developments remain scarce. We continue to pursue additional development and redevelopment opportunities in multiple markets; however, finding the right opportunities remains very challenging.
Acquisitions and Joint Ventures
Acquisitions are a key component of our long-term growth strategy. The availability of quality acquisition opportunities in the market remains sporadic. Competition for the highest quality core properties in our key growth markets is intense, which has in many cases, driven pricing to pre-recession highs. We remain disciplined in approaching these opportunities, pursuing only those that provide appropriate risk-adjusted returns.

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Table of Contents

Dispositions
Dispositions are also a key component of our ongoing management process where we selectively prune properties from our portfolio that no longer meet our geographic or growth targets. Dispositions provide capital, which may be recycled into properties that have high barrier-to-entry locations within high growth metropolitan markets, and thus have higher long-term growth potential. Additionally, proceeds from dispositions may be used to reduce outstanding debt, further deleveraging our consolidated balance sheet. As we have demonstrated in 2013, this transformative initiative will produce a portfolio with higher occupancy rates and stronger 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 (“GAAP”). The preparation of these consolidated 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 consolidated 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 require more significant judgments and estimates used in the preparation of our consolidated financial statements.
Property
Acquisitions of properties are accounted for utilizing the acquisition method and, accordingly, the results of operations of an acquired property are included in our results of operations from the date of acquisition. Estimates of fair values are based upon future cash flows and other valuation techniques in accordance with our fair value measurements accounting policy. Fair values are used to record the purchase price of acquired property among land, buildings on an “as if vacant” basis, tenant improvements, other identifiable intangibles and any goodwill or gain on purchase. 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 over the lease term which includes bargain renewal options for other identifiable intangible assets. The impact of these estimates, including incorrect estimates in connection with acquisition values and estimated useful lives, could result in significant differences related to the purchased assets, liabilities and resulting depreciation or amortization. Acquisition costs are expensed as incurred.
Real Estate Joint Ventures and Partnerships
To determine the method of accounting for partially owned real estate joint ventures and partnerships, management evaluates the characteristics of associated entities and determines whether an entity is a variable interest entity (“VIE”) and, if so, determines which party is the primary beneficiary by analyzing whether we have both the power to direct the entity’s significant economic activities and the obligation to absorb potentially significant losses or receive potentially significant benefits. Significant judgments and assumptions inherent in this analysis include the design of the entity structure, the nature of the entity’s operations, future cash flow projections, the entity’s financing and capital structure, and contractual relationships and terms. We consolidate a VIE when we have determined that we are the primary beneficiary.
Primary risks associated with our VIEs include the potential funding of the entities’ debt obligations or making additional contributions to fund the entities’ operations.
Partially owned, non-variable interest real estate joint ventures and partnerships over which we have a controlling financial interest are consolidated in our consolidated financial statements. In determining whether we have a controlling financial interest, 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 do not have a controlling financial interest, but have the ability to exercise significant influence, are accounted for using the equity method.
Management continually analyzes and assesses reconsideration events, including changes in the factors mentioned above, to determine if the consolidation treatment remains appropriate. Decisions regarding consolidation of partially owned entities frequently require significant judgment by our management. Errors in the assessment of consolidation could result in material changes to our consolidated financial statements.

32
Table of Contents

Impairment
Our property is reviewed for impairment if events or changes in circumstances indicate that the carrying amount of the property, including any capitalized costs and any identifiable intangible assets, may not be recoverable.
If such an event occurs, a comparison is made of the current and projected operating cash flows of each such property into the foreseeable future, with consideration of applicable holding periods, on an undiscounted basis to the carrying amount of such property. If we determine the carrying amount is not recoverable, our basis in the property is reduced to its estimated fair value to reflect impairment in the value of the asset. Fair values are determined by management utilizing cash flow models, market capitalization and discount rates, or by obtaining third-party broker or appraisal estimates in accordance with our fair value measurements accounting policy.
We review current economic considerations each reporting period, including the effects of tenant bankruptcies, the suspension of tenant expansion plans for new development projects, declines in real estate values and any changes to plans related to our new development projects including land held for development, to identify properties where we believe market values may be deteriorating. Determining whether a property is impaired and, if impaired, the amount of write-down to fair value requires a significant amount of judgment by management and is based on the best information available to management at the time of evaluation. The evaluations used in these analyses could result in incorrect estimates when determining carrying values that could be material to our consolidated financial statements.
Our investment in partially owned real estate joint ventures and partnerships is reviewed for impairment each reporting period. The ultimate realization 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 estimated fair value of an investment below its carrying amount is other than temporary. A considerable amount of judgment by our management is used in this evaluation. Our overall future plans for the investment, our investment partner’s financial outlook and our views on current market and economic conditions may have a significant impact on the resulting factors analyzed for these purposes.
Our investments in tax increment revenue bonds are reviewed for impairment, including the evaluation of changes in events or circumstances that may indicate that the carrying amount of the investment may not be recoverable. Realization is dependent on a number of factors, including investment performance, market conditions and payment structure. We will record an impairment charge if we determine that a decline in the value of the investment below its carrying amount is other than temporary, recovery of its cost basis is uncertain, and/or it is uncertain if the investment will be held to maturity. A considerable amount of judgment by our management is used in this evaluation, which may produce incorrect estimates that could be material to our consolidated financial statements.


33
Table of Contents

Results of Operations
Comparison of the Year Ended December 31, 2013 to the Year Ended December 31, 2012
The following table is a summary of certain items from our Consolidated Statements of Operations, which we believe represent items that significantly changed during 2013 as compared to the same period in 2012 :
 
Year Ended December 31,
 
2013
 
2012
 
Change
 
% Change
Revenues
$
497,725

 
$
456,904

 
$
40,821

 
8.9
%
Depreciation and amortization
149,493

 
129,500

 
19,993

 
15.4

Operating expenses
98,380

 
89,902

 
8,478

 
9.4

Real estate taxes, net
58,502

 
52,699

 
5,803

 
11.0

Impairment loss
2,579

 
9,585

 
(7,006
)
 
(73.1
)
General and administrative expenses
25,371

 
28,538

 
(3,167
)
 
(11.1
)
Interest expense, net
97,444

 
106,800

 
(9,356
)
 
(8.8
)
Gain on sale and acquisition of real estate joint
venture and partnership interests
33,670

 
14,203

 
19,467

 
137.1

Equity in earnings (losses) of real estate joint
ventures and partnerships, net
35,112

 
(1,558
)
 
36,670

 
2,353.7

Gain on acquisition
—

 
1,869

 
(1,869
)
 
(100.0
)
(Provision) benefit for income taxes
(7,051
)
 
70

 
(7,121
)
 
10,172.9

Revenues
The increase in revenues of $40.8 million is primarily attributable to an increase in net rental revenues of $40.1 million due primarily to increases in occupancy and rental rates, new development completions of $2.4 million and acquisitions of $18.7 million.
Depreciation and Amortization
The increase of $20.0 million is attributable primarily to acquisitions, new development completions and other capital activities.
Operating Expenses
The increase in operating expenses of $8.5 million is primarily attributable to acquisitions, which totaled $2.7 million, an increase in management fees of $2.2 million primarily attributable to a fair value increase in the assets held in a grantor trust related to our deferred compensation plan of $1.1 million and slightly higher increases in other operating expenses associated with higher occupancy.
Real Estate Taxes, net
The increase in real estate taxes, net of $5.8 million is primarily attributable to rate and valuation changes, as well as acquisitions and new development completions.
Impairment Loss
The decrease in impairment loss of $7.0 million is primarily attributable to the $6.6 million loss in 2012 associated with an equity interest in an unconsolidated real estate joint venture that owned industrial properties.
General and Administrative Expenses
The decrease in general and administrative expenses of $3.2 million is primarily attributable to a reduction in personnel due to attrition and property dispositions and a decrease in share-based compensation associated with retirement eligible employees.

34

Interest Expense, net
Net interest expense decreased $9.4 million or 8.8%. The components of net interest expense were as follows (in thousands):  
 
Year Ended December 31,
 
2013
 
2012
Gross interest expense
$
110,239

 
$
112,548

Over-market mortgage adjustment
(10,392
)
 
(2,623
)
Capitalized interest
(2,403
)
 
(3,125
)
Total
$
97,444

 
$
106,800

Gross interest expense totaled $110.2 million in 2013, down $2.3 million or 2.1% from 2012. The decrease in gross interest expense results primarily from a reduction in interest rates, offset by an increase in the weighted average debt outstanding. In 2013, the weighted average debt outstanding was $2.2 billion at a weighted average interest rate of 5.06% as compared to $2.1 billion outstanding at a weighted average interest rate of 5.12% in 2012. The increase in the weighted average debt outstanding results primarily from our net capital activity, including the issuances of unsecured notes, the redemption of preferred shares, acquisition and disposition activity and the pay down of medium-term notes and other notes, while the reduction in the weighted average interest rate is primarily attributable to the refinancing of notes and mortgages with proceeds from dispositions and note issuances. The increase in the over-market mortgage adjustment of $7.8 million is attributable to the write-off of net above-market mortgage intangibles associated with the early payoff of the related mortgage in both 2013 and 2012.
Gain on Sale and Acquisition of Real Estate Joint Venture and Partnership Interests
The gain in 2013 is attributable to the liquidation of an unconsolidated real estate joint venture that owned industrial properties of $11.5 million, the acquisition of an unconsolidated real estate joint venture interest totaling $20.2 million and the sale of an interest in four unconsolidated real estate joint ventures of $1.9 million, while the gain in 2012 was associated with the sale of an interest in six unconsolidated real estate joint ventures.
Equity in Earnings (Losses) of Real Estate Joint Ventures and Partnerships, net
The increase of $36.7 million is attributable to the gain on sale from 2013 dispositions, of which our share totaled $16.0 million and our share of impairment losses recorded in 2012, which totaled $19.9 million.
Gain on Acquisition
The decrease of $1.9 million is attributable to the realization upon consolidation associated with the purchase of a 79.6% unconsolidated joint venture interest in 2012.
(Provision) Benefit for Income Taxes
The increase of $7.1 million is attributable primarily to the gain associated with the purchase of a 50% unconsolidated joint venture interest in our taxable REIT subsidiary.

35

Comparison of the Year Ended December 31, 2012 to the Year Ended December 31, 2011
The following table is a summary of certain items from our Consolidated Statements of Operations, which we believe represent items that significantly changed during 2012 as compared to the same period in 2011 :
 
Year Ended December 31,
 
2012
 
2011
 
Change
 
% Change
Revenues
$
456,904

 
$
432,616

 
$
24,288

 
5.6
%
Depreciation and amortization
129,500

 
119,933

 
9,567

 
8.0

Operating expenses
89,902

 
81,916

 
7,986

 
9.7

Impairment loss
9,585

 
49,671

 
(40,086
)
 
(80.7
)
Interest expense, net
106,800

 
130,478

 
(23,678
)
 
(18.1
)
Gain on sale and acquisition of real estate joint
venture and partnership interests
14,203

 
—

 
14,203

 
—

Equity in (losses) earnings of real estate joint
ventures and partnerships, net
(1,558
)
 
7,834

 
(9,392
)
 
(119.9
)
Gain on acquisition
1,869

 
—

 
1,869

 
—

Revenues
The increase in revenues of $24.3 million is primarily attributable to an increase in net rental revenues of $26.8 million due primarily to increases in occupancy and rental rates, new development completions of $4.2 million and acquisitions of $11.8 million. Offsetting this net rental revenue increase is a decrease in other income of $2.5 million, which was attributable to a decline in miscellaneous revenue.
Depreciation and Amortization
The increase of $9.6 million is due to new development completions, the acquisition of four shopping centers in 2012 and two shopping centers in 2011 and other capital activities.
Operating Expenses
The increase in operating expenses of $8.0 million is attributable to an increase in management fees of $3.2 million, which results primarily from a fair value increase in the assets held in a grantor trust related to our deferred compensation plan; a $1.2 million increase in acquisition costs and an increase in overall operating expenses, of which acquisitions and new development completions totaled $1.5 million and $.5 million, respectively.
Impairment Loss
The impairment loss in 2012 of $9.6 million is mainly attributable to two properties being marketed for sale during the year, an equity interest in an unconsolidated real estate joint venture that owns industrial properties and the sale of unimproved land parcels. The impairment loss in 2011 of $49.7 million related primarily to land held for development, properties that were sold or marketed for sale, our equity interest in certain unconsolidated joint ventures and the net credit loss on the exchange of tax increment revenue bonds.
Interest Expense, net
Net interest expense decreased $23.7 million or 18.1%. The components of net interest expense were as follows (in thousands):  
 
Year Ended December 31,
 
2012
 
2011
Gross interest expense
$
112,548

 
$
133,316

Amortization of convertible bond discount
—

 
1,334

Over-market mortgage adjustment
(2,623
)
 
(1,843
)
Capitalized interest
(3,125
)
 
(2,329
)
Total
$
106,800

 
$
130,478


36

Gross interest expense totaled $112.5 million in 2012, down $20.8 million or 15.6% from 2011. The decrease in gross interest expense results primarily from a reduction in both interest rates and the weighted average debt outstanding as a result of refinancing notes and mortgages through the revolving credit facility by means of proceeds from the industrial and retail dispositions and the issuance of $300 million of 3.38% senior unsecured notes maturing in 2022. In 2012, the weighted average debt outstanding was $2.1 billion at a weighted average interest rate of 5.1% as compared to $2.4 billion outstanding at a weighted average interest rate of 5.5% in 2011. The amortization of convertible bond discount ceased in July 2011.
Gain on Sale of Real Estate Joint Venture and Partnership Interests
The increase of $14.2 million is attributable to the sale of an interest in six unconsolidated real estate joint ventures during 2012.
Equity in (Losses) Earnings of Real Estate Joint Ventures and Partnerships, net
The decrease of $9.4 million is attributable to the reduction of earnings from our unconsolidated real estate investments as a result of impairment losses. In 2012, impairment losses totaled $19.9 million as compared to $7.0 million in 2011.
Gain on Acquisition
The increase of $1.9 million is attributable to the realization upon consolidation associated with the purchase of a 79.6% unconsolidated joint venture interest.
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 rental rates during the terms of the leases through escalation provisions. In addition, many of our leases are for terms of less than 10 years, allowing 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 real estate taxes. As a result of these lease provisions, increases in operating expenses due to inflation, as well as real estate tax rate increases, generally do not have a significant adverse effect upon our operating results as they are absorbed by our tenants. Under the current economic climate, little to no inflation is occurring.
Economic Conditions
Underlying economic fundamentals indicate the economic recovery is maturing in primary markets and progressing in secondary and tertiary markets. Consumer confidence is rebounding, despite government policy-induced interruptions. Furthermore, personal income and housing prices are continuing to increase in our primary markets. We believe there is a direct correlation between housing wealth and consumption, and we expect rebounding home prices will further strengthen retail fundamentals, including rent growth and net operating income. Our focus on supermarket-anchored shopping centers in densely populated major metropolitan areas positions our portfolio to capitalize on the improving retail landscape.
As strengthening retail fundamentals drive demand for investment in top-tier retail real estate, we continue to dedicate internal resources to identify and evaluate available assets in our markets so that we may purchase the best assets and properties with the strongest upside potential. Also, we continue to see an interest in our non-core assets marketed for disposition, as potential buyers have access to available credit.
Capital Resources and Liquidity
Our primary operating liquidity needs are paying our common and preferred dividends, maintaining and operating our existing properties, paying our debt service costs, excluding debt maturities, and funding capital expenditures. Under our 2014 business plan, cash flows from operating activities are expected to meet these planned capital needs.
The primary sources of capital for funding any debt maturities and acquisitions are our excess cash flow generated by our operating properties; credit facilities; proceeds from both secured and unsecured debt issuances; proceeds from common and preferred equity issuances; and cash generated from the sale of property and the formation of joint ventures. Amounts outstanding under the revolving credit facility are retired as needed with proceeds from the issuance of long-term debt, common and preferred equity, cash generated from the disposition of properties and cash flow generated by our operating properties.

37

As of December 31, 2013 , we had an available borrowing capacity of $497.8 million under our revolving credit facility, and our debt maturities for 2014 total $368.9 million . During 2013, we issued $300 million of 3.5% and $250 million of 4.45% senior unsecured notes maturing in 2023 and 2024, respectively. We also paid off all amounts outstanding under our revolving credit facility, redeemed $75 million of our 6.75% Series D Redeemable Preferred Shares and $200 million of our 6.5% Series F Cumulative Redeemable Preferred Shares and paid down $173.6 million of fixed-rate medium term notes. Additionally, we have funds invested in short-term investments and cash and cash equivalents totaling $141.6 million primarily from the issuance of our 4.45% senior unsecured notes. The issuance of these notes in late 2013 allowed us to effectively pre-fund our January 2014 debt maturities totaling $285 million in anticipation of potential volatility and uncertainty in the capital markets.
We believe proceeds from our capital recycling program, combined with our available capacity under the credit facilities, will provide adequate liquidity to fund our capital needs, including acquisitions and new development activities. In the event our capital recycling program does not progress as expected, we believe other debt and equity alternatives are available to us. Although external market conditions are not within our control, we do not currently foresee any reasons that would prevent us from entering the capital markets if needed.
During 2013 , aggregate gross sales proceeds from our dispositions totaled $285.1 million . Operating cash flows from discontinued operations are included in net cash from operating activities in our Consolidated Statements of Cash Flows, while proceeds from discontinued operations are included as investing activities. At December 31, 2013 , discontinued operations represent 8.3% of our net cash from operating activities, and we would expect future net cash from operating activities to decrease accordingly when compared to prior periods.
We have non-recourse debt secured by acquired or developed properties held in several of our real estate joint ventures and partnerships. Off balance sheet mortgage debt for our unconsolidated real estate joint ventures and partnerships totaled $453.4 million , of which our pro rata ownership is $174.3 million at December 31, 2013 . Scheduled principal mortgage payments on this debt, excluding non-cash related items totaling $1.2 million , at 100% are as follows (in millions):  
2014
$
106.4

2015
43.7

2016
110.9

2017
56.8

2018
6.3

Thereafter
128.1

Total
$
452.2

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 contracts 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 our joint venture partners’ consent or a third party consent for assets held in special purpose entities, which are 100% owned by us.
Investing Activities:
Acquisitions
During 2013 , we acquired three centers, a 51% interest in a center at an unconsolidated real estate joint venture, and our partner’s 50% unconsolidated joint venture interest in a California property. Also, we received cash, real property and our partner’s interest in two consolidated joint ventures in exchange for our interest in two unconsolidated joint ventures and the payment of a note receivable. In all, our share of the gross purchase price for these transactions totaled approximately $247.5 million and generated gains of $20.2 million, primarily from the remeasurement of our equity interest to fair value.
Dispositions
During 2013 , we sold an interest in four unconsolidated real estate joint ventures, 20 centers and other property and five real estate assets through our interests in unconsolidated real estate joint ventures and partnerships. Our share of aggregate gross sales proceeds from these transactions totaled $285.1 million and generated gains of $121.9 million. Also, we realized an $11.5 million gain associated with the liquidation of an unconsolidated real estate joint venture that owned industrial properties.

38

Subsequent to December 31, 2013 , we completed the dissolution of our consolidated real estate joint venture with Hines Retail REIT (“Hines”), where we owned a 30% interest. This joint venture held a portfolio of 13 centers located in Texas, Tennessee, Georgia, Florida and North Carolina. The transaction was completed through the distribution of five centers to us and eight centers to Hines. The centers distributed to Hines are classified as held for sale at December 31, 2013 .
New Development
At December 31, 2013 , we had two projects under various stages of construction and development with a total square footage of approximately .6 million , of which we have funded $71.5 million to date on these projects. Upon completion, we expect our aggregate net investment in these properties to be $97.5 million .
Our new development projects are financed generally under our revolving credit facility, as it is our practice not to use third party construction financing. Management monitors amounts outstanding under our revolving credit facility and periodically pays down such balances using cash generated from operations, from debt issuances, from common and preferred share issuances and from the disposition of properties.
Capital Expenditures
Capital expenditures for additions to the existing portfolio, acquisitions, tenant improvements, new development and our share of investments in unconsolidated real estate joint ventures and partnerships are as follows (in thousands):
 
Year Ended December 31,
 
2013
 
2012
Acquisitions
$
129,719

 
$
204,180

Tenant Improvements
33,259

 
40,594

New Development
19,264

 
29,479

Capital Improvements
13,312

 
13,109

Other
10,092

 
16,671

Total
$
205,646

 
$
304,033

The decrease in capital expenditures is attributable primarily to a decline in acquisition activity in 2013 compared to 2012. The decline in new development is associated with the stabilization of nine properties in 2012, while the decrease in tenant improvements is primarily attributable to the recycling of the portfolio and a decline in costs funded for new tenant leases and renewals over the prior year.
For 2014 , we anticipate our acquisitions to total between $150 million and $225 million. We anticipate our 2014 tenant improvement expenditures to be consistent with 2013 . Our new development investment for 2014 is estimated to be approximately $50 million to $75 million. 2014 capital improvement spending is expected to be consistent with 2013 expenditures. Further, we have entered into commitments aggregating $66.0 million comprised principally of construction contracts which are generally due in 12 to 36 months and anticipated to be funded under our revolving credit facility.
Capital expenditures for additions described above relate to the following cash flows from investing activities as follows(in thousands):
 
Year Ended December 31,
 
2013
 
2012
Acquisition of real estate and land
$
105,765

 
$
198,171

Development and capital improvements
76,992

 
95,743

Real estate joint ventures and partnerships - Investments
22,600

 
9,792

Notes receivable from real estate joint ventures and
partnerships - Advances for capital expenditures
289

 
327

Total
$
205,646

 
$
304,033

Capitalized soft costs, including payroll and other general and administrative costs, interest and real estate taxes, totaled $9.7 million and $10.5 million for the year ended December 31, 2013 and 2012 , respectively.

39

Financing Activities:
Debt
Total debt outstanding was $2.3 billion at December 31, 2013 and included $2.1 billion on which interest rates are fixed and $163.6 million , including the effect of $116.7 million of interest rate contracts, which bears interest at variable rates. Additionally, of our total debt, $727.8 million was secured by operating properties while the remaining $1.6 billion was unsecured.
At December 31, 2013 , we have a $500 million unsecured revolving credit facility which expires in April 2017 and provides borrowing rates that float at a margin over LIBOR plus a facility fee. At December 31, 2013 , the borrowing margin and facility fee, which are priced off a grid that is tied to our senior unsecured credit ratings, are 115 and 20 basis points, respectively. The facility also contains a competitive bid feature that will allow us to request bids for up to $250 million . Additionally, an accordion feature allows us to increase the facility amount up to $700 million . As of January 31, 2014 , we had $120.0 million outstanding, and the available balance was $377.8 million , net of $2.2 million in outstanding letters of credit.
We also have an agreement with a bank for an unsecured and uncommitted overnight facility totaling $99 million that we maintain for cash management purposes. The facility provides for fixed interest rate loans at a 30-day LIBOR rate plus a borrowing margin based on market liquidity. As of January 31, 2014 , we had $11.0 million outstanding under this facility.
For the year ended December 31, 2013 , the maximum balance and weighted average balance outstanding under both facilities combined were $265.5 million and $61.6 million , respectively, at a weighted average interest rate of 1.0% .
In March 2013, we issued $300 million of 3.5% senior unsecured notes maturing in 2023. This transaction allowed us to reduce amounts outstanding under our revolving credit facility, which included borrowings used to redeem $75.0 million of our 6.75% Series D Cumulative Redeemable Preferred Shares and $63.0 million of fixed-rate medium term notes.
In October 2013, we issued $250 million of 4.45% senior unsecured notes maturing in 2024. This offering allowed us to repay all amounts outstanding under our revolving credit facility with the balance invested in short-term investments.
Our five most restrictive covenants include debt to assets, secured debt to assets, fixed charge and unencumbered interest coverage and debt yield ratios. We are not aware of any non-compliance with our public debt and revolving credit facility covenants as of December 31, 2013 .
Our most restrictive public debt covenant ratios, as defined in our indenture and supplemental indenture agreements, were as follows at December 31, 2013 :
Covenant
 
Restriction
 
Actual
Debt to Asset Ratio
 
Less than 60.0%
 
45.2%
Secured Debt to Asset Ratio
 
Less than 40.0%
 
14.3%
Annual Service Charge Ratio
 
Greater than 1.5
 
3.1
Unencumbered Asset Test
 
Greater than 150%
 
228.4%
At December 31, 2013 , we had four interest rate contracts with an aggregate notional amount of $116.7 million that were designated as fair value hedges and convert fixed interest payments at rates ranging from 4.2% to 7.5% to variable interest payments ranging from .2% to 4.3% .
At December 31, 2013 , we had three interest rate contracts with an aggregate notional amount of $25.8 million that were designated as cash flow hedges. These contracts have maturities through September 2017 and either fix or cap interest rates ranging from 2.3% to 5.0% . We have determined that these contracts are highly effective in offsetting future variable interest cash flows.
During 2013 , we settled three forward-starting contracts with an aggregate notional amount of $150 million hedging future fixed-rate debt issuances. These contracts fixed the 10-year swap rates at 2.4% . In connection with the $250 million issuance of 4.45% senior unsecured notes maturing in 2024, we received $6.1 million associated with the settlement of these forward-starting contracts resulting in a $5.9 million gain in accumulated other comprehensive loss.

40

We could be exposed to losses in the event of nonperformance by the counter-parties related to our interest rate contracts; however, management believes such nonperformance is unlikely.
Equity
In February 2014 , our Board of Trust Managers approved an increase in our quarterly dividend rate for our common shares from $.305 to $.325 per share commencing with the first quarter 2014 distribution. Common and preferred dividends paid totaled $165.9 million during 2013 . Our dividend payout ratio (as calculated as dividends paid on common shares divided by funds from operations (“FFO”) - basic) for the year ended December 31, 2013 approximated 66.8%, which is inclusive of non-cash transactions including the redemption costs on preferred shares, the write-off of net debt costs and other non-cash items.
In March 2013, we redeemed our 6.75% Series D Cumulative Redeemable Preferred Shares with a redemption value of $75.0 million . The funding of this redemption was under our revolving credit facility.
In June 2013 , we redeemed a portion of our 6.5% Series F Cumulative Redeemable Preferred Shares with a redemption value of $200 million . The funding of this redemption was under our revolving credit facility.
We have an effective universal shelf registration statement which expires in October 2014. We will continue to closely monitor both the debt and equity markets and carefully consider our available financing alternatives, including both public offerings and private placements.
Contractual Obligations
We have debt obligations related to our mortgage loans and unsecured debt, including any draws on our credit facilities. We have shopping centers that are subject to non-cancelable long-term ground leases where a third party owns and has leased the underlying land to us to construct and/or operate a shopping center. In addition, we have non-cancelable operating leases pertaining to office space from which we conduct our business. The table below excludes obligations related to our new development projects because such amounts are not fixed or determinable, and commitments aggregating $66.0 million comprised principally of construction contracts which are generally due in 12 to 36 months. The following table summarizes our primary contractual obligations as of December 31, 2013 (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2015
 
2016
 
2017
 
2018
 
Thereafter
 
Total
Mortgages and Notes
Payable (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
Unsecured Debt
$
344,063

 
$
139,055

 
$
123,264

 
$
66,300

 
$
66,300

 
$
1,171,054

 
$
1,910,036

Secured Debt
93,024

 
222,513

 
201,758

 
136,425

 
64,507

 
151,620

 
869,847

Lease Payments
3,617

 
3,261

 
3,143

 
2,984

 
2,966

 
131,627

 
147,598

Other Obligations (2)
61,526

 
32,575

 
50

 
50

 
—

 
—

 
94,201

Total Contractual
Obligations
$
502,230

 
$
397,404

 
$
328,215

 
$
205,759

 
$
133,773

 
$
1,454,301

 
$
3,021,682

 
___________________
(1)
Includes principal and interest with interest on variable-rate debt calculated using rates at December 31, 2013 , excluding the effect of interest rate swaps. Also, excludes a $73.7 million debt service guaranty liability.
(2)
Other obligations include income and real estate tax payments, commitments associated with our secured debt and other employee payments. Included in 2014, is the estimated contribution to our retirement plan, which meets or exceeds the minimum statutory funding requirements. See Note 19 for additional information.
Related to a development project in Sheridan, Colorado, we have provided a guaranty for the payment of any debt service shortfalls on tax increment revenue bonds issued in connection with the project. The Sheridan Redevelopment Agency ("Agency") issued Series A bonds used for an urban renewal project, of which $73.7 million remain outstanding at December 31, 2013 . The bonds are to be repaid with incremental sales and property taxes and a public improvement fee ("PIF") to be assessed on current and future retail sales and, to the extent necessary, any amounts we may have to provide under a guaranty. The incremental taxes and PIF are to remain intact until the earlier of the payment of the bond liability in full or 2040. The debt associated with this guaranty has been recorded in our consolidated financial statements as of December 31, 2013 .

41

Off Balance Sheet Arrangements
As of December 31, 2013 , none of our off balance sheet arrangements had a material effect on our liquidity or availability of, or requirement for, our capital resources. Letters of credit totaling $2.2 million were outstanding under the revolving credit facility at December 31, 2013 .
We have entered into several unconsolidated real estate joint ventures and partnerships. Under many of these agreements, we and our joint venture partners are required to fund operating capital upon shortfalls in working capital. We have also committed to fund the capital requirements of new development joint ventures. As operating manager of most of these entities, we have considered these funding requirements in our business plan.
Reconsideration events, including changes in variable interests, could cause us to consolidate these joint ventures and partnerships. We continuously evaluate these events as we become aware of them. Some triggers to be considered are additional contributions required by each partner and each partner’s ability to make those contributions. Under certain of these circumstances, we may purchase our partner’s interest. Our material unconsolidated real estate joint ventures are with entities which appear sufficiently stable; however, if market conditions were to continue to deteriorate and our partners are unable to meet their commitments, there is a possibility we may have to consolidate these entities. If we were to consolidate all of our unconsolidated real estate joint ventures, we would still be in compliance with our debt covenants.
As of December 31, 2013 , one unconsolidated real estate joint ventures was determined to be a VIE through the issuance of a secured loan, since the lender has the ability to make decisions that could have a significant impact on the profitability of the entity. Our maximum risk of loss associated with this VIE was limited to $11.5 million at December 31, 2013 .

Non-GAAP Financial Measures
Certain of our key performance indicators are considered non-GAAP financial measures. Management uses these measures along with our GAAP financial statements in order to evaluate our operating results. We believe these additional measures provide users of our financial information additional comparable indicators of our industry, as well as, our performance.
Funds from Operations
The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as net income (loss) attributable to common shareholders computed in accordance with GAAP, excluding extraordinary items and gains or losses from sales of operating real estate assets and interests in real estate equity investments, plus depreciation and amortization of operating properties and impairment of depreciable real estate and in substance real estate equity investments, including our share of unconsolidated real estate joint ventures and partnerships. We calculate FFO in a manner consistent with the NAREIT definition.
We believe FFO is a widely recognized measure of REIT operating performance which provides our shareholders with a relevant basis for comparison among other REITs. Management uses FFO as a supplemental internal 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.

42

FFO is calculated as follows (in thousands):
 
Year Ended December 31,
 
2013
 
2012 (1)
 
2011 (1)
Net income (loss) attributable to common shareholders
$
184,145

 
$
109,210

 
$
(19,855
)
Depreciation and amortization
152,075

 
143,783

 
150,668

Depreciation and amortization of unconsolidated real estate
joint ventures and partnerships
17,550

 
20,955

 
22,887

Impairment of operating properties and real estate equity
investments
457

 
15,033

 
28,995

Impairment of operating properties of unconsolidated real
estate joint ventures and partnerships
366

 
19,946

 
7,025

Gain on acquisition including associated real estate equity
investment
(20,234
)
 
(1,869
)
 
(4,559
)
Gain on sale of property and interests in real estate equity
investments
(95,675
)
 
(83,683
)
 
(11,846
)
Gain on sale of property of unconsolidated real estate
joint ventures and partnerships
(15,951
)
 
(1,247
)
 
10

Other
(1
)
 
—

 
—

Funds from operations – basic
222,732

 
222,128

 
173,325

Income attributable to operating partnership units
1,780

 
1,721

 
1,670

Funds from operations - diluted
$
224,512

 
$
223,849

 
$
174,995

 
 
 
 
 
 
Weighted average shares outstanding – basic
121,269

 
120,696

 
120,331

Effect of dilutive securities:
 
 
 
 
 
Share options and awards
1,191

 
1,009

 
894

Operating partnership units
1,554

 
1,578

 
1,617

Weighted average shares outstanding – diluted (2)
124,014

 
123,283

 
122,842

 
 
 
 
 
 
Funds from operations per share – basic
$
1.84

 
$
1.84

 
$
1.44

 
 
 
 
 
 
Funds from operations per share – diluted
$
1.81

 
$
1.82

 
$
1.42

___________________
(1)
Prior years’ results were restated to conform to the current year presentation by applying NAREIT's methodology regarding operating partnership units.
(2)
The weighted average common shares used to compute FFO per diluted common share includes operating partnership units that were excluded from the computation of diluted earnings per share. Conversion of these operating partnership units is dilutive in the computation of FFO per diluted common share, but is anti-dilutive for the computation of diluted earnings per share for the periods presented.
Same Property Net Operating Income
We consider SPNOI to be a key indicator of our financial performance as it provides a better indication of the recurring cash return on our properties by excluding certain non-cash revenues and expenses, as well as other infrequent or one-time items. We believe a pro rata basis is the most useful measurement as it provides our proportional share of SPNOI from all owned properties, including our share of SPNOI from unconsolidated joint ventures and partnerships, which cannot be readily determined under GAAP measurements and presentation. Although SPNOI is a widely used measure among REITs, there can be no assurance that SPNOI presented by us is comparable to similarly titled measures of other REITs.

43

Properties are included in the SPNOI calculation if they are owned and operated for the entirety of the most recent two fiscal year periods, except for properties for which significant redevelopment or expansion occurred during either of the periods presented, and properties classified as discontinued operations. While there is judgment surrounding changes in designations, we move new development and redevelopment properties once they have stabilized, which is typically upon attainment of 90% occupancy. A rollforward of the properties included in our same property designation is as follows:
 
Three Months Ended
December 31, 2013
 
Twelve Months Ended
December 31, 2013
Beginning of the period
256

 
261

Properties added:
 
 
 
Acquisitions
—

 
7

New Developments
—

 
8

Redevelopments
—

 
3

Properties removed:
 
 
 
Dispositions
(4
)
 
(25
)
Other
—

 
(2
)
Redevelopments
—

 
—

End of the period
252

 
252

We calculate SPNOI using operating income as defined by GAAP excluding property management fees, certain non-cash revenues and expenses such as straight-line rental revenue and the related reversal of such amounts upon early lease termination, depreciation, amortization, impairment losses, general and administrative expenses, acquisition costs and other one-time items such as lease cancellation income, environmental abatement costs and demolition expenses. Consistent with the capital treatment of such costs under GAAP, tenant improvements, leasing commissions and other direct leasing costs are excluded from SPNOI. A reconciliation of operating income to SPNOI is as follows (in thousands):
 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
 
2013
 
2012
 
2013
 
2012
Operating Income
$
39,694

 
$
40,912

 
$
163,400

 
$
146,680

Less:
 
 
 
 
 
 
 
Revenue adjustments (1)
2,281

 
2,429

 
10,322

 
10,938

Add:
 
 
 
 
 
 
 
Property management fees
662

 
668

 
3,020

 
2,729

Depreciation and amortization
40,411

 
34,968

 
149,493

 
129,500

Impairment loss
—

 
—

 
2,579

 
9,585

General and administrative
6,559

 
7,444

 
25,371

 
28,538

Acquisition costs
128

 
21

 
498

 
1,494

Other (2)
190

 
30

 
316

 
613

Net Operating Income
85,363

 
81,614

 
334,355

 
308,201

Less: NOI related to consolidated entities not defined
as same property and noncontrolling interests
(8,482
)
 
(6,835
)
 
(29,497
)
 
(16,146
)
Add: Pro rata share of properties classified as held for sale
937

 
872

 
3,743

 
3,541

Add: Pro rata share of unconsolidated entities defined
as same property
10,039

 
9,648

 
39,904

 
38,810

Same Property Net Operating Income
$
87,857

 
$
85,299

 
$
348,505

 
$
334,406

___________________
(1)
Revenue adjustments consist primarily of straight-line rentals, lease cancellation income and fee income primarily from real estate joint ventures and partnerships.
(2)
Other includes items such as environmental abatement costs and demolition expenses.

44

Newly Issued Accounting Pronouncements
In February 2013, the FASB issued Accounting Standards Update (“ASU”) No. 2013-04, "Obligations Resulting From Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date." This ASU requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date, as the sum of (1) the amount the reporting entity has agreed to pay in accordance to the arrangement and (2) any additional amounts the reporting entity expects to pay on behalf of its co-obligors. Additional disclosures on the nature and amounts of the obligation will also be required. The provisions of ASU No. 2013-04 are effective for us on January 1, 2014, and are required to be applied retrospectively. We do not expect the adoption of this update to have a material impact on our consolidated financial statements.
In July 2013, the FASB issued ASU No. 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." This ASU amends current GAAP to require entities to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for net operating loss or other tax credit carryforwards when settlement is available under the tax law. The provisions of ASU 2013-11 are effective for us on January 1, 2014, and are required to be applied to all unrecognized tax benefits in existence. Retrospective application may be applied to prior reporting periods presented. We do not expect the adoption of this update to have a material impact on our consolidated financial statements.

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
We use fixed and floating-rate debt to finance our capital requirements. These transactions expose us to market risk related to changes in interest rates. Derivative financial instruments are used to manage a portion of this risk, primarily interest rate contracts with major financial institutions. These agreements expose us to credit risk in the event of non-performance by the counter-parties. We do not engage in the trading of derivative financial instruments in the normal course of business. At December 31, 2013 , we had fixed-rate debt of $2.1 billion and variable-rate debt of $163.6 million , after adjusting for the net effect of $116.7 million notional amount of interest rate contracts. In the event interest rates were to increase 100 basis points and holding all other variables constant, annual net income and cash flows for the following year would decrease by approximately $.2 million associated with our variable-rate debt, including the effect of the interest rate contracts. The effect of the 100 basis points increase would decrease the fair value of our variable-rate and fixed-rate debt by approximately $3.4 million and $107.0 million, respectively.

45
Table of Contents

ITEM 8. Financial Statements and Supplementary Data
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, 2013 and 2012 , and the related consolidated statements of operations, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2013 . Our audits also included the financial statement schedules listed in the Index at Item 15. These financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Weingarten Realty Investors and subsidiaries as of December 31, 2013 and 2012 , and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013 , in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2013 , based on the criteria established in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2014 expressed an unqualified opinion on the Company’s internal control over financial reporting.
/s/ Deloitte & Touche LLP
Houston, Texas
February 26, 2014

46

WEINGARTEN REALTY INVESTORS
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
 
Year Ended December 31,
 
2013
 
2012
 
2011
Revenues:
 
 
 
 
 
Rentals, net
$
485,829

 
$
445,696

 
$
418,938

Other
11,896

 
11,208

 
13,678

Total
497,725

 
456,904

 
432,616

Expenses:
 
 
 
 
 
Depreciation and amortization
149,493

 
129,500

 
119,933

Operating
98,380

 
89,902

 
81,916

Real estate taxes, net
58,502

 
52,699

 
50,250

Impairment loss
2,579

 
9,585

 
49,671

General and administrative
25,371

 
28,538

 
25,461

Total
334,325

 
310,224

 
327,231

Operating Income
163,400

 
146,680

 
105,385

Interest Expense, net
(97,444
)
 
(106,800
)
 
(130,478
)
Interest and Other Income, net
7,685

 
6,047

 
5,059

Gain on Sale and Acquisition of Real Estate Joint Venture and
Partnership Interests
33,670

 
14,203

 
—

Equity in Earnings (Losses) of Real Estate Joint Ventures and
Partnerships, net
35,112

 
(1,558
)
 
7,834

Gain on Acquisition
—

 
1,869

 
—

(Provision) Benefit for Income Taxes
(7,051
)
 
70

 
(2
)
Income (Loss) from Continuing Operations
135,372

 
60,511

 
(12,202
)
Operating Income from Discontinued Operations
9,819

 
22,287

 
16,989

Gain on Sale of Property from Discontinued Operations
119,203

 
68,619

 
10,648

Income from Discontinued Operations
129,022

 
90,906

 
27,637

Gain on Sale of Property
762

 
1,004

 
1,304

Net Income
265,156

 
152,421


16,739

Less: Net Income Attributable to Noncontrolling Interests
(44,894
)
 
(5,781
)
 
(1,118
)
Net Income Adjusted for Noncontrolling Interests
220,262

 
146,640

 
15,621

Dividends on Preferred Shares
(18,173
)
 
(34,930
)
 
(35,476
)
Redemption Costs of Preferred Shares
(17,944
)
 
(2,500
)
 
—

Net Income (Loss) Attributable to Common Shareholders
$
184,145

 
$
109,210

 
$
(19,855
)
Earnings Per Common Share - Basic:
 
 
 
 
 
Income (loss) from continuing operations attributable to common shareholders
$
0.78

 
$
0.16

 
$
(0.38
)
Income from discontinued operations
0.74

 
0.74

 
0.21

Net income (loss) attributable to common shareholders
$
1.52

 
$
0.90

 
$
(0.17
)
Earnings Per Common Share - Diluted:
 
 
 
 
 
Income (loss) from continuing operations attributable to common shareholders
$
0.77

 
$
0.16

 
$
(0.38
)
Income from discontinued operations
0.73

 
0.74

 
0.21

Net income (loss) attributable to common shareholders
$
1.50

 
$
0.90

 
$
(0.17
)
See Notes to Consolidated Financial Statements.

47
Table of Contents

WEINGARTEN REALTY INVESTORS
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
 
Year Ended December 31,
 
2013
 
2012
 
2011
Net Income
$
265,156

 
$
152,421

 
$
16,739

Other Comprehensive Income (Loss):
 
 
 
 
 
Net unrealized gain on investments, net of taxes
340

 
—

 
—

Realized gain on derivatives
5,893

 
—

 
—

Net unrealized gain (loss) on derivatives
530

 
(123
)
 
(854
)
Amortization of loss on derivatives
2,299

 
2,650

 
2,551

Retirement liability adjustment
11,479

 
473

 
(7,666
)
Total
20,541

 
3,000

 
(5,969
)
Comprehensive Income
285,697

 
155,421

 
10,770

Comprehensive Income Attributable to Noncontrolling Interests
(44,894
)
 
(5,781
)
 
(1,118
)
Comprehensive Income Adjusted for Noncontrolling Interests
$
240,803

 
$
149,640

 
$
9,652

See Notes to Consolidated Financial Statements.


48
Table of Contents

WEINGARTEN REALTY INVESTORS
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
 
December 31,
 
2013
 
2012
ASSETS
 
 
 
Property
$
4,289,276

 
$
4,399,850

Accumulated Depreciation
(1,058,040
)
 
(1,040,839
)
Property Held for Sale, net
122,614

 
—

Property, net *
3,353,850

 
3,359,011

Investment in Real Estate Joint Ventures and Partnerships, net
266,158

 
289,049

Total
3,620,008

 
3,648,060

Notes Receivable from Real Estate Joint Ventures and Partnerships
13,330

 
89,776

Unamortized Debt and Lease Costs, net
164,828

 
135,783

Accrued Rent and Accounts Receivable (net of allowance for doubtful accounts of
$9,386 in 2013 and $12,127 in 2012) *
82,351

 
79,540

Cash and Cash Equivalents *
91,576

 
19,604

Restricted Deposits and Mortgage Escrows
4,502

 
44,096

Other, net
247,334

 
167,925

Total Assets
$
4,223,929

 
$
4,184,784

LIABILITIES AND EQUITY
 
 
 
Debt, net *
$
2,299,844

 
$
2,204,030

Accounts Payable and Accrued Expenses
108,535

 
119,699

Other, net
127,572

 
120,900

Total Liabilities
2,535,951

 
2,444,629

Commitments and Contingencies
—

 
—

Equity:
 
 
 
Shareholders' Equity:
 
 
 
Preferred Shares of Beneficial Interest - par value, $.03 per share;
shares authorized: 10,000
 
 
 
6.75% Series D cumulative redeemable preferred shares of beneficial interest;
100 shares issued; no shares outstanding in 2013 and 100 shares outstanding
in 2012; liquidation preference $75,000 in 2012
—

 
3

6.5% Series F cumulative redeemable preferred shares of beneficial interest;
140 shares issued; 60 shares outstanding in 2013 and 140 shares outstanding
in 2012; liquidation preference $150,000 in 2013 and $350,000 in 2012
2

 
4

Common Shares of Beneficial Interest - par value, $.03 per share;
shares authorized: 275,000; shares issued and outstanding:
121,949 in 2013 and 121,505 in 2012
3,683

 
3,663

Additional Paid-In Capital
1,679,229

 
1,934,183

Net Income Less Than Accumulated Dividends
(300,537
)
 
(335,980
)
Accumulated Other Comprehensive Loss
(4,202
)
 
(24,743
)
Total Shareholders' Equity
1,378,175

 
1,577,130

Noncontrolling Interests
309,803

 
163,025

Total Equity
1,687,978

 
1,740,155

Total Liabilities and Equity
$
4,223,929

 
$
4,184,784

* Consolidated variable interest entities' assets held as collateral and debt included in the above balances (see Note 22):
Property, net
$
70,734

 
$
226,685

Accrued Rent and Accounts Receivable, net
2,855

 
8,095

Cash and Cash Equivalents
6,548

 
11,706

Debt, net
109,923

 
276,420

See Notes to Consolidated Financial Statements.

49
Table of Contents

`
WEINGARTEN REALTY INVESTORS
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
Year Ended December 31,
 
2013
 
2012
 
2011
Cash Flows from Operating Activities:
 
 
 
 
 
Net Income
$
265,156

 
$
152,421

 
$
16,739

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
Depreciation and amortization
157,665

 
148,413

 
157,290

Amortization of debt deferred costs and intangibles, net
(7,518
)
 
(1,162
)
 
5,215

Impairment loss
2,815

 
15,436

 
75,874

Equity in (earnings) losses of real estate joint ventures and partnerships, net
(35,112
)
 
1,558

 
(7,834
)
Gain on acquisition
—

 
(1,869
)
 
(4,559
)
Gain on sale and acquisition of real estate joint venture and partnership interests
(33,670
)
 
(14,203
)
 
—

Gain on sale of property
(119,965
)
 
(69,623
)
 
(11,952
)
Distributions of income from real estate joint ventures and partnerships, net
3,498

 
3,141

 
2,186

Changes in accrued rent and accounts receivable, net
(4,606
)
 
82

 
6,662

Changes in other assets, net
(19,587
)
 
(19,008
)
 
(22,482
)
Changes in accounts payable, accrued expenses and other liabilities, net
18,420

 
(878
)
 
(13,525
)
Other, net
6,896

 
13,022

 
11,117

Net cash provided by operating activities
233,992

 
227,330

 
214,731

Cash Flows from Investing Activities:
 
 
 
 
 
Acquisition of real estate and land
(105,765
)
 
(198,171
)
 
(49,880
)
Development and capital improvements
(76,992
)
 
(95,743
)
 
(94,108
)
Proceeds from sale of property and real estate equity investments, net
282,705

 
591,091

 
113,043

Change in restricted deposits and mortgage escrows
39,505

 
(30,520
)
 
(794
)
Notes receivable from real estate joint ventures and partnerships and other receivables - Advances
(289
)
 
(6,614
)
 
(2,926
)
Notes receivable from real estate joint ventures and partnerships and other receivables - Collections
19,411

 
75,081

 
15,687

Real estate joint ventures and partnerships - Investments
(26,241
)
 
(9,792
)
 
(18,583
)
Real estate joint ventures and partnerships - Distributions of capital
59,932

 
44,976

 
17,271

Proceeds from tax increment revenue bonds
—

 
—

 
16,545

Purchase of investments
(58,836
)
 
—

 
—

Other, net
1,224

 
—

 
—

Net cash provided by (used in) investing activities
134,654

 
370,308

 
(3,745
)
Cash Flows from Financing Activities:
 
 
 
 
 
Proceeds from issuance of debt
573,542

 
300,098

 
215,750

Principal payments of debt
(449,629
)
 
(538,438
)
 
(336,760
)
Changes in unsecured credit facilities
(66,000
)
 
(100,500
)
 
86,500

Proceeds from issuance of common shares of beneficial interest, net
5,968

 
8,267

 
3,999

Repurchase of preferred shares of beneficial interest
(275,000
)
 
(72,500
)
 
—

Common and preferred dividends paid
(165,900
)
 
(173,202
)
 
(165,721
)
Debt issuance costs paid
(6,716
)
 
(4,250
)
 
(4,002
)
Distributions to noncontrolling interests
(20,151
)
 
(12,770
)
 
(23,560
)
Contributions from noncontrolling interests
106,613

 
2,123

 
3,717

Other, net
599

 
(504
)
 
(1,126
)
Net cash used in financing activities
(296,674
)
 
(591,676
)
 
(221,203
)
Net increase (decrease) in cash and cash equivalents
71,972

 
5,962

 
(10,217
)
Cash and cash equivalents at January 1
19,604

 
13,642

 
23,859

Cash and cash equivalents at December 31
$
91,576

 
$
19,604

 
$
13,642

Interest paid during the period (net of amount capitalized of $2,403, $3,125 and $2,329, respectively)
$
106,918

 
$
117,085

 
$
137,758

Income taxes paid during the period
$
1,860

 
$
1,548

 
$
1,578

See Notes to Consolidated Financial Statements.

50
Table of Contents

WEINGARTEN REALTY INVESTORS
CONSOLIDATED STATEMENTS OF EQUITY
(In thousands)
Year Ended December 31, 2013, 2012 and 2011

 
Preferred
Shares of
Beneficial
Interest
 
Common
Shares of
Beneficial
Interest
 
Additional
Paid-In
Capital
 
Net Income
Less Than
Accumulated
Dividends
 
Accumulated
Other
Comprehensive
Loss
 
Noncontrolling
Interests
 
Total
Balance, January 1, 2011
$
8

 
$
3,630

 
$
1,969,905

 
$
(151,780
)
 
$
(21,774
)
 
$
180,268

 
$
1,980,257

Net income
 
 
 
 
 
 
15,621

 
 
 
1,118

 
16,739

Shares issued under benefit plans
 
 
11

 
9,898

 
 
 
 
 
 
 
9,909

Dividends paid – common shares
 
 
 
 
 
 
(132,869
)
 
 
 
 
 
(132,869
)
Dividends paid – preferred shares
 
 
 
 
 
 
(32,852
)
 
 
 
 
 
(32,852
)
Distributions to noncontrolling interests
 
 
 
 
 
 
 
 
 
 
(23,560
)
 
(23,560
)
Contributions from noncontrolling interests
 
 
 
 
 
 
 
 
 
 
13,666

 
13,666

Other comprehensive loss
 
 
 
 
 
 
 
 
(5,969
)
 
 
 
(5,969
)
Other, net
 
 
 
 
4,175

 
(2,624
)
 
 
 
(3,290
)
 
(1,739
)
Balance, December 31, 2011
8

 
3,641

 
1,983,978

 
(304,504
)
 
(27,743
)
 
168,202

 
1,823,582

Net income
 
 
 
 
 
 
146,640

 
 
 
5,781

 
152,421

Redemption of preferred shares
(1
)
 
 
 
(69,999
)
 
(2,500
)
 
 
 
 
 
(72,500
)
Shares issued under benefit plans
 
 
22

 
16,568

 
 
 
 
 
 
 
16,590

Dividends paid – common shares
 
 
 
 
 
 
(140,686
)
 
 
 
 
 
(140,686
)
Dividends paid – preferred shares
 
 
 
 
 
 
(32,516
)
 
 
 
 
 
(32,516
)
Distributions to noncontrolling interests
 
 
 
 
 
 
 
 
 
 
(12,770
)
 
(12,770
)
Contributions from noncontrolling interests
 
 
 
 
 
 
 
 
 
 
2,123

 
2,123

Other comprehensive income
 
 
 
 
 
 
 
 
3,000

 
 
 
3,000

Other, net
 
 
 
 
3,636

 
(2,414
)
 
 
 
(311
)
 
911

Balance, December 31, 2012
7

 
3,663

 
1,934,183

 
(335,980
)
 
(24,743
)
 
163,025

 
1,740,155

Net income
 
 
 
 
 
 
220,262

 
 
 
44,894

 
265,156

Redemption of preferred shares
(5
)
 
 
 
(257,051
)
 
(17,944
)
 
 
 
 
 
(275,000
)
Shares issued under benefit plans
 
 
20

 
13,588

 
 
 
 
 
 
 
13,608

Dividends paid – common shares
 
 
 
 
 
 
(148,702
)
 
 
 
 
 
(148,702
)
Dividends paid – preferred shares
 
 
 
 
 
 
(17,198
)
 
 
 
 
 
(17,198
)
Distributions to noncontrolling interests
 
 
 
 
 
 
 
 
 
 
(20,151
)
 
(20,151
)
Contributions from noncontrolling interests
 
 
 
 
 
 
 
 
 
 
106,613

 
106,613

Acquisition of noncontrolling interests
 
 
 
 
(16,177
)
 
 
 
 
 
16,177

 
—

Other comprehensive income
 
 
 
 
 
 
 
 
20,541

 
 
 
20,541

Other, net
 
 
 
 
4,686

 
(975
)
 
 
 
(755
)
 
2,956

Balance, December 31, 2013
$
2

 
$
3,683

 
$
1,679,229

 
$
(300,537
)
 
$
(4,202
)
 
$
309,803

 
$
1,687,978

    
See Notes to Consolidated Financial Statements.

51
Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1.      Summary of Significant Accounting Policies
Business
Weingarten Realty Investors is a REIT organized under the Texas Business Organizations Code. We currently operate, and intend to operate in the future, as a REIT.
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 centers we own or lease. We also provide property management services for which we charge fees to either joint ventures where we are partners or other outside owners.
We operate a portfolio of neighborhood and community shopping centers, totaling approximately 49.9 million square feet of gross leaseable area, that is either owned by us or others. We have a diversified tenant base, with our largest tenant comprising only 3.8% of total rental revenues during 2013 . Net operating income from continuing operations generated by our properties located in Houston and its surrounding areas was 19.1% of total net operating income from continuing operations for the year ended December 31, 2013 , and an additional 8.4% of net operating income from continuing operations is generated from properties that are located in other parts of Texas.
Basis of Presentation
Our consolidated financial statements include the accounts of our subsidiaries, certain partially owned real estate joint ventures or partnerships and VIEs which meet the guidelines for consolidation. All intercompany balances and transactions have been eliminated.
Our financial statements are prepared in accordance with GAAP. 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. We have evaluated subsequent events for recognition or disclosure in our consolidated financial statements.
Revenue Recognition
Rental revenue is generally recognized on a straight-line basis over the term of the lease, which generally begins the date the tenant takes control of the space. Revenue from tenant reimbursements of taxes, maintenance expenses and insurance is subject to our interpretation of lease provisions and 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 circumstances where we provide a tenant improvement allowance for improvements that are owned by the tenant, we 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.
Property
Real estate assets are stated at cost less accumulated depreciation. 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 acquisition method and, accordingly, the results of operations of an acquired property are included in our results of operations from the date of acquisition. Estimates of fair values are based upon estimated future cash flows and other valuation techniques in accordance with our fair value measurements accounting policy. Fair values are used to allocate and record the purchase price of acquired property among land, buildings on an “as if vacant” basis, tenant improvements, other identifiable intangibles and any goodwill or gain on purchase. 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 over the lease term which includes bargain renewal options for other identifiable intangible assets. Acquisition costs are expensed as incurred.

52

Property also includes costs incurred in the development of new operating properties. These properties are carried at cost, and no depreciation is recorded on these assets until rent commences 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.
Property identified for sale is reviewed to determine if it qualifies as held for sale based on the following criteria: management has approved and is committed to the disposal plan, the assets are available for immediate sale, an active plan is in place to locate a buyer, the sale is probable and expected to qualify as a completed sale within a year, the sales price is reasonable in relation to the current fair value, and it is unlikely that significant changes will be made to the sales plan or that the sales plan will be withdrawn. Upon qualification, these properties are segregated and classified as held for sale at the lower of cost or fair value less costs to sell and its related operating results are reclassified into discontinued operations.
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 consolidated financial statements.
Real Estate Joint Ventures and Partnerships
To determine the method of accounting for partially owned real estate joint ventures and partnerships, management determines whether an entity is a VIE and, if so, determines which party is the primary beneficiary by analyzing whether we have both the power to direct the entity’s significant economic activities and the obligation to absorb potentially significant losses or receive potentially significant benefits. Significant judgments and assumptions inherent in this analysis include the design of the entity structure, the nature of the entity’s operations, future cash flow projections, the entity’s financing and capital structure, and contractual relationships and terms. We consolidate a VIE when we have determined that we are the primary beneficiary.
Primary risks associated with our involvement with our VIEs include the potential funding of the entities’ debt obligations or making additional contributions to fund the entities’ operations.
Partially owned, non-variable interest real estate joint ventures and partnerships over which we have a controlling financial interest are consolidated in our consolidated financial statements. In determining if we have a controlling financial interest, 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 do not have a controlling financial interest, but have the ability to exercise significant influence, are accounted for using the equity method.
Management continually analyzes and assesses reconsideration events, including changes in the factors mentioned above, to determine if the consolidation or equity method treatment remains appropriate.
Notes Receivable from Real Estate Joint Ventures and Partnerships
Notes receivable from real estate joint ventures and partnerships in which we have an ownership interest, primarily represent mortgage construction notes. We consider applying a reserve to a note receivable when it becomes apparent that conditions exist that may lead to our inability to fully collect on outstanding amounts due. Such conditions include delinquent or late payments on notes, deterioration in the ongoing relationship with the borrower and other relevant factors. When such conditions leading to expected losses exist, we would estimate a reserve by reviewing the borrower’s ability to meet scheduled debt service, our partner’s ability to make contributions and the fair value of the collateral.

53

Deferred Charges
Debt costs are amortized primarily on a straight-line basis, which approximates the effective interest method, over the terms of the debt. 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 a lease and are amortized over the life of the lease on a straight-line basis. Costs related to supervision, administration, unsuccessful origination efforts and other activities not directly related to completed lease agreements are charged to expense as incurred.
Accrued Rent and Accounts Receivable, net
Receivables 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 creditworthiness 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. Management’s estimate of the collectibility of accrued rents and accounts receivable is based on the best information available to management at the time of evaluation.
Cash and Cash Equivalents
All highly liquid investments with original maturities of three months or less are considered cash equivalents. Cash and cash equivalents are primarily held at major financial institutions in the U.S. We had cash and cash equivalents in certain financial institutions in excess of federally insured levels. We have diversified our cash and cash equivalents amongst several banking institutions in an attempt to minimize exposure to any one of these entities. We believe we are not exposed to any significant credit risk and regularly monitor the financial stability of these financial institutions.
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 for a specific use or in a qualified escrow account for the purposes of completing like-kind exchange transactions.
Our restricted deposits and mortgage escrows consists of the following (in thousands):
 
December 31,
 
2013
 
2012
Restricted cash (1)
$
869

 
$
36,944

Mortgage escrows
3,633

 
7,152

Total
$
4,502

 
$
44,096

___________________
(1)
The decrease between the periods presented is primarily attributable to the use of $30.7 million for the purpose of completing like-kind exchange transactions.
Other Assets, net
Other assets include an asset related to the debt service guaranty (see Note 7 for further information), tax increment revenue bonds, investments, investments held in a grantor trust, deferred tax assets, prepaid expenses, interest rate derivatives, the value of above-market leases and the related accumulated amortization and other miscellaneous receivables. Investments held in a grantor trust are adjusted to fair value at each period with changes included in our Consolidated Statements of Operations. Investments in mutual funds and the short-term time deposit are adjusted to fair value at each period with changes included in our Consolidated Statements of Comprehensive Income, which approximates the cost basis. Our tax increment revenue bonds have been classified as held to maturity and are recorded at amortized cost offset by a recognized credit loss (see Note 24 for further information). Above-market leases are amortized as adjustments to rental revenues over terms of the acquired leases. Other miscellaneous receivables have a reserve applied to the carrying amount when it becomes apparent that conditions exist that may lead to our inability to fully collect on outstanding amounts due. Such conditions include delinquent or late payments on receivables, deterioration in the ongoing relationship with the borrower and other relevant factors. We would establish a reserve when expected loss conditions exist by reviewing the borrower’s ability to generate revenues to meet debt service requirements and assessing the fair value of any collateral.

54

Derivatives and Hedging
We manage interest cost using a combination of fixed-rate and variable-rate debt. To manage our interest rate risk, we occasionally hedge the future cash flows of our existing floating-rate debt or anticipated fixed-rate debt issuances, as well as changes in the fair value of our existing fixed-rate debt instruments, principally through interest rate contracts with major financial institutions. Interest rate contracts that meet specific criteria are accounted for as either a cash flow or fair value hedge.
Cash Flow Hedges of Interest Rate Risk:
Our objective in using interest rate contracts is to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish this objective, we primarily use interest rate contracts as part of our interest rate risk management strategy. Interest rate contracts designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount or capping floating rate interest payments.
The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive loss and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. For hedges of fixed-rate debt issuances, the interest rate contracts are cash settled upon the pricing of the debt, with amounts deferred in accumulated other comprehensive loss and amortized as an increase/decrease to interest expense over the originally hedged period.
The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings.
Fair Value Hedges of Interest Rate Risk:
We are exposed to changes in the fair value of certain of our fixed-rate obligations due to changes in benchmark interest rates, such as LIBOR. We use interest rate contracts to manage our exposure to changes in fair value on these instruments attributable to changes in the benchmark interest rate. Interest rate contracts designated as fair value hedges involve the receipt of fixed-rate amounts from a counterparty in exchange for us making variable-rate payments over the life of the agreements without the exchange of the underlying notional amount. Changes in the fair value of interest rate contracts designated as fair value hedges, as well as changes in the fair value of the related debt being hedged, are recorded in earnings each reporting period.
Sales of Real Estate
Sales of real estate include the sale of tracts of land within a shopping center development, property adjacent to shopping centers, operating properties, newly developed properties, investments in real estate joint ventures and partnerships and partial sales to real estate joint ventures and partnerships in which we participate.
Profits on sales of real estate 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 GAAP, 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.
Impairment
Our property is reviewed for impairment if events or changes in circumstances indicate that the carrying amount of the property, including any capitalized costs and any identifiable intangible assets, may not be recoverable.
If such an event occurs, a comparison is made of the current and projected operating cash flows of each such property into the foreseeable future, with consideration of applicable holding periods, on an undiscounted basis to the carrying amount of such property. If we determine the carrying amount is not recoverable, our basis in the property is reduced to its estimated fair value to reflect impairment in the value of the asset. Fair values are determined by management utilizing cash flow models, market capitalization rates and market discount rates, or by obtaining third-party broker or appraisal estimates in accordance with our fair value measurements accounting policy.

55

We review economic considerations at each reporting period, including the effects of tenant bankruptcies, the suspension of tenant expansion plans for new development projects, declines in real estate values, and any changes to plans related to our new development properties including land held for development, to identify properties where we believe market values may be deteriorating. Determining whether a property is impaired and, if impaired, the amount of write-down to fair value requires a significant amount of judgment by management and is based on the best information available to management at the time of evaluation. If market conditions deteriorate or management’s plans for certain properties change, additional write-downs could be required in the future.
Our investment in partially owned real estate joint ventures and partnerships is reviewed for impairment each reporting period. The ultimate realization 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 estimated fair value of an investment below its carrying amount is other than temporary. There is no certainty that impairments will not occur in the future if market conditions decline or if management’s plans for these investments change.
Our investments in tax increment revenue bonds are reviewed for impairment, including the evaluation of changes in events or circumstances that may indicate that the carrying amount of the investment may not be recoverable. Realization is dependent on a number of factors, including investment performance, market conditions and payment structure. We will record an impairment charge if we determine that a decline in the value of the investment below its carrying amount is other than temporary, recovery of its cost basis is uncertain, and/or it is uncertain if the investment will be held to maturity.
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.
Interest Expense in Discontinued Operations
Interest expense that is specifically identifiable to property, both held for sale and sold and qualifies as discontinued operations, is included in operating income from discontinued operations in our consolidated financial statements. We do not allocate other consolidated interest to operating income from discontinued operations because the interest savings to be realized from the proceeds of the sale of these operations is not material.
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 (without regard to capital gains or the dividends paid deduction) 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 a taxable REIT subsidiary that we have created. We calculate and record income taxes in our consolidated financial statements based on the activities in this entity. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between our carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss and tax credit carry-forwards. These are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance for deferred tax assets is established for those assets we do not consider the realization of such assets to be more likely than not.
Additionally, GAAP 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 consolidated 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 addition, we are subject to the State of Texas business tax (“Texas Franchise Tax”), which is determined by applying a tax rate to a base that considers both revenues and expenses. Therefore, the Texas Franchise Tax is considered an income tax and is accounted for accordingly.

56

Share-Based Compensation
We have share option and restricted share award plans. In November 2011, we announced changes to the long-term incentive program under our Amended and Restated 2010 Long-Term Incentive Plan ("2011 Program Changes"). Future grants of awards will incorporate both service-based and market-based measures for restricted share awards to promote share ownership among the participants and to emphasize the importance of total shareholder return. The terms of each grant vary depending upon the participant's responsibilities and position within the Company. All awards are recorded at fair value on the date of grant and earn dividends throughout the vesting period. Compensation expense is measured at the grant date and recognized over the vesting period. All share awards are awarded subject to the participant’s continued employment with us.
The share awards are subject to a three -year cliff vesting basis. Service-based and market-based share awards are subject to the achievement of select performance goals as follows:
•
Service-based awards and accumulated dividends typically vest three years from the grant date. These grants are subject only to continued employment and not dependent on future performance measures. Accordingly, if such vesting criteria are not met, compensation cost previously recognized would be reversed.
•
Market-based awards vest based upon the performance metrics at the end of a three -year period. These awards are based 50% on our three-year relative total shareholder return (“TSR”) as compared to the FTSE NAREIT U.S. Shopping Center Index. The other 50% is tied to our three-year absolute TSR. At the end of a three-year period, the performance measures are analyzed; the actual number of shares earned is determined and the earned shares and the accumulated dividends vest. The probability of meeting the market criteria is considered when calculating the estimated fair value on the date of grant using a Monte Carlo simulation. These awards are accounted for as awards with market criteria, with compensation cost recognized over the service period, regardless of whether the market criteria are achieved and the awards are ultimately earned and vest.
Share options granted to non-officers prior to the 2011 Program Changes vest ratably over a three -year period beginning after the grant date, and share options and restricted shares for officers vest ratably over a five -year period after the grant date. Restricted shares granted to trust managers and share options or awards granted to retirement eligible employees are expensed immediately. Restricted shares have the same rights of a common shareholder, including the right to vote and receive dividends, except as otherwise provided by our Management Development and Executive Compensation Committee.
The grant price for our options is calculated as an average of the high and low of the quoted fair value of our common shares on the date of grant. Issued options generally expire upon the earlier of termination of employment or 10 years from the date of grant, and 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.
The fair value of share options was estimated on the date of grant using the Black-Scholes option pricing method based on certain expected weighted average assumptions; including the dividend yield, the expected volatility, the expected life and the risk free interest rate. The dividend yield was an average of the historical yields at each record date over the estimated expected life. We estimated volatility using our historical volatility data for a period of 10 years, and the expected life was based on historical data from an option valuation model of employee exercises and terminations. The risk-free rate was based on the U.S. Treasury yield curve.
Retirement Benefit Plans
Defined Benefit Plans:
We sponsor a noncontributory cash balance retirement plan (“Retirement Plan”) under which an account is maintained for each participant. 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 4.5% effective January 1, 2011. The interest credit for prior years was based on the 10 year U.S. Treasury Bill rate not to be less than 2.05% . Vesting generally occurs after three years of service. In addition to the plan described above, prior to January 1, 2012, we had established two separate and independent nonqualified supplemental retirement plans (“SRP”) for certain employees. These unfunded plans provided benefits in excess of the statutory limits of our noncontributory cash balance retirement plan. Annual additions to each participant’s account included an actuarially-determined service credit and an interest credit of 7.5% . Vesting generally occurred between five and 10 years of service. We had elected to use the actuarial present value of the vested benefits to which the participant was entitled if the participant separated immediately from the SRP, as permitted by GAAP.

57

Investments of Plan Assets
Our investment policy for our plan assets has been to determine the objectives for structuring a retirement savings program suitable to the long-term needs and risk tolerances of participants, to select appropriate investments to be offered by the plan and to establish procedures for monitoring and evaluating the performance of the investments of the plan. Our overall plan objectives for selecting and monitoring investment options are to promote and optimize retirement wealth accumulation; to provide a full range of asset classes and investment options that are intended to help diversify the portfolio to maximize return within reasonable and prudent levels of risk; to control costs of administering the plan; and to manage the investments held by the plan.
The selection of investment options is determined using criteria based on the following characteristics: fund history, relative performance, investment style, portfolio structure, manager tenure, minimum assets, expenses and operation considerations. Investment options selected for use in the plan are reviewed at least on a semi-annual basis to evaluate material changes from the selection criteria. Asset allocation is used to determine how the investment portfolio should be split between stocks, bonds and cash. The asset allocation decision is influenced by investment time horizon; risk tolerance; and investment return objectives. The primary factor in establishing asset allocation is demographics of the plan, including attained age and future service. A broad market diversification model is used in considering all these factors and the percentage allocation to each investment category may also vary depending upon market conditions. Re-balancing of the allocation of plan assets occurs semi-annually.
Defined Contribution Plans:
Effective January 1, 2012, we amended our SRP to be defined contribution plans from defined benefit plans. These unfunded plans continue to provide benefits in excess of the statutory limits of our noncontributory cash balance retirement plan. For active participants as of January 1, 2012, annual additions to each participant’s account include an actuarially-determined service credit ranging from 3% to 5% and an interest credit of 4.5% . Vesting generally occurs between five and 10 years of service. We have elected to use the actuarial present value of the vested benefits to which the participant was entitled if the participant separated immediately from the SRP, as permitted by GAAP.
The SRP participants' account balances, under the defined benefit plan, were converted to a cash balance retirement plan which no longer receives service credits but would continue to receive a 7.5% interest credit for active participants and a December 31 90-day LIBOR rate plus .50% for inactive participants.
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 IRS . Employee contributions are matched by us at the rate of 50% for the first 6% of the employee's salary. The employees vest in the employer contributions ratably over a five -year period.
Deferred Compensation Plan
We 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 net 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 selected using 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.
Fair Value Measurements
Certain financial instruments, estimates and transactions are required to be calculated, reported and/or recorded at fair value. The estimated fair values of such financial items, including debt instruments, impaired assets, acquisitions, investment securities and derivatives, have been determined using a market-based measurement. This measurement is determined based on the assumptions that management believes market participants would use in pricing an asset or liability; including, market capitalization rates, discount rates, current operating income, local economics and other factors. As a basis for considering market participant assumptions in fair value measurements, GAAP establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

58

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which is typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. The fair value of such financial instruments, estimates and transactions was determined using available market information and appropriate valuation methodologies as prescribed by GAAP.
Internally developed and third party fair value measurements, including the unobservable inputs, are evaluated by management with sufficient experience for reasonableness based on current market knowledge, trends and transactional experience in the real estate and capital markets. Our valuation policies and procedures are determined by our Accounting Group, which reports to the Chief Financial Officer and the results of significant impairment transactions are discussed with the Audit Committee on a quarterly basis.
Fair value estimates are based on limited available market information for similar transactions, including our notes receivable from real estate joint ventures and partnerships, tax increment revenue bonds and debt, and there can be no assurance that the disclosed value of any financial instrument could be realized by immediate settlement of the instrument. The following provides information about the methods used to estimate the fair value of the our financial instruments, including their estimated fair values:
Investments and Deferred Compensation Plan Obligations
Investments in mutual funds held in a grantor trust and mutual funds are valued based on publicly-quoted market prices for identical assets. The time deposit is a short-term investment tradeable in the secondary market and reflects current rates for a deposit with similar maturity and credit quality. The deferred compensation plan obligations corresponds to the value of our investments held in a grantor trust.
Derivative Instruments
We use interest rate contracts with major financial institutions to manage our interest rate risk. The valuation of these instruments is determined based on assumptions that management believes market participants would use in pricing, using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of our interest rate contracts have been determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.
We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counter-party’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral, thresholds and guarantees. An accounting policy election was made to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.
Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by ourselves and our counter-parties. However, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that the derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

59

Notes Receivable from Real Estate Joint Ventures and Partnerships
We estimate the fair value of our notes receivable from real estate joint ventures and partnerships using quoted market prices for publicly-traded notes and discounting estimated future cash receipts. The discount rates used approximate current lending rates for a note or groups of notes with similar maturities and credit quality, assumes the note is outstanding through maturity and considers the note’s collateral (if applicable). We utilize market information as available or present value techniques to estimate the amounts required to be disclosed.
Tax Increment Revenue Bonds
The fair value estimates of our held to maturity tax increment revenue bonds, which were issued by the Agency in connection with our investment in a development project in Sheridan, Colorado, are based on assumptions that management believes market participants would use in pricing, using widely accepted valuation techniques including discounted cash flow analysis based on the expected future sales tax revenues of the development project. This analysis reflects the contractual terms of the bonds, including the period to maturity, and uses observable market-based inputs, such as market discount rates and unobservable market-based inputs, such as future growth and inflation rates.
Debt
The fair value of our debt may be based on quoted market prices for publicly-traded debt, on a third-party established benchmark for inactively traded debt and on the discounted estimated future cash payments to be made for non-traded debt. For inactively traded debt, our third-party provider establishes a benchmark for all REIT securities based on the largest, most liquid and most frequent investment grade securities in the REIT bond market. This benchmark is then adjusted to consider how a market participant would be compensated for risk premiums such as, longevity of maturity dates, lack of liquidity and credit quality of the issuer. The discount rates used approximate current lending rates for loans or groups of loans with similar maturities and credit quality, assumes the debt is outstanding through maturity and considers the debt’s collateral (if applicable). We have utilized market information as available or present value techniques to estimate the amounts required to be disclosed.
Reportable Segments
Our primary focus is to lease space to tenants in shopping centers that we own, lease or manage. Historically, we reviewed operating and financial information for each property by commercial use and on an individual basis. Each commercial use or each property represents an individual operating segment.
We evaluate the performance of the reportable segments based on net operating income, defined as total revenues less operating expenses and real estate taxes. Management does not consider the effect of gains or losses from the sale of property or interests in real estate joint ventures and partnerships in evaluating segment operating performance.
With the sale of our industrial portfolio in May 2012, we no longer analyze our properties by commercial use. Further, no individual property constitutes more than 10% of our revenues, net operating income or assets, and we have no operations outside of the United States of America. Therefore, our properties have been aggregated into one reportable segment since such properties and the tenants thereof each share similar economic and operating characteristics.
Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive loss by component consists of the following (in thousands):
 
Gain
on
Investments
 
(Gain) Loss
on
Cash Flow
Hedges
 
Defined
Benefit
Pension
Plan
 
Total
Balance, December 31, 2012
$
—

 
$
7,489

 
$
17,254

 
$
24,743

Change excluding amounts reclassified
from accumulated other comprehensive loss
(340
)
 
(6,423
)
 
(10,200
)
 
(16,963
)
Amounts reclassified from accumulated
other comprehensive loss
—

 
(2,299
)
(1)  
(1,279
)
(2)  
(3,578
)
Net other comprehensive income
(340
)
 
(8,722
)
 
(11,479
)
 
(20,541
)
Balance, December 31, 2013
$
(340
)
 
$
(1,233
)
 
$
5,775

 
$
4,202

___________________
(1)
This reclassification component is included in interest expense (see Note 8 for additional information).
(2)
This reclassification component is included in the computation of net periodic benefit cost (see Note 19 for additional information).

60

Reclassifications
The reclassification of prior years’ operating results for certain properties classified as discontinued operations was made to conform to the current year presentation (see Note 15 and 17 for additional information). These items had no impact on previously reported net income, the consolidated balance sheet or cash flows.

Note 2.      Newly Issued Accounting Pronouncements
In December 2011, the FASB issued ASU No. 2011-11, “Disclosures about Offsetting Assets and Liabilities,” which requires entities to provide new disclosures about offsetting and related arrangements for financial instruments and derivatives. The provisions of ASU No. 2011-11 were effective for us on January 1, 2013, and were required to be applied retrospectively. The adoption of this ASU did not materially impact our consolidated financial statements, but required additional disclosures.
In January 2013, the FASB issued ASU No. 2013-01, "Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities," which amends the scope of ASU No. 2011-11 to apply only to entities with derivatives accounted for in accordance with Accounting Standard Code 815. The provisions of ASU No. 2013-01 were effective for us on January 1, 2013, and were required to be applied retrospectively. The adoption of this ASU did not materially impact our consolidated financial statements.
In February 2013, the FASB issued ASU No. 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income,” which requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present significant amounts reclassified out of accumulated other comprehensive income by respective line items of net income if it is required to be reclassified to net income in its entirety. For other reclassified amounts, an entity is required cross-reference to other disclosures that provide additional detail about those amounts. The provisions of ASU No. 2013-02 were effective for us on January 1, 2013, and have been applied prospectively. The adoption of this ASU did not materially impact our consolidated financial statements, but required additional disclosures.
In February 2013, the FASB issued ASU No. 2013-04, "Obligations Resulting From Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date." This ASU requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date, as the sum of (1) the amount the reporting entity has agreed to pay in accordance to the arrangement and (2) any additional amounts the reporting entity expects to pay on behalf of its co-obligors. Additional disclosures on the nature and amounts of the obligation will also be required. The provisions of ASU No. 2013-04 are effective for us on January 1, 2014, and are required to be applied retrospectively. We do not expect the adoption of this update to have a material impact on our consolidated financial statements.
In July 2013, the FASB issued ASU No. 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." This ASU amends current GAAP to require entities to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for net operating loss or other tax credit carryforwards when settlement is available under the tax law. The provisions of ASU 2013-11 are effective for us on January 1, 2014, and are required to be applied to all unrecognized tax benefits in existence. Retrospective application may be applied to prior reporting periods presented. We do not expect the adoption of this update to have a material impact on our consolidated financial statements.

Note 3.      Property
Our property consisted of the following (in thousands):
 
December 31,
 
2013
 
2012
Land
$
854,409

 
$
881,156

Land held for development
116,935

 
121,294

Land under development
4,262

 
6,155

Buildings and improvements
3,238,817

 
3,325,793

Construction in-progress
74,853

 
65,452

Total
$
4,289,276

 
$
4,399,850


61

During the year ended December 31, 2013 , we acquired three centers and other property for approximately $153.6 million , invested $19.3 million in new development projects and acquired our partner's 50% interest in an unconsolidated real estate joint venture, which increased property by $64.2 million (see Note 23 for additional information).
During the year ended December 31, 2013 , we sold 20 centers and other property. Aggregate gross sales proceeds from these transactions approximated $233.9 million and generated gains of $120.0 million .
Also, eight properties totaling $155.0 million before accumulated depreciation were classified as held for sale as of December 31, 2013 (see Note 15 for additional information).

Note 4.      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 20% to 75% during 2013 and 10% to 75% during 2012 . Combined condensed financial information of these ventures (at 100%) is summarized as follows (in thousands):
 
December 31,
 
2013
 
2012
Combined Condensed Balance Sheets
 
 
 
 
 
 
 
ASSETS
 
 
 
Property
$
1,401,982

 
$
1,631,694

Accumulated depreciation
(261,454
)
 
(273,591
)
Property, net
1,140,528

 
1,358,103

Other assets, net
142,638

 
161,344

Total
$
1,283,166

 
$
1,519,447

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Debt, net (primarily mortgages payable)
$
453,390

 
$
468,841

Amounts payable to Weingarten Realty Investors and Affiliates
30,214

 
109,931

Other liabilities, net
29,711

 
34,157

Total
513,315

 
612,929

Equity
769,851

 
906,518

Total
$
1,283,166

 
$
1,519,447


62

 
Year Ended December 31,
 
2013
 
2012
 
2011
Combined Condensed Statements of Operations
 
 
 
 
 
Revenues, net
$
165,365

 
$
195,109

 
$
205,596

Expenses:
 
 
 
 
 
Depreciation and amortization
45,701

 
59,330

 
67,459

Interest, net
28,787

 
35,491

 
37,612

Operating
28,929

 
34,989

 
36,253

Real estate taxes, net
18,929

 
23,899

 
24,333

General and administrative
934

 
1,106

 
2,969

Provision for income taxes
278

 
316

 
343

Impairment loss
1,887

 
96,781

 
28,776

Total
125,445

 
251,912

 
197,745

Operating income (loss)
$
39,920

 
$
(56,803
)
 
$
7,851

Our investment in real estate joint ventures and partnerships, as reported in our Consolidated Balance Sheets, differs from our proportionate share of the entities’ underlying net assets due to basis differences, which arose upon the transfer of assets to the joint ventures. The net positive basis differences, which totaled $6.1 million and $1.6 million at December 31, 2013 and 2012 , respectively, are generally amortized over the useful lives of the related assets.
Our real estate joint ventures and partnerships determined that the carrying amount of certain properties was not recoverable and that the properties should be written down to fair value. For the year ended December 31, 2013 , 2012 and 2011 , our unconsolidated real estate joint ventures and partnerships recorded an impairment charge of $1.9 million , $96.8 million and $28.8 million , respectively, associated primarily with various properties that are being either marketed for sale, have been sold or with shorter holding periods of finite life joint ventures where the joint ventures’ ability to recover the carrying cost of the property may be limited by the term of the venture life.
Fees earned by us for the management of these real estate joint ventures and partnerships totaled $5.0 million in 2013 , $6.1 million in 2012 and $6.0 million in 2011 .
During 2013 , the final two industrial properties in an unconsolidated real estate joint venture were sold. This joint venture was liquidated resulting in an $11.5 million gain on our investment. Also, three shopping centers were sold, and our gross sales proceeds from the disposition of these five properties totaled $35.5 million , of which our share of the gain totaled $16.0 million . Furthermore, we sold our 10% interest in two unconsolidated tenancy-in-common arrangements and two unconsolidated real estate joint ventures that we previously accounted for under the equity method, for approximately $15.7 million , resulting in a gain of $1.9 million .
During 2013 , a 51% owned unconsolidated real estate joint venture acquired real estate assets of approximately $41.2 million . We also acquired our partner’s 50% unconsolidated real estate joint venture interest in a California property that we had previously accounted for under the equity method. This transaction resulted in the consolidation of the property in our consolidated financial statements (see Note 23 for additional information).
During 2012 , our interest in 19 industrial properties held in unconsolidated real estate joint ventures, in which we are a partner, were sold through either a direct sale by the joint venture or the sale of our interest. Gross sales proceeds, including the assumption of debt, from these transactions totaled $210.4 million . Also, we sold a 47.8% unconsolidated real estate joint venture interest in a Colorado development project to our partner with gross sales proceeds totaling $29.1 million , which includes the assumption of our share of debt.
During 2012 , we acquired a partner's 79.6% interest in an unconsolidated tenancy-in-common arrangement for approximately $29.6 million that we had previously accounted for under the equity method and included the assumption of debt of $24.5 million . This transaction resulted in the consolidation of the property in our consolidated financial statements.


63

Note 5.      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 approximately 2.9% to 5.7% at December 31, 2013 and 2.9% to 16.0% at December 31, 2012 . These notes are due at various dates through 2017 and are generally secured by underlying real estate assets.
We believe these notes are fully collectible, and no allowance has been recorded. Interest income recognized on these notes was $2.2 million , $3.0 million and $3.4 million for the year ended December 31, 2013 , 2012 and 2011 , respectively.
In December 2013 , we acquired our partner’s 50% unconsolidated joint venture interest in a California property, which includes the settlement of $54.8 million of our notes receivable from real estate joint ventures and partnerships. See Note 23 for additional information.
In November 2012 , a $16.1 million note matured and negotiations for repayment were entered into. During 2013 , the note was paid. See Note 21 for additional information.
In February 2012 , we received $59.2 million in payment of our notes receivable from real estate joint ventures and partnerships, in conjunction with the sale of our interest in an unconsolidated real estate joint venture. See Note 20 for additional information.

Note 6.      Identified Intangible Assets and Liabilities
Identified intangible assets and liabilities associated with our property acquisitions are as follows (in thousands):
 
December 31,
 
2013
 
2012
Identified Intangible Assets:
 
 
 
Above-market leases (included in Other Assets, net)
$
38,577

 
$
16,142

Above-market leases - Accumulated Amortization
(8,767
)
 
(8,413
)
Below-market assumed mortgages (included in Debt, net)
4,713

 
5,722

Below-market assumed mortgages - Accumulated Amortization
(1,900
)
 
(2,367
)
Valuation of in place leases (included in Unamortized Debt and Lease Costs, net)
140,457

 
104,353

Valuation of in place leases - Accumulated Amortization
(48,961
)
 
(39,665
)
 
$
124,119

 
$
75,772

Identified Intangible Liabilities:
 
 
 
Below-market leases (included in Other Liabilities, net)
$
44,086

 
$
36,517

Below-market leases - Accumulated Amortization
(19,185
)
 
(17,533
)
Above-market assumed mortgages (included in Debt, net)
40,465

 
42,708

Above-market assumed mortgages - Accumulated Amortization
(31,114
)
 
(29,176
)
 
$
34,252

 
$
32,516

These identified intangible assets and liabilities are amortized over the applicable lease terms or the remaining lives of the assumed mortgages, as applicable.
The net amortization of above-market and below-market leases increased rental revenues by $.6 million , $.8 million and $1.5 million in 2013 , 2012 and 2011 , 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):
2014
$
1,678

2015
1,696

2016
1,609

2017
1,272

2018
1,116


64

The amortization of the in place lease intangible assets recorded in depreciation and amortization, was $11.6 million , $7.8 million and $6.2 million in 2013 , 2012 and 2011 , respectively. The estimated amortization of this intangible asset will increase depreciation and amortization for each of the next five years as follows (in thousands):
2014
$
13,268

2015
11,293

2016
8,706

2017
8,098

2018
7,748

The net amortization of above-market and below-market assumed mortgages decreased net interest expense by $10.4 million , $2.7 million and $2.2 million in 2013 , 2012 and 2011 , respectively. The significant year over year change in expense from 2012 to 2013 is primarily due to a $9.7 million write-off of an above-market assumed mortgage intangible due to the early payoff of the related mortgage. The estimated net amortization of these intangible assets and liabilities will decrease net interest expense for each of the next five years as follows (in thousands):
2014
$
1,551

2015
1,189

2016
772

2017
892

2018
982


Note 7.      Debt
Our debt consists of the following (in thousands):
 
December 31,
 
2013
 
2012
Debt payable to 2038 at 2.6% to 8.6% in 2013 and 2.6% to 8.8% in 2012
$
2,205,104

 
$
2,041,709

Unsecured notes payable under credit facilities
—

 
66,000

Debt service guaranty liability
73,740

 
74,075

Obligations under capital leases
21,000

 
21,000

Industrial revenue bonds payable at 2.4% in 2012
—

 
1,246

Total
$
2,299,844

 
$
2,204,030

The grouping of total debt between fixed and variable-rate as well as between secured and unsecured is summarized below (in thousands):
 
December 31,
 
2013
 
2012
As to interest rate (including the effects of interest rate contracts):
 
 
 
Fixed-rate debt
$
2,136,265

 
$
1,992,599

Variable-rate debt
163,579

 
211,431

Total
$
2,299,844

 
$
2,204,030

As to collateralization:
 
 
 
Unsecured debt
$
1,572,057

 
$
1,270,742

Secured debt
727,787

 
933,288

Total
$
2,299,844

 
$
2,204,030


65

We maintain a $500 million unsecured revolving credit facility, which was last amended and extended on April 18, 2013 . This facility expires in April 2017 , provides for two consecutive six-month extensions upon our request and borrowing rates that float at a margin over LIBOR plus a facility fee. At December 31, 2013 , the borrowing margin and facility fee, which are priced off a grid that is tied to our senior unsecured credit ratings, are 115 and 20 basis points, respectively. The facility also contains a competitive bid feature that will allow us to request bids for up to $250 million . Additionally, an accordion feature allows us to increase the facility amount up to $700 million .
Effective May 2010 , we entered into an agreement with a bank for an unsecured and uncommitted overnight facility totaling $99 million that we intend to maintain for cash management purposes. The facility provides for fixed interest rate loans at a 30 day LIBOR rate plus a borrowing margin based on market liquidity.
The following table discloses certain information regarding our unsecured notes payable under our credit facilities (in thousands, except percentages):
 
December 31,
 
2013
 
2012
Unsecured revolving credit facility:
 
 
 
Balance outstanding
$
—

 
$
30,000

Available balance
497,821

 
467,571

Letter of credit outstanding under facility
2,179

 
2,429

Variable interest rate (excluding facility fee)
—
%
 
1.1
%
Unsecured and uncommitted overnight facility:
 
 
 
Balance outstanding
$
—

 
$
36,000

Variable interest rate
—
%
 
1.5
%
Both facilities:
 
 
 
Maximum balance outstanding during the year
$
265,500

 
$
303,100

Weighted average balance
61,642

 
157,447

Year-to-date weighted average interest rate (excluding facility fee)
1.0
%
 
1.3
%
Related to a development project in Sheridan, Colorado, we have provided a guaranty for the payment of any debt service shortfalls until a coverage rate of 1.4 is met on tax increment revenue bonds issued in connection with the project. The bonds are to be repaid with incremental sales and property taxes and a PIF to be assessed on current and future retail sales and, to the extent necessary, any amounts we may have to provide under a guaranty. The incremental taxes and PIF are to remain intact until the earlier of the date the bond liability has been paid in full or 2040 . Therefore, a debt service guaranty liability equal to the fair value of the amounts funded under the bonds was recorded. As of December 31, 2013 and 2012 , we had $73.7 million and $74.1 million , respectively, outstanding for the debt service guaranty liability.
In October 2013, we issued $250 million of 4.45% senior unsecured notes maturing in 2024 . The notes were issued at 99.58% of the principal amount with a yield to maturity of 4.50% . The net proceeds received of $247.3 million were used to reduce all amounts outstanding under our $500 million unsecured revolving credit facility, and net excess proceeds were invested in short-term instruments and will be used to pay down future debt maturities or for general business purposes.
In March 2013, we issued $300 million of 3.5% senior unsecured notes maturing in 2023 . The notes were issued at 99.53% of the principal amount with a yield to maturity of 3.56% . The net proceeds received of $296.6 million were used to reduce amounts outstanding under our $500 million unsecured revolving credit facility, which included borrowings used to redeem $75 million of our 6.75% Series D Cumulative Redeemable Preferred Shares.
In addition, $173.6 million of fixed-rate medium term notes matured during 2013 at a weighted average interest rate of 5.4% and a $100 million 6% fixed-rate note payable was repaid prior to maturity.
In October 2012, we issued $300 million of 3.38% senior unsecured notes maturing in 2022 . The notes were issued at 99.62% of the principal amount with a yield to maturity of 3.42% . The net proceeds received of $296.9 million were used to reduce amounts outstanding under our $500 million unsecured revolving credit facility and to repay our $54.1 million of 3.95% convertible senior unsecured notes.

66

Various leases and properties, and current and future rentals from those lease and properties, collateralize certain debt. At December 31, 2013 and 2012 , the carrying value of such property aggregated $1.2 billion and $1.5 billion , respectively.
Scheduled principal payments on our debt (excluding $21.0 million of certain capital leases, $5.4 million fair value of interest rate contracts, $(3.3) million net premium/(discount) on debt, $6.5 million of non-cash debt-related items, and $73.7 million debt service guaranty liability) are due during the following years (in thousands):
2014
$
368,858

2015
276,346

2016
249,723

2017
142,332

2018
64,653

2019 (1)
153,907

2020
35,363

2021
2,278

2022
304,815

2023
301,937

Thereafter
296,327

Total
$
2,196,539

___________________
(1)
Includes $100.0 million of our 8.1% senior unsecured notes due 2019 which may be redeemed by us at any time on or after September 2014 at our option.
Our various debt agreements contain restrictive covenants, including minimum interest and fixed charge coverage ratios, minimum unencumbered interest coverage ratios, minimum net worth requirements and maximum total debt levels. We are not aware of any non-compliance with our public debt and revolving credit facility covenants as of December 31, 2013 .

Note 8.      Derivatives and Hedging
The fair value of all our interest rate contracts was reported as follows (in thousands):
 
Assets
 
Liabilities
 
Balance Sheet
Location
 
Amount
 
Balance Sheet
Location
 
Amount
Designated Hedges:
 
 
 
 
 
 
 
December 31, 2013
Other Assets, net
 
$
5,282

 
Other Liabilities, net
 
$
476

December 31, 2012
Other Assets, net
 
9,926

 
Other Liabilities, net
 
768


67

The gross presentation, the effects of offsetting for derivatives with a right to offset under master netting agreements and the net presentation of our interest rate contracts is as follows (in thousands):
 
 
 
 
 
 
 
Gross Amounts Not
Offset in Balance
Sheet
 
 
 
Gross
Amounts
Recognized
 
Gross
Amounts
Offset in
Balance
Sheet
 
Net
Amounts
Presented
in Balance
Sheet
 
Financial
Instruments
 
Cash
Collateral
Received
 
Net Amount
December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
Assets
$
5,282

 
$
—

 
$
5,282

 
$
—

 
$
—

 
$
5,282

Liabilities
476

 
—

 
476

 
—

 
—

 
476

 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2012
 
 
 
 
 
 
 
 
 
 
 
Assets
9,926

 
—

 
9,926

 
—

 
—

 
9,926

Liabilities
768

 
—

 
768

 
—

 
—

 
768

Cash Flow Hedges:
As of December 31, 2013 and 2012 , we had three active interest rate contracts designated as cash flow hedges with an aggregate notional amount of $25.8 million and $26.5 million , respectively. These contracts have maturities through September 2017 and either fix or cap interest rates ranging from 2.3% to 5.0% . We have determined that these contracts are highly effective in offsetting future variable interest cash flows.
During 2013 , we settled three forward-starting contracts with an aggregate notional amount of $150.0 million hedging future fixed-rate debt issuances. These contracts fixed the 10-year swap rates at 2.4% . In connection with the October 2013 issuance of unsecured senior notes, we received $6.1 million associated with the settlement of these contracts resulting in a $5.9 million gain in accumulated other comprehensive loss.
As of December 31, 2013 and 2012 , accumulated other comprehensive loss included a net gain (loss) balance for cash flow interest rate contracts of $1.2 million and $(7.5) million , respectively, and these amounts will be reclassified to net interest expense as interest payments are made on our fixed-rate debt. Within the next 12 months, a loss of approximately $1.9 million in accumulated other comprehensive loss is expected to be amortized to net interest expense related to settled interest rate contracts.
Summary of cash flow interest rate contract hedging activity is as follows (in thousands):
Derivatives Hedging
Relationships
 
Amount of (Gain)
Loss
Recognized
in Other
Comprehensive
Income on
Derivative
(Effective
Portion)
 
Location of Gain
(Loss) 
Reclassified
from Accumulated
Other
Comprehensive
Loss into Income
 
Amount of Gain
(Loss) 
Reclassified
from Accumulated
Other
Comprehensive
Loss into Income
(Effective Portion)
 
Location of Gain
(Loss)
Recognized in
Income on
Derivative
(Ineffective
Portion and
Amount 
Excluded from
Effectiveness
Testing)
 
Amount of Gain
(Loss)
Recognized
in Income on
Derivative
(Ineffective
Portion and
Amount 
Excluded from
Effectiveness
Testing)
Year Ended December 31, 2013
 
$
(6,423
)
 
Interest expense,
net
 
$
(2,537
)
 
Interest expense,
net
 
$
238

Year Ended December 31, 2012
 
$
123

 
Interest expense,
net
 
$
(2,650
)
 
Interest expense,
net
 
$
—

Year Ended December 31, 2011
 
$
866

 
Interest expense,
net
 
$
(2,551
)
 
Interest expense,
net
 
$
(12
)
Fair Value Hedges:
As of December 31, 2013 and 2012 , we had four interest rate contracts, maturing through October 2017 , with an aggregate notional amount of $116.7 million and $118.1 million , respectively, that were designated as fair value hedges and convert fixed interest payments at rates from 4.2% to 7.5% to variable interest payments ranging from .2% to 4.3% , and .3% to 4.3% , respectively. We have determined that our fair value hedges are highly effective in limiting our risk of changes in the fair value of fixed-rate notes attributable to changes in interest rates.

68

A summary of the impact on net income for our interest rate contracts is as follows (in thousands):
 
Gain (Loss) 
on
Contracts
 
Gain (Loss) 
on
Borrowings
 
Net Settlements
and Accruals
on Contracts (1)
 
Amount of Gain 
(Loss)
Recognized in
Income (2)
Year Ended December 31, 2013
 
 
 
 
 
 
 
Interest expense, net
$
(4,643
)
 
$
4,643

 
$
4,082

 
$
4,082

Year Ended December 31, 2012
 
 
 
 
 
 
 
Interest expense, net
(860
)
 
860

 
6,749

 
6,749

Year Ended December 31, 2011
 
 
 
 
 
 
 
Interest expense, net
3,676

 
(3,676
)
 
7,077

 
7,077

___________________
(1)
Amounts in this caption include gain (loss) recognized in income on derivatives and net cash settlements.
(2)
No ineffectiveness was recognized during the respective periods.

Note 9.      Preferred Shares of Beneficial Interest
We issued $150 million and $200 million of depositary shares on June 6, 2008 and January 30, 2007 , respectively. Each depositary share represents one-hundredth of a Series F Cumulative Redeemable Preferred Share. The depositary shares are redeemable at our option, in whole or in part, for cash at a redemption price of $25 per depositary share, plus any accrued and unpaid dividends thereon. The depositary shares are not convertible or exchangeable for any of our other property or securities. The Series F Preferred Shares pay a 6.5% annual dividend and have a liquidation value of $2,500 per share. The Series F Preferred Shares issued in June 2008 were issued at a discount, resulting in an effective rate of 8.25% .
We exercised our option to redeem a portion of the Series F depositary shares totaling $200 million on June 5, 2013 . Upon the redemption of these shares, a portion of the related original issuance costs totaling $15.7 million was reported as a deduction in arriving at net income attributable to common shareholders. The outstanding $150 million Series F Preferred Shares pay a 6.5% annual dividend and have a liquidation value of $2,500 per share. Of these outstanding shares, $64.3 million were issued at a discount and have an effective rate of 8.25% .
In April 2003, we issued $75 million of depositary shares with each share representing one-thirtieth of a Series D Cumulative Redeemable Preferred Share. The depositary shares were redeemed on March 18, 2013 , at our option, for cash at a redemption price of $25 per depositary share or $75 million , plus accrued and unpaid dividends thereon. Upon the redemption of these shares, the related original issuance costs of $2.2 million were reported as a deduction in arriving at net income attributable to common shareholders. The Series D Preferred Shares paid a 6.75% annual dividend, had a liquidation value of $750 per share and were not convertible or exchangeable for any of our property or securities.
The following table discloses the cumulative redeemable preferred dividends declared per share:
 
 
Year Ended December 31,
 
 
2013
 
2012
 
2011
Series of Preferred Shares:
 
 
 
 
 
 
Series D
 
$
13.08

 
$
50.63

 
$
50.63

Series E
 
—

 
162.16

 
173.75

Series F
 
160.24

 
162.50

 
162.50

As part of our evaluation of our capital plan, we may consider redeeming the remaining Series F Preferred Shares.

Note 10.      Common Shares of Beneficial Interest
Common dividends declared per share were $1.22 , $1.16 and $1.10 for the year ended December 31, 2013 , 2012 and 2011 , respectively. The dividend rate per share for our common shares for each quarter of 2013 and 2012 was $.305 and $.290 , respectively. Subsequent to December 31, 2013 , our Board of Trust Managers approved an increase to our quarterly dividend rate to $.325 per share.

69


Note 11.      Noncontrolling Interests
The following table summarizes the effect of changes in our ownership interest in subsidiaries on the equity attributable to us as follows (in thousands):
 
Year Ended December 31,
 
2013
 
2012
 
2011
Net income adjusted for noncontrolling interests
$
220,262

 
$
146,640

 
$
15,621

Transfers from the noncontrolling interests:
 
 
 
 
 
Net (decrease) increase in equity for the acquisition
of noncontrolling interests
(16,177
)
 
394

 
1,668

Change from net income adjusted for noncontrolling interests
and transfers from the noncontrolling interests
$
204,085

 
$
147,034

 
$
17,289


Note 12.      Leasing Operations
The terms of our leases range from less than one year for smaller tenant spaces to over 25 years for larger tenant spaces. In addition to minimum lease payments, most of the leases provide for contingent rentals (payments for real estate 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, which does not include estimated contingent rentals, at December 31, 2013 is as follows (in thousands):
2014
$
376,402

2015
330,099

2016
273,759

2017
214,766

2018
161,000

Thereafter
588,938

Total
$
1,944,964

Contingent rentals for the year ended December 31, are as follows (in thousands):
2013
$
112,551

2012
112,431

2011
112,414



70

Note 13.      Impairment
The following impairment charges were recorded on the following assets based on the difference between the carrying amount of the assets and the estimated fair value (see Note 24 for additional fair value information) (in thousands):
 
Year Ended December 31,
 
2013
 
2012
 
2011
Continuing operations:
 
 
 
 
 
Land held for development and undeveloped land (1)
$
2,358

 
$
—

 
$
23,646

Property marketed for sale or sold (2)
56

 
2,977

 
5,536

Investments in real estate joint ventures and partnerships (3)
—

 
6,608

 
1,752

Tax increment revenue bonds (4)
—

 
—

 
18,737

Other
165

 
—

 
—

Total reported in continuing operations
2,579

 
9,585

 
49,671

Discontinued operations:
 
 
 
 
 
Property held for sale or sold (5)
236

 
5,851

 
26,203

Total impairment charges
2,815

 
15,436

 
75,874

Other financial statement captions impacted by impairment:
 
 
 
 
 
Equity in loss of real estate joint ventures and partnerships, net
395

 
19,946

 
7,022

Net loss attributable to noncontrolling interests
—

 
—

 
(4,459
)
Net impact of impairment charges
$
3,210

 
$
35,382

 
$
78,437

___________________
(1)
Impairment was prompted by changes in management's plans for these properties, recent comparable market transactions and/or a change in market conditions.
(2)
These charges resulted from changes in management’s plans for these properties, primarily the marketing of these properties for sale. Also, included in this caption are impairments associated with dispositions that did not qualify to be reported in discontinued operations.
(3)
Amounts reported in 2012 were based on third party offers to buy our interests in industrial real estate joint ventures. Amounts reported in 2011 relate to market conditions.
(4)
During 2011, the tax increment revenue bonds were remarketed by the Agency. All of the outstanding bonds were recalled, and new bonds were issued. We recorded an $18.7 million net credit loss on the exchange of bonds associated with our investment in the tax increment revenue bonds.
(5)
Amounts reported were based on third party offers.

Note 14.      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, interest expense, compensation expense, impairment losses and gain from sales of property. As a result of these differences, the tax basis of our net fixed assets exceeds the book value by $88.0 million and $7.0 million at December 31, 2013 and 2012 , respectively.

71

The following table reconciles net income adjusted for noncontrolling interests to REIT taxable income (in thousands):
 
Year Ended December 31,
 
2013
 
2012
 
2011
Net income adjusted for noncontrolling interests
$
220,262

 
$
146,640

 
$
15,621

Net (income) loss of taxable REIT subsidiary included above
(4,684
)
 
11,457

 
32,043

Net income from REIT operations
215,578

 
158,097

 
47,664

Book depreciation and amortization including discontinued
operations
157,665

 
148,413

 
157,290

Tax depreciation and amortization
(90,047
)
 
(92,797
)
 
(100,633
)
Book/tax difference on gains/losses from capital transactions
(33,969
)
 
(55,242
)
 
(13,398
)
Deferred/prepaid/above and below-market rents, net
(6,429
)
 
(4,264
)
 
(13,088
)
Impairment loss from REIT operations including discontinued
operations
474

 
11,396

 
58,353

Other book/tax differences, net
(9,695
)
 
1,430

 
(3,652
)
REIT taxable income
233,577

 
167,033

 
132,536

Dividends paid deduction  (1)
(233,577
)
 
(173,202
)
 
(165,721
)
Dividends paid in excess of taxable income
$
—

 
$
(6,169
)
 
$
(33,185
)
___________________
(1)
For 2013 , the dividends paid deduction includes designated dividends of $67.7 million from 2014 .
For federal income tax purposes, the cash dividends distributed to common shareholders are characterized as follows:
 
Year Ended December 31,
 
2013
 
2012
 
2011
Ordinary income
50.5
%
 
92.8
%
 
100.0
%
Capital gain distributions
49.5
%
 
7.2
%
 
—
%
Total
100.0
%
 
100.0
%
 
100.0
%

72

Our deferred tax assets and liabilities, including a valuation allowance, consisted of the following (in thousands):
 
December 31,
 
2013
 
2012
Deferred tax assets:
 
 
 
Impairment loss (1)
$
17,692

 
$
16,951

Allowance on other assets
1,168

 
1,519

Interest expense
12,842

 
11,417

Net operating loss carryforwards (2)
8,814

 
8,642

Book-tax basis differential
886

 
1,148

Other
241

 
173

Total deferred tax assets
41,643

 
39,850

Valuation allowance (3)
(30,541
)
 
(28,376
)
Total deferred tax assets, net of allowance
$
11,102

 
$
11,474

Deferred tax liabilities:
 
 
 
Straight-line rentals
$
696

 
$
977

Book-tax basis differential
8,252

 
2,339

Other
167

 
2

Total deferred tax liabilities
$
9,115

 
$
3,318

___________________
(1)
Impairment losses will not be recognized until the related properties are sold and realization is dependent upon generating sufficient taxable income in the year the property is sold.
(2)
We have net operating loss carryforwards of $25.2 million that expire between the years of 2029 and 2033 .
(3)
Management believes it is more likely than not that a portion of the deferred tax assets, which primarily consists of impairment losses, interest expense and net operating losses, will not be realized and established a valuation allowance. However, the amount of the deferred tax asset considered realizable could be reduced if estimates of future taxable income are reduced.
We are subject to federal, state and local income taxes and have recorded an income tax provision as follows (in thousands):
 
Year Ended December 31,
 
2013
 
2012
 
2011
Net income (loss) before taxes of taxable REIT subsidiary
$
10,688

 
$
(12,894
)
 
$
(32,043
)
Federal provision (benefit) at statutory rate of 35%
$
3,741

 
$
(4,513
)
 
$
(11,215
)
Valuation allowance increase
2,165

 
3,781

 
8,776

Other
98

 
(705
)
 
1,523

Federal income tax provision (benefit) of taxable REIT subsidiary (1)
6,004

 
(1,437
)
 
(916
)
Texas franchise tax (2)
1,370

 
1,784

 
1,373

Total
$
7,374

 
$
347

 
$
457

___________________
(1)
All periods presented are open for examination by the IRS.
(2)
For all periods presented, amounts include the effects that are reported in discontinued operations. See Note 15 for additional information.
Also, a current tax obligation of $1.6 million and $1.9 million has been recorded at December 31, 2013 and 2012 , respectively, in association with these taxes.


73

Note 15.      Discontinued Operations
During 2013 , we sold 20 centers of which nine were located in Texas, three each in Florida and North Carolina; two in New Mexico and one each in California, Nevada and Tennessee. As of December 31, 2013 , we classified as held for sale eight centers that consisted of property and accumulated depreciation totaling $155.0 million and $32.4 million , respectively, of which three are located in Georgia, two each in Florida and Texas and one in North Carolina. See Note 26 for additional information.
During 2012 , we sold 27 shopping centers, 54 industrial properties, and we assigned a 75% consolidated joint venture interest to our partner. Of these dispositions, 55 were located in Texas, six each in Florida and Georgia, three in North Carolina, two each in Colorado, Louisiana and Virginia and one each in Arizona, Illinois, Kansas, Maine, Oklahoma and Tennessee. As part of these 2012 dispositions, we sold, in May 2012, a portfolio of 52 wholly-owned industrial properties in order to exit the industrial real estate market and further align and strengthen our position solely as a retail REIT. As of December 31, 2012 , no properties were classified as held for sale.
Included in the Consolidated Balance Sheet at December 31, 2012 was $371.7 million of property and $103.9 million of accumulated depreciation related to the 20 centers that were sold during 2013 , as well as the eight centers classified as held for sale.
The operating results of these centers, which includes the eight centers classified as held for sale, have been reclassified and reported as discontinued operations in the Consolidated Statements of Operations as follows (in thousands):
 
Year Ended December 31,
 
2013
 
2012
 
2011
Revenues, net
$
34,922

 
$
86,466

 
$
127,824

Depreciation and amortization
(8,172
)
 
(18,913
)
 
(37,358
)
Operating expenses
(6,176
)
 
(16,112
)
 
(23,092
)
Real estate taxes, net
(3,779
)
 
(11,010
)
 
(16,955
)
Impairment loss
(236
)
 
(5,851
)
 
(26,203
)
General and administrative
(24
)
 
(2,214
)
 
(76
)
Interest, net
(6,395
)
 
(9,663
)
 
(11,258
)
Interest and other income, net
2

 
1

 
3

Gain on acquisition
—

 
—

 
4,559

Provision for income taxes
(323
)
 
(417
)
 
(455
)
Operating income from discontinued operations
9,819

 
22,287

 
16,989

Gain on sale of property from discontinued operations
119,203

 
68,619

 
10,648

Income from discontinued operations
$
129,022

 
$
90,906

 
$
27,637



74

Note 16.      Supplemental Cash Flow Information
Non-cash investing and financing activities are summarized as follows (in thousands):
 
Year Ended December 31,
 
2013
 
2012
 
2011
Accrued property construction costs
5,175

 
5,811

 
7,535

(Decrease) increase in equity for the acquisition of noncontrolling interests in consolidated real estate joint ventures
(16,177
)
 
394

 
1,668

Reduction of debt service guaranty liability
(335
)
 
—

 
(22,925
)
Property acquisitions and investments in unconsolidated real estate
joint ventures:
 
 
 
 
 
Increase in property, net
43,122

 
16,665

 
4,749

Decrease in notes receivable from real estate joint ventures and
partnerships
(8,750
)
 
—

 
—

Increase (decrease) in real estate joint ventures and
partnerships - investments
1,746

 
(3,825
)
 
490

Increase in restricted deposits and mortgage escrows
—

 
395

 
—

Increase in debt, net
60,515

 
40,644

 
—

Increase in security deposits
187

 
1,332

 
87

Increase in noncontrolling interests
16,177

 
968

 
9,949

Sale of property and property interest:
 
 
 
 
 
Decrease in property, net
—

 
(2,855
)
 
—

Decrease in real estate joint ventures and partnerships
- investments
—

 
(95
)
 
—

Decrease in restricted deposits and mortgage escrows
—

 
(204
)
 
—

Decrease in debt, net due to debt assumption
—

 
(3,366
)
 
—

Decrease in security deposits
—

 
(11
)
 
—

Decrease in noncontrolling interests
—

 
(95
)
 
—

Consolidation of joint ventures (see Note 23):
 
 
 
 
 
Increase in property, net
60,992

 
—

 
32,307

Decrease in notes receivable from real estate joint ventures and
partnerships
(54,838
)
 
—

 
(21,872
)
Decrease in real estate joint ventures and partnerships
- investments
(11,518
)
 
—

 
(10,092
)
Increase in security deposits
164

 
—

 
—



75

Note 17.      Earnings Per Share
Earnings per common share – basic is computed using net income attributable to common shareholders and the weighted average number of shares outstanding – basic. Earnings per common share – diluted includes the effect of potentially dilutive securities. Income from continuing operations attributable to common shareholders includes gain on sale of property in accordance with Securities and Exchange Commission guidelines. The components of earnings per common share – basic and diluted for the prior periods have been recast to conform with discontinued operations. Earnings per common share – basic and diluted components for the periods indicated are as follows (in thousands):
 
Year Ended December 31,
 
2013
 
2012
 
2011
Numerator:
 
 
 
 
 
Continuing Operations:

 



Income (loss) from continuing operations
$
135,372

 
$
60,511

 
$
(12,202
)
Gain on sale of property
762

 
1,004

 
1,304

Net (income) loss attributable to noncontrolling interests
(5,545
)
 
(4,527
)
 
310

Dividends on preferred shares
(18,173
)
 
(34,930
)
 
(35,476
)
Redemption costs of preferred shares
(17,944
)
 
(2,500
)
 
—

Income (loss) from continuing operations attributable to common
shareholders – basic and diluted
$
94,472

 
$
19,558

 
$
(46,064
)
Discontinued Operations:
 
 
 
 
 
Income from discontinued operations
$
129,022

 
$
90,906

 
$
27,637

Net income attributable to noncontrolling interests
(39,349
)
 
(1,254
)
 
(1,428
)
Income from discontinued operations attributable to common
shareholders – basic and diluted
$
89,673

 
$
89,652

 
$
26,209

Denominator:
 
 
 
 
 
Weighted average shares outstanding - basic
121,269

 
120,696

 
120,331

Effect of dilutive securities:
 
 
 
 
 
Share options and awards
1,191

 
1,009

 
—

Weighted average shares outstanding - diluted
122,460

 
121,705

 
120,331

Anti-dilutive securities of our common shares, which are excluded from the calculation of earnings per common share – diluted, are as follows (in thousands):
 
Year Ended December 31,
 
2013
 
2012
 
2011
Share options (1)
1,929

 
2,354

 
3,158

Operating partnership units
1,554

 
1,578

 
1,617

Share options and awards
—

 
—

 
894

Total anti-dilutive securities
3,483

 
3,932

 
5,669

___________________
(1)
Exclusion results as exercise prices were greater than the average market price for each respective period.

Note 18.      Share Options and Awards
In April 2011, our Long-Term Incentive Plan for the issuance of options and share awards expired, and issued options of 2.9 million remain outstanding as of December 31, 2013 .
In May 2010, our shareholders approved the adoption of the Amended and Restated 2010 Long-Term Incentive Plan, under which 3.0 million of our common shares were reserved for issuance, and options and share awards of 1.7 million are available for future grant at December 31, 2013 . This plan expires in May 2020 .

76

Compensation expense, net of forfeitures, associated with share options and restricted shares totaled $8.8 million in 2013 , $9.7 million in 2012 and $6.4 million in 2011 , of which $2.4 million in 2013 , $2.0 million in 2012 and $1.5 million in 2011 was capitalized. The significant year over year change in expense from 2011 to 2012 is primarily due to an increased number of employees who became retirement eligible, requiring the related expense to be recognized immediately.
Options
The fair value of share options issued prior to 2012 was 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 fair value and weighted average assumptions were as follows:
 
Year Ended
December 31, 2011
Fair value per share option
$
5.68

Dividend yield
5.3
%
Expected volatility
39.6
%
Expected life (in years)
6.2

Risk-free interest rate
2.4
%
Following is a summary of the option activity for the three years ended December 31, 2013 :
 
Shares
Under
Option
 
Weighted
Average
Exercise
Price
Outstanding, January 1, 2011
4,614,272

 
$
27.62

Granted
483,459

 
24.87

Forfeited or expired
(230,232
)
 
22.81

Exercised
(259,796
)
 
18.34

Outstanding, December 31, 2011
4,607,703

 
28.09

Forfeited or expired
(40,390
)
 
27.12

Exercised
(481,611
)
 
20.70

Outstanding, December 31, 2012
4,085,702

 
28.98

Forfeited or expired
(79,108
)
 
32.61

Exercised
(462,848
)
 
26.95

Outstanding, December 31, 2013
3,543,746

 
$
29.16

The total intrinsic value of options exercised was $3.2 million in 2013 , $3.0 million in 2012 and $1.9 million in 2011 . As of December 31, 2013 and 2012 , there was approximately $1.1 million and $2.2 million , respectively, of total unrecognized compensation cost related to unvested share options, which is expected to be amortized over a weighted average of 1.1 years and 1.6 years, respectively.

77

The following table summarizes information about share options outstanding and exercisable at December 31, 2013 :
Range of
Exercise Prices
 
Outstanding
 
Exercisable
 
Number
 
Weighted
Average
Remaining
Contractual
Life
 
Weighted
Average
Exercise
Price
 
Aggregate
Intrinsic
Value
(000’s)
 
Number
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
 
Aggregate
Intrinsic
Value
(000’s)
$11.85 - $17.78  
 
743,869

 
5.2 years
 
$
11.85

 
 
 
610,870

 
$
11.85

 
5.2 years
 
 
$17.79 - $26.69  
 
870,886

 
6.8 years
 
$
23.78

 
 
 
475,887

 
$
23.56

 
6.7 years
 
 
$26.70 - $40.05  
 
1,465,277

 
2.8 years
 
$
35.36

 
 
 
1,465,277

 
$
35.35

 
2.8 years
 
 
$40.06 - $49.62  
 
463,714

 
2.9 years
 
$
47.46

 
 
 
463,714

 
$
47.46

 
2.9 years
 
 
Total
 
3,543,746

 
4.3 years
 
$
29.16

 
$
—

 
3,015,748

 
$
30.59

 
3.9 years
 
$
—

Restricted Shares
The fair value of the market-based share awards was estimated on the date of grant using a Monte Carlo valuation model based on the following assumptions:
 
Year Ended December 31, 2013
 
Minimum
 
Maximum
Dividend yield
0.0
%
 
3.9
%
Expected volatility
13.2
%
 
29.0
%
Expected life (in years)
N/A

 
3

Risk-free interest rate
0.1
%
 
0.4
%
A summary of the status of unvested restricted shares for the year ended December 31, 2013 is as follows:
 
Unvested
Restricted
Share
Awards
 
Weighted
Average 
Grant
Date Fair 
Value
Outstanding, January 1, 2013
496,571

 
$
23.10

Granted:
 
 
 
Service-based awards
105,336

 
29.67

Market-based awards relative to FTSE NAREIT U.S. Shopping Center
Index
44,580

 
31.83

Market-based awards relative to three-year absolute TSR
44,580

 
37.49

Trust manager awards
25,623

 
35.23

Vested
(133,006
)
 
23.30

Forfeited
(8,517
)
 
26.53

Outstanding, December 31, 2013
575,167

 
$
26.54

As of December 31, 2013 and 2012 , there was approximately $3.9 million and $4.7 million , respectively, of total unrecognized compensation cost related to unvested restricted shares, which is expected to be amortized over a weighted average of 1.4 years and 1.9 years, respectively.

Note 19.      Employee Benefit Plans
Defined Benefit Plans:
Effective April 1, 2002, we converted a noncontributory pension plan to a noncontributory cash balance retirement plan under which each participant received an actuarially determined opening balance. Certain participants were grandfathered under the prior pension plan formula.

78

The estimated net loss that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $.2 million .
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 (in thousands). The measurement dates for plan assets and obligations were December 31, 2013 and 2012 .
 
December 31,
 
2013
 
2012
Change in Projected Benefit Obligation:
 
 
 
Benefit obligation at beginning of year
$
42,530

 
$
68,390

Service cost
1,281

 
1,314

Interest cost
1,544

 
1,578

Actuarial (gain) loss
(5,807
)
 
2,005

Plan amendment (see Note 1)
—

 
(29,494
)
Benefit payments
(1,476
)
 
(1,263
)
Benefit obligation at end of year
$
38,072

 
$
42,530

Change in Plan Assets:
 
 
 
Fair value of plan assets at beginning of year
$
32,161

 
$
27,649

Actual return on plan assets
6,842

 
3,275

Employer contributions
1,800

 
2,500

Benefit payments
(1,476
)
 
(1,263
)
Fair value of plan assets at end of year
$
39,327

 
$
32,161

Funded (unfunded) status at end of year (included in other assets in 2013 and
accounts payable and accrued expenses in 2012)
$
1,255

 
$
(10,369
)
Accumulated benefit obligation
$
37,885

 
$
42,178

Net loss recognized in accumulated other comprehensive loss
$
5,775

 
$
17,254

The following is the required information for other changes in plan assets and benefit obligations recognized in other comprehensive income (in thousands):
 
Year Ended December 31,
 
2013
 
2012
 
2011
Net (gain) loss
$
(10,200
)
 
$
979

 
$
8,234

Amortization of net loss
(1,279
)
 
(1,569
)
 
(685
)
Amortization of prior service cost
—

 
117

 
117

Total recognized in other comprehensive income
$
(11,479
)
 
$
(473
)
 
$
7,666

Total recognized in net periodic benefit costs and other
comprehensive income
$
(9,824
)
 
$
1,622

 
$
12,794


79

The following is the required information for plans with an accumulated benefit obligation in excess of plan assets (in thousands):
 
December 31,
 
2013
 
2012
Projected benefit obligation
N/A
 
$
42,530

Accumulated benefit obligation
N/A
 
42,178

Fair value of plan assets
N/A
 
32,161

The components of net periodic benefit cost for the plans are as follows (in thousands):
 
Year Ended December 31,
 
2013
 
2012
 
2011
Service cost
$
1,281

 
$
1,314

 
$
3,335

Interest cost
1,544

 
1,578

 
3,454

Expected return on plan assets
(2,449
)
 
(2,249
)
 
(2,229
)
Prior service cost
—

 
(117
)
 
(117
)
Recognized loss
1,279

 
1,569

 
685

Total
$
1,655

 
$
2,095

 
$
5,128

The assumptions used to develop periodic expense for the plans are shown below:
 
Year Ended December 31,
 
2013
 
2012
 
2011
Discount rate – Retirement Plan
3.87
%
 
4.19
%
 
5.30
%
Salary scale increases – Retirement Plan
3.50
%
 
3.50
%
 
4.00
%
Salary scale increases – SRP (see Note 1)
—
%
 
—
%
 
5.00
%
Long-term rate of return on assets – Retirement Plan
7.50
%
 
8.00
%
 
8.00
%
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 7.5% as the long-term rate of return assumption for 2013 .
The assumptions used to develop the actuarial present value of the benefit obligations for the plans are shown below:
 
Year Ended December 31,
 
2013
 
2012
 
2011
Discount rate – Retirement Plan
4.70
%
 
3.87
%
 
4.19
%
Salary scale increases – Retirement Plan
3.50
%
 
3.50
%
 
3.50
%
Salary scale increases – SRP (see Note 1)
—
%
 
—
%
 
5.00
%

80

The expected contribution to be paid for the Retirement Plan by us during 2014 is approximately $2.0 million . The expected benefit payments for the next 10 years for the Retirement Plan is as follows (in thousands):
2014
$
2,680

2015
2,511

2016
2,001

2017
2,106

2018
1,896

2019-2023
11,657

The participant data used in determining the liabilities and costs for the Retirement Plan was collected as of January 1, 2013 , and no significant changes have occurred through December 31, 2013 .
At December 31, 2013 , our investment asset allocation compared to our benchmarking allocation model for our plan assets was as follows:
 
Portfolio
 
Benchmark
Cash and Short-Term Investments
6
%
 
10
%
U.S. Stocks
58
%
 
59
%
International Stocks
15
%
 
11
%
U.S. Bonds
18
%
 
17
%
International Bonds
3
%
 
2
%
Other
—
%
 
1
%
Total
100
%
 
100
%
The fair value of plan assets was determined based on publicly quoted market prices for identical assets, which are classified as Level 1 observable inputs. The allocation of the fair value of plan assets was as follows:
 
December 31,
 
2013
 
2012
Cash and Short-Term Investments
3
%
 
3
%
Large Company Funds
31
%
 
20
%
Mid Company Funds
8
%
 
8
%
Small Company Funds
8
%
 
6
%
International Funds
11
%
 
14
%
Fixed Income Funds
21
%
 
35
%
Growth Funds
18
%
 
14
%
Total
100
%
 
100
%
Concentrations of risk within our equity portfolio are investments classified within the following sectors: technology, financial services, consumer cyclical goods, healthcare and industrial, which represents approximately 17% , 15% , 15% , 14% and 13% of total equity investments, respectively.
Defined Contribution Plans:
Compensation expense related to our defined contribution plans was $3.1 million in 2013 , $3.3 million in 2012 and $.9 million in 2011 .


81

Note 20.      Related Parties
Through our management activities and transactions with our real estate joint ventures and partnerships, we had net accounts receivable of $1.4 million and $1.8 million outstanding as of December 31, 2013 and 2012 , respectively. We also had accounts payable and accrued expenses of $5.6 million and $6.3 million outstanding as of December 31, 2013 and 2012 , respectively. For the year ended December 31, 2013 , 2012 and 2011 , we recorded joint venture fee income of $5.0 million , $6.1 million and $6.0 million , respectively.
In 2013 , we sold our 10% interest in two unconsolidated tenancy-in-common arrangements to our partner for approximately $8.9 million . Also, we received cash, real property and our partner’s interest in two consolidated joint ventures in exchange for our interest in two unconsolidated joint ventures and the payment of a note receivable (see Note 21 for additional information under Litigation). Furthermore, we acquired our partner’s 50% unconsolidated joint venture interest in a California property (see Note 23 for additional information).
In 2012 , we sold our 47.8% unconsolidated joint venture interest in a Colorado development project to our partner with gross sales proceeds totaling $29.1 million , which includes the assumption of our share of debt, generating a gain of $3.5 million . Also, we sold three unconsolidated joint venture interests, ranging from 20% to 50% , in nine industrial properties to our partner with gross sales proceeds totaling $20.9 million , which includes the assumption of our share of debt, generating a gain of $8.6 million .


82

Note 21.      Commitments and Contingencies
Leases
We are engaged in the operation 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 2069 , with renewal options. Space in our shopping centers is leased to tenants pursuant to agreements that provide for terms ranging generally from one year 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):
2014
$
3,617

2015
3,261

2016
3,143

2017
2,984

2018
2,966

Thereafter
131,627

Total
$
147,598

Rental expense for operating leases was, in millions: $5.6 in 2013 ; $5.7 in 2012 and $5.4 in 2011 .
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):
2014
$
39,320

2015
35,270

2016
31,723

2017
26,719

2018
21,288

Thereafter
80,044

Total
$
234,364

Property under capital leases that is included in buildings and improvements consisted of two centers totaling $16.8 million at December 31, 2013 and 2012 . 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, 2013 and 2012 was $12.2 million and $11.4 million , respectively. Future minimum lease payments under these capital leases total $30.2 million of which $9.2 million represents interest. Accordingly, the present value of the net minimum lease payments was $21.0 million at December 31, 2013 .
The annual future minimum lease payments under capital leases as of December 31, 2013 are as follows (in thousands):
2014
$
1,825

2015
1,834

2016
1,843

2017
1,852

2018
1,862

Thereafter
21,000

Total
$
30,216


83

Commitments and Contingencies
As of December 31, 2013 and 2012 , we participate in three and four , respectively, real estate ventures structured as DownREIT partnerships that have properties in Arkansas, California, North Carolina, Texas and Utah (2012 only). As a general partner, we have operating and financial control over these ventures and consolidate them in our consolidated financial statements. These ventures allow the outside limited partners to put their interest in the partnership to us in exchange for our common shares or an equivalent amount in cash. We may acquire any limited partnership interests that are put to the partnership, and we have the option to redeem the interest in cash or a fixed number of our common shares, at our discretion. We also participate in a real estate venture that has a property in Texas that allows its outside partner to put operating partnership units to us. We have the option to redeem these units in cash or a fixed number of our common shares, at our discretion. No common shares were issued in exchange for any of these interests during the year ended December 31, 2013 and 2012 . The aggregate redemption value of these interests was approximately $41 million and $42 million as of December 31, 2013 and December 31, 2012 , respectively.
As of December 31, 2013 , we have entered into commitments aggregating $66.0 million comprised principally of construction contracts which are generally due in 12 to 36 months.
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 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 additional liabilities to us.
Litigation
During 2013 , we settled a lawsuit filed in 2011 against our joint venture partner in connection with a development project in Sheridan, Colorado for failure to perform on the joint venture’s past due intercompany note payable to us. Pursuant to the settlement agreement, a $16.1 million note receivable was paid (see Note 5 for further information) in exchange for cash and real property totaling $19.1 million , receipt of our partner’s interest in two consolidated joint ventures resulting in an increase of approximately $16.2 million in noncontrolling interests and distribution of our interest in two unconsolidated joint ventures with total assets of $23.2 million .
We are also 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, any additional liability, if any, will not have a material effect on our consolidated financial statements.

Note 22.      Variable Interest Entities
Consolidated VIEs:
Two of our real estate joint ventures whose activities principally consist of owning and operating 28 neighborhood/community shopping centers in 2013 and 30 centers in 2012 , located in Florida, Georgia, North Carolina, Tennessee and Texas, were determined to be VIEs. Based on financing agreements that are guaranteed solely by us, we have determined that we are the primary beneficiary in both instances and have consolidated these joint ventures.
A summary of our consolidated VIEs is as follows (in thousands):
 
December 31,
 
2013
 
2012
Maximum Risk of Loss (1)
$
40,471

 
$
111,305

Assets Held by VIEs
233,734

 
257,374

Assets Held as Collateral for Debt
80,137

 
246,486

___________________
(1)
The maximum risk of loss has been determined to be limited to our debt exposure for each real estate joint venture. The maximum risk of loss at December 31, 2012 , includes our debt exposure in a $100 million loan that was paid during 2013 .

84

Restrictions on the use of these assets are significant because they serve as collateral for the VIEs’ debt, and we would generally be required to obtain our partners’ approval in accordance with the joint venture agreements for any major transactions. Transactions with these joint ventures on our consolidated financial statements have been limited to changes in noncontrolling interests and reductions in debt from our partners’ contributions. We and our partners are subject to the provisions of the joint venture agreements which include provisions for when additional contributions may be required including operating cash shortfalls and unplanned capital expenditures.
Unconsolidated VIEs:
At December 31, 2013 and December 31, 2012 , one and two unconsolidated real estate joint ventures, respectively, were determined to be a VIEs through the issuance of secured loans, since the lenders had the ability to make decisions that could have a significant impact on the success of the entities. A summary of our unconsolidated VIEs is as follows (in thousands):
 
December 31,
 
2013
 
2012
Investment in Real Estate Joint Ventures and Partnerships, net (1)
$
11,536

 
$
29,628

Maximum Risk of Loss (2)
11,542

 
32,990

___________________
(1)
The carrying amount of the investments represents our contributions to the real estate joint ventures net of any distributions made and our portion of the equity in earnings of the joint ventures.
(2)
The maximum risk of loss has been determined to be limited to our debt exposure for each real estate joint venture. The maximum risk of loss at December 31, 2012 , includes $20.9 million of debt recorded in our Consolidated Balance Sheet due to its association with a tenancy-in-common arrangement that is no longer deemed a VIE.
We and our partners are subject to the provisions of the joint venture agreements that specify conditions, including operating shortfalls and unplanned capital expenditures, under which additional contributions may be required.

Note 23.      Business Combinations
Effective December 23, 2013 , we acquired a partner’s 50% interest in an unconsolidated joint venture related to a property in California, which resulted in the consolidation of this property. Management has determined that this transaction qualified as a business combination to be accounted for under the acquisition method. Accordingly, the assets and liabilities of this transaction were recorded in our Consolidated Balance Sheet at its estimated fair value as of the effective date. Fair value of assets acquired, liabilities assumed and equity interests were estimated using market-based measurements, including cash flow and other valuation techniques. The fair value measurement is based on both significant inputs for similar assets and liabilities in comparable markets and significant inputs that are not observable in the markets in accordance with our fair value measurements accounting policy. Key assumptions include third-party broker valuation estimates; a discount rate of 7.75% ; a terminal capitalization rate for similar properties; and factors that we believe market participants would consider in estimating fair value. The result of this transaction is included in our Consolidated Statements of Operations beginning December 23, 2013 .

85

The following table summarizes the transaction related to the business combination, including the assets acquired and liabilities assumed as indicated (in thousands):
 
December 23, 2013
 
Fair value of our equity interest before business combination
$
90,935

 
Fair value of consideration transferred
$
3,342

(1)  
Amounts recognized for assets and liabilities assumed:
 
 
Assets:
 
 
Property
$
64,211

 
Unamortized debt and lease costs
9,213

 
Accrued rent and accounts receivable
2,868

 
Cash and cash equivalents
754

 
Other, net
15,840

 
Liabilities:
 
 
Accounts payable and accrued expenses
(166
)
 
Other, net
(1,452
)
 
Total net assets
$
91,268

(2)  
 
 
 
Gain recognized on equity interest remeasured to fair value
$
20,234

(3)  
___________________
(1)
Consideration included $2.8 million of cash and a future obligation of $.5 million .
(2)
Excludes the effect of $54.8 million in intercompany debt that is eliminated upon consolidation.
(3)
Amount is included in Gain on Sale and Acquisition of Real Estate Joint Venture and Partnership Interests in our Consolidated Statement of Operations.
During 2012, we acquired four centers located in California, Georgia, Maryland and Texas, as well as, we consolidated a partner's 79.6% interest in an unconsolidated tenancy-in-common arrangement related to a property in Louisiana. The following table summarizes the transactions related to these acquisitions, including the assets acquired and liabilities assumed as indicated (in thousands):
 
December 31, 2012
 
Fair value of our equity interest before acquisition
$
3,825

 
Fair value of consideration transferred
$
218,481

(1)  
Amounts recognized for assets and liabilities assumed:
 
 
Assets:
 
 
Property
$
195,377

 
Unamortized debt and lease costs
36,787

 
Restricted deposits and mortgage escrows
395

 
Other, net
3,742

 
Liabilities:
 
 
Debt, net
(46,923
)
(2)  
Accounts payable and accrued expenses
(2,250
)
 
Other, net
(5,899
)
 
Total net assets
$
181,229

 
 
 
 
Acquisition costs (included in operating expenses)
$
1,391

 
Gain on acquisition
$
1,869

 
___________________
(1)
Includes assumption of debt totaling $37.8 million .
(2)
Represents the fair value of debt, which includes $6.3 million that was previously recorded.

86

The following table summarizes the impact to revenues and net income attributable to common shareholders from our business combination and acquisitions as follows (in thousands):
 
Year Ended December 31,
 
2013
 
2012
Increase in revenues
$
197

 
$
9,370

Increase in net income attributable to common shareholders
—

 
442

The following unaudited supplemental pro forma data is presented for the year ended December 31, 2013, as if the business combination occurring in 2013 was completed on January 1, 2011. The following unaudited supplemental pro forma data is presented for the year ended December 31, 2012 and 2011, as if the 2012 acquisitions were completed on January 1, 2010. The gain related to these business combinations and acquisitions were adjusted to the assumed acquisition date. The unaudited supplemental pro forma data is not necessarily indicative of what the actual results of our operations would have been assuming the transactions had been completed as set forth above, nor do they purport to represent our results of operations for future periods. The following table summarizes the supplemental pro forma data, as follows (in thousands, except per share amounts):

 
Pro Forma
2013 (1)
 
Pro Forma
2012 (1)
 
Pro Forma
2011 (1)
Revenues
$
506,861

 
$
474,383

 
$
460,472

Net income
244,918

 
152,016

 
37,664

Net income attributable to common shareholders
163,907

 
108,805

 
1,070

Earnings per share – basic
1.35

 
0.90

 
0.01

Earnings per share – diluted
1.34

 
0.89

 
0.01

___________________
(1)
There are no non-recurring pro forma adjustments included within or excluded from the amounts in the preceding table.

Note 24.      Fair Value Measurements
Recurring Fair Value Measurements:
Assets and liabilities measured at fair value on a recurring basis as of December 31, 2013 and 2012 , aggregated by the level in the fair value hierarchy in which those measurements fall, are as follows (in thousands):
 
 
Quoted Prices 
in Active 
Markets for
Identical Assets
and Liabilities
(Level 1)
 
Significant 
Other Observable 
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Fair Value at
December 31,
2013
 
 
Assets:
 
 
 
 
 
 
 
 
Investments, mutual funds held in a grantor trust
$
18,583

 
 
 
 
 
$
18,583

 
Investments, mutual funds and time deposit
8,408

 
$
50,034

 
 
 
58,442

 
Derivative instruments:
 
 
 
 
 
 
 
 
Interest rate contracts
 
 
5,282

 
 
 
5,282

 
Total
$
26,991

 
$
55,316

 
$
—

 
$
82,307

 
Liabilities:
 
 
 
 
 
 
 
 
Derivative instruments:
 
 
 
 
 
 
 
 
Interest rate contracts
 
 
$
476

 
 
 
$
476

 
Deferred compensation plan obligations
$
18,583

 
 
 
 
 
18,583

 
Total
$
18,583

 
$
476

 
$
—

 
$
19,059


87

 
 
Quoted Prices 
in Active 
Markets for
Identical Assets
and Liabilities
(Level 1)
 
Significant 
Other
Observable  Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Fair Value at
December 31,
2012
 
 
Assets:
 
 
 
 
 
 
 
 
Investments, mutual funds held in a grantor trust
$
16,030

 
 
 
 
 
$
16,030

 
Derivative instruments:
 
 
 
 
 
 
 
 
Interest rate contracts
 
 
9,926

 
 
 
9,926

 
Total
$
16,030

 
$
9,926

 
$
—

 
$
25,956

 
Liabilities:
 
 
 
 
 
 
 
 
Derivative instruments:
 
 
 
 
 
 
 
 
Interest rate contracts
 
 
$
768

 
 
 
$
768

 
Deferred compensation plan obligations
$
16,030

 
 
 
 
 
16,030

 
Total
$
16,030

 
$
768

 
$
—

 
$
16,798

Nonrecurring Fair Value Measurements:
Property Impairments
Property is reviewed for impairment if events or changes in circumstances indicate that the carrying amount of the property, including any identifiable intangible assets, site costs and capitalized interest, 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. If we conclude that an impairment may have occurred, estimated fair values are determined by management utilizing cash flow models, market capitalization rates and market discount rates, or by obtaining third-party broker valuation estimates, appraisals, bona fide purchase offers or the expected sales price of an executed sales agreement in accordance with our fair value measurements accounting policy. Market capitalization rates and market discount rates are determined by reviewing current sales of similar properties and transactions, and utilizing management’s knowledge and expertise in property marketing.
Investments in Real Estate Joint Ventures and Partnerships Impairments
The fair value of our investment in partially owned real estate joint ventures and partnerships is estimated by management based on a number of factors, including the performance of each investment, the life and other terms of the investment, holding periods, market conditions, cash flow models, market capitalization rates and market discount rates, or by obtaining third-party broker valuation estimates, appraisals and bona fide purchase offers in accordance with our fair value measurements accounting policy. Market capitalization rates and market discount rates are determined by reviewing current sales of similar properties and transactions, and utilizing management’s knowledge and expertise in property marketing. We recognize an impairment loss if we determine the fair value of an investment is less than its carrying amount and that loss in value is other than temporary.
Assets measured at fair value on a nonrecurring basis at December 31, 2013 , aggregated by the level in the fair value hierarchy in which those measurements fall, are as follows (in thousands):
 
Quoted Prices 
in Active 
Markets for
Identical 
Assets
and Liabilities
(Level 1)
 
Significant 
Other
Observable 
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Fair Value
 
Total Gains
(Losses)  (1)
Property (2)
 
 
$
3,300

 
$
8,576

 
$
11,876

 
$
(2,358
)
Total
$
—

 
$
3,300

 
$
8,576

 
$
11,876

 
$
(2,358
)
___________________
(1)
Total gains (losses) exclude impairments on disposed assets because they are no longer held by us.
(2)
In accordance with our policy of evaluating and recording impairments on the disposal of long-lived assets, property with a carrying amount of $14.3 million was written down to a fair value of $11.9 million , resulting in a loss of $2.4 million , which was included in earnings for the period. Management’s estimate of the fair value of these properties was determined using bona fide purchase offer for the Level 2 inputs. See the quantitative information about the significant unobservable inputs used for our Level 3 fair value measurements table below.

88

Assets measured at fair value on a nonrecurring basis at December 31, 2012 , aggregated by the level in the fair value hierarchy in which those measurements fall, are as follows (in thousands):
 
Quoted Prices
in Active
Markets for
Identical
Assets
and Liabilities
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Fair Value
 
Total Gains
(Losses)  (1)
Property (2)
 
 
$
5,773

 
$
13,906

 
$
19,679

 
$
(2,971
)
Investment in real estate joint ventures
and partnerships (3)
 
 
24,231

 
 
 
24,231

 
(6,608
)
Total
$
—

 
$
30,004

 
$
13,906

 
$
43,910

 
$
(9,579
)
___________________
(1)
Total gains (losses) exclude impairments on disposed assets because they are no longer held by us.
(2)
In accordance with our policy of evaluating and recording impairments on the disposal of long-lived assets, property with a carrying amount of $22.4 million was written down to a fair value of $19.7 million less costs to sell of $.3 million , resulting in a loss of $3.0 million , which was included in earnings for the period. Management’s estimate of fair value of these properties was determined using a bona fide purchase offer for the Level 2 inputs. See the quantitative information about the significant unobservable inputs used for our Level 3 fair value measurements table below.
(3)
Our net investment in real estate joint ventures and partnerships with a carrying amount of $30.8 million was written down to a fair value of $24.2 million , resulting in a loss of $6.6 million , which was included in earnings for the period. Management’s estimate of fair value of this investment was determined using the weighted average of the bona fide purchase offers received for the Level 2 inputs.
Fair Value Disclosures:
Unless otherwise listed below, short-term financial instruments and receivables are carried at amounts which approximate their fair values based on their highly-liquid nature, short-term maturities and/or expected interest rates for similar instruments.
Schedule of our fair value disclosures is as follows (in thousands):
 
December 31,
 
2013
 
2012
 
Carrying Value
 
Fair Value
Using
Significant
Unobservable
Inputs
(Level 3)
 
Carrying Value
 
Fair Value
Using
Significant
Unobservable
Inputs
(Level 3)
Notes receivable from real estate joint ventures
and partnerships
$
13,330

 
$
13,549

 
$
89,776

 
$
93,572

Tax increment revenue bonds (1)
25,850

 
25,850

 
26,505

 
26,505

Debt:
 
 
 
 
 
 
 
Fixed-rate debt
2,136,265

 
2,150,891

 
1,992,599

 
2,094,122

Variable-rate debt
163,579

 
172,349

 
211,431

 
223,759

___________________
(1)
At December 31, 2013 and 2012 , the credit loss balance on our tax increment revenue bonds was $31.0 million .

89

The quantitative information about the significant unobservable inputs used for our Level 3 fair value measurements as of December 31, 2013 and 2012 reported in the above tables, is as follows:
 
Description
 
Fair Value at
December 31,
 
Unobservable
Inputs
 
Range
 
 
 
2013
 
2012
 
 
 
 
Minimum
 
Maximum
 
 
(in thousands)
 
Valuation Technique
 
 
2013
2012
 
2013
2012
 
Property
 
$
8,576

 
$
13,906

 
Broker valuation
estimate
 
Indicative bid (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
Bona fide purchase
offers
 
Contract price (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
Discounted cash flows
 
Discount rate
 
 
 
 
 
10.0
%
 
 
 
 
 
 
 
 
 
Capitalization rate
 
 
9.3
%
 
 
9.5
%
 
 
 
 
 
 
 
 
 
Holding period
(years)
 
 
 
 
 
1

 
 
 
 
 
 
 
 
 
Expected future
inflation rate (2)
 
 
 
 
 
3.0
%
 
 
 
 
 
 
 
 
 
Market rent growth
rate (2)
 
 
 
 
 
3.0
%
 
 
 
 
 
 
 
 
 
Expense growth
rate (2)
 
 
 
 
 
3.0
%
 
 
 
 
 
 
 
 
 
Vacancy rate (2)
 
 
 
 
 
5.0
%
 
 
 
 
 
 
 
 
 
Renewal rate (2)
 
 
 
 
 
75.0
%
 
 
 
 
 
 
 
 
 
Average market
rent rate (2)
 
 
 
 
 
$
10.52

 
 
 
 
 
 
 
 
 
Average leasing
cost per square
foot (2)
 
 
 
 
 
$
16.50

 
Notes receivable
from real
estate joint
ventures and
partnerships
 
13,549

 
93,572

 
Discounted cash flows
 
Discount rate
 
 
 
 
2.7
%
3.0
%
 
Tax increment
revenue bonds
 
25,850

 
26,505

 
Discounted cash flows
 
Discount rate
 
 
 
 
7.5
%
7.5
%
 
 
 
 
 
 
 
 
 
Expected future
growth rate
 
1.0
%
1.0
%
 
2.0
%
4.0
%
 
 
 
 
 
 
 
 
 
Expected future
inflation rate
 
1.0
%
1.0
%
 
2.0
%
2.0
%
 
Fixed-rate debt
 
2,150,891

 
2,094,122

 
Discounted cash flows
 
Discount rate
 
1.3
%
1.1
%
 
7.4
%
6.5
%
 
Variable-rate
debt
 
172,349

 
223,759

 
Discounted cash flows
 
Discount rate
 
.8
%
1.4
%
 
5.0
%
5.0
%
___________________
(1)
These fair values were developed by third parties, subject to our corroboration for reasonableness.
(2)
Only applies to one property valuation.


90

Note 25.      Quarterly Financial Data (Unaudited)
Summarized quarterly financial data is as follows (in thousands):
 
First
 
Second
 
Third
 
Fourth
 
2013
 
 
 
 
 
 
 
 
Revenues (1)
$
119,874

 
$
124,217

 
$
125,451

 
$
128,183

 
Net income
44,817

(2)(3)  
104,178

(2)  
62,389

(2)  
53,772

(2)  
Net income attributable to
common shareholders
33,668

(2)(3)  
45,421

(2)(4)  
57,832

(2)  
47,224

(2)  
Earnings per common
share – basic
0.28

(2)(3)  
0.37

(2)(4)  
0.48

(2)  
0.39

(2)  
Earnings per common
share – diluted
0.28

(2)(3)  
0.37

(2)(4)  
0.47

(2)  
0.38

(2)  
2012
 
 
 
 
 
 
 
 
Revenues (1)
$
107,838

 
$
111,712

 
$
117,807

 
$
119,547

 
Net income
22,638

(5)(6)  
32,761

(2)(5)(6)  
42,047

(2)  
54,975

(2)  
Net income attributable to
common shareholders
12,328

(5)(6)  
22,550

(2)(5)(6)  
31,404

(2)  
42,928

(2)  
Earnings per common
share – basic
0.10

(5)(6)  
0.19

(2)(5)(6)  
0.26

(2)  
0.36

(2)  
Earnings per common
share – diluted
0.10

(5)(6)  
0.19

(2)(5)(6)  
0.26

(2)  
0.35

(2)  
___________________
(1)
Revenues from the sale of operating properties have been reclassified and reported in discontinued operations for all periods presented.
(2)
The quarter results include significant gains on the sale of properties and real estate joint venture and partnership interests and on acquisitions. Gain amounts are: $11.7 million , $78.4 million , $38.4 million and $25.2 million for the three months ended March 31, 2013 , June 30, 2013 , September 30, 2013 and December 31, 2013 , respectively, and $31.3 million , $17.0 million and $27.7 million for the three months ended June 30, 2012 , September 30, 2012 and December 31, 2012 , respectively.
(3)
The quarter results include a write-off of an above-market assumed mortgage intangible due to the early payoff of the related mortgage of $9.7 million .
(4)
The quarter results include net income attributable to noncontrolling interests of $37.7 million associated with applicable gains discussed in (2) above and a $15.7 million deduction associated with the redemption of the Series F preferred shares (see Note 9 for additional information).
(5)
The quarter results include significant impairment charges. Impairment amounts are: $10.0 million and $24.9 million for the three months ended March 31, 2012 and June 30, 2012 , respectively.
(6)
During the second quarter of 2012, we disposed of our wholly-owned Industrial portfolio.

Note 26. Subsequent Events
In January 2014, we completed the dissolution of our consolidated real estate joint venture with Hines, in which we have a 30% ownership interest. At December 31, 2013 , this joint venture held a portfolio of 13 properties located in Texas, Tennessee, Georgia, Florida and North Carolina with $172.9 million in total assets and $11.1 million of debt,net, which will be assumed by Hines. This transaction was completed through the distribution of five properties to us and eight properties to Hines. The eight properties distributed to Hines were classified as held for sale at December 31, 2013 (see Note 15 for further information).
Subsequent to December 31, 2013 , we sold two centers with gross proceeds totaling $55.6 million . Also, we received notice in December 2013 from the holder of one of our ground leases in Texas of their intent to exercise their purchase option under the ground lease. This transaction is expected to close in the second half of 2014, will result in the disposition of three properties, and we do not expect any impairment associated with this transaction.
* * * * *


91

ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.

ITEM 9A. Controls and Procedures
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, 2013 . 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, 2013 .
There has been no change to our internal control over financial reporting during the quarter ended December 31, 2013 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
MANAGEMENT’S ANNUAL 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 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, 2013 based on the framework in Internal Control—Integrated Framework (1992) 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 Officer and Chief Financial Officer believe that WRI’s internal control over financial reporting is effective as of December 31, 2013 .
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 26, 2014

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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, 2013 , based on criteria established in Internal Control — Integrated Framework (1992) 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 Annual 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 trust managers, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and trust managers of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013 , based on the criteria established in Internal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedules as of and for the year ended December 31, 2013 , of the Company and our report dated February 26, 2014 , expressed an unqualified opinion on those financial statements and financial statement schedules.
/s/ Deloitte & Touche LLP
Houston, Texas
February 26, 2014


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ITEM 9B. Other Information
Not applicable.

PART III

ITEM 10. Trust Managers, Executive Officers and Corporate Governance
Information with respect to our trust managers and executive officers is incorporated herein by reference to the “Election of Trust Managers - Proposal One," “Compensation Discussion and Analysis - Overview” and “Share Ownership of Beneficial Owners and Management” sections of our definitive Proxy Statement for the Annual Meeting of Shareholders to be held April 24, 2014 .
Code of Conduct and 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 125
Houston, Texas 77008
(713) 866-6000
www.weingarten.com
We have also adopted a Code of Conduct for Officers and Senior Financial Associates setting forth a code of ethics applicable to our principal executive officer, principal financial officer, chief accounting officer and financial associates, which is available on our website at www.weingarten.com . Shareholders may request a free copy of the Code of Conduct for Officers and Senior Financial Associates from the address and phone number set forth above.
Governance Guidelines
We have adopted Governance Guidelines, which are available on our website at www.weingarten.com . Shareholders may request a free copy of the Governance Guidelines from the address and phone number set forth above under “Code of Conduct and Ethics.”

ITEM 11. Executive Compensation
Information with respect to executive compensation is incorporated herein by reference to the “Compensation Discussion and Analysis,” “Trust Manager Compensation,” “Compensation Committee Report,” “Summary Compensation Table” and “Trust Manager Compensation Table” sections of our definitive Proxy Statement for the Annual Meeting of Shareholders to be held April 24, 2014 .

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
The “Share Ownership of Beneficial Owners and Management” section of our definitive Proxy Statement for the Annual Meeting of Shareholders to be held April 24, 2014 is incorporated herein by reference.

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The following table summarizes the equity compensation plans under which our common shares of beneficial interest may be issued as of December 31, 2013 :
Plan category
 
Number of 
shares to
be issued upon exercise
of outstanding options,
warrants and rights
 
Weighted 
average
exercise price of outstanding  options,
warrants and 
rights
 
Number of 
shares
remaining 
available
for future 
issuance
Equity compensation plans approved by shareholders
 
3,543,746
 
$29.16
 
1,676,028
Equity compensation plans not approved by shareholders
 
—
 
—
 
—
Total
 
3,543,746
 
$29.16
 
1,676,028

ITEM 13. Certain Relationships and Related Transactions, and Trust Manager Independence
The “Governance,” “Compensation Committee Interlocks and Insider Participation” and “Certain Transactions” sections of our definitive Proxy Statement for the Annual Meeting of Shareholders to be held April 24, 2014 are incorporated herein by reference.

ITEM 14. Principal Accountant Fees and Services
The “Accounting Firm Fees” section within “Ratification of Independent Registered Public Accounting Firm - Proposal Two” of our definitive Proxy Statement for the Annual Meeting of Shareholders to be held April 24, 2014 is incorporated herein by reference.

PART IV

ITEM 15. Exhibits and Financial Statement Schedules
(a)
The following documents are filed as part of this Report:
Page  
 
 
 
 
 
 
(A)
 
(B)
Financial Statements:
 
 
 
(i)
 
 
(ii)
 
 
(iii)
 
 
(iv)
 
 
(v)
 
 
(vi)
 
(C)
Financial Statement Schedules:
 
 
 
II
 
 
III
 
 
IV
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 thereto.

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(b)
 
Exhibits:
3.1
—
Restated Declaration of Trust (filed as Exhibit 3.1 to WRI’s 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 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 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 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 Form 8-A dated February 23, 1998 and incorporated herein by reference).
3.8
—
Sixth Amendment of the Restated Declaration of Trust dated May 6, 2010 (filed as Exhibit 3.1 to WRI’s Form 8-K dated May 6, 2010 and incorporated herein by reference).
3.9
—
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).
3.10
—
Second Amended and Restated Bylaws of Weingarten Realty Investors (filed as Exhibit 3.1 to WRI’s Form 8-K on February 26, 2010 and incorporated herein by reference).
4.1
—
Form of Indenture between Weingarten Realty Investors and The Bank of New York Mellon Trust Company, N.A. (successor in interest to JPMorgan Chase Bank, National Association, formerly and Texas Commerce Bank National Association) (filed as Exhibit 4(a) to WRI’s Registration Statement on Form S-3 (No. 33-57659) dated February 10, 1995 and incorporated herein by reference).
4.2
—
Form of Indenture between Weingarten Realty Investors and The Bank of New York Mellon Trust Company, N.A. (successor in interest to JPMorgan Chase Bank, National Association, formerly and Texas Commerce Bank National Association) (filed as Exhibit 4(b) to WRI’s Registration Statement on Form S-3 (No. 33-57659) and incorporated herein by reference).
4.3
—
Form of Fixed Rate Senior Medium Term Note (filed as Exhibit 4.19 to WRI’s Annual Report on Form 10-K for the year ended December 31, 1998 and incorporated herein by reference).
4.4
—
Form of Floating Rate Senior Medium Term Note (filed as Exhibit 4.20 to WRI’s Annual Report on Form 10-K for the year ended December 31, 1998 and incorporated herein by reference).
4.5
—
Form of Fixed Rate Subordinated Medium Term Note (filed as Exhibit 4.21 to WRI’s Annual Report on Form 10-K for the year ended December 31, 1998 and incorporated herein by reference).
4.6
—
Form of Floating Rate Subordinated Medium Term Note (filed as Exhibit 4.22 to WRI’s Annual Report on Form 10-K for the year ended December 31, 1998 and incorporated herein by reference).
4.7
—
Statement of Designation of 6.75% Series D Cumulative Redeemable Preferred Shares (filed as Exhibit 3.1 to WRI’s Form 8-A dated April 17, 2003 and incorporated herein by reference).
4.8
—
Statement of Designation of 6.50% Series F Cumulative Redeemable Preferred Shares (filed as Exhibit 3.1 to WRI’s Form 8-A dated January 29, 2007 and incorporated herein by reference).
4.9
—
6.75% Series D Cumulative Redeemable Preferred Share Certificate (filed as Exhibit 4.2 to WRI’s Form 8-A dated April 17, 2003 and incorporated herein by reference).
4.10
—
6.50% Series F Cumulative Redeemable Preferred Share Certificate (filed as Exhibit 4.2 to WRI’s Form 8-A dated January 29, 2007 and incorporated herein by reference).
4.11
—
Form of Receipt for Depositary Shares, each representing 1/30 of a share of 6.75% Series D Cumulative Redeemable Preferred Shares, par value $.03 per share (filed as Exhibit 4.3 to WRI’s Form 8-A dated April 17, 2003 and incorporated herein by reference).
4.12
—
Form of Receipt for Depositary Shares, each representing 1/100 of a share of 6.50% Series F Cumulative Redeemable Preferred Shares, par value $.03 per share (filed as Exhibit 4.3 to WRI’s Form 8-A dated January 29, 2007 and incorporated herein by reference).
4.13
—
Form of 7% Notes due 2011 (filed as Exhibit 4.17 to WRI’s Annual Report on Form 10-K for the year ended December 31, 2001 and incorporated herein by reference).

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4.14
—
Form of 8.10% Note due 2019 (filed as Exhibit 4.1 to WRI’s Current Report on Form 8-K dated August 14, 2009 and incorporated herein by reference).
4.15
—
Second Supplemental Indenture, dated October 9, 2012, between Weingarten Realty Investors and The Bank of New York Trust Company, National Association (successor to J.P. Morgan Chase Company, National Association) (filed as Exhibit 4.1 to WRI's Form 8-K on October 9, 2012 and incorporated herein by reference).
4.16
—
Form of 3.375% Senior Note due 2022 (filed as Exhibit 4.2 to WRI's Form 8-K on October 9, 2012 and incorporated herein by reference).
4.17
—
Form of 3.50% Senior Note due 2023 (filed as Exhibit 4.1 to WRI's Form 8-K on March 22, 2013 and incorporated herein by reference).
4.18
—
Form of 4.450% Senior Note due 2024 (filed as Exhibit 4.1 to WRI's Form 8-K on October 15, 2013 and incorporated herein by reference).
10.1†
—
2001 Long Term Incentive Plan (filed as Exhibit 10.7 to WRI’s Annual Report on Form 10-K for the year ended December 31, 2001 and incorporated herein by reference).
10.2†
—
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).
10.3†
—
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).
10.4†
—
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).
10.5†
—
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 herein by reference).
10.6†
—
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 herein by reference).
10.7†
—
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 herein by reference).
10.8†
—
Amendment No. 2 to the Weingarten Realty Investors Retirement Benefit Restoration Plan dated November 9, 2007 (filed as Exhibit 10.43 on WRI’s Form 10-K for the year ended December 31, 2007 and incorporated herein by reference).
10.9†
—
Amendment No. 2 to the Weingarten Realty Investors Deferred Compensation Plan dated November 9, 2007 (filed as Exhibit 10.44 on WRI’s Form 10-K for the year ended December 31, 2007 and incorporated herein by reference).
10.10†
—
Amendment No. 2 to the Weingarten Realty Investors Supplemental Executive Retirement Plan dated November 9, 2007 (filed as Exhibit 10.45 on WRI’s Form 10-K for the year ended December 31, 2007 and incorporated herein by reference).
10.11†
—
Amendment No. 3 to the Weingarten Realty Investors Retirement Benefit Restoration Plan dated November 17, 2008 (filed as Exhibit 10.1 on WRI’s Form 8-K on December 4, 2008 and incorporated herein by reference).
10.12†
—
Amendment No. 3 to the Weingarten Realty Investors Deferred Compensation Plan dated November 17, 2008 (filed as Exhibit 10.2 on WRI’s Form 8-K on December 4, 2008 and incorporated herein by reference).
10.13†
—
Amendment No. 3 to the Weingarten Realty Investors Supplemental Executive Retirement Plan dated November 17, 2008 (filed as Exhibit 10.3 on WRI’s Form 8-K on December 4, 2008 and incorporated herein by reference).
10.14†
—
Amendment No. 1 to the Weingarten Realty Investors 2001 Long Term Incentive Plan dated November 17, 2008 (filed as Exhibit 10.4 on WRI’s Form 8-K on December 4, 2008 and incorporated herein by reference).
10.15†
—
Severance and Change to Control Agreement for Johnny Hendrix dated November 11, 1998 (filed as Exhibit 10.54 on WRI’s Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).
10.16†
—
Severance and Change to Control Agreement for Stephen C. Richter dated November 11, 1998 (filed as Exhibit 10.55 on WRI’s Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).

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10.17†
—
Amendment No. 1 to Severance and Change to Control Agreement for Johnny Hendrix dated December 20, 2008 (filed as Exhibit 10.56 on WRI’s Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).
10.18†
—
Amendment No. 1 to Severance and Change to Control Agreement for Stephen Richter dated December 31, 2008 (filed as Exhibit 10.57 on WRI’s Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).
10.19
—
Promissory Note with Reliance Trust Company, Trustee of the Trust under the Weingarten Realty Investors Deferred Compensation Plan, Supplemental Executive Retirement Plan and Retirement Benefit Restoration Plan dated March 12, 2009 (filed as Exhibit 10.57 on WRI’s Form 10-Q for the quarter ended March 31, 2009 and incorporated herein by reference).
10.20†
—
First Amendment to the Weingarten Realty Retirement Plan, amended and restated, dated December 2, 2009 (filed as Exhibit 10.51 on WRI’s Annual Report on Form 10-K for the year ended December 31, 2009 and incorporated herein by reference).
10.21†
—
First Amendment to the Master Nonqualified Plan Trust Agreement dated March 12, 2009 (filed as Exhibit 10.53 on WRI’s Annual Report on Form 10-K for the year ended December 31, 2009 and incorporated herein by reference).
10.22†
—
Second Amendment to the Master Nonqualified Plan Trust Agreement dated August 4, 2009 (filed as Exhibit 10.54 on WRI’s Annual Report on Form 10-K for the year ended December 31, 2009 and incorporated herein by reference).
10.23†
—
Non-Qualified Plan Trust Agreement for Recordkept Plans dated September 1, 2009 (filed as Exhibit 10.55 on WRI’s Annual Report on Form 10-K for the year ended December 31, 2009 and incorporated herein by reference).
10.24†
—
Amended and Restated 2010 Long-Term Incentive Plan (filed as Exhibit 99.1 to WRI’s Form 8-K dated April 26, 2010 and incorporated herein by reference).
10.25†
—
Amendment No. 4 to the Weingarten Realty Investors Deferred Compensation Plan dated February 26, 2010 (filed as Exhibit 10.57 on WRI’s Form 10-Q for the quarter ended March 31, 2010 and incorporated herein by reference).
10.26†
—
Amendment No. 4 to the Weingarten Realty Investors Supplemental Executive Retirement Plan dated May 6, 2010 (filed as Exhibit 10.58 on WRI’s Form 10-Q for the quarter ended March 31, 2010 and incorporated herein by reference).
10.27
—
First Amendment to Promissory Note with Reliance Trust Company, Trustee of the Master Nonqualified Plan Trust under Weingarten Realty Investors Supplemental Executive Retirement Plan and Weingarten Realty Investors Retirement Benefit Restoration Plan dated March 11, 2010 (filed as Exhibit 10.59 on WRI’s Form 10-Q for the quarter ended June 30, 2010 and incorporated herein by reference).
10.28†
—
2002 WRI Employee Share Purchase Plan dated May 6, 2003 (filed as Exhibit 10.60 on WRI’s Form 10-Q for the quarter ended June 30, 2010 and incorporated herein by reference).
10.29†
—
Amended and Restated 2002 WRI Employee Share Purchase Plan dated May 10, 2010 (filed as Exhibit 10.61 on WRI’s Form 10-Q for the quarter ended June 30, 2010 and incorporated herein by reference).
10.30
—
Fixed Rate Promissory Note with JPMorgan Chase Bank, National Association dated May 11, 2010 (filed as Exhibit 10.62 on WRI’s Form 10-Q for the quarter ended June 30, 2010 and incorporated herein by reference).
10.31†
—
Weingarten Realty Investors Executive Medical Reimbursement Plan and Summary Plan Description (filed as Exhibit 10.59 on WRI’s Form 10-K dated December 31, 2010 and incorporated herein by reference).
10.32
—
Second Amendment to Promissory Note with Reliance Trust Company, Trustee of the Master Nonqualified Plan Trust under the Weingarten Realty Investors Supplemental Executive Retirement Plan and Weingarten Realty Investors Retirement Benefit Restoration Plan dated March 11, 2011 (filed as Exhibit 10.58 on WRI’s Form 10-Q for the quarter ended March 31, 2011 and incorporated herein by reference).
10.33†
—
Second Amendment to the Weingarten Realty Retirement Plan dated March 14, 2011 (filed as Exhibit 10.59 on WRI’s Form 10-Q for the quarter ended March 31, 2011 and incorporated herein by reference).
10.34†
—
Third Amendment to the Weingarten Realty Retirement Plan dated May 4, 2011 (filed as Exhibit 10.60 on WRI’s Form 10-Q for the quarter ended March 31, 2011 and incorporated herein by reference).
10.35†
—
Third Amendment to the Master Nonqualified Plan Trust Agreement dated April 26, 2011 (filed as Exhibit 10.1 on WRI’s Form 10-Q for the quarter ended June 30, 2011 and incorporated herein by reference).

98
Table of Contents

10.36
—
Amended and Restated Credit Agreement dated September 30, 2011 (filed as Exhibit 10.1 on WRI’s Form 8-K on October 4, 2011 and incorporated herein by reference).
10.37
—
Credit Agreement dated August 29, 2011 among Weingarten Realty Investors, the Lenders Party Hereto and The Bank of Nova Scotia, as Administrative Agent (filed as Exhibit 10.1 on WRI’s Form 8-K on August 31, 2011 and incorporated herein by reference).
10.38
—
Credit Agreement Note dated August 29, 2011 with The Bank of Nova Scotia (filed as Exhibit 10.2 on WRI’s Form 8-K on August 31, 2011 and incorporated herein by reference).
10.39
—
Credit Agreement Note dated August 29, 2011 with Compass Bank (filed as Exhibit 10.3 on WRI’s Form 8-K on August 31, 2011 and incorporated herein by reference).
10.40
—
Credit Agreement Note dated August 29, 2011 with PNC Bank, National Association (filed as Exhibit 10.4 on WRI’s Form 8-K on August 31, 2011 and incorporated herein by reference).
10.41
—
Credit Agreement Note dated August 29, 2011 with Sumitomo Mitsui Banking Corporation (filed as Exhibit 10.5 on WRI’s Form 8-K on August 31, 2011 and incorporated herein by reference).
10.42
—
Credit Agreement Note dated August 29, 2011 U.S. Bank National Association (filed as Exhibit 10.6 on WRI’s Form 8-K on August 31, 2011 and incorporated herein by reference).
10.43
—
Guaranty associated with Credit Agreement among Weingarten Realty Investors, the Lenders Party Hereto and The Bank of Nova Scotia, as Administrative Agent, dated August 29, 2011 (filed as Exhibit 10.7 on WRI’s Form 8-K on August 31, 2011 and incorporated herein by reference).
10.44
—
Amendment Agreement dated September 30, 2011 to Amended and Restated Credit Agreement dated September 30, 2011 (filed as Exhibit 10.70 on WRI’s Form 10-K for the year ended December 31, 2011 and incorporated herein by reference).
10.45
—
Amendment Agreement dated November 14, 2011 to the Credit Agreement dated August 29, 2011 among Weingarten Realty Investors, the Lenders Party Hereto and The Bank of Nova Scotia, as Administrative Agent (filed as Exhibit 10.71 on WRI’s Form 10-K for the year ended December 31, 2011 and incorporated herein by reference).
10.46
—
Guaranty dated November 14, 2011 associated with Credit Agreement among Weingarten Realty Investors, the Lenders Party Hereto and The Bank of Nova Scotia, as Administrative Agent, dated August 29, 2011 (filed as Exhibit 10.72 on WRI’s Form 10-K for the year ended December 31, 2011 and incorporated herein by reference).
10.47
—
Third Amendment to Promissory Note with Reliance Trust Company, Trustee of the Master Nonqualified Plan Trust under the Weingarten Realty Investors Supplemental Executive Retirement Plan and Weingarten Realty Investors Retirement Benefit Restoration Plan dated February 15, 2012 (filed as Exhibit 10.1 on WRI's Form 10-Q for the quarter ended March 31, 2012 and incorporated herein by reference).
10.48†
—
Fourth Amendment to the Weingarten Realty Retirement Plan dated March 2, 2012 (filed as Exhibit 10.2 on WRI's Form 10-Q for the quarter ended March 31, 2012 and incorporated herein by reference).
10.49
—
Purchase and Sale Agreement dated April 10, 2012 (filed as Exhibit 10.1 on WRI's Form 8-K on April 12, 2012 and incorporated herein by reference).
10.50†
—
Amendment No. 4 to the Weingarten Realty Investors Retirement Benefit Restoration Plan dated August 10, 2012 (filed as Exhibit 10.1 on WRI's Form 10-Q for the quarter ended September 30, 2012 and incorporated herein by reference).
10.51†
—
Amendment No. 5 to the Weingarten Realty Investors Supplemental Executive Retirement Plan dated August 10, 2012 (filed as Exhibit 10.2 on WRI's Form 10-Q for the quarter ended September 30, 2012 and incorporated herein by reference).
10.52
—
Assignment and Assumption dated September 6, 2012 of the Amended and Restated Credit Agreement dated September 30, 2011 (filed as Exhibit 10.3 on WRI's Form 10-Q for the quarter ended September 30, 2012 and incorporated herein by reference).
10.53†
—
Master Nonqualified Plan Trust Agreement dated August 23, 2006 (filed as Exhibit 10.53 on WRI's Form 10-K for the year ended December 31, 2012 and incorporated herein by reference).
10.54†
—
Restatement of the Weingarten Realty Retirement Plan dated November 17, 2008 (filed as Exhibit 10.54 on WRI's Form 10-K for the year ended December 31, 2012 and incorporated herein by reference).
10.55
—
Amendment Agreement dated April 18, 2013 of the Amended and Restated Credit Agreement dated September 30, 2011 (filed as Exhibit 10.1 on WRI's Form 10-Q for the quarter ended March 31, 2013 and incorporated herein by reference).

99
Table of Contents

10.56
—
Fourth Amendment to Promissory Note with Reliance Trust Company, Trustee of the Master Nonqualified Plan Trust under the Weingarten Realty Investors Supplemental Executive Retirement Plan and Weingarten Realty Investors Retirement Benefit Restoration Plan dated March 11, 2013(filed as Exhibit 10.2 on WRI's Form 10-Q for the quarter ended March 31, 2013 and incorporated herein by reference).
10.57†*
—
Restatement of the Weingarten Realty Investors Retirement Plan dated December 23, 2013.
12.1*
—
Computation of Ratios.
21.1*
—
Listing of Subsidiaries of the Registrant.
23.1*
—
Consent of Deloitte & Touche LLP.
31.1*
—
Certification pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).
31.2*
—
Certification pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).
32.1**
—
Certification pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).
32.2**
—
Certification pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).
101.INS**
—
XBRL Instance Document
101.SCH**
—
XBRL Taxonomy Extension Schema Document
101.CAL**
—
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**
—
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**
—
XBRL Taxonomy Extension Labels Linkbase Document
101.PRE**
—
XBRL Taxonomy Extension Presentation Linkbase Document
 
 
*
Filed with this report.
**
Furnished with this report.
†
Management contract or compensation plan or arrangement.

100
Table of Contents

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
WEINGARTEN REALTY INVESTORS
 
 
 
 
By:
/s/  Andrew M. Alexander
 
 
Andrew M. Alexander
 
 
Chief Executive Officer
Date: February 26, 2014
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each of Weingarten Realty Investors, a real estate investment trust organized under the Texas Business Organizations Code, and the undersigned trust managers and officers of Weingarten Realty Investors hereby constitute and appoint Andrew M. Alexander, Stanford Alexander, 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.

101
Table of Contents

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/ Andrew M. Alexander
Chief Executive Officer,
President and Trust Manager
February 26, 2014
 
Andrew M. Alexander
 
 
 
 
By:
/s/ Stanford Alexander
Chairman
and Trust Manager
February 26, 2014
 
Stanford Alexander
 
 
 
 
By:
/s/ Shelaghmichael Brown
Trust Manager
February 26, 2014
 
Shelaghmichael Brown
 
 
 
 
By:
/s/ James W. Crownover
Trust Manager
February 26, 2014
 
James W. Crownover
 
 
 
 
By:
/s/ Robert J. Cruikshank
Trust Manager
February 26, 2014
 
Robert J. Cruikshank
 
 
 
 
By:
/s/ Melvin Dow
Trust Manager
February 26, 2014
 
Melvin Dow
 
 
 
 
By:
/s/ Stephen A. Lasher
Trust Manager
February 26, 2014
 
Stephen A. Lasher
 
 
 
 
By:
/s/ Stephen C. Richter
Executive Vice President and
Chief Financial Officer
February 26, 2014
 
Stephen C. Richter
 
 
 
 
By:
/s/ Thomas L. Ryan
Trust Manager
February 26, 2014
 
Thomas L. Ryan
 
 
 
 
By:
/s/ Douglas W. Schnitzer
Trust Manager
February 26, 2014
 
Douglas W. Schnitzer
 
 
 
 
By:
/s/ Joe D. Shafer
Senior Vice President/Chief Accounting Officer
(Principal Accounting Officer)
February 26, 2014
 
Joe D. Shafer
 
 
 
 
By:
/s/ C. Park Shaper
Trust Manager
February 26, 2014
 
C. Park Shaper
 
 
 
 
By:
/s/ Marc J. Shapiro
Trust Manager
February 26, 2014
 
Marc J. Shapiro

102
Table of Contents

Schedule II
WEINGARTEN REALTY INVESTORS
VALUATION AND QUALIFYING ACCOUNTS
December 31, 2013 , 2012 , and 2011
(Amounts in thousands)
Description
 
Balance at
beginning
of period
 
Charged
to costs
and
expenses
 
Deductions
(1)
 
Balance
at end of
period
2013
 
 
 
 
 
 
 
 
Allowance for Doubtful Accounts
 
$
12,127

 
$
1,420

 
$
4,161

 
$
9,386

Tax Valuation Allowance
 
28,376

 
2,243

 
78

 
30,541

2012
 
 
 
 
 
 
 
 
Allowance for Doubtful Accounts
 
$
11,301

 
$
7,157

 
$
6,331

 
$
12,127

Tax Valuation Allowance
 
24,595

 
3,781

 
—

 
28,376

2011
 
 
 
 
 
 
 
 
Allowance for Doubtful Accounts
 
$
10,137

 
$
7,563

 
$
6,399

 
$
11,301

Tax Valuation Allowance
 
15,818

 
10,823

 
2,046

 
24,595

___________________
(1)
Write-offs of amounts previously reserved.

103
Table of Contents

Schedule III

WEINGARTEN REALTY INVESTORS
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2013
(Amounts in thousands)
 
 
Initial Cost to Company
 
 
 
Gross Amounts Carried at Close of Period
 
 
 
 
 
 
 
 
Description
 
Land
 
Building and
Improvements
 
Cost
Capitalized
Subsequent 
to
Acquisition
 
Land
 
Building and
Improvements
 
Total
(1)
 
Accumulated
Depreciation
 
Total Costs,
Net of
Accumulated
Depreciation
 
Encumbrances
(2)
 
Date of
Acquisition /
Construction
Centers:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10-Federal Shopping Center
 
$
1,791

 
$
7,470

 
$
1,125

 
$
1,791

 
$
8,595

 
$
10,386

 
$
(7,087
)
 
$
3,299

 
$
(7,351
)
 
03/20/2008
1919 North Loop West
 
1,334

 
8,451

 
11,514

 
1,337

 
19,962

 
21,299

 
(7,968
)
 
13,331

 
—

 
12/05/2006
580 Market Place
 
3,892

 
15,570

 
3,135

 
3,889

 
18,708

 
22,597

 
(5,843
)
 
16,754

 
(16,280
)
 
04/02/2001
8000 Sunset Strip Shopping Center
 
18,320

 
73,431

 
929

 
18,320

 
74,360

 
92,680

 
(3,190
)
 
89,490

 
—

 
06/27/2012
Alabama Shepherd Shopping Center
 
637

 
2,026

 
7,860

 
1,062

 
9,461

 
10,523

 
(4,038
)
 
6,485

 
—

 
04/30/2004
Angelina Village
 
200

 
1,777

 
10,421

 
1,127

 
11,271

 
12,398

 
(6,730
)
 
5,668

 
—

 
04/30/1991
Arcade Square
 
1,497

 
5,986

 
1,502

 
1,495

 
7,490

 
8,985

 
(2,764
)
 
6,221

 
—

 
04/02/2001
Argyle Village Shopping Center
 
4,524

 
18,103

 
2,889

 
4,526

 
20,990

 
25,516

 
(7,145
)
 
18,371

 
—

 
11/30/2001
Arrowhead Festival Shopping Center
 
1,294

 
154

 
3,531

 
1,903

 
3,076

 
4,979

 
(1,319
)
 
3,660

 
—

 
12/31/2000
Avent Ferry Shopping Center
 
1,952

 
7,814

 
1,171

 
1,952

 
8,985

 
10,937

 
(3,354
)
 
7,583

 
—

 
04/04/2002
Ballwin Plaza
 
2,988

 
12,039

 
454

 
2,517

 
12,964

 
15,481

 
(5,868
)
 
9,613

 
—

 
10/01/1999
Bartlett Towne Center
 
3,479

 
14,210

 
1,168

 
3,443

 
15,414

 
18,857

 
(5,636
)
 
13,221

 
(2,041
)
 
05/15/2001
Bell Plaza
 
1,322

 
7,151

 
513

 
1,322

 
7,664

 
8,986

 
(3,636
)
 
5,350

 
(6,765
)
 
03/20/2008
Bellaire Blvd. Shopping Center
 
124

 
37

 
—

 
124

 
37

 
161

 
(37
)
 
124

 
—

 
11/13/2008
Best in the West
 
13,191

 
77,159

 
4,960

 
13,194

 
82,116

 
95,310

 
(19,025
)
 
76,285

 
—

 
04/28/2005
Blalock Market at I-10
 
—

 
4,730

 
2,037

 
—

 
6,767

 
6,767

 
(4,205
)
 
2,562

 
—

 
12/31/1990
Boca Lyons Plaza
 
3,676

 
14,706

 
2,371

 
3,651

 
17,102

 
20,753

 
(5,031
)
 
15,722

 
—

 
08/17/2001
Boswell Towne Center
 
1,488

 
—

 
1,857

 
615

 
2,730

 
3,345

 
(1,506
)
 
1,839

 
—

 
12/31/2003
Braeswood Square Shopping Center
 
—

 
1,421

 
1,240

 
—

 
2,661

 
2,661

 
(2,369
)
 
292

 
—

 
05/28/1969
Broadway Marketplace
 
898

 
3,637

 
1,017

 
906

 
4,646

 
5,552

 
(2,589
)
 
2,963

 
—

 
12/16/1993
Broadway Shopping Center
 
234

 
3,166

 
740

 
235

 
3,905

 
4,140

 
(2,616
)
 
1,524

 
(2,653
)
 
03/20/2008
Brookwood Marketplace
 
7,050

 
15,134

 
7,163

 
7,511

 
21,836

 
29,347

 
(4,085
)
 
25,262

 
(18,277
)
 
08/22/2006
Brookwood Square Shopping Center
 
4,008

 
19,753

 
1,404

 
4,008

 
21,157

 
25,165

 
(9,296
)
 
15,869

 
—

 
12/16/2003
Brownsville Commons
 
1,333

 
5,536

 
232

 
1,333

 
5,768

 
7,101

 
(1,117
)
 
5,984

 
—

 
05/22/2006
Buena Vista Marketplace
 
1,958

 
7,832

 
1,142

 
1,956

 
8,976

 
10,932

 
(3,054
)
 
7,878

 
—

 
04/02/2001
Bull City Market
 
930

 
6,651

 
355

 
930

 
7,006

 
7,936

 
(1,504
)
 
6,432

 
(3,624
)
 
06/10/2005
Camelback Village Square
 
—

 
8,720

 
1,045

 
—

 
9,765

 
9,765

 
(4,729
)
 
5,036

 
—

 
09/30/1994
Camp Creek Marketplace II
 
6,169

 
32,036

 
1,303

 
4,697

 
34,811

 
39,508

 
(6,669
)
 
32,839

 
(20,413
)
 
08/22/2006

104
Table of Contents

Schedule III

 
 
Initial Cost to Company
 
 
 
Gross Amounts Carried at Close of Period
 
 
 
 
 
 
 
 
Description
 
Land
 
Building and
Improvements
 
Cost
Capitalized
Subsequent 
to
Acquisition
 
Land
 
Building and
Improvements
 
Total
(1)
 
Accumulated
Depreciation
 
Total Costs,
Net of
Accumulated
Depreciation
 
Encumbrances
(2)
 
Date of
Acquisition /
Construction
Capital Square
 
$
1,852

 
$
7,406

 
$
1,410

 
$
1,852

 
$
8,816

 
$
10,668

 
$
(3,217
)
 
$
7,451

 
$
—

 
04/04/2002
Centerwood Plaza
 
915

 
3,659

 
2,216

 
914

 
5,876

 
6,790

 
(1,821
)
 
4,969

 
—

 
04/02/2001
Charleston Commons Shopping Center
 
23,230

 
36,877

 
1,655

 
23,210

 
38,552

 
61,762

 
(7,256
)
 
54,506

 
—

 
12/20/2006
Cherry Creek Retail Center
 
5,416

 
14,624

 
—

 
5,416

 
14,624

 
20,040

 
(1,649
)
 
18,391

 
—

 
06/16/2011
Chino Hills Marketplace
 
7,218

 
28,872

 
11,010

 
7,234

 
39,866

 
47,100

 
(14,833
)
 
32,267

 
—

 
08/20/2002
Citadel Building
 
3,236

 
6,168

 
8,075

 
534

 
16,945

 
17,479

 
(14,270
)
 
3,209

 
—

 
12/30/1975
College Park Shopping Center
 
2,201

 
8,845

 
6,354

 
2,641

 
14,759

 
17,400

 
(8,865
)
 
8,535

 
(11,004
)
 
11/16/1998
Colonial Landing
 
—

 
16,390

 
15,425

 
—

 
31,815

 
31,815

 
(9,992
)
 
21,823

 
(17,703
)
 
09/30/2008
Colonial Plaza
 
10,806

 
43,234

 
13,092

 
10,813

 
56,319

 
67,132

 
(19,872
)
 
47,260

 
—

 
02/21/2001
Commons at Dexter Lake I
 
2,923

 
12,007

 
1,282

 
2,923

 
13,289

 
16,212

 
(4,160
)
 
12,052

 
—

 
11/13/2008
Commons at Dexter Lake II
 
2,023

 
6,940

 
92

 
2,023

 
7,032

 
9,055

 
(1,509
)
 
7,546

 
—

 
11/13/2008
Countryside Centre
 
15,523

 
29,818

 
8,727

 
15,559

 
38,509

 
54,068

 
(6,252
)
 
47,816

 
—

 
07/06/2007
Creekside Center
 
1,732

 
6,929

 
1,970

 
1,730

 
8,901

 
10,631

 
(3,212
)
 
7,419

 
(7,834
)
 
04/02/2001
Crossroads Shopping Center
 
—

 
2,083

 
1,491

 
—

 
3,574

 
3,574

 
(3,426
)
 
148

 
—

 
05/11/1972
Cullen Plaza Shopping Center
 
106

 
2,841

 
617

 
106

 
3,458

 
3,564

 
(2,737
)
 
827

 
(6,085
)
 
03/20/2008
Cypress Pointe
 
3,468

 
8,700

 
1,054

 
3,468

 
9,754

 
13,222

 
(5,470
)
 
7,752

 
—

 
04/04/2002
Cypress Station Square
 
3,736

 
8,374

 
1,656

 
2,389

 
11,377

 
13,766

 
(9,100
)
 
4,666

 
—

 
12/06/1972
Dacula Market
 
1,353

 
104

 
2,437

 
1,393

 
2,501

 
3,894

 
(194
)
 
3,700

 
—

 
05/12/2011
Dallas Commons Shopping Center
 
1,582

 
4,969

 
94

 
1,582

 
5,063

 
6,645

 
(955
)
 
5,690

 
—

 
09/14/2006
Danville Plaza Shopping Center
 
—

 
3,360

 
2,070

 
—

 
5,430

 
5,430

 
(4,944
)
 
486

 
—

 
09/30/1960
DDS Office Building
 
959

 
3,141

 
—

 
959

 
3,141

 
4,100

 
(36
)
 
4,064

 
—

 
10/07/2013
Desert Village Shopping Center
 
3,362

 
14,969

 
1,003

 
3,362

 
15,972

 
19,334

 
(1,332
)
 
18,002

 
—

 
10/28/2010
Discovery Plaza
 
2,193

 
8,772

 
1,077

 
2,191

 
9,851

 
12,042

 
(3,133
)
 
8,909

 
—

 
04/02/2001
Eastdale Shopping Center
 
1,423

 
5,809

 
1,943

 
1,417

 
7,758

 
9,175

 
(3,767
)
 
5,408

 
—

 
12/31/1997
Eastern Horizon
 
10,282

 
16

 
(202
)
 
1,569

 
8,527

 
10,096

 
(4,668
)
 
5,428

 
—

 
12/31/2002
Edgewater Marketplace
 
4,821

 
11,225

 
312

 
4,821

 
11,537

 
16,358

 
(1,005
)
 
15,353

 
(17,600
)
 
11/19/2010
El Camino Shopping Center
 
4,431

 
20,557

 
4,135

 
4,429

 
24,694

 
29,123

 
(6,795
)
 
22,328

 
—

 
05/21/2004
Embassy Lakes Shopping Center
 
2,803

 
11,268

 
597

 
2,803

 
11,865

 
14,668

 
(3,400
)
 
11,268

 
—

 
12/18/2002
Entrada de Oro Plaza Shopping Center
 
6,041

 
10,511

 
1,633

 
6,115

 
12,070

 
18,185

 
(2,665
)
 
15,520

 
—

 
01/22/2007
Epic Village St. Augustine
 
283

 
1,171

 
4,065

 
320

 
5,199

 
5,519

 
(1,796
)
 
3,723

 
—

 
09/30/2009
Falls Pointe Shopping Center
 
3,535

 
14,289

 
392

 
3,522

 
14,694

 
18,216

 
(4,211
)
 
14,005

 
—

 
12/17/2002
Festival on Jefferson Court
 
5,041

 
13,983

 
2,754

 
5,022

 
16,756

 
21,778

 
(4,571
)
 
17,207

 
—

 
12/22/2004
Fiesta Market Place
 
137

 
429

 
8

 
137

 
437

 
574

 
(431
)
 
143

 
(1,549
)
 
03/20/2008
Fiesta Trails
 
8,825

 
32,790

 
2,903

 
8,825

 
35,693

 
44,518

 
(10,491
)
 
34,027

 
—

 
09/30/2003
Flamingo Pines Plaza
 
10,403

 
35,014

 
(15,073
)
 
5,335

 
25,009

 
30,344

 
(5,210
)
 
25,134

 
—

 
01/28/2005

105
Table of Contents

Schedule III

 
 
Initial Cost to Company
 
 
 
Gross Amounts Carried at Close of Period
 
 
 
 
 
 
 
 
Description
 
Land
 
Building and
Improvements
 
Cost
Capitalized
Subsequent 
to
Acquisition
 
Land
 
Building and
Improvements
 
Total
(1)
 
Accumulated
Depreciation
 
Total Costs,
Net of
Accumulated
Depreciation
 
Encumbrances
(2)
 
Date of
Acquisition /
Construction
Fountain Plaza
 
$
1,319

 
$
5,276

 
$
1,143

 
$
1,095

 
$
6,643

 
$
7,738

 
$
(3,395
)
 
$
4,343

 
$
—

 
03/10/1994
Francisco Center
 
1,999

 
7,997

 
3,989

 
2,403

 
11,582

 
13,985

 
(7,498
)
 
6,487

 
(9,996
)
 
11/16/1998
Freedom Centre
 
2,929

 
15,302

 
5,437

 
6,944

 
16,724

 
23,668

 
(3,990
)
 
19,678

 
(1,018
)
 
06/23/2006
Galleria Shopping Center
 
10,795

 
10,339

 
8,487

 
10,805

 
18,816

 
29,621

 
(3,397
)
 
26,224

 
(18,638
)
 
12/11/2006
Galveston Place
 
2,713

 
5,522

 
6,074

 
3,279

 
11,030

 
14,309

 
(8,177
)
 
6,132

 
—

 
11/30/1983
Gateway Plaza
 
4,812

 
19,249

 
3,384

 
4,808

 
22,637

 
27,445

 
(7,391
)
 
20,054

 
(22,268
)
 
04/02/2001
Gateway Station
 
1,622

 
3

 
9,325

 
1,921

 
9,029

 
10,950

 
(2,493
)
 
8,457

 
—

 
09/30/2009
Glenbrook Square Shopping Center
 
632

 
3,576

 
612

 
632

 
4,188

 
4,820

 
(2,096
)
 
2,724

 
(5,138
)
 
03/20/2008
Grayson Commons
 
3,180

 
9,023

 
217

 
3,163

 
9,257

 
12,420

 
(2,165
)
 
10,255

 
(5,840
)
 
11/09/2004
Greenhouse Marketplace
 
4,607

 
22,771

 
3,423

 
4,750

 
26,051

 
30,801

 
(6,779
)
 
24,022

 
—

 
01/28/2004
Griggs Road Shopping Center
 
257

 
2,303

 
140

 
257

 
2,443

 
2,700

 
(2,257
)
 
443

 
(3,947
)
 
03/20/2008
Hallmark Town Center
 
1,368

 
5,472

 
1,048

 
1,367

 
6,521

 
7,888

 
(2,444
)
 
5,444

 
—

 
04/02/2001
Harrisburg Plaza
 
1,278

 
3,924

 
866

 
1,278

 
4,790

 
6,068

 
(4,006
)
 
2,062

 
(10,587
)
 
03/20/2008
Harrison Pointe Center
 
8,230

 
13,493

 
487

 
7,193

 
15,017

 
22,210

 
(4,194
)
 
18,016

 
—

 
01/30/2004
HEB - Dairy Ashford & Memorial
 
1,717

 
4,234

 
—

 
1,717

 
4,234

 
5,951

 
(345
)
 
5,606

 
—

 
03/06/2012
Heights Plaza Shopping Center
 
58

 
699

 
2,449

 
928

 
2,278

 
3,206

 
(1,304
)
 
1,902

 
—

 
06/30/1995
High House Crossing
 
2,576

 
10,305

 
461

 
2,576

 
10,766

 
13,342

 
(3,373
)
 
9,969

 
—

 
04/04/2002
Highland Square
 
—

 
—

 
1,887

 
—

 
1,887

 
1,887

 
(426
)
 
1,461

 
—

 
10/06/1959
Hope Valley Commons
 
2,439

 
8,487

 
352

 
2,439

 
8,839

 
11,278

 
(797
)
 
10,481

 
—

 
08/31/2010
Humblewood Shopping Center
 
2,215

 
4,724

 
3,150

 
1,166

 
8,923

 
10,089

 
(8,223
)
 
1,866

 
(12,879
)
 
03/09/1977
I45/Telephone Rd.
 
678

 
11,182

 
768

 
678

 
11,950

 
12,628

 
(5,600
)
 
7,028

 
(12,966
)
 
03/20/2008
Independence Plaza I
 
12,795

 
23,063

 
—

 
12,795

 
23,063

 
35,858

 
(608
)
 
35,250

 
(18,973
)
 
06/11/2013
Independence Plaza II
 
6,555

 
8,564

 
—

 
6,555

 
8,564

 
15,119

 
(233
)
 
14,886

 
—

 
06/11/2013
Jess Ranch Marketplace
 
8,750

 
25,560

 
—

 
8,750

 
25,560

 
34,310

 
—

 
34,310

 
—

 
12/23/2013
Jess Ranch Marketplace Phase III
 
8,431

 
21,470

 
—

 
8,431

 
21,470

 
29,901

 
—

 
29,901

 
—

 
12/23/2013
Lake Pointe Market
 
1,404

 
—

 
4,507

 
1,960

 
3,951

 
5,911

 
(2,279
)
 
3,632

 
—

 
12/31/2004
Lakeside Marketplace
 
6,064

 
22,989

 
3,198

 
6,150

 
26,101

 
32,251

 
(5,736
)
 
26,515

 
(16,872
)
 
08/22/2006
Largo Mall
 
10,817

 
40,906

 
3,683

 
10,810

 
44,596

 
55,406

 
(11,449
)
 
43,957

 
—

 
03/01/2004
Laveen Village Marketplace
 
1,190

 
—

 
5,036

 
1,006

 
5,220

 
6,226

 
(2,679
)
 
3,547

 
—

 
08/15/2003
Lawndale Shopping Center
 
82

 
927

 
867

 
82

 
1,794

 
1,876

 
(1,232
)
 
644

 
(3,695
)
 
03/20/2008
League City Plaza
 
1,918

 
7,592

 
903

 
1,918

 
8,495

 
10,413

 
(4,417
)
 
5,996

 
(10,249
)
 
03/20/2008
Leesville Towne Centre
 
7,183

 
17,162

 
1,223

 
7,223

 
18,345

 
25,568

 
(4,705
)
 
20,863

 
—

 
01/30/2004
Little York Plaza Shopping Center
 
342

 
5,170

 
1,908

 
342

 
7,078

 
7,420

 
(5,522
)
 
1,898

 
(4,468
)
 
03/20/2008
Lyons Avenue Shopping Center
 
249

 
1,183

 
82

 
249

 
1,265

 
1,514

 
(1,055
)
 
459

 
(2,687
)
 
03/20/2008
Madera Village Shopping Center
 
3,788

 
13,507

 
1,159

 
3,816

 
14,638

 
18,454

 
(2,965
)
 
15,489

 
(8,907
)
 
03/13/2007

106
Table of Contents

Schedule III

 
 
Initial Cost to Company
 
 
 
Gross Amounts Carried at Close of Period
 
 
 
 
 
 
 
 
Description
 
Land
 
Building and
Improvements
 
Cost
Capitalized
Subsequent 
to
Acquisition
 
Land
 
Building and
Improvements
 
Total
(1)
 
Accumulated
Depreciation
 
Total Costs,
Net of
Accumulated
Depreciation
 
Encumbrances
(2)
 
Date of
Acquisition /
Construction
Manhattan Plaza
 
$
4,645

 
$
—

 
$
18,386

 
$
4,009

 
$
19,022

 
$
23,031

 
$
(9,694
)
 
$
13,337

 
$
—

 
12/31/2004
Market at Town Center - Sugarland
 
8,600

 
26,627

 
23,821

 
8,600

 
50,448

 
59,048

 
(20,705
)
 
38,343

 
—

 
12/23/1996
Market at Westchase Shopping Center
 
1,199

 
5,821

 
2,512

 
1,415

 
8,117

 
9,532

 
(5,563
)
 
3,969

 
—

 
02/15/1991
Marketplace at Seminole Outparcel
 
1,000

 
—

 
46

 
1,046

 
—

 
1,046

 
—

 
1,046

 
—

 
08/21/2006
Marketplace at Seminole Towne
 
15,067

 
53,743

 
6,288

 
21,665

 
53,433

 
75,098

 
(10,056
)
 
65,042

 
(39,646
)
 
08/21/2006
Markham Square Shopping Center
 
1,236

 
3,075

 
5,169

 
1,139

 
8,341

 
9,480

 
(5,384
)
 
4,096

 
—

 
06/18/1974
Markham West Shopping Center
 
2,694

 
10,777

 
3,957

 
2,696

 
14,732

 
17,428

 
(7,003
)
 
10,425

 
—

 
09/18/1998
Marshall's Plaza
 
1,802

 
12,315

 
653

 
1,804

 
12,966

 
14,770

 
(3,011
)
 
11,759

 
—

 
06/01/2005
Mendenhall Commons
 
2,655

 
9,165

 
518

 
2,655

 
9,683

 
12,338

 
(2,079
)
 
10,259

 
—

 
11/13/2008
Menifee Town Center
 
1,827

 
7,307

 
4,919

 
1,824

 
12,229

 
14,053

 
(3,881
)
 
10,172

 
—

 
04/02/2001
Millpond Center
 
3,155

 
9,706

 
1,555

 
3,161

 
11,255

 
14,416

 
(2,968
)
 
11,448

 
—

 
07/28/2005
Mohave Crossroads
 
3,953

 
63

 
35,877

 
3,128

 
36,765

 
39,893

 
(13,343
)
 
26,550

 
—

 
12/31/2009
Monte Vista Village Center
 
1,485

 
58

 
5,466

 
755

 
6,254

 
7,009

 
(3,677
)
 
3,332

 
—

 
12/31/2004
Moore Plaza
 
6,445

 
26,140

 
10,698

 
6,487

 
36,796

 
43,283

 
(16,302
)
 
26,981

 
—

 
03/20/1998
Mueller Regional Retail Center
 
10,382

 
56,303

 
78

 
10,382

 
56,381

 
66,763

 
(631
)
 
66,132

 
(34,300
)
 
10/03/2013
North Creek Plaza
 
6,915

 
25,625

 
4,198

 
6,954

 
29,784

 
36,738

 
(7,593
)
 
29,145

 
—

 
08/19/2004
North Towne Plaza
 
960

 
3,928

 
7,272

 
879

 
11,281

 
12,160

 
(7,373
)
 
4,787

 
(9,889
)
 
02/15/1990
North Towne Plaza
 
6,646

 
99

 
1,526

 
1,005

 
7,266

 
8,271

 
(1,204
)
 
7,067

 
—

 
04/01/2010
North Triangle Shops
 
—

 
431

 
1,281

 
990

 
722

 
1,712

 
(511
)
 
1,201

 
—

 
01/15/1977
Northbrook Shopping Center
 
1,629

 
4,489

 
3,085

 
1,713

 
7,490

 
9,203

 
(6,889
)
 
2,314

 
(9,207
)
 
11/06/1967
Northwoods Shopping Center
 
1,768

 
7,071

 
413

 
1,772

 
7,480

 
9,252

 
(2,271
)
 
6,981

 
—

 
04/04/2002
Oak Forest Shopping Center
 
760

 
2,726

 
5,039

 
748

 
7,777

 
8,525

 
(5,518
)
 
3,007

 
(8,018
)
 
12/30/1976
Oak Grove Market Center
 
5,758

 
10,508

 
885

 
5,861

 
11,290

 
17,151

 
(1,948
)
 
15,203

 
(7,358
)
 
06/15/2007
Oracle Crossings
 
4,614

 
18,274

 
28,966

 
10,582

 
41,272

 
51,854

 
(7,050
)
 
44,804

 
—

 
01/22/2007
Oracle Wetmore Shopping Center
 
24,686

 
26,878

 
6,747

 
13,813

 
44,498

 
58,311

 
(7,606
)
 
50,705

 
—

 
01/22/2007
Overton Park Plaza
 
9,266

 
37,789

 
10,807

 
9,264

 
48,598

 
57,862

 
(12,169
)
 
45,693

 
—

 
10/24/2003
Palmer Plaza
 
765

 
3,081

 
2,506

 
827

 
5,525

 
6,352

 
(3,735
)
 
2,617

 
—

 
07/31/1980
Palmilla Center
 
1,258

 
—

 
12,957

 
2,882

 
11,333

 
14,215

 
(6,335
)
 
7,880

 
—

 
12/31/2002
Palms of Carrollwood
 
3,995

 
16,390

 
392

 
3,995

 
16,782

 
20,777

 
(1,301
)
 
19,476

 
—

 
12/23/2010
Paradise Marketplace
 
2,153

 
8,612

 
(2,104
)
 
1,197

 
7,464

 
8,661

 
(3,726
)
 
4,935

 
—

 
07/20/1995
Park Plaza Shopping Center
 
257

 
7,815

 
1,077

 
314

 
8,835

 
9,149

 
(8,416
)
 
733

 
—

 
01/24/1975
Parkway Pointe
 
1,252

 
5,010

 
724

 
1,260

 
5,726

 
6,986

 
(2,089
)
 
4,897

 
—

 
06/29/2001
Parliament Square II
 
2

 
10

 
1,183

 
3

 
1,192

 
1,195

 
(616
)
 
579

 
—

 
06/24/2005
Parliament Square Shopping Center
 
443

 
1,959

 
1,410

 
443

 
3,369

 
3,812

 
(2,247
)
 
1,565

 
—

 
03/18/1992
Perimeter Village
 
29,701

 
42,337

 
1,682

 
34,404

 
39,316

 
73,720

 
(7,211
)
 
66,509

 
(26,416
)
 
07/03/2007

107
Table of Contents

Schedule III

 
 
Initial Cost to Company
 
 
 
Gross Amounts Carried at Close of Period
 
 
 
 
 
 
 
 
Description
 
Land
 
Building and
Improvements
 
Cost
Capitalized
Subsequent 
to
Acquisition
 
Land
 
Building and
Improvements
 
Total
(1)
 
Accumulated
Depreciation
 
Total Costs,
Net of
Accumulated
Depreciation
 
Encumbrances
(2)
 
Date of
Acquisition /
Construction
Phillips Crossing
 
$
—

 
$
1

 
$
28,096

 
$
872

 
$
27,225

 
$
28,097

 
$
(7,793
)
 
$
20,304

 
$
—

 
09/30/2009
Phillips Landing
 
1,521

 
1,625

 
11,314

 
1,819

 
12,641

 
14,460

 
(4,047
)
 
10,413

 
—

 
09/30/2009
Phoenix Office Building
 
1,696

 
3,255

 
1,071

 
1,773

 
4,249

 
6,022

 
(1,078
)
 
4,944

 
—

 
01/31/2007
Pike Center
 
—

 
40,537

 
288

 
—

 
40,825

 
40,825

 
(2,512
)
 
38,313

 
—

 
08/14/2012
Plantation Centre
 
3,463

 
14,821

 
1,826

 
3,471

 
16,639

 
20,110

 
(3,952
)
 
16,158

 
(350
)
 
08/19/2004
Promenade 23
 
16,028

 
2,271

 
11

 
16,028

 
2,282

 
18,310

 
(277
)
 
18,033

 
—

 
03/25/2011
Prospector's Plaza
 
3,746

 
14,985

 
2,323

 
3,716

 
17,338

 
21,054

 
(5,295
)
 
15,759

 
—

 
04/02/2001
Publix at Laguna Isles
 
2,913

 
9,554

 
266

 
2,914

 
9,819

 
12,733

 
(2,565
)
 
10,168

 
—

 
10/31/2003
Pueblo Anozira Shopping Center
 
2,750

 
11,000

 
5,033

 
2,768

 
16,015

 
18,783

 
(8,191
)
 
10,592

 
(11,180
)
 
06/16/1994
Rainbow Plaza
 
6,059

 
24,234

 
2,785

 
6,081

 
26,997

 
33,078

 
(11,051
)
 
22,027

 
—

 
10/22/1997
Rainbow Plaza I
 
3,883

 
15,540

 
721

 
3,896

 
16,248

 
20,144

 
(5,501
)
 
14,643

 
—

 
12/28/2000
Raintree Ranch Center
 
11,442

 
595

 
17,488

 
10,983

 
18,542

 
29,525

 
(7,316
)
 
22,209

 
—

 
03/31/2008
Rancho Encanto
 
957

 
3,829

 
3,799

 
839

 
7,746

 
8,585

 
(4,330
)
 
4,255

 
—

 
04/28/1997
Rancho San Marcos Village
 
3,533

 
14,138

 
5,102

 
3,887

 
18,886

 
22,773

 
(5,505
)
 
17,268

 
—

 
02/26/2003
Rancho Towne & Country
 
1,161

 
4,647

 
704

 
1,166

 
5,346

 
6,512

 
(2,526
)
 
3,986

 
—

 
10/16/1995
Randalls Center/Kings Crossing
 
3,570

 
8,147

 
310

 
3,570

 
8,457

 
12,027

 
(5,002
)
 
7,025

 
—

 
11/13/2008
Red Mountain Gateway
 
2,166

 
89

 
9,588

 
2,737

 
9,106

 
11,843

 
(4,417
)
 
7,426

 
—

 
12/31/2003
Regency Centre
 
3,791

 
15,390

 
1,317

 
2,180

 
18,318

 
20,498

 
(3,941
)
 
16,557

 
—

 
07/28/2006
Regency Panera Tract
 
1,825

 
3,126

 
73

 
1,400

 
3,624

 
5,024

 
(672
)
 
4,352

 
—

 
07/28/2006
Reynolds Crossing
 
4,276

 
9,186

 
117

 
4,276

 
9,303

 
13,579

 
(1,774
)
 
11,805

 
—

 
09/14/2006
Richmond Square
 
1,993

 
953

 
13,571

 
14,512

 
2,005

 
16,517

 
(1,198
)
 
15,319

 
—

 
12/31/1996
Ridgeway Trace
 
26,629

 
544

 
20,369

 
15,573

 
31,969

 
47,542

 
(6,066
)
 
41,476

 
—

 
11/09/2006
River Oaks Shopping Center
 
1,354

 
1,946

 
431

 
1,363

 
2,368

 
3,731

 
(2,011
)
 
1,720

 
—

 
12/04/1992
River Oaks Shopping Center
 
3,534

 
17,741

 
35,967

 
4,207

 
53,035

 
57,242

 
(21,419
)
 
35,823

 
—

 
12/04/1992
River Point at Sheridan
 
28,898

 
4,042

 
(243
)
 
9,358

 
23,339

 
32,697

 
(3,576
)
 
29,121

 
(6,720
)
 
04/01/2010
Rose-Rich Shopping Center
 
502

 
2,738

 
3,028

 
486

 
5,782

 
6,268

 
(5,406
)
 
862

 
—

 
03/01/1982
Roswell Corners
 
6,136

 
21,447

 
687

 
5,981

 
22,289

 
28,270

 
(5,896
)
 
22,374

 
(7,437
)
 
06/24/2004
Roswell Crossing Shopping Center
 
7,625

 
18,573

 
250

 
7,625

 
18,823

 
26,448

 
(1,234
)
 
25,214

 
(12,640
)
 
07/18/2012
San Marcos Plaza
 
1,360

 
5,439

 
434

 
1,358

 
5,875

 
7,233

 
(1,956
)
 
5,277

 
—

 
04/02/2001
Scottsdale Horizon
 
—

 
3,241

 
284

 
1

 
3,524

 
3,525

 
(670
)
 
2,855

 
—

 
01/22/2007
Sea Ranch Centre
 
11,977

 
4,219

 
555

 
11,977

 
4,774

 
16,751

 
(173
)
 
16,578

 
—

 
03/06/2013
Shasta Crossroads
 
2,844

 
11,377

 
1,004

 
2,842

 
12,383

 
15,225

 
(4,119
)
 
11,106

 
—

 
04/02/2001
Shoppes at Bears Path
 
3,252

 
5,503

 
1,178

 
3,290

 
6,643

 
9,933

 
(1,474
)
 
8,459

 
—

 
03/13/2007
Shoppes at Memorial Villages
 
1,417

 
4,786

 
7,556

 
3,332

 
10,427

 
13,759

 
(6,554
)
 
7,205

 
—

 
01/11/2012
Shoppes of South Semoran
 
4,283

 
9,785

 
(1,630
)
 
4,745

 
7,693

 
12,438

 
(1,507
)
 
10,931

 
(9,039
)
 
08/31/2007

108
Table of Contents

Schedule III

 
 
Initial Cost to Company
 
 
 
Gross Amounts Carried at Close of Period
 
 
 
 
 
 
 
 
Description
 
Land
 
Building and
Improvements
 
Cost
Capitalized
Subsequent 
to
Acquisition
 
Land
 
Building and
Improvements
 
Total
(1)
 
Accumulated
Depreciation
 
Total Costs,
Net of
Accumulated
Depreciation
 
Encumbrances
(2)
 
Date of
Acquisition /
Construction
Shops at Kirby Drive
 
$
1,201

 
$
945

 
$
276

 
$
1,202

 
$
1,220

 
$
2,422

 
$
(309
)
 
$
2,113

 
$
—

 
05/27/2008
Shops at Three Corners
 
6,215

 
9,303

 
5,531

 
6,224

 
14,825

 
21,049

 
(9,352
)
 
11,697

 
—

 
12/31/1989
Silver Creek Plaza
 
3,231

 
12,924

 
3,141

 
3,228

 
16,068

 
19,296

 
(5,827
)
 
13,469

 
(15,283
)
 
04/02/2001
Six Forks Shopping Center
 
6,678

 
26,759

 
5,616

 
6,728

 
32,325

 
39,053

 
(10,193
)
 
28,860

 
—

 
04/04/2002
South Fulton Crossing
 
14,373

 
154

 
(11,434
)
 
2,669

 
424

 
3,093

 
(2
)
 
3,091

 
—

 
01/10/2007
South Semoran - Pad
 
1,056

 
—

 
(129
)
 
927

 
—

 
927

 
—

 
927

 
—

 
09/06/2007
Southampton Center
 
4,337

 
17,349

 
2,699

 
4,333

 
20,052

 
24,385

 
(6,828
)
 
17,557

 
(19,986
)
 
04/02/2001
Southgate Shopping Center
 
571

 
3,402

 
5,896

 
1,152

 
8,717

 
9,869

 
(7,228
)
 
2,641

 
—

 
03/26/1958
Southgate Shopping Center
 
232

 
8,389

 
476

 
232

 
8,865

 
9,097

 
(5,615
)
 
3,482

 
(6,914
)
 
03/20/2008
Spring Plaza Shopping Center
 
863

 
2,288

 
579

 
863

 
2,867

 
3,730

 
(2,378
)
 
1,352

 
—

 
03/20/2008
Squaw Peak Plaza
 
816

 
3,266

 
3,138

 
818

 
6,402

 
7,220

 
(2,431
)
 
4,789

 
—

 
12/20/1994
Stella Link Shopping Center
 
227

 
423

 
1,529

 
294

 
1,885

 
2,179

 
(1,653
)
 
526

 
—

 
07/10/1970
Stella Link Shopping Center
 
2,602

 
1,418

 
(1,307
)
 
2,602

 
111

 
2,713

 
(16
)
 
2,697

 
—

 
08/21/2007
Stonehenge Market
 
4,740

 
19,001

 
2,207

 
4,740

 
21,208

 
25,948

 
(6,732
)
 
19,216

 
(4,944
)
 
04/04/2002
Stony Point Plaza
 
3,489

 
13,957

 
11,185

 
3,453

 
25,178

 
28,631

 
(6,288
)
 
22,343

 
(11,567
)
 
04/02/2001
Summerhill Plaza
 
1,945

 
7,781

 
2,480

 
1,943

 
10,263

 
12,206

 
(4,069
)
 
8,137

 
—

 
04/02/2001
Sunset 19 Shopping Center
 
5,519

 
22,076

 
1,393

 
5,547

 
23,441

 
28,988

 
(7,316
)
 
21,672

 
—

 
10/29/2001
Surf City Crossing
 
3,220

 
52

 
5,028

 
2,655

 
5,645

 
8,300

 
(1,071
)
 
7,229

 
—

 
12/06/2006
Tates Creek Centre
 
4,802

 
25,366

 
1,405

 
5,766

 
25,807

 
31,573

 
(6,527
)
 
25,046

 
—

 
03/01/2004
Taylorsville Town Center
 
2,179

 
9,718

 
724

 
2,180

 
10,441

 
12,621

 
(2,946
)
 
9,675

 
—

 
12/19/2003
The Centre at Post Oak
 
13,731

 
115

 
23,758

 
17,874

 
19,730

 
37,604

 
(10,677
)
 
26,927

 
—

 
12/31/1996
The Shoppes at Parkwood Ranch
 
4,369

 
52

 
10,015

 
2,347

 
12,089

 
14,436

 
(4,064
)
 
10,372

 
—

 
12/31/2009
The Village Arcade
 
—

 
6,657

 
791

 
—

 
7,448

 
7,448

 
(4,997
)
 
2,451

 
—

 
12/31/1992
Thompson Bridge Commons
 
604

 
—

 
625

 
513

 
716

 
1,229

 
(58
)
 
1,171

 
—

 
04/26/2005
Thousand Oaks Shopping Center
 
2,973

 
13,142

 
298

 
2,973

 
13,440

 
16,413

 
(3,936
)
 
12,477

 
(13,893
)
 
03/20/2008
TJ Maxx Plaza
 
3,400

 
19,283

 
1,671

 
3,430

 
20,924

 
24,354

 
(5,568
)
 
18,786

 
—

 
03/01/2004
Town & Country Shopping Center
 
—

 
3,891

 
4,913

 
—

 
8,804

 
8,804

 
(5,701
)
 
3,103

 
—

 
01/31/1989
Town and Country - Hammond, LA
 
1,030

 
7,404

 
1,820

 
1,104

 
9,150

 
10,254

 
(5,113
)
 
5,141

 
—

 
12/30/1997
Tropicana Beltway Center
 
13,947

 
42,186

 
404

 
13,949

 
42,588

 
56,537

 
(11,488
)
 
45,049

 
(32,135
)
 
11/20/2007
Tropicana Marketplace
 
2,118

 
8,477

 
(1,880
)
 
1,266

 
7,449

 
8,715

 
(3,699
)
 
5,016

 
—

 
07/24/1995
Tyler Shopping Center
 
5

 
21

 
4,022

 
300

 
3,748

 
4,048

 
(2,313
)
 
1,735

 
—

 
12/31/2002
University Place
 
10,733

 
20,791

 
693

 
10,733

 
21,484

 
32,217

 
(1,620
)
 
30,597

 
(30,780
)
 
08/07/2012
Valley Plaza
 
1,414

 
5,818

 
4,779

 
1,422

 
10,589

 
12,011

 
(4,789
)
 
7,222

 
—

 
12/31/1997
Valley Shopping Center
 
4,293

 
13,736

 
776

 
8,170

 
10,635

 
18,805

 
(2,282
)
 
16,523

 
—

 
04/07/2006
Valley View Shopping Center
 
1,006

 
3,980

 
2,506

 
1,006

 
6,486

 
7,492

 
(3,298
)
 
4,194

 
—

 
11/20/1996

109
Table of Contents

Schedule III

 
 
Initial Cost to Company
 
 
 
Gross Amounts Carried at Close of Period
 
 
 
 
 
 
 
 
Description
 
Land
 
Building and
Improvements
 
Cost
Capitalized
Subsequent 
to
Acquisition
 
Land
 
Building and
Improvements
 
Total
(1)
 
Accumulated
Depreciation
 
Total Costs,
Net of
Accumulated
Depreciation
 
Encumbrances
(2)
 
Date of
Acquisition /
Construction
Village Arcade - Phase II
 
$
—

 
$
787

 
$
280

 
$
—

 
$
1,067

 
$
1,067

 
$
(736
)
 
$
331

 
$
—

 
12/31/1992
Village Arcade II Phase III
 
—

 
16

 
15,870

 
—

 
15,886

 
15,886

 
(9,190
)
 
6,696

 
—

 
12/31/1996
Vizcaya Square Shopping Center
 
3,044

 
12,226

 
1,239

 
3,044

 
13,465

 
16,509

 
(3,653
)
 
12,856

 
—

 
12/18/2002
Waterford Village
 
5,830

 
—

 
7,925

 
2,893

 
10,862

 
13,755

 
(3,616
)
 
10,139

 
—

 
06/11/2004
West Jordan Town Center
 
4,306

 
17,776

 
1,753

 
4,308

 
19,527

 
23,835

 
(5,114
)
 
18,721

 
—

 
12/19/2003
Westchase Shopping Center
 
3,085

 
7,920

 
6,492

 
3,189

 
14,308

 
17,497

 
(12,214
)
 
5,283

 
(3,596
)
 
08/29/1978
Westgate Shopping Center
 
245

 
1,425

 
589

 
239

 
2,020

 
2,259

 
(1,729
)
 
530

 
—

 
07/02/1965
Westhill Village Shopping Center
 
408

 
3,002

 
4,744

 
437

 
7,717

 
8,154

 
(5,243
)
 
2,911

 
—

 
05/01/1958
Westland Fair
 
27,562

 
10,506

 
(9,288
)
 
12,220

 
16,560

 
28,780

 
(7,645
)
 
21,135

 
—

 
12/29/2000
Westminster Center
 
11,215

 
44,871

 
7,425

 
11,204

 
52,307

 
63,511

 
(17,721
)
 
45,790

 
(43,169
)
 
04/02/2001
Westminster Plaza
 
1,759

 
7,036

 
488

 
1,759

 
7,524

 
9,283

 
(2,286
)
 
6,997

 
(6,172
)
 
06/21/2002
Westwood Center
 
10,497

 
36

 
7,198

 
5,188

 
12,543

 
17,731

 
(3,056
)
 
14,675

 
—

 
01/26/2007
Westwood Village Shopping Center
 
—

 
6,968

 
3,227

 
—

 
10,195

 
10,195

 
(8,177
)
 
2,018

 
—

 
08/25/1978
Whitehall Commons
 
2,529

 
6,901

 
449

 
2,522

 
7,357

 
9,879

 
(1,670
)
 
8,209

 
(3,893
)
 
10/06/2005
Whole Foods @ Carrollwood
 
2,772

 
126

 
4,634

 
2,854

 
4,678

 
7,532

 
(236
)
 
7,296

 
—

 
09/30/2011
Winter Park Corners
 
2,159

 
8,636

 
1,282

 
2,159

 
9,918

 
12,077

 
(3,146
)
 
8,931

 
—

 
09/06/2001
 
 
910,027

 
2,374,610

 
771,210

 
853,301

 
3,202,546

 
4,055,847

 
(1,025,810
)
 
3,030,037

 
(682,839
)
 
 
New Development:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hilltop Village Center
 
3,196

 
7,234

 
29,681

 
3,995

 
36,116

 
40,111

 
—

 
40,111

 
—

 
11/17/2011
Tomball Marketplace
 
9,616

 
262

 
22,171

 
8,132

 
23,917

 
32,049

 
(4,675
)
 
27,374

 
—

 
04/12/2006
 
 
12,812

 
7,496

 
51,852

 
12,127

 
60,033

 
72,160

 
(4,675
)
 
67,485

 
—

 
 
Miscellaneous (not to exceed 5% of total)
 
144,196

 
2,668

 
14,405

 
110,178

 
51,091

 
161,269

 
(27,555
)
 
133,714

 
—

 
 
Total of Portfolio
 
$
1,067,035

 
$
2,384,774

 
$
837,467

 
$
975,606

 
$
3,313,670

 
$
4,289,276

 
$
(1,058,040
)
 
$
3,231,236

 
$
(682,839
)
 
 
___________________
(1)
The tax basis of our net fixed asset exceeds the book value by approximately $88.0 million at December 31, 2013 .
(2)
Encumbrances do not include $27.4 million outstanding under fixed-rate mortgage debt associated with three properties each held in a tenancy-in-common arrangement, $11.1 million outstanding associated under fixed-rate mortgage debt associated with properties classified as held for sale and $6.5 million of non-cash debt related items.
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. Tenant and leasehold improvements are depreciated over the remaining life of the lease or the useful life whichever is shorter.

110
Table of Contents

Schedule III

The changes in total cost of the properties were as follows (in thousands):
 
Year Ended December 31,
 
2013
 
2012
 
2011
Balance at beginning of year
$
4,399,850

 
$
4,688,526

 
$
4,777,794

Additions at cost
279,624

 
310,454

 
180,956

Retirements or sales
(232,823
)
 
(608,466
)
 
(123,252
)
Property held for sale
(155,017
)
 
—

 
(94,761
)
Property transferred from held for sale
—

 
18,090

 
—

Impairment loss
(2,358
)
 
(8,754
)
 
(52,211
)
Balance at end of year
$
4,289,276

 
$
4,399,850

 
$
4,688,526

The changes in accumulated depreciation were as follows (in thousands):
 
Year Ended December 31,
 
2013
 
2012
 
2011
Balance at beginning of year
$
1,040,839

 
$
1,059,531

 
$
971,249

Additions at cost
130,698

 
130,965

 
133,220

Retirements or sales
(81,094
)
 
(157,723
)
 
(23,418
)
Property held for sale
(32,403
)
 
—

 
(21,520
)
Property transferred from held for sale
—

 
8,066

 
—

Balance at end of year
$
1,058,040

 
$
1,040,839

 
$
1,059,531


111
Table of Contents

Schedule IV
WEINGARTEN REALTY INVESTORS
MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 2013
(Amounts in thousands)
 
State
 
Interest
Rate
 
Final
Maturity
Date
 
Periodic
Payment
Terms
 
Face
Amount of
Mortgages
 
Carrying
Amount of
Mortgages
(1)
Shopping Centers:
 
 
 
 
 
 
 
 
 
 
 
First Mortgages:
 
 
 
 
 
 
 
 
 
 
 
College Park Realty Company
NV
 
7.00%
 
10/31/2053
 
At Maturity
 
$
3,410

 
$
3,410

American National Insurance
Company
TX
 
5.95%
 
04/01/2014
 
$136 Annual P&I
 
1,351

 
1,351

Construction Loans:
 
 
 
 
 
 
 
 
 
 
 
Weingarten I-4 Clermont
Landing, LLC
FL
 
2.92%
 
06/30/2014
 
$779 Annual P&I
 
10,677

 
10,677

Total Mortgage Loans on
Real Estate
 
 
 
 
 
 
 
 
$
15,438

 
$
15,438

___________________
(1)
The aggregate cost at December 31, 2013 for federal income tax purposes is $15.4 million , and there are no prior liens to be disclosed.
Changes in mortgage loans are summarized below (in thousands):
 
Year Ended December 31,
 
2013
 
2012
 
2011
Balance, Beginning of Year
$
91,662

 
$
159,916

 
$
192,092

Additions to Existing Loans (1)
699

 
734

 
4,161

Collections/Reductions of Principal
(22,085
)
 
(68,988
)
 
(14,464
)
Reduction of Principal due to Business Combinations (2)
(54,838
)
 
—

 
(21,873
)
Balance, End of Year
$
15,438

 
$
91,662

 
$
159,916

___________________
(1)
The caption above, “Additions to Existing Loans” also includes accrued interest.
(2)
This caption relates to acquired unconsolidated real estate joint-venture interests during the respective periods.

112
Exhibit 10.57










WEINGARTEN REALTY RETIREMENT PLAN
Restatement of the Plan Generally Effective January 1, 2013


Table of Contents
Page

ARTICLE I DEFINITIONS    2
1.1    Plan Definitions    2
1.2    Construction    12
ARTICLE II HOURS OF SERVICE.    13
2.1    Crediting of Hours of Service    13
2.2    Hours of Service Equivalencies    14
2.3    Determination of Non-Duty Hours of Service    15
2.4    Allocation of Hours of Service to Service Computation Periods    16
2.5    Department of Labor Rules    16
ARTICLE III SERVICE & CREDITED SERVICE    17
3.1    Service and Credited Service Prior to January 1, 2002    17
3.2    Service and Credited Service On or After January 1, 2002    17
3.3    Transfers    17
3.4    Retirement or Termination and Reemployment    18
3.5    Finality of Determinations    18
ARTICLE IV ELIGIBILITY FOR PARTICIPATION    19
4.1    Participation    19
4.2    Termination of Participation    19
4.3    Participation Upon Reemployment    19
4.4    Finality of Determinations    19
ARTICLE V NORMAL RETIREMENT    20
5.1    Eligibility    20
5.2    Regular Benefit Amount    20
5.3    Minimum Benefit Amount    21
5.4    401(a)(l7) Fresh Start Adjustments    21
5.5    Payment    22
5.6    Opening Balance    22
5.7    Interest Credits    22
5.8    Service Credits    23
ARTICLE VI EARLY RETIREMENT    24
6.1    Eligibility    24
6.2    Amount    24
6.3    Payment    24
ARTICLE VII VESTED RIGHTS    25
7.1    Vesting    25
7.2    Eligibility for Deferred Vested Retirement Benefit    26
7.3    Amount of Deferred Vested Retirement Benefit    26
7.4    Payment    26
7.5    Immediate Commencement Option for Small Benefits    26
7.6    Election of Former Vesting Schedule    27
ARTICLE VIII DISABILITY RETIREMENT BENEFIT    28
8.1    Eligibility    28
8.2    Amount    28
8.3    Special Rules for Calculating Disability Retirement Benefit    28
8.4    Payment    28

i
Table of Contents
(continued)
Page

ARTICLE IX FORMS OF PAYMENT    29
9.1    Normal Form of Payment    29
9.2    Optional Forms of Payment    30
9.3     Designation of Beneficiary and Beneficiary in Absence of Designated Beneficiary     33
9.4    Notice Regarding Forms of Payment    33
9.5    Election Period    34
9.6    Spousal Consent Requirements    34
9.7    Death Prior to Annuity Starting Date    35
9.8    Effect of Reemployment on Form of Payment    35
ARTICLE X SURVIVOR BENEFITS    36
10.1    Eligibility for Qualified Preretirement Survivor Annuity    36
10.2    Amount of Qualified Preretirement Survivor Annuity    36
10.3    Enhanced Qualified Preretirement Survivor Annuity    36
10.4    Payment of Qualified Preretirement Survivor Annuity    37
10.5    Non-Spouse Survivor Annuity    37
ARTICLE XI GENERAL PROVISIONS & LIMITATIONS REGARDING BENEFITS    38
11.1    Suspension of Benefits    38
11.2    Non-Alienation of Retirement Rights or Benefits    38
11.3    Payment of Benefits to Others    38
11.4    Payment of Small Benefits; Deemed Cash out    38
11.5    Direct Rollovers    39
11.6    Limitations on Commencement    40
ARTICLE XII MAXIMUM RETIREMENT BENEFITS    41
12.1    Applicability    41
12.2    Definitions    41
12.3    Maximum Limitation on Annual Benefits    49
12.4    Exceptions    49
12.5    Manner of Reduction    49
ARTICLE XIII PENSION FUND    50
13.1    Pension Fund    50
13.2    Contributions by the Employers    50
13.3    Expenses of the Plan    50
13.4    No Reversion    50
13.5    Forfeitures Not to Increase Benefits    51
13.6    Change of Funding Medium    51
ARTICLE XIV ADMINISTRATION    52
14.1    Authority of the Sponsor    52
14.2    Action of the Sponsor    52
14.3    Claims Review Procedure    52
14.4    Qualified Domestic Relations Orders    53
14.5    Indemnification    54
14.6    Actions Binding    54
ARTICLE XV ADOPTION BY OTHER ENTITIES    55
15.1    Adoption by Affiliated Companies    55
15.2    Effective Plan Provisions    55

ii
Table of Contents
(continued)
Page

ARTICLE XVI AMENDMENT & TERMINATION OF PLAN    56
16.1    Sponsor's Right of Amendment    56
16.2    Termination of the Plan    56
16.3    Adjustment of Allocation    57
16.4    Assets Insufficient for Allocation    57
16.5    Assets Insufficient for Allocation Under Paragraph (c) of Section 16.2    58
16.6    Allocations Resulting in Discrimination    58
16.7    Residual Assets    58
16.8    Meanings of Terms    58
16.9    Payments by the Funding Agent    59
16.10    Residual Assets Distributable to the Employers    59
16.11    Withdrawal of an Employer    59
ARTICLE XVII MISCELLANEOUS    60
17.1    No Commitment as to Employment    60
17.2    Claims of Other Persons    60
17.3    Governing Law    60
17.4    Nonforfeitability of Benefits Upon Termination or Partial Termination    60
17.5    Merger, Consolidation, or Transfer of Plan Assets    60
17.6    Funding Agreement    61
17.7    Benefit Offsets for Overpayments    61
17.8    Internal Revenue Requirements    61
17.9    Overall Permitted Disparity Limits    62
17.10    Veterans Reemployment Rights    62
ARTICLE XVIII TOP-HEAVY PROVISIONS    63
18.1    Top-Heavy Plan Definitions    63
18.2    Applicability of Top-Heavy Plan Provisions    65
18.3    Top-Heavy Vesting    65
18.4    Minimum Top-Heavy Benefit    65
ARTICLE XIX FUNDING-BASED LIMITS    67
19.1    Effective Date and Application    67
19.2    Funding Based Limitation on Shutdown Benefits and
Other Unpredictable Contingent Event Benefits    67
19.3    Limitations on Plan Amendments Increasing Liability for Benefits    67
19.4    Limitations on Accelerated Benefit Distributions    68
19.5    Limitation on Benefit Accruals for Plans with Severe Funding Shortfalls    71
19.6    Methods to Avoid or Terminate Benefit Limitations    72
19.7    Special Rules    72
19.8    Treatment of Plan as of Close of Prohibited or Cessation Period    75
19.9    Definitions    77
ARTICLE XX HEROES EARNINGS ASSISTANCE AND RELIEF TAX ACT PROVISIONS     78
20.1    Death benefits    78
20.2    Differential wage payments    78
ADDENDUM A Required Minimum Distributions    79


iii


PREAMBLE
Weingarten Realty Investors, a Texas real estate investment trust, previously established and currently maintains the Weingarten Realty Retirement Plan for the exclusive benefit of its eligible employees and their beneficiaries. The Plan was most recently restated effective April 1, 2002, to reflect the applicable requirements of the Economic Growth and Tax Relief Reconciliation Act of 2001, as well as subsequent changes in applicable law and Regulations, and to incorporate amendments made to the Plan following the prior Plan restatement.
The Plan is hereby amended and restated to incorporate all amendments made to the Plan following the restatement of the Plan described above and to incorporate changes in applicable law and Regulations. The Plan as restated is intended to continue to qualify as a defined benefit pension plan under Internal Revenue Code Section 401(a).
Except as otherwise specifically provided herein, this amended and restated Plan shall be effective as of January 1, 2013, and the rights of any person who does not have at least one Hour of Service under the Plan on or after January 1, 2013, shall generally be determined in accordance with the terms of the Plan as in effect on the date for which he is last credited with an Hour of Service. In no event shall a Participant who retired or otherwise terminated employment during the period beginning January 2, 2002 and ending close of business March 31, 2002 (the "Freeze Period") accrue benefits under the Plan for employment during the Freeze Period.
Notwithstanding any other provision of the Plan to the contrary, a Participant's vested interest in his Accrued Benefit under the Plan on and after the effective date of this amendment and restatement shall be not less than his vested interest in his Accrued Benefit on the day immediately preceding the effective date.

1


ARTICLE I
DEFINITIONS
1.1
Plan Definitions
As used herein, the following words and phrases, when they appear with initial letters capitalized as indicated below, have the meanings hereinafter set forth:
(a)
An "Active Participant" means a Participant who is accruing Credited Service under the Plan in accordance with the provisions of Article III.
(b)
A Participant's "Accrued Benefit" as of any date means the following:
(1)
For a Grandfathered Participant, the portion of his monthly normal retirement benefit accrued as of that date determined as provided in Article V, based on his years of Credited Service and his Average Annual Earnings determined as of that date.
(2)
For a Cash Balance Participant, his Frozen Accrued Benefit or his Cash Balance Account as of that date; provided, however, that if the Participant has not attained Normal Retirement Date, the value of his Cash Balance Account shall be determined assuming Interest Credits continue to accrue on such account until his Normal Retirement Date at the rate in effect under Section 5.7.
(c)
The "Actuarial Equivalent" of a value means the actuarial equivalent determined using the following factors (i) the table prescribed by the Secretary of the Treasury, which shall be based on the prevailing commissioners' standard table, described in Code Section 807(d)(5)(A), used to determine reserves for group annuity contracts issued on the date as of which present value is being determined (without regard to any other subparagraph of Code Section 807(d)(5)) and (ii) the annual rate of interest on 30-year Treasury securities for the second calendar month preceding the Plan Year in which the distribution is made. Effective for distributions with an Annuity Starting Date on or after December 31, 2002, the table described in (i) shall be the table set forth in Revenue Ruling 2001-62. Effective for distributions with an Annuity Starting Date on or after January 1, 2008, the table described in (i) shall be the applicable table described under Section 417(e)(3), as such table is updated from time to time under applicable Internal Revenue Service guidance. Effective with respect to distributions with an Annuity Starting Date on or after January 1, 2011, the annual rate of interest described in (ii) shall be a 4.5% annual rate; provided, however, that the Actuarial Equivalent of a Participant’s Accrued Benefit on and after January 1, 2011 shall not be less than the Actuarial Equivalent of the Participant’s Accrued Benefit as of December 31, 2010 determined under the definition of Actuarial Equivalence effective on December 31, 2010.

2


For Plan Years beginning on and after January 1, 2008, solely for purposes of determining the present value of a benefit payment that is subject to Code Section 417(e), the applicable interest rate shall be the adjusted first, second, and third segment rates applied under the rules similar to the rules of Code Section 430(h)(2)(C) for the second calendar month preceding the Plan Year in which the distribution is made. For this purpose, the first, second, and third segment rates are the first, second, and third segment rates that would be determined under Code Section 430(h)(2)(C) if:
(1)
Code Section 430(h)(2)(D) were applied by substituting the average yields for the month described in clause (2) below for the average yields for the 24-month period described in such section; and
(2)
Code Section 430(h)(2)(G)(i)(II) were applied by substituting “Section 417(e)(3)(A)(ii)(II)” for “Section 412(b)(5)(B)(ii)(II)”; and
(3)
The applicable percentage under Code Section 430(h)(2)(G) is treated as being 20% in 2008, 40% in 2009, 60% in 2010, and 80% in 2011.
For purposes of determining the present value of a Cash Balance Participant's Frozen Accrued Benefit or a Grandfathered Participant's Accrued Benefit, present value for a Participant who has reached Normal Retirement Date shall be calculated based on the immediate annuity payable to the Participant as of his Annuity Starting Date. For a Participant who has not yet reached Normal Retirement Date at the time such present value is being determined, the present value shall be calculated based on a deferred annuity payable commencing at Normal Retirement Date. For purposes of this paragraph, immediate and deferred annuities will be in the normal form applicable to unmarried Participants under Section 9.1 of the Plan.
(d)
The "Actuary" means an independent actuary selected by the Sponsor, who is an enrolled actuary as defined in Code Section 7701 (a)(35), or a firm or corporation of actuaries having such a person on its staff, which person, firm, or corporation is to serve as the actuarial consultant for the Plan
(e)
The "Administrator" means the Sponsor unless the Sponsor designates another person or persons to act as such.
(f)
An "Affiliated Company" means any corporation or business, other than an Employer, which would be aggregated with an Employer for a relevant purpose under Code Section 414.
(g)
A Participant's, or Beneficiary's, if the Participant has died, "Annuity Starting Date" means the first day of the first period for which an amount is paid as an annuity or, in the case of a single sum payment, the first day on which all events have occurred which entitle the Participant, or his Beneficiary, if applicable, to such benefit.

3


If a Participant whose Annuity Starting Date has occurred is reemployed by an Employer or an Affiliated Company resulting in a suspension of benefits in accordance with the provisions of Section 11.1, for purposes of determining the form of payment of such Participant's benefit upon his subsequent retirement, such prior Annuity Starting Date shall apply to benefits accrued prior to the Participant's reemployment. Such prior Annuity Starting Date shall also apply to benefits accrued following the Participant's reemployment if such prior Annuity Starting Date occurred on or after the Participant's Normal Retirement Date. Such prior Annuity Starting Date shall not apply to benefits accrued following the Participant's reemployment if such prior Annuity Starting Date occurred prior to the Participant's Normal Retirement Date.
(h)
A Grandfathered Participant's "Average Annual Earnings” means his highest average annual Earnings received for any five consecutive Earnings Computation Periods (or the Grandfathered Participant's period of employment, if shorter) during the ten consecutive Earnings Computation Periods immediately preceding the date the Grandfathered Participant's employment terminates.
If a Grandfathered Participant is credited with less than a full year of Credited Service for any Earnings Computation Period, his Earnings for such Earnings Computation Period shall be annualized for purposes of determining his Average Annual Earnings by multiplying his actual Earnings for such Earnings Computation Period by the ratio that 2080 bears to the number of Hours of Service credited to the Grandfathered Participant for the Earnings Computation Period.
The Average Annual Earnings of a Grandfathered Participant who becomes Disabled shall be determined assuming the Grandfathered Participant continues to receive Earnings during the period he is Disabled, but has not commenced retirement benefit payments under the Plan, at the rate in effect for such Grandfathered Participant immediately prior to the date he became Disabled, adjusted as provided in the preceding paragraph to reflect full‑time employment.
(i)
A Participant's "Beneficiary" means any beneficiary who is entitled to receive a benefit under the Plan upon the death of the Participant.
(j)
A "Break in Service" with respect to any Employee means any Service Computation Period during which he completes fewer than 501 Hours of Service, except that no Employee shall incur a Break in Service solely by reason of temporary absence from work not exceeding 12 months resulting from illness, layoff, or other cause if authorized in advance by an Employer pursuant to its uniform leave policy, if his employment is not otherwise terminated during the period of such absence.
(k)
A "Cash Balance Account" means the account maintained for a Cash Balance Participant that includes his Opening Account Balance, determined as provided in Section 5.6, any Service Credits credited to his account as provided in Section 5.8, and the Interest Credits credited to his account as provided in Section 5.7.

4


(l)
A "Cash Balance Participant" means a Participant who is an Active Participant on or after April 1, 2002 and who is not a Grandfathered Participant.
(m)
The "Code" means the Internal Revenue Code of 1986, as amended from time to time. Reference to a Code section shall include (i) such section and any comparable section or sections of any future legislation that amends, supplements, or supersedes such section and (ii) all rulings, regulations, notices, announcements, and other pronouncements issued by the U.S. Treasury Department, the Internal Revenue Service, and any court of competent jurisdiction that relate to such section.
(n)
A Participant's "Credited Service" means his period of service for purposes of determining the amount of any benefit for which he is eligible under the Plan, as computed in accordance with the provisions of Article m.
(o)
"Disabled" means a Grandfathered Participant can no longer continue in the service of his employer because of a mental or physical condition that is likely to result in death or is expected to continue for a period of at least six months. A Grandfathered Participant shall be considered Disabled only if (i) he has completed at least ten years of Service at the time his active service ceases and (ii) he is eligible to receive a disability benefit under the terms of the Social Security Act.
(p)
The “Earnings” of a Participant for any Earnings Computation Period means the amount reported under Sections 6041, 6051, and 6052 (“Wages, Tips and Other Compensation” Box on Form W-2) and paid during the Earnings Computation Period. Earnings is defined as wages within the meaning of Code Section 3401(a) and all other payments of compensation to an Employee by the Employer (in the course of the Employer’s trade or business) for which the Employer is required to furnish the Employee a written statement under Code Sections 6041(d), 6051(a)(3), and 6052. Earnings must be determined without regard to any rules under Code Section 3401(a) that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code Section 3401(a)(2)). Notwithstanding the foregoing, the following items of compensation shall not be included in a Participant’s Earnings: (i) automobile allowance; (ii) proceeds from the exercise of non-qualified stock options; (iii) proceeds from the exercise of incentive stock options (whether such exercise is a disqualifying disposition or otherwise); (iv) restricted stock dividend income; (v) restricted stock vested income; (vi) all forms of compensation paid after termination of employment ( e.g. , severance pay, vacation pay) other than compensation earned for services provided prior to the date of termination of employment; (vii) distributions from any non-qualified deferred compensation plan; (viii) personal use of company vehicle; and (ix) market bonus. Prior to May 1, 2012, the items of compensation identified in the immediately preceding sentence were not excluded from Earnings.
In addition to the foregoing, Earnings include any amount that would have been included in the foregoing description but for the Participant’s election to defer

5


payment of such amount under Code Sections 402(e)(3) (certain pre-tax elective deferrals), 402(h)(1) (certain pre-tax deferrals to a simplified employee pension plan), 403(b) (certain employee deferrals under a tax-deferred annuity plan or contract), 408(p)(2)(A)(i) (simple retirement account), 125 (cafeteria plan deductions), 132(f)(4) (qualified transportation fringe benefits), or 457 (certain deferred compensation plans).
In no event, however, shall the Earnings of a Participant taken into account under the Plan for any Earnings Computation Period exceed (1) $200,000 for Earnings Computation Periods beginning before January 1, 1994, or (2) $150,000 for Earnings Computation Periods beginning on or after January 1, 1994. The limitations set forth in the preceding sentence shall be subject to adjustment annually as provided in Code Section 401(a)(17)(B) and Code Section 415(d); provided, however, that the dollar increase in effect on January 1 of any calendar year, if any, is effective for Earnings Computation Periods beginning in such calendar year.
Notwithstanding the provisions of the preceding paragraph, effective for Plan Years beginning on and after January 1, 2002, the annual Earnings of each Participant, who is credited with an hour of service on or after January 1, 2002, to be taken into account in determining benefit accruals shall be subject to the following limits (rather than the limits described above):
(1)
with respect to any Earnings Computation Period beginning on and after January 1, 2002, annual Earnings shall not exceed $200,000 (adjusted for cost-of-living increases in accordance with Code Section 401(a)(17)(B)). The cost-of-living adjustment in effect for a calendar year applies to annual Earnings for the Earnings Computation Period that begins with or within such calendar year.
(2)
with respect to any Earnings Computation Period beginning prior to January 1, 2002, annual Earnings shall be limited to $200,000.
Earnings received by a Participant during the Freeze Period shall be included in his Earnings for the 2002 Earnings Computation Period only if such Participant was actively employed as an Employee on April 1, 2002.
(q)
An "Earnings Computation Period" means each calendar year.
(r)
“Effective Date” means the effective date of this restatement of the Plan, which shall be January 1, 2013, unless otherwise stated herein. The Plan was originally established effective May 24, 1980.
(s)
Effective for periods on and after the Effective Date and through December 31, 2004, an "Employee" means any employee of an Employer. Notwithstanding the foregoing, the term "Employee" shall not include the following:

6


(1)
any nonresident alien who does not receive United States source income.
(2)
any person covered by a collective bargaining agreement between employee representatives and the Employer.
Any "leased employee," other than an excludable leased employee, shall be treated as an employee of an Employer or any other Affiliated Company for all purposes of the Plan, including benefit accrual; provided, however, that contributions to a qualified plan made on behalf of a leased employee by the leasing organization that are attributable to services for the Employer shall be treated as having been made by the Employer and there shall be no duplication of benefits under this Plan.
A “leased employee" means any person who performs services for an Employer or an Affiliated Company (the "recipient") (other than an employee of the recipient) pursuant to an agreement between tile recipient and any other person (the "leasing organization") on a substantially full-time basis for a period of at least one year, provided that such services are performed under the primary direction or control of the recipient. An "excludable leased employee" means any leased employee of the recipient who is covered by a money purchase pension plan maintained by the leasing organization which provides for (i) a nonintegrated employer contribution on behalf of each participant in the plan equal to at least ten percent of compensation, (ii) full and immediate vesting, and (iii) immediate participation by employees of the leasing organization (other than employees who perform substantially all of their services for the leasing organization or whose compensation from the leasing organization in each plan year during the four-year period ending with the plan year is less than $1,000); provided, however, that leased employees do not constitute more than 20 percent of the recipient's non‑highly compensated work force. For purposes of this Section, contributions or benefits provided to a leased employee by the leasing organization that are attributable to services performed for the recipient shall be treated as provided by the recipient.
Effective on and after January 1, 2005, an “Employee” means any employee of an Employer. Notwithstanding the foregoing, the term “Employee” shall not include the following:
(1)
Employees who are nonresident aliens (within the meaning of Code Section 7701(b)(1)(B)) and who receive no earned income (within the meaning of Code Section 911(d)(2)) from the Employer which constitutes income from sources within the United States (within the meaning of Code Section 861(a)(3)).
(2)
Employees whose employment is governed by the terms of a collective bargaining agreement between Employee representatives (within the meaning of Code Section 7701(a)(46)) and the Employer under which retirement benefits were the subject of good faith bargaining between the parties, unless such agreement expressly provides for coverage in this Plan.

7


(3)
Individuals classified by the Employer as independent contractors, regardless of whether such an individual is subsequently determined by the Internal Revenue Service to be an Employee.
(4)
Employees of Affiliated Employers, unless such Affiliated Employer have specifically adopted this Plan in writing.
(5)
Leased Employees, as defined above.
(t)
An "Employer" means the Sponsor and any entity which has adopted the Plan as may be provided under Article XV.
(u)
An "Entry Date" means each day of the Plan Year.
(v)
“ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. Reference to a section of ERISA shall include such section and any comparable section or sections of any future legislation that amends, supplements, or supersedes such section.
(w)
The "Freeze Period" means the period beginning January 2, 2002 and ending on the close of business March 31, 2002.
(x)
A Cash Balance Participant's "Frozen Accrued Benefit" means his benefit accrued as of January 1, 2002 under the terms of the Plan in effect on that date.
(y)
The "Funding Agent" means the person or persons which at the time shall be designated, qualified, and acting under the Funding Agreement and shall include (i) any trustee for a trust established pursuant to the Funding Agreement, (ii) any insurance company that issues an annuity or insurance contract pursuant to the Funding Agreement, or (iii) any person holding assets in a custodial account pursuant to the Funding Agreement. The Sponsor may designate a person or persons other than the Funding Agent to perform any responsibilities of the Funding Agent under the Plan, other than trustee responsibilities as defined in ERISA Section 405(c)(3), and the Funding Agent shall not be liable for the performance of such person in carrying out such responsibilities except as otherwise provided by ERISA. The term Funding Agent shall include any delegate of the Funding Agent as may be provided in the Funding Agreement.
(z)
The "Funding Agreement" means the agreement entered into between the Sponsor and the Funding Agent relating to the holding, investment, and reinvestment of the assets of the Plan, together with all amendments thereto and shall include any agreement establishing a trust, a custodial account, an annuity contract, or an insurance contract (other than a life, health or accident, property, casualty, or liability insurance contract) for the investment of assets; provided, however, that any custodial account or contract established hereunder meets the requirements of Code Section 401(f).

8


(aa)
A "Grandfathered Participant" means any Participant who was born prior to January 1, 1952, was hired by an Employer prior to January 1, 1997, and was an active Employee on April 1, 2002.
(bb)
A "Highly Compensated Employee" means any Employee or former Employee who is a highly compensated active employee or a highly compensated former employee as defined hereunder.
A "highly compensated active employee" includes any Employee who performs services for an Employer or any Affiliated Company during the Plan Year and who (i) was a five percent owner at any time during the Plan Year or the look back year or (ii) received compensation from the Employers and Affiliated Companies during the look back year in excess of $80,000 (subject to adjustment annually at the same time and in the same manner as under Code Section 415(d)). The dollar amount in (ii) shall be pro-rated for any Plan Year of fewer than 12 months.
A "highly compensated former employee" includes any Employee who (i) separated from service from an Employer and all Affiliated Companies (or is deemed to have separated from service from an Employer and all Affiliated Companies) prior to the Plan Year, (ii) performed no services for an Employer or any Affiliated Company during the Plan Year, and (iii) for either the separation year or any Plan Year ending on or after the date the Employee attains age 55, was a highly compensated active employee, as determined under the rules in effect under Code Section 414(q) for such year.
The determination of who is a Highly Compensated Employee hereunder shall be made in accordance with the provisions of Code Section 414(q) and regulations issued thereunder.
For purposes of this definition, the following terms have the following meanings:
(1)
An employee's "compensation" means compensation as defined in Code Section 415(c)(3) and regulations issued thereunder.
(2)
The “look back year" means the 12-month period immediately preceding the Plan Year.
(cc)
An "Hour of Service" with respect to any Employee means an hour which is determined and credited as such in accordance with the provisions of Article II.
(dd)
An "Interest Credit" means the amount credited to a Cash Balance Participant's Cash Balance Account each Plan Year as provided in Section 5.8 of the Plan.
(ee)
A Participant's "Normal Retirement Date” means, for purposes of benefit eligibility, the date he attains age 65 and for all other purposes, the first day of the month coinciding with or immediately following such date.

9


(ff)
A Cash Balance Participant's "Opening Balance” means the initial amount, if any, credited to his Cash Balance Account upon the conversion of the Plan to a cash balance plan as of April 1, 2002.
(gg)
A "Participant" means any person who becomes eligible to participate in the Plan in accordance with the provisions of Article IV and who retains an Accrued Benefit under the Plan. The term Participant includes both Cash Balance Participants and Grandfathered Participants.
(hh)
The "Pension Fund" means the fund or funds maintained under the Funding Agreement for purposes of accumulating contributions made by the Employers and paying benefits under the Plan.
(ii)
The "Plan" means this Weingarten Realty Retirement Plan, established effective May 24, 1980, as amended and restated by this instrument, with all amendments, modifications, and supplements hereafter made.
(jj)
A "Plan Year" means the following: (i) for periods prior to December 1, 1992, the 12-consecutive-month period ending each November 30; (ii) the period beginning December 1, 1992 and ending December 31, 1992; and (iii) each 12‑consecutive‑month period ending December 31 thereafter.
(kk)
A “Project Employee” means an Employee employed for short-term assignments, generally of six months’ duration or less.
(ll)
A "Qualified Joint and Survivor Annuity" is an immediate annuity payable to the Participant for his life with a survivor benefit payable upon the death of the Participant to the Participant's Spouse (determined as of his Annuity Starting Date) for the remainder of such Spouse's lifetime. The amount of the survivor benefit payable under a Qualified Joint and Survivor Annuity shall be equal to at least 50 percent of the amount the Participant was receiving on his date of death.
(mm)
A "Qualified Preretirement Survivor Annuity" is an annuity payable to the surviving Spouse of a Participant for such Spouse's life as provided in Article X.
(nn)
A Participant's "Required Beginning Date" means the April 1 following the calendar year in which occurs the later of the Participant's (i) attainment of age 70½ or (ii) the date the Participant retires; provided, however, that clause (ii) shall not apply to a Participant who is a five percent owner, as defined in Code Section 416(i), with respect to the Plan Year ending with or within the calendar year in which the Participant attains age 70½. The Required Beginning Date of a Participant who is a five percent owner hereunder shall not be redetermined if the Participant ceases to be a five percent owner with respect to any subsequent Plan Year.

10


(oo)
A Participant's "Service" means his period of service for purposes of determining his eligibility for a benefit under the Plan, as computed in accordance with the provisions of Article III.
(pp)
A "Service Computation Period" means the 12-month period used for determining an Employee's years of Service and years of Credited Service.
The Service Computation Period for determining an Employee's years of Service and years of Credited Service is the Plan Year.
Effective January 1, 2005, notwithstanding the foregoing, solely for purposes of determining the eligibility of Project Employees, the initial Service Computation Period shall be the twelve (12) consecutive month period commencing with the Employee’s employment commencement date. The eligibility computation period for each such Employee shall shift to the Plan Year which includes the anniversary date of the Employee’s employment commencement date without regard to whether the Employee is entitled to be credited with one thousand (1,000) Hours of Service during the period, provided that an Employee who is credited with one thousand (1,000) Hours of Service in both the initial eligibility computation period and the Plan Year which includes the first anniversary of the Employee’s employment commencement date shall be credited with two (2) years of eligibility service.
(qq)
A "Service Credit" means the amount credited to the Cash Balance Account of any Cash Balance Participant who accrues Credited Service for the Plan Year, determined as provided in Section 5.8 of the Plan.
(rr)
A Grandfathered Participant's "Social Security Benefit" means the amount that would be payable to the Grandfathered Participant at Social Security normal retirement age as a monthly old age benefit for the Grandfathered Participant under the Federal Social Security Act (exclusive of benefits for the Grandfathered Participant's relatives or dependents), whether or not payment is actually made because such amount is delayed, suspended, or forfeited because of failure to apply, other work, or any other reason. For purposes of determining a Grandfathered Participant's Social Security Benefit, the Grandfathered Participant's salary history shall be estimated applying a salary scale, projected backwards, to the Grandfathered Participant's earnings at termination of employment, retirement, or, if the Grandfathered Participant continues employment after his Normal Retirement Date, Normal Retirement Date, as applicable, unless the Grandfathered Participant provides the Administrator with his actual earnings history within a reasonable period of time following notification of his right to provide such history and the consequences of failing to do so. If the Grandfathered Participant provides his actual earnings history, such history shall be used for the years for which it is supplied and the projection shall be used for all years for which the history is not supplied. The salary scale used for projecting earnings shall be the actual change in average wages from year to year, as determined by the Social Security Administration. Within a reasonable period of time before a Grandfathered Participant's Annuity Starting Date, the Administrator

11


shall notify the Grandfathered Participant of his right to provide his actual earnings history and the consequences of doing so or failing to do so.
(ss)
The "Sponsor" means Weingarten Realty Investors, and any successor thereto.
(tt)
A Participant's "Spouse" means the person who is the Participant's lawful spouse.
1.2
Construction
Where required by the context, the noun, verb, adjective, and adverb forms of each defined term shall include any of its other forms. Wherever used herein, the masculine pronoun shall include the feminine, the singular shall include the plural, and the plural shall include the singular.

12


ARTICLE II
HOURS OF SERVICE.
2.1
Crediting of Hours of Service
An Employee shall be credited with an Hour of Service under the Plan for:
(a)
Each hour for which he is paid, or entitled to payment, for the performance of duties for an Employer as an Employee; provided, however, that hours paid for at a premium rate shall be treated as straight-time hours.
(b)
Each hour for which he is paid, or entitled to payment, by an Employer on account of a period of time during which no duties as an Employee are performed (irrespective of whether he remains an Employee) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty, or leave of absence, up to a maximum of eight hours per day and 40 hours per week; provided, however, that no more than 501 Hours of Service shall be credited to an Employee on account of any single continuous period during which he performs no duties (whether or not such period occurs in a single Service Computation Period); provided, further, that no Hours of Service shall be credited for payment which is made or due under a program maintained solely for the purpose of complying with applicable Workers' Compensation, unemployment compensation, or disability insurance laws; and provided, further, that no Hours of Service shall be credited to an Employee for payment which is made or due solely as reimbursement for medical or medically related expenses incurred by him.
(c)
Each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by an Employer; provided, however, that the crediting of Hours of Service for back pay awarded or agreed to with respect to periods of employment or absence from employment described in any other paragraph of this Section shall be subject to the limitations set forth therein and, if applicable, in Section 2.4.
(d)
With respect only to an Employee who is a Grandfathered Participant, each hour for which he would have been scheduled to work for an Employer during the period of time he is absent from work because of Disability, determined based on the work schedule in effect for such Employee immediately prior to the date he became Disabled; provided, however, that Hours of Service shall be credited hereunder only until the earlier of the Employee's Annuity Starting Date or his Normal Retirement Date.
(e)
Each hour for which he would have been scheduled to work for an Employer during the period of time that he is absent from work because of service with the armed forces of the United States, up to a maximum of eight hours per day and 40 hours per week, but only if he is eligible for reemployment rights under the Uniformed Services Employment and Reemployment Rights Act of 1994 and he returns to work

13


with an Employer within the period during which he retains such reemployment rights.
(f)
Solely for purposes of determining whether he has incurred a Break in Service, each hour for which he would have been scheduled to work for an Employer during the period of time that he is absent from work because of the birth of a child, pregnancy, the adoption of a child, or the caring for a child for the period beginning following the birth or adoption of such child, up to a maximum of eight hours per day and 40 hours per week so that, when added to Hours of Service credited under any other paragraph of this Section, he shall be credited with not fewer than 501 total Hours of Service under the Plan for the Service Computation Period in which his absence commenced or the immediately following Service Computation Period; provided, however, that he shall be credited with Hours of Service under this paragraph for the Service Computation Period in which his absence from employment commenced only if necessary to prevent a Break in Service; and provided, further, that he shall be credited with Hours of Service under this paragraph for the Service Computation Period immediately following the Service Computation Period in which his absence from employment commenced only if he is not credited with Hours of Service under this paragraph for the Service Computation Period in which his absence from employment commenced.
(g)
Solely for purposes of determining whether he has incurred a Break in Service, each hour for which he would be scheduled to work for an Employer during the period of time that he is absent from work on an approved leave of absence pursuant to the Family and Medical Leave Act of 1993; provided, however, that Hours of Service shall not be credited to an Employee under this paragraph if the Employee fails to return to employment with an Employer following such leave.
Notwithstanding anything to the contrary contained in this Section, no more than one Hour of Service shall be credited to an Employee for any one hour of his employment or absence from employment.
2.2
Hours of Service Equivalencies
Notwithstanding any other provision of the Plan to the contrary, an Employer may elect to credit Hours of Service to its Employees in accordance with one or more of the following equivalencies, and if an Employer does not maintain records that accurately reflect actual hours of service, such Employer shall credit Hours of Service to its Employee in accordance with one or more of the following equivalencies:
(a)
If the Employer maintains its records on the basis of days worked, an Employee shall be credited with ten Hours of Service for each day on which he performs an Hour of Service.

14


(b)
If the Employer maintains its records on the basis of weeks worked, an Employee shall be credited with 45 Hours of Service for each week in which he performs an Hour of Service.
(c)
If the Employer maintains its records on the basis of semi-monthly payroll periods, an Employee shall be credited with 95 Hours of Service for each semi-monthly payroll period in which he performs an Hour of Service.
(d)
If the Employer maintains its records on the basis of months worked, an Employee shall be credited with 190 Hours of Service for each month in which he performs an Hour of Service.
2.3
Determination of Non-Duty Hours of Service
In the case of a payment which is made or due from an Employer on account of a period during which an Employee performs no duties, and which results in the crediting of Hours of Service, or in the case of an award or agreement for back pay, to the extent that such award or agreement is made with respect to a period during which an Employee performs no duties, the number of Hours of Service to be credited shall be determined as follows:
(a)
In the case of a payment made or due which is calculated on the basis of units of time, such as hours, days, weeks, or months, the number of Hours of Service to be credited shall be the number of regularly scheduled working hours included in the units of time on the basis of which the payment is calculated.
(b)
In the case of a payment made or due which is not calculated on the basis of units of time, the number of Hours of Service to be credited shall be equal to the amount of the payment divided by the Employee's most recent hourly rate of compensation immediately prior to the period to which the payment relates.
(c)
Notwithstanding the provisions of paragraphs (a) and (b), no Employee shall be credited on account of a period during which no duties are performed with a number of Hours of Service that is greater than the number of regularly scheduled working hours during such period.
(d)
If an Employee is without a regular work schedule, the number of "regularly scheduled working hours" shall mean the average number of hours worked by Employees in the same job classification during the period to which the payment relates, or if there are no other Employees in the same job classification, the average number of hours worked by the Employee during an equivalent, representative period.
For the purpose of crediting Hours of Service for a period during which an Employee performs no duties, a payment shall be deemed to be made by or due from an Employer (i) regardless of whether such payment is made by or due from an Employer directly, or indirectly through (among others) a trust fund or insurer to which the Employer contributes or pays premiums, and (ii) regardless of

15


whether contributions made or due to such trust fund insurer, or other entity are for the benefit of particular persons or are on behalf of a group of persons in the aggregate.
2.4
Allocation of Hours of Service to Service Computation Periods
Hours of Service credited under Section 2.1 shall be allocated to the appropriate Service Computation Period as follows:
(a)
Hours of Service described in paragraph (a) of Section 2.1 shall be allocated to the Service Computation Period in which the duties are performed.
(b)
Hours of Service credited to an Employee for a period during which an Employee performs no duties shall be allocated as follows:
(1)
Hours of Service credited to an Employee on account of a payment which is calculated on the basis of units of time, such as hours, days, weeks, or months, shall be allocated to the Service Computation Period or Periods in which the period during which no duties are performed occurs, beginning with the first unit of time to which the payment relates.
(2)
Hours of Service credited to an Employee on account of a payment which is not calculated on the basis of units of time shall be allocated to the Service Computation Period or Periods in which the period during which no duties are performed occurs, or, if such period extends beyond one Service Computation Period, such Hours of Service shall be allocated equally between the first two such Service Computation Periods.
(3)
Hours of Service credited to an Employee for a period of absence during which the Employee performs no duties and for which no payment is due from his Employer shall be allocated to the Service Computation Period or Periods during which such absence occurred.
(4)
Hours of Service credited to an Employee because of an award or agreement for back pay shall be allocated to the Service Computation Period or Periods to which the award or agreement for back pay pertains, rather than to the Service Computation Period in which the award, agreement, or payment is made.
2.5
Department of Labor Rules
The rules set forth in paragraphs (b) and (c) of Department of Labor Regulation Section 2530.200b-2, which relate to determining Hours of Service attributable to reasons other than the performance of duties and crediting Hours of Service to Service Computation Periods, are hereby incorporated into the Plan by reference.

16


ARTICLE III
SERVICE & CREDITED SERVICE
3.1
Service and Credited Service Prior to January 1, 2002
Each person who is an Employee on or after April 1, 2002, shall be credited with Service and Credited Service for purposes of the Plan for periods prior to January 1, 2002 equal to the Service and Credited Service with which he had been credited in accordance with the Plan provisions in effect immediately prior to such date.
3.2
Service and Credited Service On or After January 1, 2002
Each person who is an Employee on or after April 1, 2002, shall be credited with Service and Credited Service with respect to periods of employment on or after January 1, 2002, for purposes of the Plan as follows:
(a)
He shall be credited with a year of Service for each Service Computation Period for which he is credited with at least 1,000 Hours of Service.
(b)
Subject to any limitations set forth in Article V, he shall be credited with a year of Credited Service for each Service Computation Period for which he is credited with at least 2080 Hours of Service; provided, however, that he shall be credited with a partial year of Credited Service in the ratio that his Hours of Service for the Service Computation Period bears to 2080.
(c)
Notwithstanding the foregoing, no Credited Service shall be credited to an Employee for the following periods:
(1)
periods before his attainment of age 21.
(2)
the Freeze Period, unless the Employee was an active Employee on April 1, 2002.
3.3
Transfers
Notwithstanding the foregoing, Service and Credited Service credited to a person shall be subject to the following:
(a)
Any person who transfers or retransfers to employment with an Employer as an Employee directly from other employment (i) with an Employer in a capacity other than as an Employee or (ii) with any other Affiliated Company, shall be credited with Service, but not Credited Service, for such other employment as if such other employment were employment with an Employer as an Employee.
(b)
Any person who transfers from employment with an Employer as an Employee directly to other employment (i) with an Employer in a capacity other than as an Employee or (ii) with any other Affiliated Company, shall be deemed by such transfer

17


not to lose his Service or Credited Service, and shall be deemed not to retire or otherwise terminate his employment as an Employee until such time as he is no longer in the employment of an Employer or any other Affiliated Company, at which time he shall become entitled to benefits if he is otherwise eligible therefore under the provisions of the Plan; provided, however, that up to such time he shall receive credit only for Service, but not for Credited Service, for such other employment as if such other employment were employment with an Employer as an Employee.
3.4
Retirement or Termination and Reemployment
If an Employee retires or otherwise terminates employment with the Employers and all Affiliated Companies, his eligibility for and the amount of any benefit to which he may be entitled under the Plan shall be determined based upon the Service and Credited Service with which he is credited at the time of such retirement or other termination of employment. If such retired or former Employee is reemployed by an Employer or any Affiliated Company, the Service and Credited Service with which he was credited at the time of such prior retirement or other termination of employment shall be aggregated with the Service and Credited Service with which he is credited following his reemployment for purposes of determining his eligibility for and the amount of any benefit to which he may be entitled under the Plan upon his subsequent retirement or other termination of employment if:
(a)
he was eligible for any retirement benefit at the time of his previous retirement or other termination of employment; or
(b)
he terminated his employment before satisfying the conditions of eligibility for any retirement benefit under the Plan and either (i) the aggregate number of his years of Service (not including any years of Service not required to be aggregated because of previous Breaks in Service) is greater than the number of his consecutive one-year Breaks in Service or (ii) the number of his consecutive one-year Breaks in Service is less than five.
Notwithstanding any other provision of this Section, if a retired or former Employee returns to employment in a capacity other than as an Employee, his period of employment shall be treated for the purposes of the Plan solely in accordance with the transfer provisions of this Article III.
3.5
Finality of Determinations
All determinations with respect to the crediting of Service and Credited Service under the Plan shall be made on the basis of the records of the Employers, and all determinations so made shall be final and conclusive upon Employees, former Employees, and all other persons claiming a benefit interest under the Plan. Notwithstanding anything to the contrary contained in this Article, there shall be no duplication of Service and Credited Service.
I

18


ARTICLE IV
ELIGIBILITY FOR PARTICIPATION
4.1
Participation
Each Employee who was an Active Participant immediately prior to January 1, 2002, and who is an active Employee on April 1, 2002, shall become an Active Participant as of April 1, 2002. Each other person shall become an Active Participant as of the Entry Date coinciding with or immediately following the date he becomes an Employee. Effective January 1, 2005, each other person other than a Project Employee shall become an Active Participant as of the Entry Date coinciding with or immediately following the date he becomes an Employee. Notwithstanding the preceding, effective January 1, 2005, with respect to Project Employees, any Project Employee who is credited with at least 1,000 Hours of Service in his initial Service Computation Period (or in any subsequent Service Computation Period) shall become a Participant on the first day of the month occurring on or following the completion of such requirement in such Computation Period.
4.2
Termination of Participation
A Participant shall remain an Active Participant as long as he continues in employment as an Employee. A person shall remain a Participant as long as he retains an Accrued Benefit under the Plan.
4.3
Participation Upon Reemployment
If a former Employee who was a Participant hereunder is reemployed as an Employee, he shall again become an Active Participant hereunder as of his reemployment date. If a former Employee who was not a Participant hereunder is reemployed as an Employee, he shall become an Active Participant hereunder as of the later of (a) the Entry Date as of which he would have become an Active Participant if he had continued employment as an Employee or (b) his reemployment date.
4.4
Finality of Determinations
All determinations with respect to the eligibility of an Employee to become a Participant under the Plan shall be made on the basis of the records of the Employers, and all determinations so made shall be final and conclusive for all Plan purposes. Each Employee who becomes a Participant shall be entitled to the benefits, and be bound by all the terms, provisions, and conditions of the Plan and the Funding Agreement.

19


ARTICLE V
NORMAL RETIREMENT
5.1
Eligibility
Each Participant who retires from employment with his Employer and all Affiliated Companies on his Normal Retirement Date shall be eligible for a normal retirement benefit. In addition, a Participant who continues in employment with his Employer or an Affiliated Company after his Normal Retirement Date shall be eligible for a normal retirement benefit commencing on his Normal Retirement Date.
5.2
Regular Benefit Amount
(a)
For periods on and after the Effective Date and prior to October 1, 2003, an eligible Grandfathered Participant's monthly normal retirement benefit shall be equal to 1/12 th of the following:
(1)
1.50 percent of the Grandfathered Participant's Average Annual Earnings multiplied by his number of years of "adjusted Credited Service" at retirement not in excess of 40 years; minus
(2)
1.50 percent of the Grandfathered Participant's Social Security Benefit multiplied by his number of years of "adjusted Credited Service" at retirement not in excess of 33.3 years (excluding any years of Credited Service credited to the Participant prior to July 1, 1976).
For periods on and after October 1, 2003, an eligible Grandfathered Participant's monthly normal retirement benefit shall be equal to 1/12 th of the following:
(3)
1.50 percent of the Grandfathered Participant's Average Annual Earnings multiplied by his number of years of "adjusted Credited Service" at retirement; minus
(4)
1.50 percent of the Grandfathered Participant's Social Security Benefit multiplied by his number of years of "adjusted Credited Service" at retirement not in excess of 33.3 years (excluding any years of Credited Service credited to the Participant prior to July 1, 1976).
A Grandfathered Participant's "adjusted Credited Service" means the following:
(5)
for a Grandfathered Participant who is eligible for a normal retirement benefit, his actual years of Credited Service.
(6)
for a Grandfathered Participant who is not eligible for a normal retirement benefit, his actual years of Credited Service plus the additional years of Credited Service the Grandfathered Participant would have at Normal

20


Retirement Date if he continued in employment as an Employee to Normal Retirement Date.
In calculating the retirement benefit of a Grandfathered Participant whose employment as an Employee has not continued to Normal Retirement Date, the amount determined under paragraph (1) and (2) above shall be separately multiplied by a fraction, not to exceed one, the numerator of which is the Grandfathered Participant's actual years of Credited Service and the denominator of which is the number of years of Credited Service the Grandfathered Participant would have at Normal Retirement Date if he continued employment as an Employee to Normal Retirement Date, excluding years of Credited Service in excess of the limit specified in paragraph (1) or (2), as applicable, and excluding for purposes of paragraph (2), years of Credited Service credited to the Participant prior to July 1, 1976.
In no event will a reduction in a Grandfathered Participant's Average Annual Earnings or an increase in his Social Security Benefit reduce the normal retirement benefit payable to him below the amount that would have been payable to him under the same form of payment had he retired prior to his Normal Retirement Date when eligible for an early retirement benefit.
(b)
An eligible Cash Balance Participant's normal retirement benefit shall be equal 1/12 th of the greater of:
(1)
the annual Participant's Frozen Accrued Benefit, as described in Section 1.1(x); or
(2)
the annual amount of normal retirement benefit payable to the Participant commencing on his Normal Retirement Date (or his Annuity Starting Date, if later) that is the Actuarial Equivalent of his Cash Balance Account.
5.3
Minimum Benefit Amount
Notwithstanding any other provision of the Plan to the contrary, in no event will the monthly normal retirement benefit payable to a Grandfathered Participant be less than 1/12th of the product of:
(a)
two percent of his average annual Earnings during his five consecutive highest paid years of Service multiplied by
(b)
his years of Credited Service at retirement not in excess of ten years.
5.4
401(a)(l7) Fresh Start Adjustments
The monthly normal retirement benefit of a Grandfathered Participant whose Earnings exceeded the $200,000 or $150,000 Earnings limitations described in Article I for Earnings Computation Periods ending before the Earnings Computation Periods in which the limitations were effective shall be the greatest of (a), (b), (c) or (d) below:

21


(a)
the Grandfathered Participant's Accrued Benefit determined as of the end of the 1988 Earnings Computation Period, using the Plan formula in effect on that date (without regard to any amendments made after that date), as if the Grandfathered Participant terminated employment on that date;
(b)
the Grandfathered Participant's Accrued Benefit determined under the Plan formula in effect after the 1993 Earnings Computation Period applying the $150,000 Earnings limitation; or
(c)
the sum of (i) the Grandfathered Participant's Accrued Benefit determined as of the end of the 1993 Earnings Computation Period, using the Plan formula in effect on that date (without regard to any amendments made after that date), as if the Grandfathered Participant terminated employment on that date; plus (ii) the Grandfathered Participant's Accrued Benefit under the Plan formula as amended to comply with the $150,000 Earnings limitation, taking into account only the Grandfathered Participant's years of Credited Service for Earnings Computation Periods beginning on or after January 1, 1994; or
(d)
the Grandfathered Participant's Accrued Benefit determined under the Plan formula in effect on December 31, 2001, applying the $200,000 Earnings limitation.
5.5
Payment
A monthly normal retirement benefit shall be paid to an eligible Participant commencing as of his Normal Retirement Date.
5.6
Opening Balance
The Opening Balance of a Cash Balance Participant who was an Active Participant in the Plan on January 1, 2002 and was an active Employee on April 1, 2002 is the Actuarially Equivalent present value of his Frozen Accrued Benefit determined as of January 1, 2002. For purposes of determining such present value, the following factors shall be used: (a) the 1983 Group Annuity Mortality Table adjusted for 50 percent male content and 50 percent female content and (b) an interest rate of six percent and the calculation shall be based on a deferred annuity payable at Normal Retirement Date.
The Opening Balance of any other Cash Balance Participant is zero.
5.7
Interest Credits
On the last day of each Plan Year beginning on or after January 1, 2002, an Interest Credit shall be credited to the Cash Balance Account of a Participant whose Annuity Starting Date has not occurred. The Interest Credit rate shall be equal to the annual rate of interest on ten-year U.S. Treasury Bill Constant Maturities in effect for the third calendar month immediately preceding the Plan Year; provided, however, that if such rate is less than 2.05 percent, the rate used hereunder shall be 2.05 percent. Effective on and after January 1, 2011, the Interest Credit rate shall be a 4.5 percent annual rate; provided, however, that the value of a Participant’s Cash Balance Account as of any date after

22


December 31, 2010 shall not be less than the value of the Participant’s Cash Balance Account as of December 31, 2010, credited as provided in this Section 5.7 with an Interest Credit Rate equal to the annual rate of interest on ten-year U.S. Treasury Bill Constant Maturities, but no less than 2.05 percent, excluding any Service Credits credited to such Account after December 31, 2010. An Interest Credit of less than zero shall in no event result in the Cash Balance Account being less than the aggregate amount of Service Credits credited to the Account. The Interest Credit shall be based on the value of a Participant's Cash Balance Account on the first day of the Plan Year. The Interest Credit for the Plan Year in which a Participant's Annuity Starting Date occurs shall be credited to the Participant's Cash Balance Account as of the last day of the calendar month preceding the month in which the Participant's Annuity Starting Date occurs and shall accrue only through such day. No further Interest Credits shall be credited to a Participant's Cash Balance Account following his Annuity Starting Date.
The Interest Credit on a Cash Balance Participant's Cash Balance Account for the 2002 Plan Year shall be based on the Participant's Opening Balance and interest on that balance for the full calendar year, including the Freeze Period.
Special Rule Relating To Termination of the Plan . Effective January 1, 2008, upon the termination of the Plan:
(a)
If an interest credit rate (or an equivalent amount) under the Plan is a variable rate, then for such rate, the rate of interest used to determine accrued benefits under the Plan shall be equal to the average of the rates of interest used under the Plan during the 5-year period ending on the termination date; and
(b)
The interest rate and mortality table used to determine the amount of any benefit under the Plan payable in the form of an annuity payable at normal retirement age shall be the rate and table specified under the Plan for such purpose as of the termination date, except that if such interest rate is a variable rate, the interest rate shall be determined under the rules of subclause (a).
5.8
Service Credits
For each Plan Year beginning on or after January 1, 2002, a Service Credit shall be credited to the Cash Balance Account of any Cash Balance Participant who is an Active Participant at any time during such Plan Year. The amount of such Service Credit shall be a percentage of the Cash Balance Participant's Earnings for the Plan Year determined from the following chart based on the Cash Balance Participant's years of Credited Service on the last day of the immediately preceding Plan Year:
Years of Credited Service
Percentage of Earnings
0 through 9.99
3%
10 through 19.99
4%
20 or more
5%


23


ARTICLE VI
EARLY RETIREMENT
6.1
Eligibility
Each Participant who retires from employment with his Employer and all Affiliated Companies at or after age 55, but prior to his Normal Retirement Date and who has at least 15 years of Service and who is not eligible for a disability retirement benefit under the provisions of Article VIII shall be eligible for an early retirement benefit.
6.2
Amount
An eligible Grandfathered Participant's monthly early retirement benefit shall be equal to his Accrued Benefit on the date of his early retirement; provided, however, that the amount of such benefit shall be reduced by 1/15 th for each of the first five years and 1/30 th for each of the next five years by which his Annuity Starting Date precedes his Normal Retirement Date.
An eligible Cash Balance Participant's monthly early retirement benefit shall be equal to the greater of (1) his monthly Frozen Accrued Benefit reduced by 1/15 th for each of the first five years and 1/30 th for each of the next five years and reduced actuarially for each additional month by which his Annuity Starting Date precedes his Normal Retirement Date or (2) the monthly retirement benefit payable as of his Annuity Starting Date in a single life annuity, as described in Section 9.1(a), that is the Actuarial Equivalent of his Cash Balance Account.
6.3
Payment
A monthly early retirement benefit shall be paid to an eligible Participant commencing as of the first day of the month following the later of the month in which he retires or the month in which be makes written application for the benefit, but not later than his Normal Retirement Date.

24


ARTICLE VII
VESTED RIGHTS
7.1
Vesting
(a)
A Grandfathered Participant's vested interest in his Accrued Benefit shall be at all times 100 percent.
(b)
A Cash Balance Participant's vested interest in his Accrued Benefit shall be determined in accordance with one of the following schedules, whichever is applicable, based upon the number of full years of Service credited to him.
(1)
Vesting Schedule applicable to a Cash Balance Participant whose vested interest in his Accrued Benefit was at least 20 percent as of December 31, 2001:
Years of Service
Vested Interest
less than 2
0%
2, but less than 3
20%
3, but less than 4
40%
4, but less than 5
60%
5 or more
100%

(2)
Vesting Schedule applicable to a Cash Balance Participant who did not have a vested interest in his Accrued Benefit as of December 31, 2001:
Years of Service
Vested Interest
less than 5
0%
5 or more
100%

(3)
Vesting Schedule applicable to a Cash Balance Participant, effective January 1, 2008:
Years of Service
Vested Interest
less than 3
0%
3 or more
100%

Notwithstanding any other provision of the Plan to the contrary, a Cash Balance Participant's vested interest in his Accrued Benefit shall be 100 percent if he is employed by an Employer or an Affiliated Company on his Normal Retirement Date, regardless of whether he has completed the number of years of Service required under the above schedule for 100 percent vesting.

25


7.2
Eligibility for Deferred Vested Retirement Benefit
Each Participant who terminates employment with his Employer and all Affiliated Companies, who has a vested interest in his Accrued Benefit, and who is not eligible for a normal, early, or disability retirement benefit under the Plan shall be eligible for a deferred vested retirement benefit.
7.3
Amount of Deferred Vested Retirement Benefit
An eligible Grandfathered Participant's monthly deferred vested retirement benefit shall be equal to his vested Accrued Benefit on the date of his termination of employment; provided, however, that if the Participant is eligible to elect to begin benefit payments before his Normal Retirement Date as provided in Section 7.4, the amount of such benefit shall be reduced for early commencement in the same way as provided in Section 6.2 with respect to an early retirement benefit.
An eligible Cash Balance Participant's monthly deferred vested retirement benefit shall be equal to the greater of (1) his monthly Frozen Accrued Benefit reduced by 1/15 th for each of the first five years and 1/30 th for each of the next five years and reduced actuarially for each additional month by which his Annuity Starting Date precedes his Normal Retirement Date or (2) the monthly retirement benefit payable as of his Annuity Starting Date in a single life annuity, as described in Section 9.1(a), that is the Actuarial Equivalent of his Cash Balance Account.
7.4
Payment
A monthly deferred vested retirement benefit shall be paid to an eligible Participant commencing as of his Normal Retirement Date; provided, however, that a Participant who has 15 years of Service may elect to begin benefit payments as of the first day of any month following the month in which he attains age 55.
7.5
Immediate Commencement Option for Small Benefits
Effective with respect to distributions occurring on and after January 1, 2008, notwithstanding any other provision of the Plan to the contrary, if the Actuarially Equivalent present value of a Participant's Accrued Benefit is greater than $1,000, but not greater than $50,000, the Participant may elect to begin benefit payments as soon as reasonably practicable following his termination of employment in the normal form of payment provided in Section 9.1. Effective with respect to distributions occurring on and after the Effective Date and prior to January 1, 2008, such an election may be made if the Actuarially Equivalent present value of the Participant's Accrued Benefit is greater than $5,000, but not greater than $50,000. A married Participant may waive the normal 50 percent Qualified Joint and Survivor Annuity described in paragraph (b) or (c), as applicable, of Section 9.1 and elect the single life annuity described in paragraph (a) of Section 9.1. In lieu of receiving payment in one of the normal forms, a Participant may elect to receive a single sum payment of the full Actuarially Equivalent present value of his Accrued Benefit. A Participant's election of a form of payment hereunder other than the normal form applicable to him shall be subject to the requirements of Sections 9.4, 9.5, and 9.6.

26


7.6
Election of Former Vesting Schedule
In the event the Sponsor adopts an amendment to the Plan that changes the vesting schedule under the Plan, including any amendment which directly or indirectly affects the computation of the nonforfeitable interest of Participants' rights to Accrued Benefits, any Participant with three or more years of Service shall have a right to have his nonforfeitable interest in his Accrued Benefit continue to be determined under the vesting schedule in effect prior to such amendment rather than under the new vesting schedule, unless the nonforfeitable interest of such Participant in his Accrued Benefit under the Plan, as amended, at any time is not less than such interest determined without regard to such amendment. Such Participant shall exercise such right by giving written notice of his exercise thereof to the Administrator within 60 days after the latest of (i) the date he receives notice of such amendment from the Administrator, (ii) the effective date of the amendment, or (iii) the date the amendment is adopted. Notwithstanding the foregoing provisions of this Section, the vested interest of each Participant on the effective date of such amendment shall not be less than his vested interest under the Plan as in effect immediately prior to the effective date thereof.

27


ARTICLE VIII
DISABILITY RETIREMENT BENEFIT
8.1
Eligibility
Each Grandfathered Participant who retires from employment with his Employer and all Affiliated Companies prior to his Normal Retirement Date due to Disability shall be eligible for a disability retirement benefit.
8.2
Amount
An eligible Grandfathered Participant's monthly disability retirement benefit shall be equal to his Accrued Benefit determined as of his Annuity Starting Date; provided, however, that if the Grandfathered Participant is eligible to elect to begin benefit payments before his Normal Retirement Date the amount of such benefit shall be reduced for early commencement in the same way as provided in Section 6.2 with respect to an early retirement benefit.
8.3
Special Rules for Calculating Disability Retirement Benefit
A Disabled Grandfathered Participant shall be credited with Service and Credited Service while he is Disabled based on his Hours of Service credited in accordance with the provisions of Section 2.1(d). Such Grandfathered Participant's Average Annual Earnings shall be determined assuming Earnings continued while he is Disabled as provided in Section 1.1(h). A Disabled Grandfathered Participant's Accrued Benefit shall be determined under the provisions of the Plan in effect on the date the Disabled Grandfathered Participant ceases to be credited with Hours of Service under Section 2.1.
8.4
Payment
A monthly disability retirement benefit shall be paid to an eligible Grandfathered Participant commencing as of his Normal Retirement Date; provided, however, that a Grandfathered Participant who has 15 years of Service may elect to begin benefit payments as of the first day of any month following the month in which he attains age 55.

28


ARTICLE IX
FORMS OF PAYMENT
9.1
Normal Form of Payment
A Participant who is eligible to receive any retirement benefit under Section 5.1, 6.1, 7.2, or 8.1 of the Plan shall receive payment of such benefit in accordance with one of the following normal forms of payment:
(a)
A Participant who is not married on his Annuity Starting Date shall receive such benefit in the form of a single life annuity. Such Participant shall receive a monthly retirement benefit payable for his lifetime, the last monthly payment being for the month in which his death occurs.
(b)
A Participant who is married on his Annuity Starting Date and who is either (1) a Grandfathered Participant whose benefit is determined under the regular benefit formula in Section 5.2 or (2) a Cash Balance Participant whose benefit is based on his Frozen Accrued Benefit and such Frozen Accrued Benefit was determined under the regular benefit amount described in Section 5.2 of the Plan as in effect on December 31, 2001, shall receive such benefit in the form of a subsidized 50 percent Qualified Joint and Survivor Annuity. Such Participant shall receive an unreduced monthly retirement benefit payable for his lifetime, the last monthly payment being for the month in which his death occurs. If the Participant's Spouse survives him, then commencing with the month following the month in which the Participant's death occurs, his Spouse shall receive a monthly benefit for his or her remaining lifetime equal to one-half of the amount payable during the Participant's lifetime, the last payment being for the month in which the Spouse's death occurs. Notwithstanding the foregoing, if the Participant's Spouse is more than five years younger than the Participant, the monthly amount payable to the surviving Spouse following the death of the Participant shall be reduced so that it is the Actuarial Equivalent of the benefit payable to a Spouse who is exactly five years younger than the Participant.
(c)
A Participant who is married on his Annuity Starting Date and who is either (1) a Grandfathered Participant whose benefit is determined under the minimum benefit amount described in Section 5.3 of the Plan, or (2) is a Cash Balance Participant whose benefit is either (i) based on his Cash Balance Account or (ii) based on his Frozen Accrued Benefit and such Frozen Accrued Benefit was determined under the minimum benefit amount described in Section 5.3 of the Plan as in effect on December 31, 2001, shall receive such benefit in the form of a non-subsidized 50 percent Qualified Joint and Survivor Annuity. Such Participant shall receive a reduced monthly retirement benefit payable for his lifetime, the last monthly payment being for the month in which his death occurs. If the Participants Spouse survives him, then commencing with the month following the month in which the Participant's death occurs, his Spouse shall receive a monthly benefit for his or her remaining

29


lifetime equal to one-half of the reduced amount payable during the Participant's lifetime, the last payment being for the month in which the Spouse's death occurs.
The reduced monthly payments to be made to the Participant under this paragraph shall be in an amount which, on the date of commencement thereof, is the Actuarial Equivalent of the monthly benefit otherwise payable to the Participant under the form of payment described in paragraph (a).
To receive a benefit under the Qualified Joint and Survivor Annuity form of payment described in paragraph (b) or (c) above, a Participant's Spouse must be the same Spouse to whom the Participant was married on his Annuity Starting Date. Once a Participant's Annuity Starting Date occurs and retirement benefit payments commence under one of the normal forms of payment, the form of payment will not change even if the Participant's marital status changes; provided, however, that if the Participant is reemployed by an Employer or an Affiliated Company, any benefits he accrues under the Plan following such reemployment with respect to which a separate Annuity Starting Date occurs shall be payable in the form elected by the Participant as of such separate Annuity Starting Date.
Subject to the requirements of Section 9.6, a Participant may waive the normal form of payment applicable to him and elect to receive payment of his benefit in one of the optional forms of payment provided in Section 9.2.
9.2
Optional Forms of Payment
Within the election period described in Section 9.5, a Participant who is eligible to receive a normal, early, deferred vested, or disability retirement benefit may elect to receive payment of such benefit in accordance with anyone of the following options. If the Participant is married on his Annuity Starting Date, any such election must satisfy the requirements of Section 9.6.
If the Participant's Beneficiary under an optional form of payment dies prior to the Participant's Annuity Starting Date, the election shall become inoperative and ineffective, and benefit payments, if any, shall be made under the normal form of payment provided in Section 9.1, unless the Participant elects another optional form of payment provided under the Plan prior to his Annuity Starting Date. Once a Participant's Annuity Starting Date occurs, however, the optional form of payment elected by the Participant will not change even if the Participant's marital status changes or his Beneficiary predeceases him; provided, however, that if the Participant is reemployed by an Employer or an Affiliated Company, any benefits he accrues under the Plan following his reemployment with respect to which a separate Annuity Starting Date occurs shall be payable in the form elected by the Participant as of such separate Annuity Starting Date.
The monthly payments made under any optional form of payment hereunder shall be the Actuarial Equivalent of the monthly benefit otherwise payable to the Participant in the single life annuity form described in paragraph (a) or, if the Participant is married and is entitled to the subsidized 50 percent Qualified Joint and Survivor Annuity, paragraph (b) of Section 9.1.

30


(a)
Single Life Annuity . The Participant shall receive a monthly retirement benefit payable for his lifetime, the last monthly payment being for the month in which his death occurs.
(b)
100% Joint and Survivor Annuity . The Participant shall receive a reduced monthly retirement benefit payable for his lifetime, the last monthly payment being for the month in which his death occurs. If the Participant's Beneficiary survives him, then commencing with the month following the month in which the Participant's death occurs, his Beneficiary shall receive a monthly benefit for his or her remaining lifetime equal to the reduced amount payable during the Participant's lifetime, the last monthly payment being for the month in which the Beneficiary's death occurs.
(c)
75% Joint and Survivor Annuity . The Participant shall receive a reduced monthly retirement benefit payable for his lifetime, the last monthly payment being for the month in which his death occurs. If the Participant's Beneficiary survives him, then commencing with the month following the month in which the Participant's death occurs, his Beneficiary shall receive a monthly benefit for his or her remaining lifetime equal to three-quarters of the reduced amount payable during the Participant's lifetime, the last monthly payment being for the month in which the Beneficiary's death occurs.
(d)
50% Joint and Survivor Annuity . The Participant shall receive a reduced monthly retirement benefit payable for his lifetime, the last monthly payment being for the month in which his death occurs. If the Participant's Beneficiary survives him, then commencing with the month following the month in which the Participant's death occurs, his Beneficiary shall receive a monthly benefit for his or her remaining lifetime equal to one-half of the reduced amount payable during the Participant's lifetime, the last monthly payment being for the month in which the Beneficiary's death occurs.
(e)
Ten-Year Certain and Life Annuity . The Participant shall receive a reduced monthly retirement benefit payable for his lifetime, the last monthly payment being for the month in which his death occurs. If the Participant's death occurs prior to the end of the ten-year period commencing with his Annuity Starting Date, his Beneficiary shall receive a continued monthly benefit equal to such reduced amount for the remainder of such ten-year period. If the Participant's Beneficiary dies after becoming eligible to receive a benefit hereunder, but prior to the end of the ten-year period, the unpaid monthly benefit shall be paid to the Beneficiary designated by the Participant to receive payment in such event or, if none, in accordance with the provisions of Section 9.3. In lieu of receiving continued monthly payments, a Participant's Beneficiary may elect to receive the Actuarially Equivalent present value of such payments in a single sum.
(f)
Five-Year Certain and Life Annuity . The Participant shall receive a reduced monthly retirement benefit payable for his lifetime, the last monthly payment being for the month in which his death occurs. If the Participant's death occurs prior to the

31


end of the five‑year period commencing with his Annuity Starting Date, his Beneficiary shall receive a continued monthly benefit equal to such reduced amount for the remainder of such five‑year period. If the Participant's Beneficiary dies after becoming eligible to receive a benefit hereunder, but prior to the end of the five-year period, the unpaid monthly benefit shall be paid to the Beneficiary designated by the Participant to receive payment in such event or, if none, in accordance with the provisions of Section 9.3. In lieu of receiving continued monthly payments, a Participant's Beneficiary may elect to receive the Actuarially Equivalent present value of such payments in a single sum.
(g)
Single Sum Payment . The Participant may elect to receive a single sum payment in lieu of any other retirement benefit payable under the Plan. Such single sum payment shall be equal to the following;
(1)
For a Grandfathered Participant, the Actuarially Equivalent present value of his vested Accrued Benefit.
(2)
For a Cash Balance Participant, the greater of (i) or (ii) as follows:
(i)
the greater of his vested Cash Balance Account balance or an amount equal to the present value of his vested Cash Balance Account, projected to Normal Retirement Age using the Interest Credit Rate for the Plan Year in which the distribution will be made, with present value determined using the “applicable interest rate” and the “applicable mortality table,” as provided under Code Section 417(e) and related guidance; or
(ii)
the Actuarially Equivalent present value of his Frozen Accrued Benefit.
A Participant may only elect this form of payment if the amount of the single sum payment, as determined above, does not exceed $50,000.
Notwithstanding any other provision of the Plan to the contrary, distribution under an optional form of payment shall be made in accordance with Code Section 401(a)(9), Regulations issued thereunder, including the minimum distribution incidental benefit requirement, and the provisions of Addendum A hereto. If a Participant designates a person other than his Spouse as his Beneficiary under an optional form of payment, and if payments under the optional form elected would not meet the minimum distribution incidental benefit requirement, the election shall be ineffective and benefit payments, if any, shall be made under the normal form of payment provided in Section 9.1, unless the Participant elects another optional form of payment provided under the Plan prior to his Annuity Starting Date.

32


9.3
Designation of Beneficiary and Beneficiary in Absence of Designated Beneficiary
A Participant's Beneficiary may be any individual or, in the case of a Beneficiary to receive payments for the remainder of a period-certain under the form of payment elected by the Participant, any individuals, trust, or estate, selected by the Participant. A Participant's designation of a Beneficiary is subject to the spousal consent requirements of Section 9.6.
If payment is to be made to a Participant's surviving Beneficiary for the remainder of a period certain under the form of payment elected by the Participant and no Beneficiary survives or the Participant has not designated a Beneficiary, the Participant's Beneficiary shall be the Participant's estate. If any payments are to be made to a trust or to the estate of a Participant as Beneficiary hereunder, such payments shall be made in an Actuarially Equivalent single sum payment.
9.4
Notice Regarding Forms of Payment
The Administrator shall provide a Participant with a written description of (i) the terms and conditions of the normal forms of payment provided in Section 9.1, (ii) the optional forms of payment provided in Section 9.2, (iii) the Participant's right to waive the normal form of payment provided in Section 9.1 and to elect an optional form of payment and the effect thereof, (iv) the rights of the Participant's Spouse with respect to the Qualified Joint and Survivor Annuity form of payment, and (v) the Participant's right to revoke a waiver of the normal form of payment or to change his election of an option and the effect thereof. The explanation shall notify the Participant of his right to defer payment of his retirement benefit under the Plan until his Normal Retirement Date, or such later date as may be provided under the Plan. The Administrator shall provide such explanation no fewer than 30 days and no more than 90 days before a Participant's Annuity Starting Date. Effective for distribution notices issued on and after January 1, 2007, such explanation may be provided no fewer than 30 days and no more than 180 days before a Participant’s Annuity Starting Date.
Notices to Participants shall include the relative values of the various optional forms of benefit under the Plan as provided in Treasury Regulation Section 1.417(a)-3. This provision is effective as follows: to qualified pre-retirement survivor annuity explanations provided on or after July 1, 2004; to qualified joint and survivor annuity explanations with respect to any distribution with an annuity starting date that is on or after February 1, 2006; and with respect to any optional form of benefit that is subject to the requirements of Code Section 417(e)(3) if the actuarial present value of that optional form is less than the actuarial present value as determined under Code Section 417(e)(3) on or after October 1, 2004.
Notwithstanding the foregoing, a Participant's Annuity Starting Date may occur fewer than 30 days after receipt of such explanation if the Administrator clearly informs the Participant:
(a)
of his right to consider his form of payment election for a period of at least 30 days following his receipt of the explanation;
(b)
the Participant, after receiving the explanation, affirmatively elects an early Annuity Starting Date, with his Spouse's written consent, if necessary;

33


(c)
the Participant's Annuity Starting Date occurs after the date the explanation is provided to him;
(d)
the election period described in Section 9.5 does not end until the later of his Annuity Starting Date or the expiration of the seven-day period beginning the day after the date the explanation is provided to him; and
(e)
actual payment of the Participant's retirement benefit does not begin to the Participant before such revocation period ends.
9.5
Election Period
A Participant may waive or revoke a waiver of the normal form of payment provided in Section 9.1 and elect, modify, or change an election of an optional form of payment provided in Section 9.2 by written notice delivered to the Administrator at any time during the election period; provided, however, that no waiver of the normal form of payment and election of an optional form of payment shall be valid unless the Participant has received the written explanation described in Section 9.4. Subject to the provisions of Section 9.4 extending a Participant's election period under certain circumstances, a Participant's "election period" means the 90-day period ending on his Annuity Starting Date. Effective for distribution notices issued on and after January 1, 2007, “election period” means the 180-day period ending on the Participant’s Annuity Starting Date.
The form in which a Participant shall receive payment of his retirement benefit shall be determined upon the later of his Annuity Starting Date or the date his election period ends, based upon any waiver and election in effect on such date. Except as otherwise specifically provided in the Plan, in no event shall the form in which a Participant's retirement benefit is paid be changed on or after such date.
9.6
Spousal Consent Requirements
A married Participant's waiver of the normal Qualified Joint and Survivor Annuity form of payment and his election, modification, or change of an election of an optional form of payment must include the written consent of the Participant's Spouse, if any. A Participant's Spouse shall be deemed to have given written consent to the Participant's waiver and election if the Participant establishes to the satisfaction of a Plan representative that such consent cannot be obtained because of any of the following circumstances:
(a)
the Spouse cannot be located,
(b)
the Participant is legally separated or has been abandoned within the meaning of local law, and the Participant has a court order to that effect, or
(c)
other circumstances set forth in Code Section 401(a)(11) and regulations issued thereunder.
Notwithstanding the foregoing, written spousal consent shall not be required if the Participant elects an optional form of payment that is a Qualified Joint and Survivor Annuity.

34


Any written spousal consent given pursuant to this Section shall acknowledge the effect of the waiver of the Qualified Joint and Survivor Annuity form of payment and of the election of an optional form of payment, shall specify the optional form of payment selected by the Participant and that such form may not be changed (except to a Qualified Joint and Survivor Annuity) without written spousal consent, shall specify any Beneficiary designated by the Participant and that such Beneficiary may not be changed without written spousal consent, and shall be witnessed by a Plan representative or a notary public. Any written consent given or deemed to be given by a Participant's Spouse shall be irrevocable and shall be effective only with respect to such Spouse and not with respect to any subsequent Spouse.
9.7
Death Prior to Annuity Starting Date
Notwithstanding any other provision of the Plan to the contrary, should a Participant die prior to his Annuity Starting Date neither he nor any person claiming under or through him shall be entitled to any retirement benefit under the Plan; and no benefit shall be paid under the Plan with respect to such Participant except any survivor benefit payable under the provisions of Article X.
9.8
Effect of Reemployment on Form of Payment
Notwithstanding any other provision of the Plan , if a former Employee is reemployed, his prior election of a form of payment hereunder shall become ineffective, except to the extent that the Participant's Annuity Starting Date occurred prior to such reemployment and such prior Annuity Starting Date is preserved with respect to a portion or all of the Participant's retirement benefit.

35


ARTICLE X
SURVIVOR BENEFITS
10.1
Eligibility for Qualified Preretirement Survivor Annuity
If a Participant dies before his Annuity Starting Date, his surviving Spouse shall be eligible for a Qualified Preretirement Survivor Annuity if all of the following requirements are met on the Participant's date of death:
(a)
The Participant has a Spouse as defined in Section 1.1.
(b
Such Spouse has been married to the Participant throughout the one-year period immediately preceding his date of death.
(c)
The Participant has a vested Accrued Benefit.
10.2
Amount of Qualified Preretirement Survivor Annuity
The monthly amount of the Qualified Preretirement Survivor Annuity payable to a surviving Spouse shall be equal to the survivor benefit that would have been payable to the Spouse if the Participant had:
(a)
separated from service on the earlier of his actual separation from service date or his date of death;
(b)
survived to the date as of which payment of the Qualified Preretirement Survivor Annuity to his surviving Spouse commences;
(c)
elected to commence retirement benefits as of the date described in paragraph (b) above in the form of a 50 percent Qualified Joint and Survivor Annuity, as described in paragraph (b) or (c) of Section 9.1, as applicable; and
(d)
died on his Annuity Starting Date.
Notwithstanding the foregoing, if prior to a Participant's death the Participant elected an optional form of payment in accordance with the provisions of Article IX that is a Qualified Joint and Survivor Annuity, for purposes of determining the amount of the Qualified Preretirement Survivor Annuity, the optional form of payment elected by the Participant shall be substituted for the 50 percent Qualified Joint and Survivor Annuity in paragraph (c) above.
10.3
Enhanced Qualified Preretirement Survivor Annuity
If a Grandfathered Participant dies while employed by an Employer or an Affiliated Company after becoming eligible for a retirement benefit in accordance with the provisions of Section 5.1 or 6.1 or if a Disabled Grandfathered Participant dies, the monthly amount of the Qualified Preretirement Survivor Annuity payable to his surviving Spouse shall be the greater of the amount determined in Section 10.2 or 50 percent of the Grandfathered Participant's Accrued Benefit on his date of death,

36


without reduction for early commencement; provided, however, that if the Grandfathered Participant's surviving Spouse is more than five years younger than the Participant, the percentage of the Grandfathered Participant's Accrued Benefit payable to the Spouse as a Qualified Preretirement Survivor Annuity hereunder shall be reduced so that the benefit payable to the surviving Spouse is the Actuarial Equivalent of the benefit that would be payable if the Spouse were exactly five years younger than the Grandfathered Participant.
10.4
Payment of Qualified Preretirement Survivor Annuity
Payment of a Qualified Preretirement Survivor Annuity to a Participant's surviving Spouse shall commence as of the first day of the month following the later of (i) the month in which the Participant dies or (ii) the month in which the Participant would have attained earliest retirement age (as defined herein) under the Plan; provided, however, that the surviving Spouse of a Grandfathered Participant who is entitled to the enhanced Qualified Preretirement Survivor Annuity described in Section 10.3 may elect to commence payment as of the first day of the month following the month in which the Grandfathered Participant dies. Notwithstanding the foregoing, a Participant's surviving Spouse may elect to defer commencement of payment of the Qualified Preretirement Survivor Annuity to a date no later than the Participant's Normal Retirement Date. If a Participant's surviving Spouse dies before the date as of which payment of the Qualified Preretirement Survivor Annuity is to commence to such Spouse, no Qualified Preretirement Survivor Annuity shall be payable hereunder.
Payment of a Qualified Preretirement Survivor Annuity shall continue to a Participant's surviving Spouse for such Spouse's lifetime, the last monthly payment being for the month in which the Spouse's death occurs.
For purposes of this Article, a Participant's “earliest retirement age” means the earliest age at which the Participant could have elected to commence retirement benefits under the Plan if he had survived, but based on his years of Service on his date of death.
10.5
Non-Spouse Survivor Annuity
A Grandfathered Participant, who has a vested Accrued Benefit, and who does not have a Spouse who is entitled to a Qualified Preretirement Survivor Annuity hereunder may designate a non‑Spouse Beneficiary to receive a non-Spouse survivor annuity hereunder in the event the Grandfathered Participant dies while employed by an Employer or an Affiliated Company after becoming eligible for a retirement benefit in accordance with the provisions of Section 5.1 or 6.1 or after becoming Disabled. Such non-Spouse Beneficiary shall have the same survivor rights as a surviving Spouse under Sections 10.3 and 10.4; provided, however, that payment of the non-Spouse survivor annuity shall commence to such non-Spouse Beneficiary within one year of the Grandfathered Participant's date of death. Without the consent of his designated non-Spouse Beneficiary, such Grandfathered Participant may revoke or change his designation at any time prior to his Annuity Starting Date. If the Grandfathered Participant's designated non-Spouse Beneficiary should die prior to the commencement of a non-Spouse survivor annuity under this Section, no benefit shall be payable pursuant to the provisions of this Article with respect to the deceased Grandfathered Participant.

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ARTICLE XI
GENERAL PROVISIONS & LIMITATIONS REGARDING BENEFITS
11.1
Suspension of Benefits
If a retired or former Employee is reemployed by an Employer or an Affiliated Company prior to his Normal Retirement Date, any benefits payable to such retired or former Employee under the Plan shall be suspended during the period of such reemployment, unless such retired or former Employee is entitled to receive a normal retirement benefit as provided in Section 5.1.
11.2
Non-Alienation of Retirement Rights or Benefits
Except as provided in Code Section 401(a)(13)(B) (relating to qualified domestic relations orders), Code Sections 401(a)(13)(C) and (D) (relating to offsets ordered or required under a criminal conviction involving the Plan, a civil judgment in connection with a violation or alleged violation of fiduciary responsibilities under ERISA, or a settlement agreement between the Participant and the Department of Labor in connection with a violation or alleged violation of fiduciary responsibilities under ERISA), Section 1.401(a)-13(b)(2) of the Treasury Regulations (relating to Federal tax levies), or as otherwise required by law, no benefit under the Plan at any time shall be subject in any manner to anticipation, alienation, assignment (either at law or in equity), encumbrance, garnishment, levy, execution, or other legal or equitable process; and no person shall have the power in any manner to anticipate, transfer, assign (either at law or in equity), alienate or subject to attachment, garnishment, levy, execution, or other legal or equitable process, or in any way encumber his benefits under the Plan, or any part thereof, and any attempt to do so shall be void.
11.3
Payment of Benefits to Others
If any person to whom a retirement benefit is payable is unable to care for his affairs because of illness or accident, any payment due (unless prior claim therefore shall have been made by a duly qualified guardian or other legal representative) may be paid to the Spouse, parent, brother or sister, or any other individual deemed by the Administrator to be maintaining or responsible for the maintenance of such person. The monthly payment of a retirement benefit to a person for the month in which he dies shall, if not paid to such person prior to his death, be paid to his Spouse, parent, brother, sister, or estate as the Administrator shall determine. Any payment made in accordance with the provisions of this Section shall be a complete discharge of any liability of the Plan with respect to the benefit so paid.
11.4
Payment of Small Benefits; Deemed Cash out
With respect to distributions made on and after March 28, 2005, if the Actuarially Equivalent present value of any retirement benefit payable under Section 5.1, 6.1, 7.2, or 8.1 or any survivor benefit is $1,000 or less, such Actuarially Equivalent present value shall be paid to the Participant, or his Beneficiary, if applicable, in a single sum payment, in lieu of all other benefits under the Plan, as soon as practicable following the date of the Participant's retirement, death, or other termination of employment and he shall cease to be a Participant under the Plan as of the date of such payment.

38


With respect to distributions made on and after the Effective Date but prior to March 28, 2005, the limit in the immediately preceding sentence was $5,000. For distributions made prior to March 22, 1999, the Actuarially Equivalent present value of a benefit shall be deemed to exceed $5,000 if the Actuarially Equivalent present value of the benefit exceeded such amount at the time of any prior distribution.
If a former Participant is reemployed, any retirement benefit to which he may become entitled because of his subsequent retirement or termination of employment shall be reduced to its Actuarial Equivalent to reflect the value of any single sum payment made to him hereunder or under the provisions of Section 7.5 or 9.2.
If the nonforfeitable Accrued Benefit of a Participant is zero, such Participant shall be deemed to have received distribution of his entire vested Accrued Benefit under the Plan, in lieu of all other benefits under the Plan, as of the date of his termination of employment with his Employer and all Affiliated Companies and he shall cease to be a Participant under the Plan as of such date.
A distribution hereunder is deemed to be made because of a Participant's retirement or termination of employment if it is made before the end of the second Plan Year following the Plan Year in which such retirement or termination occurred.
11.5
Direct Rollovers
Notwithstanding any other provision of the Plan to the contrary, in lieu of receiving a single sum payment as provided in Section 9.2 or Section 11.5, a "qualified distributee" may elect in writing, in accordance with rules prescribed by the Sponsor, to have any portion or all of such payment that is an "eligible rollover distribution" paid directly by the Plan to the "eligible retirement plan" designated by the "qualified distributee"; provided, however, that this provision shall not apply if the total distribution is less than $200 and that a "qualified distribute” may not elect this provisions with respect to any partial distribution that is less than $500. Any such payment by the Plan to another "eligible retirement plan" shall be a direct rollover. For purposes of this Section, the following terms have the following meanings:
(a)
Effective for distributions made after December 31, 2001, an "eligible retirement plan" means an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), an annuity plan described in Code Section 403(a), a qualified trust described in Code Section 401(a) that accepts rollovers, an annuity contract described in Code Section 403(b), and an eligible plan under Code Section 457(b) that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision; provided that any such 403(b) annuity contract or 457 plan agrees to separately account for the rollover. Effective for distributions made after December 31, 2007, an eligible retirement plan includes an individual retirement account described in Code Section 408A (a “Roth IRA”).
(b)
An "eligible rollover distribution" means any distribution of all or any portion of a Participant's Accrued Benefit or a distribution of all or any portion of a survivor

39


benefit under Article X; provided, however, that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments made not less frequently than annually for the life or life expectancy of the qualified distributee or the joint lives or joint life expectancies of the qualified distributee and the qualified distributee's designated beneficiary, or for a specified period of ten years or more; and any distribution to the extent such distribution is required under Code Section 401(a)(9).
(c)
A "qualified distributee" means a Participant, his surviving Spouse, or his Spouse or former Spouse who is an alternate payee under a qualified domestic relations order, as defined in Code Section 414(P).
(d)
Effective for distributions on and after January 1, 2009, a non-spouse beneficiary who is a designated beneficiary under Section 9.3 shall also be a “qualified distributee” but may elect a rollover only if it is a direct rollover from this Plan to an individual retirement account such beneficiary establishes for the purposes of receiving such distribution. For purposes of this paragraph 11.5(d) only, an indirect rollover, where the distribution is first paid to the beneficiary and subsequently transferred by the beneficiary within sixty (60) days to an individual retirement account, is not permitted.
11.6
Limitations on Commencement
Notwithstanding any other provision of the Plan to the contrary, payment of a Participant's retirement benefit shall commence not later than the earlier of:
(a)
the 60 th day after the end of the Plan Year in which occurs the Participant's Normal Retirement Date, the tenth anniversary of the date on which he first became a Participant, or the Participant's retirement or other termination of employment, whichever is latest; or
(b)
his Required Beginning Date.
Distributions required to commence under this Section shall be made in accordance with Code Section 401(a)(9), Regulations issued thereunder, and the provisions of Addendum A hereto. If payment of a Participant's retirement benefit does not commence until his Required Beginning Date, his Required Beginning Date shall be considered his Annuity Starting Date for all purposes of the Plan.
Subject to the requirements of Code Sections 401(a)(9) and 411(d)(6), no benefit payments shall commence under the Plan until the Participant, or his surviving Spouse, if applicable, makes written application therefore on a form satisfactory to the Administrator. If the amount of a monthly retirement benefit payable to a Participant cannot be determined for any reason (including lack of information as to whether the Participant is still living or his marital status) on the date payment of such benefit is to commence under this Section, payment shall be made retroactively to such date no later than 60 days after the date on which the amount of such monthly retirement benefit can be determined.

40


ARTICLE XII
MAXIMUM RETIREMENT BENEFITS
12.1
Applicability
The provisions of this Article XII are effective for limitation years ending after December 31, 2001, but with respect only to Participants who have an Hour of Service on or after the first day of the first limitation year ending after December 31, 2001. The provisions of this Article XII shall, in all events, comply with the provisions of Code Section 415 and Treasury Regulations published pursuant to such Code Section on April 5, 2007, the provisions of which are specifically incorporated herein by reference; to the extent any portion of this Article XII conflicts with such Regulations, the provisions of the Regulations shall govern, effective January 1, 2008.
12.2
Definitions
For purposes of this Article, the following terms have the following meanings.
(a)
An "affiliated employer" means any corporation or business, other than an Employer, which would be aggregated with an Employer for a relevant purpose under Code Section 414 as modified by Code Section 415(h).
(b)
A Participant's "annual benefit" means a benefit that is payable annually in the form of a "Straight Life Annuity." Except as provided below, where a benefit is payable in a form other than a "Straight Life Annuity," the benefit shall be adjusted to an actuarially equivalent "Straight Life Annuity" that begins at the same time as such other form of benefit and is payable on the first day of each month, before applying the limitations of this Article. For a Participant who has or will have distributions commencing at more than one Annuity Starting Date, the "Annual Benefit" shall be determined as of each such Annuity Starting Date (and shall satisfy the limitations of this Article as of each such date), actuarially adjusting for past and future distributions of benefits commencing at the other Annuity Starting Dates. For this purpose, the determination of whether a new Annuity Starting Date has occurred shall be made without regard to Regulations Section 1.401(a)-20, Q&A 10(d), and with regard to Regulations Section 1.415(b)1(b)(1)(iii)(B) and (C).
No actuarial adjustment to the benefit shall be made for (a) survivor benefits payable to a surviving spouse under a qualified joint and survivor annuity to the extent such benefits would not be payable if the Participant’s benefit were paid in another form; (b) benefits that are not directly related to retirement benefits (such as a qualified disability benefit, preretirement incidental death benefits, and postretirement medical benefits); or (c) the inclusion in the form of benefit of an automatic benefit increase feature, provided the form of benefit is not subject to Code Section 417(e)(3) and would otherwise satisfy the limitations of this Article, and the Plan provides that the amount payable under the form of benefit in any "Limitation Year" shall not exceed the limits of this Article applicable at the Annuity Starting Date, as increased in subsequent years pursuant to Code Section 415(d). For this purpose, an automatic

41


benefit increase feature is included in a form of benefit if the form of benefit provides for automatic, periodic increases to the benefits paid in that form.
The determination of the "Annual Benefit" shall take into account Social Security supplements described in Code Section 411(a)(9) and benefits transferred from another defined benefit plan, other than transfers of distributable benefits pursuant Regulations Section 1.411(d)-4, Q&A-3(c), but shall disregard benefits attributable to Employee contributions or rollover contributions.
Effective for distributions in Plan Years beginning after December 31, 2003, the determination of actuarial equivalence of forms of benefit other than a "Straight Life Annuity" shall be made in accordance with (1) or (2) below.
(1)
Benefit forms not subject to Code Section 417(e)(3) . The "Straight Life Annuity" that is actuarially equivalent to the Participant’s form of benefit shall be determined under this subsection (1) if the form of the Participant’s benefit is either (a) a nondecreasing annuity (other than a "Straight Life Annuity") payable for a period of not less than the life of the Participant (or, in the case of a qualified pre-retirement survivor annuity, the life of the surviving spouse), or (b) an annuity that decreases during the life of the Participant merely because of (1) the death of the survivor annuitant (but only if the reduction is not below 50% of the benefit payable before the death of the survivor annuitant), or (2) the cessation or reduction of Social Security supplements or qualified disability payments (as defined in Code Section 401(a)(11)).
(i)
"Limitation Years" beginning before July 1, 2007 . For "Limitation Years" beginning before July 1, 2007, the actuarially equivalent "Straight Life Annuity" is equal to the annual amount of the "Straight Life Annuity" commencing at the same Annuity Starting Date that has the same actuarial present value as the Participant’s form of benefit computed using whichever of the following produces the greater annual amount: (I) the interest rate and mortality table (or other tabular factor) specified in the Plan for adjusting benefits in the same form; and (II) 5% interest rate assumption and the applicable mortality table defined in the Plan for that Annuity Starting Date.
(ii)
"Limitation Years" beginning on or after July 1, 2007 . For "Limitation Years" beginning on or after July 1, 2007, the actuarially equivalent "Straight Life Annuity" is equal to the greater of (I) the annual amount of the "Straight Life Annuity" (if any) payable to the Participant under the Plan commencing at the same Annuity Starting Date as the Participant’s form of benefit; and (II) the annual amount of the "Straight Life Annuity" commencing at the same Annuity Starting Date that has the same actuarial present value as the Participant’s form of benefit, computed using a 5% interest rate assumption and

42


the applicable mortality table defined in the Plan for that Annuity Starting Date.
(2)
Benefit Forms Subject to Code Section 417(e)(3) . The "Straight Life Annuity" that is actuarially equivalent to the Participant’s form of benefit shall be determined under this paragraph if the form of the Participant’s benefit is other than a benefit form described in Section 12.2(b)(1) above. In this case, the actuarially equivalent "Straight Life Annuity" shall be determined as follows:
(i)
Annuity Starting Date in Plan Years Beginning After 2005 . If the Annuity Starting Date of the Participant’s form of benefit is in a Plan Year beginning after 2005, the actuarially equivalent "Straight Life Annuity" is equal to the greatest of (I) the annual amount of the "Straight Life Annuity" commencing at the same Annuity Starting Date that has the same actuarial present value as the Participant’s form of benefit, computed using the interest rate and mortality table (or other tabular factor) specified in the Plan for adjusting benefits in the same form; (II) the annual amount of the "Straight Life Annuity" commencing at the same Annuity Starting Date that has the same actuarial present value as the Participant’s form of benefit, computed using a 5.5 percent interest rate assumption and the applicable mortality table defined in the Plan; and (III) the annual amount of the "Straight Life Annuity" commencing at the same Annuity Starting Date that has the same actuarial present value as the Participant’s form of benefit, computed using the applicable interest rate and applicable mortality table defined in the Plan, divided by 1.05.
(ii)
Annuity Starting Date in Plan Years Beginning in 2004 or 2005 . If the Annuity Starting Date of the Participant’s form of benefit is in a Plan Year beginning in 2004 or 2005, except as provided in the transition rule of (iii) below, the actuarially equivalent "Straight Life Annuity" is equal to the annual amount of the "Straight Life Annuity" commencing at the same annuity starting date that has the same actuarial present value as the Participant’s form of benefit, computed using whichever of the following produces the greater annual amount: (I) the interest rate and mortality table (or other tabular factor) specified in the Plan for adjusting benefits in the same form; and (II) a 5.5% interest rate assumption and the applicable mortality table defined in the Plan.
(c)
The "defined benefit compensation limitation" means 100 percent of a Participant's average 415 Compensation for his high three years. Average 415 Compensation for the Participant’s high three years means the average 415 Compensation for the three consecutive calendar years of service (or, if the Participant has fewer than three

43


consecutive calendar years of service, the Participant’s longest consecutive period of service, including fractions of years, but not less than one year) with the Employer that produces the highest average. A Participant’s 415 Compensation for a calendar year of service shall not include compensation in excess of the limitation under Code Section 401(a)(17) that is in effect for the calendar year in which such year of service begins.
(d)
The "defined benefit dollar limitation" means $160,000, as adjusted, effective January 1 of each year, under Code Section 415(d) in such manner as the Secretary shall prescribe, and payable in the form of a straight life annuity. A limitation as adjusted under Code Section 415(d) will apply to "limitation years" ending with or within the calendar year for which the adjustment applies.
(e)
"Defined benefit plan" has the meaning given such term in Code Section 415(k).
(f)
The "limitation year" means the Plan Year.
(g)
A Participant's "old law benefit" means his Accrued Benefit under the Plan as of the last day of the "limitation year" beginning in 1999 (the "freeze date"), determined without regard to any amendment adopted after the "freeze date".
(h)
The “maximum permissible benefit” means the lesser of the "Defined Benefit Dollar Limitation" or the "Defined Benefit Compensation Limitation" (both adjusted where required, as provided below).
(1)
Adjustment for Less Than 10 Years of Participation or Service : If the Participant has less than 10 years of participation in the Plan, the "Defined Benefit Dollar Limitation" shall be multiplied by a fraction -- (i) the numerator of which is the number of "Years of Participation" in the Plan (or part thereof, but not less than one year), and (ii) the denominator of which is ten (10). In the case of a Participant who has less than ten Years of Service with the Employer, the "Defined Benefit Compensation Limitation" shall be multiplied by a fraction -- (i) the numerator of which is the number of "Years of Service" with the Employer (or part thereof, but not less than one year), and (ii) the denominator of which is ten (10).
(2)
Adjustment of "Defined Benefit Dollar Limitation" for Benefit Commencement Before Age 62 or after Age 65 : Effective for benefits commencing in "Limitation Years" ending after December 31, 2001, the "Defined Benefit Dollar Limitation" shall be adjusted if the Annuity Starting Date of the Participant’s benefit is before age 62 or after age 65. If the Annuity Starting Date is before age 62, the "Defined Benefit Dollar Limitation" shall be adjusted under Section 12.2(h)(2)(i), as modified by Section 12.2(h)(2)(iii). If the Annuity Starting Date is after age 65, the "Defined Benefit Dollar Limitation" shall be adjusted under Section 12.2(h)(2)(ii), as modified by Section 12.2(h)(2)(iii).

44


(i)
Adjustment of "Defined Benefit Dollar Limitation" for Benefit Commencement Before Age 62:
(I)
"Limitation Years" Beginning Before July 1, 2007 . If the Annuity Starting Date for the Participant’s benefit is prior to age 62 and occurs in a "Limitation Year" beginning before July 1, 2007, the "Defined Benefit Dollar Limitation" for the Participant’s Annuity Starting Date is the annual amount of a benefit payable in the form of a "Straight Life Annuity" commencing at the Participant’s Annuity Starting Date that is the actuarial equivalent of the "Defined Benefit Dollar Limitation" (adjusted under Section 12.2(h)(1) for years of participation less than ten (10), if required) with actuarial equivalence computed using whichever of the following produces the smaller annual amount: (1) the interest rate and mortality table (or other tabular factor) specified in the Plan; or (2) a five-percent (5%) interest rate assumption and the applicable mortality table as defined in the Plan.
(II)
"Limitation Years" Beginning on or After July 1, 2007 .
(A)
Plan Does Not Have Immediately Commencing "Straight Life Annuity" Payable at both Age 62 and the Age of Benefit Commencement . If the Annuity Starting Date for the Participant’s benefit is prior to age 62 and occurs in a "Limitation Year" beginning on or after July 1, 2007, and the Plan does not have an immediately commencing "Straight Life Annuity" payable at both age 62 and the age of benefit commencement, the "Defined Benefit Dollar Limitation" for the Participant’s Annuity Starting Date is the annual amount of a benefit payable in the form of a "Straight Life Annuity" commencing at the Participant’s Annuity Starting Date that is the actuarial equivalent of the "Defined Benefit Dollar Limitation" (adjusted under Section 12.2(h)(1) for years of participation less than ten (10), if required) with actuarial equivalence computed using a five-percent (5%) interest rate assumption and the applicable mortality table for the Annuity Starting Date as defined in the Plan (and expressing the Participant’s age based on completed calendar months as of the Annuity Starting Date).

45


(B)
Plan Has Immediately Commencing "Straight Life Annuity" Payable at both Age 62 and the Age of Benefit Commencement . If the Annuity Starting Date for the Participant’s benefit is prior to age 62 and occurs in a "Limitation Year" beginning on or after July 1, 2007, and the Plan has an immediately commencing "Straight Life Annuity" payable at both age 62 and the age of benefit commencement, the "Defined Benefit Dollar Limitation" for the Participant’s Annuity Starting Date is the lesser of the limitation determined under Section 12.2(h)(2)(i)(II)(A) and the "Defined Benefit Dollar Limitation" (adjusted under Section 12.2(h)(1) for years of participation less than ten (10), if required) multiplied by the ratio of the annual amount of the immediately commencing "Straight Life Annuity" under the Plan at the Participant’s Annuity Starting Date to the annual amount of the immediately commencing "Straight Life Annuity" under the Plan at age 62, both determined without applying the limitations of this article.
(ii)
Adjustment of "Defined Benefit Dollar Limitation" for Benefit Commencement After Age 65 :
(I)
"Limitation Years" Beginning Before July 1, 2007 . If the Annuity Starting Date for the Participant’s benefit is after age 65 and occurs in a Limitation Year beginning before July 1, 2007, the "Defined Benefit Dollar Limitation" for the Participant’s Annuity Starting Date is the annual amount of a benefit payable in the form of a "Straight Life Annuity" commencing at the Participant’s Annuity Starting Date that is the actuarial equivalent of the "Defined Benefit Dollar Limitation" (adjusted under Section 12.2(h)(1) for years of participation less than ten (10), if required) with actuarial equivalence computed using whichever of the following produces the smaller annual amount: (1) the interest rate and mortality table (or other tabular factor) specified in the Plan; or (2) a five-percent (5%) interest rate assumption and the applicable mortality table as defined in the Plan.
(II)      "Limitation Years" Beginning Before July 1, 2007 .
(A)
Plan Does Not Have Immediately Commencing "Straight Life Annuity" Payable at both Age 65 and

46


the Age of Benefit Commencement . If the annuity starting date for the Participant’s benefit is after age 65 and occurs in a "Limitation Year" beginning on or after July 1, 2007, and the Plan does not have an immediately commencing "Straight Life Annuity" payable at both age 65 and the age of benefit commencement, the "Defined Benefit Dollar Limitation" at the Participant’s Annuity Starting Date is the annual amount of a benefit payable in the form of a "Straight Life Annuity" commencing at the Participant’s Annuity Starting Date that is the actuarial equivalent of the "Defined Benefit Dollar Limitation" (adjusted under Section 12.2(h)(1)for years of participation less than 10, if required), with actuarial equivalence computed using a 5% interest rate assumption and the applicable mortality table for that Annuity Starting Date as defined in the Plan (and expressing the Participant’s age based on completed calendar months as of the Annuity Starting Date).
(B)
Plan Has Immediately Commencing "Straight Life Annuity" Payable at both Age 65 and the Age of Benefit Commencement . If the Annuity Starting Date for the Participant’s benefit is after age 65 and occurs in a "Limitation Year" beginning on or after July 1, 2007, and the plan has an immediately commencing "Straight Life Annuity" payable at both age 65 and the age of benefit commencement, the "Defined Benefit Dollar Limitation" at the Participant’s Annuity Starting Date is the lesser of the limitation determined under Section 12.2(h)(2)(ii)(II)(A) and the "Defined Benefit Dollar Limitation" (adjusted under Section 12.2(h)(1) for years of participation less than ten (10), if required) multiplied by the ratio of the annual amount of the adjusted immediately commencing "Straight Life Annuity" under the Plan at the Participant’s Annuity Starting Date to the annual amount of the adjusted immediately commencing "Straight Life Annuity" under the Plan at age 65, both determined without applying the limitations of this Article. For this purpose, the adjusted immediately commencing "Straight Life Annuity" under the Plan at the Participant’s Annuity Starting Date is the annual amount of such annuity payable to the Participant, computed disregarding the Participant’s accruals after

47


age 65 but including actuarial adjustments even if those actuarial adjustments are used to offset accruals; and the adjusted immediately commencing "Straight Life Annuity" under the Plan at age 65 is the annual amount of such annuity that would be payable under the Plan to a hypothetical Participant who is age 65 and has the same accrued benefit as the Participant.
(iii)
Notwithstanding the other requirements of this Section 12.2(h)(2), no adjustment shall be made to the "Defined Benefit Dollar Limitation" to reflect the probability of a Participant’s death between the Annuity Starting Date and age 62, or between age 65 and the Annuity Starting Date, as applicable, if benefits are not forfeited upon the death of the Participant prior to the Annuity Starting Date. To the extent benefits are forfeited upon death before the Annuity Starting Date, such an adjustment shall be made. For this purpose, no forfeiture shall be treated as occurring upon the Participant’s death if the Plan does not charge Participants for providing a qualified preretirement survivor annuity, as defined in Code Section 417(c), upon the Participant’s death.
(i)
“Compensation” as used in this Article XII shall mean “415 Compensation,” which shall be compensation as defined in Treasury Regulation 1.415(c)-2(a) and shall include regular pay after severance from employment, provided the following requirements are satisfied:
(1)
The payment is regular compensation for services during the Participant's regular working hours, or compensation for services outside the Participant's regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments;
(2)
The payment would have been paid to the Participant prior to a severance from employment if the Participant had continued in employment with the Employer; and
(3)
Such payments are made no later than the later of 2 1 / 2 months after severance from employment or by the end of the Limitation Year that includes the date of such severance from employment.
For this purpose, severance from employment means termination of employment with the Employer maintaining the Plan. An Employee does not have a severance from employment if, in connection with a change of employment, the Employee’s new employer maintains the Plan with respect to the Employee.

48


12.3
Maximum Limitation on Annual Benefits
Subject to the provisions of Section 12.4, the "aggregate annual retirement benefit" accrued or payable to a Participant may not at any time within any "limitation year" exceed the "maximum permissible benefit".
12.4
Exceptions
As permitted pursuant to Method 2 described in Q&A 14 of Revenue Ruling 98-1, in no event will a Participant's "aggregate annual retirement benefit" be less than the Participant's "old law benefit" limited under the provisions of Code Section 415, as in effect on December 7, 1994. The Plan mortality and interest rate factors for purposes of applying Code Section 415(b)(2)(B), (C), and (D) shall be the mortality and interest rate factors in effect under the Plan as of December 7, 1994, determined without regard to any amendment to the Plan that was adopted after that date. If the interest rate factor under the Plan in effect on December 7, 1994 is a variable interest rate, such variable interest rate shall be the rate calculated on the date the Participant's benefit is being determined, rather than the rate calculated on December 7, 1994. Notwithstanding any other provision of this Section to the contrary, in no event will a Participant's "old law benefit" exceed the Participant's total benefit (prior to adjustment for compliance with Code Section 415) under the terms of the Plan in effect after the "freeze date”.
12.5
Manner of Reduction
If the Participant's "aggregate annual retirement benefit" exceeds the limitations specified in this Article, the reduction in the amount of his "annual retirement benefit" shall be equal to the amount by which his "aggregate annual retirement benefit" exceeds the limitations of this Article multiplied by a fraction, the numerator of which is his "annual retirement benefit" (determined without regard to this Article) and the denominator of which is his "aggregate annual retirement benefit" (determined without regard to the limitations of this Article or any corresponding limitation in any other defined benefit plan maintained by an Employer or any affiliated employer).

49


ARTICLE XIII
PENSION FUND
13.1
Pension Fund
The Pension Fund is maintained by the Funding Agent for the Plan under a Funding Agreement with the Sponsor. Subject to the provisions of Title IV of ERISA, benefits under the Plan shall be only such as can be provided by the assets of the Pension Fund, and no liability for payment of benefits shall be imposed upon the Employers or any Affiliated Company, or any of their officers, employees, directors, or stockholders.
13.2
Contributions by the Employers
So long as the Plan continues, contributions will be made by the Employers at such times and in such amounts as the Sponsor in its sole discretion shall from time to time determine, based on the advice of the Actuary and consistent with the funding policy for the Plan. Subject to the provisions of Section 13.5, all such contributions shall be delivered to the Funding Agent for deposit in the Pension Fund. Participants shall make no contributions under the Plan.
13.3
Expenses of the Plan
The expenses of administration of the Plan, including the expenses of the Administrator and fees of the Funding Agent and any investment advisor, shall be paid from the Pension Fund, unless the Sponsor or an Employer elects to make payment.
13.4
No Reversion
The Pension Fund shall be for the exclusive benefit of Participants and persons claiming under or through them. All contributions pursuant to Section 13.2 hereof shall be based on the facts then understood by the Sponsor, shall be conditioned upon the initial qualification of the Funding Agreement and Plan under Code Sections 401 and 501(a), and, unless otherwise specified by the Sponsor, shall be conditioned upon deductibility of the contributions under Code Section 404 in the year for which such contributions were made. All such contributions shall be irrevocable and such contributions as well as the Pension Fund, or any portion of the principal or income thereof, shall never revert to or inure to the benefit of the Employers or any Affiliated Company except that:
(a)
the residual amounts specified in Article XVI may be returned to the Employers;
(b)
any contributions which are made under a mistake of fact may be returned to the Employers within one year after the contributions were made;
(c)
any contributions made for years during which the Funding Agreement and Plan were not initially qualified under Code Sections 401 and 501(a) may be returned to the Employers within one year after the date of denial of initial qualification, but only if an application for determination was filed within the period of time prescribed under ERISA Section 403(c)(2)(B); and

50


(d)
any contributions, which are not, in whole or in part, deductible under Code Section 404 for the year for which they were made, may to the extent such contributions were not so deductible, be returned to the Employers within one year after the disallowance of the deduction.
The Sponsor shall determine, in its sole discretion, whether the contributions described above, other than the residual amounts described in paragraph (a), shall be returned to an Employer. If any such contributions are to be returned, the Sponsor shall so direct the Funding Agent, in writing, no later than ten days prior to the last day upon which they may be returned.
13.5
Forfeitures Not to Increase Benefits
Any forfeitures arising from the termination of employment or death of an Employee, or for any other reason, shall be used to reduce Employer contributions to the Pension Fund, and shall not be applied to increase the benefits any Participant otherwise would receive under the Plan at any time prior to the termination of the Plan.
13.6
Change of Funding Medium
The Sponsor shall have the right to change at any time the means through which benefits under the Plan shall be provided. No such change shall constitute a termination of the Plan or result in the diversion to the Employers of any funds previously contributed in accordance with the Plan.

51


ARTICLE XIV
ADMINISTRATION
14.1
Authority of the Sponsor
The Sponsor, which shall be the administrator for purposes of ERISA and the plan administrator for purposes of the Code, shall have all the powers and authority expressly conferred upon it herein and further shall have the sole discretionary right, authority, and power to interpret and construe the Plan, and to determine any disputes arising thereunder, subject to the provisions of Section 14.3. In exercising such powers and authority, the Sponsor at all times shall exercise good faith, apply standards of uniform application, and refrain from arbitrary action. The Sponsor may employ such attorneys, agents, and accountants as it may deem necessary or advisable to assist it in carrying out its duties hereunder. The Sponsor shall be a "named fiduciary" as that term is defined in ERISA Section 402(a)(2). The Sponsor may:
(a)
allocate any of the powers, authority, or responsibilities for the operation and administration of the Plan (other than trustee responsibilities as defined in ERISA Section 405(c)(3)) among named fiduciaries; and
(b)
designate a person or persons other than a named fiduciary to carry out any of such powers, authority, or responsibilities;
except that no allocation by the Sponsor of, or designation by the Sponsor with respect to, any of such powers, authority, or responsibilities to another named fiduciary or a person other than a named fiduciary shall become effective unless such allocation or designation shall first be accepted by such named fiduciary or other person in a writing signed by it and delivered to the Sponsor.
14.2
Action of the Sponsor
Any act authorized, permitted, or required to be taken by the Sponsor under the Plan, which has not been delegated in accordance with Section 14.1, may be taken by a majority of the members of the board of directors of the Sponsor, either by vote at a meeting, or in writing without a meeting or by the employee or employees of the Sponsor designated by the board of directors to carry out such acts on behalf of the Sponsor. All notices, advice, directions, certifications, approvals, and instructions required or authorized to be given by the Sponsor under the Plan shall be in writing and signed by either (i) a majority of the members of the board of directors of the Sponsor, or by such member or members as may be designated by an instrument in writing, signed by all the members thereof, as having authority to execute such documents on its behalf, or (ii) the employee or employees of the Sponsor who have the authority to act on behalf of the Sponsor.
14.3
Claims Review Procedure
Whenever the Administrator decides for whatever reason to deny, whether in whole or in part, a claim for benefits filed by any person (hereinafter referred to as the "claimant"), the Administrator shall transmit to the claimant a written notice of its decision, which notice shall be written in a manner calculated to be understood by the claimant and shall contain a statement of (i) the specific

52


reasons for the denial of the claim, (ii) specific reference to pertinent Plan provisions on which the denial is based, and (iii) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such information is necessary. The notice shall also include a statement advising the claimant that, within 60 days of the date on which he receives such notice, he may obtain review of the decision of the Administrator in accordance with the procedures hereinafter set forth.
Within the 60-day period beginning on the date the claimant receives notice regarding disposition of his claim, the claimant or his authorized representative may request that the claim denial be reviewed by filing with the Administrator a written request therefor, which request shall contain the following information:
(a)
the date on which the claimant's request was filed with the Administrator provided that the date on which the claimant's request for review was in fact filed with the Administrator shall control in the event that the date of the actual filing is later than the date stated by the claimant pursuant to this paragraph;
(b)
the specific portions of the denial of his claim which the claimant requests the Administrator to review;
(c)
a statement by the claimant setting forth the basis upon which he believes the Administrator should reverse its previous denial of his claim for benefits and accept his claim as made; and
(d)
any written material (offered as exhibits) which the claimant desires the Administrator to examine in its consideration of his position as stated pursuant to paragraph (c) of this Section.
Within 60 days of the date determined pursuant to paragraph (a) of this Section (or, if special circumstances require an extension, within 120 days of that date; provided that the delay and the reasons for the delay are communicated to the claimant within the initial 60-day period), the Administrator shall conduct a full and fair review of its decision denying the claimant's claim for benefits and shall render its written decision on review to the claimant. The Administrator's decision on review shall be written in a manner calculated to be understood by the claimant and shall specify the reasons and Plan provisions upon which the Administrator's decision was based.
14.4
Qualified Domestic Relations Orders
The Administrator shall establish reasonable procedures to determine the status of domestic relations orders and to administer distributions under domestic relations orders which are deemed to be qualified orders. Such procedures shall be in writing and shall comply with the provisions of Code Section 414(p) and regulations issued thereunder.

53


14.5
Indemnification
In addition to whatever rights of indemnification the members of the board of directors of the Sponsor or any employee or employees to whom any power, authority, or responsibility is delegated pursuant to Section 14.2, may be entitled under the articles of incorporation, regulations, or bylaws of the Sponsor, under any provision of law, or under any other agreement, the Sponsor shall satisfy any liability actually and reasonably incurred by any such person or persons, including expenses, attorneys' fees, judgments, fines, and amounts paid in settlement (other than amounts paid in settlement not approved by the Sponsor), in connection with any threatened, pending, or completed action, suit, or proceeding which is related to the exercise or failure to exercise by such person or persons of any of the powers, authority, responsibilities, or discretion as provided under the Plan and the Funding Agreement, or reasonably believed by such person or persons to be provided thereunder, and any action taken by such person or persons in connection therewith, unless the same is judicially determined to be the result of such person's or persons' gross negligence or willful misconduct.
14.6
Actions Binding
Subject to the provisions of Section 14.3, any action taken by the Sponsor which is authorized, permitted, or required under the Plan shall be final and binding upon the Employers, the Funding Agent, all persons who have or who claim an interest under the Plan, and all third parties dealing with the Employers or the Funding Agent.

54


ARTICLE XV
ADOPTION BY OTHER ENTITIES
15.1
Adoption by Affiliated Companies
An Affiliated Company that is not an Employer may, with the consent of the Sponsor, adopt the Plan and become an Employer hereunder by causing an appropriate written instrument evidencing such adoption to be executed in accordance with the requirements of its organizational authority. Any such instrument shall specify the effective date of the adoption. Unless otherwise specified in the adoption instrument, for purposes of computing the Service and Average Annual Earnings of an Employee who is in the employ of the Employer on the effective date of the adoption, employment with and compensation from the Employer before the effective date of the adoption shall be treated as employment with and Earnings from an Employer. Unless otherwise specifically provided in the adoption instrument, for purposes of computing the Credited Service of an Employee, only employment with the Employer for periods on or after the effective date of the adoption shall be treated as employment with an Employer. Any Employer shall undertake to contribute its appropriate share, as determined by the Sponsor, of any contributions made to the Funding Agent hereunder. Notwithstanding the foregoing, however, any adoption of the Plan by an Employer shall be subject to the receipt of a determination from the Internal Revenue Service to the effect that with respect to such Employer the Plan meets the requirements for qualification under Code Section 401(a), and, should an adverse determination be issued by the Internal Revenue Service, the adoption of the Plan by said Employer shall be null and void and of no effect whatsoever.
15.2
Effective Plan Provisions
An Employer who adopts the Plan shall be bound by the provisions of the Plan in effect at the time of the adoption and as subsequently in effect because of any amendment to the Plan.

55


ARTICLE XVI
AMENDMENT & TERMINATION OF PLAN
16.1
Sponsor's Right of Amendment
The Sponsor reserves the right at any time and from time to time, by means of a written instrument executed in the name of the Sponsor by its duly authorized representatives, to amend or modify the Plan and, to the extent provided therein, to amend or modify the Funding Agreement. No pension or other benefit granted prior to the time of any amendment or modification of the Plan shall be reduced, suspended, or discontinued as a result thereof, except to the extent necessary to enable the Plan to meet the requirements for qualification under the Code or the requirements of any governmental authority. Moreover, no such action shall operate to recapture for the Employers any contributions made to the Pension Fund, except as provided in Section 13.4 or Section 16.7.
Effective August 9, 2006, no amendment to this Plan shall retroactively decrease a Participant’s accrued benefit or otherwise retroactively place greater restrictions or conditions on a Participant’s rights to Code Section 411(d)(6) protected benefits, even if the amendment adds a restriction or condition that is otherwise permitted under Code Section 411(a), unless otherwise permitted under Treasury Regulations Sections 1.411(d)-3 or 1.411(d)-4. An optional form of benefit hereunder may be eliminated prospectively by an amendment to the Plan provided that such amendment satisfies the requirements of Treasury Regulations Sections 1.411(d)-3 or 1.411(d)-4.
16.2
Termination of the Plan
The Sponsor reserves the right, by means of a written instrument executed in the name of the Sponsor by its duly authorized representatives, at any time to terminate the Plan. In the event of termination, no further benefits shall accrue, no further contributions shall be made, except as may be required under Title IV of ERISA or Code Section 412, and all assets remaining in the Pension Fund, after provision has been made for payment of the expenses of administration and liquidation in connection with the termination, shall be allocated by the Funding Agent upon the advice of the Actuary, among the Participants and Beneficiaries of the Plan, in the following manner and order of precedence:
(a)
In the case of benefits payable as an annuity,
(1)
in the case of the benefit of a Participant or Beneficiary which was in pay status as of the beginning of the three-year period ending on the termination date of the Plan, to each such benefit, based on the provisions of the Plan (as in effect during the five-year period ending on such date) under which such benefit would be the least; and
(2)
in the case of a Participant's or Beneficiary's benefit (other than a benefit described in subparagraph (1) of this paragraph) which would have been in pay status as of the beginning of such three-year period if the Participant had retired prior to the beginning of such three-year period and if his benefits had commenced (in the normal form of annuity under the Plan) as of the beginning of such period, to each such benefit based on the provisions of the

56


Plan (as in effect during the five-year period ending on such date) under which such benefit would be the least.
For purposes of subparagraph (1) of this paragraph, the lowest benefit in pay status during a three-year period shall be considered the three-year benefit in pay status for such period.
(b)
Next,
(1)
to all other benefits, if any, of individuals under the Plan guaranteed under Title IV of ERISA (determined without regard to ERISA Section 4022(b)(5)); and
(2)
to the additional benefits, if any, which would be determined under subparagraph (1) of this paragraph if ERISA Section 4022(b)(6) did not apply.
For purposes of this paragraph, ERlSA Section 4021 shall be applied without regard to subsection (c) thereof.
(c)
Next, to all nonforfeitable benefits under the Plan.
(d)
Last, to all other benefits under the Plan.
Notwithstanding any other provision of the Plan to the contrary, other than Sections 16.3 through 16.8, the amount allocated to any Participant under this Section 16.2 shall be fully vested and nonforfeitable. The Sponsor shall furnish all information reasonably required for the purposes of making such allocations. The Funding Agent shall implement the allocations determined under this Section among the persons for whose benefit such allocations are made through distribution of the assets of the Pension Fund, through application of the amounts allocated to the purchase from an insurance company of immediate or deferred annuities, or through creation of one or more new funds for the purpose of distributing the assets of the Pension Fund (to the extent so allocated), or by a combination of the foregoing.
16.3
Adjustment of Allocation
The amount allocated under any paragraph of Section 16.2 with respect to any benefit shall be properly adjusted for any allocations of assets with respect to that benefit under a prior paragraph of Section 16.2.
16.4
Assets Insufficient for Allocation
If the assets available for allocation under any paragraph of Section 16.2 (other than paragraphs (c) and (d)) are insufficient to satisfy in full the benefits of all individuals which are described in that paragraph, the assets shall be allocated pro rata among such individuals on the basis of the present value (as of the date of termination of the Plan) of their respective benefits described in that paragraph.

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16.5
Assets Insufficient for Allocation Under Paragraph (c) of Section 16.2
This Section applies if the assets available for allocation under paragraph (c) of Section 16.2 are not sufficient to satisfy in full the benefits of individuals described in such paragraph.
(a)
If this Section applies, except as provided in paragraph (b), the assets shall be allocated to the benefits of individuals described in paragraph (c) of Section 16.2 on the basis of the benefits of individuals which would have been described in such paragraph under the Plan as in effect at the beginning of the five-year period ending on the date of termination of the Plan.
(b)
If the assets available for allocation under paragraph (a) of this Section are sufficient to satisfy in full the benefits described in such paragraph (without regard to this paragraph (b)), then for purposes of paragraph (a), benefits of individuals described in such paragraph shall be determined on the basis of the Plan as amended by the most recent Plan amendment effective during such five-year period under which the assets available for allocation are sufficient to satisfy in full the benefits of individuals described in paragraph (a), and any assets remaining to be allocated under such paragraph (a) on the basis of the Plan as amended by the next succeeding Plan amendment effective during such period.
16.6
Allocations Resulting in Discrimination
If the Secretary of the Treasury determines that the allocation made pursuant to this Article (without regard to this Section) results in discrimination prohibited by Code Section 401(a)(4), then the assets allocated under paragraphs (b)(2), (c), and (d) of Section 16.2 shall be reallocated to the extent necessary to prevent the disqualification of the Plan (or any trust or annuity contract under the Plan) under Code Section 401(a).
16.7
Residual Assets
Subject to the provisions of Section 16.10, any residual assets of the Plan shall be distributable to the Employers if:
(a)
all liabilities of the Plan to Participants and their beneficiaries have been satisfied; and
(b)
the distribution does not contravene any provision of law.
16.8
Meanings of Terms
The terms used in Sections 16.2 through 16.7 shall have, where required, the same meaning as the same terms have as used in ERlSA Section 4044; provided, however, that any term specifically defined in the Plan shall retain its meaning as defined thereunder.

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16.9
Payments by the Funding Agent
The Funding Agent shall make the payments specified in a written direction of the Sponsor in accordance with the provisions of Section 16.2 until the same shall be superseded by a further written direction. The obligation of the Funding Agent to make any payment hereunder in all events shall be limited to the amount of the Pension Fund at the time any such payment shall become due.
16.10
Residual Assets Distributable to the Employers
Upon written notice from the Sponsor that any residual assets of the Plan are distributable to the Employers in accordance with the provisions of Section 16.7, then the Funding Agent shall pay over such residual assets, or an amount equal to the fair market value of that portion of such residual assets which are not so paid, to the Employers; provided, however, that, under no circumstances or conditions other than as set forth in this Section 16.10 and in Section 13.4, shall any contribution of the Employers, or any portion of the proceeds or avails thereof, ever revert, be paid, or inure to the benefit, directly or indirectly, of the Employers or any Affiliated Company; nor shall any portion of the principal or the income from the Pension Fund ever be used for or diverted to any purpose other than for the exclusive benefit of Participants and persons claiming under or through them pursuant to the Plan.
16.11
Withdrawal of an Employer
Each Employer shall have the right to withdraw from the Plan by action in accordance with its organizational authority, and by filing with the Sponsor written notice thereof, in which event the Employer shall cease to be an Employer for purposes of the Plan. An Employer shall be deemed automatically to withdraw from the Plan in the event it completely discontinues contributions to the Plan or it ceases to be an Affiliated Company.
If such withdrawal is for the purpose of establishing or merging with a separate plan which meets the requirements for qualification under applicable provisions of the Code, the portion of the assets of the Pension Fund which is applicable to the withdrawing Employer, as determined by the Sponsor upon the advice of the Actuary, on a fair and equitable basis, taking into account the contributions made by the Employer, benefit payments made with respect to its Employees and retired and former Employees, and other relevant factors, shall be transferred to and become a part of the trust fund or other financing medium maintained in connection with the separate plan, subject to the limitations on merger, consolidation, or transfers of Plan assets set forth in Section 17.5.

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ARTICLE XVII
MISCELLANEOUS
17.1
No Commitment as to Employment
Nothing contained herein shall be construed as a commitment or agreement on the part of any person to continue his employment with his Employer, or as a commitment on the part of his Employer to continue the employment, compensation, or benefits of any person for any period, and all employees of an Employer shall remain subject to discharge, layoff, or disciplinary action to the same extent as if the Plan had never been put into effect.
17.2
Claims of Other Persons
Nothing in the Plan or Funding Agreement shall be construed as giving any Participant or any other person, firm, or corporation, any legal or equitable right as against the Employers, their officers, employees, or directors, or as against the Funding Agent, except such rights as are specifically provided for in the Plan or Funding Agreement or hereafter created in accordance with the terms and provisions of the Plan.
17.3
Governing Law
Except as provided under Federal law, the provisions of the Plan shall be governed by and construed in accordance with the laws of the State of Texas.
17.4
Nonforfeitability of Benefits Upon Termination or Partial Termination
Notwithstanding any other provision of the Plan, in the event of the termination or a partial termination of the Plan, including the complete discontinuation of contributions to the Plan, the rights of all Employees who are affected by such termination to benefits accrued to the date of such termination, to the extent funded as of such date, shall be nonforfeitable.
17.5
Merger, Consolidation, or Transfer of Plan Assets
The Plan shall not be merged or consolidated with any other plan, nor shall any of its assets or liabilities be transferred to another plan, unless, immediately after such merger, consolidation, or transfer of assets or liabilities, each Participant in the Plan would receive a benefit under the Plan which is at least equal to the benefit he would have received immediately prior to such merger, consolidation, or transfer of assets or liabilities (assuming in each instance that the Plan had then terminated).
If another qualified plan merges or consolidates with the Plan, notwithstanding any other provision of the Plan to the contrary, the forms of payment and other provisions that were available with respect to benefits accrued immediately prior to the transfer or merger under such other qualified plan and that may not be eliminated under Code Section 411(d)(6) shall continue to be available under the Plan with respect to the benefit that the Participant would have received immediately prior to such merger, consolidation or transfer of assets or liabilities.

60


17.6
Funding Agreement
The Funding Agreement and the Pension Fund maintained thereunder shall be deemed to be a part of the Plan as if fully set forth herein and the provisions of the Funding Agreement are hereby incorporated by reference into the Plan.
17.7
Benefit Offsets for Overpayments
If a Participant or Beneficiary receives benefits hereunder for any period in excess of the amount of benefits to which he was entitled under the terms of the Plan as in effect for such period, such overpayment shall be offset against current or future benefit payments, as applicable, until such time as the overpayment is entirely recouped by the Plan.
17.8
Internal Revenue Requirements
Notwithstanding any other provision of the Plan to the contrary, to conform to the requirements of U.S. Treasury Regulations, the benefit payable under the Plan shall be subject to the following limitations:
(a)
If the Plan is terminated, the benefit of any Highly Compensated Employee shall be limited to a benefit that is nondiscriminatory under Code Section 401(a)(4).
(b)
The annual payments in anyone year to any of the 25 Highly Compensated Employees with the greatest compensation (hereinafter referred to as a "restricted employee") in the current or any prior year shall not exceed an amount equal to the payments that would be made on behalf of the restricted employee under (1) a straight life annuity that is the Actuarial Equivalent of the restricted employee's Accrued Benefit and other benefits to which the restricted employee is entitled under the Plan (other than a Social Security supplement), and (2) the amount of the payments the restricted employee is entitled to receive under a Social Security supplement. For purposes of this paragraph, "benefit" includes, among other benefits, loans in excess of the amounts set forth in Code Section 72(p )(2)(A), any periodic income, any withdrawal values payable to a living employee, and any death benefits not provided for by insurance on the restricted employee's life. The foregoing provisions of this paragraph shall not apply, however, if:
(1)
After payment to a restricted employee of all benefits payable to the restricted employee under the Plan, the value of Plan assets equals or exceeds 110 percent of the value of "current liabilities" as defined in Code Section 412(1)(7), (each value being determined as of the same date in accordance with applicable Treasury regulations);
(2)
The value of the benefits payable under the Plan to or for a restricted employee is less than one percent of the value of current liabilities before distribution; or

61


(3)
The value of benefits payable under the Plan to or for a restricted employee does not exceed the amount described in Code Section 411(a)(11)(A).
17.9
Overall Permitted Disparity Limits
If an Employer or an Affiliated Company maintains another qualified plan, in no event shall the "overall permitted disparity limits" of Internal Revenue Service regulations Section 1.401(1)-5 be exceeded. The "annual" overall disparity limit of Section 1.401(1)-5(b) shall not be exceeded if the “total annual disparity fraction" determined as of the end of the Plan Year for each Participant who accrues a benefit under the Plan for the Plan Year does not exceed one. An Employee's "total annual disparity fraction" is the sum of the Employee's annual disparity fractions under all qualified plans maintained by an Employer or an Affiliated Company as determined under Internal Revenue Service regulations Sections 1.401(l)-5(b)(3) through 1.401(l)-5(b)(8) for the plan year ending in the current Plan Year.
The "cumulative" permitted disparity limit of Internal Revenue Service regulations Section 1.401(1)-5(c) shall not be exceeded if a Participant's "cumulative disparity fraction" does not exceed 35. A Participant's "cumulative disparity fraction" is the sum of the Participant's "total annual disparity fractions" attributable to the Participant's total years of service under all plans maintained by an Employer or an Affiliated Company.
17.10
Veterans Reemployment Rights
Notwithstanding any other provision of the Plan to the contrary, contributions, benefits, and service credit with respect to qualified military service shall be provided in accordance with Code Section 4l4(u).

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ARTICLE XVIII
TOP-HEAVY PROVISIONS
18.1
Top-Heavy Plan Definitions
For purposes of this Article, the following terms have the following meanings.
(a)
The "compensation" of an Employee means compensation as defined in Code Section 415 and regulations issued thereunder. In no event, however, shall the compensation of a Participant taken into account under the Plan for any Plan Year exceed (1) $200,000 for Plan Years beginning prior to January 1 , 1994, or (2) $150,000 for Plan Years beginning on or after January 1, 1994. The limitations set forth in the preceding sentence shall be subject to adjustment annually as provided in Code Section 401(a)(17)(B) and Code Section 415(d); provided, however, that the dollar increase in effect on January 1 of any calendar year, if any, is effective for Plan Years beginning in such calendar year.
(b)
The "determination date" with respect to any Plan Year means the last day of the immediately preceding Plan Year.
(c)
Effective for Plan Years beginning after December 31, 2001, a "key employee" means any Employee or former Employee (including any deceased Employee) who at any time during the Plan Year that includes the "determination date" was an officer of an Employer or an Affiliated Company having annual compensation greater than $130,000 (as adjusted under Code Section 416(i)(l) for Plan Years beginning after December 31, 2002), a five-percent owner of an Employer or an Affiliated Company, or a one-percent owner of an Employer or an Affiliated Company having annual compensation of more than $150,000. For this purpose, annual compensation means compensation within the meaning of Code Section 415(c)(3). The determination of who is a "key employee" will be made in accordance with Code Section 416(i)(l) and the applicable regulations and other guidance of general applicability issued thereunder.
(d)
A "non-key employee" means any Employee who is not a key employee.
(e)
A "permissive aggregation group" means those plans included in an Employer's required aggregation group together with any other plan or plans of the Employer or an Affiliated Company so long as the entire group of plans would continue to meet the requirements of Code Sections 401(a)(4) and 410.
(f)
A "required aggregation group" means the group of tax-qualified plans maintained by an Employer or an Affiliated Company consisting of each plan in which a key employee participates and each other plan which enables a plan in which a key employee participates to meet the requirements of Code Section 401 (a)(4) or Code Section 410, including any plan that terminated within the five-year period ending on the relevant determination date.

63


(g)
The "testing period" means the period of consecutive years of service, not in excess of five, during which an Employee has the greatest aggregate compensation from his Employer, excluding, however, any year which ends in a Plan Year beginning prior to January 1, 1984, as well as any Plan Year which begins after the close of the last Plan Year in which the Plan was a top-heavy plan.
(h)
A "top-heavy group" with respect to a particular Plan Year means a required or permissive aggregation group if the sum, as of the determination date, of the present value of the cumulative accrued benefits for key employees under all defined benefit plans included in such group and the aggregate of the account balances of key employees under all defined contribution plans included in such group exceeds 60 percent of a similar sum determined for all employees covered by the plans included in such group.
(i)
A "top-heavy plan" with respect to a particular Plan Year means (i) in the case of a defined benefit plan, a plan for which, as of the determination date, the present value of the cumulative accrued benefits under the plan (within the meaning of Code Section 416(g) and the regulations and rulings thereunder) for key employees exceeds 60 percent of the present value of the cumulative accrued benefits under the plan for all employees, with the present value of the cumulative accrued benefits to be determined under the accrual method uniformly used under all plans maintained by his Employer or, if no such method exists, under the slowest accrual method permitted under the fractional accrual rate of Code Section 411(b)(1)(c), (ii), in the case of a defined contribution plan, a plan for which, as of the determination date, the aggregate of the accounts (within the meaning of Code Section 416(g) and the regulations and rulings thereunder) of key employees exceeds 60 percent of the aggregate of the accounts of all participants covered under the plan, with the accounts valued as of the most recent valuation date coinciding with or preceding the determination date, and (iii) any plan included in a required aggregation group that is a top-heavy group.
Effective for Plan Years beginning after December 31, 2001, the present values of accrued benefits and the amounts of account balances of an Employee as of the determination date shall be increased by the distributions made with respect to the Employee under the Plan and any plan aggregated with the Plan under Code Section 416(g)(2) during the one-year period ending on the determination date. The preceding sentence shall also apply to distributions under a terminated plan which, had it not been terminated, would have been aggregated with the Plan under Code Section 416(g)(2)(A)(i). In the case of a distribution made for a reason other than severance from employment, death, or disability, this provision shall be applied by substituting "five-year period" for "one-year period". The accrued benefits and accounts of any individual who has not performed services for an Employer or an Affiliated Company during the one-year period ending on the determination date shall not be taken into account.

64


Notwithstanding the foregoing, if a plan is included in a required or permissive aggregation group which is not a top-heavy group, such plan shall not be a top-heavy plan. For purposes of this Article, the present value of the cumulative accrued benefits under the Plan shall be determined as of the date Plan costs for minimum funding purposes are computed, and shall be calculated using the actuarial assumptions otherwise employed under the Plan for actuarial valuations, except that the same actuarial assumptions shall be used for all plans within a required or permissive aggregation group.
18.2
Applicability of Top-Heavy Plan Provisions
Notwithstanding any other provision of the Plan to the contrary, if the Plan is deemed to be a top-heavy plan for any Plan Year, the provisions contained in this Article with respect to vesting and benefit accrual shall be applicable with respect to such Plan Year. If the Plan is determined to be a top-heavy plan and upon a subsequent determination date is determined no longer to be a top-heavy plan, the vesting and benefit accrual provisions specified elsewhere in the Plan shall again become applicable as of such subsequent determination date; provided, however, that in the event such prior vesting provisions do again become applicable, (i) the nonforfeitable accrued benefit of any Participant or Beneficiary shall not be reduced and (ii) any Participant with three years of service may elect to continue to have his nonforfeitable interest in his Accrued Benefit determined in accordance with the vesting schedule specified in Section 18.3.
18.3
Top-Heavy Vesting
If the Plan is determined to be a top-heavy plan, an Employee's nonforfeitable right to a percentage of the accrued portion of his monthly normal retirement benefit shall be determined no less rapidly than in accordance with the following vesting schedule.
Years of Service
Vested Interest
less than 2
0%
2, but less than 3
20%
3, but less than 4
40%
4, but   less than 5
60%
5 or more
100%

18.4
Minimum Top-Heavy Benefit
If the Plan is determined to be a top-heavy plan, the annual normal retirement benefit of an Employee who is a non-key employee and who is eligible therefore, payable in the form of a single life annuity beginning at his Normal Retirement Date, shall not be less than such Employee’s average compensation for years in the testing period multiplied by the lesser of:
(a)
Two percent multiplied by his years of Service; or
(b)
20 percent.

65


For purposes of this Article, “Years of Service" shall only include years of Service completed after December 31, 1983, but shall not include any such year of Service with an Employer if the Plan was not a top-heavy plan with respect to the Plan Year ending within such year of Service. For purposes of satisfying the minimum benefit requirements of Code Section 416(c)(1) and the Plan, in determining years of Service with an Employer or an Affiliated Company, any Service with the Employer or Affiliated Company shall be disregarded to the extent that such Service occurs during a Plan Year when the Plan benefits (within the meaning of Code Section 410(b)) no key employee or former key employee.
Any minimum benefit required by this Section 18.4 shall be made without regard to the number of Hours of Service credited to an Employee for a Plan Year and without regard to any Social Security contribution made by his Employer on behalf of the Employee and without regard to whether the non-key employee was employed on a specific date. In the event the Plan is part of a required aggregation group in which another top-heavy plan is included, non-key employees who are also covered under such other top-heavy plan shall not receive minimum top-heavy benefits under both top-heavy plans. Such non-key employees shall receive the minimum top-heavy benefit provided under the Plan in lieu of the minimum top-heavy benefit or allocation provided under such other top-heavy plan.

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ARTICLE XIX
FUNDING-BASED LIMITS
19.1
Effective Date and Application
(a)
Effective Date . The provisions of this Article generally apply to Plan Years beginning after December 31, 2007. However, the effective dates of the provisions relating to Regulation Section 1.436-1 are applicable to Plan Years beginning on or after January 1, 2010. For Plan Years beginning after December 31, 2007 and prior to January 1, 2010, the provisions of Code Section 436 are incorporated herein by reference.
(b)
Interpretation of Provisions . The limitations imposed by this Article to the Plan shall be interpreted and administered in accordance with Code Section 436 and Regulation Section 1.436-1.
19.2
Funding Based Limitation on Shutdown Benefits and Other Unpredictable Contingent Event Benefits
(a)
In General . If a Participant is entitled to an Unpredictable Contingent Event Benefit payable with respect to any event occurring during any Plan Year, then such benefit shall not be paid if the Adjusted Funding Target Attainment Percentage for such Plan Year is:
(1)
less than sixty percent (60%) or,
(2)
sixty percent (60%) or more, but would be less than sixty percent (60%) percent if the Adjusted Funding Target Attainment Percentage were re-determined applying an actuarial assumption that the likelihood of occurrence of the unpredictable contingent event during the Plan Year is one hundred percent (100%).
(b)
Exemption . Paragraph (a) of this Section 19.2 shall cease to apply with respect to any Plan Year, effective as of the first day of the Plan Year, upon payment by the Employer of the contribution described in Regulation Section 1.436-1(f)(2)(iii).
19.3
Limitations on Plan Amendments Increasing Liability for Benefits
(a)
In General . No amendment to the Plan which has the effect of increasing liabilities of the Plan by reason of increases in benefits, establishment of new benefits, changing the rate of benefit accrual, or changing the rate at which benefits become nonforfeitable shall take effect in a Plan Year if the Adjusted Funding Target Attainment Percentage for such Plan Year is:
(1)
less than eighty percent (80%), or

67


(2)
eighty percent (80%) or more, but would be less than eighty percent (80%) if the benefits attributable to the amendment were taken into account in determining the Adjusted Funding Target Attainment Percentage.
(b)
Exemption if Contribution Is Made . Paragraph (a) of this Section 19.3 shall cease to apply with respect to a Plan amendment upon payment by the Employer of the contribution described in Regulation Section 1.436-1(f)(2)(iv).
(c)
Exception for Certain Benefit Increases . The limitation set forth in paragraph (a) of this Section 19.3 does not apply to any amendment to the Plan that provides a benefit increase under a plan formula that is not based on Earnings, provided that the rate of such increase does not exceed the contemporaneous rate of increase in the average wages of Participants covered by the amendment. Paragraph (a) shall not apply to any other amendment permitted under Regulation Section 1.436-1(c)(4).
19.4
Limitations on Accelerated Benefit Distributions
(a)
Funding Percentage Less Than Sixty Percent (60%) . Notwithstanding any other provisions of the Plan, if the Plan's Adjusted Funding Target Attainment Percentage for a Plan Year is less than sixty percent (60%), then a Participant or Beneficiary is not permitted to elect, and the Plan shall not pay, a single sum payment or other optional form of benefit that includes a Prohibited Payment with an Annuity Starting Date on or after the applicable Section 436 Measurement Date, and the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a Prohibited Payment. The limitation set forth in this Section 19.4(a) does not apply to any payment of a benefit which under Code Section 411(a)(11) may be immediately distributed without the consent of the participant.
(b)
Bankruptcy . Notwithstanding any other provisions of the Plan, a Participant or Beneficiary is not permitted to elect, and the Plan shall not pay, a single sum payment or other optional form of benefit that includes a Prohibited Payment with an Annuity Starting Date that occurs during any period in which the Employer is a debtor in a case under Title 11, United States Code, or similar Federal or State law. The preceding sentence shall not apply to payments made within a Plan Year with an Annuity Starting Date that occurs on or after the date on which the enrolled actuary of the Plan certifies that the Adjusted Funding Target Attainment Percentage of the Plan is not less than one hundred percent (100%). In addition, during such period in which the Plan sponsor is a debtor, the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a Prohibited Payment, except for payments that occur on a date within a Plan Year that is on or after the date on which the Plan's enrolled actuary certifies that the Plan's Adjusted Funding Target Attainment Percentage for that Plan Year is not less than one hundred percent (100%). The limitation set forth in this Section 19.4(b) does not apply to any payment of a benefit which under Code Section 411(a)(11) may be immediately distributed without the consent of the Participant.

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(c)
Limited Payment if Funding Percentage at Least Sixty Percent (60%) But Less Than Eighty Percent (80%).
(1)
In General . Notwithstanding any other provisions of the Plan, if the Plan's Adjusted Funding Target Attainment Percentage for a Plan Year is sixty percent (60%) or greater but less than eighty percent (80%) (or would be less than eighty percent (80%) to the extent described in Section 19.3), then a Participant or Beneficiary is not permitted to elect, and the Plan shall not pay any Prohibited Payment with an Annuity Starting Date on or after the applicable Section 436 Measurement Date, and the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a Prohibited Payment. The preceding sentence shall not apply if the present value (determined in accordance with Code Section 417(e)(3)) of the portion of the benefit that is being paid in a Prohibited Payment (which portion is determined under paragraph (2)(B) below) does not exceed the lesser of:
(i)
fifty percent (50%) of the present value (determined in accordance with Code Section 417(e)(3)) of the benefit payable in the optional form of benefit that includes the Prohibited Payment; or
(ii)
one hundred percent (100%) of the PBGC maximum benefit guarantee amount (as defined in Regulation Section 1.436-1(d)(3)(iii)(C)).
The limitation set forth in this Section 19.4(c) does not apply to any payment of a benefit which under Code Section 411(a)(11) may be immediately distributed without the consent of the Participant.
(2)
Bifurcation if Optional Form Unavailable .
(i)
Requirement to Offer Bifurcation . If an optional form of benefit that is otherwise available under the terms of the Plan is not available as of the Annuity Starting Date because of the application of this Section 19.4(c), then the Participant or Beneficiary may elect to:
(I)
Receive the unrestricted portion of that optional form of benefit (determined under the rules of Regulation Section 1.436-1(d)(3)(iii)(D)) at that Annuity Starting Date, determined by treating the unrestricted portion of the benefit as if it were the Participant's or Beneficiary's entire benefit under the Plan;
(II)
Commence benefits with respect to the Participant's or Beneficiary's entire benefit under the Plan in any other optional form of benefit available under the Plan at the same

69


Annuity Starting Date that satisfies Sections 19.4(c)(1)(A) or (B) above; or
(III)
Defer commencement of the payments in accordance with any general right to defer commencement of benefits under the Plan.
(ii)
Rules Relating to Bifurcation . If the Participant or Beneficiary elects payment of the unrestricted portion of the benefit as described in Regulation Section 1.436-1(d)(3)(ii)(A)(1), then the Participant or Beneficiary may elect payment of the remainder of the Participant's or Beneficiary's benefits under the Plan in any optional form of benefit at that Annuity Starting Date otherwise available under the Plan that would not have included a Prohibited Payment if that optional form applied to the entire benefit of the Participant or Beneficiary. The rules of Regulation Section 1.417(e)-1 are applied separately to the separate optional forms for the unrestricted portion of the benefit and the remainder of the benefit (the restricted portion).
(iii)
Plan Alternative That Anticipates Election of Payment That Includes a Prohibited Payment . With respect to every optional form of benefit that includes a Prohibited Payment and that is not permitted to be paid under Regulation Section 1.436-1(d)(3)(i), for which no additional information from the Participant or Beneficiary (such as information regarding a Social Security leveling optional form of benefit) is needed to make that determination, rather than wait for the Participant or Beneficiary to elect such optional form of benefit, the Plan will provide for separate elections with respect to the restricted and unrestricted portions of that optional form of benefit.
(3)
Other Rules .
(i)
One Time Application . Only one Prohibited Payment meeting the requirements of subparagraph (c)(1) of this Section 19.4 may be made with respect to any Participant during any period of consecutive Plan Years to which the limitations under Regulation Section 1.436-1(d) apply.
(ii)
Treatment of Beneficiaries . For purposes of paragraph (c) of this Section 19.4, benefits provided with respect to a Participant and any Beneficiary of the Participant (including an alternate payee, as defined in Code Section 414(p)(8)) are aggregated. If the only benefits paid under the Plan with respect to the Participant are death benefits payable to the Beneficiary, then the determination of the Prohibited Payment is applied by substituting the lifetime of the Beneficiary for the lifetime of the Participant. If the Accrued Benefit of a Participant

70


is allocated to such an alternate payee and one or more other persons, then the "unrestricted amount" is allocated among such persons in the same manner as the accrued benefit is allocated, unless a qualified domestic relations order (as defined in Code Section 414(p)(1)(A)) with respect to the Participant or the alternate payee provides otherwise.
(iii)
Treatment of Annuity Purchases and Plan Transfers . This paragraph 19.4(c)(3)(C) applies for purposes of applying paragraphs 19.4(c)(1) and 19.4(c)(2)(C). In the case of a Prohibited Payment described in Regulation Section 1.436-1(j)(6)(i)(B) (relating to purchase from an insurer), the present value of the portion of the benefit that is being paid in a prohibited payment is the cost to the Plan of the irrevocable commitment and, in the case of a prohibited payment described in Regulation Section 1.436-1(j)(6)(i)(C) (relating to certain plan transfers), the present value of the portion of the benefit that is being paid in a Prohibited Payment is the present value of the liabilities transferred (determined in accordance with Code Section 414(l)). In addition, the present value of the accrued benefit is substituted for the present value of the benefit payable in the optional form of benefit that includes the prohibited payment in Regulation Section 1.436-1(d)(3)(i)(A).
(4)
Exception . This Section 19.4 shall not apply for any Plan Year if the terms of the Plan (as in effect for the period beginning on September 1, 2005, and ending with such Plan Year) provide for no benefit accruals with respect to any Participant during such period.
(5)
Right to Delay Commencement . If a Participant or Beneficiary requests a distribution in an optional form of benefit that includes a Prohibited Payment that is not permitted to be paid under paragraphs (a), (b), or (c) of this Section 19.4, then the Participant retains the right to delay commencement of benefits in accordance with the terms of the Plan and applicable qualification requirements (such as Code Sections 411(a)(11) and 401(a)(9)).
19.5
Limitation on Benefit Accruals for Plans with Severe Funding Shortfalls
(a)
In General . If the Plan's Adjusted Funding Target Attainment Percentage for a Plan Year is less than sixty percent (60%), benefit accruals under the Plan shall cease as of the Section 436 Measurement Date. In addition, if the Plan is required to cease benefit accruals under this Section 19.5, then the Plan is not permitted to be amended in a manner that would increase the liabilities of the Plan by reason of an increase in benefits or establishment of new benefits.

71


(b)
Exemption . Paragraph (a) above shall cease to apply with respect to any Plan Year, effective as of the first day of the Plan Year, upon payment by the Employer of the contribution described in Regulation Section 1.436-1(f)(2)(v).
(c)
Temporary Modification of Limitation . In the case of the first Plan Year beginning during the period beginning on October 1, 2008, and ending on September 30, 2009, the provisions of paragraph (a) of this Section 19.5 shall be applied by substituting the Plan's Adjusted Funding Target Attainment Percentage for the preceding Plan Year for such percentage for such Plan Year, but only if the Adjusted Funding Target Attainment Percentage for the preceding year is greater.
19.6
Methods to Avoid or Terminate Benefit Limitations
See Code Sections 436(b)(2), (c)(2), (e)(2), and (f) and Regulation Section 1.436 1(f) for rules relating to Employer contributions and other methods to avoid or terminate the application of the limitations set forth in Sections 19.2, 19.3 and 19.4 of this Article for a Plan Year. In general, the methods a Plan sponsor may use to avoid or terminate one or more of the benefit limitations under Sections 19.2, 19.3 and 19.4 of this Article for a Plan Year include Employer contributions and elections to increase the amount of plan assets which are taken into account in determining the Adjusted Funding Target Attainment Percentage, making an Employer contribution that is specifically designated as a current year contribution that is made to avoid or terminate application of certain of the benefit limitations, or providing security to the Plan.
19.7
Special Rules
(a)
Rules of Operation for Periods Prior To and After Certification of Plan's Adjusted Funding Target Attainment Percentage .
(1)
In General. Code Section 436(h) and Regulation Section 1.436-1(h) set forth a series of presumptions that apply (A) before the Plan's enrolled actuary issues a certification of the Plan's Adjusted Funding Target Attainment Percentage for the Plan Year and (B) if the Plan's enrolled actuary does not issue a certification of the Plan's Adjusted Funding Target Attainment Percentage for the Plan Year before the first day of the 10th month of the Plan Year (or if the Plan's enrolled actuary issues a range certification for the Plan Year pursuant to Regulation Section 1.436-1(h)(4)(ii) but does not issue a certification of the specific Adjusted Funding Target Attainment Percentage for the Plan by the last day of the Plan Year). For any period during which a presumption under Code Section 436(h) and Regulation Section 1.436-1(h) applies to the Plan, the limitations under Sections 19.2, 19.3, 19.4, and 19.5 of this Article are applied to the Plan as if the Adjusted Funding Target Attainment Percentage for the Plan Year were the presumed Adjusted Funding Target Attainment Percentage determined under the rules of Code Section 436(h) and Regulation Section 1.436-1(h)(1), (2), or (3). These presumptions are set forth in the following subsections.

72


(2)
Presumption of Continued Underfunding Beginning First Day of Plan Year . If a limitation under Sections 19.2, 19.3, 19.4, and 19.5 of this Article applied to the Plan on the last day of the preceding Plan Year, then, commencing on the first day of the current Plan Year and continuing until the Plan's enrolled actuary issues a certification of the Adjusted Funding Target Attainment Percentage for the Plan for the current Plan Year, or, if earlier, the date subsection (3) or (4) below applies to the Plan:
(i)
The Adjusted Funding Target Attainment Percentage of the Plan for the current Plan Year is presumed to be the Adjusted Funding Target Attainment Percentage in effect on the last day of the preceding Plan Year; and
(ii)
The first day of the current Plan Year is a Section 436 Measurement Date.
(3)
Presumption of Underfunding Beginning First Day of 4th Month . If the Plan's enrolled actuary has not issued a certification of the Adjusted Funding Target Attainment Percentage for the Plan Year before the first day of the 4th month of the Plan Year and the Plan's Adjusted Funding Target Attainment Percentage for the preceding Plan Year was either at least sixty percent (60%) but less than seventy percent (70%) or at least eighty percent (80%) but less than ninety percent (90%), or is described in Regulation Section 1.436-1(h)(2)(ii), then, commencing on the first day of the 4th month of the current Plan Year and continuing until the Plan's enrolled actuary issues a certification of the Adjusted Funding Target Attainment Percentage for the Plan for the current Plan Year, or, if earlier, the date subsection (iv) below applies to the Plan:
(i)
The Adjusted Funding Target Attainment Percentage of the Plan for the current Plan Year is presumed to be the Plan's Adjusted Funding Target Attainment Percentage for the preceding Plan Year reduced by ten (10) percentage points; and
(ii)
The first day of the 4th month of the current Plan Year is a Section 436 Measurement Date.
(4)
Presumption of Underfunding On and After First Day of 10th Month . If the Plan's enrolled actuary has not issued a certification of the Adjusted Funding Target Attainment Percentage for the Plan Year before the first day of the 10th month of the Plan Year (or if the Plan's enrolled actuary has issued a range certification for the Plan Year pursuant to Regulation Section 1.436-1(h)(4)(ii) but has not issued a certification of the specific Adjusted Funding Target Attainment Percentage for the Plan by the last day of the Plan Year), then, commencing on the first day of the 10th month of the current Plan Year and continuing through the end of the Plan Year:

73


(i)
The Adjusted Funding Target Attainment Percentage of the Plan for the current Plan Year is presumed to be less than sixty percent (60%); and
(ii)
The first day of the 10th month of the current Plan Year is a Section 436 Measurement Date.
(b)
New Plans, Plan Termination, Certain Frozen Plans, and Other Special Rules .
(1)
The limitations in Sections 19.2, 19.3, and 19.5 of this Article do not apply to a new Plan for the first five (5) Plan Years of the Plan, determined under the rules of Code Section 436(i) and Regulation Section 1.436-1(a)(3)(i).
(2)
Plan Termination . The limitations on Prohibited Payments in Sections 19.2 and 19.4 of this Article do not apply to prohibited payments that are made to carry out the termination of the Plan in accordance with applicable law. Any other limitations under this Amendment do not cease to apply as a result of termination of the Plan.
(3)
Exception to Limitations on Prohibited Payments Under Certain Frozen Plans . The limitations on Prohibited Payments set forth in Sections 19.2 and 19.4 of this Article do not apply for a Plan Year if the terms of the Plan, as in effect for the period beginning on September 1, 2005, and continuing through the end of the Plan Year, provide for no benefit accruals with respect to any participants. This paragraph (3) shall cease to apply as of the date any benefits accrue under the Plan or the date on which a Plan amendment that increases benefits takes effect.
(4)
Special Rules Relating to Unpredictable Contingent Event Benefits and Plan Amendments Increasing Benefit Liability . During any period in which none of the presumptions under this Section 19.7 apply to the Plan and the Plan's enrolled actuary has not yet issued a certification of the Plan's Adjusted Funding Target Attainment Percentage for the Plan Year, the limitations under Sections 19.2 and 19.3 of this Article shall be based on the inclusive presumed Adjusted Funding Target Attainment Percentage for the Plan, calculated in accordance with the rules of Regulation Section 1.436 1(g)(2)(iii).
(c)
Special Rules Under PRA 2010 .
(1)
Payments Under Social Security Leveling Options . For purposes of determining whether the limitations under Section 19.4 of this Article apply to payments under a Social Security leveling option, within the meaning of Code Section 436(j)(3)(C)(i), the Adjusted Funding Target Attainment Percentage for a Plan Year shall be determined in accordance with the "Special Rule for Certain Years" under Code Section 436(j)(3) and any

74


Regulation or other published guidance thereunder issued by the Internal Revenue Service.
(2)
Limitation on Benefit Accruals . For purposes of determining whether the accrual limitation under Section 19.5 of this Article applies to the Plan, the Adjusted Funding Target Attainment Percentage for a Plan Year shall be determined in accordance with the "Special Rule for Certain Years" under Code Section 436(j)(3) (except as provided under Section 203(b) of the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (PRA 2012), if applicable).
(d)
Special Rules under MAP 21 . The Plan may use the special rules relating to pension funding stabilization as set forth in the provisions of the Moving Ahead for Progress in the 21st Century Act (MAP 21) and as provided by guidance issued in Regulations or other guidance from the Internal Revenue Service, such as Notice 2012-61.
(e)
Multiple Employer Plans . For a multiple employer plan to which Code Section 413(c)(4)(A) applies, including a plan for which the election described in Code Section 413(c)(4)(B) has been made, the rules in this Amendment apply separately to each Employer under the plan, as if each such Employer maintained a separate plan. For a multiple employer plan to which Code Section 413(c)(4)(A) does not apply, the rules in this Amendment apply as if all Participants in the plan are employed by a single Employer.
(f)
Notice Requirement . See ERISA Section 101(j) for rules requiring the Plan Administrator of a single employer defined benefit pension plan to provide a written notice to Participants and Beneficiaries within 30 days after certain specified dates if the Plan has become subject to a limitation described in Subsection 19.2(a), 19.4(a), 19.4(b) or 19.4(c) of this Article.
19.8
Treatment of Plan as of Close of Prohibited or Cessation Period
(a)
Application to Prohibited Payments and Accruals .
(1)
Resumption of Prohibited Payments . If a limitation on Prohibited Payments under Section 19.4 of this Article applied to a Plan as of a Section 436 Measurement Date, but that limit no longer applies to the Plan as of a later Section 436 Measurement Date, then the limitation does not apply to benefits with Annuity Starting Dates that are on or after that later Section 436 Measurement Date. In addition, after the Code Section 436 Measurement Date on which the limitation on Prohibited Payments under Section 19.4(a) and 19.4(c) cease to apply to the Plan, any Participant or Beneficiary who had an Annuity Starting Date within the period during which that limitation applied to the Plan will not be provided with the opportunity to have a new Annuity Starting Date.

75


(2)
Resumption of Benefit Accruals . If a limitation on benefit accruals under Section 19.5 of this Article applied to the Plan as of a Section 436 Measurement Date, but that limitation no longer applies to the Plan as of a later Section 436 Measurement Date, then benefit accruals shall resume prospectively and that limitation does not apply to benefit accruals that are based on service on or after that later Section 436 Measurement Date, except to the extent that the Plan provides that benefit accruals will not resume when the limitation ceases to apply. The Plan will comply with the rules relating to partial years of participation and the prohibition on double proration under Department of Labor regulation 29 CFR Section 2530.204-2(c) and (d).
In addition, benefit accruals that were not permitted to accrue because of the application of Section 19.5 of this Article shall be restored when that limitation ceases to apply if the continuous period of the limitation was 12 months or less and the Plan's enrolled actuary certifies that the Adjusted Funding Target Attainment Percentage for the Plan Year would not be less than sixty percent (60%) taking into account any restored benefit accruals for the prior Plan Year.
(b)
Shutdown and other Unpredictable Contingent Event Benefits . If an Unpredictable Contingent Event Benefit with respect to an unpredictable contingent event that occurs during the Plan Year is not permitted to be paid after the occurrence of the event because of the limitations of Section 19.2 of this Article, but is permitted to be paid later in the same Plan Year (as a result of additional contributions or pursuant to the enrolled actuary's certification of the Adjusted Funding Target Attainment Percentage for the Plan Year that meets the requirements of Regulation Section 1.436-1(g)(5)(ii)(B)), then that unpredictable contingent event benefit shall be paid, retroactive to the period that benefit would have been payable under the terms of the Plan (determined without regard to Section 19.2 of this Article). If the Unpredictable Contingent Event Benefit does not become payable during the same Plan Year in accordance with the preceding sentence, then the Plan is treated as if it does not provide for that benefit.
(c)
Treatment of Plan Amendments That Do Not Take Effect . If a Plan amendment does not take effect as of the effective date of the amendment because of the limitation of Section 19.3 or 19.5 of this Article, but is permitted to take effect later in the same Plan Year (as a result of additional contributions or pursuant to the enrolled actuary's certification of the Adjusted Funding Target Attainment Percentage for the Plan Year that meets the requirements of Regulation Section 1.436-1(g)(5)(ii)(C)), then the Plan amendment must automatically take effect as of the first day of the Plan Year (or, if later, the original effective date of the amendment). If the Plan amendment cannot take effect during the Plan Year, then it shall be treated as if it were never adopted, unless the Plan amendment provides otherwise.

76


19.9
Definitions
(a)
Adjusted Funding Target Attainment Percentage . The term Adjusted Funding Target Attainment Percentage means the adjusted funding target attainment percentage as defined in Regulation Section 1.436-1(j)(1).
(b)
Annuity Starting Date . The term Annuity Starting Date means the annuity starting date as defined in Regulation Section 1.436-1(j)(2).
(c)
Prohibited Payment . The term Prohibited Payment means a prohibited payment as defined in Regulation Section 1.436-1(j)(6).
(d)
Section 436 Measurement Date . The term Section 436 Measurement Date means the section 436 date as defined in Regulation Section 1.436-1(j)(8).
(e)
Unpredictable Contingent Event Benefit . The term Unpredictable Contingent Event Benefit means an unpredictable contingent event as defined in Regulation Section 1.436-1(j)(9).

77


ARTICLE XX
HEROES EARNINGS ASSISTANCE AND RELIEF TAX ACT PROVISIONS
20.1
Death benefits.
In the case of a death or disability occurring on or after January 1, 2007, if a Participant dies while performing qualified military service (as defined in Code Section 414(u)), the survivors of the Participant are entitled to any additional benefits (other than benefit accruals relating to the period of qualified military service) provided under the Plan as if the Participant had resumed and then terminated employment on account of death. The Plan will credit the Participant’s qualified military service as service for vesting purposes, as though the Participant had resumed employment under USERRA immediately prior to the Participant’s death.
20.2
Differential wage payments.
For years beginning after December 31, 2008, (i) an individual receiving a differential wage payment, as defined by Code Section 3401(h)(2), shall be treated as an employee of the employer making the payment, (ii) the differential wage payment shall be treated as compensation, and (iii) the Plan shall not be treated as failing to meet the requirements of any provision described in Code Section 414(u)(1)(C) by reason of any contribution or benefit which is based on the differential wage payment. The immediately preceding clause (iii) shall apply only if all employees of the Employer performing service in the uniformed services described in Code Section 3401(h)(2)(A) are entitled to receive differential wage payments (as defined in Code Section 3401(h)(2)) on reasonably equivalent terms and, if eligible to participate in a retirement plan maintained by the employer, to make contributions based on the payments on reasonably equivalent terms (taking into account Code Sections 410(b)(3), (4), and (5)).
* * * * *

EXECUTED this   23   day of     December      , 20 13  .

WEINGARTEN REALTY INVESTORS

By: /s/ Stephen C. Richter            

Name: Stephen C. Richter            

Title:     Senior Vice President, Chief Financial Officer


78


Addendum A
Required Minimum Distributions
1.    General Rules
1.1
Effective Date . The provisions of this Addendum apply for purposes of determining required minimum distributions for calendar years beginning with the 2003 calendar year.
1.2
Precedence . The requirements of this Addendum will take precedence over any inconsistent provisions of the Plan.
1.3
Requirements of Treasury Regulations Incorporated . All distributions required under this Addendum will be determined and made in accordance with the Treasury Regulations under Section 401(a)(9) of the Internal Revenue Code.
1.4
TEFRA Section 242(b)(2) Elections . Notwithstanding the other provisions of this Addendum, other than Section 1.3, distributions may be made under a designation made before January 1, 1984, in accordance with Section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act (TEFRA) and the provisions of the Plan that relate to Section 242(b)(2) of TEFRA.
2.    Time and Manner of Distribution.
2.1
Required Beginning Date . The Participant’s entire interest will be distributed, or begin to be distributed, to the Participant no later than the Participant’s required beginning date.
2.2
Death of Participant Before Distributions Begin . If the Participant dies before distributions begin, the Participant’s entire interest will be distributed, or begin to be distributed, no later than as follows:
(a)
If the Participant’s surviving spouse is the Participant’s sole designated Beneficiary, then distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died, or by December 31 of the calendar year in which the Participant would have attained age 70 ½, if later.
(b)
If the Participant’s surviving spouse is not the Participant’s sole designated Beneficiary, then distributions to the designated Beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died.
(c)
If there is no designated Beneficiary as of September 30 of the year following the year of the Participant’s death, the Participant’s entire interest will be

79


distributed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.
(d)
If the Participant’s surviving spouse is the Participant’s sole designated Beneficiary and the surviving spouse dies after the Participant but before distributions to the surviving spouse begin, this Section 2.2, other than Section 2.2(a), will apply as if the surviving spouse were the Participant.
For purposes of this Section 2.2 and Section 5, distributions are considered to begin on the Participant’s required beginning date (or, if Section 2.2(d) applies, the date distributions are required to begin to the surviving spouse under Section 2.2(a)). If annuity payments irrevocably commence to the Participant before the Participant’s required beginning date (or to the Participant’s surviving spouse before the date distributions are required to begin to the surviving spouse under Section 2.2(a)), the date distributions are considered to begin is the date distributions actually commence.
2.3
Form of Distribution . Unless the Participant’s interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the required beginning date, as of the first distribution calendar year distributions will be made in accordance with Sections 3, 4 and 5 of this Addendum. If the Participant’s interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of Section 401(a)(9) of the Code and the Treasury regulations. Any part of the Participant’s interest which is in the form of an individual account described in Section 414(k) of the Code will be distributed in a manner satisfying the requirements of Section 401(a)(9) of the Code and the Treasury regulations that apply to individual accounts.
3.    Determination of Amount to be Distributed Each Year.
3.1
General Annuity Requirements . If the Participant’s interest is paid in the form of annuity distributions under the Plan, payments under the annuity will satisfy the following requirements:
(a)
the annuity distributions will be paid in periodic payments made at intervals not longer than one year;
(b)
the distribution period will be over a life (or lives) or over a period certain not longer than the period described in Section 4 or 5;
(c)
once payments have begun over a period certain, the period certain will not be changed even if the period certain is shorter than the maximum permitted;
(d)
payments will either be nonincreasing or increase only as follows:

80


(1)
by an annual percentage increase that does not exceed the annual percentage increase in a cost-of-living index that is based on prices of all items and issued by the Bureau of Labor Statistics;
(2)
to the extent of the reduction in the amount of the Participant’s payments to provide for a survivor benefit upon death, but only if the Beneficiary whose life was being used to determine the distribution period described in Section 4 dies or is no longer the Participant’s Beneficiary pursuant to a qualified domestic relations order within the meaning of Section 414(p);
(3)
to provide cash refunds of employee contributions upon the Participant’s death; or
(4)
to pay increased benefits that result from a Plan amendment.
3.2
Amount Required to be Distributed by Required Beginning Date . The amount that must be distributed on or before the Participant’s required beginning date (or, if the Participant dies before distributions begin, the date distributions are required to begin under Section 2.2(a) or (b)) is the payment that is required for one payment interval. The second payment need not be made until the end of the next payment interval even if that payment interval ends in the next calendar year. Payment intervals are the periods for which payments are received, e.g., bi-monthly, monthly, semi-annually, or annually. All of the Participant’s benefit accruals as of the last day of the first distribution calendar year will be included in the calculation of the amount of the annuity payments for payment intervals ending on or after the Participant’s required beginning date.
3.3
Additional Accruals After First Distribution Calendar Year . Any additional benefits accruing to the Participant in a calendar year after the first distribution calendar year will be distributed beginning with the first payment interval ending in the calendar year immediately following the calendar year in which such amount accrues.
4.
Requirements For Annuity Distributions That Commence During Participant’s Lifetime.
4.1
Joint Life Annuities Where the Beneficiary Is Not the Participant’s Spouse . If the Participant’s interest is being distributed in the form of a joint and survivor annuity for the joint lives of the Participant and a nonspouse Beneficiary, annuity payments to be made on or after the Participant’s required beginning date to the designated Beneficiary after the Participant’s death must not at any time exceed the applicable percentage of the annuity payment for such period that would have been payable to the Participant using the table set forth in Q&A-2 of Section 1.401(a)(9)-6 of the Treasury regulations. If the form of distribution combines a joint and survivor annuity for the joint lives of the Participant and a nonspouse Beneficiary and a period certain annuity, the requirement in the preceding sentence will apply to

81


annuity payments to be made to the designated Beneficiary after the expiration of the period certain.
4.2
Period Certain Annuities . Unless the Participant’s spouse is the sole designated Beneficiary and the form of distribution is a period certain and no life annuity, the period certain for an annuity distribution commencing during the Participant’s lifetime may not exceed the applicable distribution period for the Participant under the Uniform Lifetime Table set forth in Section 1.401(a)(9)-9 of the Treasury regulations for the calendar year that contains the annuity starting date. If the annuity starting date precedes the year in which the Participant reaches age 70, the applicable distribution period for the Participant is the distribution period for age 70 under the Uniform Lifetime Table set forth in Section 1.401(a)(9)-9 of the Treasury regulations plus the excess of 70 over the age of the Participant as of the Participant’s birthday in the year that contains the annuity starting date. If the Participant’s spouse is the Participant’s sole designated Beneficiary and the form of distribution is a period certain and no life annuity, the period certain may not exceed the longer of the Participant’s applicable distribution period, as determined under this Section 4.2, or the joint life and last survivor expectancy of the Participant and the Participant’s spouse as determined under the Joint and Last Survivor Table set forth in Section 1.401(a)(9)-9 of the Treasury regulations, using the Participant’s and spouse’s attained ages as of the Participant’s and spouse’s birthdays in the calendar year that contains the annuity starting date.
5.
Requirements For Minimum Distributions Where Participant Dies Before Date Distributions Begin.
5.1
Participant Survived by Designated Beneficiary . If the Participant dies before the date distribution of his or her interest begins and there is a designated Beneficiary, the Participant’s entire interest will be distributed, beginning no later than the time described in Section 2.2(a) or (b), over the life of the designated Beneficiary or over a period certain not exceeding:
(a)
unless the annuity starting date is before the first distribution calendar year, the life expectancy of the designated Beneficiary determined using the Beneficiary’s age as of the Beneficiary’s birthday in the calendar year immediately following the calendar year of the Participant’s death; or
(b)
if the annuity starting date is before the first distribution calendar year, the life expectancy of the designated Beneficiary determined using the Beneficiary’s age as of the Beneficiary’s birthday in the calendar year that contains the annuity starting date.
5.2
No Designated Beneficiary . If the Participant dies before the date distributions begin and there is no designated Beneficiary as of September 30 of the year following the year of the Participant’s death, distribution of the Participant’s entire interest

82


will be completed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.
5.3
Death of Surviving Spouse Before Distributions to Surviving Spouse Begin . If the Participant dies before the date distribution of his or her interest begins, the Participant’s surviving spouse is the Participant’s sole designated Beneficiary, and the surviving spouse dies before distributions to the surviving spouse begin, this Section 5 will apply as if the surviving spouse were the Participant, except that the time by which distributions must begin will be determined without regard to Section 2.2(a).
6.    Definitions.
6.1
Designated Beneficiary . The individual who is designated as the Beneficiary under Section 9.3 of the Plan and is the designated Beneficiary under Section 401(a)(9) of the Internal Revenue Code and Section 1.401(a)(9)-l, Q&A-4, of the Treasury regulations.
6.2
Distribution calendar year . A calendar year for which a minimum distribution is required. For distributions beginning before the Participant’s death, the first distribution calendar year is the calendar year immediately preceding the calendar year which contains the Participant’s required beginning date. For distributions beginning after the Participant’s death, the first distribution calendar year is the calendar year in which distributions are required to begin pursuant to Section 2.2.
6.3
Life expectancy . Life expectancy as computed by use of the Single Life Table in Section 1.401(a)(9)-9 of the Treasury regulations.

83


EXHIBIT 12.1

WEINGARTEN REALTY INVESTORS
COMPUTATION OF RATIOS
(Amounts in thousands)
 
 
Year Ended December 31,
 
2013
 
2012
 
2011
 
2010
 
2009
Income (loss) from continuing operations
$
135,372

 
$
60,511

 
$
(12,202
)
 
$
7,179

 
$
27,104

Equity in (earnings) losses of real estate joint ventures
 and partnerships, net
(35,112
)
 
1,558

 
(7,834
)
 
(12,889
)
 
(5,548
)
Provision (benefit) for income taxes
7,051

 
(70
)
 
2

 
(291
)
 
5,871

Gain on sale of property
762

 
1,004

 
1,304

 
2,005

 
24,494

Fixed charges
101,723

 
111,809

 
134,597

 
140,819

 
156,531

Amortization of capitalized interest
2,412

 
2,397

 
2,347

 
2,129

 
1,843

Distributions of income from real estate joint ventures
 and partnerships
3,498

 
3,141

 
2,186

 
1,733

 
2,841

Capitalized interest
(2,403
)
 
(3,125
)
 
(2,329
)
 
(3,405
)
 
(8,716
)
Net income as adjusted
$
213,303

 
$
177,225

 
$
118,071

 
$
137,280

 
$
204,420

Fixed charges:
 
 
 
 
 
 
 
 
 
Interest on indebtedness, net
$
97,444

 
$
106,800

 
$
130,478

 
$
135,664

 
$
146,139

Capitalized interest
2,403

 
3,125

 
2,329

 
3,405

 
8,716

Portion of rents representative of the interest factor
1,876

 
1,884

 
1,790

 
1,750

 
1,676

Fixed charges
101,723

 
111,809

 
134,597

 
140,819

 
156,531

Preferred dividends
18,173

 
34,930

 
35,476

 
35,476

 
35,476

Combined fixed charges and preferred dividends
$
119,896

 
$
146,739

 
$
170,073

 
$
176,295

 
$
192,007

 
 
 
 
 
 
 
 
 
 
RATIO OF EARNINGS TO FIXED CHARGES (1)
$
2.10

 
$
1.59

 
$
0.88

 
$
0.97

 
$
1.31

 
 
 
 
 
 
 
 
 
 
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
   AND PREFERRED DIVIDENDS (2)
$
1.78

 
$
1.21

 
$
0.69

 
$
0.78

 
$
1.06

____________________
(1)
The deficiency for the year ended December 31, 2011 and 2010 is $16.5 million and $3.5 million, respectively, which represents the dollar amount by which the ratio is less than one.
(2)
The deficiency for the year ended December 31, 2011 and 2010 is $52.0 million and $39.0 million, respectively, which represents the dollar amount by which the ratio is less than one.

 
        




EXHIBIT 21.1
WEINGARTEN REALTY INVESTORS
LIST OF SUBSIDIARIES OF THE REGISTRANT
 
Subsidiary
 
State of Incorporation
 
6485 Crescent Drive LP
 
Delaware
 
Best in the West Holdings, LLC
 
Delaware
 
Crowfarn Drive LP
 
Delaware
 
Cumberland Potranco Joint Venture
 
Texas
 
Decatur 215, LLC
 
Delaware
 
Eastex Venture
 
Texas
 
El Camino Holdings LLC
 
Texas
 
Fenton Market Place Venture
 
Texas
 
GDC River Hill Tower, LLC
 
Delaware
 
Green Valley Lot 8B, LLC
 
Delaware
 
GVR SPE I LLC
 
Delaware
 
High House Holdings LLC
 
Delaware
 
Jacinto City, Ltd.
 
Texas
 
Jackson West Holdings, LLC
 
Delaware
 
Las Tiendas Holdings, LLC
 
Delaware
 
Main/O.S.T., Ltd.
 
Texas
 
Mansell Crossing Retail LP
 
Delaware
 
Markham West Shopping Center, L.P.
 
Delaware
 
Northcross Holdings, LLC
 
Delaware
 
Northwest Hollister Venture
 
Texas
 
Outland Center Drive LP
 
Delaware
 
Phelan Boulevard Venture
 
Texas
 
Pineapple Commons Retail LP
 
Delaware
 
Preston Shepard Retail LP
 
Delaware
 
RGC Starr Retail, Ltd.
 
Texas
 
Roswell Corners Holdings LLC
 
Delaware
 
Shary Retail, Ltd.
 
Texas
 
Shasta NP Owner, LLC
 
Delaware
 
Shasta NP, LLC
 
Delaware
 
Sheldon Center, Ltd.
 
Texas
 
Southside Industrial Way LP
 
Delaware
 
Strategic Retail Partners II, L.L.C.
 
Delaware
 
SV Portfolio LP
 
Delaware
 
U.S. Fire & Indemnity Company
 
Vermont
 
Utah-WRI Holdings, L.L.C.
 
Delaware
 
VPBH Associates, L.P.
 
Texas
 
WB Retail Sub GP LLC
 
Delaware
 
WB Sub GP, LLC
 
Delaware
 
Weingarten 1815 S. 10th JV
 
Texas
 
Weingarten Aurora Inc.
 
Colorado
 
Weingarten DRC Clermont TRS, LLC
 
Florida
 
Weingarten DRC Clermont, LLC
 
Florida
 
Weingarten Herndon Plaza JV
 
Delaware
 
Weingarten I-4 Clermont Landing TRS, LLC
 
Florida
 
Weingarten I-4 Clermont Landing, LLC
 
Florida
 




Subsidiary
 
State of Incorporation
 
Weingarten I-4 St. Augustine EV, LLC
 
Florida
 
Weingarten Las Tiendas JV
 
Texas
 
Weingarten Lowry Inc.
 
Colorado
 
Weingarten Maya Tropicana II, LLC
 
Delaware
 
Weingarten Maya Tropicana, LLC
 
Delaware
 
Weingarten NAP GP, LLC
 
Delaware
 
Weingarten NAP, LP
 
Delaware
 
Weingarten Newquist, LLC
 
Delaware
 
Weingarten Nolana JV
 
Texas
 
Weingarten Northcross JV
 
Texas
 
Weingarten Nostat, Inc.
 
Texas
 
Weingarten Realty Management Company
 
Texas
 
Weingarten Shary Crossing JV
 
Texas
 
Weingarten Shary North JV
 
Texas
 
Weingarten Shary South JV
 
Texas
 
Weingarten Sheridan II LLC
 
Colorado
 
Weingarten Sheridan LLC
 
Colorado
 
Weingarten Sleiman, LLC
 
Delaware
 
Weingarten Starr Plaza JV
 
Texas
 
Weingarten Stoneridge, LLC
 
Delaware
 
Weingarten Tenth-Jackson West JV
 
Texas
 
Weingarten Thorncreek Inc.
 
Colorado
 
Weingarten/Finger Venture
 
Texas
 
Weingarten/Investments, Inc.
 
Texas
 
Weingarten/Maya Tropicana Venture
 
Nevada
 
Weingarten/Miller/Aurora II LLC
 
Colorado
 
Weingarten/Miller/Fiest, LLC
 
Delaware
 
Weingarten/Miller/Lowry II LLC
 
Colorado
 
Weingarten/Miller/Thorncreek II, LLC
 
Colorado
 
Weingarten/Miller/Westminster Joint Venture
 
Texas
 
Weingarten/Monvis LLC
 
Arizona
 
WNI/Tennessee Holdings, Inc.
 
Delaware
 
WNI/Tennessee, L.P.
 
Delaware
 
WRI 151 Ingram GP, LLC
 
Delaware
 
WRI 151 Ingram LP
 
Delaware
 
WRI Alliance Riley Venture
 
Texas
 
WRI Best in the West, LLC
 
Delaware
 
WRI Brookwood Marketplace, LLC
 
Delaware
 
WRI Camp Creek Marketplace II, LLC
 
Delaware
 
WRI Charleston Commons Holdings, LLC
 
Delaware
 
WRI Charleston Commons, LLC
 
Delaware
 
WRI Condor, LLC
 
Delaware
 
WRI Cumberland GP, LLC
 
Texas
 
WRI Cumberland, LP
 
Texas
 
WRI Edgewater Marketplace, LLC
 
Delaware
 
WRI El Camino, LP
 
Texas
 
WRI Fiesta Trails Holdings, LLC
 
Texas
 
WRI Fiesta Trails, LP
 
Texas
 
WRI Freedom Centre, L.P.
 
Delaware
 




Subsidiary
 
State of Incorporation
 
WRI Galleria Holdings, LLC
 
Delaware
 
WRI Galleria, LLC
 
Delaware
 
WRI Gateway Station GP, LLC
 
Delaware
 
WRI Gateway Station, LP
 
Delaware
 
WRI Golden State, LLC
 
Delaware
 
WRI GP I, Inc.
 
Texas
 
WRI Greenhouse LP
 
Delaware
 
WRI Hilltop Village, LLC
 
Delaware
 
WRI HR Heritage Station LLC
 
Delaware
 
WRI HR Manager LLC
 
Delaware
 
WRI HR Parkland LLC
 
Delaware
 
WRI HR Retail Venture I LLC
 
Delaware
 
WRI HR Thompson Bridge LLC
 
Delaware
 
WRI HR Venture Properties I LLC
 
Delaware
 
WRI Independence Plaza, LLC
 
Delaware
 
WRI Jackson West, LP
 
Delaware
 
WRI JT Flamingo Pines, LP
 
Delaware
 
WRI JT GP, LLC
 
Delaware
 
WRI JT Hollywood Hills I GP, LLC
 
Delaware
 
WRI JT Hollywood Hills I, LP
 
Delaware
 
WRI JT Hollywood Hills II GP, LLC
 
Delaware
 
WRI JT Hollywood Hills II, LP
 
Delaware
 
WRI JT Northridge, LP
 
Delaware
 
WRI JT Pembroke Commons, LP
 
Delaware
 
WRI JT Princeton Lakes GP, LLC
 
Delaware
 
WRI JT Princeton Lakes, LP
 
Delaware
 
WRI JT Retail Holdings GP, LLC
 
Delaware
 
WRI JT Retail Holdings, LP
 
Delaware
 
WRI JT Tamiami Trail, LP
 
Delaware
 
WRI Lakeside Marketplace, LLC
 
Delaware
 
WRI Las Tiendas, LP
 
Delaware
 
WRI Madera Village Holdings, LLC
 
Delaware
 
WRI Madera Village, LLC
 
Delaware
 
WRI Marshalls Plaza, LP
 
Texas
 
WRI Mueller, LLC
 
Texas
 
WRI North American Properties, L.P.
 
Delaware
 
WRI North Towne, LLC
 
Delaware
 
WRI Northcross, LP
 
Texas
 
WRI Oak Grove Market Center, LLC
 
Delaware
 
WRI Retail Pool I, L.P.
 
Texas
 
WRI Ridgeway, LLC
 
Delaware
 
WRI Roswell Corners, LLC
 
Delaware
 
WRI Roswell Crossing, LLC
 
Delaware
 
WRI Seminole Holdings, LLC
 
Delaware
 
WRI Seminole II, LLC
 
Delaware
 
WRI Seminole Marketplace, LLC
 
Delaware
 
WRI Shoppes at Bears Path, LLC
 
Delaware
 
WRI Shoppes of South Semoran Holdings, LLC
Delaware
 
WRI Shoppes of South Semoran, LLC
 
Delaware
 




Subsidiary
 
State of Incorporation
 
WRI Southern Industrial Pool LLC
 
Delaware
 
WRI Trautmann, L.P.
 
Delaware
 
WRI University Place, LLC
 
Delaware
 
WRI West Gate South, L.P.
 
Texas
 
WRI Western Queen Anne LLC
 
Delaware
 
WRI Western Retail Partners GP, LLC
 
Delaware
 
WRI Western Retail Partners LP
 
Delaware
 
WRI Western Retail REIT LP
 
Delaware
 
WRI Westgate Industrial Holdings LLC
 
Texas
 
WRI Westgate Industrial LP
 
Texas
 
WRI/BIT Retail JV, LP
 
Delaware
 
WRI/High House LLC
 
Delaware
 
WRI/Lone Star, Inc.
 
Texas
 
WRI/Louisiana Holdings, Inc.
 
Delaware
 
WRI/Miller Westminster I LLC
 
Delaware
 
WRI/Miller Westminster II LLC
 
Delaware
 
WRI/Raleigh LP
 
Delaware
 
WRI/TEXLA, LLC
 
Louisiana
 
WRI/Utah Properties, L.P.
 
Delaware
 
WRI/West Jordan LLC
 
Delaware
 
WRI-AEW Lone Star Retail Portfolio, LLC
 
Delaware
 
WRI-GDC Englewood, LLC
 
Delaware
 
WRI-IND GP, LLC
 
Delaware
 
WRI-JAMESTOWN Retail Venture, LP
 
Delaware
 
WRIJV, LP
 
Delaware
 
WRI-RET GP, LLC
 
Delaware
 
WRI-SRP Chatham Crossing, LLC
 
Delaware
 
WRI-SRP Cole Park Plaza, LLC
 
Delaware
 
WRI-SRP Hilton Head, LLC
 
Delaware
 
WRI-SRP Indian Harbour, LLC
 
Delaware
 
WRI-SRP Lake Washington, LLC
 
Delaware
 
WRI-SRP Paradise Isle Holdings, LLC
 
Delaware
 
WRI-SRP Paradise Isle, LLC
 
Delaware
 
WRI-SRP Shoppes of Port Charlotte Pad, LLC
 
Delaware
 
WRI-SRP Shoppes of Port Charlotte, LLC
 
Delaware
 
WRI-SRP Sunrise West, LLC
 
Delaware
 
WRI-TC Alafaya Square, LLC
 
Delaware
 
WRI-TC East Lake Woodlands, LLC
 
Delaware
 
WRI-TC International Drive Value Center, LLC
 
Delaware
 
WRI-TC Kendall Corners, LLC
 
Delaware
 
WRI-TC Marketplace at Dr. Phillips, LLC
 
Delaware
 
WRI-TC Palm Lakes Plaza, LLC
 
Delaware
 
WRI-TC South Dade Shopping Center, LLC
 
Delaware
 
WRI-URS Clackamas, LLC
 
Delaware
 
WRI-URS Meridian, LLC
 
Delaware
 
WRI-URS Mukilteo Speedway, LLC
 
Delaware
 
WRI-URS Rainier Valley, LLC
 
Delaware
 
WRI-URS Raleigh Hills, LLC
 
Delaware
 
WRI-URS South Hill, LLC
 
Delaware
 




Subsidiary
 
State of Incorporation
 
WS Atlantic North, LLC
 
Delaware
 
WS Atlantic West, LLC
 
Delaware
 
WS Kernan Village, LLC
 
Delaware
 
WT Florida Ventures, LLC
 
Delaware
 






EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statements No. 33-41604, No. 33-54404, No. 333-166577 and No. 333-166594 on Form S-8, in Post-Effective Amendment No. 1 to Registration Statement No. 33-25581 on Form S-8 and in Registration Statements No. 333-104559, No. 333-121506, No. 333-122342, No. 333-122448, No. 333-124298, No. 333-142418, No. 333-166916, No. 333-166914 and No. 333-177218 on Form S-3 of our reports dated February 26, 2014 , relating to the consolidated financial statements and financial statement schedules of Weingarten Realty Investors, (the “Company”) and the effectiveness of Weingarten Realty Investors’ internal control over financial reporting, appearing in this Annual Report on Form 10-K of Weingarten Realty Investors for the year ended December 31, 2013 .
/s/ Deloitte & Touche LLP

Houston, Texas
February 26, 2014




EXHIBIT 31.1

CERTIFICATION
I, Andrew M. Alexander, certify that:
1. I have reviewed this report on Form 10-K of Weingarten Realty Investors;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
BY:
/s/ Andrew M. Alexander
 
 
Andrew M. Alexander
 
 
President/Chief Executive Officer
 
February 26, 2014




EXHIBIT 31.2

CERTIFICATION
I, Stephen C. Richter, certify that:
1. I have reviewed this report on Form 10-K of Weingarten Realty Investors;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
BY:
/s/ Stephen C. Richter
 
 
Stephen C. Richter
 
 
Executive Vice President/Chief Financial Officer
 
February 26, 2014




EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Weingarten Realty Investors (the “Company”) on Form 10-K for the period ended December 31, 2013 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Andrew M. Alexander, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
1.  The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
BY:
/s/ Andrew M. Alexander
 
 
Andrew M. Alexander
 
 
President/Chief Executive Officer
 
February 26, 2014




EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Weingarten Realty Investors (the “Company”) on Form 10-K for the period ended December 31, 2013 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stephen C. Richter, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
1.  The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
BY:
/s/ Stephen C. Richter
 
 
Stephen C. Richter
 
 
Executive Vice President/Chief Financial Officer
 
February 26, 2014